imarketkorea inc. and its subsidiaries inc. and its subsidiaries consolidated statements of...
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iMarketKorea Inc. and its subsidiaries
Consolidated Financial StatementsAs of and For the Years Ended December 31, 2016 and 2015
ATTACHMENT: INDEPENDENT AUDITOR’S REPORT
iMarketKorea Inc.
(Table of Contents)
Independent Auditors’ Report
Consolidated Financial Statements as of and for the Years Ended December 31, 2016 and 2015
Notes to Consolidated Financial Statements
Independent Auditors’ Report English Translation of Independent Auditors’ Report Originally Issued in Korean on March 21, 2017
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 statements of financial
position as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive
income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash
flows, all expressed in Korean won, for the years ended December 31, 2016 and 2015, 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
audits. We conducted our audits 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.
Deloitte Anjin LLC 9F., 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. © For information, contact Deloitte Anjin LLC
2017.
We believe that the audit evidence 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 the Group as of December 31, 2016 and 2015, and its financial performance and its cash
flows for the years ended December 31, 2016 and 2015, in accordance with K-IFRS.
March 21, 2017
Notice to Readers
This report is effective as of March 21, 2017, 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, 2016 AND 2015
The accompanying consolidated financial statements, including all footnote disclosures, were
prepared by, and are the responsibility of, the Company.
Kim, Gyu Il
Chief Executive Officer
IMARKETKOREA INC.
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2016 AND 2015
Notes December 31, 2016 December 31, 2015
(In Korean won)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 5 and 33 ₩ 72,580,393,043 ₩ 49,461,553,014
Trade receivables 7, 31 and 33 868,812,209,158 844,329,407,580
Other receivables 7, 31 and 33 2,368,383,517 1,566,121,741
Other financial assets 6, 8 and 33 70,917,942,591 11,208,781,209
Current income tax assets 167,835,153 275,339,396
Inventories 9 78,312,962,612 104,394,147,103
Other current assets 10 11,645,850,835 14,093,289,116
Total current assets 1,104,805,576,909 1,025,328,639,159
NON-CURRENT ASSETS:
Long-term trade receivables 7 and 33 43,092,110 25,103,550
Long-term other receivables 7 and 33 7,268,689,470 7,026,993,685
Other long-term financial assets 6, 8 and 33 13,370,654,605 9,129,772,484
Property, plant and equipment 11 9,956,750,167 11,378,497,710
Intangible assets 12, 31 and 35 197,441,977,962 211,489,441,758
Deferred income tax assets 28 1,177,856,329 1,927,168,099
Total non-current assets 229,259,020,643 240,976,977,286
Total assets ₩ 1,334,064,597,552 ₩ 1,266,305,616,445
LIABILITIES
CURRENT LIABILITIES:
Trade payables 16, 31 and 33 ₩ 798,940,073,862 ₩ 724,149,155,871
Other payables 16, 31 and 33 11,425,262,527 12,041,988,603
Other financial liabilities 17 and 33 1,635,059,786 337,264,260
Current income tax liabilities 10,215,943,885 11,137,622,331
Short-term borrowings 18, 32 and 33 10,479,673,753 14,153,677,980
Current convertible bonds 20 and 33 1,090,200,000 1,090,200,000
Current redeemable preferred share liabilities 20 and 33 1,895,110,000 1,895,110,000
Other current liabilities 21 3,749,507,886 12,790,130,157
Total current liabilities 839,430,831,699 777,595,149,202
NON-CURRENT LIABILITIES:
Bonds 19 and 33 10,000,000 10,000,000
Non-current other financial liabilities 17 and 33 633,339,422 853,934,781
Defined benefit obligations 22 2,486,827,322 4,574,291,729
Deferred income tax liabilities 28 33,901,946,029 34,067,208,591
Other non-current liabilities 21 148,731,816 156,599,269
Total non-current liabilities 37,180,844,589 39,662,034,370
Total liabilities 876,611,676,288 817,257,183,572
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
AS OF DECEMBER 31, 2016 AND 2015
Notes December 31, 2016 December 31, 2015
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 23 114,992,075,028 114,707,403,975
Components of other capital 23 (176,524,079) 117,413,450
Retained earnings 23 259,066,747,155 250,071,568,586
Total equity attributable from the
parent company
392,048,968,104 383,063,056,011
Non-controlling interests 65,403,953,160 65,985,376,862
Total shareholders' equity 457,452,921,264 449,048,432,873
Total liabilities and shareholders'
equity ₩ 1,334,064,597,552 ₩ 1,266,305,616,445
(Concluded)
See notes
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
Notes 2016 2015
(In Korean won)
SALES 4 and 31 ₩ 3,400,004,480,418 ₩3,143,908,414,690
COST OF SALES 24 and 31 3,210,536,780,058 2,960,413,627,460
GROSS PROFIT 189,467,700,360 183,494,787,230
SELLING AND ADMINISTRATIVE EXPENSES 24, 25, 31 and 32 128,982,750,325 119,804,374,758
OPERATING INCOME 60,484,950,035 63,690,412,472
NON-OPERATING INCOME AND EXPENSES:
Other non-operating income 26 and 31 17,695,435,153 15,370,901,489
Other non-operating expenses 26 25,006,517,244 15,244,990,778
Finance income 27 1,524,127,691 2,314,626,531
Finance expenses 27 583,203,050 682,298,494
Loss on equity method investments 4, 14 and 15 - 144,102,781
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
(6,370,157,450) 1,987,264,747
INCOME BEFORE INCOME TAX EXPENSE 54,114,792,585 65,677,677,219
INCOME TAX EXPENSE 28 18,524,755,276 16,112,035,152
NET INCOME 35,590,037,309 49,565,642,067
OTHER COMPREHENSIVE INCOME (LOSS):
Items that will not be reclassified
subsequently to profit or loss:
Remeasurement of defined benefit plan 22 529,816,330 105,163,656
Income tax relating to items that will
not be reclassified subsequently, net 22 (145,341,972) (24,730,742)
Items that may be reclassified subsequently
to profit or loss:
Gain on foreign operations translation, net 23 (332,346,275) 152,492,079
Capital change in equity method 14, 15 and 23 - (369,543,916)
52,128,083 (136,618,923)
TOTAL COMPREHENSIVE INCOME ₩ 35,642,165,392 ₩ 49,429,023,144
NET INCOME ATTRIBUTABLE TO:
Owners of the parent company ₩ 26,148,668,356 ₩ 41,590,130,572
Non-controlling interests 9,441,368,953 7,975,511,495
TOTAL COMPREHENSIVE INCOME:
Owners of the parent company ₩ 26,178,589,094 ₩ 41,474,140,660
Non-controlling interests 9,463,576,298 7,954,882,484
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
Notes 2016 2015
(In Korean won)
EARNINGS PER SHARE:
Basic earnings per share 29 ₩ 743 ₩ 1,170
Diluted earnings per share 29 ₩ 743 ₩ 1,170
(Concluded)
See notes
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
Capital stock
Other contributed
capital
Components of
other capital
Retained
earnings
Non-controlling
interests Total
(In Korean won)
Balance at January 1, 2015 ₩ 18,166,670,000 ₩ 125,339,585,275 ₩ 334,435,935 ₩ 226,188,417,441 ₩ 63,077,308,885 ₩ 433,106,417,536
Net income - - - 41,590,130,572 7,975,511,495 49,565,642,067
Remeasurement of
defined benefit plan - - - 101,032,573 (20,599,659) 80,432,914
Gain (loss) on foreign
operation translation, net - - 152,521,431 - (29,352) 152,492,079
Capital change in equity method - - (369,543,916) - - (369,543,916)
Share-based payment reserve - - - - 185,493 185,493
Year-end dividends - - - (17,808,012,000) (5,047,000,000) (22,855,012,000)
Acquisition of treasury stock - (10,632,181,300) - - - (10,632,181,300)
Balance at December 31,2015 ₩ 18,166,670,000 ₩ 114,707,403,975 ₩ 117,413,450 ₩ 250,071,568,586 ₩ 65,985,376,862 ₩ 449,048,432,873
Balance at January 1, 2016 ₩ 18,166,670,000 ₩ 114,707,403,975 ₩ 117,413,450 ₩ 250,071,568,586 ₩ 65,985,376,862 ₩ 449,048,432,873
Net income - - - 26,148,668,356 9,441,368,953 35,590,037,309
Additional acquisition of
subsidiary's share - (47,246,109) - - 124,581,515 77,335,406
Remeasurement of
defined benefit plan - - - 444,572,713 (60,098,355) 384,474,358
Loss on foreign operation
translation, net - - (293,937,529) - (38,408,746) (332,346,275)
Share-based payment reserve - 504,017,162 - - (3,867,069) 500,150,093
Year-end dividends - - - (17,598,062,500) (10,045,000,000) (27,643,062,500)
Acquisition of treasury stock - (172,100,000) - - - (172,100,000)
Balance at December 31,2016 ₩ 18,166,670,000 ₩ 114,992,075,028 ₩ (176,524,079) ₩ 259,066,747,155 ₩ 65,403,953,160 ₩ 457,452,921,264
See notes
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
(In Korean won)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ₩ 35,590,037,309 ₩ 49,565,642,067
Income tax expense 18,524,755,276 16,112,035,152
Interest expense 583,203,050 682,298,494
Depreciation 2,360,779,091 2,487,928,705
Amortization 12,338,689,755 14,004,662,233
Loss on disposal of property, plant and equipment 93,638,517 20,761,831
Loss on disposal of intangible asset 29,118,482 -
Severance benefits 4,290,042,995 3,914,417,864
Bad debts expense 445,333,504 (92,778,511)
Other bad debts expense - 456,526
Impairment loss on investments in associates - 221,951,220
Loss on disposal of other investments - 36,075,379
Loss on foreign currency translation 346,334,744 627,140,232
Loss on valuation of forward exchange contracts 1,417,107,784 139,971,395
Impairment loss on intangible assets 4,574,471,694 550,043,265
Compensation expenses associated with stock option 500,150,093 3,744,961
Loss on equity method investments - 144,102,781
Loss on disposal of available-for-sale (“AFS”) financial assets 48,620 -
Loss on disposal of inventories 57,752,284 -
Interest income (1,524,127,691) (2,314,626,531)
Dividend income (560,000) -
Gain on foreign currency translation (1,556,089,501) (671,089,931)
Reversal of allowance for other bad debts (8,417,257) (93,550,902)
Gain on valuation of forward exchange contracts (137,250,990) (223,660,578)
Gain on disposal of AFS financial assets - (16,567)
Gain on valuation of financial assets held for trading (6,326,256) -
Gain on disposal of property, plant and equipment (26,608,250) (100,823,952)
Gain on exemption of debts - (40,000,000)
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 (30,134,978,048) (176,913,551,825)
Decrease in other financial assets 431,425,289 1,876,753,347
Decrease (increase) in inventories 26,198,429,735 (52,570,537,632)
Decrease (increase) in other assets 2,344,828,960 (6,761,284,801)
Increase in trade payables 77,944,495,638 120,751,611,524
Increase in other payables 670,313,114 2,602,950,001
Decrease in other financial liabilities (337,264,266) (266,043,691)
Increase (decrease) in other current liabilities (8,984,502,693) 3,942,780,738
Payment of defined benefit obligations (3,486,836,516) (2,894,447,834)
Decrease in employees’ plan assets (2,488,626,580) (2,030,042,184)
Cash generated from operations: 140,049,367,886 (27,882,207,224)
Interest received 1,776,092,818 2,189,769,657
