6-K 1 d788551d6k.htm FORM 6-K Form 6-K
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2019

Commission File Number 1-14926

 

 

KT Corporation

(Translation of registrant’s name into English)

 

 

90, Buljeong-ro,

Bundang-gu, Seongnam-si,

Gyeonggi-do,

Korea

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F   ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

    Yes   ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

 

 

 


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated:   August 14, 2019
KT Corporation
By:   /s/ Seunghoon Chi
Name:   Seunghoon Chi
Title:   Vice President
By:   /s/ Youngkyoon Yun
Name:   Youngkyoon Yun
Title:   Director


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KT Corporation and Subsidiaries

Consolidated Interim Financial Statements

June 30, 2019 and 2018


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LOGO    LOGO             

Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

KT Corporation

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of KT Corporation and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position as at June 30, 2019, and the related consolidated interim statements of profit or loss and comprehensive income for the three-month and six-month periods ended June 30, 2019 and 2018, and consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2019 and 2018, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to issue a report on these consolidated interim financial statements based on our review.

We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standard on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe the accompanying consolidated interim financial statements do not present fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

 

  

 

Samil PricewaterhouseCoopers, 100, Hangangdaero, Yongsan-gu, Seoul 04386, Korea, www.samil.com


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Other Matters

We have audited the consolidated statement of financial position of the Group as at December 31, 2018, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 11, 2019. The consolidated statement of financial position as at December 31, 2018, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2018.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

 

LOGO

Seoul, Korea

August 14, 2019

 

This report is effective as of August 14, 2019, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying interim consolidated financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

 

2


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KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2019 and December 31, 2018

 

 

 

(in millions of Korean won)    Notes      June 30, 2019
(Unaudited)
     December 31, 2018  

Assets

        

Current assets

        

Cash and cash equivalents

     4      W 2,250,125      W 2,703,422  

Trade and other receivables, net

     4, 5        6,509,416        5,807,421  

Other financial assets

     4, 6        677,123        994,781  

Current income tax assets

        1,741        4,046  

Inventories, net

     7        607,643        683,998  

Current assets held for sale

     9        —          13,035  

Other current assets

     8        1,772,292        1,687,549  
     

 

 

    

 

 

 

Total current assets

        11,818,340        11,894,252  
     

 

 

    

 

 

 

Non-current assets

        

Trade and other receivables, net

     4, 5        918,856        842,995  

Other financial assets

     4, 6        913,156        623,176  

Property and equipment, net

     10        13,192,832        13,068,257  

Right-of-use assets

     30        884,481        —    

Investment properties, net

     10        1,328,921        1,091,084  

Intangible assets, net

     10        3,132,757        3,407,123  

Investments in associates and joint ventures

     11        245,716        272,407  

Deferred income tax assets

        419,127        443,641  

Other non-current assets

     8        615,247        545,895  
     

 

 

    

 

 

 

Total non-current assets

        21,651,093        20,294,578  
     

 

 

    

 

 

 

Total assets

      W 33,469,433      W 32,188,830  
     

 

 

    

 

 

 

 

3


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2019 and December 31, 2018

 

 

 

(in millions of Korean won)    Notes      June 30, 2019
(Unaudited)
    December 31,
2018
 

Liabilities

       

Current liabilities

       

Trade and other payables

     4, 12      W 8,320,394     W 7,007,515  

Borrowings

     4, 13        583,633       1,368,481  

Other financial liabilities

     4, 6        868       942  

Current income tax liabilities

        199,041       249,837  

Other provisions

     14        100,671       111,461  

Deferred income

        61,175       52,878  

Other current liabilities

     8        642,305       596,590  
     

 

 

   

 

 

 

Total current liabilities

        9,908,087       9,387,704  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade and other payables

     4, 12        1,536,282       1,513,864  

Borrowings

     4, 13        5,673,216       5,279,812  

Other financial liabilities

     4, 6        147,606       163,454  

Net defined benefit liabilities

     15        667,368       561,269  

Other provisions

     14        121,067       163,995  

Deferred income

        102,532       110,702  

Deferred income tax liabilities

        242,067       206,473  

Other non-current liabilities

     8        66,589       70,277  
     

 

 

   

 

 

 

Total non-current liabilities

        8,556,727       8,069,846  
     

 

 

   

 

 

 

Total liabilities

        18,464,814       17,457,550  
     

 

 

   

 

 

 

Equity attribute to owners of the Controlling Company

       

Share capital

        1,564,499       1,564,499  

Share premium

        1,440,258       1,440,258  

Retained earnings

     17        11,438,900       11,328,859  

Accumulated other comprehensive income

        141,280       50,158  

Other components of equity

     18        (1,162,552     (1,181,083
     

 

 

   

 

 

 
        13,422,385       13,202,691  

Non-controlling interest

        1,582,234       1,528,589  
     

 

 

   

 

 

 

Total equity

        15,004,619       14,731,280  
     

 

 

   

 

 

 

Total liabilities and equity

      W 33,469,433     W 32,188,830  
     

 

 

   

 

 

 

The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes.

 

4


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KT Corporation and Subsidiaries

Consolidated Interim Statements of Profit or Loss

Three-Month and Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

            Period Ended June 30  
(in millions of Korean won, except per share amounts)    Notes      2019
(Unaudited)
    2018
(Unaudited)
 
          Three months     Six months     Three months      Six months  

Operating revenue

     19      W 6,098,533     W 11,932,910     W 5,806,938      W 11,517,139  

Operating expenses

     20        5,810,277       11,242,564       5,407,789        10,720,868  
     

 

 

   

 

 

   

 

 

    

 

 

 

Operating profit

        288,256       690,346       399,149        796,271  

Other income

     21        68,643       132,712       61,465        114,482  

Other expenses

     21        60,225       123,815       59,482        124,646  

Finance income

     22        130,605       248,006       149,823        226,848  

Finance costs

     22        138,858       261,766       160,991        269,000  

Share of net profits (losses) of associates and joint venture

     11        (4,825     (4,166     1,246        240  
     

 

 

   

 

 

   

 

 

    

 

 

 

Profit before income tax expense

        283,596       681,317       391,210        744,195  

Income tax expense

     23        80,529       218,480       110,538        239,431  
     

 

 

   

 

 

   

 

 

    

 

 

 

Profit for the period

      W 203,067     W 462,837     W 280,672      W 504,764  
     

 

 

   

 

 

   

 

 

    

 

 

 

Profit for the period attributable to:

            

Owners of the Controlling Company:

      W 173,934     W 405,024     W 251,022      W 447,979  

Non-controlling interest:

        29,133       57,813       29,650        56,785  

Earnings per share attributable to the equity holders of the Controlling Company during the period (in Korean won):

     24            

Basic earnings per share

      W 710     W 1,652     W 1,024      W 1,828  

Diluted earnings per share

        709       1,652       1,024        1,827  

The above consolidated interim statements of profit or loss should be read in conjunction with the accompanying notes.

 

5


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KT Corporation and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

            Period Ended June 30  
(in millions of Korean won)    Notes      2019
(Unaudited)
    2018
(Unaudited)
 
          Three months     Six months     Three months     Six months  

Profit for the period

      W 203,067     W 462,837     W 280,672     W 504,764  
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

           

Items that will not be reclassified to profit or loss:

           

Remeasurements of the net defined benefit liability

     15        (7,949     (8,175     (5,923     (10,963

Share of remeasurement gain (loss) of associates and joint ventures

        1       662       (3     (75

Gain on valuation of equity instruments at fair value through other comprehensive income

     6        63,673       115,522       33,373       52,985  

Items that may be subsequently reclassified to profit or loss:

           

Valuation gain on cash flow hedge

     6        31,404       66,340       40,466       20,781  

Other comprehensive income from cash flow hedges reclassified to profit or loss

        (26,163     (53,423     (58,549     (52,858

Share of other comprehensive income from associates and joint ventures

        (615     (1,547     (1,683     (3,238

Exchange differences on translation of foreign operations

        1,272       3,047       5,167       3,592  
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income for the period, net of tax

        61,623       122,426       12,848       10,224  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      W 264,690     W 585,263     W 293,520     W 514,988  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period attributable to:

           

Owners of the Controlling Company

      W 217,025     W 492,140     W 252,532     W 442,424  

Non-controlling interest

        47,665       93,123       40,988       72,564  

The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.

 

6


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KT Corporation and Subsidiaries

Consolidated Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

(in millions of Korean won)         Attributable to owners of the Controlling Company              
    Notes     Share
capital
    Share
premium
    Retained
earnings
   

Accumulated
other comprehensive

income

   

Other

components

of equity

    Total    

Non-controlling

interest

    Total equity  

Balance as at January 1, 2018

    W 1,564,499     W 1,440,258     W 9,854,172     W 30,985     W (1,205,302   W 11,684,612     W 1,391,764     W 13,076,376  

Changes in accounting policy

      —         —         925,205       (1,520     (18     923,667       76,445       1,000,112  

Comprehensive income

                 

Profit for the period

      —         —         447,979       —         —         447,979       56,785       504,764  

Gain on valuation of financial instruments at fair value through other comprehensive income

    6       —         —         583       34,378       —         34,961       18,024       52,985  

Remeasurements of net defined benefit liabilities

    15       —         —         (7,083     —         —         (7,083     (3,880     (10,963

Valuation loss on cash flow hedge

    6       —         —         —         (32,077     —         (32,077     —         (32,077

Share of other comprehensive income of associates and joint ventures

      —         —         —         (3,135     —         (3,135     (103     (3,238

Share of loss on remeasurements of associates and joint ventures

      —         —         (75     —         —         (75     —         (75

Exchange differences on translation of foreign operations

      —         —         —         1,854       —         1,854       1,738       3,592  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —         —         441,404       1,020       —         442,424       72,564       514,988  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

                 

Dividends paid by the Controlling Company

      —               (245,097     —         —         (245,097     —         (245,097

Dividends paid to non-controlling interest of subsidiaries

      —         —         —         —         —         —         (46,833     (46,833

Appropriations of loss on disposal of treasury stock

      —         —         (2,046     —         2,046       —         —         —    

Share-based payment

      —         —         —         —         3,199       3,199       —         3,199  

Others

      —         —         —         —         (93     (93     130       37  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

      —         —         (247,143     —         5,152       (241,991     (46,703     (288,694
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at June 30, 2018 (Unaudited)

    W 1,564,499     W 1,440,258     W 10,973,638     W 30,485     W (1,200,168   W 12,808,712     W 1,494,070     W 14,302,782  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.

