daewoo engineering construction abundance of business risks, including but not limited to the...

Daewoo E&C 75, Saemunan-ro, Jongno-gu, Seoul

www.daewooenc.com

DAEWOO ENGINEERING & CONSTRUCTION

2015. 1. 1 ~ 2015. 12. 31

DAEWOO ENGINEERING & CONSTRUCTION

Message froM Ceo

to achieve the unprecedented aim of surpassing KRW 10 trillion in total revenue. While acknowledging the

potential difficulties in reaching this goal, we are fully committed to fulfill clients’ expectations and to deliver

long-term value to our shareholders.

In doing so, we established a centralized organizational structure by having a unified division that uniformly

manages all tasks of a project, from awarding to completion. We also created two new divisions to strengthen

the capabilities of our overseas business, namely the Overseas Infra Project Division and the Global Business

Management Division. Furthermore, to enhance business stability, performance and competitiveness, we plan

to continue reforming the structure of the organization by improving efficiency wherever possible, with a

focus on upgrading the risk analysis and management function.

In addition, Daewoo E&C plans to maximize net profits by selectively bidding for low-risk projects. We

will focus on improving our project review capabilities which will grant us a competitive edge at selecting

profitable domestic projects as well as perform large scale international projects at a high margin.

Our respected shareholders,

The year 2016 will be an important year for the renewed growth of Daewoo E&C. Despite of the worsening

business conditions, we are confident that our management team and employees will continue to do our best

to fulfill the business goals, but also take Daewoo E&C to greatness and make it a truly global enterprise.

Moreover, Daewoo E&C is committed to establish a creative corporate culture and become the leader

enterprise at carrying out its responsibilities as a corporate citizen. We will stay committed to contribute to

society and community, in accordance with our vision “For the People & Better Tomorrow.”

We are once more grateful for your continuous support and wish you and your families a healthy and happy year.

Thank you.

March 25, 2016

Dear valued shareholders,

We would like to express our deepest

appreciation for your continued support

and encouragement for Daewoo E&C.

Last year, Daewoo E&C successfully recovered its position

as a strong and reliable global EPC player. The company

recorded an outstanding economic performance of KRW

13.1 trillion in new orders, KRW 9.9 trillion in total revenue

and KRW 334.6 billion in operating profits despite the

abundance of business risks, including but not limited to the

volatility in oil-prices.

Since the financial crisis of 2008, many construction companies were forced to restructure their operations

at a large-scale due to the large financial losses incurred by taking on abnormally low bid-price projects.

However, Daewoo E&C was able to report a relatively strong performance. The reasons include our

employees’ dedication to our company strengthening the competitiveness of the firm, but also reducing costs

by diversifying the business lines. But this performance would not have been possible without the endless trust

and support that our loyal shareholders put in us. We at Daewoo E&C, would like to express once more our

sincere gratitude for your continuous support.

Dear shareholders,

Unfavorable business climate is expected to be continued over the next upcoming years due to various factors

such as the stagnant growth of the world economy and the fluctuations of oil prices. Uncertainty in business

environment is likely to grow as we will encounter not only a steep decline in new orders from oil-producing

countries, but also a dwindling domestic real estate market following an oversupply of housing and fears of a

potential interest rate hike.

Nonetheless, Daewoo E&C will set its aim high for the year 2016 at KRW 12.2 trillion in new orders and KRW

11.2 trillion in total revenue. Through constant and forward-looking innovation, we will wholeheartedly strive

04. 05.2015 DAEWOO ENGINEERING & CONSTRUCTION ANNUAL REPORT

Youngsik ParkPresident & CEO

_ Ranked 1st in housing supply record 6 yrs straight

_ Won the contract for Ulsan S-Oil RUC project

_ Won the contract for Al-Zour refinery in Kuwait

_ Firstly obtained ISO 22301 certification in the industry

_ Attained $50billion of winning overseas contracts in

the shortest time frame in Korea

_ Prugio‘s grand prize award at “The Most Trusted

Brand Awards 2014“

_ Obtained ISO/IEC 20000 certification

_ Won contract for New Orbital Highway in Qatar

_ Began construction of Iraq AKKAS Central Gas

Processing Facility

_ Recipient of the “Grand Architecture Award,” at

the 9th Korea Civil Engineering and Construction

Awards (Songdo Global Campus Prugio)