Interest paid (557,678,371) (594,639,341)
Dividends received 560,000 -
Income tax paid (18,844,103,148) (15,931,045,863)
122,424,239,185 (42,218,122,771)
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (CONTINUED)
2016 2015
(In Korean won)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in other long-term financial assets ₩ 5,461,407,107 ₩ 21,594,636,369
Decrease in long-term other receivables 1,557,824,053 1,548,675,657
Disposition of property, plant and equipment 361,217,457 125,166,621
Disposition of intangible assets 118,181,818 268,131,244
Increase in other financial assets (67,957,782,903) (3,089,173,440)
Increase in long-term other receivables (2,702,619,666) (1,277,909,963)
Acquisition of property, plant and equipment (1,394,909,932) (1,924,013,454)
Acquisition of intangible assets (3,034,999,209) (512,684,885)
Acquisition of investments in subsidiaries - (28,270,802,397)
Net cash outflow due to loss of control of a subsidiary - (1,752,710)
(67,591,681,275) (11,539,726,958)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 79,538,487,797 38,118,675,069
Proceeds from long-term borrowings - 10,000,000
Increase in government grants 44,532,500 -
Dividends paid to shareholders (27,643,062,500) (22,855,012,000)
Repayment from short-term borrowings (83,377,620,420) (36,775,265,793)
Repayment from current portion of long-term borrowings (126,385,000) (2,190,465)
Acquisition of treasury stock (172,100,000) (10,632,181,300)
Additional acquisition of investments in subsidiaries 77,335,406 -
(31,658,812,217) (32,135,974,489)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 23,173,745,693 (85,893,824,218)
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF YEAR 49,461,553,014 135,380,305,761
EFFECT OF EXCHANGE RATE ON CASH AND CASH
EQUIVALENTS (54,905,664) (24,928,529)
CASH AND CASH EQUIVALENTS AT THE
END OF YEAR ₩ 72,580,393,043 ₩ 49,461,553,014
(Concluded)
See notes
IMARKETKOREA INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
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 areas, 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, 2016, 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, 2016, are consistent with the accounting policies used to prepare the
consolidated financial statements as of and for the year ended December 31, 2015.
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, 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 application of these amendments has no material impact on the disclosures or the amounts
recognized in the Group’s consolidated financial statements.
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
application of these amendments has no material impact on the disclosures or the amounts recognized in the
Group’s consolidated financial statements.
- 2 -
Amendments to K-IFRS 1001 – Disclosure Initiative
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 application of these
amendments has no material impact on the disclosures or the amounts recognized in the Group’s consolidated
financial statements.
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 application of these amendments has no material impact on the disclosures or
the amounts recognized in the Group’s consolidated financial statements.
Amendments to K-IFRS 1038 – Intangible Assets
The amendments to K-IFRS 1038 do not allow the presumption that revenue is an appropriate basis for the
amortization of intangible assets; the presumption can only be limited when the intangible asset is 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 application of these amendments has no material impact on the
disclosures or the amounts recognized in the Group’s consolidated financial statements.
Amendments to K-IFRS 1016 – Property, Plant and Equipment and K-IFRS 1041 – Agriculture: Bearer Plants
The amendments to K-IFRS 1016 and K-IFRS 1041 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 application of these amendments has no material impact on the disclosures or the
amounts recognized in the Group’s consolidated financial statements
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, 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, and 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
material impact on the disclosures or the amounts recognized in the Group’s consolidated financial statements.
2) New and revised K-IFRSs in issue, but not yet effective
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. This standard will supersede K-IFRS 1039, Financial
Instruments: Recognition and Measurement. The amendments are effective for annual periods beginning on or
after January 1, 2018.
In principle, new K-IFRS 1109 should be applied retrospectively. However, there are exceptional clauses such as
the exemption of rewriting comparative information in case of classification, measurement and impairment of
financial instruments. In case of risk aversion accounting, it is applied prospectively, except for some exceptions,
like time value accounting of options.
On the introduction of K-IFRS 1109, the Group will undertake the maintenance of internal accounting control
process for reporting the financial instruments and the change in the accounting system.
- 3 -
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.
Existing K-IFRSs and interpretations, including K-IFRS 1018, provide revenue recognition guidance by transaction
types, such as sales of goods, rendering of services, interest income, royalty income, dividend income and
construction revenue; however, under the new standard, K-IFRS 1115, the five-step approach (Step 1: Identify the
contract(s) with a customer, Step 2: Identify the performance obligations in the contract, Step 3: Determine the
transaction price, Step 4: Allocate the transaction price to the performance obligations in the contract and Step 5:
Recognize revenue when the entity satisfied a performance obligation) is applied for all types of contracts or
agreements. The application of these amendments has no material impact on the disclosures or the amounts
recognized in the Group’s consolidated financial statements.
On the introduction of K-IFRS 1115, the Group will undertake the maintenance of internal accounting control
process for reporting the financial instruments and the change in the accounting system.
Amendments to K-IFRS 1102 – Share-Based Payment
The amendments include: 1) when measuring the fair value of a share-based payment, the effects of vesting and
non-vesting conditions on the measurement of cash-settled share-based payment should be consistent with the
measurement of equity-settled share-based payment; 2) share-based payment transaction in which the Group settles
the share-based payment arrangement net by withholding a specified portion of the equity instruments per statutory
tax withholding requirements would be classified as equity settled in its entirety, if otherwise would be classified as
equity settled without the net settlement feature; and 3) when a cash-settled share-based payment changes to an
equity-settled share-based payment because of modifications of the terms and conditions, the original liability
recognized is derecognized and the equity-settled share-based payment is recognized at the modification date fair
value. Any difference between the carrying amount of the liability at the modification date and the amount
recognized in equity at the same date would be recognized in profit and loss immediately. The amendments are
effective for annual periods beginning on or after January 1, 2018.
Amendments to K-IFRS 1007 – Statement of Cash Flows
The amendments require that changes in liabilities arising from financial activities are disclosed. The amendments
are effective for annual periods beginning on or after January 1, 2017.
Amendments to K-IFRS 1012 – Income Taxes
The amendments clarify that unrealized losses on fixed-rate debt instruments measured at fair value and measured
at cost for tax purposes give rise to a deductible temporary difference regardless of whether the holder expects to
recover the carrying amount of the debt instrument by sale or by use and that the estimate of probable future taxable
profit may include the recovery of some of assets for more than their carrying amount. When the Group assesses
whether there will be sufficient taxable profit, the Group should compare the deductible temporary differences with
future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary
differences. The amendments are effective for annual periods beginning on or after January 1, 2017.
The application of these amendments has no significant impact on the disclosure in the Group’s consolidated
financial statements.
- 4 -
(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.
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.
- 5 -
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.
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.
- 6 -
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.
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 1105, 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.
- 7 -
(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.
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.
- 8 -
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).
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.
- 9 -
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 statements 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.
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 -
(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.
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:
- 11 -
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.
(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.
- 12 -
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.
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.
- 13 -
(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.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified
as at FVTPL.
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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.
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.
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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.
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.
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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 asset 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.
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.
- 18 -
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.
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.
- 19 -
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 derecognizes 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.
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.