 

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KT Corporation and Subsidiaries

Consolidated Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

          Attributable to owners of the Controlling Company              
(in millions of Korean won)   Notes    

Share

capital

   

Share

premium

   

Retained

earnings

   

Accumulated

other comprehensive

income

   

Other

components

of equity

    Total    

Non-controlling

interest

    Total equity  

Balance as at January 1, 2019

    W 1,564,499     W 1,440,258     W 11,328,859     W 50,158     W (1,181,083   W 13,202,691     W 1,528,589     W 14,731,280  

Changes in accounting policy

    30       —         —         (6,149     —         —         (6,149     —         (6,149

Comprehensive income

                 

Profit for the period

      —         —         405,024       —         —         405,024       57,813       462,837  

Remeasurements of net defined benefit liabilities

    15       —         —         (3,223     —         —         (3,223     (4,952     (8,175

Valuation gain on cash flow hedge

    6       —         —         —         12,917       —         12,917       —         12,917  

Share of other comprehensive income of associates and joint ventures

      —         —         —         (1,100     —         (1,100     (447     (1,547

Share of gain on remeasurements of associates and joint ventures

      —         —         650       —         —         650       12       662  

Disposal of financial instruments at fair value through other comprehensive income

      —         —         (1,433     —         —         (1,433     1,433       —    

Gain on valuation of financial instruments at fair value through other comprehensive income

    6       —         —         —         76,587       —         76,587       38,935       115,522  

Exchange differences on translation of foreign operations

      —         —         —         2,718       —         2,718       329       3,047  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —         —         401,018       91,122       —         492,140       93,123       585,263  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

                 

Dividends paid by the Controlling Company

      —         —         (269,659     —         —         (269,659     —         (269,659

Dividends paid to non-controlling interest of subsidiaries

      —         —         —         —         —         —         (35,500     (35,500

Appropriations of loss on disposal of treasury stock

      —         —         (15,169     —         15,169       —         —         —    

Change in ownership interest in subsidiaries

      —         —         —         —         484       484       (3,975     (3,491

Disposal of treasury stock

      —         —         —         —         118       118       —         118  

Others

      —         —         —         —         2,760       2,760       (3     2,757  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

      —         —         (284,828     —         18,531       (266,297     (39,478     (305,775
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at June 30, 2019 (Unaudited)

    W 1,564,499     W 1,440,258     W 11,438,900     W 141,280     W (1,162,552   W 13,422,385     W 1,582,234     W 15,004,619  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.

 

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Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

          Six-Month Period Ended June 30  
(in millions of Korean won)    Notes   

2019

(Unaudited)

    

2018

(Unaudited)

 

Cash flows from operating activities

        

Cash generated from operations

   25    W 2,469,048      W 2,037,665  

Interest paid

        (120,585      (128,991

Interest received

        138,859        120,047  

Dividends received

        16,400        9,541  

Income tax paid

        (232,092      (65,531
     

 

 

    

 

 

 

Net cash inflow from operating activities

        2,271,630        1,972,731  
     

 

 

    

 

 

 

Cash flows from investing activities

        

Collection of loans

        32,344        32,212  

Disposal of financial assets at fair value through profit or loss

        632,625        64,109  

Disposal of financial assets at amortized cost

        288,211        706,305  

Disposal of financial assets at fair value through other comprehensive income

        —          923  

Disposal of assets held-for-sale

        28,172        7,600  

Disposal of investments in associates and joint ventures

        10,253        402  

Disposal of property and equipment and investment properties

        21,334        38,200  

Disposal of intangible assets

        2,759        9,508  

Disposal of right-of-use assets

        4,051        —    

Discontinued operations

        2,000        —    

Loans granted

        (24,264      (32,080

Acquisition of financial assets at fair value through profit or loss

        (463,099      (67,788

Acquisition of financial assets at amortized cost

        (220,484      (482,489

Acquisition of financial assets at fair value through other comprehensive income

        (446      (16,239

Acquisition of investments in associates and joint ventures

        (4,399      (6,527

Acquisition of property and equipment and investment properties

        (1,623,268      (1,014,491

Acquisition of intangible assets

        (416,016      (348,969

Acquisition of right-of-use assets

        (4,158      —    

Decrease in cash due to exclusion from consolidation scope

        —          (28,000
     

 

 

    

 

 

 

Net cash outflow from investing activities

      W (1,734,385    W (1,137,324
     

 

 

    

 

 

 

 

The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.

 

9


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2019 and 2018

 

 

 

          Six-Month Period Ended June 30  
(in millions of Korean won)    Notes   

2019

(Unaudited)

    

2018

(Unaudited)

 

Cash flows from financing activities

        

Proceeds from borrowings

      W 584,050      W 608,570  

Settlement of derivative assets and liabilities, net

        33,635        (4,451

Cash inflow from other financing activities

        19,283        —    

Repayments of borrowings

        (1,066,858      (789,262

Dividends paid

        (305,159      (291,930

Decrease in leases liabilities

        (251,555      (37,838

Cash outflow from consolidated equity transaction

        (4,439      —    
     

 

 

    

 

 

 

Net cash outflow from financing activities

        (991,043      (514,911
     

 

 

    

 

 

 

Effect of exchange rate change on cash and cash equivalents

        501        1,014  
     

 

 

    

 

 

 

Net increase (decrease) in cash and cash equivalents

        (453,297      321,510  

Cash and cash equivalents

        

Beginning of the period

        2,703,422        1,928,182  
     

 

 

    

 

 

 

End of the period

      W 2,250,125      W 2,249,692  
     

 

 

    

 

 

 

 

The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.

 

10


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

1.

General Information

The consolidated financial statements include the accounts of KT Corporation, which is the controlling company as defined under Korean IFRS 1110 Consolidated Financial Statements, and its 65 controlled subsidiaries (collectively referred to as the “Group”) as described in Note 1.2.

 

  1.1

The Controlling Company

KT Corporation (the “Controlling Company”) commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telephone services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The headquarters are located in Seongnam City, Gyeonggi Province, Republic of Korea, and the address of its registered head office is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province.

On October 1, 1997, upon the announcement of the Government-Investment Enterprises Management Basic Act and the Privatization Law, the Controlling Company became a government-funded institution under the Commercial Code of Korea.

On December 23, 1998, the Controlling Company’s shares were listed on the Korea Stock Exchange.

On May 29, 1999, the Controlling Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), representing new shares and 20,813,311 government-owned shares, at the New York Stock Exchange. On July 2, 2001, the additional ADS representing 55,502,161 government-owned shares were issued at the New York Stock Exchange.

In 2002, the Controlling Company acquired the entire government-owned shares in accordance with the Korean government’s privatization plan. At the end of the reporting period, the Korean government does not own any share in the Controlling Company.

 

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Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

1.2

Consolidated Subsidiaries

The consolidated subsidiaries as at June 30, 2019 and December 31, 2018, are as follows:

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of Business    Location    June 30,
2019
     December 31,
2018
     Closing
month

KT Powertel Co., Ltd. 2

  

Trunk radio system business

   Korea      44.8      44.8    December

KT Linkus Co., Ltd.

  

Public telephone maintenance

   Korea      92.4      92.4    December

KT Submarine Co., Ltd. 2,4

  

Submarine cable construction and maintenance

   Korea      39.3      39.3    December

KT Telecop Co., Ltd.

  

Security service

   Korea      86.8      86.8    December

KT Hitel Co., Ltd.

  

Data communication

   Korea      67.1      67.1    December

KT Service Bukbu Co., Ltd.

  

Opening services of fixed line

   Korea      67.3      67.3    December

KT Service Nambu Co., Ltd.

  

Opening services of fixed line

   Korea      77.3      77.3    December

KT Commerce Inc.

  

B2C, B2B service

   Korea      100.0      100.0    December

KT Strategic Investment Fund No.1

  

Investment fund

   Korea      100.0      100.0    December

KT Strategic Investment Fund No.2

  

Investment fund

   Korea      100.0      100.0    December

KT Strategic Investment Fund No.3

  

Investment fund

   Korea      100.0      100.0    December

KT Strategic Investment Fund No.4

  

Investment fund

   Korea      100.0      100.0    December

KT Strategic Investment Fund No.5

  

Investment fund

   Korea      100.0      —        December

BC-VP Strategic Investment Fund No.1

  

Investment fund

   Korea      100.0      100.0    December

BC Card Co., Ltd.

  

Credit card business

   Korea      69.5      69.5    December

VP Inc.

  

Payment security service for credit card, others

   Korea      50.9      50.9    December

H&C Network

  

Call centre for financial sectors

   Korea      100.0      100.0    December

BC Card China Co., Ltd.

  

Software development and data processing

   China      100.0      100.0    December

INITECH Co., Ltd. 4

  

Internet banking ASP and security solutions

   Korea      58.2      58.2    December

Smartro Co., Ltd.

  

VAN (Value Added Network) business

   Korea      81.1      81.1    December

KTDS Co., Ltd. 4

  

System integration and maintenance

   Korea      95.5      95.5    December

KT M Hows Co., Ltd.

  

Mobile marketing

   Korea      90.0      90.0    December

KT M&S Co., Ltd.

  

PCS distribution

   Korea      100.0      100.0    December

GENIE Music Corporation (KT Music Corporation) 2

  

Online music production and distribution

   Korea      36.0      36.0    December

KT MOS Bukbu Co., Ltd. 4

  

Telecommunication facility maintenance

   Korea      100.0      100.0    December

KT MOS Nambu Co., Ltd. 4

  

Telecommunication facility maintenance

   Korea      98.4      98.4    December

KT Skylife Co., Ltd. 4

  

Satellite broadcasting business

   Korea      50.3      50.3    December

Skylife TV Co., Ltd.