_ Began construction of Ras Djinet combined-cycle

power plant

_ Won order for Jazan Refinery, Package 12, in Saudi

Arabia

_ Published sustainability report

_ Began construction of Oman Sur Independent

Power Plant (2011~2014)

_ Began construction of Saudi Arabia RTIP Tank Farm

Project (PKG 1&2) (2012~2015)

_ Began construction of Malaysia IB Tower Project

_ Received the Grand Prize for Civil Engineering

Structure of the Year 2011 from the Korean Society

of Civil Engineers

(Busan-Geoje Fixed Link (Geoga Daero)

_ Began construction of Ruwais Refinery Expansion-

Tankage project (2010~2014) in the UAE

_ Completed the Corporate Restructuring and

Improvement Work

_ Launched new apartment complex brand, Prugio

_ Received Best Knowledge Management Award

from Korea Management Association

_ Established as an independent corporate entity

_ Received Presidential Award for Daewoo Institute

of Construction Technology (DICT)

_ Began construction of the longest tunnel in Korea

(Yeongdong railway track relocation project

between Dongbaeksan & Dogye, 1999~2007)

_ Obtained the ISO 9000 certification, a first among

construction companies in Korea

_ Began construction of Houay Ho Dam in Laos

(1993~1997)

_ Began construction of motorway in Pakistan

(1992~1997)

_ Began construction of Wolsong Nuclear Power

Plant Units 3 & 4 (1992~1999)

_ Entered the US construction market, a first among

construction companies in Korea (residential area

for elderly retirees in Seattle, 1988~2003)

_ Began construction of the first cogeneration power

plant in Korea

(Mokdong Cogeneration Power Plant, 1985~1987)

_ Received the US$ 4 Billion Construction Export

Tower award (Ranked 15th among Top Global

Contractors by ENR)

_ Won the contract for the first overseas export of a

research reactor (Jordan)

_ Opened “Busan-Geoje Fixed Link (Geoga Daero)”,

the world’s deepest and Korea’s very first

automobiles-only immersed tunnel

_ Signed M&A agreement with Korea Development

Bank

_ Began construction of Tripoli waterfront project Libya

_ Ranked first in the Construction Capability

Evaluation (for three consecutive years)

_ Received grand prize in the “Korea Residential

Service Award”


Evaluation (for two consecutive years)

_ Selected as the best in quality service survey by

women consumers for Prugio

_ Received grand prize in the Engineering and

Construction Technology Awards of Korea


Evaluation

_ Joined Kumho Asiana Group as an affiliate

_ Received the Presidential Award in the 9th Most

Livable Apartment Contest (Gireum Prugio)

_ Began construction of the nation’s 1st and the world’

s biggest tidal power plant

(Sihwa Lake Tidal Power Plant, 2004~2009)

_ Began construction of the 1st submersible tunnel

in Korea (private-invested Busan-Geoje Fixed Link

Project, 2004~2010)

_ Established Daewoo Institute of Construction

Technology (DICT), first in the Korean Construction

industry

_ Began construction of Suyeong Bay Olympic Yacht

Marina(the world’s largest, 1983~1987)

_ Daewoo Co., Ltd. was established

(construction / trading sectors)

_ Began construction of the first turn-key project in

Korea (Daejeon Depot, 1979~1984)

_ Advanced into Libya

(Garinius Medical School, 1978~1982)

_ Began construction of Dongjak Grand Bridge

(1978~1984)

_ Obtained international contractor certification

_ Advanced into Ecuador, a first among Korean

construction companies

_ Established as Daewoo Construction Co., Ltd.

2015

2014

2013

2012

2011

2010

2003

2001

2000

1999

1993

1992

1988

1985

1984

2009

2008

2007

2006

2005

2004

1983

1982

1979

1978

1976

1973

Company History


PROGRESS REPORT

MAJOR BUSINESSES

Business overview

Summary of Business Performance and Financial Status for the past 3 Years

(Unit: KRW million)

2013

2014

2015

Total Assets

2013

2014

2015

Sales

8,417,075

9,853,092

9,877,475

9,693,783

9,889,840

9,650,769

2013

2014

2014

2015

2015

Net Income

Equity Capital

(-442,708)

134,880

146,232

2,649,219

2,784,572

2,593,960

Despite the domestic and international economic slump caused by persistent low oil prices during 2015, through early reorganization of the business portfolio Daewoo Engineering & Construction gained a relatively strong achievement compared with other construction companies.