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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 realizable 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:
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
(1) Components of the Group’s segment revenue and income for the years ended December 31, 2016 and 2015,
are as follows:
2016
MRO and
E-Commerce
Wholesale in
medicine Other Total
(In thousands of Korean won)
Segment total revenue ₩ 2,994,574,745 ₩ 366,951,475 ₩ 97,285,176 ₩ 3,458,811,396
(-)Intersegment revenue (40,140,445) (2,369,278) (16,297,193) (58,806,916)
Customers 2,954,434,300 364,582,197 80,987,983 3,400,004,480
Segment income 30,866,654 12,437,109 10,811,030 54,114,793
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
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 the 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,
2016 and 2015, is as follows:
2016 2015
(In thousands of Korean won)
Total of segment income ₩ 54,114,793 ₩ 65,448,651
Loss of equity method - (144,103)
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 ₩ 54,114,793 ₩ 65,677,677
- 23 -
(2) Segment assets and liabilities
Adjustments of each reportable segment assets into consolidated total assets as of December 31, 2016 and 2015, are
as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
E-Commerce (industrial MRO) ₩ 1,048,736,871 ₩ 999,432,403
Wholesale in medicines 203,348,492 184,241,804
Other 35,064,929 26,938,714
Total segment assets 1,287,150,292 1,210,612,921
Adjustment and removal 46,914,306 55,692,695
Consolidated total assets ₩ 1,334,064,598 ₩ 1,266,305,616
Adjustments of each reportable segment liabilities into consolidated total liabilities as of December 31, 2016 and
2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
E-Commerce (industrial MRO) ₩ 659,463,089 ₩ 612,942,256
Wholesale in medicines 175,062,908 158,354,989
Other 23,982,554 23,095,684
Total segment liabilities 858,508,551 794,392,929
Adjustment and removal 18,103,125 22,864,255
Consolidated total liabilities ₩ 876,611,676 ₩ 817,257,184
(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, 2016 and 2015, are ￦1,144,380 million and ￦1,093,500 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, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Cash ￦ 24,961 ￦ 53,589
Deposits 72,555,432 49,407,964
￦ 72,580,393 ￦ 49,461,553
- 24 -
6. FINANCIAL INSTRUMENTS RESTRICTED AND PLEDGED AS COLLATERAL:
Details of financial instruments restricted and those pledged as collateral as of December 31, 2016 and 2015, are as
follows:
Category Financial institution
December 31,
2016
December 31,
2015 Description
(In thousands of Korean won)
Short-term financial
instruments Time deposit Citibank Korea and
others ₩ 3,220,000 ₩ 3,851,500 Offer collateral for
Koreit, Inc.’s
borrowing
Long-term financial
instruments Demand deposit Woori Bank and
others 16,000 14,000 Guarantee deposits for
checking account
₩ 3,236,000 ₩ 3,865,500
7. TRADE AND OTHER RECEIVABLES:
(1) Details of trade and other receivables as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
Current Non-current Current Non-current
(In thousands of Korean won)
Trade receivables ₩ 871,223,559 ₩ 2,235,410 ₩ 846,890,723 ₩ 2,297,510
Less: allowance for doubtful accounts (2,411,350) (2,192,318) (2,561,315) (2,272,406)
Net book value ₩ 868,812,209 ₩ 43,092 ₩ 844,329,408 ₩ 25,104
Other receivables:
Other accounts receivable ₩ 2,542,209 ₩ - ₩ 1,279,110 ₩ -
Less: allowance for doubtful accounts (441,186) - (441,186) -
Short-term loans 51,633 - 375,244 -
Less: allowance for doubtful accounts (50,000) - (50,000) -
Accrued income 254,477 - 285,023 -
Guarantee deposit 11,251 7,268,689 117,931 7,026,994
Debt-equity swap receivables - 146,370 - 146,370
Less: allowance for doubtful accounts - (146,370) - (146,370)
Net book value ₩ 2,368,384 ₩ 7,268,689 ₩ 1,566,122 ₩ 7,026,994
(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 collectibility of individual
outstanding receivables.
- 25 -
1) Trade receivables and other receivables overdue, but not impaired as of December 31, 2016 and 2015, are as
follows:
December 31, 2016
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 9,323,053 ₩ 59,407 ₩ - ₩ 9,382,460
Other receivables 93,315 - 16,540 109,855
₩ 9,416,368 ₩ 59,407 ₩ 16,540 ₩ 9,492,315
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
2) Aging analysis of trade receivables and other receivables impaired as of December 31, 2016 and 2015, are as
follows:
December 31, 2016
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 1,061,573 ₩ 1,349,777 ₩ 2,192,318 ₩ 4,603,668
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 (1,061,573) (1,349,777) (2,829,874) (5,241,224)
₩ - ₩ - ₩ - ₩ -
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)
₩ - ₩ - ₩ - ₩ -
- 26 -
3) The changes in allowance for doubtful accounts for the years ended December 31, 2016 and 2015, are as
follows:
2016
Trade
receivables
Other accounts
receivable
Short-term
loans
Debt-equity swap
receivables
(In thousands of Korean won)
Beginning balance ₩ 4,833,721 ₩ 441,186 ₩ 50,000 ₩ 146,370
Impairment loss 445,334 - - -
Impairment reversal - - - -
Write-off (675,387) - - -
Business combination - - - -
Ending balance ₩ 4,603,668 ₩ 441,186 ₩ 50,000 ₩ 146,370
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
8. OTHER FINANCIAL ASSETS:
(1) Other financial assets as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
Current Non-current Current Non-current
(In thousands of Korean won)
Short-term and long-term
financial instruments ₩ 70,770,577 ₩ 420,214 ₩ 10,985,120 ₩ 62,598
Forward exchange contracts(*) 137,251 - 223,661 -
AFS financial assets - 12,734,482 - 8,869,645
Financial assets held for trading(*) 10,115 - - -
Held-to-maturity financial assets - 215,959 - 197,529
₩ 70,917,943 ₩ 13,370,655 ₩ 11,208,781 ₩ 9,129,772
(*) Forward exchange contracts and financial assets held for trading 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, 2016 and 2015, none of the other financial assets is either past due or impaired.
- 27 -
(3) Details of AFS financial assets as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Investments in SVIC 25 partnerships ₩ 6,801,000 ₩ 7,096,000
Investments in SVIC 30 partnerships 4,550,000 1,640,000
Investments in Specialty Contractor Financial Cooperative 50,121 50,121
Investments in Information and Communication Financial Cooperative 15,166 15,166
Deposit of Information and Communication Corporation License 18,170 18,170
Investments in Plant & Mechanical Contractors Financial
Cooperative of Korea - 50,163
Investments in C-mate Co., Ltd. 1,300,000 -
Others 25 25
₩ 12,734,482 ₩ 8,869,645
Above AFS investment is measured using cost method because AFS investments are not evaluated reliably at fair
value.
(4) Details of financial assets held for trading as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Equity securities of
Korea Steel Shapes Co., Ltd. ₩ 10,115 ₩ -
(5) Details of held-to-maturity financial assets as of December 31, 2016 and 2015, are as follows:
Annual interest
rates (%) Date of maturity
Book value
December 31,
2016
December 31,
2015
(In thousands of Korean won)
Metro Bond 1.50%–2.50% 2020.01.31–2022.06.30 ₩ 179,629 ₩ 161,199
Korea National Hosing Bond 2.25% 2018.05.31 36,330 36,330
₩ 215,959 ₩ 197,529
9. INVENTORIES:
(1) Inventories as of December 31, 2016 and 2015, consist of the following:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Merchandise ₩ 73,001,098 ₩ 101,853,662
Finished goods 329,913 80,960
Raw materials 343,547 400,365
Work in progress 50,704 49,264
Materials in transit 4,587,701 2,009,896
₩ 78,312,963 ₩ 104,394,147
10. OTHER CURRENT ASSETS:
Other current assets as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Advance payments ₩ 5,634,942 ₩ 9,432,015
Less: allowance for doubtful accounts (627,158) (635,576)
Prepaid expenses 1,098,906 1,430,645
Prepaid value-added tax 5,539,161 3,866,205
₩ 11,645,851 ₩ 14,093,289
- 28 -
11. PROPERTY, PLANT AND EQUIPMENT:
(1) Property, plant and equipment as of December 31, 2016 and 2015, consist of the following:
December 31, 2016 December 31, 2015
Acquisition
cost
Accumulated
depreciation
Government
grants 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 (715,617) - 2,114,411 2,830,028 (645,317) 2,184,711
Structures 18,500 (2,053) - 16,447 18,500 (1,139) 17,361
Machinery 278,234 (167,474) - 110,760 272,834 (128,137) 144,697
Equipment and
furniture 17,793,311 (13,484,380) (43,049) 4,265,882 17,199,522 (11,900,010) 5,299,512
Vehicles 1,263,653 (676,943) - 586,710 1,712,355 (730,106) 982,249
Facility 654,178 (652,855) - 1,323 654,178 (651,493) 2,685
Finance lease
assets 1,222,887 (489,155) - 733,732 1,222,887 (244,578) 978,309
Construction
in progress 358,511 - - 358,511 - - -
₩ 26,188,276 ₩ (16,188,477) ₩ (43,049) ₩ 9,956,750 ₩ 25,679,278 ₩ (14,300,780) ₩ 11,378,498
(*) 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, 2016 and 2015, are as
follows: 2016
Beginning of
year Acquisition Disposal Depreciation
Government
grant(*1) Other(*2) End of year
(In thousands of Korean won)
Land ₩ 1,768,974 ₩ - ₩ - ₩ - ₩ - ₩ - ₩ 1,768,974
Buildings 2,184,711 - - (70,300) - - 2,114,411
Structures 17,361 - - (914) - - 16,447
Machinery 144,697 5,400 - (39,337) - - 110,760
Equipment and
furniture 5,299,512 818,437 (80,882) (1,741,770) (44,533) 15,118 4,265,882
Vehicles 982,249 212,562 (347,366) (262,519) - 1,784 586,710
Facility 2,685 - - (1,362) - - 1,323
Finance lease
assets 978,309 - - (244,577) - - 733,732
Construction
in progress - 358,511 - - - - 358,511
₩ 11,378,498 ₩ 1,394,910 ₩ (428,248) ₩ (2,360,779) ₩ (44,533) ₩ 16,902 ₩ 9,956,750
(*1) The Group has received government grants amounting to ₩ 44,533 thousand from Korea Workers' Compensation and
Welfare Service and used to convert day care center’s facility for the year ended December 31, 2016.