  

TV contents provider

   Korea      92.6      92.6    December

KT Estate Inc.

  

Residential building development and supply

   Korea      100.0      100.0    December

KT AMC Co., Ltd.

  

Asset management and consulting services

   Korea      100.0      100.0    December

KTNEXR Co., Ltd.

  

Cloud system implementation

   Korea      100.0      100.0    December

KTGDH Co., Ltd.

(KTSB Data service Co., Ltd.)

  

Data centre development and related service

   Korea      100.0      51.0    December

KT Sat Co., Ltd.

  

Satellite communication business

   Korea      100.0      100.0    December

Nasmedia, Inc.3

  

Online advertisement

   Korea      42.8      42.8    December

 

12


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of Business    Location    June 30,
2019
     December 31,
2018
     Closing
month

KT Sports Co., Ltd.

  

Management of sports group

   Korea      100.0      100.0    December

KT Music Contents Fund No.1

  

Music contents investment business

   Korea      80.0      80.0    December

KT Music Contents Fund No.2

  

Music contents investment business

   Korea      100.0      100.0    December

KT-Michigan Global Content Fund

  

Content investment business

   Korea      88.6      88.6    December

Autopion Co., Ltd.

  

Service for information and communication

   Korea      100.0      100.0    December

KTCS Corporation 2,4

  

Database and online information provider

   Korea      30.9      30.9    December

KTIS Corporation 2,4

  

Database and online information provider

   Korea      30.1      30.1    December

KT M mobile Co., Ltd.

  

Special category telecommunications operator and sales of communication device

   Korea      100.0      100.0    December

KT Investment Co., Ltd.

  

Technology business finance

   Korea      100.0      100.0    December

Whowho&Company Co., Ltd.

  

Software development and supply

   Korea      100.0      100.0    December

PlayD Co., Ltd.
(N Search Marketing Co., Ltd.)

  

Advertising agency business

   Korea      100.0      100.0    December

Next connect PFV

  

Residential building development and supply

   Korea      100.0      100.0    December

KT Rwanda Networks Ltd.

  

Network installation and management

   Rwanda      51.0      51.0    December

AOS Ltd.

  

System integration and maintenance

   Rwanda      51.0      51.0    December

KT Belgium

  

Foreign investment business

   Belgium      100.0      100.0    December

KT ORS Belgium

  

Foreign investment business

   Belgium      100.0      100.0    December

Korea Telecom Japan Co., Ltd.

  

Foreign telecommunication business

   Japan      100.0      100.0    December

KBTO sp.zo.o.

  

Electronic communication business

   Poland      96.7      96.2    December

Korea Telecom China Co., Ltd.

  

Foreign telecommunication business

   China      100.0      100.0    December

KT Dutch B.V.

  

Super iMax and East Telecom management

   Netherlands      100.0      100.0    December

Super iMax LLC

  

Wireless high speed internet business

   Uzbekistan      100.0      100.0    December

East Telecom LLC

  

Fixed line telecommunication business

   Uzbekistan      91.0      91.0    December

Korea Telecom America, Inc.

  

Foreign telecommunication business

   USA      100.0      100.0    December

PT. KT Indonesia

  

Foreign telecommunication business

   Indonesia      99.0      99.0    December

PT. BC Card Asia Pacific

  

Software development and supply

   Indonesia      99.9      99.9    December

KT Hong Kong Telecommunications Co., Ltd.

  

Fixed line communication business

   Hong Kong      100.0      100.0    December

KT Hong Kong Limited

  

Foreign investment business

   Hong Kong      100.0      100.0    December

Korea Telecom Singapore Pte. Ltd.

  

Foreign investment business

   Singapore      100.0      100.0    December

Texnoprosistem LLP

  

Fixed line internet business

   Uzbekistan      100.0      100.0    December

Nasmedia Thailand Company Limited

  

Internet advertising solution

   Thailand      99.9      99.9    December

KT huimangjieum

  

Publishing

   Korea      100.0      —        December

 

1 

Sum of the ownership interests owned by the Controlling Company and subsidiaries.

2 

Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company can exercise the majority voting rights in its decision-making process at all times considering the historical voting pattern at the shareholders’ meetings.

3 

Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company holds the majority of voting right based on an agreement with other investors.

4 

The number of subsidiaries’ treasury stock is deducted from the total number of shares when calculating the controlling percentage ownership.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

1.3

Changes in Scope of Consolidation

Subsidiaries newly included in the consolidation during the six-month period ended June 30, 2019:

 

Location

  

Name of Subsidiary

  

Reason

Korea

   KT Strategic Investment Fund No.5    Newly established

Korea

   KT huimangjieum    Newly established

Summarized information for consolidated subsidiaries as at June 30, 2019 and December 31, 2018 and for the six-month periods ended June 30, 2019 and 2018, is as follows:

 

(in millions of Korean won)    June 30, 2019  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss) for
the period
 

KT Powertel Co., Ltd.

   W 117,968      W 19,909      W 31,304      W 2,233  

KT Linkus Co., Ltd.

     65,402        57,861        46,837        (1,708

KT Submarine Co., Ltd.

     133,784        31,772        22,666        (552

KT Telecop Co., Ltd.

     294,646        166,049        163,916        (3,541

KT Hitel Co., Ltd.

     279,475        71,468        154,040        2,536  

KT Service Bukbu Co., Ltd.

     71,929        65,901        106,277        (581

KT Service Nambu Co., Ltd.

     67,453        57,165        129,980        776  

BC Card Co., Ltd. 1

     4,138,049        2,900,613        1,746,306        78,645  

H&C Network 1

     243,789        60,110        157,798        1,440  

Nasmedia Co., Ltd. 1

     356,809        208,615        59,304        11,186  

KTDS Co., Ltd. 1

     141,879        91,351        198,222        2,506  

KT M Hows Co., Ltd.

     65,837        46,215        15,423        2,912  

KT M&S Co., Ltd.

     228,012        200,424        372,360        7,456  

GENIE Music Corporation (KT Music Corporation)

     230,162        80,667        107,687        4,079  

KT MOS Bukbu Co., Ltd.

     32,126        27,540        29,433        433  

KT MOS Nambu Co., Ltd.

     29,906        23,872        29,982        1,063  

KT Skylife Co., Ltd. 1

     819,653        139,702        344,875        32,303  

KT Estate Inc. 1

     1,626,763        259,129        229,822        25,000  

KTGDH Co., Ltd. (KTSB Data service Co., Ltd.)

     10,598        1,904        1,948        175  

KT Sat Co., Ltd.

     668,039        154,110        80,481        6,851  

KT Sports Co., Ltd.

     22,618        16,847        27,854        2,596  

KT Music Contents Fund No.1

     10,327        1,646        264        124  

KT Music Contents Fund No.2

     7,608        143        255        118  

KT-Michigan Global Content Fund

     12,793        147        199        (95

Autopion Co., Ltd.

     8,321        5,770        2,660        (300

KT M mobile Co., Ltd.

     139,951        33,526        81,988        (4,707

KT Investment Co., Ltd. 1

     80,358        63,377        1,405        446  

KTCS Corporation 1

     364,065        204,904        460,628        5,823  

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

(in millions of Korean won)    June 30, 2019  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss) for
the period
 

KTIS Corporation

     328,352        162,797        230,192        8,419  

Next connect PFV

     397,478        30,898        974        (454

Korea Telecom Japan Co., Ltd.1

     2,260        3,052        1,041        853  

Korea Telecom China Co., Ltd.

     689        27        334        2  

KT Dutch B.V

     32,848        91        —          10  

Super iMax LLC

     4,573        6,276        2,260        (141

East Telecom LLC 1

     21,107        17,044        8,159        1,501  

Korea Telecom America, Inc.

     4,298        511        3,287        282  

PT. KT Indonesia

     8        —          —          —    

KT Rwanda Networks Ltd. 2

     143,194        177,555        9,356        (14,468

KT Belguium

     93,266        11        —          (36

KT ORS Belgium

     6,916        14        —          (34

KBTO sp.zo.o.

     1,102        294        240        (2,250

AOS Ltd. 2

     13,361        4,807        3,012        (605

KT Hong Kong Telecommunications Co., Ltd.

     4,068        2,241        6,143        214  

KT huimangjieum

     2,099        946        36        (346

 

(in millions of Korean won)    December 31, 2018      June 30, 2018  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss) for
the period
 

KT Powertel Co., Ltd.

   W 124,064      W 28,217      W 34,501      W 3,708  

KT Linkus Co., Ltd.

     54,147        44,895        51,093        1,411  

KT Submarine Co., Ltd.

     130,715        27,530        31,253        (1,822

KT Telecop Co., Ltd.

     272,492        140,314        162,020        (712

KT Hitel Co., Ltd.

     272,708        66,043        125,576        2,734  

KT Service Bukbu Co., Ltd.

     30,599        23,964        95,440        (597

KT Service Nambu Co., Ltd.

     37,452        27,939        112,419        (602

BC Card Co., Ltd. 1

     3,722,379        2,630,536        1,749,993        70,922  

H&C Network 1

     245,841        63,188        133,265        5,054  

Nasmedia Co., Ltd. 1

     303,112        161,164        53,693        11,033  

KTDS Co., Ltd. 1

     148,675        95,834        192,784        3,299  

KT M Hows Co., Ltd.

     60,197        42,386        9,752        (689

KT M&S Co., Ltd.

     228,073        207,740        379,794        6,007  

GENIE Music Corporation (KT Music Corporation)

     221,559        75,827        69,429        1,718  

KT MOS Bukbu Co., Ltd.

     14,121        10,571        —          —    

KT MOS Nambu Co., Ltd.

     14,313        8,927        —          —    

KT Skylife Co., Ltd. 1

     816,001        149,841        338,435        32,157  

KT Estate Inc. 1

     1,695,995        304,712        248,975        18,127  

KTSB Data service

     8,632        523        2,390        (409

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

(in millions of Korean won)    December 31, 2018      June 30, 2018  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss) for
the period
 

KT Sat Co., Ltd.

     685,926        173,513        63,889        339  

KT Sports Co., Ltd.