The business results based on 2015 showed new orders of KRW 13 trillion 73.6 billion, total revenue of KRW 9 trillion 877.5 billion and operating profit of KRW 334.6 billion. The goals set for 2016 include new orders of KRW 12 trillion 200 billion and total revenue of KRW 11 trillion 170 billion.

In addition, by awarding the S-OIL RUC and Kuwait Al-Zour Refinery Projects, we have completed the lineups of the whole performance system on petrochemical plant construction, and laid the foundation for a new leap forward through newly establishing the 2025 vision and long-term strategy as a grand 10-year plan aiming for “Global Infra & Energy Developer.”

Even though unfavorable business conditions will continue in 2016, we will aggressively engage ourselves in new challenges and creations to become a global enterprise by securing core competitiveness through innovation and differentiation.

CATEGORY DESCRIPTION

Civil Project BusinessConstruction of roads, bridges, harbors, reclamation, siterenovation/dredging, high-speed railways, etc.

Building Works New construction of commercial, office and factory buildings

Housing Business Construction and pre-sale of apartments, etc.

Power Plant Business Construction of energy plants such as thermal, nuclear power plants and IPPs

Plant Business Construction of OIL & GAS, refinery and LNG plants

Others Real estate lease and sales, steel structure construction, hotel business, etc.

08. 09.

2013

2015 DAEWOO ENGINEERING & CONSTRUCTION ANNUAL REPORT

Civil pRoJeCT Business

Sosa-Wonsi doubletrack railroad station

Guri-Pocheon highway Bridge Construction Botswana

In 2015, the Civil Project Division reported KRW 1.2634 trillion in new orders KRW 1.8469 trillion in total revenue. For 2016,

the Division set the target of new orders to KRW 2.6 trillion by increasing the bidding success rate through strengthening

competitiveness in sales and in winning orders.

Daewoo E&C is focusing on strengthening substantiality by eliminating the cost increasing factors in advance through

development of profitable projects and thorough risk management.

In the domestic market, we will create stable operating profits by securing bidding advantage in technology oriented

bids and comprehensive screening projects in public sectors and awarding new projects based on profitability in private

sectors and SOC projects. We will continue to create profits through stable project management in 87 ongoing projects

including private Guri-Pocheon Expressway. As the developer of new construction market, the Division will focus on

developing new markets such as new & renewable energy, water management and O&M project outside of the public

sector.

In the overseas markets, the Division is putting its best effort in process management and cost rate management as

revenue starts to grow in large-scale projects such as Al-Faw western breakwater in Iraq and the orbital highway in Qatar.

The Division is continuing its efforts of diversifying markets in order to proactively cope with global depression. In Asia

and South African markets, the Division is considering the strategic entry based on localization and partnership. Keeping

pace with the change of trend in the construction market, the Division aims to lay the groundwork for constitutional

change in construction business by identifying more development projects.

Building WoRks Housing Business

Kyung Hee University sports complex

kt Eulji hotel Malaysia IB Tower Ansan Central Prugio

Gunsan Theoceancity Prugio Dongtan Haengbok Maeul Prugio


In 2015, the Building Works Division recorded KRW 2.6 trillion in new orders and KRW 2.3 trillion in total revenue through

the efficient management and aggressive marketing strategy centered on strong business sectors such as housing,

commercial buildings and officetels (studio apartments) as the domestic construction market showed signs of solid

recovery particularly in the real estate market.

Partnering with top-performing developers, the Division reported various development projects such as Cheonan-

Buldang 4,5BL commercial residential complexes and Sangamdong multipurpose facilities in the domestic development

market. The division also utilized its development project capability by directly participating in the whole process from

ground purchasing to construction and successfully supplied Asan-Tangjeong 2,3BL commercial residential complex

and Goyang-Samsong residential complex. The Division strives to strengthen its business capability as a developer

by implementing various development projects such as Wirye-Woonam Station multipurpose building, Wirye 10BL

multipurpose commercial building, Bucheon Sambo Techno Tower, and Dongtan Knowledge Industry Center in addition

to the residential sector and expanding the business opportunities by proposing the customer specific development

projects on privately owned grounds. We are also diversifying its business portfolio in the contracting market by

participating in various projects such as KT Eulji Hotel, Kyunghee University Gymnasium and Seoul National University HIP

remodeling projects.