(*2) Other fluctuations consist of transfer of advance payments and others, and also include net effects of change in exchange
rate.
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 advance payments and others, and also include net effects of change in exchange
rate.
- 29 -
12. INTANGIBLE ASSETS:
(1) Intangible assets as of December 31, 2016 and 2015, consist of the following:
(2) The changes in intangible assets for the years ended December 31, 2016 and 2015, are as follows:
2016
Beginning of
year Acquisition Disposal Amortization
Impairment
loss Other(*) End of year
(In thousands of Korean won)
Patent rights ₩ 22,778 ₩ - ₩ - ₩ (6,452) ₩ - ₩ (1,271) ₩ 15,055
Trademarks 13,807 2,422 - (12,977) - 43,390 46,642 Development
costs 132,796 - - (57,371) - - 75,425 Membership
rights 3,390,581 - (147,300) - - - 3,243,281 Other intangible
assets 14,200,477 676,856 - (4,433,635) - (64,120) 10,379,578 Goodwill 39,666,074 - - - (4,574,472) - 35,091,602 Customer
relationship 154,062,929 - - (7,828,255) - - 146,234,674
Construction
in progress - 2,355,721 - - - - 2,355,721
₩211,489,442 ₩ 3,034,999 ₩ (147,300) ₩ (12,338,690) ₩ (4,574,472) ₩ (22,001) ₩197,441,978
(*) Other fluctuations consist of transfer of advance payments and others, and also include net effects of change in exchange
rate.
(*) Other fluctuations consist of transfer of advance payments and others, and also include net effects of change in exchange
rate.
December 31, 2016 December 31, 2015
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 ₩ 147,446 ₩ (132,391) ₩ - ₩ 15,055 ₩ 148,717 ₩ (125,939) ₩ - ₩ 22,778
Trademarks 84,503 (37,861) - 46,642 38,691 (24,884) - 13,807
Development
costs 453,899 (378,474) - 75,425 453,899 (321,103) - 132,796
Membership
rights 4,695,554 - (1,452,273) 3,243,281 4,842,854 - (1,452,273) 3,390,581
Other intangible
assets 35,798,432 (25,418,854) - 10,379,578 35,185,696 (20,985,219) - 14,200,477
Goodwill 39,666,074 - (4,574,472) 35,091,602 39,666,074 - - 39,666,074
Customer
relationship 167,356,991 (21,122,317) - 146,234,674 167,356,991 (13,294,062) - 154,062,929
Construction
in progress 2,355,721 - - 2,355,721 - - - -
₩ 250,558,620 ₩ (47,089,897) ₩ (6,026,745) ₩ 197,441,978 ₩ 247,692,922 ₩ (34,751,207) ₩ (1,452,273) ₩ 211,489,442
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
- 30 -
(3) Details of significant individual intangible assets as of December 31, 2016 and 2015, are as follows:
Description
December 31, 2016 December 31, 2015
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. ₩ 138,179,584 20 years ₩ 145,031,465 21 years
Customer
relationship
The value of customer relationship
related to business combination of
Interpark Qubridge Co., Ltd. and
Guardian Co., Ltd. 8,055,090 8 years 9,031,464 9 years
Goodwill The amount of exceeded acquisition
related to business combination of
Allen Care Co., Ltd. 11,255,468 Indefinite 11,255,468 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. 18,284,138 Indefinite 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, 2016 December 31, 2015
(In thousands of Korean won)
MRO and E-commerce ₩ 7,144,845 ₩ 16,494,280
Other (manufacturing security document) 4,080,624 4,080,624
Other (total distribution agency service) 166,743 166,743
Wholesale in medicine 23,699,390 18,924,427
₩ 35,091,602 ₩ 39,666,074
2) Principal assumption used for the impairment test:
The Group conducted impairment test of goodwill that it holds as of December 31, 2016, considering change of
CGUs in 2016. 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, 2016 December 31, 2015 December 31, 2016 December 31, 2015
MRO and E-Business 7.76% 9.67% 1.00% 2.00%
Wholesale in medicine 8.07%–10.77% 10.00%–11.74% 1.00% 1.00%–2.00%
- 31 -
13. INVESTMENTS IN SUBSIDIARIES:
(1) The Group’s investments in subsidiaries as of December 30, 2016 and 2015, consist of the following:
Ownership (%)
Nature of business Location
December
31, 2016
December
31, 2015
Reporting
month
Koreit, Inc. Security paper manufacturing Korea 53.7 53.7 December
Interpark International Co., Ltd.(*1) Wholesale and retail in e-business Korea 98.7 98.5 December
Interpark Logistics Co., Ltd.(*1) 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 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. MRO business Korea 100.0 100.0 December
Guardian Co., Ltd. Wholesale in medicine Korea 100.0 100.0 December
iMarketFocus Inc. MRO business China 100.0 100.0 December
Global M&S Co. Ltd. (*2) Wholesale and retail in e-business Japan 100.0 100.0 December
Interpark international (HK) Ltd. (*2) Wholesale and retail in e-business Hong Kong 100.0 100.0 December
Interpark international PTE. Ltd.
(formerly, Interpark international
(SINGAPORE) Ltd.) (*2,3) Wholesale and retail in e-business Singapore 100.0 100.0 December
Shenzhen Interpark Trading Co., Ltd
(formerly, Interpark international
(CHINA) Ltd.) (*2,3) Wholesale and retail in e-business China 100.0 100.0 December
Interpark international (THAILAND)
Ltd. (*2,4) Wholesale and retail in e-business Thailand 100.0 100.0 December
Interpark international (RUS)
Ltd. (*2,4) Wholesale and retail in e-business Russia 100.0 100.0 December
(*1) Additionally acquired during the current period.
(*2) Interpark International Co., Ltd. has 100% share.
(*3) The name is changed during the current period.
(*4) Newly established during the current period.
(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, 2016 and 2015, are as follows:
December 31, 2016
Description Reason
Interpark international (THAILAND) Ltd. Newly established
Interpark international (RUS) Ltd. Newly established
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
(4) There are no subsidiaries that have been excluded from consolidation for the year ended December 31, 2016.
Subsidiaries excluded from consolidation for the year ended December 31, 2015, are as follows:
December 31, 2015
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.
- 32 -
(5) The financial information of the Group’s subsidiaries as of and for the year ended December 31, 2016, is as
follows:
Assets Liabilities Sales
Net income
(loss)
Total
comprehensive
income (loss)
(In thousands of Korean won)
Koreit, Inc. ￦ 11,170,111 ￦ 13,545,370 ￦ 21,486,951 ￦ 743,924 ￦ 704,919
Interpark International Co., Ltd. 19,319,650 7,704,065 44,005,769 (4,272,866) (4,224,574)
Interpark Logistics Co., Ltd. 4,575,168 2,733,119 31,792,455 125,636 125,636
iMarket America, Inc. 2,773,962 333,261 4,883,320 (116,641) (44,081)
iMarket Vietnam Co., Ltd. 42,946,604 41,756,351 158,380,364 676,901 700,988
iMarket Xian, Inc. 1,847,953 420,568 8,236,303 193,273 140,030
Allen Care Co., Ltd. 316,244,126 180,738,263 315,147,157 17,174,660 17,174,660
Interpark Qubridge Co., Ltd. 23,044,479 28,375,363 114,420,662 (3,326,353) (3,326,353)
Guardian Co., Ltd. 28,960,622 24,724,153 51,804,319 (1,514,947) (1,514,947)
iMarketFocus Inc. 14,672,518 6,249,641 26,157,861 (866,724) (1,251,685)
Global M&S Co. Ltd. 2,317,301 1,385,814 8,164,234 189,454 199,356
Interpark international (HK) Ltd. 5,491,481 159,634 1,927,052 (414,607) (391,140)
Interpark international PTE. Ltd. 1,846,124 209,089 2,838,055 1,402 9,291
Shenzhen Interpark Trading Co., Ltd 481,561 33,138 396,935 (156,240) (154,182)
Interpark international(THAILAND) Ltd. 559,496 2,269 - (14,160) (11,769)
Interpark international (RUS) Ltd. 604,937 - - - 2,585
(6) The financial position and non-controlling interest of the subsidiaries that have significant non-controlling
interest as of December 31, 2016, are as follows:
Koreit, Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Current assets ₩ 6,314,329 ₩ 172,825,299
Non-current assets 4,855,782 143,418,827
Total assets ₩ 11,170,111 ₩ 316,244,126
Current liabilities 10,396,625 150,253,099
Non-current liabilities 3,148,745 30,485,164
Total liabilities ₩ 13,545,370 ₩ 180,738,263
Controlling interests (1,274,359) 69,107,990
Non-controlling interests (1,100,900) 66,397,873
Total equity ₩ (2,375,259) ₩ 135,505,863
(7) The financial performance and non-controlling interest of the subsidiaries that have significant non-controlling
interest for the year ended December 31, 2016, are as follows:
Koreit, Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Sales ￦ 21,486,951 ￦ 315,147,157
Operating income 1,062,404 23,853,125
Net income 743,924 17,174,660
Other comprehensive loss (39,005) -
Total comprehensive income 704,919 17,174,660
Net income of non-controlling interest 344,798 8,759,076
Total comprehensive income of
non-controlling interest 344,798 8,759,076
- 33 -
(8) Summary of cash flows for subsidiaries for the year ended December 31, 2016, 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. ₩ 188,397 ₩ 7,680 ₩ (322,046) ₩ (125,969) ₩ 735,089 ₩ 6,466 ₩ 615,586
Interpark International Co., Ltd. (6,747,725) (1,285,504) 9,020,255 987,026 815,737 (61,372) 1,741,391
Interpark Logistics Co., Ltd. (148,229) (95,759) 700,000 456,012 328,594 - 784,606
iMarket America, Inc. 304,033 11,320 - 315,353 1,990,033 - 2,305,386
iMarket Vietnam Co., Ltd. (6,445,051) (429,266) 5,908,815 (965,502) 2,961,361 - 1,995,859
iMarket Xian, Inc. 127,072 289,396 - 416,468 1,069,041 - 1,485,509
Allen Care Co., Ltd. 20,177,868 (24,855,105) (20,500,000) (25,177,237) 28,261,926 - 3,084,689
Interpark Qubridge Co., Ltd. 2,322,194 378,528 (2,600,000) 100,722 1,087,639 - 1,188,361
Guardian Co., Ltd. 1,998,835 (222,688) - 1,776,147 1,124,061 - 2,900,208
iMarketFocus Inc. (2,093,071) 2,162,801 - 69,730 840,641 - 910,371
Global M&S Co. Ltd. (341,239) (788) 418,656 76,629 178,982 (72,764) 182,847
Interpark international (HK) Ltd. (1,651,941) (3,158,348) 4,841,170 30,881 78,312 6,723 115,916
Interpark international PTE. Ltd. (1,573,446) 12,785 2,031,145 470,484 96,947 21,744 589,175
Shenzhen Interpark
Trading Co., Ltd (286,947) 28,642 126,756 (131,549) 402,810 22,460 293,721
Interpark international
(THAILAND) Ltd. (11,942) (2,367) 546,257 531,948 - 25,126 557,074
Interpark international
(RUS) Ltd. (599,700) - 590,100 (9,600) - 9,600 -
14. INVESTMENTS IN ASSOCIATES:
(1) Details of investments in associates as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
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 ₩ - 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 ₩ -
(*) Impairment losses are recognized for the entire amount of acquisition cost.