     9,560        6,376        27,416        2,670  

KT Music Contents Fund No.1

     14,092        1,035        233        103  

KT Music Contents Fund No.2

     7,629        281        40        (118

KT-Michigan Global Content Fund

     12,741        —          820        527  

Autopion Co., Ltd.

     8,838        5,801        8,070        306  

KT M mobile Co., Ltd.

     146,334        35,335        85,113        (5,772

KT Investment Co., Ltd. 1

     74,580        58,040        1,470        (29

KTCS Corporation 1

     350,280        188,561        468,038        7,498  

KTIS Corporation

     229,246        68,997        224,247        6,521  

Next connect PFV

     385,769        34,370        —          —    

Korea Telecom Japan Co., Ltd.1

     1,326        2,910        853        (256

Korea Telecom China Co., Ltd.

     661        22        223        (136

KT Dutch B.V

     31,693        41        60        (3

Super iMax LLC

     4,150        4,528        2,544        (103

East Telecom LLC 1

     16,590        14,263        7,078        839  

Korea Telecom America, Inc.

     4,218        832        3,679        254  

PT. KT Indonesia

     8        —          —          —    

KT Rwanda Networks Ltd. 2

     144,129        162,801        7,527        (13,643

KT Belguium

     90,172        1        —          (12

KT ORS Belgium

     6,709        5        —          (17

KBTO sp.zo.o.

     1,364        217        42        (2,251

AOS Ltd. 2

     14,018        4,952        2,100        (832

KT Hong Kong Telecommunications Co., Ltd.

     3,616        2,143        5,222        159  

 

1 

These companies are the intermediate controlling companies of other subsidiaries and the above financial information is from their consolidated financial statements.

2 

At the end of the reporting period, convertible preferred stock issued by subsidiaries is included in liabilities.

 

16


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

2.

Significant Accounting Policies

 

  2.1

Basis of Preparation

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The Group’s consolidated interim financial statements for the six-month period ended June 30, 2019, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as at June 30, 2019.

(1) New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2019.

 

   

Enactment of Korean IFRS 1116 Leases

Korean IFRS 1116 Leases replaces Korean IFRS 1017 Leases. Under Korean IFRS 1116, with implementation of a single lease model, lessee is required to recognize assets and liabilities for all lease which lease term is over 12 months and underlying assets are not low value assets. A lessee is required to recognize a right-of-use asset and a lease liability representing its obligation to make lease payments.

With implementation of Korean IFRS 1116 Lease, the Group has changed accounting policy. The Group has adopted Korean IFRS 1116 retrospectively, as permitted under the specific transitional provisions in the standard, and recognized the cumulative impact of initially applying the standard as at January 1, 2019, the date of initial application. The Group has not restated comparatives for the 2018 reporting period. The impact of the adoption of the leasing standard and the new accounting policies are disclosed in Note 30.

 

   

Korean IFRS 1109 Financial Instruments

The narrow-scope amendments made to Korean IFRS 1109 Financial Instruments enable entities to measure certain prepayable financial assets with negative compensation at amortized cost. When a modification of a financial liability measured at amortized cost that does not result in the derecognition, a modification gain or loss shall be recognized in profit or loss. The amendment does not have a significant impact on the financial statements.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

   

Amendments to Korean IFRS 1019 Employee Benefits

The amendments require that an entity shall calculate current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement based on updated actuarial assumptions from the date of the change. The amendments also require that a reduction in a surplus must be recognized in profit or loss even if that surplus was not previously recognized because of the impact of the asset ceiling. The amendment does not have a significant impact on the financial statements.

 

   

Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures

The amendments clarify that an entity shall apply Korean IFRS 1109 to financial instruments in an associate or joint venture to which the equity method is not applied. These include long-term interests that, in substance, form part of the entity’s net investment in an associate or joint venture. The amendment does not have a significant impact on the financial statements

 

   

Enactment to Interpretation of Korean IFRS 2123 Uncertainty over Income Tax Treatments

The Interpretation explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment, and includes guidance on how to determine whether each uncertain tax treatment is considered separately or together. It also presents examples of circumstances where a judgement or estimate is required to be reassessed. The enactment does not have a significant impact on the financial statements.

 

   

Annual Improvements to Korean IFRS 2015 – 2017 Cycle:

 

   

Korean IFRS 1103 Business Combination

The amendments clarify that when a party to a joint arrangement obtains control of a business that is a joint operation, and had rights to the assets and obligations for the liabilities relating to that joint operation immediately before the acquisition date, the transaction is a business combination achieved in stages. In such cases, the acquirer shall remeasure its entire previously held interest in the joint operation. The amendment does not have a significant impact on the financial statements.

 

   

Korean IFRS 1111 Joint Agreements

The amendments clarify that when a party that participates in, but does not have joint control of, a joint operation might obtain joint control of the joint operation in which the activity of the joint operation constitutes a business. In such cases, previously held interests in the joint operation are not re-measured. The amendment does not have a significant impact on the financial statements.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

 

 

Paragraph 57A of Korean IFRS 1012 Income Tax

The amendment is applied to all the income tax consequences of dividends and requires an entity to recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. The amendment does not have a significant impact on the financial statements.

 

   

Korean IFRS 1023 Borrowing Costs

The amendments clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use (or sale), it becomes part of general borrowings. The amendment does not have a significant impact on the financial statements.

(2) New standards and interpretations not yet adopted by the Group

There are no certain new accounting standard and interpretation that have been published that are not mandatory for annual reporting period commencing January 1, 2019 and have not been early adopted by the Group.

 

  2.2

Accounting Policies

Significant accounting policies and method of computation used in the presentation of the condensed consolidated interim financial statements are consistent with those of the consolidated financial statements for the year ended December 31, 2018, except for the changes due to the application of amendment and enactments of standards described in Note 2.1 (1) the one described below.

 

  2.2.1

Income Tax Expense

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate is applied to the pre-tax income.

 

3.

Critical Accounting Estimates and Assumptions

The Group makes estimates and assumptions concerning the future. The estimates and assumptions are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual results may differ from these estimates.

Significant accounting estimates and assumptions applied in the preparation of these condensed consolidated interim financial statements are the same as those applied to the consolidated financial statements for the year ended December 31, 2018, except for the estimates used to determine income tax expense, and accounting estimates and assumptions for implementation of Korean IFRS 1116.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

4.

Financial Instruments by Category

Financial instruments by category as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019  
Financial assets   

Financial assets
at amortized

cost

     Financial assets at
fair value through
profit or loss
    

Financial assets

at fair value

through other

comprehensive

income

    

Derivatives

used for hedging

     Total  

Cash and cash equivalents

   W 2,250,125      W —        W —        W —        W 2,250,125  

Trade and other receivables 1

     5,993,206        —          1,395,648        —          7,388,854  

Other financial assets

     421,947        609,871        498,977        59,484        1,590,279  

 

(in millions of Korean won)    June 30, 2019  
Financial liabilities   

Financial liabilities
at amortized

cost

    

Financial liabilities at
fair value through

profit and loss

    

Derivatives

used for hedging

     Total  

Trade and other payables 1

   W 9,090,918      W —        W —        W 9,090,918  

Borrowings

     6,256,849        —          —          6,256,849  

Other financial liabilities

     125,428        7,806        15,240        148,474  

 

1

Lease receivables (lease liabilities) and others which are not applied to financial Instruments by category are excluded.

 

(in millions of Korean won)    December 31, 2018  
Financial assets   

Financial assets
at amortized

cost

     Financial assets at
fair value through
profit or loss
     Financial assets at
fair value through
other comprehensive
income
    

Derivatives

used for hedging

     Total  

Cash and cash equivalents

   W 2,703,422      W —        W —        W —        W 2,703,422  

Trade and other receivables

     5,553,068        —          1,097,348        —          6,650,416  

Other financial assets

     484,272        777,685        326,157        29,843        1,617,957  

 

(in millions of Korean won)    December 31, 2018  
Financial liabilities   

Financial liabilities
at amortized

cost

    

Financial liabilities
at fair value through

profit and loss

    

Derivatives

used for hedging

     Total  

Trade and other payables

   W 8,521,379      W —        W —        W 8,521,379  

Borrowings

     6,648,293        —          —          6,648,293  

Other financial liabilities

     99,330        7,758        57,308        164,396  

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

5.

Trade and Other Receivables

Trade and other receivables as at June 30, 2019 and December 31, 2018, are as follows:

 

     June 30, 2019  
(in millions of Korean won)    Total amounts      Provision for
impairment
     Present
value discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 3,946,411      W (370,161    W (9,225    W 3,567,025  

Other receivables

     3,025,286        (82,662      (233      2,942,391  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,971,697      W (452,823    W (9,458    W 6,509,416  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 457,742      W (2,404    W (22,187    W 433,151  

Other receivables

     530,919        (20,141      (25,073      485,705  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 988,661      W (22,545    W (47,260    W 918,856  
  

 

 

    

 

 

    

 

 

    

 

 

 
     December 31, 2018  
(in millions of Korean won)    Total amounts      Provision for
impairment
     Present
value discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 3,422,086      W (357,548    W (9,873    W 3,054,665  

Other receivables

     2,827,864        (74,948      (160      2,752,756  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,249,950      W (432,496    W (10,033    W 5,807,421  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 402,027      W (2,376    W (17,970    W 381,681  

Other receivables

     506,061        (18,874      (25,873      461,314  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 908,088      W (21,250    W (43,843    W 842,995  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Details of other receivables as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Loans

   W 80,463      W 88,476  

Receivables 1

     2,922,064        2,739,825  

Accrued income

     11,709        10,171  

Refundable deposits

     370,192        370,481  

Loans receivable

     71,427        54,952  

Finance lease receivables

     42,728        22,230  

Others

     32,316        21,757  

Less: Provision for impairment

     (102,803      (93,822
  

 

 

    

 

 

 
   W  3,428,096      W  3,214,070  
  

 

 

    

 

 

 

 

1 

The settlement receivables of BC Card Co., Ltd. of W2,092,183 million (December 31, 2018: W1,895,575 million) are included.

The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of receivables mentioned above as at June 30, 2019.