In the overseas market, the Division strives to strengthen its local domination by persistently building trust with project

owners, by completing projects in Singapore and Malaysia on schedule.

The Division plans to maintain the business size in residential sector in suitable level with focus on profitability and safety

and to aggressively expand the public sector and private contracting business in the domestic market in 2016. In the

overseas markets, we plan to diversify its business area from Southeast Asia to the Middle East and Africa and actively

identify the development projects such as the New Town Development project in Vietnam in order to maximize profits.

In 2015, the Housing Division recorded KRW 4.3 trillion in new orders and KRW 3.2 trillion in total revenue by focusing

on projects that were suitable for pre-sale in response to the favorable market conditions and carrying out the business

diversification strategy including expansion in private-public joint projects with guaranteed profit. While the division is

laying the foundation for continued growth, it is also giving its best efforts to maximize profitability.

Daewoo E&C selects excellent project sites and proactively respond to market changes based on the company’s market

analysis and forecast system.

Moreover, the Division developed new complexes in Gunsan and Geochang using the demand analysis technique and

supplied Dongtan Haengbok Village Prugio to the New Stay (large scale rental housing complex) projects, which is the

government’s residential innovation program for middle income families, as a foothold to enter the rental management

business. The successful pre-sale of Banpo Central Prugio Summit has joined Seocho Prugio Summit as the Twin

Landmark in Gangnam District to enhance the value of the luxury apartment brand ‘Summit’ and to demonstrate its

marketability and competitiveness.

Although the uncertainty of the market will increase in 2016 due to the increasing mortgage rates, loan restriction, and

burden of concentrated housing supply, the Division intends to secure stable growth and profitability by focusing on risk

management with the goal of profit maximization through strengthening the core competitiveness.

We will also lay the groundwork for continued growth through maximizing market power and securing differentiated

competitiveness by seeking expansion of new businesses and new contractors.


Power Plant Business

In 2015, the Power Plant Division focused on strengthening substantiality based on technology accumulated over the

years and experience on wide range project executions, and strived to diversify its business to overseas power plant

operating business and new & renewable energy business.

The Division is currently constructing the Safi coal-fired power plant in Morocco and the Ras Djinet combined cycle

power plant in Algeria in North Africa which is the company’s core market. In Korea, we are also constructing Samcheok

Green Power Units 1 and 2 and currently in the design and procurement phase of main equipment of Yeongnam/Shin-

Pyeongtaek combined cycle power plant. Furthermore, we began the O&M project for the Pocheon combined cycle

power plant, which is Daewoo E&C’s new future growth engine.

As for nuclear power plants, the Division successfully completed construction of the Shin-Wolsong nuclear power plants

Units 1 and 2 and the Wolsong radioactive waste disposal center and is about to complete Korea’s first EPC project for a

research nuclear reactor in Jordan. Furthermore, the Division has solidified its status as an EPC powerhouse in nuclear by

awarding the steam generator replacement project for Hanbit Units 3 and 4.

Although the electric power demand is expected to increase particularly in developing countries in 2016, fluctuations in

the market is expected due to the falling oil prices and economic depression. Hence, the Power Business Division aims to

secure the EPC cost competitiveness and strengthen the business capability in target countries with the utmost goal of

winning the projects with assured profitability.

We will also continue to actively seek out future growth engines by developing independent power plant projects and

entering into new & renewable energy business to become a global energy developer.

Sinwolseong Nuclear power plant Unit 1, 2

Pocheon Compound Steam Power Generation Nigeria Otumara ProjectMorocco SAFI a coal-burning plant Nigeria Indorama Project

Plant Business

Morocco Jorf Lasfar Fertilizer Project

In 2015, the Plant Business Division recorded KRW 4.2 trillion in new orders which represented a drastic increase over the

previous year despite contraction of the market due to falling oil prices. We awarded the Ulsan S-OIL RUC project, which

is the Korea’s largest plant construction project, to persist and secure projects in the domestic market and establish the

opportunity to accumulate EPC capability in residue upgrading process.