- 34 -
(2) There are no changes in investments in associates for the year ended December 31, 2016. Changes in
investments in associates for the year ended December 31, 2015, 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) ₩ -
(3) Summary of financial information of the associates as of and for the years ended December 31, 2016 and 2015,
is as follows:
December 31, 2016
Assets Liabilities Sales Net income
Total
Comprehensive
income
(In thousands of Korean won)
Aerogel Application Group Inc. ₩ 230,012 ₩ 95,434 ₩ - ₩ - ₩ -
Enerband China, Co., Ltd. 117,115 325,098 - - -
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)
(4) The reconciliation of the Group’s share of associates’ net assets to their book value as of December 31, 2016
and 2015, is as follows:
December 31, 2016
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, 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.
- 35 -
(5) Accumulative unrecognized loss on equity method of associates, which comes from discontinuing equity
method, for the years ended December 31, 2016 and 2015, is as follows:
2016 2015
(In thousands of Korean won)
Unrecognized loss on equity method of Enerband China, Co., Ltd. ₩ 103,406 ₩ 103,406
15. INVESTMENTS IN JOINT VENTURE:
There are no changes in investments in joint venture for the year ended December 31, 2016. Changes of
investments in joint venture as of December 31, 2015, 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) ₩ -
16. TRADE PAYABLES AND OTHER PAYABLES:
Trade payables and other payables as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Trade payables ₩ 798,940,074 ₩ 724,149,156
Other accounts payable 6,741,001 6,173,967
Accrued expenses 4,081,492 5,236,487
Guarantee deposits received 602,770 631,535
₩ 810,365,337 ₩ 736,191,145
17. OTHER FINANCIAL LIABILITIES:
Other financial liabilities as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
Current Non-current Current Non-current
(In thousands of Korean won)
Forward exchange contracts(*) ₩ 1,417,108 ₩ - ₩ 139,971 ₩ -
Finance lease liabilities 217,952 633,339 197,293 853,935
₩ 1,635,060 ₩ 633,339 ₩ 337,264 ₩ 853,935
(*) 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.
- 36 -
18. SHORT-TERM BORROWINGS:
Details of short-term borrowings as of December 31, 2016 and 2015, are as follows:
Creditor
Annual
interest rate (%) December 31, 2016 December 31, 2015
(In thousands of Korean won)
Short-term
borrowings in
Korean won Industrial bank of Korea 5.43% ₩ - ₩ 500,000
Citibank Korea 2.48%–2.57% 5,120,000 7,720,000
SiwonSRI - 35,600 35,600
Shinhan Bank 3.77%-4.01% 3,865,000 -
Kookmin Bank 3.62% - 4,841,466
KEB Hana Hank 3.58% 1,000,000 -
Short-term
borrowings
in foreign
currency Woori Bank(*) 3.69% 459,074 749,677
iMarketXian, Inc. 4.35% - 306,935
₩ 10,479,674 ₩ 14,153,678
(*) 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).
19. BONDS:
Details of bonds as of December 31, 2016 and 2015, are as follows:
Issued date Maturity date
Annual
interest rate (%) December 31, 2016 December 31, 2015
(In thousands of Korean won)
Bonds 2015.10.08 2018.10.08 3.50% ₩ 10,000 ₩ 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, 2017
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.
- 37 -
(2) Redeemable preferred share liabilities
Koreit, Inc., the Group’s subsidiary, issued redeemable convertible preferred share liabilities on August 30, 2012,
and details of redeemable convertible preferred share liabilities are as follows:
Contents
Number of outstanding shares 27,073 shares
Issued price per share ₩ 70,000
Issued amount ₩ 1,895,110,000
Issued date 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, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
Current Non-current Current Non-current
(In thousands of Korean won)
Advances from customers ₩ 2,005,396 ₩ - ₩ 10,758,593 ₩ -
Withholdings 1,450,670 - 1,793,634 -
Provision 293,442 - 237,903 -
Deferred revenue - 142,107 - 142,107
Others - 6,625 - 14,492
₩ 3,749,508 ₩ 148,732 ₩ 12,790,130 ₩ 156,599
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 ₩816,754 thousand (2015: ₩536,522 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,
2016 and 2015, is as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Present value of defined benefit liability ₩ 20,611,475 ₩ 19,939,805
Fair value of plan assets (18,124,648) (15,365,513)
Total ₩ 2,486,827 ₩ 4,574,292
- 38 -
2) Changes in the carrying amount of defined benefit obligations for the years ended December 31, 2016 and
2015, are as follows:
2016 2015
(In thousands of Korean won)
Beginning balance ₩ 19,939,805 ₩ 16,826,655
Current service cost 4,100,149 3,742,374
Interest expense 864,484 618,226
Remeasurements factor:
Actuarial gains and losses arising
from changes in demographic
assumptions (263,399) (96,682)
Actuarial gains and losses arising
from changes in financial
assumptions 153,835 56,466
Actuarial gains and losses arising
from experience adjustments (610,845) (224,214)
Benefits paid (3,486,837) (2,894,448)
Transferred in/from associates (85,717) 108,659
Business combination - 1,802,769
Ending balance ₩ 20,611,475 ₩ 19,939,805
3) The changes in the fair value of plan assets for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Beginning balance ₩ 15,365,513 ₩ 12,916,147
Expected return on plan assets 674,590 446,182
Remeasurement loss (190,593) (159,266)
Employer contribution 5,647,853 3,792,631
Benefits paid (3,159,226) (1,762,589)
Transferred in/from associates (213,489) 33,408
Business combination - 99,000
Ending balance ₩ 18,124,648 ₩ 15,365,513
The Group’s plan assets are composed of cash and cash equivalent, and actual return on plan assets for the years
ended December 31, 2016 and 2015, is ₩247,808 thousand and ₩299,581 thousand, respectively.
4) The composition of costs recognized according to defined benefit plans is as follows:
2016 2015
(In thousands of Korean won)
Cost of sales ₩ 133,110 ₩ 90,351
Selling and administrative expenses 4,156,933 3,824,067
₩ 4,290,043 ₩ 3,914,418
5) The amounts recognized as remeasurements of net defined benefit liability in other comprehensive income
(expense) for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Remeasurements before income tax expense ₩ 529,816 ₩ 105,164
Income tax expense (145,342) (24,731)
Remeasurements after income tax expense ₩ 384,474 ₩ 80,433
6) The principal assumptions used for the purposes of the actuarial valuations are as follows:
December 31, 2016 December 31, 2015
Discount rate(s) 2.54%–3.30% 2.54%–3.20%
Expected rate(s) of salary increase 3.69%–5.37% 3.85%–5.22%
- 39 -
7) 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:
2016 2015
Increase Decrease Increase Decrease
(In thousands of Korean won)
Changes of 100 basis points of
discount rate ₩ (1,520,715) ₩ 1,753,006 ₩ (1,322,667) ₩ 1,078,410
Changes of 1 % of expected
rate of salary increase 1,751,563 (1,547,510) 1,484,917 (1,310,217)
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, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(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.
(2) Other contributed capital as of December 31, 2016 and 2015, consist of the following:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Paid-up capital in excess of par value ₩ 134,652,554 ₩ 134,652,554
Treasury stock(*) (20,117,250) (19,945,150)
Stock option 504,017 -
Other capital surpluses (47,246) -
₩ 114,992,075 ₩ 114,707,404
(*) The Company additionally acquired ₩172,100 thousand of treasury stocks (17,000 shares) for improvement
in shareholder value, and has ₩20,117,250 thousand of treasury stocks (764,215 shares) in all as of
December 31, 2016. Treasury stocks will be disposed of according to future market conditions.
The changes in treasury stocks for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In share and thousands of Korean won)
Number of shares Book value Number of shares Book value
Beginning of year 747,215 ₩ 19,945,150 349,826 ₩ 9,312,969
Acquisition of treasury stock 17,000 172,100 397,389 10,632,181
End of year 764,215 ₩ 20,117,250 747,215 ₩ 19,945,150
- 40 -
(3) The details of components of other capital as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Foreign operation translation income (loss) ₩ (176,524) ₩ 117,413
(4) The changes in components of other capital for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Beginning of year ₩ 117,413 ₩ 334,436
Changes that occurred by change of other comprehensive income
of associates and joint ventures - (369,544)
Exchange differences from conversion of foreign operation’s net asset (293,937) 152,521
End of year ₩ (176,524) ₩ 117,413
(5) Retained earnings as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Statutory reserve:
Legal reserve(*) ₩ 9,647,069 ₩ 9,627,868
Voluntary reserve:
Appropriated retained earnings for business expansion 219,703,632 195,420,581
Other discretionary appropriated retained earnings 270,300 270,300
Unappropriated retained earnings 29,445,746 44,752,820
₩ 259,066,747 ₩ 250,071,569
(*) 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.
(6) The changes in retained earnings for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Beginning of year ₩ 250,071,569 ₩ 226,188,417
Net income attributable from the parent company 26,148,668 41,590,131
Dividends (17,598,063) (17,808,012)
Remeasurements of defined benefit liability 444,573 101,033
End of year ₩ 259,066,747 ₩ 250,071,569
(7) Details of payment of dividends for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In Korean won) Dividend per share ₩ 500 ₩ 500
Number of outstanding shares 35,196,125 shares 35,616,024 shares
Total payment of dividends ₩ 17,598,062,500 ₩ 17,808,012,000
- 41 -
24. CLASSIFICATION OF EXPENSES BY NATURE:
The classification of expenses by nature for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
Cost of sales
Selling and
administrative
expenses Total Cost of sales
Selling and
administrative
expenses Total
(In thousands of Korean won)
Changes in
inventories ₩3,176,181,084 ₩ - ₩ 3,176,181,084 ₩ 2,935,818,245 ₩ - ₩ 2,935,818,245
Salaries 6,392,873 58,102,290 64,495,163 4,949,262 55,205,348 60,154,610
Depreciation 406,971 1,953,808 2,360,779 395,152 2,092,777 2,487,929
Amortization 544,444 11,794,246 12,338,690 2,177,774 11,826,888 14,004,662
Commission 466,178 22,201,483 22,667,661 2,492,091 16,865,111 19,357,202
Rents 1,926,083 10,150,617 12,076,700 966,250 9,482,572 10,448,822
Electronic data
processing
service fee - 7,217,437 7,217,437 - 7,622,463 7,622,463
Others 24,619,147 17,562,869 42,182,016 13,614,853 16,709,216 30,324,069
₩3,210,536,780 ₩ 128,982,750 ₩ 3,339,519,530 ₩ 2,960,413,627 ₩ 119,804,375 ₩ 3,080,218,002
25. SELLING AND ADMINISTRATIVE EXPENSES:
Selling and administrative expenses for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Salaries ₩ 44,819,348 ₩ 44,046,376
Severance benefits 4,639,810 4,106,239
Employee benefits 8,643,132 7,052,733
Travel 2,478,444 2,772,663
Entertainment expenses 998,453 1,044,335
Communications 976,087 923,362
Utilities 246,726 185,176
Electricity cost 17,631 16,311
Taxes and dues 1,008,970 886,931
Depreciation 1,953,808 2,092,777
Amortization 11,794,246 11,826,888
Rents 10,150,617 9,482,572
Cost of repairs 54,134 44,999
Insurance premiums 1,306,613 1,491,748
Cost of car maintenance 413,640 479,583
Ordinary research and development 325,045 35,559
Transportation expense 4,091,973 4,382,187
Training expenses 306,596 328,889
Publication expenses 45,977 46,195
Packaging 75,618 115,328
Office supplies 939 698
Consumable supplies 855,113 837,246
Commission 22,201,483 16,865,111
Advertising 1,403,723 1,498,706
Bad debts expense 445,334 (92,779)
Promotion 623,838 361,149
Service contract expenses 175,839 160,080
Stock compensation expenses 500,150 3,745
Electronic data processing service fee 7,217,437 7,622,463
Event cost 91,263 172,642
Others 1,120,763 1,014,463
₩ 128,982,750 ₩ 119,804,375
- 42 -
26. OTHER NON-OPERATING INCOME AND EXPENSES:
(1) Other non-operating income for the years ended December 31, 2016 and 2015, consists of the following:
2016 `2015
(In thousands of Korean won)
Gain on foreign currency transactions ₩ 7,508,082 ₩ 6,277,885
Gain on foreign currency translation 1,556,090 671,090
Gains on valuation of foreign exchange forward contracts 137,251 223,661
Gains on foreign exchange forward transaction 7,304,249 5,357,286
Dividend income 560 -
Gain on valuation of financial assets held for trading 6,326 -
Gain from disposal of property, plant and equipment 26,608 100,824
Reversal of allowance for other bad debts 8,417 93,551
Gains on disposal of AFS financial assets - 17
Gain on exemption of debts - 40,000
Miscellaneous gain 1,147,852 2,606,587
₩ 17,695,435 ₩ 15,370,901
(2) Other non-operating expenses for the years ended December 31, 2016 and 2015, consist of the following:
2016 2015
(In thousands of Korean won)
Loss on foreign currency transactions ₩ 8,514,710 ₩ 4,073,979
Loss on foreign currency translation 346,335 627,140
Loss on valuation of foreign exchange forward contracts 1,417,108 139,971
Loss on foreign exchange forward transaction 8,252,788 7,434,588
Loss on disposal of property, plant and equipment 93,639 20,762
Loss on disposal of intangible assets 29,118 -
Impairment loss on intangible assets 4,574,472 550,043
Other bad debts expense - 457
Loss on disposal of inventories 57,752 -
Loss on disposal of other investments - 36,075
Loss on disposal of AFS financial assets 49 278,082
Donations and contributions 423,911 -
Miscellaneous loss 1,296,635 2,083,894
₩ 25,006,517 ₩ 15,244,991
27. FINANCE INCOME AND EXPENSES:
(1) Finance income for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Interest income on short-term bank deposits ₩ 1,513,991 ₩ 2,228,706
Interest income on loans and receivables 10,137 85,921
₩ 1,524,128 ₩ 2,314,627
(2) Finance expenses for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Interest expenses on borrowings and bank overdrafts ₩ 583,203 ₩ 682,298
- 43 -
(3) Details of finance income and expenses by category of financial instruments for the years ended December 31,
2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Finance income:
Cash and cash equivalent ₩ 1,513,991 ₩ 2,228,706
Loans and receivables 10,137 85,921
₩ 1,524,128 ₩ 2,314,627
Finance expenses:
Financial liability at amortized cost ₩ 583,203 ₩ 682,298
₩ 583,203 ₩ 682,298
28. INCOME TAX:
(1) Income tax expenses for the years ended December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Ⅰ. Income tax ₩ 18,086,047 ₩ 18,296,559
Current income tax 18,086,047 18,296,559
Ⅱ. Deferred income taxes 438,708 (2,184,524)
Changes in deferred income tax (*) 584,050 (2,159,793)
Items directly charged to equity (145,342) (24,731)
Ⅲ. Income tax expense 18,524,755 16,112,035
(*) End of deferred income tax assets (liabilities) (32,724,090) (32,140,040)
Beginning of deferred income tax assets (liabilities) (32,140,040) (32,151,809)
Changes due to business combination - (2,148,024)
Changes in deferred income tax 584,050 (2,159,793)
(2) Reconciling items between income before income tax and income tax expense for the years ended
December 31, 2016 and 2015, are as follows:
2016 2015
(In thousands of Korean won)
Income before income tax ₩ 54,114,793 ₩ 65,677,677
Current applicable tax rate 23.3% 23.5%
Income tax expenses calculated at current applicable tax rate 12,633,780 15,431,998
Adjustments:
Tax effect of non-deductible expense 69,056 19,254
Tax effect of non-recognition deferred income tax assets 5,052,757 -
Other (change in tax rate, etc.) 769,162 660,783
Subtotal 5,890,975 680,037
Income tax expense ₩ 18,524,755 ₩ 16,112,035
Effective tax rate 34.2% 24.5%
(3) The income tax directly charged to equity for the years ended December 31, 2016 and 2015, is as follows:
2016 2015
Before tax Tax credit After tax Before tax Tax credit After tax
(In thousands of Korean won)
Remeasurements of net
defined benefit obligations ₩ 529,816 ₩ (145,342) ₩ 384,474 ₩ 105,164 ₩ (24,731) ₩ 80,433
- 44 -
(4) The changes in deferred income tax assets (liabilities) for the years ended December 31, 2016 and 2015, are as
follows:
2016
Beginning of year Net income
Other
comprehensive
income End of year
(In thousands of Korean won)
I. Temporary differences to be deducted: Defined benefit obligation ₩ 3,780,153 ₩ 255,959 ₩ (189,911) ₩ 3,846,201
Accrued expenses (annual debt) 499,147 (9,443) - 489,704
Intangible asset 396 (396) - -
Tangible asset (651) 9,402 - 8,751
Uncollectible accounts 230 - - 230
Financial guarantee liabilities 11,572 - - 11,572
Membership right 338,837 - - 338,837
Investments in associates 157,669 - - 157,669
Other account receivable 123,934 - - 123,934
Defined contribution
retirement benefit - 15,389 - 15,389
Government grants - 10,044 - 10,044
Provisions 124 - - 124
Others 278,537 (278,537) - -
Subtotal 5,189,948 2,418 (189,911) 5,002,455
II. Temporary differences to be added: Accrued revenues ₩ (15,549) ₩ (69,256) ₩ - ₩ (84,805)
Severance insurance (3,420,594) (417,795) 44,569 (3,793,820)
Prepaid expenses - (1,216) - (1,216)
Lump-sum depreciation provision - (10,044) - (10,044)
Customer relation (33,893,845) 1,722,216 - (32,171,629)
Others - (1,665,031) - (1,665,031)
Subtotal (37,329,988) (441,126) 44,569 (37,726,545)
Total (I+II) ₩ (32,140,040) ₩ (438,708) ₩ (145,342) ₩ (32,724,090)
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
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
Other account receivable 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)
- 45 -
(5) Temporary differences and loss carryforward not recognized as deferred tax assets (liabilities) as of
December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Temporary differences to be added
Investments in subsidiaries ₩ (459,054) ₩ (459,054)
Temporary differences to be deducted Investments in subsidiaries 18,774,550 -
Loss carryforward 2,328,540 2,328,540
₩ 20,644,036 ₩ 1,869,486
(6) The expiration of loss carryforward not recognized as deferred tax assets for the year ended December 31,
2016, 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, 2016 and 2015, are
as follows:
2016 2015
(In Korean won)
Basic earnings per share ₩ 743 ₩ 1,170
Diluted earnings per share (*) 743 1,170
(*) As the Company has no dilution effect of diluted securities for the year ended December 31, 2016, and has no
dilutive securities outstanding as of December 31, 2015, diluted earnings per share for the years ended
December 31, 2016 and 2015, are identical to basic earnings per share.
(2) Basic earnings per share for the years ended December 31, 2016 and 2015, are calculated as follows:
2016 2015
(In Korean won)
Net income attributable to owners of the parent company ₩ 26,148,668,356 ₩ 41,590,130,572
Weighted-average number of common
shares outstanding during the year 35,194,599 shares 35,533,682 shares
Basic earnings per share ￦ 743 ￦ 1,170
30. SHARE-BASED PAYMENT ARRANGEMENT:
The Group granted share options to its employees during the current period. The fair value of the options is based
on the binary option-pricing model. The variables applied to the model are as follows. The Company recognized
₩500,150 thousand of stock compensation for the year ended December 31, 2016.
iMarketKorea Inc.
Interpark Qubridge
Co., Ltd. Guardian Co., Ltd.
(In Korean won)
Number of shares to issue 262,000 shares 59,400 shares 4,000 shares
Vesting period 2 years from grant date 2 years from grant date 2 years from grant date
Stock price of grant date 19,250 8,118 131,317
Exercise price 20,000 7,800 92,000
Expectation volatility of stock value 30.74% 24,66% 24.66%
Option expiration date 2021.03.28 2021.03.25 2020.09.27
Risk-free interest rate 1.48% 1.59% 1.59%
- 46 -
31. RELATED-PARTY TRANSACTIONS:
(1) The Group’s related parties as of December 31, 2016, are as follows:
Related parties
Parent company Interpark Holdings Co., Ltd.
Subsidiaries of parent company Interpark Co., Ltd., Interpark Global Corporation, Livetone Co, Ltd.,
Interpark Tour Co, Ltd., Interpark Theater Co., Ltd., Circle Contents
Company Co., Ltd., Beijing HM, Interpark INT Shanghai Co., Ltd.
Interpark C&E Corporation(Formerly Bookpark Corporation)(*1) and
New Contents Company(*2)
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., Surf Inc., Digital Idea Corporation, PT Reservasi Global Digital,
Interpark Tour Japan Co., Ltd. and DigiArt Production Co., Ltd.
Other associates Aerogel Application Group Inc. and Enerband China Co., Ltd.
(*1) The name was changed during the current period.
(*2) Newly established in the current period.
(2) Transactions with related parties
Significant transactions with related parties for the years ended December 31, 2016 and 2015, are as follows:
2016
Name of a company
Sales Purchases
Sales
Rental
revenues
Other
sales
Purchase of
inventory
Acquisition
of intangible
assets
Commission
expenses
Other
operating
expenses
(In thousands of Korean won)
Parent company Interpark Holdings Co., Ltd. ₩ 7,228 ₩ - ₩ - ₩ - ₩ - ₩ - ₩ 441,256
Subsidiaries of
parent company
Interpark Co., Ltd. 20,346,315 54,332 660 104,212 120,479 82,004 201,905
Interpark Global Corporation 437,334 - - - - - -
Interpark C&E Corporation 245 - - - - - -
Interpark Theater Co., Ltd. 54,185 - - - - - -
Associates of
parent company Interpark Bizmarket Co.,Ltd. 122,486 - - 9,109,139 - - 1,080
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
parentcompany
Interpark Bizmarket Co., Ltd. 839,832 - - 32,349,816 - 7,599
Surf Inc. 405 - - - - -
- 47 -
(3) Significant account balances arising from transaction with related parities as of December 31, 2016 and 2015,
are as follows:
December 31, 2016
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. ₩ 489 ₩ 208,202 ₩ - ₩ -
Subsidiaries of
parent company
Interpark Co., Ltd. 2,154,323 46,091 - 106,948
Interpark Theater Co., Ltd. 2,102 - - -
Interpark Global Corporation 32,804 - - -
Interpark C&E Corporation 269 - - -
Associates of
parent company Interpark Bizmarket Co.,Ltd. - - 559,627 26,169
Associates Aerogel Application Group Inc. 18,260 - - -
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 - - -
The Group does not have any provision for impairment of related accounts receivable as of December 31, 2016 and
2015.
(4) There are no equity transactions with related parties for the years ended December 31, 2016 and 2015.
(5) The Group has not provided guarantees and collateral with respect to financing to related parties as of
December 31, 2016.
(6) There have been no guarantees and collateral provided to related parties as of December 31, 2016.
(7) Dividends paid to Interpark Holdings Co., Ltd. (parent company) are ₩7,190 million and ₩6,653 million for
the years ended December 31, 2016 and 2015, respectively.
(8) Compensation for key management personnel for the years ended December 31, 2016 and 2015, is as follows:
2016 2015
(In thousands of Korean won)
Salaries ₩ 2,335,232 ₩ 2,974,088
Severance benefits 664,731 865,134
₩ 2,999,963 ₩ 3,839,222
- 48 -
32. COMMITMENTS AND CONTINGENCIES:
(1) Litigation in progress
There is no litigation in progress as of December 31, 2016.
(2) Details of commitments that the Group entered into with financial institutions as of December 31, 2016, are as
follows:
Currency
Credit
lines
Exercise
amount Bank
(In thousands of Korean won, JPY, USD and RMB)
Borrowings KRW 42,220,000 9,985,000 Shinhan Bank and others
JPY 218,000 43,994 Woori Bank
USD 6,000 - Citibank
Import usance KRW 30,000,000 987,968 Citibank Korea
USD 48,425 7,953 Woori Bank and others
Trade financing KRW 470,000 - Woori Bank
Secured loan of credit sales (purchase) KRW 219,200,000 113,865,100 Shinhan Bank and others
Secured loan of credit sales (sell) KRW 12,510,000 - KEB Hana Bank and others
Foreign exchange forward transaction contract USD 24,200 3,076 Shinhan Bank and others
Assurance of others KRW 15,000,000 2,500,000 Woori Bank
Assurance of performance KRW 17,752,207 - Seoul Guarantee Insurance
Foreign exchange forward transaction contract USD 50 38 Industrial Bank of Korea
KRW 337,152,207 127,338,068
USD 78,675 11,067
JPY 218,000 43,994
(3) The Group has entered into agreements with Samsung SDS Co., Ltd. for computer system operating assistance,
under which the Group paid electronic data processing service fee amounting to ₩6,796 million and ₩6,993
million for the years ended December 31, 2016 and 2015, respectively.
33. 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, 2016 and 2015, is as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Total liability (A) ₩ 876,611,676 ₩ 817,257,184
Total equity (B) 457,452,921 449,048,433
Debt-to-equity ratio (A/B) 191.6% 182.0%
- 49 -
(2) Categorizations of financial assets and liabilities as of December 31, 2016 and 2015, are as follows:
1) December 31, 2016
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 ₩ - ₩ - ₩ - ₩ 72,580,393 ₩ 72,580,393
Trade receivables - - - 868,812,209 868,812,209
Other receivables - - - 2,368,384 2,368,384
Other financial assets 147,366 - - 70,770,577 70,917,943
Subtotal 147,366 - - 1,014,531,563 1,014,678,929
Non-current:
Trade receivables - - - 43,092 43,092
Other receivables - - - 7,268,689 7,268,689
Other financial assets - 12,734,482 215,959 420,214 13,370,655
Subtotal - 12,734,482 215,959 7,731,995 20,682,436
Total ₩ 147,366 ₩ 12,734,482 ₩ 215,959 ₩ 1,022,263,558 ₩ 1,035,361,365
Liabilities Liabilities at FVTPL
Financial
liabilities at
amortized cost Total
(In thousands of Korean won)
Current:
Trade payables ₩ - ₩ 798,940,074 ₩ 798,940,074
Other payables - 11,425,263 11,425,263
Other financial liabilities 1,417,108 217,952 1,635,060
Short-term borrowings - 10,479,674 10,479,674
Current convertible bonds - 1,090,200 1,090,200
Current redeemable preferred
share liabilities - 1,895,110 1,895,110
Subtotal 1,417,108 824,048,273 825,465,381
Non-current:
Bonds - 10,000 10,000
Other financial liabilities - 633,339 633,339
Subtotal - 643,339 643,339
Total ₩ 1,417,108 ₩ 824,691,612 ₩ 826,108,720
- 50 -
2) 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
(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.
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.
- 51 -
The carrying amount of all financial assets, except for the amount in the following table, is the amount after
deducting the impairment loss, which represents the maximum exposure of the Group to credit risk without
considering the value of the collateral acquired. The maximum exposure to credit risk of the Group's financial
guarantee contracts as of December 31, 2016 and 2015, is as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Financial guarantee contract(*) ₩ 2,500,000 ₩ -
(*) The maximum exposure to a risk from a financial guarantee contract is the maximum amount that the Group
will be required to pay when the warranty is charged
The amount included in the above relating to the financial guarantee contract is the maximum amount the Group is
required to pay if the assurance party claims the full amount of the guarantee. Based on the estimates made at the
end of the current period, the Group believes that it is more likely that the Group will not pay guarantees under the
financial guarantee contracts. However, the above estimates may change as the probability of a credit loss to the
financial receivables held by the assurance holder may change the probability that the assurance party will be
required to make payments to the Group on a guarantee contract.
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.
2) 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.
A. The Group’s borrowings with variable interest rates as of December 31, 2016 and 2015, are as follows:
December 31, 2016 December 31, 2015
(In thousands of Korean won)
Short-term borrowings ₩ 5,579,074 ₩ 9,276,612
B. As of December 31, 2016 and 2015, 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:
2016 2015
1% increase 1% decrease 1% increase 1% decrease
(In thousands of Korean won)
Income/equity ₩ 55,791 ₩ (55,791) ₩ 92,766 ₩ (92,766)
- 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, 2016 and 2015, are as follows:
Monetary assets Monetary liabilities
December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015
(In thousands of Korean won)
USD ₩ 49,647,523 ₩ 24,943,470 ₩ 11,178,195 ₩ 4,393,228
EUR 1,561,155 615,858 33,269 69,707
JPY 221,955 185,339 624,466 953,428
CNY 2,718 5,238 92 5,152
Other currencies 51,690 - 275 -
As of December 31, 2016 and 2015, if foreign currency translation expects changes in foreign currency by 10%, the
effects on income and equity would be as follows:
December 31, 2016 December 31, 2015
10% increase 10% decrease 10% increase 10% decrease
(In thousands of Korean won)
USD ₩ 3,846,933 ₩ (3,846,933) ₩ 2,055,024 ₩ (2,055,024) EUR 152,789 (152,789) 54,615 (54,615)
JPY (40,251) 40,251 (76,809) 76,809
CNY 263 (263) 9 (9)
Other currencies 5,142 (5,142) - -
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, 2016, 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 58,473,813 USD 49,415 1,135.31–1,214.00 44
KRW 6,508,643 EUR 5,233 1,237.37–1,272.38 10
USD 7,127 KRW 8,509,789 1,159.55–1,203.50 5
JPY 80,031 KRW 824,227 1,026.33–1,052.39 3
The Group recognized ₩137 million and ₩(-)1,417 million of gain on valuation of foreign exchange forward
contract and loss on valuation of foreign exchange forward contract, respectively, for the year ended December 31,
2016. Also, realized gain on foreign exchange forward transaction and loss on foreign exchange forward
transaction are ₩7,304 million and ₩(-)8,253 million , respectively, for the year ended December 31, 2016 (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.
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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, 2016
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 ₩ 672,175,223 ₩ 126,764,851 ₩ - ₩ - ₩ 798,940,074
Other payables 9,117,234 2,308,029 - - 11,425,263
Short-term borrowings 5,628,440 4,924,640 - - 10,553,080
Current convertible bonds - 1,117,455 - - 1,117,455
Current redeemable
preferred share liabilities - 1,914,061 - - 1,914,061
Bonds - - 10,700 - 10,700
Other financial liabilities 1,635,060 - 633,339 - 2,268,399
₩ 688,555,957 ₩ 137,029,036 ₩ 644,039 ₩ - ₩ 826,229,032
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
(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.
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, 2016 December 31, 2015
(In thousands of Korean won)
AFS financial
assets(*)
Investments in SVIC 25 partnerships ₩ 6,801,000 ₩ 7,096,000
Investments in SVIC 30 partnerships 4,550,000 1,640,000
Investments in Specialty Contractor
Financial Cooperative 50,121 50,121
Investments in Information and
Communication Financial Cooperative 15,166 15,166
Deposit of Information and
Communication Corporation License 18,170 18,170
Investments in
Plant & Mechanical Contractors
Financial Cooperative of Korea -
50,163
Investments in C-mate Co., Ltd. 1,300,000 -
Others 25 25
₩ 12,734,482 ₩ 8,869,645
(*) 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.
- 54 -
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 option-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).
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, 2016
Level 1 Level 2 Level 3 Total
(In thousands of Korean won)
Assets at FVTPL:
Foreign exchange forward ₩ - ₩ 137,251 ₩ - ₩ 137,251
Financial assets held for trading 10,115 ₩ - ₩ - ₩ 10,115
Financial assets ₩ 10,115 ₩ 137,251 ₩ - ₩ 147,366
Liabilities at FVTPL:
Foreign exchange forward ₩ - ₩ 1,417,108 ₩ - ₩ 1,417,108
Financial liabilities ₩ - ₩ 1,417,108 ₩ - ₩ 1,417,108
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
There is no transfer between Level 1 and Level 2 for the years ended December 31, 2016 and 2015.
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.
- 55 -
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.
(7) Offset between financial assets and liabilities
Details of financial assets that are under available offset contract as of December 31, 2016, 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 ₩ 14,750,053 ₩ (4,368,031) ₩ 10,382,022
Details of financial liabilities that are under available offset contract of December 31, 2016, 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 ₩ 15,712,996 ₩ (4,368,031) ₩ 11,344,965
34. TRANSACTIONS NOT INVOLVING CASH FLOWS:
Investing and financing activities of non-cash transactions for the years ended December 31, 2016 and 2015, are as
follows:
2016 2015
(In thousands of Korean won)
Transfer from advance payments to tangible and intangible assets ₩ - ₩ 16,118
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
Transfer from trade receivables to financial assets held for trading 4,904 -
- 56 -
35. BUSINESS COMBINATIONS:
(1) There are no business combinations that occurred for the year ended December 31, 2016, and details of
business combinations that occurred for the year ended December 31, 2015, 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
(*) 50% of iMarketFocus Inc.’s shares was additionally acquired for the year ended December 31, 2015
(Acquisition cost: ₩6,256,525 thousand).
(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
Interpark Qubridge
Co., Ltd. and
Guardian Co., Ltd. iMarketFocus Inc.
Fair value of the identifiable assets ₩ 38,622,298 ₩ 12,346,102 Fair value of the identifiable liabilities 42,809,325 2,289,705
Total fair value of identifiable net asset ₩ (4,187,027) ₩ 10,056,397
(3) The goodwill arising from the business combination that occurred for the year ended December 31, 2015, is as
follows:
2015
Interpark Qubridge
Co., Ltd. and
Guardian Co., Ltd. iMarketFocus Inc.
Acquisition price ₩ 24,577,425 ₩ 11,361,025
Plus: Non-controlling interests - -
Less: Fair value of identifiable net assets acquired 4,187,027 (10,056,397)
Less: Customer relationship (9,763,746) -
Plus: Deferred tax liabilities 2,148,024 -
Goodwill ₩ 21,148,730 ₩ 1,304,628
(4) Net cash outflows due to the business combination for the year ended December 31, 2015, are as follows:
2015
Interpark Qubridge Co., Ltd.
and Guardian Co., Ltd. iMarketFocus Inc.
Consideration paid in cash ₩ 24,577,425 ₩ 6,256,525
Less: cash and cash equivalent acquired (1,517,947) (1,045,201)
Total deduction ₩ 23,059,478 ₩ 5,211,324
- 57 -
(5) In relation to the new business operated by Interpark Qubridge Co., Ltd., Guardian Co., Ltd. and iMarketFocus
Inc., ₩126,168,153 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. (₩1,532,054 thousand) are included in sales in the consolidated statement of
comprehensive income for the year ended December 31, 2015.
(6) 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 statements portray the annual projected operation profit of the combined
entity and provide standard of comparison for the future term.
36. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS:
The Group’s consolidated financial statements as of and for the year ended December 31, 2016, have been
approved by the board of directors on February 14 , 2017, and final approval of the consolidated financial
statements is expected to be on March 29, 2017, during the shareholders’ meeting.