A portion of the trade receivables is classified as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.

 

6.

Other Financial Assets and Liabilities

Details of other financial assets and liabilities as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Other financial assets

     

Financial assets at amortized cost 1

   W 421,947      W 484,272  

Financial assets at fair value through profit or loss 1,2

     609,871        777,685  

Financial assets at fair value through other comprehensive income 1

     498,977        326,157  

Derivatives used for hedging

     59,484        29,843  

Less: Non-current

     (913,156      (623,176
  

 

 

    

 

 

 

Current

   W 677,123      W 994,781  
  

 

 

    

 

 

 

Other financial liabilities

     

Financial liabilities at amortized cost

   W 125,428      W 99,330  

Financial liabilities at fair value through profit or loss

     7,806        7,758  

Derivatives used for hedging

     15,240        57,308  

Less: Non-current

     (147,606      (163,454
  

 

 

    

 

 

 

Current

   W 868      W 942  
  

 

 

    

 

 

 

 

1

As at June 30, 2019, the Group’s other financial assets amounting to W85,037 million (December 31, 2018: W60,978 million), which consist of checking account deposits, and time deposits and others, are subject to withdrawal restrictions.

2 

As at June 30, 2019, MMW (Money Market Wrap) and MMT (Money Market Trust) amounting to W376,481 million are included in other financial assets.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Details of financial assets at fair value through profit or loss as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Equity instruments (Listed)

   W 530      W 121  

Equity instruments (Unlisted)

     84,040        62,911  

Debt securities

     525,222        714,653  

Derivative held for trading

     79        —    
  

 

 

    

 

 

 

Total

   W 609,871      W 777,685  

Less: non-current

     (343,423      (269,148
  

 

 

    

 

 

 

Current

   W 266,448      W 508,537  
  

 

 

    

 

 

 

The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to credit risk is the carrying amount as at June 30, 2019.

Investment in Korea Software Financial Cooperative amounting to W1,136 million is provided as collateral.

Details of financial assets at fair value through other comprehensive income as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Equity instruments (Listed)

   W 7,434      W 8,861  

Equity instruments (Unlisted)

     484,411        310,387  

Debt securities

     7,132        6,909  
  

 

 

    

 

 

 

Total

     498,977        326,157  

Less: non-current

     (498,977      (326,157
  

 

 

    

 

 

 

Current

   W —        W —    
  

 

 

    

 

 

 

Upon disposal of these equity instruments, any balance within the accumulated other comprehensive income for these equity instruments is not reclassified to profit or loss, but to retained earnings. Upon disposal of debt securities, remaining balance of the accumulated other comprehensive income of debt investments is reclassified to profit or loss.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Details of valuation of derivatives used for hedging as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  
     Assets      Liabilities      Assets      Liabilities  

Interest rate swap 1

   W —        W 1,869      W —        W 599  

Currency swap 2

     56,430        13,371        29,843        54,074  

Currency forwards 3

     3,054        —          —          2,635  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     59,484        15,240        29,843        57,308  

Less: non-current

     (58,065      (14,394      (4,732      (56,366
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 1,419      W 846      W  25,111      W 942  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1

The interest rate swap contract is to hedge the risk of variability in future fair value of the bond.

2

The currency swap contract is to hedge the risk of variability in cash flow from the bond. In applying the cash flow hedge accounting, the Group hedges its exposures to cash flow fluctuation until September 7, 2034.

3

The currency forward contract is to hedge the risk of variability in cash flow from transactions in foreign currencies due to changes in foreign exchange rate.

The full value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The valuation gains and losses on the derivative contracts for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019     2018  
Type of Transaction    Valuation
gain
     Valuation
loss
    

Other

comprehensive
income1

    Valuation
gain
     Valuation
loss
    

Other

comprehensive
income1

 

Interest rate swap

   W —        W —        W  (1,402   W 116      W —        W 1,989  

Currency swap

     75,830        —          90,002       76,274        —          28,488  

Currency forwards

     5,622        —          —         5,937        —          —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   W  81,452      W  —        W  88,600     W  82,327      W  —        W  30,477  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

1 

The amounts are before adjustments of deferred income tax directly reflected in equity and allocation to the non-controlling interest.

The ineffective portion recognized in profit or loss on the cash flow hedge is valuation gain of W3,114 million for the current period (the six-month period ended June 30, 2018: valuation gain of W3,162 million).

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

7.

Inventories

Inventories as at June 30, 2019 and December 31, 2018, are as follows:

 

     June 30, 2019      December 31, 2018  
(in millions of Korean won)    Acquisition
cost
     Valuation
allowance
   

Carrying

amount

     Acquisition
cost
     Valuation
allowance
   

Carrying

amount

 

Merchandise

   W  724,189      W  (121,049   W  603,140      W  794,020      W (113,581   W  680,439  

Others

     4,503        —         4,503        3,560        —         3,560  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

   W 728,692      W  (121,049   W 607,643      W 797,580      W (113,581   W 683,999  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Cost of inventories recognized as expenses for the six-month period ended June 30, 2019, amounts to W2,094,465 million (the six-month period ended June 30, 2018: W1,883,796 million) and valuation loss on inventory amounts to W7,468 million for the six-month period ended June 30, 2019 (the six-month period ended June 30, 2018: valuation loss of W39,770 million).

 

8.

Other Assets and Liabilities

Other assets and liabilities as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Other assets

     

Advance payments

   W 156,521      W 162,784  

Prepaid expenses 1

     1,730,888        1,667,372  

Contract assets 1

     489,075        398,797  

Others

     11,055        4,491  

Less: Non-current

     (615,247      (545,895
  

 

 

    

 

 

 

Current

   W  1,772,292      W  1,687,549  
  

 

 

    

 

 

 

Other liabilities

     

Advances received

   W 175,474      W 165,565  

Withholdings

     103,644        89,403  

Unearned revenue 1

     58,785        39,528  

Contract liabilities 1

     347,112        347,462  

Others

     23,879        24,909  

Less: Non-current

     (66,589      (70,277
  

 

 

    

 

 

 

Current

   W 642,305      W 596,590  
  

 

 

    

 

 

 

 

1 

The amounts include adjustments arising from adoption of Korean IFRS 1115 (Note 19).

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

9.

Assets Held for Sale

In the prior year, as the Group decided to sell total shares of PT Mitra Transksi Indonesia, investments in associates, with the approval of the Board of Directors and shareholders, the associated asset amounting to W13,035 million was presented as held for sale. The associated asset was sold during the six-month period ended June 30, 2019.

 

10.

Property and Equipment, Investment Properties, and Intangible Assets

Changes in property and equipment for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Beginning, net

   W  13,068,257      W  13,562,319  

Changes in accounting policy 1

     (209,760      —    

Acquisition and capital expenditure

     1,695,279        772,188  

Disposal and termination

     (35,567      (49,363

Depreciation

     (1,221,326      (1,354,014

Transfer from (to) investment property

     (47,302      94,625  

Others

     (56,749      (25,721
  

 

 

    

 

 

 

Ending, net

   W 13,192,832      W 13,000,034  
  

 

 

    

 

 

 

 

1 

With the application of Korean IFRS 1116, the assets were reclassified from property and equipment to right-of-use assets (Note 30).

Details of property and equipment provided as collateral as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019
     Carrying
amount
     Secured
amount
     Related line
item
     Related
amount
     Secured party

Land and Buildings

   W  13,028      W  15,109        Borrowings      W  11,975      Standard Charted Bank/Korea Development Bank

Others

     48,064        41,598        Borrowings        6,941      Shinhan Bank

 

(in millions of Korean won)    December 31, 2018
     Carrying
amount
     Secured
amount
     Related line
item
     Related
amount
     Secured party

Land and Buildings

   W  13,163      W  15,113        Borrowings      W 7,878      Standard Charted Bank/Korea Development Bank

Others

     50,278        40,252        Borrowings        10,063      Shinhan Bank

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Changes in investment properties for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Beginning

   W 1,091,084      W  1,189,531  

Acquisition

     213,479        56,345  

Disposal

     (40      —    

Depreciation

     (22,904      (22,591

Transfer from (to) property and equipment

     47,302        (94,625
  

 

 

    

 

 

 

Ending

   W  1,328,921      W 1,128,660  
  

 

 

    

 

 

 

Details of investment properties provided as collateral as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019  
     Carrying
amount
     Secured
amount
     Related
account
     Related
amount
 

Land and Buildings

   W  534,750      W  63,774        Deposits      W  58,373  

Land and Buildings

     5,215        3,991        Borrowings        3,325  

 

(in millions of Korean won)    December 31, 2018  
     Carrying
amount
     Secured
amount
     Related
account
     Related
amount
 

Land and Buildings

   W  548,567      W  66,551        Deposits      W  59,492  

Land and Buildings

     5,292        3,987        Borrowings        3,322  

Changes in intangible assets for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Beginning, net

   W 3,407,123      W 2,632,703  

Changes in accounting policy 1

     (26,207      —    

Acquisition and capital expenditure

     71,455        89,036  

Disposal and termination

     (4,338      (9,079

Amortization

     (329,140      (311,880

Others

     13,864        49,186  
  

 

 

    

 

 

 

Ending, net

   W  3,132,757      W  2,449,966  
  

 

 

    

 

 

 

 

1 

With the application of Korean IFRS 1116, the assets were reclassified from intangible assets to right-of-use assets (Note 30).

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

The carrying amount of membership rights and others, excluding goodwill, with indefinite useful life not subject to amortization is W241,541 million as at June 30, 2019 (December 31, 2018: W239,619 million).