In the overseas market, the Division awarded the Al-Zour Refinery project in 2015 following the Clean Fuel project in

2014 to solidify its presence in Kuwait. We aim to reduce risks in large projects and to secure improved EPC execution

experiences by retaining refinery process performances and joint ventures with advanced companies.

decline of new investment in oil producing countries is expected to fall to the lowest level in 6 years due to continued

drop in oil prices in 2016. Because of such market environment, Daewoo E&C plans to seek substantiality instead of

external growth and focus on strengthening our bidding strategy and project management to secure profits.

The Division will aggressively seek new projects in LNG train construction which the company has advantage in and also

seek business plans for project financing to enhance stability and profitability.

REPORT OF INDEPENDENT AUDITORS


We have audited the accompanying consolidated financial statements of DAEWOO ENGINEERING

& CONSTRUCTION CO., LTD. and its subsidiaries (collectively “the Group”), which comprise the

consolidated statements of financial position as of December 31, 2015 and 2014, and the consolidated

statements of income, comprehensive income, changes in equity and cash flows for the years then

ended, and notes, comprising a summary of significant accounting policies and other explanatory

information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements

inaccordance with the International Financial Reporting Standards as adopted by the Republic of

Korea(Korean IFRS) and for such internal control as management determines is necessary to enable

the preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We

conducted our audits in accordance with the Korean Standards on Auditing. Those standards require

that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether the 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 auditor’s 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 considers 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 we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the

financial position of DAEWOO ENGINEERING & CONSTRUCTION CO., LTD. and its subsidiaries as of

December 31, 2015 and 2014, and their financial performance and cash flows for the years then ended

in accordance with the Korean IFRS.

Other Matters

The accompanying consolidated financial statements as of and for the years ended December 31,

2015 and 2014, have been translated into US dollars solely for the convenience of the reader and have

been translated on the basis set forth in Note 4 to the consolidated financial statements.

Auditing standards and their application in practice vary among countries. The procedures and

practices used in the Republic of Korea to audit such financial statements may differ from those

generally accepted and applied in other countries.

Seoul, Korea, March 17, 2016

To the Board of Directors and Shareholders of

DAEWOO ENGINEERING & CONSTRUCTION CO., LTD.

This report is effective as of March 17, 2016, the audit report date. Certain subsequent events or

circumstances, which may occur between the audit report date and the time of reading this report,

could have a material impact on the accompanying consolidated financial statements and notes thereto.

Accordingly, the readers of the audit report should understand that there is a possibility that the above

audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if

any.

2015 2014 2015 2014

Assets

Current assets

Cash and cash equivalents \ 384,009 \ 229,677 $ 327,653 $ 195,970

Financial instrument assets 218,440 170,415 186,382 145,405

Trade receivables 2,808,775 3,259,363 2,396,566 2,781,026

Other receivables 606,543 652,036 517,528 556,345

Advance payments 442,453 505,023 377,520 430,907

Prepaid expenses 216,939 253,360 185,101 216,176

Inventories 1,278,836 1,196,872 1,091,157 1,021,222

Assets held for sale 505,375 568,248 431,207 484,853

6,461,370 6,834,994 5,513,114 5,831,904

Non-current assets

Investments in subsidiaires and associates 474,849 465,710 405,161 397,363


Investment in securities 305,345 349,163 260,533 297,921

Other receivables 1,028,369 977,968 877,448 834,444


Investment property 171,902 178,460 146,674 152,270

Property, plant and equipment 364,545 202,371 311,045 172,672

Intangible assets 90,936 86,931 77,590 74,173

Deferred income tax assets 664,758 688,372 567,200 587,348

3,189,397 3,054,846 2,721,328 2,606,525

Total Assets \ 9,650,767 \ 9,889,840 $ 8,234,442 $ 8,438,429

2015 2014 2015 2014

Liabilities

Current Liabilities

Financial instrument liabilities \ 1,518,392 \ 1,431,566 $ 1,295,556 $ 1,221,473

Trade payables 457,580 485,536 390,427 414,280

Other payables 1,334,865 1,121,185 1,138,963 956,642

Advances received 981,091 887,560 837,108 757,304

Withholdings 100,813 118,873 86,019 101,429

Guarantee deposits received 56,602 59,485 48,295 50,755

Income tax payable 8,772 5 7,485 4

4,458,115 4,104,210 3,803,853 3,501,887

Non-current liabilities

Financial instrument liabilities 786,474 1,163,269 671,053 992,550


Provisions 354,702 572,023 302,647 488,074


Defined benefit liabilities 170,133 196,137 145,165 167,352

2,408,082 3,136,412 2,054,678 2,676,118

Total liabilities 6,866,197 7,240,622 5,858,531 6,178,005

Equity

Capital stock 2,078,113 2,078,113 1,773,134 1,773,134

Capital surplus 548,200 548,200 467,747 467,747

Other components of equity (99,174) (99,174) (84,619) (84,619)

Accumulated other comprehensive income (158,590) (152,058) (135,316) (129,743)

Retained earnings 416,021 274,137 354,965 233,905

Total equity 2,784,570 2,649,218 2,375,911 2,260,424

Total liabilities and equity \ 9,650,767 \ 9,889,840 $ 8,234,442 $ 8,438,429

Separate Statements of Financial Position(December 31, 2015 and 2014)

In millions of Korean won and thousands of US dollars In millions of Korean won and thousands of US dollars

DAEWOO ENGINEERING & CONSTRUCTION CO., LTD.

16. 17.


18. 19.


2015 2014 2015 2014

Sales \ 9,877,475 \ 9,853,092 $ 8,427,880 $ 8,407,075

Cost of sales 9,189,470 9,131,755 7,840,845 7,791,600

Gross profit 688,005 721,337 587,035 615,475

Selling and administrative expenses 353,444 305,857 301,573 260,970

Operating income 334,561 415,480 285,462 354,505

Other income 417,672 477,033 356,375 407,025

Other expenses 506,945 621,584 432,547 530,362

Financial income 21,534 28,533 18,374 24,346

Financial costs 91,508 116,154 78,078 99,108

Profit before income tax 175,314 183,308 149,586 156,406

Income tax expense 29,082 48,428 24,816 41,321

Profit (loss) for the year \ 146,232 \ 134,880 $ 124,770 $ 115,085

Earnings (loss) per share attributable to the equity holders of the Company during period

Basic earnings (loss) per share \ 356 \ 328 $ 0.304 $ 0.280

Diluted earnings (loss) per share 355 328 0.303 0.280

2015 2014 2015 2014

Cash flows from operating activities

Cash generated from operations \ 754,490 \ 484,440 $ 643,763 $ 413,345

Interest received 22,997 23,701 19,622 20,223

Interest paid (88,454) (113,556) (75,473) (96,891)

Income tax paid 8,809 (49,510) 7,516 (42,244)

Dividends received 12,339 15,136 10,528 12,915

Net cash inflow from operating activities 710,181 360,211 605,956 307,348

Cash flows from investing activities

Decrease in current financial instrument assets 64,067 72,886 54,665 62,189

Increase in current financial instrument liabilities (derivatives) 18,829 16,932 16,066 14,447

Decrease in current other receivables 22,587 21,593 19,272 18,424

Disposal of assets held for sale 87,519 66,485 74,675 56,728

Decrease in investments in securities 147,202 151,572 125,599 129,328

Disposal of investments in subsidiaries and associates 4,205 1,192 3,588 1,017

Decrease in non-current other receivables 97,611 52,177 83,286 44,520

Disposal of investment property 5,394 9,501 4,602 8,107

Disposal of property, plant and equipment 5,859 2,812 4,999 2,399

Disposal of intangible assets - 900 - 768

Increase in current financial instrument assets (123,198) (68,568) (105,118) (58,505)

Decrease in current financial instrument liabilities (derivatives) (16,339) (27,670) (13,941) (23,609)

Increase in current other receivables (37,790) (33,977) (32,244) (28,991)

Acquisition of investments in securities (126,444) (47,562) (107,887) (40,582)

Acquisition of investments in subsidiaries and associates (31,240) (66,270) (26,655) (56,544)

Increase in non-current financial instrument assets (4,400) (1,400) (3,754) (1,195)

Increase in non-current other receivables (225,906) (103,001) (192,753) (87,885)

Acquisition of property, plant and equipment (219,183) (63,089) (187,016) (53,830)

Acquisition of intangible assets (4,644) (4,269) (3,962) (3,642)

Net cash inflow from investing activities (335,871) (19,756) (286,578) (16,856)

Separate Statements of Income Separate Statements of Cash Flows(Years Ended December 31, 2015 and 2014) (Years Ended December 31, 2015 and 2014)


DAEWOO ENGINEERING & CONSTRUCTION CO., LTD. DAEWOO ENGINEERING & CONSTRUCTION CO., LTD.

20. 21.


2015 2014 2015 2014

Cash flows from financing activities

Increase in current financial instrument liabilities 4,460,933 3,480,184 3,806,257 2,969,440

Increase in non-current financial instrument liabilities 597,697 773,072 509,980 659,618

Decrease in current financial instrument liabilities (5,278,938) (4,689,684) (4,504,213) (4,001,437)

Decrease in non-current financial instrument liabilities - - - -

Net cash outflow from financing activities (220,308) (436,428) (187,976) (372,379)

Exchange gain on cash and cash equivalents 330 1,604 281 1,367

Net increase (decrease) in cash and cash equivalents 154,332 (94,369) 131,683 (80,520)

Cash and cash equivalents at the beginning of year 229,677 324,046 195,970 276,490

Cash and cash equivalents at the end of year \ 384,009 \ 229,677 $ 327,653 $ 195,970

In millions of Korean won and thousands of US dollars

2015 2014 2015 2014

Assets

Current assets

Cash and cash equivalents \ 539,046 \ 325,690 $ 459,938 $ 277,892


Trade receivables 2,822,566 3,263,114 2,408,333 2,784,227

Other receivables 604,706 619,349 515,961 528,455

Advance payments 495,749 527,535 422,994 450,115


Inventories 1,285,202 1,231,598 1,096,589 1,050,852

Assets held for sale 505,375 568,248 431,207 484,853

6,699,865 6,987,914 5,716,608 5,962,382

Non-current assets

Investments in associates 137,732 54,003 117,519 46,078


Investment in securities 307,281 351,144 262,185 299,611

Other receivables 1,017,028 969,635 867,771 827,334


Investment property 171,902 178,460 146,674 152,270

Property, plant and equipment 936,319 797,642 798,907 680,582

Intangible assets 120,349 115,191 102,687 98,286

Deferred income tax assets 675,585 693,181 576,438 591,451

3,452,193 3,272,303 2,945,558 2,792,069

Total assets \ 10,152,058 \ 10,260,217 $ 8,662,166 $ 8,754,451

Consolidated Statements of Financial Position(December 31, 2015 and 2014)

In millions of Korean won and thousands of US dollars)

DAEWOO ENGINEERING & CONSTRUCTION CO., LTD.AND SUBSIDIARIES

22. 23.


Liabilities

Current Liabilities

Financial instrument liabilities \ 1,648,417 \ 1,569,890 $ 1,406,499 $ 1,339,497

Trade payables 459,419 480,967 391,996 410,381

Other payables 1,346,590 1,124,446 1,148,968 959,425


Withholdings 133,373 149,395 113,800 127,471


Income tax payable 27,632 17,750 23,577 15,145

4,671,531 4,233,702 3,985,949 3,612,374

Non-current liabilities

Financial instrument liabilities 1,016,810 1,319,551 867,585 1,125,897

Other payables - 250 - 213


Provisions 355,200 572,417 303,072 488,410


Defined benefit liabilities 172,325 198,029 147,035 168,967

Deferred income tax liabilities 16,258 16,262 13,871 13,875

2,649,848 3,300,922 2,260,961 2,816,486

Total liabilities 7,321,379 7,534,624 6,246,910 6,428,860

Equity attributable to owners of the Parent Company

Capital stock 2,078,113 2,078,113 1,773,134 1,773,134

Capital surplus 549,538 548,906 468,889 468,349

Other components of equity (99,174) (99,174) (84,620) (84,620)

Accumulated other comprehensive income (150,980) (154,967) (128,823) (132,225)

Retained earnings 395,417 256,819 337,387 219,129

2,772,914 2,629,697 2,365,967 2,243,767

Non-conrolling interest 57,765 95,896 49,289 81,824

Total equity 2,830,679 2,725,593 2,415,256 2,325,591

Total liabilities and equity \ 10,152,058 \ 10,260,217 $ 8,662,166 $ 8,754,451

2015 2014 2015 2014

In millions of Korean won and thousands of US dollars)

2015 2014 2015 2014

Sales \ 9,935,734 \ 9,995,023 $ 8,477,589 $ 8,528,177

Cost of sales 9,207,717 9,231,385 7,856,414 7,876,608

Gross profit 728,017 763,638 621,175 651,569

Selling and administrative expenses 384,584 336,665 328,143 287,258

Operating income (loss) 343,433 426,973 293,032 364,311

Income from associates (19,119) 12,757 (16,313) 10,885

Other income 411,819 467,000 351,381 398,464

Other expenses 491,556 627,804 419,416 535,669

Financial income 21,460 28,304 18,311 24,150

Financial costs 97,248 123,445 82,976 105,328

Profit before income tax 168,789 183,785 144,019 156,813

Income tax expense 26,752 54,075 22,827 46,139

Profit (loss) for the year 142,037 129,710 121,192 110,674

Profit (loss) for the year attributable to:

Equity holders of the Parent Company \ 143,292 \ 132,403 $ 122,263 $ 112,972

Non-controlling interest (1,255) (2,693) (1,071) (2,298)

Earnings (loss) per share attributable to the equity holders of the Parent Company during the year

Basic earnings (loss) per share \ 349 \ 322 $ 0.30 $ 0.27

Diluted earnings (loss) per share 348 322 0.30 0.27

In millions of Korean won and thousands of US dollars

Consolidated Statements of Income(December 31, 2015 and 2014)


24. 25.


2015 2014 2015 2014

Cash flows from operating activities

Cash generated from operations \ 737,645 \ 404,912 $ 629,390 $ 345,488

Interest received 23,079 23,106 19,692 19,715

Interest paid (93,867) (120,847) (80,091) (103,112)

Income tax paid 6,316 (50,781) 5,389 (43,328)

Dividends received 11,869 8,726 10,127 7,445

Dividends paid - (706) 0 (602)

Net cash inflow from operating activities 685,042 264,410 584,507 225,606

Cash flows from investing activities

Decrease in current financial instrument assets 85,794 73,116 73,203 62,386

Increase in current financial instrument liabilities (derivatives) 18,829 16,932 16,066 14,447

Decrease in current other receivables 22,089 20,713 18,847 17,673

Disposal of assets held for sale 87,519 68,055 74,675 58,067

Decrease in investments in securities 147,247 151,572 125,637 129,328

Disposal of investments in associates - 1,192 - 1,017

Decrease in non-current other receivables 96,682 51,826 82,493 44,220

Disposal of investment property 5,394 9,501 4,602 8,107

Disposal of property, plant and equipment 6,410 3,035 5,469 2,590

Disposal of intangible assets 8 1,313 7 1,120

Increase in current financial instrument assets (126,698) (90,674) (108,104) (77,367)

Decrease in current financial instrument liabilities (derivatives) (16,339) (27,670) (13,941) (23,609)

Increase in current other receivables (36,267) (33,977) (30,945) (28,991)

Acquisition of investments in securities (126,444) (48,151) (107,887) (41,084)

Acquisition of investments in associates (30,359) (1,987) (25,904) (1,695)

Increase in non-current financial instrument assets (4,400) (1,400) (3,754) (1,195)

Increase in non-current other receivables (222,706) (93,797) (190,022) (80,032)

Acquisition of property, plant and equipment (440,552) (156,004) (375,898) (133,109)

Acquisition of intangible assets (5,332) (4,338) (4,549) (3,701)

Net cashflow by changes in ownership interest of subsidiaries (1,992) - (1,700) -

Net cash inflow from investing activities (541,117) (60,743) (461,705) (51,828)

Cash flows from financing activities

Increase in current financial instrument liabilities 4,572,226 3,672,666 3,901,217 3,133,674

Increase in non-current financial instrument liabilities 847,142 867,201 722,817 739,933

Increase in paid-in capital of the non-controlling interest 48,295 43,899 41,207 37,456

Decrease in current financial instrument liabilities (5,397,699) (4,872,895) (4,605,545) (4,157,760)

Decrease in non-current financial instrument liabilities (495) - (422) -

Decrease in paid-in capital of the non-controlling interest (495) - (422) -

Net cash inflow (outflow) from financing activities 68,974 (289,129) 58,852 (246,697)

Exchange gain on cash and cash equivalents 457 1,554 392 1,326

Net increase (decrease) in cash and cash equivalents 213,356 (83,908) 182,046 (71,593)

Cash and cash equivalents at the beginning of year 325,690 409,598 277,892 349,485

Cash and cash equivalents at the end of year \ 539,046 \ 325,690 $ 459,938 $ 277,892

Consolidated Statements of Cash Flows(December 31, 2015 and 2014)



2015 2014 2015 2014

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