Goodwill is allocated to the Group’s cash-generating unit which is identified by operating segments. As at June 30, 2019, goodwill allocated to each cash-generation unit is as follows:

 

(in millions of Korean won)       
     Amount  

Cash generating Unit

  

Customer/Marketing

  

Telecom Wireless business 1

   W 65,057  

Finance

  

BC Card Co., Ltd. 1

     41,234  

Others

  

GENIE Music Corporation (KT Music Corporation) 1

     53,871  

PlayD Co., Ltd. (N SEARCH MARKETING Corporation) 1

     42,745  

KT Telecop Co., Ltd. 1

     15,418  

KT MOS Bukbu Co., Ltd and others

     18,143  
  

 

 

 

Total

   W 236,468  
  

 

 

 

 

1

The recoverable amounts of telecom wireless business, BC Card Co., Ltd., PlayD Co., Ltd. (N SEARCH MARKETING Corporation) and KT Telecop Co., Ltd. are calculated based on value-in use calculations. The recoverable amounts of GENIE Music Corporation (KT Music Corporation) is calculated based on value-in use calculations or fair value less costs to sell. These calculations use pre-tax cash flow projections for the next five years based on financial budgets. Cash flow that exceeds the period of financial budgets is projected by expected growth rate. This growth rate does not exceed the long-term average growth rate of the industry which the cash-generate unit belongs in. The Group estimated its revenue growth rate based on past performance and its expectation of future market changes. The Group determined cash flow projections based on past performance and its estimation of market growth. Specific risk of related operating segment is reflected in discount rate.

 

11.

Investments in Associates and Joint Ventures

Details of associates as at June 30, 2019 and December 31, 2018, are as follows:

 

     Percentage of
ownership (%)
    Location     

Date of
financial
statements

 
   June 30,
2019
    December 31,
2018
              

Korea Information & Technology Fund

     33.3     33.3     Korea        December 31  

KT-SB Venture Investment Fund

     —         50.0     Korea        December 31  

KT-IBKC Future Investment Fund 1 1

     50.0     50.0     Korea        December 31  

KT-CKP New Media Investment Fund

     49.7     49.7     Korea        December 31  

K Bank Inc. 1

     10.0     10.0     Korea        December 31  

 

1

At the end of the reporting period, even though the Group (KT-IBKC Future Investment Fund 1) has 50% ownership, the equity method of accounting has been applied as the Group, which is a limited partner of the investment fund, cannot participate in determining the operating and financial policies. Also, 8.8% of non-voting convertible stock are excluded in deriving percentage of ownership of K bank Inc.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

     2019  
(in millions of Korean won)    Beginning     

Acquisition

(Disposal)

    Share of net profit (loss)
from associates and
joint ventures 1
    Others     Ending  

KIF Fund

   W 148,255      W —       W (220   W (4,280   W 143,755  

KT-SB Venture Investment

     4,470        (4,470     —         —         —    

KT-IBKC future investment fund 1

     9,961        3,250       (76     (1,318     11,817  

KT-CKP New Media Investment Fund

     281        —         17       —         298  

K Bank Inc.

     52,655        —         (9,392     (199     43,064  

Others

     56,785        (5,735     5,505       (9,773     46,782  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   W 272,407      W (6,955   W (4,166   W (15,570   W 245,716  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     2018  
(in millions of Korean won)    Beginning     

Acquisition

(Disposal)

    Share of net profit (loss)
from associates and
joint ventures 1
    Others     Ending  

KIF Fund

   W 139,534      W —       W 8,869     W (3,959   W 144,444  

KT-SB Venture Investment

     2,942        —         (3     —         2,939  

KT-IBKC future investment fund 1

     10,825        —         461       (1     11,285  

KT-CKP New Media Investment Fund

     2,294        (405     (756     1       1,134  

K Bank Inc.

     42,108        —         (7,123     66       35,051  

Others

     81,728        6,527       (1,639     (8,417     78,199  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   W 279,431      W 6,122     W (191   W (12,310   W 273,052  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

1

KT investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit (loss) from associates and joint ventures as operating revenue and expense. These include its share in net profit from associates and joint ventures of W (-) 10 million (the six-month period ended June 30, 2018: net loss of W431 million) recognized as operating revenue and expense during the period.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Summarized financial information of associates and joint ventures as at June 30, 2019 and December 31, 2018 and for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019  
     Assets      Liabilities      Operating
revenue
    

Profit (loss)

for the period

 

Korea Information & Technology Fund

   W 431,266      W —        W —        W (659

KT-IBKC future investment fund 1

     27,420        150        437        (152

KT-CKP New Media Investment Fund

     599        —          35        33  

K Bank Inc.

     2,851,096        2,622,025        46,426        (49,956
(in millions of Korean won)    December 31, 2018      June 30, 2018  
     Assets      Liabilities      Operating
revenue
     Loss for the
period
 

Korea Information & Technology Fund

   W 444,764      W —        W 35,366      W 26,633  

KT-SB Venture Investment

     8,946        6        —          (5

KT-IBKC future investment fund 1

     19,922        —          1,227        921  

KT-CKP New Media Investment Fund

     565        —          275        (1,522

K Bank Inc.

     2,184,657        1,904,574        29,682        (39,548

Due to the discontinuance of equity method of accounting, the Group has not recognized loss from associates and joint ventures of W6,092 million for the six-month period ended June 30, 2019 (the six-month period ended June 30, 2018: loss of W5,597 million). The accumulated comprehensive loss of associates and joint ventures as at June 30, 2019, which was not recognized by the Group is W12,567 million (December 31, 2018: loss of W6,475 million).

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

12.

Trade and Other Payables

Details of trade and other payables as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Current liabilities

     

Trade payables

   W 1,079,292      W 1,236,489  

Other payables

     7,241,102        5,771,026  
  

 

 

    

 

 

 

Total

   W 8,320,394      W 7,007,515  
  

 

 

    

 

 

 

Non-current liabilities

     

Trade payables

   W 2,482      W 3,207  

Other payables

     1,533,800        1,510,657  
  

 

 

    

 

 

 

Total

   W 1,536,282      W 1,513,864  
  

 

 

    

 

 

 

Details of other payables as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Non-trade payables 1

   W 5,842,486      W 5,191,268  

Accrued expenses

     1,011,092        904,135  

Operating deposits

     943,421        819,968  

Lease liabilities 2

     765,758        163,858  

Others

     212,145        202,454  

Less: non-current

     (1,533,800      (1,510,657
  

 

 

    

 

 

 

Current

   W 7,241,102      W 5,771,026  
  

 

 

    

 

 

 

 

  1

Settlement payables of BC Card Co., Ltd., a subsidiary of the Group, of W2,119,807 million related to credit card transactions are included as at June 30, 2019 (December 31, 2018: W1,996,320 million).

  2

With the application of Korean IFRS 1116, the lease liabilities were included in other liabilities (Note 30).

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

13.

Borrowings

Details of borrowings as at June 30, 2019 and December 31, 2018, are as follows:

Debentures

 

(in millions of Korean won and foreign currencies in thousands)     June 30, 2019     

December 31, 2018

 
Type    Maturity   

Annual interest

rates

    Foreign
currency
     Korean
won
     Foreign
currency
   Korean
won
 

MTNP notes 1

   Sep 7, 2034      6.500     USD 100,000      W 115,680      USD 100,000    W 111,810  

MTNP notes

   Apr 22, 2019      —         —          —        USD 350,000      391,335  

MTNP notes

   Jul 18, 2026      2.500     USD 400,000        462,720      USD 400,000      447,240  

MTNP notes

   Aug 7, 2022      2.625     USD 400,000        462,720      USD 400,000      447,240  

FR notes 2

   Aug 23, 2020     

LIBOR

+0.400

(3M) 

    USD 200,000        231,360      USD 200,000      223,620  

FR notes 2

   Aug 23, 2023     

LIBOR

+0.900

(3M) 

    USD 100,000        115,680      USD 100,000      111,810  

MTNP notes

   Jul 6, 2020      0.310     JPY 4,000,000        42,934      JPY 4,000,000      40,527  

MTNP notes

   Jul 6, 2021      0.380     JPY 16,000,000        171,736      JPY 16,000,000      162,109  

MTNP notes

   Nov 13, 2020      0.300     JPY 30,000,000        322,005      JPY 30,000,000      303,954  

The 180-2nd Public bond

   Apr 26, 2021      4.710     —          380,000      —        380,000  

The 181-3rd Public bond

   Aug 26, 2021      4.090     —          250,000      —        250,000  

The 182-2nd Public bond

   Oct 28, 2021      4.310     —          100,000      —        100,000  

The 183-2nd Public bond

   Dec 22, 2021      4.090     —          90,000      —        90,000  

The 183-3rd Public bond

   Dec 22, 2031      4.270     —          160,000      —        160,000  

The 184-2nd Public bond

   Apr 10, 2023      2.950     —          190,000      —        190,000  

The 184-3rd Public bond

   Apr 10, 2033      3.170     —          100,000      —        100,000  

The 185-2nd Public bond

   Sep 16, 2020      3.650     —          300,000      —        300,000  

The 186-2nd Public bond

   Jun 26, 2019      —         —          —        —        170,000  

The 186-3rd Public bond

   Jun 26, 2024      3.418     —          110,000      —        110,000  

The 186-4th Public bond

   Jun 26, 2034      3.695     —          100,000      —        100,000  

The 187-2nd Public bond

   Sep 2, 2019      2.965     —          220,000      —        220,000  

The 187-3rd Public bond

   Sep 2, 2024      3.314     —          170,000      —        170,000  

The 187-4th Public bond

   Sep 2, 2034      3.546     —          100,000      —        100,000  

The 188-1st Public bond

   Jan 29, 2020      2.259     —          160,000      —        160,000  

The 188-2nd Public bond

   Jan 29, 2025      2.454     —          240,000      —        240,000  

The 188-3rd Public bond

   Jan 29, 2035      2.706     —          50,000      —        50,000  

The 189-1st Public bond

   Jan 28, 2019      —         —          —        —        100,000  

The 189-2nd Public bond

   Jan 28, 2021      1.946     —          130,000      —        130,000  

The 189-3rd Public bond

   Jan 28, 2026      2.203     —          100,000      —        100,000  

The 189-4rd Public bond

   Jan 28, 2036      2.351     —          70,000      —        70,000  

The 190-1st Public bond

   Jan 29, 2021      2.548     —          110,000      —        110,000  

The 190-2nd Public bond

   Jan 30, 2023      2.749     —          150,000      —        150,000  

The 190-3rd Public bond

   Jan 30, 2028      2.947     —          170,000      —        170,000  

The 190-4th Public bond

   Jan 30, 2038      2.931     —          70,000      —        70,000  

The 191-1st Public bond

   Jan 14, 2022      2.048     —          220,000      —        —    

The 191-2nd Public bond

   Jan 15, 2024      2.088     —          80,000      —        —    

The 191-3rd Public bond

   Jan 15, 2029      2.160     —          110,000      —        —    

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

(in millions of Korean won and foreign currencies in thousands)      June 30, 2019     

December 31, 2018

 
Type    Maturity    Annual interest
rates
     Foreign
currency
     Korean
won
     Foreign
currency
   Korean
won
 

The 191-4th Public bond

   Jan 14, 2039      2.213      —          90,000      —        —    
           

 

 

       

 

 

 

Subtotal

 

        5,944,835           6,029,645  

Less: Current portion

 

        (379,912         (880,940

Discount on bonds

 

        (19,105         (20,056
     

 

 

       

 

 

 

Total

 

      W 5,545,818         W 5,128,649  
     

 

 

       

 

 

 

 

1 

As at June 30, 2019, the Group has outstanding notes in the amount of USD 100 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 2,000 million. However, the MTN program has been suspended since 2007.

2 

The Libor (3M) is approximately 2.320% as at June 30, 2019.

Short-term borrowings

 

(in millions of Korean won)          
Type    Financial institution    Annual interest rates    June 30, 2019    December 31, 2018
Operational    NongHyup Bank    3.600%    W 15,000    W 15,000
   Shinhan Bank    3.610%~4.720%    59,800    59,800
   Shinhan Bank, Indonesia    —      —      614
   Woori Bank    3.200%~3.850%    18,000    —  
   Korea Development Bank    2.800%~4.350%    20,300    16,200
      Soohyup Bank    4.310%    1,000    1,000
   Total    W114,100    W 92,614

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Long-term borrowings

 

(in millions of Korean won and thousands of foreign currencies)      June 30, 2019     December 31, 2018  
Financial institution    Type   

Annual interest

rates

    

Foreign

currency

    

Korean

won

   

Foreign

currency

    

Korean

won

 

Export-Import

   Inter-Korean              

Bank of Korea

   Cooperation Fund 1      1.500%        —        W 3,701       —        W 3,948  

Shinhan Bank

   General loans      3.120%        —          5,000       —          5,000  
   Facility loans      2.870%        —          30,000       —          30,000  
   Vessel facility loans 2      LIBOR(3M)+0.706%        USD 6,000        6,941       USD 9,000        10,063  
                

Standard Charted Bank

   General loans      3.160%        —          6,000       —          6,000  

NongHyup Bank

   Facility loans      2.000%        —          92       —          104  
   General loans      —          —          —         —          8,000  

Korea Development Bank

   General loans      3.020%        —          10,000       —          10,000  
   General loans      3.310%        —          30,000          30,000  

NH Investment & Security Co., Ltd.

   Commercial papers      —          —          —         —          300,000  

Others

   Redeemable
convertible preferred
stock 3
     1.000%        —          950       —          950  
  

Kookmin Bank

and other 2

     LIBOR(3M)+1.850%        USD 117,253        124,335       USD 127,023        142,025  
           

 

 

      

 

 

 

Subtotal

              217,019          546,090  
           

 

 

      

 

 

 

Less: Current portion

              (89,621        (394,927
           

 

 

      

 

 

 

Total

            W 127,398        W 151,163  
           

 

 

      

 

 

 

 

1 

The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a seven-year grace period.

2 

LIBOR(3M) is approximately 2.320% as at June 30, 2019.

3 

Skylife TV Co., Ltd., a subsidiary of the Group, issued 1,900,000 of redeemable convertible preferred stock with a par value per share of W500 in 2010.

Repayment schedule of the Group’s debentures and borrowings including the portion of current liabilities as at June 30, 2019, is as follows:

 

(in millions of Korean won)                                                 
     Debentures      Borrowings      Total  
     In local
currency
     In foreign
currency
    

Sub-

total

     In local
currency
     In foreign
currency
    

Sub-

total

        

Jul. 1, 2019 ~ Jun. 30, 2020

   W 380,000      W —        W 380,000      W 151,568      W 52,154      W 203,722      W 583,722  

Jul. 1, 2020 ~ Jun. 30, 2021

     920,000        596,299        1,516,299        15,518        45,213        60,731        1,577,030  

Jul. 1, 2021 ~ Jun. 30, 2022

     660,000        171,736        831,736        30,518        33,909        64,427        896,163  

Jul. 1, 2022 ~ Jun. 30, 2023

     340,000        462,720        802,720        512        —          512        803,232  

Thereafter

     1,720,000        694,080        2,414,080        1,727        —          1,727        2,415,807  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 4,020,000      W 1,924,835      W 5,944,835      W 199,843      W 131,276      W 331,119      W 6,275,954  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

14.

Provisions

Changes in provisions for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

     2019  
(in millions of Korean won)    Litigation      Restoration cost      Others      Total  

Beginning balance

   W 58,760      W  118,828      W 97,868      W  275,456  

Increase (transfer)

     (8,623      6,195        12,543        10,115  

Usage

     (35,624      (1,662      (9,836      (47,122

Reversal

     —          (2,761      (13,950      (16,711
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 14,513      W 120,600      W 86,625      W 221,738  
  

 

 

    

 

 

    

 

 

    

 

 

 
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 14,513      W 1,804      W 84,354      W 100,671  

Non-current

     —          118,796        2,271        121,067  
     2018  
(in millions of Korean won)    Litigation      Restoration cost      Others      Total  

Beginning balance

   W 18,306      W 100,216      W 84,508      W 203,030  

Increase (transfer)

     5        2,765        13,144        15,914  

Usage

     (340      (1,123      (9,334      (10,797

Reversal

     —          (910      (683      (1,593
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 17,971      W 100,948      W 87,635      W 206,554  
  

 

 

    

 

 

    

 

 

    

 

 

 
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 16,898      W 1,797      W 62,368      W 81,063  

Non-current

     1,073        99,151        25,267        125,491  

 

15.

Net Defined Benefit Liabilities

The amounts recognized in the statements of financial position as at June 30, 2019 and December 31, 2018, are determined as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Present value of defined benefit obligations

   W 2,319,749      W 2,201,876  

Fair value of plan assets

     (1,652,381      (1,643,046
  

 

 

    

 

 

 

Liabilities

   W 667,368      W 561,269  
  

 

 

    

 

 

 

Assets

   W —        W 2,439  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Changes in the defined benefit obligations for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Beginning

   W  2,201,876      W  1,911,166  

Current service cost

     121,591        109,776  

Interest expense

     23,138        24,746  

Benefit paid

     (40,360      (38,438

Remeasurements

     10,893        7,123  

Others

     2,611        —    
  

 

 

    

 

 

 

Ending

   W 2,319,749      W 2,014,373  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

Changes in the fair value of plan assets for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Beginning

   W  1,643,046      W  1,519,779  

Interest income

     17,634        20,181  

Remeasurements on plan assets

     (1,175      (7,835

Employer contributions

     32,249        3,568  

Benefits paid

     (40,950      (36,614

Others

     1,577        —    
  

 

 

    

 

 

 

Ending

   W 1,652,381      W 1,499,079  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

Amounts recognized in the consolidated statement of profit or loss for the six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  

Current service cost

   W  121,591      W  109,776  

Net interest cost

     5,504        4,565  

Transfer in (out)

     (8,573      (5,202
  

 

 

    

 

 

 

Total expenses

   W 118,522      W 109,139  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

16.

Commitments and Contingencies

As at June 30, 2019, major commitments with local financial institutions are as follows:

 

(in millions of Korean won and foreign
currencies in thousands)
   Financial institution    Currency    Limit      Used amount  

Bank overdraft

   Kookmin Bank and others    KRW      1,637,000        —    

Inter-Korean Cooperation Fund

   Export-Import Bank of Korea    KRW      37,700        3,701  

Collateralized loan on electronic accounts receivable-trade

   Shinhan Bank and others    KRW      467,560        32,847  

Plus electronic notes payable

   Industrial Bank of Korea    KRW      50,000        1,482  

Loans for working capital

   Korea Development Bank and others    KRW      278,250        181,050  
   Shinhan Bank and others    KRW      2,123        92  

Facility loans

   Kookmin Bank and others    USD      212,000        107,482  

Facility loans on ships

   Shinhan Bank    USD      6,000        6,000  

Derivatives transaction limit

   Korea Development Bank    KRW      100,000        22,996  

Borrowing commitment

   Woori Bank and others    KRW      100,000        —    
     

 

  

 

 

    

 

 

 

Total

      KRW      2,672,633        242,168  
      USD      218,000        113,482  
     

 

  

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

As at June 30, 2019, guarantees received from financial institutions are as follows:

 

(in millions of Korean won and

foreign currencies in thousands)

   Financial institution    Currency     Limit  

Performance guarantee

   Seoul Guarantee Insurance and others      KRW       177,630  
        USD       1,200  

Guarantee for import letters of credit

   Industrial Bank of Korea and others      USD       5,980  

Guarantee for payment in foreign currency

   KEB Hana Bank and others     
USD
PLN1
 
 
   
49,082
23,000
 
 

Comprehensive credit line

   KEB Hana Bank and others     
KRW
USD
 
 
   
40,000
10,000
 
 

Bid guarantee

   KEB Hana Bank      USD       400  

Bid guarantee

   Korea Software Financial Cooperative and others      KRW       48,302  

Performance guarantee / Warranty Guarantee

        KRW       413,996  

Guarantee for advances received/others

        KRW       164,631  

Warranty guarantee

   Seoul Guarantee Insurance      KRW       877  

Guarantees for licensing

        KRW       4,146  

Guarantees for deposits

        KRW       3,272  

Guarantees for lease

        KRW       1,615  
     

 

 

   

 

 

 

Total

        KRW       854,469  
        USD       66,662  
        PLN1       23,000  
     

 

 

   

 

 

 

 

1 

Polish Zloty.

As at June 30, 2019, guarantees provided by the Group to a third party, are as follows:

 

(in millions of Korean won)                             
     Subject to payment guarantees    Creditor    Limit      Used amount      Period

KT Estate Inc.

   Busan Gaya Centreville Buyers    Shinhan
Bank
   W 4,854      W  3,333      Nov 10, 2017

~ Oct. 31, 2020

KT Estate Inc.

   Daegu Beomeo-Crossroads

SeohanIDaum Buyers

   Shinhan
Bank
     8,172        5,663      Oct. 29, 2017

~ Nov. 30, 2020

KT Hitel Co., Ltd.

   KEB Hana Bank    Cash
payers
     683        —        Apr 19, 2019

~ Apr 17, 2020

KT Hitel Co., Ltd.

   Korea Software Financial Cooperative    Yonsei
University
and others
     34,715        1,713      Oct 22, 2018

~ Oct 22, 2021

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities incurred prior to spin-off. As at June 30, 2019, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of W2,649 million.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

For the six-month period ended June 30, 2019, the Group made agreements with the Securitization Specialty Companies (2019: Giga LTE Forty third to Forty fifth Securitization Specialty Co., Ltd., 2018: Giga LTE Thirty seventh to Forty second Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreement the Group will receive asset management fees upon liquidation of securitization Specialty Company.

As at June 30, 2019, the Group is a defendant in 184 lawsuits with the total claimed amount of W136,143 million (2018: W169,246 million). As at June 30, 2019, litigation provisions of W14,513 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated at the end of the reporting period.

In December 2013, Asia Broadcast Satellite Holdings Ltd. (“ABS”) filed a request for meditation to the International Chamber of Commerce (“ICC”) for the compensation of damages from the ownership of the satellite Koreasat-3 (“K3”) and the alleged breach of the entrustment control contract related to K3, which was made and entered into with the Controlling Company and its subsidiary, KT Sat Co., Ltd. In addition, ABS filed a suit against the Controlling Company and KT Sat Co., Ltd., a subsidiary, at International Centre for Dispute Resolution of the American Arbitration Association on December 24, 2013, for the compensation of damages from the relocation of ground equipment and the alleged breach of the entrustment control contract related to K3. These two meditations were merged into one procedure by ICC and still in progress and, in July 2017, the ICC issued a partial ruling that ABS has the ownership of K3. However, in October 2017, the Controlling Company and its subsidiary, KT Sat Co., Ltd. filed a lawsuit seeking the cancellation of the partial ruling in the Federal Court of New York. In April and July 2018, ICC and the Federal Court of New York issued the ruling that KT Sat Co., Ltd. should pay compensation for damages and dismissed the partial ruling. As a result, the Controlling Company and KT Sat Co., Ltd. is planning to file an appeal for the cancellation of the partial ruling and payment of compensation for damages. The outcome of the appeal cannot be reasonably estimated at the end of the reporting period.

According to the financial and other covenants included in certain debentures and borrowings, the Group is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restriction on provision of additional collateral and disposal of certain assets.

At the end of the reporting period, the Group is offering construction completion guarantee agreement to development of Nonsan Hwagidong apartment complex. If a contingent event occurs in between November 24, 2017 and to August 9, 2019, the Group collaterally guarantees the debt of AbleNS 1st Co. up to W6,000 million.

At the end of the reporting period, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

The Group is jointly and severally obligated with Bohoon Construction Co., Ltd. to pay the defect repair guarantee of Bohoon Construction Co., Ltd. in connection with the construction of the Poseung National Industrial Complex in Pyeongtaek, Gyeonggi Province. As at June 30, 2019, the Group and Bohoon Construction Co., Ltd. are jointly and severally liable for reimbursement of W140 million.

At the end of the reporting period, contract amount of property and equipment acquisition agreement made but not yet recognized amounts to W843,749 million (December 31, 2018: W1,474,009 million).

 

17.

Retained Earnings

Details of retained earnings as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Legal reserve1

   W 782,249      W 782,249  

Voluntary reserves2

     4,651,362        4,651,362  

Unappropriated retained earnings

     6,005,289        5,895,248  
  

 

 

    

 

 

 

Total

   W 11,438,900      W 11,328,859  
  

 

 

    

 

 

 

 

1 

The Commercial Code of the Republic of Korea requires the Controlling 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 share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital with the approval of the Controlling Company’s Board of Directors or used to reduce accumulated deficit, if any, with the ratification of the Controlling Company’s majority shareholders.

2 

The provision of research and development of human resources is separately accumulated with tax reserve fund during earned surplus disposal by Tax Reduction and Exemption Control Act of Korea. Reversal of this provision can be paid out as dividends according to related tax law.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

18.

Other Components of Equity

The Group’s other components of equity as at June 30, 2019 and December 31, 2018, are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Treasury stock

   W (830,658    W (830,874

Gain or loss on disposal of treasury stock

     2,918        (12,251

Share-based payments

     8,773        5,956  

Equity transaction within consolidated entities 1

     (343,585      (343,914
  

 

 

    

 

 

 

Total

   W (1,162,552    W (1,181,083
  

 

 

    

 

 

 

 

1

Profit or loss from transactions with non-controlling interest and investment difference from change in proportion of subsidiaries are included.

As at June 30, 2019 and December 31, 2018, the details of treasury stock are as follows:

 

     June 30, 2019      December 31, 2018  

Number of shares (in shares)

     15,962,870        15,967,040  

Amounts (in millions of Korean won)

   W 830,658      W 830,874  

Treasury stock is expected to be used for the stock compensation for the Group’s directors and employees and other purposes.

 

19.

Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities

The Group has recognized the following amounts relating to revenue in the statement of profit or loss for the three-month and six-month periods ended December 31, 2019 and 2018:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Revenue from contracts with customers

   W 6,049,702      W 11,830,312      W 5,754,635      W 11,413,710  

Revenue from other sources

     48,831        102,598        52,303        103,429  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,098,533      W 11,932,910      W 5,806,938      W 11,517,139  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating revenues for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Services provided

   W 5,150,178      W 10,124,859      W 5,008,487      W 9,868,350  

Sales of goods1

     948,355        1,808,051        798,451        1,648,789  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,098,533      W 11,932,910      W 5,806,938      W 11,517,139  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1 

The amounts include revenue from construction commitment recognized using percentage of completion method.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

Revenues from services provided are recognized over time, and sales of goods are recognized at a point of time.

The contract assets and liabilities recognized in relation to the revenues from contracts with customers are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Contract assets

   W 489,075      W 398,797  

Contract liabilities

     347,112        347,461  

Deferred revenue1

     94,075        96,198  

 

1 

Deferred revenue recognized relating to government grant is excluded.

The contract costs recognized as assets are as follows:

 

(in millions of Korean won)    June 30, 2019      December 31, 2018  

Contract costs recognized as assets

   W 1,568,629      W 1,469,855  

The Group recognized W772,703 million (the six-month period ended June 30, 2018: W666,494 million) of operating expenses in the current reporting period which relates to contract cost assets.

For three-month and six-month periods ended June 30, 2019 and 2018, the recognized revenue arising from carried-forward contract liabilities from prior year is as follows:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Revenue recognized that was included in the contract liability balance at the beginning of the year

           

Allocation of the transaction price

   W 74,198      W 157,724      W 49,215      W 106,758  

Deferred revenue of joining/installment fee

     11,470        24,207        10,278        20,011  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 85,668      W 181,931      W 59,493      W 126,769  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

20.

Operating Expenses

Operating expenses for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Salaries and wages

   W 1,006,133      W 1,989,930      W 987,493      W 1,909,606  

Depreciation

     616,554        1,244,230        669,655        1,348,658  

Depreciation of right-of-use asset

     121,796        237,106        —          —    

Amortization of intangible assets

     164,691        329,140        152,406        305,217  

Commissions

     270,179        488,214        259,715        528,057  

Interconnection charges

     132,139        271,846        155,294        311,998  

International interconnection fee

     55,654        111,145        57,764        113,499  

Purchase of inventories

     1,103,297        2,025,577        798,033        2,010,291  

Changes of inventories

     38,788        76,356        121,548        (136,725

Sales commission

     588,637        1,136,976        430,926        862,066  

Service cost

     388,240        764,334        381,843        735,464  

Utilities

     72,556        149,035        73,792        150,679  

Taxes and dues

     66,212        130,690        73,881        137,516  

Rent

     39,068        75,916        116,406        230,973  

Insurance premium

     19,874        38,108        16,750        35,619  

Installation fee

     37,654        77,197        34,691        70,183  

Advertising expenses

     45,294        74,773        39,648        84,336  

Research and development expenses

     40,360        80,408        40,340        83,728  

Card service cost

     763,435        1,502,652        777,078        1,513,059  

Others

     239,716        438,931        220,526        426,644  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 5,810,277      W 11,242,564      W 5,407,789      W 10,720,868  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of employee benefits for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Short-term employee benefits

   W 928,769      W 1,835,623      W 906,262      W 1,754,666  

Post-employment benefits

(defined benefit)

     58,873        118,522        54,733        109,139  

Post-employment benefits

(defined contribution)

     15,522        28,753        12,812        26,125  

Share-based payment

     1,489        2,978        1,622        3,242  

Others

     1,480        4,054        12,064        16,434  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 1,006,133      W 1,989,930      W 987,493      W 1,909,606  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2019 and 2018 (Unaudited), and December 31, 2018

 

 

 

21.

Other Income and Other Expenses

Other income for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows:

 

(in millions of Korean won)    2019      2018  
     Three months      Six months      Three months      Six months  

Gain on disposal of property and equipment and investment properties

   W 2,625      W 10,230      W 10,523      W 32,288  

Gain on disposal of intangible assets

     970        1,226        2,993        3,824  

Gain on disposal of right-of-use assets

     1,392        2,665        —          —    

Gain on disposal of investments in associates

     3,708        3,689        —          —    

Compensation on property and equipment

     42,897        62,668        36,629        56,423  

Gain on government subsidies

     3,509        6,976        2,682        6,680  

Others

     13,542        45,258        8,638        15,267  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 68,643      W 132,712      W 61,465      W 114,482  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other expenses for the three-month and six-month periods ended June 30, 2019 and 2018, are as follows: