Hanwha Corporation and Subsidiaries

Transcription

Consolidated Financial Statements
December 31, 2013 and 2012
Index
December 31, 2013
Page(s)
Report of Independent Auditors ……………………………………...……………………….
1~2
Consolidated Financial Statements
Consolidated Statements of Financial Position ……………………………………...………..
3~4
Consolidated Statements of Comprehensive Income ……………………………………......
5
Consolidated Statements of Changes in Equity ……………………………………...………...
6
Consolidated Statements of Cash Flows ……………………………………………………….
7~8
Notes to Consolidated Financial Statements …………………………………………………...
9 ~ 282
Report of Independent Auditors
To the Shareholders and Board of Directors of
Hanwha Corporation
We have audited the accompanying consolidated statements of financial position of Hanwha
Corporation and its subsidiaries (“the Group”) as of December 31, 2013 and 2012, and the related
consolidated statements of comprehensive income, changes in equity and cash flows for the years
then ended, expressed in Korean won. These financial statements are the responsibility of the
Group's management. Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of certain subsidiaries, including Hanwha Life
Insurance Co., Ltd., whose financial statements represent 86% and 76% of the Group’s consolidated
total assets as of December 31, 2013 and December 31, 2012, respectively, and 62% and 51% of the
Group's consolidated total sales for the respective years ended, and associates, Yeochun NCC Co.,
Ltd. and Hanwha Investments & Securities Co., Ltd., whose financial statements represent 0.6% of
the Group's consolidated total assets as of December 31, 2013. These statements were audited by
other auditors whose reports have been furnished us and our opinion, insofar as it relates to the
amounts included for the subsidiaries and the associates referred to above, is based solely on the
reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of
Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits and the reports of the other auditors provide a reasonable basis for our opinion.
92 Hangang-daero, Yongsan-gu, Seoul 140-702, Korea (Yongsan P.O Box 266, 140-600) www.samil.com
Samil PricewaterhouseCoopers is the Korean network firm of PricewaterhouseCoopers International Limited (PwCIL). “PricewaterhouseCoopers”
and “PwC” refer to the network of member firms of PwCIL. Each member firm is a separate legal entity and does not act as an agent of PwCIL or
any other member firm.
In our opinion, based on our audits and the reports of other auditors, the consolidated financial
statements, referred to above, present fairly, in all material respects, the financial position of Hanwha
Corporation and its subsidiaries as of December 31, 2013 and 2012, and their financial performance
and cash flows for the years then ended, in accordance with International Financial Reporting
Standards as adopted by the Republic of Korea (“Korean IFRS”).
The accompanying consolidated financial statements as of and for the years ended December 31,
2013 and 2012, have been translated into US dollars solely for the convenience of the reader and
have been translated on the basis set forth in Note 3 to the consolidated financial statements.
Auditing standards and their application in practice vary among countries. The procedures and
practices used in the Republic of Korea to audit such financial statements may differ from those
generally accepted and applied in other countries. Accordingly, this report is for use by those who are
informed about Korean auditing standards and their application in practice.
Seoul, Korea
March 13, 2014
This report is effective as of March 13, 2014, the audit report date. Certain subsequent events or
circumstances, which may occur between the audit report date and the time of reading this report, could have
a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the
readers of the audit report should understand that there is a possibility that the above audit report may have
to be revised to reflect the impact of such subsequent events or circumstances, if any.
2
Consolidated Statements of Financial Position
December 31, 2013 and 2012 and January 1, 2012
(in thousands)
Notes
Assets
Current assets
Cash and cash equivalents
Available-for-sale financial assets
Trade and other receivables
Other financial assets
Other current assets
Current income tax assets
Inventories
Assets classified as held for sale
(included assets of disposal group)
5,6
5,7
5,8,59
5,9,10
11
50
12
\
5,7
5,8,59
5,9,10
43
14
15
16,17
11
50
Assets for financial business
Deposits
Securities
Investments in associates
Loans and non-trade receivables
Property, plant and equipment
Investment property
Intangible assets
Derivative financial assets
Deferred income tax assets
Other assets
Separate account assets
26,27
26,27
26,28
43
26,29
33
33
33
26,31
50
50
26,29,30
32
37
\
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings and debentures
Other financial liabilities
Other current liabilities
Provisions for other liabilities and charges
Current income tax liabilities
Liabilities of disposal group classified
as held-for-sale
1,350,376,230
709,987
4,441,368,349
404,802,277
692,692,032
7,030,767
2,506,671,505
13
Non-current assets
Investment property
Intangible assets
Other non-current assets
5,18
5,19
5,10,20
21
23
50
Korean Won
December 31, 2012
December 31, 2013
\
\
January 1, 2012
1,232,709,840
10,508,906
3,534,550,006
198,122,957
632,047,062
5,386,343
2,129,032,678
\
1,224,169,393
7,043,631
3,545,019,959
308,209,507
684,944,716
958,490
2,000,143,906
56,794,013
113,440,542
15,407,791
9,460,445,160
7,855,798,334
7,785,897,393
146,368,625
33,800,232
218,408,556
889,752,473
1,105,753,776
8,879,905,825
622,816,650
55,283,559
70,355,698
12,022,445,394
134,251,192
326,455,289
430,371,113
983,042,696
1,398,637,809
8,727,545,251
667,433,781
49,599,302
91,653,258
12,808,989,691
113,352,427
119,288,439
323,704,447
1,167,357,599
1,409,439,496
8,302,964,583
499,720,119
55,902,645
84,019,453
12,075,749,208
327,550,074
667,771,466
43,820,824,901
147,745,101
20,379,573,157
1,579,853,482
2,642,048,649
366,798,137
149,123,577
25,455,068
1,066,375
1,845,461,975
3,509,119,901
16,377,327,256
91,839,719,119
113,322,609,673
577,064,332
2,271,998,921
37,843,339,048
133,992,077
18,122,099,183
1,594,144,794
2,493,858,794
362,416,912
107,972,643
16,185,156
9,344,907
1,599,533,959
3,467,604,909
14,821,304,463
83,420,860,098
104,085,648,123
332,786,785
3,565,406,741
32,124,134,342
95,155,723
15,967,117,676
1,616,397,692
2,195,071,295
379,051,928
13,985,241
21,228,963
5,604,272
1,699,567,038
3,276,529,610
12,714,557,775
74,006,595,081
93,868,241,682
2,850,834,541
4,732,458,317
310,709,782
977,276,633
80,557,173
120,614,028
13
\
\
2,628,456,630
4,829,485,362
332,827,180
907,252,482
74,639,783
62,720,429
\
\
2,657,573,003
4,834,682,839
288,889,450
1,045,464,011
62,857,068
118,222,385
2,723,014
-
-
9,075,173,488
8,835,381,866
9,007,688,756
13,642,813
5,693,204,714
470,752,509
1,132,232,752
726,631,060
77,342,547
929,608,368
9,043,414,763
36,676,978
4,843,225,437
504,857,494
1,249,440,011
697,179,153
108,452,460
1,049,348,859
8,489,180,392
25,726,241
4,582,173,017
505,888,641
430,281,859
568,069,821
51,426,161
1,069,402,430
7,232,968,170
Non-current liabilities
Other non-current liabilities
Net defined benefit liabilities
Deferred income tax liabilities
5,18
5,19
5,10,20
21
22
23
50
Liabilities for financial business
Withheld liabilities
Insurance contract liabilities
Policyholder's equity adjustments
Derivative financial liabilities
Other liabilities
Separate account liabilities
38
34,35
36
50
50
26,31
39
40
26,41
42
35,37
657,650,158
64,810,093,245
264,297,971
58,257,578
173,858,381
31,369,456
110,772,041
13,273,559
1,323,095,410
182,763,095
16,802,634,391
84,428,065,285
102,546,653,536
655,831,941
57,955,756,684
466,717,477
2,016,417
436,911,645
18,659,544
161,741,407
13,472,138
1,375,477,892
140,413,863
14,948,129,868
76,175,128,876
93,499,691,134
555,131,993
51,101,249,243
419,143,080
164,750,806
442,575,582
63,543,253
111,909,354
14,721,104
1,107,696,763
97,783,282
13,128,477,968
67,206,982,428
83,447,639,354
51
52
53
54
55
377,190,145
472,849,561
38,711,211
32,862,111
3,378,452,217
4,300,065,245
6,475,890,892
10,775,956,137
113,322,609,673
377,190,145
477,791,021
33,575,198
116,752,953
3,275,282,805
4,280,592,122
6,305,364,867
10,585,956,989
104,085,648,123
377,190,145
478,874,886
45,814,366
150,474,520
3,050,732,944
4,103,086,861
6,317,515,467
10,420,602,328
93,868,241,682
Total liabilities
Equity attributable to owners of the Parent
Capital stock
Capital surplus
Capital adjustments
Accumulated other comprehensive income
Retained earnings
Non-controlling interest
Total equity
Total liabilities and equity
64
\
\
The accompanying notes are an integral part of these consolidated financial statements.
3
\
Consolidated Statements of Financial Position
December 31, 2013 and 2012 and January 1, 2012
(in thousands)
Notes
Assets
Current assets
Inventories
(included assets of disposal group)
5,6
5,7
5,8,59
5,9,10
11
50
12
US Dollars (Note 3)
December 31, 2012
December 31, 2013
$
1,279,614
673
4,208,631
383,590
656,393
6,662
2,375,317
13
January 1, 2012
1,168,113
9,958
3,349,332
187,741
598,926
5,104
2,017,467
$
1,160,020
6,675
3,359,253
292,059
649,052
908
1,895,332
53,818
107,496
14,600
8,964,698
7,444,137
7,377,899
Non-current assets
Investment property
Intangible assets
5,7
5,8,59
5,9,10
43
14
15
16,17
11
50
138,699
32,029
206,963
843,128
1,047,810
8,414,580
590,180
52,388
66,669
11,392,446
127,216
309,348
407,819
931,529
1,325,346
8,270,203
632,459
47,000
86,850
12,137,770
107,413
113,037
306,742
1,106,186
1,335,582
7,867,871
473,534
52,973
79,617
11,442,955
Deposits
Securities
Investment property
Intangible assets
Other assets
26,27
26,27
26,28
43
26,29
33
33
33
26,31
50
50
26,29,30
32
37
310,386
632,779
41,524,519
140,003
19,311,639
1,497,066
2,503,600
347,577
141,309
24,121
1,010
1,748,756
3,325,234
15,519,120
87,027,119
107,384,263
546,825
2,152,941
35,860,266
126,971
17,172,462
1,510,608
2,363,175
343,425
102,315
15,337
8,855
1,515,715
3,285,895
14,044,636
79,049,426
98,631,333
315,348
3,378,572
30,440,760
90,169
15,130,406
1,531,695
2,080,045
359,189
13,252
20,117
5,311
1,610,506
3,104,832
12,048,287
70,128,489
88,949,343
$
Total assets
Liabilities
Current liabilities
Liabilities of disposal group classified
as held-for-sale
5,18
5,19
5,10,20
21
23
50
$
2,701,445
4,484,467
294,428
926,065
76,336
114,294
13
$
$
2,490,720
4,576,410
315,386
859,710
70,728
59,434
$
$
2,518,310
4,581,335
273,751
990,679
59,563
112,027
2,580
-
-
8,599,615
8,372,388
8,535,665
5,18
5,19
5,10,20
21
22
23
50
12,928
5,394,868
446,084
1,072,902
688,554
73,290
880,895
8,569,521
34,755
4,589,430
478,402
1,183,967
660,645
102,769
994,361
8,044,329
24,378
4,342,057
479,379
407,734
538,302
48,731
1,013,363
6,853,944
Policyholder's equity adjustments
Other liabilities
38
34,35
36
50
50
26,31
39
40
26,41
42
35,37
623,188
61,413,904
250,448
55,205
164,748
29,726
104,967
12,578
1,253,763
173,187
15,922,140
80,003,854
97,172,990
621,465
54,918,750
442,260
1,911
414,017
17,682
153,266
12,766
1,303,400
133,056
14,164,816
72,183,389
88,600,106
526,042
48,423,433
397,179
156,118
419,384
60,213
106,045
13,950
1,049,652
92,660
12,440,517
63,685,193
79,074,802
51
52
53
54
55
357,425
448,071
36,683
31,140
3,201,414
4,074,733
6,136,540
10,211,273
107,384,263
357,425
452,754
31,816
110,635
3,103,649
4,056,279
5,974,948
10,031,227
98,631,333
357,425
453,781
43,414
142,589
2,890,868
3,888,077
5,986,464
9,874,541
88,949,343
Total liabilities
Capital stock
Capital surplus
Capital adjustments
Retained earnings
Total equity
64
$
$
$
The US dollars figures are provided for information purposes only and do not form part of the audited consolidated financial statements. Refer to Note 3.
4
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2013 and 2012
(in thousands, except per share amounts)
Revenue
Revenue from non-financial business
Revenue from financial business
Cost of sales
Cost of sales from non-financial business
Cost of sales from financial business
44
44
2013
\
\
17,156,329,852
18,495,644,601
35,651,974,453
$
18,333,585
18,362,111
36,695,696
$
16,257,301
17,526,433
33,783,734
15,111,667,991
17,594,260,697
32,705,928,688
2,946,045,765
16,235,026
17,838,943
34,073,969
2,621,727
14,319,784
16,672,283
30,992,067
2,791,667
46,47
1,902,975,864
1,719,939,236
1,803,256
1,629,811
863,732,422
1,226,106,529
818,471
1,161,856
623,869,200
688,092,374
51,546,139
467,454,459
20,832,606
581,493,599
585,920,662
60,173,154
492,062,256
22,936,129
591,177
652,035
48,845
442,959
19,741
551,022
555,217
57,020
466,277
21,734
404,433,534
812,726,493
383,240
770,138
179,764,803
316,220,329
170,345
299,650
44,48
48
49
49
Profit before income tax
Income tax expense
19,347,432,766
19,377,535,548
38,724,968,314
17,132,822,518
18,825,437,510
35,958,260,028
2,766,708,286
Operating profit
Other gains
Other losses
Finance income
Finance costs
Share in profit of associates
2012
45,47
45,47
Gross profit
Selling and administrative expenses
US Dollars (Note 3)
2013
2012
Korean Won
Notes
50
Profit for the year
\
224,668,731
\
496,506,164
$
212,895
$
470,488
Profit attributable to:
Equity holders of the Parent Company
Profit for the year
\
130,004,330
\
286,553,250
$
123,192
$
271,537
\
94,664,401
\
209,952,914
$
89,703
$
198,951
Non-controlling interests
Profit for the year
Other comprehensive income
1. Items that may be reclassified
subsequently to profit or loss:
Change in value of available-for-sale
financial assets
Share in other comprehensive
income of associates
Gain (loss) on valuation of
derivatives qualifying cash flow hedge
Translation of foreign currency
financial statements
2. Items that will not be reclassified to profit
or loss:
Remeasurements of the net defined
benefit liabilities
Other comprehensive income of
separate accounts
Other comprehensive income (loss)
for the year, net of tax
(193,377,059)
(50,060,802)
(183,243)
(47,437)
5,7,54
(208,495,221)
72,293,563
(197,568)
68,505
54
10,589,273
(16,955,245)
10,034
(16,067)
31,54
(185,484)
54
211,461
(176)
200
4,714,373
(105,610,581)
4,467
(100,075)
35,687,324
(85,713,579)
33,817
(81,222)
22
59,537,281
(96,495,186)
56,417
(91,439)
54
(23,849,957)
10,781,607
(22,600)
10,217
(157,689,735)
(135,774,381)
(149,426)
(128,659)
Total comprehensive income
for the year
Attributable to:
Equity holders of the Parent Company
Total comprehensive income
for the year
\
66,978,996
\
360,731,783
$
63,469
$
341,829
\
79,925,317
(12,946,321)
\
198,739,766
161,992,017
$
75,737
(12,268)
$
188,326
153,503
\
66,978,996
\
360,731,783
$
63,469
$
341,829
\
\
1,869
1,919
\
\
4,119
4,169
$
$
1.77
1.82
$
$
3.90
3.95
Earnings per share
attributable to the equity holders
of the Parent Company during the year
Basic earnings per common share
Basic earnings per preferred share
56
56
5
Consolidated Statements of Changes in Equity
(in thousands)
Capital Stock
Balance at January 1, 2012
Comprehensive income :
Profit for the year
financial assets
benefit liabilities
Other comprehensive income of separate
accounts
Transactions with equity holders of
the Parent :
Dividends
Paid in capital increase of subsidiaries
Capital transaction within the Group
Other changes in Equity
Balance at December 31, 2012
Profit for the year
financial assets
benefit liabilities
accounts
the Parent :
Dividends
\
Capital Surplus
377,190,145
\
Korean Won
Accumulated Other
Comprehensive
Income
Capital
Adjustments
478,874,886
\
45,814,366
\
150,474,520
Retained
Earnings
\
Non-Controlling
Interest
3,050,732,944
\
6,317,515,467
Total
Equity
\
10,420,602,328
-
-
-
-
286,553,250
209,952,914
-
-
-
22,860,618
-
49,432,945
72,293,563
-
-
-
(15,501,314)
-
(1,453,931)
(16,955,245)
-
-
-
(88,744)
-
300,205
211,461
-
-
-
(45,793,278)
-
(59,817,303)
(105,610,581)
-
-
-
-
(54,091,917)
(42,403,269)
(96,495,186)
-
-
-
4,801,151
-
5,980,456
10,781,607
\
377,190,145
\
(2,816,659)
1,732,794
477,791,021
\
(12,239,168)
33,575,198
\
116,752,953
\
(31,325,078)
23,413,606
3,275,282,805
\
(132,154,437)
17,004,201
(41,987,995)
(17,004,386)
6,305,364,867
\
(163,479,515)
14,187,542
(41,987,995)
(4,097,154)
10,585,956,989
\
377,190,145
\
477,791,021
\
33,575,198
\
116,752,953
\
3,275,282,805
\
6,305,364,867
\
10,585,956,989
\
-
-
-
-
130,004,330
94,664,401
224,668,731
-
-
-
(86,667,326)
-
(121,827,895)
(208,495,221)
-
-
-
12,305,233
-
(1,715,960)
10,589,273
-
-
-
(304,035)
-
118,551
(185,484)
-
-
-
1,257,236
-
3,457,137
4,714,373
-
-
-
-
33,811,829
25,725,452
59,537,281
-
-
-
(10,481,950)
-
(13,368,007)
(23,849,957)
377,190,145
(7,471,804)
(19,691,586)
22,221,930
472,849,561
5,136,013
38,711,211
32,862,111
(31,325,078)
(29,321,669)
3,378,452,217
(86,221,249)
97,069,728
142,289,015
30,334,853
6,475,890,893
(117,546,327)
89,597,924
122,597,429
28,371,127
10,775,956,138
\
\
(in thousands)
Capital Stock
$
$
357,425
Profit for the year
financial assets
benefit liabilities
accounts
the Parent :
Dividends
$
357,425
357,425
$
453,781
$
\
\
US Dollars (Note 3)
Accumulated Other
Comprehensive
Income
Capital
Adjustments
Capital Surplus
Profit for the year
financial assets
benefit liabilities
accounts
the Parent :
Dividends
$
496,506,164
43,414
$
142,589
Retained
Earnings
$
\
\
Non-Controlling
Interest
2,890,868
$
5,986,464
Total
Equity
$
9,874,541
-
-
-
-
271,537
198,951
-
-
-
21,663
-
46,842
470,488
68,505
-
-
-
(14,689)
-
(1,378)
(16,067)
-
-
-
(84)
-
284
200
-
-
-
(43,394)
-
(56,681)
(100,075)
-
-
-
-
(51,257)
(40,182)
(91,439)
-
-
-
4,550
-
5,667
10,217
-
$
(2,669)
1,642
452,754
$
(11,598)
31,816
$
110,635
$
(29,684)
22,185
3,103,649
$
(125,229)
16,113
(39,788)
(16,115)
5,974,948
$
(154,913)
13,444
(39,788)
(3,886)
10,031,227
$
452,754
$
31,816
$
110,635
$
3,103,649
$
5,974,948
$
10,031,227
-
-
-
-
123,192
89,703
212,895
-
-
-
(82,126)
-
(115,442)
(197,568)
-
-
-
11,660
-
(1,626)
10,034
-
-
-
(288)
-
112
(176)
-
-
-
1,191
-
3,276
4,467
-
-
-
-
32,040
24,377
56,417
-
-
-
(9,932)
-
(12,668)
(22,600)
357,425
(7,080)
(18,660)
21,057
448,071
4,867
36,683
31,140
(29,684)
(27,783)
3,201,414
(81,703)
91,983
134,833
28,747
6,136,540
(111,387)
84,903
116,173
26,888
10,211,273
$
$
$
$
$
6
$
Consolidated Statements of Cash Flows
(in thousands)
Korean Won
Notes
2013
2012
Cash flows from operating activities
Cash generated from operations
Interest and dividends received from financial business
Interest paid for financial business
Income tax paid
Net cash generated from operating activities
\
61
3,610,496,050
3,062,438,124
(50,314,043)
(218,453,455)
6,404,166,676
\
4,398,863,403
3,027,613,464
(49,111,751)
(646,715,402)
6,730,649,714
Cash flows from investing activities
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Proceeds from disposal of intangible assets
Acquisition of investments in associates
Proceeds from disposal of investments in associates
Change in held-to-maturity financial assets
Change in available-for-sale financial assets
Acquisition of investment property
Proceeds from disposal of investment property
Proceeds from disposal of assets classified as held for sale
Change in other financial assets
Interest received
Dividends received
Increase(Decrease) in cash from changes in scope of consolidation
Other
Net cash used in investing activities
(1,020,055,445)
154,853,241
(59,830,571)
19,725,220
(22,309,073)
538,588
(4,794,620,560)
(1,223,716,611)
(275,346,354)
133,284,394
50,150,477
(229,157,750)
47,239,534
93,503,272
(14,862,702)
(12,208,156)
(7,152,812,496)
(1,117,836,009)
72,928,464
(42,896,406)
9,443,059
(76,272,679)
90,736,484
(3,370,900,177)
(1,410,664,281)
(264,627,876)
5,056,679
10,543,579
8,303,807
57,547,803
157,090,053
11,347,146
(25,898,002)
(5,886,098,356)
6,671,874,199
(5,759,552,948)
50,554,502
121,109,200
(441,837,868)
(31,325,078)
610,822,007
8,541,018,536
(8,380,401,807)
32,266,638
(173,884,206)
(496,080,109)
(31,325,078)
(508,406,026)
Cash flows from financing activities
Increase in borrowings and debentures
Repayment of borrowings and debentures
Change in other financial liabilities
Change in non-controlling interests
Interest paid
Dividends paid
Net cash provided by(used in) financing activities
(137,823,813)
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gains(losses) on cash and cash equivalents
Cash and cash equivalents at the end of year
\
1,809,774,172
5,975,945
1,677,926,304
7
336,145,332
\
1,556,956,178
(83,327,338)
1,809,774,172
Consolidated Statements of Cash Flows
US Dollars (Note 3)
(in thousands)
Notes
2013
2012
Interest and dividends received from financial business
Income tax paid
Net cash provided by operating activities
$
61
3,421,298
2,901,960
(47,677)
(207,006)
6,068,575
$
4,168,353
2,868,960
(46,538)
(612,826)
6,377,949
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of investments in associates
Change in held-to-maturity financial assets
Change in available-for-sale financial assets
Acquisition of investment property
Proceeds from disposal of investment property
Proceeds from disposal of assets classified as held for sale
Change in other financial assets
Interest received
Dividends received
Increase(Decrease) in cash from changes in scope of consolidation
Other
(966,602)
146,739
(56,695)
18,692
(21,140)
510
(4,543,372)
(1,159,591)
(260,918)
126,300
47,522
(217,149)
44,764
88,603
(14,084)
(11,568)
(6,777,990)
(1,059,259)
69,107
(40,649)
8,948
(72,276)
85,982
(3,194,258)
(1,336,742)
(250,761)
4,792
9,991
7,869
54,532
148,858
10,753
(24,541)
(5,577,654)
6,322,254
(5,457,740)
47,905
114,763
(418,685)
(29,684)
578,814
8,093,451
(7,941,251)
30,576
(164,772)
(470,084)
(29,684)
(481,764)
Increase in borrowings and debentures
Repayment of borrowings and debentures
Change in other financial liabilities
Change in non-controlling interests
Interest paid
Dividends paid
Net cash provided by(used in) financing activities
(130,602)
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gains(losses) on cash and cash equivalents
Cash and cash equivalents at the end of year
$
1,714,938
5,664
1,590,000
318,531
$
8
1,475,368
(78,961)
1,714,938
Notes to Consolidated Financial Statements
1. General Information
Hanwha Corporation (the “Company”) was established on October 28, 1952, and is engaged in
the manufacturing and selling of explosives and trading business. The Company has
manufacturing facilities in the cities of Yeosu, Daejeon, Boeun, Gumi and several business
offices.
On June 25, 1976, the Company listed its stock on the Korea Exchange. After numerous capital
increases, the capital stock of the Company as of December 31, 2013, amounted to ￦ 377,190
million. As of December 31, 2013, the Company’s major stockholders consist of:
Number of shares
Percentage of
ownership
Kim Seung-Youn
16,977,949
22.51%
Kim Dong-Kwan
3,330,000
4.41%
Hanwha S&C Co., Ltd.
1,650,000
2.19%
Cheonan Bukil Institute and others
5,059,748
6.71%
42,540,332
56.39%
69,558,029
92.21%
Others
Treasury stock
5,880,000
7.79%
75,438,029
100.00%
The Company’s consolidated subsidiaries as of December 31, 2013 and 2012, are as follows:
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
Gyeonggi Hwasung
BioValley Co., Ltd.
100
100
Korea
December 31
Real estate
Gunpo Ecotech Co., Ltd.
100
100
Korea
December 31
Water treatment
business
Gimhae Techno Valley
Co., Ltd.
80
80
Korea
December 31
Real estate
Subsidiaries
Agricultural Corporation
Company Green Tomorrow
90
90
Korea
December 31
Processing and
distribution of
agricultural
products,
livestocks, and
forest products
Daedeok techno valley
Co., Ltd.
65
65
Korea
December 31
Real estate
Dreampharma Corp.
100
100
Korea
December 31
Pharmaceutical
business
Seosan Techno Valley
65
65
Korea
December 31
Real estate
Asan Techno Valley
65
65
Korea
December 31
H Compound corporation
100
100
Korea
December 31
Eco E&O corporation
100
100
Korea
December 31
NHL Development Co., Ltd.
100
100
Korea
December 31
9
Real estate
Manufacture of
compound
Water treatment
and prevention of
environmental
pollution business
Shipping service
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
100
100
Korea
December 31
Aquarium business
operation
Yeongam Techno Solar
Power Corporation
95.24
-
Korea
December 31
Solar energy
generation
Yeongam Haeoreum Solar
Power Corpoation
93.75
-
Korea
December 31
Solar energy
generation
Ilsan Seaworld Co., Ltd.
90
92.97
Korea
December 31
Food1st Food Culture
Co., Ltd.
100
100
China
December 31
Hi-pass Solar Corporation
100
100
Korea
December 31
The Korean Peninsula Solar
Power Corporation
100
-
Korea
December 31
Hanwha 63 City Co., Ltd.
100
100
Korea
December 31
Hanwha Galleria Co., Ltd.
100
100
Korea
December 31
Hanwha Engineering and
Construction Corp.
100
100
Korea
December 31
Hanwha International
(Shanghai) Co., Ltd.
100
100
China
December 31
General trading
Hanwha TechM (Suzhou)
Co., Ltd.
100
-
China
December 31
Sales Machinery
Hanwha City Development
Co., Ltd.
100
100
Korea
December 31
Yeosu Sea World
Corporation
Aquarium business
operation
Institutional food
service
and restaurant
business
Solar energy
generation
Solar energy
generation
Real estate
management,
service, etc.
Department store
and wholesale,
retail
Engineering and
construction
services
Real estate
Food service,
wholesale and
retail sales
Life insurance
industry
Hanwha B&B Co., Ltd.
100
-
Korea
December 31
Hanwha Life Insurance
Co., Ltd.1,3
48.29
50.25
Korea
December 31
Hanwha General
Insurance Co., Ltd.1
52.99
57.89
Korea
December 31
Services for
insurance
Hanwha I&A Co., Ltd.1
100
100
Korea
December 31
Services for
insurance
Hanwha L&C Corporation
100
100
Korea
December 31
Synthetic resin
67.25
67.25
Korea
December 31
Leasing service
90
90
Korea
December 31
Sports club
operating
99.99
99.99
Korea
December 31
Asset management
100
100
Korea
June 30
Bank business
42.11
42.11
Korea
December 31
Synthetic resin and
other
petrochemicals
100
100
Korea
December 31
Holding company
Hanwha Station
Development Co., Ltd.
Hanwha Eagles
Professional
Baseball Club
Hanwha Asset
Management Co., Ltd.1
Hanwha Savings Bank
Co., Ltd.2
Hanwha Chemical
Corporation3
Hanwha Chemical Overseas
Holdings, Co., Ltd.
10
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
80
80
Korea
December 31
Solar total energy
solution supply
69.45
69.45
Korea
December 31
Department store
Hanwha Techm Co., Ltd.
100
100
Korea
December 31
Manufacture and
sales of machinery
Hanwha Tele Marketing &
Services Co., Ltd.
100
100
Korea
December 31
Insurance agent
and brokerage
99.98
99.98
Korea
December 31
Packaging
100
100
China
December 31
General trading
99.32
99.32
Korea
December 31
Tourism and lodge
industry
-
-
Korea
February 28,
May 31,
August 31,
November 30
Other financial
business
Environment Facilities
100
100
Korea
December 31
Acropark Golf Corp.
100
100
Japan
December 31
Amru and Hanwha
International
90
-
Cambodia
December 31
Grain wholesale
business
Chandler LLC.
90
90
USA
December 31
Real estate
development
Daiichi Q Solar K.K
100
-
Japan
December 31
Solar energy
generation
Eagle Petroleum Corsicana,
LLC
100
100
USA
December 31
Resources
development
Eagle Petroleum Monterey,
LLC
100
100
USA
December 31
Resources
development
Eagle Petroleum, LLC
100
100
USA
December 31
Resources
development
Garnet Solar Power
Generation 1, LLC
100
-
USA
December 31
Solar energy
generation
Hale Ali’I Park Association,
LLC
100
100
USA
December 31
Real estate
development
Hale Ka Lae, LLC
100
100
USA
December 31
Real estate
development
Hanwha Aerospace, LLC
100
100
USA
December 31
Holding company
Hanwha Agritech Ltd.
100
-
Hong Kong
December 31
Grain wholesale
business
Hanwha America
Development Inc.
100
100
USA
December 31
Holding company
Hanwha America
Development LLC.
100
100
USA
December 31
Real estate
development
Hanwha Azdel, Inc.
100
100
USA
December 31
Manufacture of car
parts
Hanwha Q CELLS Korea
Hanwha Timeworld Co., Ltd.
Hanwha Polydreamer
Co., Ltd.
Hanwha Trading (Shanghai)
Co., Ltd.
Hanwha Hotel &
Resort Inc.
Hanwha Hotels and Resorts
the first Asset Securitization
Co., Ltd.4
11
Incinerator
business
Management of
golf
course and resort
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
Hanwha Canada
Development Inc.
100
100
Canada
December 31
Resources
development
Hanwha Chandler LLC.
100
100
USA
December 31
Real estate
development
Hanwha Chemical (Ningbo)
Co., Ltd.
100
100
China
December 31
Manufacture of
compound
Hanwha Chemical (Thailand)
Co., Ltd.
99.99
99.99
Thailand
December 31
Manufacture of
compound
Hanwha Chemical Malaysia
Sdn. Bhd.
100
-
Malaysia
December 31
Sales
petrochemicals
Hanwha Development
Services LLC.
100
100
USA
December 31
Real estate
development
Hanwha Europe GmbH
100
100
Germany
December 31
General trading
Hanwha Greentech Limited.
80
80
Hong Kong
December 31
Reforestation
industry
Hanwha Hawaii LLC
100
100
USA
December 31
Real estate
development
Hanwha Holdings(USA), Inc.
100
100
USA
December 31
Holding company
Hanwha Hong Kong Co.,
Ltd.
100
100
Hong Kong
December 31
General trading
Hanwha Internacional do
Brasil Intermediacoes de
Negocios Ltda.
100
100
Brasil
December 31
General trading
Hanwha International (S) Pte
Ltd.
100
100
Singapore
December 31
General trading
Hanwha International Corp.
100
100
USA
December 31
Holding company
INDIA PVT., LT
100
-
India
December 31
General trading
Hanwha International LLC.
100
100
USA
December 31
General trading
Hanwha L&C Alabama LLC
100
100
USA
December 31
Manufacture of car
parts
Hanwha L&C Beijing Co.,
Ltd.
100
100
China
December 31
Manufacture of car
parts
Hanwha L&C Canada, Inc.
100
100
Canada
December 31
Manufacturing
Hanwha L&C Czech, s.r.o.
100
100
Czech
December 31
Manufacture of car
parts
Hanwha L&C Holdings USA
Inc.
100
100
USA
December 31
Holding company
LLC
100
100
USA
December 31
Holding company
Hanwha L&C Shanghai Co.,
Ltd.
100
100
China
December 31
Manufacturing
Hanwha L&C Trading
100
100
China
December 31
General trading
Hanwha L&C USA LLC
100
100
USA
December 31
Retail business
Company Limited(Vietnam)
100
100
Vietnam
December 31
Life insurance
industry
Hanwha Life Investment
(America) Ltd.
100
100
USA
December 31
Investment
12
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
Hanwha Machinery
Americas, Inc.
100
100
USA
December 31
Sales Machinery
Hanwha Machinery
Corporation
100
100
USA
December 31
Holding company
Hanwha Parcel O LLC
100
100
USA
December 31
Hanwha PVPLUS LLC
100
100
USA
December 31
Real estate
ESS(Energy
Storage System)
investment
Hanwha Q CELLS Americas
Holdings. Corp. (formerly
Hanwha SolarEnergy
America Holdings Corp)
100
100
USA
December 31
Solar total energy
solution supply
Hanwha Q CELLS Australia
Pty Ltd.
100
100
Australia
December 31
Photovoltaic
business
Hanwha Q CELLS Canada,
Inc
100
-
Canada
December 31
Solar energy
generation
Hanwha Q CELLS Gmbh
100
100
Germany
December 31
Photovoltaic
business
Hanwha Q CELLS
Investment Co., Ltd.
100
100
England
December 31
Holding company
Hanwha Q CELLS Japan
Co., Ltd. (formerly Hanwha
Japan Co., Ltd.)
100
100
Japan
December 31
General trading
Hanwha Q CELLS Malaysia
Sdn. Bhd.
100
100
Malaysia
December 31
Photovoltaic
business
Hanwha Q CELLS Solar
Power Sdn. Bhd.
100
-
Malaysia
December 31
EPC business
Hanwha Q CELLS USA
Corp. (formerly Komodo
Enterprise Inc.)
100
-
USA
December 31
Solar energy
generation
Hanwha Resources
(Australia) Pty Ltd.
100
100
Australia
December 31
Resources
development
Hanwha Resources
(Canada) Ltd.
100
100
Canada
December 31
Resources
development
Hanwha Resources (USA)
Corporation
100
100
USA
December 31
Resources
development
Hanwha Riverside LLC.
100
100
USA
December 31
Real estate
development
Hanwha Saudi Contracting
Co., Ltd.
100
100
Saudi Arabia
December 31
Construction
industry
Hanwha Solar America LLC
100
100
USA
December 31
Solar energy
Laboratory
Hanwha Solar Australia Pty
Ltd.
100
100
Australia
December 31
Photovoltaic
business
Hanwha Solar Canada Inc.
100
100
Canada
December 31
Photovoltaic
business
Hanwha Solar Electric Power
Engineering Co., Ltd.
100
100
China
December 31
Photovoltaic
business
13
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
Hanwha Solar Engineering
R&D center Co., Ltd.
100
100
China
December 31
Photovoltaic
business
Hanwha Solar Holdings
Co., Ltd
100
100
England
December 31
Holding company
Hanwha Solar Power Kitsuki
G.K.
62.18
-
Japan
December 31
Photovoltaic
business
Hanwha SolarOne Co., Ltd.5
48.62
49.47
England
December 31
Photovoltaic
business
Hanwha SolarOne
Deutschland GmbH
(formerly Hanwha
SolarOne GmbH)
100
100
Germany
December 31
Photovoltaic
business
Hanwha SolarOne Hong
Kong Limited
100
100
Hong Kong
December 31
Investment and
Procurement
Hanwha SolarOne
Investment Holding Ltd.
100
100
England
December 31
Holding company
Hanwha SolarOne
Technology Co., Ltd.
(formerly Hanwha Solar
Technology Co., Ltd.)
100
100
China
December 31
Manufacture of
silicon ingot
Hanwha SolarOne USA Inc.
100
100
USA
December 31
Photovoltaic
business
Hanwha SolarOne(Nantong)
Co., Ltd.
100
100
China
December 31
Photovoltaic
business
HanwhaSolarOne(Qidong)
Co., Ltd.
100
100
China
December 31
Manufacture of
silicon ingot
Hanwha SolarOne(Shanghai)
Co., Ltd. (formerly Hanwha
Solar Technology
(Shanghai) Co., Ltd.)
100
83
China
December 31
Photovoltaic
business
Hanwha Sonoran LLC.
100
100
USA
December 31
Hanwha TechM Hungary
Co., Ltd.
97.21
97.21
Hungary
December 31
Hanwha TechM USA LLC
100
-
USA
December 31
Hanwha Village Market, LLC
100
100
USA
December 31
Real estate
development
Hanwha West Properties
LLC
100
100
USA
December 31
Real estate
development
HQ MEX, LLC
100
-
USA
December 31
Solar energy
generation
HQ MEXICO HOLDINGS S
DE RL DE CV
100
-
USA
December 31
Solar energy
generation
HQC Maywood, LLC
100
-
USA
December 31
Solar energy
generation
HSEA HVES, LLC
100
-
USA
December 31
Solar energy
generation
HSEA PR Isla Solar I, LLC
100
-
USA
December 31
Solar energy
generation
14
Real estate
development
Lease business of
real estate and
supply of utility
Manufacture of car
parts
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
HSESM American Union LLC
100
-
USA
December 31
Solar energy
generation
HSESM LeGrand UHS LLC
100
-
USA
December 31
Solar energy
generation
HSESM PlanadaES LLC
100
-
USA
December 31
Solar energy
generation
Kalaeloa Renewable Energy
Park, LLC
100
-
USA
December 31
Solar energy
generation
Maxxsol 01 srl.
100
100
Italy
December 31
Solar heat power
generation
MC2 Engineering and
Construction Service, Inc.
100
100
USA
December 31
Photovoltaic
business
Nantong Hanwha Import &
Export Co., Ltd.
100
100
China
December 31
Photovoltaic
business
PT. Hanwha Life Insurance
(Indonesia) (formerly PT
Multicor Life Insurance
(Indonesia))
95.09
80
Indonesia
December 31
Life insurance
industry
PT. Hanwha Mining Services
Indonesia
100
-
Indonesia
December 31
Manufacture and
sales of explosives
S&P World Network JLT
100
100
Arab Emirates
December 31
General trading
58.77
58.77
USA
December 31
Solar Monkey 1, LLC
100
-
USA
December 31
Solar Monkey 2, LLC
100
-
USA
December 31
Sonoran Vista LLC.
90
90
USA
December 31
Tecsol srl.
100
100
Italy
December 31
Think Biotech (Cambodia)
Co., Ltd.
100
100
Cambodia
December 31
Three Rock Solar, LLC
60
-
USA
December 31
Universal Bearings LLC.
100
100
USA
December 31
Manufacture of
Bearings
World corporation
100
100
Saipan
December 31
Hotel industry
Dongbu Index Private equity
Investment Trust No.1
100
-
Korea
January 31
Collective
investment
schemes (Security)
Midas Private Equity
Investment Trust HW-1
100
-
Korea
March 31
Collective
investment
schemes (Security)
Mirae Asset Maps Global
New Recycling Energy
Private special asset
90
90
Korea
December 31
Collective
investment
Schemes (Special
asset)
Mirae Asset Triumph Private
Equity Investment Trust
No.2
100
-
Korea
March 31
Collective
investment
schemes (Security)
Silent Power Inc
Photovoltaic
business
Solar energy
generation
Solar energy
generation
Real estate
development
Solar heat power
generation
Forest
development and
reforestation
Solar energy
generation
Beneficiary certificates
15
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
Mirae Asset Triumph
middle/small investors'
private equity investment
Trust No.5
100
-
Korea
December 31
Collective
investment
schemes (Security)
Saneun Korea foreign bond
trust No.3
100
100
Korea
February 28,
May 31,
August 31,
November 30
Collective
investment
schemes (Security)
trust No.7
100
100
Korea
February 28,
May 31,
August 31,
November 30
Collective
investment
schemes (Security)
trust No.8
100
100
Korea
February 28,
May 31,
August 31,
November 30
Collective
investment
schemes (Security)
Shingyoung private equity
investment trust HW-4
100
-
Korea
March 31
Collective
investment
schemes (Security)
Shinhan BNPP global solar
energy private equity
investment Trust
90
90
Korea
the end of
every quarter
Aegis KORIF Private real
estate Trust 11-1
95.9
95.9
Korea
February 28,
August 31
estate Trust 11-2
95.9
95.9
Korea
February 28,
August 31
estate Trust 17-1
98.13
-
Korea
September 30
estate Trust 17-2
98.13
-
Korea
September 30
estate Trust 17-3
98.13
-
Korea
September 30
estate Trust 17-4
98.13
-
Korea
September 30
Truston Life Plan Private
equity investment Trust
No.1
100
-
Korea
December 31
Collective
investment
schemes (Security)
Pine Tree sol Three Private
No.2
100
100
Korea
March 31,
June 30,
September 30,
December 31
Collective
investment
Schemes (Real
estate)
No.3
100
100
Korea
the end of
every quarter
Collective
investment
Schemes (Real
estate)
16
Collective
investment
Schemes (Special
asset)
Collective
investment
Schemes (Real
estate)
Collective
investment
Schemes (Real
estate)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
Main business
No.5
97.09
97.1
Korea
the end of
every quarter
Collective
investment
Schemes (Real
estate)
No.6-2
98
-
Korea
March 31,
June 30,
September 30,
December 31
Hana HW Landchip Private
real estate feeder
investment trust No.1
98
-
Korea
26th of every
quarter
Korea Value Private equity
investment Trust No.19
100
-
Korea
December 31
100
-
Korea
March 31
100
100
Korea
November 30
74.99
75
Korea
December 31
95.54
95.5
Korea
September 30
98.85
-
Korea
April 30
98.85
-
Korea
December 31
84.91
84.9
Korea
the end of
every quarter,
June 30
Hanwha LTI Infra Private
special asset investment
Trust No.1
90
90
Korea
the end of
every quarter,
July 31
Hanwha Master Piece private
equity real estate No.7
100
100
Korea
May 31
Hanwha Tri-Circle Private
real estate Investment Trust
No.17
100
100
Korea
May 31,
November 30
Hanwha Tri-Circle Infra
Special asset No.1
80
80
Korea
the end of
every quarter,
June 30
Special asset No.3
80
80
Korea
the end of
every quarter,
July 31
Hyundai Vessel Private
Equity Special asset
95
95
Korea
February 28,
May 31,
August 31,
November 30
Korea Value private equity
security investment Trust
No.9
Hankook Investment Private
equity Global Prestige
Securities Trust No.1
Hawha Asia Pacific Longshort Specialized Private
Equity Investment Trust
NO.1
Hanwha Prudential U.S. Real
Estate Debt
Hanwha AI Global Choice
Private equity investment
Trust No.1
Hanwha AI Global Choice
Private equity investment
Trust No.2
Hanwha LTI Private special
asset investment Trust No.2
17
Collective
investment
Schemes (Real
estate)
Collective
investment
Schemes (Real
estate)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
Schemes (Real
estate)
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
Collective
investment
Schemes (Special
asset)
Collective
investment
Schemes (Special
asset)
Collective
investment
Schemes (Real
estate)
Collective
investment
Schemes (Real
estate)
Collective
investment
Schemes (Special
asset)
Collective
investment
Schemes (Special
asset)
Collective
investment
Schemes (Special
asset)
Percentage
of ownership
(2013)
Percentage
of ownership
(2012)
Location
Year end1
IBK Private equity investment
trust No.10
100
-
Korea
March 31
KB Dividend Equity Private
100
100
Korea
December 31
1
Main business
Collective
investment
schemes (Security)
Collective
investment
schemes (Security)
The reporting period of certain subsidiaries including Hanwha Life Insurance Co., Ltd. changed from March
31 to December 31 due to the amendment of enforcement ordinance of the Insurance Business Act.
2
The reporting period of Hanwha Savings Bank Co., Ltd., engaged in financial business, ends on June 30,
which is different from the Company’s reporting period. For consolidation purposes, however, additional
financial statements of the same period are prepared.
3
Although the percentage of ownership is less than 50%, the Company is considered to have control over
these companies, as the remaining shareholders who hold less than 1% are widely dispersed, and the
Company is able to exercise its majority voting rights in the decision-making process only with the Controlling
Company’s ownership interests resulting from the average attendance rate in the general meeting of
shareholders for the last five years.
4
Although the percentage of ownership is less than the majority, the Company is considered having control
over Hanwha Hotels and Resorts the first Asset Securitization Co., Ltd. since the Company has the current
ability to direct the activities of the investee that significantly affect the investee’s returns and is exposed to
variable returns from its involvement with the investee.
5
Although the percentage of ownership is less than the majority, the Company is considered to have control
over Hanwha SolarOne Co., Ltd., since the Company has control to substantially govern the financial and
operating key policies of the entity.
18
Summarized financial information of subsidiaries as of and for the years ended December 31, 2013
and 2012, are as follows:
(in millions)
Korean Won
2013
Assets
Gyeonggi Hwasung Bio
Valley Co., Ltd.
Liabilities
￦ 213,798
Equity
￦ 198,092
￦ 15,706
￦
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
-
￦
(7,471)
￦ (7,471)
6,809
2,729
4,080
1,007
470
470
Gimhae Techno Valley Co., Ltd.
Daedeok techno valley Co., Ltd.
225,950
205,858
20,092
6,232
(3,336)
(3,717)
3,790
27
3,763
354
73
73
5,027
-
5,027
-
96
96
Dreampharma Corp.
190,489
97,104
93,385
93,039
27,554
26,590
249,125
251,011
(1,886)
25,836
(5,076)
(5,056)
Asan Techno Valley
240,529
252,027
(11,498)
42,618
(8,569)
(8,355)
16,420
1,169
15,251
5,244
232
303
3,314
1,198
2,116
9,922
1,050
1,050
270,117
34,142
235,975
162,875
2,166
(1,257)
37,749
28,845
8,904
14,235
562
562
8,435
8,428
7
-
(34)
(34)
Eco E&O corporation
Yeosu Sea World Corporation
Yeongam Techno Solar Power
Corporation
Power Corpoation
Ilsan Seaworld,Co., Ltd.
Co., Ltd.
Power Corporation
6,919
6,915
4
-
(27)
(27)
55,303
50,170
5,133
-
(1,667)
(1,667)
3,903
3,114
789
11,601
(561)
(535)
11,597
11,339
258
-
(36)
(36)
99
1
98
-
(1)
(1)
47,713
23,118
24,595
130,050
3,180
3,515
Construction Corp.
Hanwha International (Shanghai)
Co., Ltd.
Co., Ltd.
1,703,966
915,797
788,169
367,471
17,701
19,831
5,190,791
3,830,832
1,359,959
3,768,371
68,714
23,713
5,873
27,336
(21,463)
2,489
(1,721)
(2,844)
258,555
70,848
187,707
-
(5,172)
(5,172)
10,951
2,146
8,805
1,253
3
24
Hanwha Life Insurance Co., Ltd.1
Hanwha General Insurance Co.,
Ltd. 2
Hanwha I&A Co., Ltd.
82,295,531
75,316,783
6,978,748
14,313,063
443,343
249,625
9,006,356
8,455,279
551,077
5,045,051
(50,825)
(78,968)
Hanwha Station Development
Co., Ltd.
Hanwha Eagles
Professional Baseball
Club
Hanwha Asset Management
Co., Ltd.
Hanwha Savings Bank
Co., Ltd.
Hanwha Chemical Corporation
11,153
7,249
3,904
40,648
884
(1,294)
1,134,751
768,804
365,947
1,267,473
16,103
18,494
467,644
369,449
98,195
60,737
12,462
12,472
10,415
6,141
4,274
43,026
(1,821)
(1,821)
121,351
9,771
111,580
50,835
13,303
12,921
759,327
728,765
30,562
58,073
9,107
9,162
6,824,768
3,302,757
3,522,011
3,591,399
98,497
50,783
19
(in millions)
Korean Won
2013
Assets
Holdings, Co., Ltd.
Services Co., Ltd.
Hanwha Polydreamer Co., Ltd
Hanwha Trading (Shanghai) Co.,
Ltd.
Hanwha Hotel & Resort Inc.
Hanwha Hotels and Resorts the
first Asset Securitization Co.,
Ltd.
Acropark Golf Corp.
Hanwha America Development
Inc.
Hanwha Canada Development
Inc.
Hanwha Chemical (Ningbo) Co.,
Ltd.
Co., Ltd.
Hanwha Chemical Malaysia Sdn.
Bhd.
Hanwha Europe GmbH3
Hanwha Holdings(USA), Inc.4
Hanwha Hong Kong Co., Ltd.
Hanwha Internacional do Brasil
Intermediacoes de Negocios
Ltda.
Hanwha International (S) Pte Ltd.
75,500
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
39
75,461
-
28
28
161,775
19,069
142,706
91,394
5,338
5,404
348,462
113,377
235,085
126,211
14,489
15,336
503,613
323,242
180,371
489,652
28,600
28,523
7,010
4,455
2,555
19,416
(805)
(847)
71,718
34,787
36,931
130,922
2,240
2,222
27,345
19,392
7,953
190,746
1,405
1,457
2,359,557
1,537,439
822,118
1,037,284
64,975
69,416
40,103
41,274
(1,171)
1,860
42
42
2,151
279
1,872
2,547
390
390
24,395
16,973
7,422
6,236
(41)
(1,370)
101,534
4,956
96,578
-
1,043
(426)
16,950
17,134
(184)
34,254
(197)
(184)
396,850
267,708
129,142
367,485
(23,782)
(23,142)
50,934
29,926
21,008
54,649
(2,389)
(4,191)
2,589
13
2,576
583
(563)
(734)
105,081
94,064
11,017
222,292
3,611
7,075
566,868
316,564
250,304
745,932
6,065
4,160
36,056
17,279
18,777
151,027
232
(555)
116
41
75
503
(397)
(421)
(7,831)
155,724
169,337
(13,613)
1,436,431
(8,213)
52,997
2,532
50,465
-
(33)
(788)
Hanwha L&C Beijing Co., Ltd.
42,412
10,222
32,190
39,663
5,199
5,427
62,856
58,522
4,334
35,832
1,156
797
41,544
26,103
15,441
49,639
2,201
1,258
Hanwha L&C Holdings USA Inc.
41,785
3,360
38,425
-
-
(575)
Hanwha L&C Shanghai Co., Ltd.
Hanwha L&C Trading (Shanghai)
Co., Ltd.
Hanwha Life Insurance Company
Limited. ( Vietnam )
(America) Ltd.
Hanwha Machinery Corporation
Holdings. Corp. 5
Hanwha Q CELLS Australia Pty
Ltd.
Hanwha Q CELLS Gmbh
Hanwha Q CELLS Investment
Co., Ltd.
44,795
22,140
22,655
48,644
3,266
3,440
16,558
15,709
849
22,488
(293)
(300)
50,004
25,396
24,608
18,067
(12,078)
(12,374)
11,608
22
11,586
730
22
139
48,318
-
48,318
-
-
(723)
134,524
90,918
43,606
60,616
(9,282)
(11,843)
7,440
5,736
1,704
21,652
(685)
(1,029)
587,051
269,483
317,568
606,187
(51,626)
(43,712)
348,906
-
348,906
-
(55)
(5,485)
20
(in millions)
Korean Won
2013
Assets
Co., Ltd.
Sdn. Bhd.
Hanwha Resources (Australia)
Pty Ltd.
Hanwha Resources (Canada)
Ltd.
Corporation 6
Co., Ltd.
Hanwha Solar Holdings Co., Ltd
Hanwha Solar Power
Kitsuki G.K.
Co., Ltd.
(Indonesia)
Co., Ltd.
World Corporation
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
286,005
231,366
54,639
833,382
10,171
1,383
224,087
255,509
(31,422)
266,784
63,567
64,491
16,097
1,123
14,974
657
657
(1,946)
3,113
10
3,103
-
(4,039)
(4,354)
84,093
46,260
37,833
10,536
(9,583)
(9,942)
173,810
208,511
(34,701)
261,749
(41,364)
(39,947)
807,944
-
807,944
-
(15)
(12,339)
13,246
-
13,246
-
-
-
1,543,592
1,214,497
329,095
841,474
(155,697)
(146,313)
10,168
143
10,025
1,294
(18)
63
13,624
1,474
12,150
1,596
(3,091)
(7,080)
105,374
90,710
14,664
296,735
8,176
7,779
5,806
8,579
(2,773)
23
(1,935)
(1,852)
41,033
3,680
37,353
25,606
3,930
3,286
21
(in millions)
US Dollars (Note 3)
2013
Assets
Gyeonggi Hwasung Bio
Valley Co., Ltd.
$
Liabilities
203
$
Equity
188
$
15
$
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
-
$
(7)
$
(7)
6
3
3
1
-
-
Gimhae Techno Valley Co., Ltd.
Daedeok techno valley Co., Ltd.
214
195
19
6
(3)
(4)
4
-
4
-
-
-
5
-
5
-
-
-
Dreampharma Corp.
181
92
89
88
26
25
236
238
(2)
24
(5)
(5)
Asan Techno Valley
228
239
(11)
40
(8)
(8)
16
1
15
5
-
-
Eco E&O corporation
Yeongam Techno Solar Power
Corporation
Power Corpoation
Co., Ltd.
Power Corporation
Construction Corp.
Hanwha International (Shanghai)
Co., Ltd.
Co., Ltd.
3
1
2
9
1
1
256
32
224
154
2
(1)
36
27
9
13
1
1
8
8
-
-
-
-
7
7
-
-
-
-
52
48
4
-
(2)
(2)
4
3
1
11
(1)
(1)
11
11
-
-
-
-
-
-
-
-
-
-
45
22
23
123
3
3
1,615
868
747
348
17
19
4,919
3,630
1,289
3,571
65
22
6
26
(20)
2
(2)
(3)
245
67
178
-
(5)
(5)
10
2
8
1
-
-
Hanwha Life Insurance Co., Ltd.1
77,983
71,370
6,613
13,563
420
237
Hanwha General Insurance Co.,
Ltd. 2
8,534
8,012
522
4,781
(48)
(75)
11
7
4
39
1
(1)
1,075
729
346
1,201
15
18
443
350
93
58
12
12
10
6
4
41
(2)
(2)
Hanwha Asset Management
Co., Ltd.
115
9
106
48
13
12
Hanwha Savings Bank
Co., Ltd.
720
691
29
55
9
9
6,467
3,130
3,337
3,403
93
48
Co., Ltd.
Hanwha Eagles
Club
22
(in millions)
US Dollars (Note 3)
2013
Assets
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
Holdings, Co., Ltd.
72
-
72
-
-
-
153
18
135
87
5
5
330
107
223
120
14
15
Services Co., Ltd.
Hanwha Polydreamer Co., Ltd
Hanwha Trading (Shanghai) Co.,
Ltd.
Hanwha Hotels and Resorts the
first Asset Securitization Co.,
Ltd.
477
306
171
464
27
27
7
4
3
18
(1)
(1)
68
33
35
124
2
2
26
18
8
181
1
1
2,236
1,457
779
983
62
66
38
39
(1)
2
-
-
2
-
2
2
-
-
23
16
7
6
-
(1)
96
5
91
-
1
-
16
16
-
32
-
-
376
254
122
348
(23)
(22)
48
28
20
52
(2)
(4)
2
-
2
1
(1)
(1)
89
11
211
3
7
300
237
707
6
4
16
18
143
-
(1)
-
-
-
-
-
-
148
160
(12)
1,361
(8)
(7)
Acropark Golf Corp.
Inc.
Inc.
Hanwha Chemical (Ningbo) Co.,
Ltd.
Co., Ltd.
Hanwha Chemical Malaysia Sdn.
Bhd.
Hanwha Europe GmbH3
100
Hanwha Holdings(USA), Inc.4
537
34
Hanwha Internacional do Brasil
Intermediacoes de Negocios
Ltda.
Hanwha International (S) Pte Ltd.
50
2
48
-
-
(1)
40
10
30
38
5
5
60
55
5
34
1
1
39
25
14
47
2
1
40
3
37
-
-
(1)
Hanwha L&C Trading (Shanghai)
Co., Ltd.
Hanwha Life Insurance Company
Limited. ( Vietnam )
(America) Ltd.
Hanwha Machinery Corporation
Holdings. Corp. 5
42
21
21
46
3
3
16
15
1
21
-
-
47
24
23
17
(11)
(12)
11
-
11
1
-
-
46
-
46
-
-
(1)
127
86
41
57
(9)
(11)
7
5
2
21
(1)
(1)
556
255
301
574
(49)
(41)
Hanwha Q CELLS Australia Pty
Ltd.
Hanwha Q CELLS Gmbh
23
(in millions)
US Dollars (Note 3)
2013
Assets
Co., Ltd.
Co., Ltd.
Sdn. Bhd.
Pty Ltd.
Ltd.
Corporation 6
Co., Ltd.
Hanwha Solar Power
Kitsuki G.K.
Co., Ltd.
(Indonesia)
Co., Ltd.
World Corporation
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
331
-
331
-
-
(5)
271
219
52
790
10
1
212
242
(30)
253
60
61
15
1
14
1
1
(2)
3
-
3
-
(4)
(4)
80
44
36
10
(9)
(9)
165
198
(33)
248
(39)
(38)
766
-
766
-
-
(12)
13
-
13
-
-
-
1,463
1,151
312
797
(148)
(139)
10
-
10
1
-
-
13
1
12
2
(3)
(7)
100
86
14
281
8
7
6
8
(2)
-
(2)
(2)
39
3
36
24
4
3
24
(in millions)
Korean Won
2012
Assets
Liabilities
Equity
Sales
Net profit
(loss)
Net
Comprehensive
profit (loss)
￦ 70,251
￦ 50,108
￦ 20,143
￦ 5,299
￦ 2,620
￦ 2,620
Gyeonggi Hwasung Bio Valley
Co., Ltd.
8,943
692
8,251
-
(315)
(315)
6,733
3,122
3,611
1,163
551
551
Co., Ltd.
9,173
288
8,885
-
(919)
(919)
1,064
25
1,039
155
(987)
(987)
348
-
348
-
(5)
(5)
7,608
7,608
Kumdan Ecotech Co., Ltd.
Dangjin Techno Polis Co., Ltd.
Daedeok techno valley Co.,
Ltd.
Dreampharma Corp.
11,601
-
11,601
7,933
185,038
118,244
66,794
85,492
(818)
(1,728)
278,248
275,078
3,170
10,973
(6,143)
(6,332)
Asan Techno Valley
265,376
268,518
(3,142)
16,313
4,720
4,600
Yangju Enviro Corp.
7,097
1,024
6,073
3,487
(2,180)
(2,180)
17,198
2,250
14,948
6,408
1,198
1,161
1,594
528
1,066
1,137
266
266
315,245
78,015
237,230
197,765
(11,443)
(29,961)
40,763
32,420
8,343
6,329
266
266
Eco E&O corporation
EaglesEnergy Co., Ltd.
11,649
195
11,454
1,735
894
894
Ilsan Seaworld Co., Ltd.
14,635
7,836
6,799
-
(742)
(742)
Chilgok Enviro Co., Ltd.
25,281
5,980
19,301
3,271
990
990
2,225
2,523
(298)
5,702
(677)
(673)
57
57
-
-
(1)
(1)
Food1st Food Culture Co., Ltd.
35,688
14,608
21,080
96,065
718
718
1,610,952
842,613
768,339
363,036
2,114
1,095
5,047,378
3,711,132
1,336,246
3,240,749
84,260
64,061
7,811
37,960
(30,149)
221,681
(33,960)
(32,841)
3,578
2,144
1,434
5,180
(1,784)
(1,850)
263,060
70,182
192,878
-
(56,521)
(56,521)
75,200,616
68,361,218
6,839,398
13,657,516
585,132
655,016
7,580,191
7,111,502
468,689
4,796,615
38,950
47,777
9,245
5,939
3,306
34,916
299
299
1,064,789
717,359
347,430
1,102,864
3,283
(8,154)
480,497
391,498
88,999
61,932
10,775
10,896
12,914
6,819
6,095
48,619
7,004
7,004
Hanwha Asset
Management Co., Ltd.
109,970
11,665
98,305
42,436
9,489
9,504
Hanwha Savings Bank
Co., Ltd.
766,132
744,732
21,400
64,830
11,321
11,732
Construction Corp.
Hanwha Nanotech Corporation
Co., Ltd.
Hanwha Life Insurance Co.,
Ltd.
Hanwha General
Insurance Co., Ltd.
Co., Ltd.
Hanwha Eagles
Club
25
(in millions)
Korean Won
2012
Assets
Hanwha Chemical
Corporation
Holdings, Co., Ltd.
Liabilities
Equity
Sales
Net
Comprehensive
profit (loss)
Net profit
(loss)
6,733,655
3,221,251
3,512,404
3,559,004
119,769
113,244
75,472
38
75,434
-
(513)
(513)
163,846
26,543
137,303
66,845
(1,227)
(1,452)
335,609
111,780
223,829
127,384
27,754
25,957
Services Co., Ltd.
Hanwha Polydreamer Co., Ltd.
Co., Ltd.
Co., Ltd.
455,340
303,491
151,849
376,480
17,347
18,914
6,410
3,007
3,403
12,769
(4,320)
(4,320)
71,943
37,234
34,709
136,043
1,759
4,978
22,584
16,089
6,495
223,881
1,067
688
2,421,021
1,668,319
752,702
1,028,132
1,086
25,380
40,104
41,410
(1,306)
1,675
(519)
(519)
2,435
252
2,183
2,604
480
480
30,474
31,131
(657)
7,370
(8,660)
(8,979)
102,414
5,410
97,004
-
1,114
(6,304)
-
-
-
-
(2,536)
(2,542)
411,857
314,665
97,192
316,025
(35,348)
(42,135)
55,693
30,494
25,199
56,705
661
(310)
76,503
28,440
255,515
5,136
3,735
318,238
246,110
773,655
(3,852)
(21,529)
11,652
131,099
(2,737)
(3,655)
-
-
(3,247)
930,555
7,584
8,205
32,920
(917)
(1,185)
45,467
3,930
3,594
39,000
-
-
(2,993)
11,008
(1,028)
21,589
(726)
(679)
37,823
11,061
26,762
34,973
2,866
1,274
43,966
24,752
19,214
45,587
3,966
2,865
70,853
33,871
36,982
16,217
(7,371)
(9,629)
11,478
32
11,446
689
76
(801)
49,042
-
49,042
-
-
(3,078)
44,931
4,950
39,981
-
(758)
(3,739)
197,063
165,465
31,598
389,921
4,059
(1,753)
Acropark Golf Corp.
Inc.
Inc.
Co., Ltd.
Co., Ltd.
Hanwha Europe GmbH
104,943
564,348
24,556
12,904
Ltd.
53,790
2,537
51,253
69,228
75,009
(5,781)
69,218
65,682
3,536
46,959
32,776
14,183
42,411
3,411
9,980
Inc.
Hanwha L&C Trading
Ltd.
Company Limited. ( Vietnam )
(America) Ltd.
Hanwha Machinery
Corporation
Holdings. Corp.
Hanwha Q CELLS Japan Co.,
Ltd.
Sdn. Bhd.
Hanwha Q CELLS Gmbh
Co., Ltd.
149,053
278,901
(129,848)
10,717
110,741
115,688
285,352
88,694
196,658
48,157
(15,078)
(16,870)
120,263
1,941
118,322
-
527
(4,372)
26
(in millions)
Korean Won
2012
Assets
Pty Ltd.
Ltd.
Corporation
Hanwha Saudi Contracting Co.
Ltd.
Hanwha Solar Holdings Co.,
Ltd.
Hanwha SolarOne Co., Ltd.
Hanwha TechM Hungary Co.,
Ltd.
Q-Cells Japan K.K.
Liabilities
Equity
Net profit
(loss)
Sales
Net
Comprehensive
profit (loss)
18,724
1,040
17,684
5,830
684
1,162
7,448
7
7,441
-
(889)
(1,256)
91,778
44,002
47,776
11,962
781
(2,867)
120,535
115,289
5,246
283,915
2,581
2,239
583,872
-
583,872
-
(10)
(40,649)
1,568,600
1,096,339
472,261
656,924
(279,058)
(314,580)
10,286
190
10,096
1,235
(581)
(433)
9,565
7,109
2,456
8,971
(2,102)
(2,358)
Q-CELLS NORTH AMERICA
21,189
13,295
7,894
9,366
1,985
1,698
Think Biotech (Cambodia) Co.,
Ltd.
World corporation
17,447
10,563
6,884
43,928
2,334
2,030
3,468
4,389
(921)
9
(1,880)
(1,860)
40,053
5,986
34,067
22,660
2,576
22
27
(in millions)
US Dollars (Note 3)
2012
Assets
Kumdan Ecotech Co., Ltd.
$
Liabilities
67
$
Equity
47
$
20
$
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
5
$
2
$
2
Co., Ltd.
8
1
7
-
-
-
6
3
3
1
1
1
Co., Ltd.
9
-
9
-
(1)
(1)
1
-
1
-
(1)
(1)
-
-
-
-
-
-
Daedeok techno valley Co.,
Ltd.
Dreampharma Corp.
11
-
11
8
7
7
175
112
63
81
(1)
(2)
264
261
3
10
(6)
(6)
Asan Techno Valley
251
254
(3)
15
4
4
Yangju Enviro Corp.
7
1
6
3
(2)
(2)
16
2
14
6
1
1
2
1
1
1
-
-
299
74
225
187
(11)
(28)
39
31
8
6
-
-
Eco E&O corporation
11
-
11
2
1
1
14
7
7
-
(1)
(1)
Chilgok Enviro Co., Ltd.
24
6
18
3
1
1
Food1st Food Culture Co., Ltd.
2
2
-
5
(1)
(1)
-
-
-
-
-
-
34
14
20
91
1
1
1,527
798
729
344
2
1
4,783
3,517
1,266
3,071
80
61
7
36
(29)
210
(32)
(31)
3
2
1
5
(2)
(2)
249
67
182
-
(54)
(54)
71,260
64,779
6,481
12,942
554
621
7,183
6,739
444
4,545
37
45
9
6
3
33
-
-
1,009
680
329
1,045
3
(8)
455
371
84
59
10
10
12
6
6
46
7
7
Hanwha Asset
Management Co., Ltd.
104
11
93
40
9
9
Hanwha Savings Bank
Co., Ltd.
726
706
20
61
11
11
Construction Corp.
Co., Ltd.
Hanwha Life Insurance Co.,
Ltd.
Hanwha General
Insurance Co., Ltd.
Co., Ltd.
Hanwha Eagles
Club
28
(in millions)
US Dollars (Note 3)
2012
Assets
Hanwha Chemical
Corporation
Holdings, Co., Ltd.
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
6,381
3,052
3,329
3,373
113
107
72
-
72
-
-
-
155
25
130
63
(1)
(1)
318
106
212
121
26
25
Services Co., Ltd.
Hanwha Polydreamer Co., Ltd.
Co., Ltd.
Co., Ltd.
431
288
143
357
16
18
6
3
3
12
(4)
(4)
68
35
33
129
2
5
Acropark Golf Corp.
Inc.
Inc.
Co., Ltd.
Co., Ltd.
Hanwha Europe GmbH
21
15
6
212
1
1
2,294
1,581
713
974
1
24
38
39
(1)
2
-
-
2
-
2
2
-
-
29
29
-
7
(8)
(9)
97
5
92
-
1
(6)
-
-
-
-
(2)
(2)
390
298
92
299
(33)
(40)
53
29
24
54
1
-
99
72
27
242
5
4
535
302
233
733
(4)
(20)
23
12
11
124
(3)
(3)
Ltd.
51
2
49
-
-
(3)
66
71
(5)
882
7
8
66
62
4
31
(1)
(1)
44
31
13
43
4
3
40
3
37
-
-
(3)
9
10
(1)
20
(1)
(1)
36
10
26
33
3
1
42
23
19
43
4
3
67
32
35
15
(7)
(9)
11
-
11
1
-
(1)
46
-
46
-
-
(3)
43
5
38
-
(1)
(4)
187
157
30
369
4
(2)
Inc.
Hanwha L&C Trading
Ltd.
Company Limited. ( Vietnam )
(America) Ltd.
Hanwha Machinery
Corporation
Holdings. Corp.
Hanwha Q CELLS Japan Co.,
Ltd.
Sdn. Bhd.
Hanwha Q CELLS Gmbh
Co., Ltd.
141
264
(123)
10
105
110
270
84
186
46
(14)
(16)
114
2
112
-
-
(4)
29
(in millions)
US Dollars (Note 3)
2012
Assets
Pty Ltd.
Ltd.
Corporation
Hanwha Saudi Contracting Co.,
Ltd.
Hanwha Solar Holdings Co.,
Ltd.
Hanwha TechM Hungary Co.,
Ltd.
Q-Cells Japan K.K.
Liabilities
Equity
Net
Comprehensive
profit (loss)
Net profit
(loss)
Sales
18
1
17
6
1
1
7
-
7
-
(1)
(1)
87
42
45
11
1
(3)
114
109
5
269
2
2
553
-
553
-
-
(39)
1,486
1,039
447
622
(264)
(298)
10
-
10
1
(1)
-
9
7
2
9
(2)
(2)
20
13
7
9
2
2
Think Biotech (Cambodia) Co.,
Ltd.
World corporation
17
10
7
42
2
2
3
4
(1)
-
(2)
(2)
38
6
32
21
2
-
1
Financial information of Hanwha Life Insurance Co., Ltd. which includes 31 beneficiary certificates as of
December 31, 2013
2
Financial information of Hanwha General Insurance Co., Ltd. which includes 7 beneficiary certificates as of
December 31, 2013
3
Consolidated financial information of Hanwha Europe GmbH which includes the financial information of Texsol
srl. and Maxxol 01 srl., the subsidiaries of the Company.
4
Consolidated financial information of Hanwha Holdings (USA) Inc. which includes the financial information of 25
subsidiaries.
5
Consolidated financial information of Hanwha Q CELLS Americas Holdings Corp. which includes the financial
information of 16 subsidiaries.
6
Consolidated financial information of Hanwha Resources(USA) Corporation which includes the financial
information of Eagle Petroleum, LLC, Eagle Petroleum Corsicana, LLC and Eagle Petroleum Monterey, LLC, its
subsidiaries.
7
Consolidated financial information of Hanwha SolarOne Co., Ltd. which includes the financial information of 13
subsidiaries.
30
Details of the changes in scope of consolidation for the year ended December 31, 2013, are as
follows:
(a) Subsidiaries newly included in the consolidation for the year ended December 31, 2013:
Included1
Reason
Amru and Hanwha International
Newly established
Daiichi Q Solar K.K
Newly established
Garnet Solar Power Generation 1, LLC
Newly acquired
Hanwha Agritech Ltd.
Newly established
Hanwha Chemical Malaysia Sdn. Bhd.
Newly established
Hanwha International INDIA PVT., LT
Newly established
Hanwha Q CELLS Canada, Inc
Newly established
Hanwha Q CELLS Solar Power Sdn. Bhd.
Newly established
Hanwha Q CELLS USA Corp.
Newly acquired
Hanwha Solar Power Kitsuki G.K.
Newly established
HANWHA TECHM USA LLC
Newly established
HQ MEX, LLC
Newly established
HQ MEXICO HOLDINGS S DE RL DE CV
Newly established
HQC Maywood, LLC
Newly established
HSEA HVES, LLC
Newly established
HSEA PR Isla Solar I, LLC
Newly established
HSESM American Union LLC
Newly acquired
HSESM LeGrandUHS LLC
Newly acquired
HSESM PlanadaCCMS LLC
Newly acquired
HSESM PlanadaES LLC
Newly acquired
Kalaeloa Renewable Energy Park, LLC
Newly acquired
PT. Hanwha Mining Services Indonesia
Newly established
Solar Monkey 1, LLC
Newly acquired
Solar Monkey 2, LLC
Newly acquired
Three Rock Solar, LLC
Newly acquired
Yeongam Techno Solar Power Corporation
Newly acquired
Yeongam Haeoreum Solar Power Corpoation
1
Newly acquired
The Korean Peninsula Solar Power Corporation
Newly established
Hanwha TechM (Suzhou) Co., Ltd.
Newly established
Newly established
Except for above companies, Hanwha Chemical Corporation, Hanwha Life Insurance Co., Ltd. (formerly
Korea Life Insurance Co., Ltd.) and 127 other companies are included due to adoption of Korean IFRS 1110
(Note 2.2(a)).
31
(b) Subsidiaries excluded from the consolidation for the year ended December 31, 2013:
Excluded
Reason
HSESM PlanadaCCMS LLC
Liquidated
Q Cells Japan K.K.
Liquidated
Mergered
Kumdan Ecotech Corp.
Sold
Sold
Yangju Enviro Corp.
Liquidated
Sold
Chilgok Enviro Corp.
Sold
Mergered
(c) Changes of consolidated beneficiary certificates for the year ended December 31, 2013:
1
Category
Beginning
Increase1
Decrease
Ending
40
58
(60)
38
The consolidated beneficiary certificates increased by purchasing IBK Private equity investment trust No. 10
and 57 other beneficiary certificates.
32
2. Significant Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial
statements of Hanwha Corporation and its subsidiaries (collectively, the “Group”) are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
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 the International Financial
Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). The accompanying
consolidated financial statements have been condensed, restructured and translated into English
from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair
presentation of the Group's financial position, financial performance or cash flows, is not presented
in the accompanying consolidated financial statements.
The consolidated financial statements of the Group for the annual period beginning on January 1,
2011, have been prepared in accordance with Korean IFRS. These are the standards, subsequent
amendments and related interpretations issued by the International Accounting Standards Board
("IASB") that have been adopted by the Republic of Korea.
The preparation of the consolidated financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the consolidated financial statements are
disclosed in Note 4.
2.2 Changes in Accounting Policy and Disclosures
(a) New and amended standards adopted by group
The Group newly applied the following amended and enacted standards for the annual period
beginning on January 1, 2013:
- Amendment to Korean IFRS 1001, Presentation of Financial Statements: Presentation of Items
of Other Comprehensive Income
The amendment requires entities to group items presented in other comprehensive income based
on whether they are potentially reclassifiable to profit or loss subsequently. The Group applies the
amendment retroactively and there is no impact of the application of this amendment on its total
comprehensive income or loss.
- Amendment to Korean IFRS 1019, Employee Benefits
The amendment requires entities to immediately recognize all actuarial gains and losses incurred
in other comprehensive income or loss. All past service costs incurred are immediately recognized
in accordance with the change of the plan, and the previous separate calculation of the interest
cost and the expected returns on plan assets has been revised to calculate net interest expense
(income) by applying the discount rate used in the defined benefit obligation measurement in the
net defined benefit liabilities (assets). There is no material impact of the application of this
amendment on the consolidated financial statements.
33
- Korean IFRS 1110, Consolidated Financial Statements
Korean IFRS 1110, Consolidated Financial Statements, introduces a single control concept and
provides a specific guidance for the control.
The Group reclassified Hanwha Chemical Corporation, Hanwha Life Insurance Co., Ltd.(formerly
Korea Life Insurance Co., Ltd.) and 127 other companies as subsidiaries according to Korean IFRS
1110, while prior to the adoption of the above enactment these companies was classified as an
associates.
Although Hanwha Corporation and its subsidiaries have less than half of ownership interest in
Hanwha Chemical Corporation, Hanwha Life Insurance Co., Ltd.(formerly Korea Life Insurance Co.,
Ltd.) and others, the Group reclassified these companies as subsidiaries according to Korean IFRS
1110, when considering the size and dispersion of holdings of the other shareholders and that the
Group could exercise majority of voting right based on the voting patterns at previous general
meetings of shareholders.
Accordingly, the comparative financial statements of the Group were retrospectively adjusted and
restated as if those have been subsidiaries from the date when the Group obtained control over the
entities.
a) Newly included subsidiaries as a result of adoption of Korean IFRS 1110
Percentage of
ownership
Location
Year end
Main business
Co., Ltd.
100
Korea
December 31
Real estate
Gimhae Techno Valley Co., Ltd
80
Korea
December 31
Real estate
Company
Agricultural Corporation Company
Green Tomorrow
90
Korea
December 31
Processing and
distribution of
agricultural products,
livestocks, and forest
products
Dangjin Techno Polis Co., Ltd
100
Korea
December 31
Real estate
Daedeok techno valley Co., Ltd
65
Korea
December 31
Real estate
Dreampharma Corp.
100
Korea
December 31
Pharmaceutical
business
65
Korea
December 31
Real estate
Asan Techno Valley
65
Korea
December 31
Real estate
100
Korea
December 31
Manufacture of
compound
NHL Development Co. Ltd
100
Korea
December 31
Shipping service
EaglesEnergy Co., Ltd
100
Korea
December 31
Solar energy
generation
100
Korea
December 31
100
Korea
December 31
100
Korea
December 31
34
Solar energy
generation
Real estate
management,
service, etc.
Department store
and wholesale, retail
Percentage of
ownership
Location
Year end
Main business
100
Korea
December 31
Manufacture and
sales of CNT
100
Korea
December 31
Real estate
50.25
Korea
December 31
Life insurance
industry
57.89
Korea
December 31
Services for
insurance
(formerly KLI I&A Co., Ltd.,)
100
Korea
December 31
Services for
insurance
100
Korea
December 31
Synthetic resin
67.25
Korea
December 31
Department store
90
Korea
December 31
Sports club operating
Hanwha
Asset Management Co., Ltd.
99.99
Korea
December 31
Asset management
42.11
Korea
December 31
Synthetic resin and
other petrochemicals
Hanwha Chemical
Overseas Holdings, Co., Ltd
100
Korea
December 31
Holding company
80
Korea
December 31
Solar total energy
solution supply
69.45
Korea
December 31
Department store
100
Korea
December 31
Insurance agent and
brokerage
99.98
Korea
December 31
Packaging
Hanwha
Trading (Shanghai) Co., Ltd.
100
China
December 31
General trading
Chandler LLC.
90
USA
December 31
Real estate
development
Hale Ali’I Park Association, LLC
100
USA
December 31
Real estate
development
Hale ka Lae, LLC
100
USA
December 31
Real estate
development
Hanwha Aerospace, LLC
100
USA
December 31
Holding company
Hanwha
America Development LLC.
100
USA
December 31
Real estate
development
Hanwha Azdel Inc.
100
USA
December 31
Manufacture of car
parts
Hanwha Chandler LLC.
100
USA
December 31
Real estate
development
Hanwha
Chemical (Ningbo) Co., Ltd.
100
China
December 31
Manufacture of
compound
99.99
Thailand
December 31
Manufacture of
compound
Hanwha
Development Services LLC.
100
USA
December 31
Real estate
development
Hanwha Hawaii LLC
100
USA
December 31
Real estate
development
Company
Hanwha City Development Co.,
Ltd
Hanwha Life Insurance Co., Ltd.
(formerly Korea Life Insurance
Co., Ltd.)
Hanwha General
Insurance Co., Ltd.
Hanwha Station
Development Co., Ltd.
Hanwha Eagles PROFESSIONAL Baseball Club
Services Co., Ltd.
Hanwha
Polydreamer Co., Ltd
Hanwha
Chemical (Thailand) Co., Ltd.
35
Percentage of
ownership
Location
Year end
Main business
100
USA
December 31
Holding company
100
USA
December 31
Holding company
Hanwha International LLC.
100
USA
December 31
General trading
100
China
December 31
Manufacture of car
parts
100
Canada
December 31
Manufacturing
100
China
December 31
Manufacturing
Hanwha L&C Alabama LLC
100
USA
December 31
Manufacture of car
parts
100
Czech
December 31
Manufacture of car
parts
100
USA
December 31
Holding company
Hanwha L&C Holdings USA LLC
100
USA
December 31
Holding company
Hanwha L&C
Trading (Shanghai) Co., Ltd.
100
China
December 31
General trading
Hanwha L&C USA LLC
100
USA
December 31
Retail business
Hanwha Machinery Americas,
Inc.
100
USA
December 31
Sales Machinery
Hanwha Parcel O LLC
100
USA
December 31
Real estate
development
Hanwha PVPLUS LLC
100
USA
December 31
Asset Securitization
Hanwha Q CELLS
Australia Pty Ltd.
100
Australia
December 31
Photovoltaic
business
Hanwha Q CELLS
Malaysia Sdn. Bhd.
100
Malaysia
December 31
Photovoltaic
business
Hanwha Q CELLS
North America Inc
100
USA
December 31
Photovoltaic
business
Hanwha Q CELLS Gmbh
100
Germany
December 31
Photovoltaic
business
Hanwha Q CELLS
Investment Co., Ltd.
100
England
December 31
Holding company
Hanwha Riverside LLC.
100
USA
December 31
Real estate
development
Hanwha Solar America LLC
100
USA
December 31
Solar energy
Laboratory
Hanwha Solar Australia Pty Ltd.
100
Australia
December 31
Photovoltaic
business
Hanwha Solar Canada Inc.
100
Canada
December 31
Photovoltaic
business
Hanwha Solar Electric Power
Engineering Co., Ltd.
100
China
December 31
Photovoltaic
business
Hanwha Solar Engineering
R&D center Co., Ltd.
100
China
December 31
R&D
100
England
December 31
Holding company
Company
36
Percentage of
ownership
Location
Year end
Main business
83
China
December 31
Photovoltaic
business
100
China
December 31
Manufacture of
silicon ingot
100
USA
December 31
Solar total energy
solution supply
100
China
December 31
Photovoltaic
business
Hanwha
SolarOne(Qidong) Co., Ltd.
100
China
December 31
Manufacture of
silicon ingot
49.47
England
December 31
Photovoltaic
business
100
Germany
December 31
Photovoltaic
business
100
Hong Kong
December 31
Investment and
Procurement
Hanwha SolarOne
Investment Holding Ltd.
100
England
December 31
Holding company
Hanwha SolarOne USA Inc.
100
USA
December 31
Photovoltaic
business
Hanwha Sonoran LLC.
100
USA
December 31
Real estate
development
Hanwha Village Market, LLC
100
USA
December 31
Real estate
development
Hanwha West Properties LLC
100
USA
December 31
Real estate
development
100
Vietnam
December 31
Life insurance
industry
100
USA
December 31
Investment
100
USA
December 31
Solar total energy
solution supply
100
China
December 31
Photovoltaic
business
80
Indonesia
December 31
Life insurance
industry
58.77
USA
December 31
Photovoltaic
business
Sonoran Vista LLC.
90
USA
December 31
Real estate
development
Universal Bearings LLC.
100
USA
December 31
Manufacture of
Bearings
Company
Hanwha
SolarOne(Shanghai) Co., Ltd.
Technology (Shanghai) Co.,
Ltd.)
Hanwha
SolarOne Technology Co., Ltd.
Technology Co., Ltd.)
Hanwha Q CELLS
Americas Holdings. Corp.
(formerly Hanwha SolarEnergy
America Holdings Corp)
Hanwha
SolarOne(Nantong) Co., Ltd.
Hanwha SolarOne
Deutschland GmbH
(formerly Hanwha SolarOne
GmbH)
Hanwha SolarOne
Hong Kong Limited
Company Limited. (Vietnam)
(formerly Korea Life Insurance
Company Limited(Vietnam))
(America) Ltd.
(formerly Korea Life
Investment(America) Ltd.)
MC2 Engineering and
Construction Service, Inc.
Nantong Hanwha Import &
Export Co., Ltd.
(Indonesia) (formerly PT Multicor
Life Insurance (Indonesia))
Silent Power Inc
37
b) Newly included beneficiary certificates as result of adoption of Korean IFRS 1110
Percentage of
ownership
Location
Year end
KB Dividend Equity Private
100
Korea
Dec 23
KB Wellian Real estate X
50.5
Korea
Jun 25, Dec 25
SH Capital Private Real estate IX
55.4
Korea
Dec 31
Lazard Korea Equity Private
Placement Investment Trust 4
100
Korea
May 31
100
Korea
Mar 31
90
Korea
Dec 31
100
Korea
The last day of
Feb, May, Aug, Nov
Collective investment
schemes (Security)
Schemes
(Special asset)
schemes (Security)
Saneun Korea foreign bond private
equity investment trust No.7
100
Korea
The last day of
Feb, May, Aug, Nov
schemes (Security)
100
Korea
The last day of
Feb, May, Aug, Nov
schemes (Security)
ShinYoung Private Securities
Investment Trust HW-1
100
Korea
Nov 12
Shinhan BNPP global solar energy
private equity investment Trust
90
Korea
The last day of each
quarter
SHBNPP Private Corporate
Security No.19
100
Korea
Dec 23
Aegis KORIF Private real estate
Trust 11-1
95.9
Korea
Feb 28, Aug 28
Aegis KORIF Private real estate
Trust 11-2
95.9
Korea
Feb 28, Aug 28
Pine Tree sol Three Private equity
100
Korea
quarter
100
Korea
quarter
investment Trust No.5-2
58.3
Korea
Nov 30
97.1
Korea
quarter
KIVAM Private Value Equity Fund 3
100
Korea
Dec 23
100
Korea
Nov 30
schemes (Security)
100
Korea
Dec 23
schemes (Security)
75
Korea
Dec 31
schemes (Security)
69.5
Korea
Sep 29
schemes (Security)
Company
Lazard Korea Equity Private
Placement Investment Trust 5
Mirae Asset Maps Global New
Recycling Energy Private special
asset Investment Trust No.1
Hankook Investment Private
equity Global Prestige Securities
Trust No.1
KIM Private Basic Securities
Investment Trust 30
Hawha Asia Pacific Long-short
Specialized Private Equity
Investment Trust NO. 1
Hanwha China A Tracker I
38
Main business
schemes (Security)
Schemes
(Real estate)
Schemes
(Real estate)
schemes (Security)
schemes (Security)
Schemes
(Special asset)
schemes (Security)
Schemes
(Real estate)
Schemes
(Real estate)
Schemes
(Real estate)
Schemes
(Real estate)
Schemes
(Real estate)
Schemes
(Real estate)
schemes (Security)
Percentage of
ownership
Location
Hanwha LTI Private special asset
84.9
Korea
Hanwha LTI Infra Private special
asset investment Trust No.1
90
Korea
Hanwha Prudential
U.S. Real Estate Debt
95.5
Korea
Sep 27
Hanwha Master Piece private
equity real estate No. 7
100
Korea
May 31
Hanwha SRI Equity Investment
Trust Security
99.9
Korea
Dec 31
Hanwha Private fund 3
100
Korea
Dec 25
schemes (Security)
Hanwha Smart Private Equity
Investment Trust Security VIII
100
Korea
Mar 31
schemes (Security)
Hanwha Kazakhsta3 Private
offering Fund of funds 1
100
Korea
July 31
schemes (Security)
Hanwha Quant Active Equity
Investment Trust Security I
88.4
Korea
May 7
Hanwha TRIcircle USA
private immovables 4
100
Korea
May 31
Hanwha Tri-circle
private fund 17 for real estate
100
Korea
May 31, Nov 30
Special asset No.1
80
Korea
quarter, June 9
Special asset No.2
80
Korea
quarter, July 28
Special asset No.3
80
Korea
quarter, July 28
100
Korea
Feb 27, May 27,
Aug 27, Nov 27
95
Korea
Mar 1, June 1,
Sep 1, Dec 1
90
Korea
Oct 9
Company
Hyundai Customized
Private fund 79
Hyundai Vessel Private Equity
Special asset Investment
Trust No.2
heungkuk highclass
investment trust no.363
39
Year end
Main business
quarter,
Jun 28
quarter,
July 7
Schemes
(Special asset)
Schemes
(Special asset)
Schemes
(Real estate)
Schemes
(Real estate)
schemes (Security)
schemes (Security)
Schemes
(Real estate)
Schemes
(Real estate)
Schemes
(Special asset)
Schemes
(Special asset)
Schemes
(Special asset)
schemes (Security)
Schemes
(Special asset)
schemes (Security)
c) The effects of adoption of Korean IFRS 1110 on the comparative consolidated financial
statements
i) Consolidated Statements of Financial Position
Korean Won
December 31, 2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
Assets
Current assets
￦
4,463,707
￦
3,392,091
￦
7,855,798
555,701
677,009
1,232,710
5,131
5,378
10,509
2,487,827
1,046,723
3,534,550
68,922
129,201
198,123
516,861
115,185
632,046
508
4,878
5,386
Inventories
715,316
1,413,717
2,129,033
113,441
-
113,441
10,581,172
2,227,818
12,808,990
Non-current assets
95,118
39,133
134,251
319,914
6,541
326,455
446,734
(16,363)
430,371
6,153,144
(5,170,101)
983,043
364,702
1,033,936
1,398,638
3,027,252
5,700,293
8,727,545
158,560
508,874
667,434
3,318
46,282
49,600
12,430
79,223
91,653
820,513
82,600,347
83,420,860
Investment property
Intangible assets
Deposits
Securities
Investment property
Intangible assets
Derivatives
20,205
556,859
577,064
-
2,271,999
2,271,999
85,463
37,757,876
37,843,339
-
133,992
133,992
602,816
17,519,283
18,122,099
7,788
1,586,357
1,594,145
-
2,493,859
2,493,859
54,886
307,531
362,417
-
107,973
107,973
204
15,981
16,185
-
9,345
9,345
-
1,599,534
1,599,534
40
Korean Won
December 31, 2012
(in millions)
Previous Amounts
Other assets
Total assets
Adjustments
Amended Amounts
49,151
3,418,454
3,467,605
-
14,821,304
14,821,304
15,865,392
88,220,256
104,085,648
Liabilities
Current liabilities
4,957,338
3,878,044
8,835,382
1,369,862
1,258,595
2,628,457
2,571,673
2,257,812
4,829,485
177,236
155,591
332,827
805,111
102,142
907,253
233
74,407
74,640
Defined benefit liabilities
33,223
29,497
62,720
4,802,830
3,686,350
8,489,180
13,539
23,138
36,677
2,057,737
2,785,488
4,843,225
550,851
(45,994)
504,857
1,001,152
248,289
1,249,441
342,634
354,545
697,179
66,778
41,674
108,452
770,139
279,210
1,049,349
744,875
75,430,254
76,175,129
653,452
2,380
655,832
-
57,955,757
57,955,757
Policyholders’ equity adjustment
-
466,717
466,717
Derivatives
Defined benefit liability
Other liabilities
-
2,016
2,016
145
436,767
436,912
-
18,660
18,660
2,013
159,728
161,741
457
13,015
13,472
83,768
1,291,710
1,375,478
5,040
135,374
140,414
-
14,948,130
14,948,130
10,505,043
82,994,648
93,499,691
4,977,793
(697,201)
4,280,592
377,190
-
377,190
Capital surplus
399,553
78,238
477,791
Capital adjustments
(25,461)
59,036
33,575
Total liabilities
Equity
Capital stock
41
Korean Won
December 31, 2012
(in millions)
Previous Amounts
34,660
Retained earnings
Total equity
Adjustments
￦
Amended Amounts
82,093
116,753
4,191,851
(916,568)
3,275,283
382,556
5,922,809
6,305,365
5,360,349
5,225,608
10,585,957
15,865,392
￦
88,220,256
￦
104,085,648
US Dollars (Note 3)
December 31, 2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
Assets
Current assets
$
4,230
$
3,214
$
7,444
527
641
1,168
5
5
10
2,357
992
3,349
66
122
188
490
109
599
-
5
5
678
1,340
2,018
Inventories
Non-current assets
107
-
107
10,027
2,111
12,138
90
37
127
303
6
309
423
(16)
407
5,831
(4,899)
932
Investment property
Intangible assets
Deposits
Securities
346
980
1,326
2,869
5,402
8,271
150
482
632
3
44
47
12
75
87
777
78,272
79,049
19
528
547
-
2,153
2,153
81
35,779
35,860
-
127
127
571
16,601
17,172
7
1,504
1,511
Investment property
-
2,363
2,363
42
US Dollars (Note 3)
December 31, 2012
(in millions)
Previous Amounts
Intangible assets
Adjustments
Amended Amounts
52
291
343
Derivatives
-
102
102
-
15
15
-
9
9
-
1,516
1,516
47
3,239
3,286
-
14,045
14,045
15,034
83,597
98,631
4,697
3,675
8,372
1,298
1,193
2,491
Other assets
Total assets
Liabilities
Current liabilities
2,437
2,139
4,576
168
147
315
763
97
860
-
71
71
31
28
59
4,551
3,493
8,044
13
22
35
1,949
2,640
4,589
522
(44)
478
949
235
1,184
325
336
661
63
40
103
730
264
994
706
71,477
72,183
619
2
621
-
54,919
54,919
Policyholders’ equity adjustment
-
442
442
-
2
2
-
414
414
Derivatives
-
18
18
2
151
153
1
12
13
79
1,224
1,303
Other liabilities
5
128
133
-
14,165
14,165
9,954
78,645
88,599
Total liabilities
43
US Dollars (Note 3)
December 31, 2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
Equity
4,717
(661)
4,056
Capital stock
357
-
357
Capital surplus
379
74
453
Capital adjustments
(24)
56
32
33
78
111
3,972
(869)
3,103
363
5,613
5,976
5,080
4,952
10,032
Retained earnings
Total equity
$
15,034
44
$
83,597
$
98,631
Korean Won
December 31, 2011
(in millions)
Previous Amounts
Assets
￦
15,029,731
Current assets
Non-current assets
Adjustments
￦
78,838,511
Amended Amounts
￦
93,868,242
4,274,814
3,511,083
7,785,897
10,043,776
2,031,973
12,075,749
711,141
73,295,455
74,006,596
Liabilities
9,970,896
73,476,743
83,447,639
Current liabilities
5,173,630
3,834,059
9,007,689
4,149,509
3,083,459
7,232,968
Equity
647,757
66,559,225
67,206,982
5,058,835
5,361,768
10,420,603
4,685,641
(582,554)
4,103,087
373,194
5,944,322
6,317,516
US Dollars (Note 3)
December 31, 2011
(in millions)
Previous Amounts
Assets
$
14,242
Current assets
4,051
Non-current assets
Adjustments
$
74,707
Amended Amounts
$
88,949
3,327
7,378
9,517
1,926
11,443
674
69,454
70,128
9,449
69,626
79,075
Current liabilities
4,903
3,633
8,536
3,932
2,922
6,854
614
63,071
63,685
4,793
5,081
9,874
4,440
(552)
3,888
353
5,633
5,986
Liabilities
Equity
45
Korean Won
December 31, 2010
(in millions)
Previous Amounts
Assets
￦
14,624,386
Current assets
Non-current assets
Adjustments
￦
72,842,763
Amended Amounts
￦
87,467,149
3,879,151
3,197,924
7,077,075
10,048,839
1,167,619
11,216,458
696,396
68,477,220
69,173,616
9,518,220
67,453,986
76,972,206
Current liabilities
5,086,639
3,186,944
8,273,583
3,777,070
2,714,520
6,491,590
654,511
61,552,522
62,207,033
5,106,166
5,388,777
10,494,943
4,675,643
(611,582)
4,064,061
430,523
6,000,359
6,430,882
Liabilities
Equity
US Dollars (Note 3)
December 31, 2010
(in millions)
Previous Amounts
Assets
$
13,858
Adjustments
$
69,025
Amended Amounts
$
82,883
Current assets
3,676
3,030
6,706
Non-current assets
9,522
1,106
10,628
660
64,889
65,549
Liabilities
9,019
63,919
72,938
Current liabilities
4,820
3,020
7,840
3,579
2,572
6,151
Equity
46
620
58,327
58,947
4,839
5,106
9,945
4,431
(580)
3,851
408
5,686
6,094
Korean Won
(in millions)
January 1, 2010
Previous Amounts
Assets
￦
67,339,050
Adjustments
￦
10,458,032
Amended Amounts
￦
77,797,082
Current assets
3,701,335
2,248,108
5,949,443
Non-current assets
5,742,851
3,998,836
9,741,687
57,894,864
4,211,088
62,105,952
Liabilities
61,497,132
8,874,156
70,371,288
Current liabilities
5,105,411
3,209,963
8,315,374
3,044,862
1,808,818
4,853,680
53,346,859
3,855,375
57,202,234
5,841,918
1,583,876
7,425,794
3,571,926
(55,859)
3,516,067
2,269,992
1,639,735
3,909,727
Equity
US Dollars (Note 3)
January 1, 2010
(in millions)
Previous Amounts
Assets
$
63,810
Adjustments
$
9,910
Amended Amounts
$
73,720
Current assets
3,507
2,131
5,638
Non-current assets
5,442
3,789
9,231
54,861
3,990
58,851
58,274
8,409
66,683
Current liabilities
4,838
3,042
7,880
2,885
1,714
4,599
50,551
3,653
54,204
5,536
1,501
7,037
3,385
(53)
3,332
2,151
1,554
3,705
Liabilities
Equity
47
ii) Consolidated Statements of Income
Korean Won
(in millions)
2012
Previous Amounts
Adjustments
Amended Amounts
Revenue
￦
11,438,376
￦
5,717,954
￦
17,156,330
64,830
18,430,814
18,495,644
11,503,206
24,148,768
35,651,974
10,447,611
4,664,057
15,111,668
53,775
17,540,486
17,594,261
10,501,386
22,204,543
32,705,929
1,001,820
1,944,225
2,946,045
620,367
1,099,572
1,719,939
Cost of sales
Gross profit
Operating profit
381,453
844,653
1,226,106
Other gains
327,659
253,835
581,494
Other losses
362,139
223,782
585,921
42,653
17,520
60,173
Finance income
Finance costs
281,922
210,140
492,062
Share of profit of associates
272,419
(249,483)
22,936
380,123
432,603
812,726
Income tax expenses
61,479
254,741
316,220
318,644
177,862
496,506
310,182
(23,629)
286,553
8,462
201,491
209,953
46,037
26,257
72,294
2,819
(19,774)
(16,955)
(120)
331
211
(8,106)
(97,505)
(105,611)
40,630
(90,691)
(50,061)
(23,553)
(72,942)
(96,495)
Profit for the year
Attributable to owners of the parent
Attributable to non-controlling interests
Items that may be reclassified
subsequently to profit or loss
Gain (loss) on valuation of available-forsale financial assets
Gain (loss) on valuation of investments in
associates
Loss on valuation of derivatives
Translation of foreign currency financial
statements
Items that will not be reclassified to profit
or loss
Actuarial loss on defined benefit liability
48
Korean Won
(in millions)
2012
Previous Amounts
of separate accounts
Adjustments
Amended Amounts
-
10,782
10,782
(23,553)
(62,160)
(85,713)
Other comprehensive income (loss) for the
year
17,077
(152,851)
(135,774)
Total comprehensive income (loss) for the
year
335,721
25,011
360,732
Attributable to Equity holders of the Parent
317,098
(118,358)
198,740
18,623
143,369
161,992
4,459
(340)
4,119
4,509
(340)
4,169
Attributable to Non-controlling interest
Earnings per share
US Dollars (Note 3)
2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
Revenue
$
10,839
$
5,418
$
16,257
61
17,465
17,526
10,900
22,883
33,783
9,900
4,420
14,320
Cost of sales
51
16,621
16,672
9,951
21,041
30,992
949
1,842
2,791
588
1,042
1,630
361
800
1,161
Other gains
310
241
551
Other losses
343
212
555
40
17
57
Finance costs
267
199
466
Share of profit of associates
Gross profit
Operating profit
Finance income
259
(237)
22
360
410
770
Income tax expenses
58
242
300
302
168
470
294
(23)
271
8
191
199
Profit for the year
49
US Dollars (Note 3)
2012
(in millions)
Previous Amounts
Items that may be reclassified
subsequently to profit or loss
Gain (loss) on valuation of available-forsale financial assets
Gain (loss) on valuation of investments in
associates
Adjustments
Amended Amounts
43
25
68
3
(19)
(16)
-
-
-
(8)
(92)
(100)
38
(86)
(48)
(22)
(69)
(91)
-
10
10
(22)
(59)
(81)
16
(145)
(129)
318
23
341
300
(112)
188
18
135
153
4
-
4
4
-
4
Loss on valuation of derivatives
statements
Items that will not be reclassified to profit
or loss
Actuarial loss on defined benefit liability
of separate accounts
Other comprehensive income (loss) for the
year
Total comprehensive income (loss) for the
year
Attributable to Equity holders of the Parent
Attributable to Non-controlling interest
Earnings per share
50
Korean Won
2011
(in millions)
Previous Amounts
Revenue
￦
12,185,911
Gross profit
Adjustments
￦
Amended Amounts
21,222,751
￦
33,408,662
306,523
793,385
1,099,908
93,520
223,912
317,432
134,527
(28,562)
105,965
(41,007)
252,474
211,467
Profit for the year
US Dollars (Note 3)
2011
(in millions)
Previous Amounts
Revenue
$
11,547
Gross profit
Profit for the year
Adjustments
$
Amended Amounts
20,111
$
31,658
290
752
1,042
89
212
301
128
(27)
101
(39)
239
200
Korean Won
2010
(in millions)
Previous Amounts
Revenue
￦
14,471,780
Gross profit
Profit for the year
Adjustments
￦
Amended Amounts
17,311,806
￦
31,783,586
555,626
1,233,179
1,788,805
1,172,341
(316,321)
856,020
1,149,100
(771,131)
377,969
23,241
454,810
478,051
US Dollars (Note 3)
2010
(in millions)
Previous Amounts
Revenue
$
13,713
Gross profit
Profit for the year
51
Adjustments
$
Amended Amounts
16,405
$
30,118
527
1,168
1,695
1,111
(300)
811
1,089
(731)
358
22
431
453
iii) Consolidated Statements of Cash Flows
Korean Won
2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
￦
846,547
Interest and dividends received from
financial business
51,568
￦
3,552,316
2,976,045
￦
4,398,863
3,027,613
(30,837)
(18,275)
(49,112)
Income tax paid
(72,648)
(574,067)
(646,715)
794,630
5,936,019
6,730,649
(174,325)
(943,511)
(1,117,836)
32,114
40,814
72,928
(29,782)
(13,114)
(42,896)
1,961
7,482
9,443
(41,857)
(34,416)
(76,273)
74,540
16,196
90,736
Changes in held-to-maturity investment
-
(3,370,900)
(3,370,900)
Changes in available-for-sale financial
assets
-
(1,410,664)
(1,410,664)
(1,517)
(263,111)
(264,628)
4,429
628
5,057
10,544
-
10,544
(98,167)
106,471
8,304
Proceeds from disposal of property, plant
and equipment
Proceeds from disposal of investments in
associates
Acquistion of investment property
Proceeds from disposal of investment
property
Proceeds from disposal of assets classified
as held for sale
Changes in other financial assets
Interest received
Dividends received
Cash flows from changes in scope of
consolidation
Other
40,343
17,205
57,548
125,712
31,378
157,090
(1,042)
12,389
11,347
-
(25,898)
(25,898)
(57,047)
(5,829,051)
(5,886,098)
Proceeds from borrowings
2,431,567
6,109,452
8,541,019
Repayment of borrowings
(2,649,103)
(5,731,299)
(8,380,402)
Changes in other financial liabilities
1,459
30,808
32,267
Changes in non-controlling interest
389
(174,274)
(173,885)
(258,190)
(237,890)
(496,080)
(31,323)
(2)
(31,325)
Interest paid
Dividends paid
52
Korean Won
2012
(in millions)
Previous Amounts
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents of the year,
beginning
Exchange losses on cash and cash
equivalents
ending
￦
Adjustments
Amended Amounts
(505,201)
(3,205)
(508,406)
232,382
103,763
336,145
351,122
1,205,834
1,556,956
(7,598)
(75,729)
(83,327)
575,906
￦
1,233,868
￦
1,809,774
US Dollars (Note 3)
2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
$
802
Interest and dividends received from
financial business
Income tax paid
$
3,366
$
4,168
49
2,820
2,869
(29)
(17)
(46)
(69)
(544)
(613)
753
5,625
6,378
(165)
(894)
(1,059)
30
39
69
(28)
(13)
(41)
2
7
9
(40)
(32)
(72)
71
15
86
Changes in held-to-maturity investment
-
(3,194)
(3,194)
Changes in available-for-sale financial
assets
-
(1,337)
(1,337)
(1)
(250)
(251)
4
1
5
10
-
10
(93)
101
8
38
17
55
119
30
149
(1)
12
11
-
(25)
(25)
Proceeds from disposal of property, plant
and equipment
Proceeds from disposal of investments in
associates
Acquistion of investment property
Proceeds from disposal of investment
property
Proceeds from disposal of assets classified
as held for sale
Changes in other financial assets
Interest received
Dividends received
Cash flows from changes in scope of
consolidation
Other
53
US Dollars (Note 3)
2012
(in millions)
Previous Amounts
Adjustments
Amended Amounts
(54)
(5,523)
(5,577)
Proceeds from borrowings
2,304
5,789
8,093
Repayment of borrowings
(2,510)
(5,431)
(7,941)
2
29
31
Changes in other financial liabilities
Changes in Non-controlling interest
-
(165)
(165)
(245)
(225)
(470)
(30)
-
(30)
(479)
(3)
(482)
Net increase in cash and cash equivalents
220
99
319
beginning
333
1,142
1,475
(7)
(72)
(79)
Interest paid
Dividends paid
Net cash used in financing activities
Exchange losses on cash and cash
equivalents
ending
$
546
$
1,169
$
1,715
- Korean IFRS 1111, Joint Arrangements
Korean IFRS 1111, Joint Arrangements, reflects the substance of joint arrangements and focuses
on the rights and obligations of the parties to the joint arrangements rather than on the legal forms
of the arrangements. Joint arrangements are classified into joint operations or joint ventures. The
adoption of this standard does not have an impact on the consolidated financial statements.
- Korean IFRS 1112, Disclosures of Interests in Other Entities
Korean IFRS 1112, Disclosure of Interests in Other Entities, provides disclosure requirements for
all types of equity investments in other entities including subsidiaries, associates, joint ventures and
unconsolidated structured entities.
- Korean IFRS 1027, Separate Financial Statements
Korean IFRS 1027, Separate Financial Statements, contains accounting treatments and
requirements for investments in subsidiaries, associates and joint ventures relating only to separate
financial statements of the Controlling Company.
- Korean IFRS 1113, Fair Value Measurement
Korean IFRS 1113, Fair Value Measurement, provides a precise definition of fair value, and a
single source of fair value measurement and disclosure requirements for use across K-IFRS. The
Group has applied this standard prospectively according to the transitional provisions of K-IFRS
1113 and there is no material impact of the application of this standard on the consolidated
financial statements.
54
(b) New standards and interpretations not yet adopted
New standards, amendments and interpretations issued but not effective for the financial year
beginning January 1, 2013, and not early adopted by the Group are as follows:
- Amendment to Korean IFRS 1110, Consolidated Financial Statements
Amendment to Korean IFRS 1110, Consolidated Financial Statements, provides that, if a parent
company qualifies as an investment entity, it is required to measure its investments in subsidiaries
at fair value through profit and loss instead of consolidating these subsidiaries in its consolidated
financial statements. The amendment does not apply for a parent of an investment entity if the
parent itself is not an investment entity. This amendment is effective for annual periods beginning
on or after January 1, 2014, with early adoption permitted. The Group expects that the application
of this amendment would not have a material impact on its consolidated financial statements.
- Amendment to Korean IFRS 1032, Financial Instruments: Presentation
Amendment to Korean IFRS 1032, Financial Instruments: Presentation, provides that the right to
offset must not be contingent on a future event and must be legally enforceable in all of
circumstances; and if an entity can settle amounts in a manner such that outcome is, in effect,
equivalent to net settlement, the entity will meet the net settlement criterion. This amendment is
effective for annual periods beginning on or after January 1, 2014, and the Group is assessing the
impact of application of this amendment on its consolidated financial statements.
- Amendment to Korean IFRS 1039, Financial Instruments: Recognition and Measurement
Amendment to Korean IFRS 1039, Financial Instruments: Recognition and Measurement, allows
the continuation of hedge accounting for a derivative that has been designated as a hedging
instrument in a circumstance in which that derivative is novated to a central counterparty (CCP) as
a consequence of laws or regulations. This amendment is effective for annual periods beginning on
or after January 1, 2014, with early adoption permitted. The Group is assessing the impact of
application of this amendment on its consolidated financial statements.
- Enactment of Korean IFRS 2121, Levies
Korean IFRS 2121, Levies, are applied to a liability to pay a levy imposed by a government in
accordance with the legislation. The interpretation requires that the liability to pay a levy is
recognized when the activity that triggers the payment of the levy occurs, as identified by the
legislation (the obligating event). This interpretation is effective for annual periods beginning on or
after January 1, 2014, with early adoption permitted. The Group expects that the application of this
interpretation would not have a material impact on its consolidated financial statements.
2.3 Consolidation
The Group has prepared the consolidated financial statements in accordance with Korean IFRS
1110, Consolidated Financial Statements.
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Company has
control. The Company controls the corresponding investee when it is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Consolidation of a subsidiary begins from the date the
Company obtains control of a subsidiary and ceases when the Company loses control of the
55
subsidiary.
The Group applies the acquisition method to account for business combinations. The consideration
transferred is measured at the fair values of the assets transferred, and identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are initially measured at
their fair values at the acquisition date. The Group recognizes any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis in the event of liquidation, either at fair value or at
the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s
identifiable net assets. All other non-controlling interests are measured at their acquisition-date fair
values, unless another measurement basis is required by IFRSs. Acquisition-related costs are
expensed as incurred.
Goodwill is recognized as the excess of the aggregate of the consideration transferred, the amount
of any non-controlling interest in the acquiree, and the acquisition-date fair value of the acquirer’s
previously held equity interest in the acquiree over the identifiable net assets acquired. If this
consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference
is recognized in profit or loss.
Balances of receivables and payables, income and expenses and unrealized gains on transactions
between the Group subsidiaries are eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
In transactions with non-controlling interests, which do not result in loss of control, the Group
recognizes directly in equity any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received, and attribute it to the
owners of the parent.
If the Group loses control of a subsidiary, any investment continuously retained in the subsidiary is
re-measured at its fair value at the date when control is lost and any resulting differences are
recognized in profit or loss.
(b) Associates
Associates are all entities over which the Group has significant influence, and investments in
associates are initially recognized at acquisition cost using the equity method. Unrealized gains on
transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates. If there is any objective evidence that the investment in the associate is
impaired, the Group recognizes the difference between the recoverable amount of the associate
and its book value as impairment loss.
(c) Joint Arrangements
A joint arrangement of which two or more parties have joint control is classified as either a joint
operation or a joint venture. A joint operator has rights to the assets, and obligations for the
liabilities, relating to the joint operation and recognizes the assets, liabilities, revenues and
expenses relating to its interest in a joint operation. A joint venturer has rights to the net assets
relating to the joint venture and accounts for that investment using the equity method.
2.4 Foreign Currency Translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the each entity operates (the “functional
currency’). The consolidated financial statements are presented in Korean won, which is the
Controlling Company’s functional and presentation currency.
56
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in profit or loss.
Exchange differences arising on non-monetary financial assets and liabilities such as equity
instruments at fair value through profit or loss and available-for-sale equity instruments are
recognized in profit or loss and included in other comprehensive income, respectively, as part of
the fair value gain or loss.
(c) Translation to presentation currency
The results and financial position of all Group entities that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:




Assets and liabilities for each statement of financial position presented are translated at the
closing rate at the end of the reporting period;
Income and expenses for each statement of income are translated at average exchange rates;
and
Equity is translated at the historical exchange rate; and
All resulting exchange differences are recognized in other comprehensive income.
2.5 Financial Assets
(a) Classification and measurement
The Group classifies its financial assets in the following categories: financial assets at fair value
through profit or loss, available-for-sale financial assets, loans and receivables, and held-tomaturity financial assets. Regular purchases and sales of financial assets are recognized on trade
date.
At initial recognition, financial assets are measured at fair value plus, in the case of financial assets
not carried at fair value through profit or loss, transaction costs. Transaction costs of financial
assets carried at fair value through profit or loss are expensed in the statement of income. After the
initial recognition, available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and receivables, and held-to-maturity
investments are subsequently carried at amortized cost using the effective interest rate method.
Changes in fair value of financial assets at fair value through profit or loss are recognized in profit
or loss and changes in fair value of available-for-sale financial assets are recognized in other
comprehensive income. When the available-for-sale financial assets are sold or impaired, the fair
value adjustments recorded in equity are reclassified into profit or loss.
(b) Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset
(a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of
the financial asset or a group of financial assets that can be reliably estimated.
Impairment of loans and receivables is presented as a deduction in an allowance account.
Impairment of other financial assets is directly deducted from their carrying amount. The Group
57
writes off financial assets when the assets are determined to be no longer recoverable.
The objective evidence that a financial asset is impaired includes significant financial difficulty of
the issuer or obligor; a delinquency in interest or principal payments over three months; it becomes
probable that the borrower will enter bankruptcy or other financial reorganization; or the
disappearance of an active market for that financial asset because of financial difficulties. A
significant decline in the fair value of an available-for-sale equity instrument from its cost or a
prolonged decline below its cost is also objective evidence of impairment.
(c) Derecognition
If the Group transfers a financial asset and the transfer does not result in derecognition because
the Group has retained substantially of all risks and rewards of ownership of the transferred asset
due to a recourse in the event the debtor defaults, the Group continues to recognize the transferred
asset in its entirety and recognizes a financial liability for the consideration received. The related
financial liability is classified as ‘borrowings’ in the statement of financial position (Note 8).
2.6 Derivative Instruments
Derivatives are initially recognized at fair value on the date when a derivative contract is entered
into and are subsequently re-measured at their fair value. Changes in the fair value of the
derivatives that are not qualified for hedge accounting are recognized in the statement of income
within 'revenue (cost of sales)' or 'other gains (losses)' according to the nature of transactions.
The Group applies hedge accounting for a part of derivative instruments. The effective portion of
changes in fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income and the ineffective portion is recognized in profit or loss.
Amounts of changes in fair value of effective hedging instruments accumulated in other
comprehensive income are included in the initial measurement of the cost of non-financial assets
as hedging transactions and recognized as ‘the resulting profit or loss’ for the periods when the
corresponding transactions affect profit or loss. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that is reported in other comprehensive income is recognized
in ‘profit or loss’.
The Group applies fair value hedge accounting for hedging fixed interest risks on borrowings. The
effective portion of changes in fair value of derivatives that are designated and qualify as fair value
hedges is recognized as ‘the resulting profit or loss’, and the ineffective portion is recognized in
‘profit or loss’. However, changes in the fair value of the hedged items attributable to hedged risk
are recognized as ‘the resulting profit or loss’.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying
amount of a hedged item for which the effective interest method is used is amortized to profit or
loss over the period to maturity.
Embedded derivatives are separated from the host contract and accounted for separately only if
the following criteria have been met: (a) the economic characteristics and risks of the embedded
derivative are not closely related to those of the host contract; (b) a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative; and (c) changes
in the fair value of the hybrid (combined) instrument are recognized immediately in profit or loss.
2.7 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the
weighted-average method, moving-average method, first-in, first-out (FIFO) method and specific
identification method..
58
2.8 Non-current Assets (or Disposal Group) Held-for-sale
Non-current assets (or disposal group) are classified as assets held-for-sale when their carrying
amount is to be recovered principally through a sale transaction and a sale is considered highly
probable. The assets are measured at the lower amount between their carrying amount and the fair
value less costs to sell.
2.9 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditures that is directly attributable to the
acquisition of the items.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method
to allocate the difference between their cost and their residual values over their estimated useful
lives, as follows:
Building
Structure
Machinery
Vehicle
Tool and equipment
Others
Useful lives
5 - 65 years
5 - 55 years
2 - 20 years
1 - 12 years
1 - 20 years
1 - 30 years
The depreciation method, residual values and useful lives of property, plant and equipment are
reviewed at the end of each reporting period and, if appropriate, accounted for as changes in
accounting estimates.
2.10 Borrowing Costs
Borrowing costs incurred in the acquisition or construction of a qualifying asset are capitalized in
the period when it is prepared for its intended use, and investment income earned on the
temporary investment of borrowings made specifically for the purpose obtaining a qualifying asset
is deducted from the borrowing costs eligible for capitalization during the period. Other borrowing
costs are recognized as expenses for the period in which they are incurred.
2.11 Government Grants
Government grants are recognized at their fair values when there is reasonable assurance that the
grant will be received and the Group will comply with the conditions attaching to it. Government
grants related to assets are presented by deducting the grants in arriving at the carrying amount of
the assets, and grants related to income are deferred and presented by deducting the related
expenses for the purpose of the government grants.
2.12 Intangible Assets
Goodwill is measured as explained in Note 2.3.(a) and carried at its cost less accumulated
impairment losses.
Intangible assets, except for goodwill, are initially recognized at its historical cost and carried at its
cost less accumulated amortization and accumulated impairment losses.
59
Development costs that are directly attributable to the design and testing of identifiable and unique
products are the aggregate costs recognized after meeting the asset recognition criteria, including
technical feasibility, and determined to have future economic benefits. Membership rights are
regarded as intangible assets with indefinite useful life and not amortized because there is no
foreseeable limit to the period over which the assets are expected to be utilized. Intangible assets
with definite useful life that are amortized using the straight-line method over their estimated useful
lives, are as follows:
Development costs
Others
Useful lives
3 - 10 years
1 - 30 years
2.13 Investment Property
Property held to earn rentals or for capital appreciation or both is classified as investment property.
Investment property is measured initially at its cost. After recognition as an asset, investment
property is carried at cost less accumulated depreciation and impairment losses.
Investment property, except for land, is depreciated using the straight-line method over their useful
lives from five to 60 years.
2.14 Impairment of Non-financial Assets
Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are
tested annually for impairment. Assets that are subject to amortization are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. Non-financial assets, other than goodwill, that suffered impairment
are reviewed for possible reversal of the impairment at each reporting date.
2.15 Financial Liabilities
(a) Classification and measurement
Financial liabilities at fair value through profit or loss are financial instruments held for trading.
Financial liabilities are classified in this category if incurred principally for the purpose of
repurchasing them in the near term. Derivatives that are not designated as hedges or bifurcated
from financial instruments containing embedded derivatives are also categorized as held-fortrading.
The Group classifies non-derivative financial liabilities, except for financial liabilities at fair value
through profit or loss, financial guarantee contracts and financial liabilities that arise when a
transfer of financial assets does not qualify for derecognition, as financial liabilities carried at
amortized cost and presented as ‘trade and other payables’, ‘borrowings and debentures’, and
‘other financial liabilities’ in the statement of financial position.
(b) Derecognition
Financial liabilities are removed from the statement of financial position when it is extinguished, for
example, when the obligation specified in the contract is discharged, cancelled or expired or when
the terms of an existing financial liability are substantially modified.
2.16 Financial Guarantee Contracts
60
Financial guarantees contracts provided by the Group are initially measured at fair value on the
date the guarantee was given. Subsequent to initial recognition, the Group’s liabilities under such
guarantees are measured at the higher of the amounts below and recognized as ‘other financial
liabilities’:

the amount determined in accordance with Korean IFRS 1037, Provisions, Contingent
Liabilities and Contingent Assets; or

the initial amount, less accumulated amortization recognized in accordance with Korean
IFRS1018, Revenue.
2.17 Provisions
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation and the increase in the provision due to passage of time is recognized as interest
expense.
2.18 Deferred acquisition costs
Acquisition costs arising from long-term insurance contracts are deferred and amortized over the
contract period or seven years, whichever is shorter. Acquisition costs arising from short-term
insurance contracts whose contract period is shorter than one year are expensed in the current
period. In case the actual expenditure is larger than the estimated amount, only the estimated
amount is capitalized and the remainder is expensed in the current period. If additional premium
ratio is relatively high in the beginning period for early recovery of the acquisition costs, the actual
acquisition costs are expensed in the current period. When the contract is canceled, any
unamortized portion as of the cancellation date (or the date it becomes invalid in case the contract
becomes ineffective before cancellation date) is fully amortized in the fiscal year in which such
cancellation occurs.
2.19 Classification of insurance contracts and investment contracts
(a) Classification of contracts
A contract under which one party (the insurer) accepts significant insurance risk from another party
(the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event
(the insured event) adversely affects the policyholder is classified as insurance contract. A contract
that does not expose the insurer to significant insurance risk, but exposes the financial risk, is
classified as investment contract.
a) Insurance contract
The significance of insurance risk is assessed contract by contract, by calculating the
percentage of benefits with the amounts when the insured events are not occurred to additional
benefits. The additional benefits refer to amounts that exceed those that would be payable if no
insured event occurred. In case significance of insurance risk (proportion of the additional
benefits) is higher than 5%, the Group classifies the contracts as insurance contracts for which
insurance risk is considered significant. If the contracts are classified as insurance contracts at
the initial recognition, the contracts remain insurance contracts until all rights and obligations are
extinguished or expire. Even if insurance risk is not significant during the term of the contracts,
the contracts are not reclassified as investment contracts.
b) Investment contract
61
A contract that does not expose the insurer to significant insurance risk, but exposes the
financial risk, is classified as investment contract. Financial risk means the risk of a possible
future change in one or more of a specified interest rate, financial instrument price, commodity
price, foreign exchange rate, index of prices or rates, credit rating or credit index or other
variable, provided in the case of a non-financial variable that the variable is not specific to a
party to the contract. Investment contracts containing a discretionary participation feature are
accounted for as insurance contracts in accordance with K-IFRS 1104, and investment
contracts without discretionary participation feature are accounted for as financial instruments in
accordance with K-IFRS 1039.
(b) Unbundling of deposit components
The deposit component of an insurance contract is unbundled when both of the following
conditions are met:

the insurer can measure the deposit component (including any embedded surrender options)
separately (that is, without considering the insurance component); and

the insurer’s accounting policies do not otherwise require it to recognize all obligations and
rights arising from the deposit component.
Unbundling is permitted, but not required, if the insurer can measure the deposit component
separately, but its accounting policies require it to recognize all obligations and rights arising from
the deposit component, regardless of the basis used to measure those rights and obligations.
Unbundling is prohibited if an insurer cannot measure the deposit component separately.
The Group has not recognized an unbundled deposit component, unless it has to be separated. To
unbundle a contract, the Group applies K-IFRS 1104 to the insurance component and K-IFRS 1039
to the deposit component.
(c) Discretionary participation features
Certain insurance and investment contracts include discretionary participation features.
Discretionary participation feature is a contractual right to receive, as a supplement to guaranteed
benefits, additional benefits:

that are likely to be a significant portion of the total contractual benefits;

whose amount or timing is contractually at the discretion of the issuer; and

that are contractually based on:
a) the performance of a specified pool of contracts or a specified type of contract;
b) realized and/or unrealized investment returns on a specified pool of assets held by the
issuer; or
c) the profit or loss of the Group, fund or other entity that issues the contract.
Some insurance contracts contain a discretionary participation feature as well as a guaranteed
element. The issuer of such a contract may, but need not, recognize the guaranteed element
separately from the discretionary participation feature. The Group does not recognize them
separately, but classifies the whole contract as a liability. The resulting changes in the guaranteed
element and in the portion of the discretionary participation feature classified as a liability are
recognized in profit or loss.
62
(d) Embedded derivatives contained in insurance contract
The Group does not separate or measure the embedded derivatives if embedded derivative is itself
an insurance contract or there is a policyholder’s option to surrender an insurance contract for a
fixed amount (or for an amount based on a fixed amount and an interest rate). Otherwise, the
Group separates the embedded derivatives from their host contract and measures them at fair
value, and includes changes in their fair value in profit or loss.
2.20 Reinsurance contracts
The Group concludes reinsurance agreements with reinsurance companies to transfer insurance
risk arising from direct insurance contracts to them. The Group does not offset reinsurance assets
against the related insurance liabilities and income or expense from reinsurance contracts against
the expense or income from the related insurance contracts.
The Group considers whether its reinsurance assets are impaired at the end of each reporting
period. If a contractor’s reinsurance asset is impaired, the contractor shall reduce its carrying
amount accordingly and recognize that impairment loss in profit or loss.
A reinsurance asset is impaired if, and only if:

there is objective evidence, as a result of an event that occurred after initial recognition of the
reinsurance asset, that the cedant may not receive all amounts due to it under the terms of
the contract; and

that event has a reliably measurable impact on the amounts that the cedant will receive from
the reinsurer.
2.21 Insurance contract liabilities
The Group records reserves based on the laws of the insurance business and other related
regulations. It includes premium reserve, reserve for outstanding claims, unearned premium
reserve, reserve for policyholders’ dividend, reserve for policyholders’ profit dividend and reserve
for assumed reinsurance premium.
(a) Premium reserve
Premium reserve is a provision for expected insurance claims and related expenses to be paid
based on the net premium method. Premium reserve is the amount accounted for using the
standard interest rates and standard risk rates announced by the Financial Supervisory Service
(“FSS”) or the amount accounted for using the base rates applied on the date of computation of
premium, whichever is larger. In case premium reserve is less than zero, premium reserve is
considered as nil. Furthermore, the Group carries out the liability adequacy test based on KIFRS
1104 and determines whether the amount is less than the carrying amount that would be required if
the relevant insurance liabilities are within the scope of K-IFRS 1037. If it is less, the Group
increases the carrying amount of the relevant insurance liabilities.
(b) Reserve for outstanding claims
Reserve for outstanding claims is a provision for claims incurred but not yet paid and for claims not
incurred and, therefore, not yet settled, whose insured events have occurred prior to the end of the
reporting period.
a) Individual estimated amount: Individually estimated amounts to be incurred in dispute or in
litigation pertaining to policies whose events for payment of claims and others have arisen as
of the end of each fiscal year. In case part of the insurance claims was paid, the remaining
63
balance is to be reserved.
b) Incurred but not reported (“IBNR”): Calculated as certain percentage of the accumulated
risk premium revenue for the last 12 months ending at year-end of each fiscal period.
c) Reserve for elapsed contracts: Reserve for insurance contracts became elapsed due to
delay in premium payment, but still within the grace period providing reinstatement or
retention right.
d) Insurance claims payables: Unpaid insurance claims that were settled to be paid for
insurance claims, cancellation refund, dividend and others.
In accordance with the Supervisory Regulation and the Enforcement Regulation on the
Supervision of the Insurance Industry amended in February 2006, IBNR was determined with
statistical values based on experience. As such, IBNR was computed by subtracting the
individual reserve estimate as of March 31, 2012, from the estimate of the total incurred claims
amount, which has been projected in accordance with the chain-ladder method based on the
historical data of the paid claims for the last three years.
(c) Reserve for unearned premium
Reserve for unearned premium refers to the premiums to be charged during subsequent periods,
out of premiums whose payment dates have matured before the end of the reporting period. It is
calculated according to the guideline for calculation of premium and policy reserve. Furthermore,
the Group carries out the liability adequacy test based on K-IFRS 1104 and determines whether
the amount is less than the carrying amount that would be required if the relevant insurance
liabilities are within the scope of K-IFRS 1037. If it is less, the Group increases the carrying amount
of the relevant insurance liabilities.
(d) Reserve for minimum guaranteed benefit
Reserve for minimum guarantee refers to amounts that are to guarantee a certain level of
insurance. It is calculated by considering the future loss, according to the guideline for reserve for
minimum guaranteed benefit. Furthermore, the Group carries out the liability adequacy test based
on K-IFRS 1104 and determines whether the amount is less than the carrying amount that would
be required if the relevant insurance liabilities are within the scope of K-IFRS 1037. If it is less, the
Group increases the carrying amount of the relevant insurance liabilities.
(e) Reserve for policyholders’ dividends and reserve for policyholders’ profit dividend
The Group sells dividend insurance contracts and accounts for reserve for policyholders’ dividends
and policyholders’ profit dividend with respect to the dividend. Policyholders’ dividend schemes by
the Article 6-13 of the Supervisory Regulation on Insurance Industry are equivalent to discretionary
participation features.
a) Reserve for policyholders’ dividends
In compliance with the Supervisory Regulation, the Group provides reserve for excess
crediting rate, mortality gain dividend, interest dividend, operating expense dividend and longterm maintenance dividend, and revalues the reserve for policyholders’ dividends to estimate
the provision.
Reserve for policyholders’ dividends equals to the incurred reserve for policyholders’
dividends added to reserve for policyholders’ dividends for the subsequent year. The incurred
reserve for policyholders’ dividends refers to the amount that was settled but unpaid at the
end of the reporting period. Reserve for policyholders’ dividends for the subsequent year
64
refers to an estimate of policyholders’ dividends for valid insurance contracts at the end of the
reporting period calculated based on the estimated contract lapse rate.
b) Reserve for policyholders’ profit dividend
In accordance with the Supervisory Regulation on “Disposition of Surplus before
Policyholders’ Dividend Reserve,” the Group initially accumulates reserve for losses on
dividend insurance contracts and reserve for policyholders’ dividend as expected reserve for
policyholders’ dividends for subsequent year from policyholders’ equity. The balance is then
allocated to reserve for policyholders’ profit dividend.
c) The policyholders’ dividends not accruing on reserve for policyholders’ dividends, newly
accumulated at the end of the previous fiscal year, are added to reserve for policyholders’
profit dividend accumulated at gross value. The policyholders’ dividend resulting in excess of
reserve for policyholders’ dividends, newly accumulated at the end of the previous fiscal year,
is deducted from the reserve for policyholders’ profit dividend accumulated at gross value
prior to the current fiscal year end.
The Group is required to appropriate reserve for policyholders’ profit dividend, accumulated at
gross value for its source of policyholders’ dividend, for individual policyholders within five
years from the end of the related fiscal year.
(f) Reserve for loss preservation
In order to preserve the losses on dividend insurance contracts, the Group can accumulate reserve
for loss preservation within 30 percent of dividend insurance profit policyholder’s equity. The Group
is required to preserve the above-mentioned reserve for losses on dividend insurance contracts
within five years from the end of the related fiscal year and to appropriate the remaining balances
for its source of policyholders’ dividend, for individual policyholders.
(g) Reserve for reinsurance premium
In case the Group assumes reinsurance contracts, it reserves the total amount that the reinsurance
counterparty has not reserved.
2.22 Liability adequacy test
The Group assesses at the end of each reporting period whether its recognized insurance liabilities
are adequate, using current estimates of future cash flows under its insurance contracts. If that
assessment shows that the carrying amount of its insurance liabilities is inadequate in the light of
the estimated future cash flows, the entire deficiency shall be recognized in profit or loss. The
Group assesses liability adequacy test quarterly if there are significant changes on current
estimates. Otherwise, the Group applies a liability adequacy test that meets specified minimum
requirements. The minimum requirements are as follows:

The test considers current estimates of all contractual cash flows and related cash flows, such
as claim handling costs, as well as cash flows resulting from embedded options and
guarantees.

If the test shows that the liability is inadequate, the entire deficiency is recognized in profit or
loss.
65
2.23 Separate account assets (liabilities)
In order to secure soundness of asset management and recoverability, the Group manages special
accounts separately from general accounts in accordance with the Regulation on Insurance
Supervision. Assets and liabilities are separately administered from the general accounts, and the
asset management and income distribution are deemed assets and liabilities in the segment
reporting. These accounts are presented as separate account assets and liabilities in the
consolidated statements of financial position.
The Group receives the fees for operation and management of the separate accounts, and
accounts for them as fees and commissions from separate accounts. In accordance with the
Supervisory Regulation, separate accounts are presented as an independent account distinctively
from general accounts. In connection with retirement insurance among the separate accounts, the
Group manages variable interest and fixed interest types. In the case of operating loss from special
accounts, the Group appropriates deficiency by charging it first to reserve for policyholders’ profit
dividend reserved in separate account and remaining loss is charged to shareholders’ equity.
Additionally, the Group reverts 10% of the retained earnings arisen from special accounts to
shareholders’ equity and 90% to policyholders’ equity. In addition, general accounts’ receivables
(payables) from (to) separate accounts are presented in separate accounts’ debits (credits), in case
there is a fund transfer between general accounts and separate accounts.
2.24 Compensation receivables
The recoverable portion of insurance claims paid which arises from the disposal of pledged assets
acquired during the solving process of insurance incidents or exercising the right of indemnity are
accounted for as compensation receivables and calculated based on the experience rate for the
past 3 years.
2.25 Current and Deferred Tax
The tax expense for the period consists of current and deferred tax. Tax is recognized on the profit
for the period in the statement of income, except to the extent that it relates to items recognized in
other comprehensive income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively. The tax expense is calculated on the
basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Deferred tax is recognized for temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts as expected tax consequences at the recovery or settlement
of the carrying amounts of the assets and liabilities. However, deferred tax assets and liabilities are
not recognized if they arise from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred tax assets are recognized only to the extent that it is probable that future
taxable profit will be available against which the deductible temporary differences can be utilized.
Deferred tax liability is recognized for taxable temporary differences associated with investments in
subsidiaries, associates, and interests in joint ventures, except to the extent that the Group is able
to control the timing of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. In addition, deferred tax asset is recognized for
deductible temporary differences arising from such investments to the extent that it is probable the
temporary difference will reverse in the foreseeable future and taxable profit will be available
against which the temporary difference can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balances on a net basis.
66
2.26 Employee Benefits
(a) Post-employment benefits
The Group has both defined benefit and defined contribution plans. A defined contribution plan is a
pension plan under which the Group pays fixed contributions into a separate entity. The
contributions are recognized as employee benefit expenses when an employee has rendered
service.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined
benefit plans define an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation. The
liability recognized in the statement of financial position in respect of defined benefit pension plans
is the present value of the defined benefit obligation at the end of the reporting period less the fair
value of plan assets. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds and that have terms to maturity approximating to the terms of the related pension
obligation. The remeasurements of the net defined benefit liability are recognized in other
comprehensive income.
If any plan amendments, curtailments, or settlements occur, past service costs or any gains or
losses on settlement are recognized as profit or loss for the year.
(b) Share-based payments
Equity-settled share-based payments granted to employees are estimated at the grant date fair
value of equity instruments and recognized as employee benefit expenses over the vesting period.
The number of equity instruments expected to vest is remeasured with consideration to non-market
vesting conditions at the end of the reporting period, with any changes from the original
measurement recognized in the profit for the year and equity.
2.27 Revenue Recognition (except for construction contracts)
Revenue is measured at the fair value of the consideration received or receivable for the sale of
goods or rendering of services arising from the normal activities of the Group. It is stated as net of
value added taxes, returns, rebates and discounts, after elimination of intra-company transactions.
The Group recognizes revenue when the amount of revenue can be reliably measured; when it is
probable that future economic benefits will flow to the entity; and when specific criteria have been
met for each of the Group’s activities, as described below. The Group bases its estimate on
historical results, taking into consideration the type of customer, the type of transaction and the
specifics of each arrangement.
(a) Sale of goods
Revenue from the sale of goods is recognized when products are delivered to the purchaser.
(b) Rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably,
revenue associated with such a transaction is recognized by reference to the stage of performance
of the services. When the outcome of the transaction involving the rendering of services cannot be
estimated reliably, revenue is recognized only to the extent of the expenses recognized that are
recoverable.
67
(c) Interest income
Interest income is recognized using the effective interest method according to the time passed.
When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable
amount and continues unwinding the discount as interest income. Interest income on impaired
loans and receivables is recognized using the original effective interest rate.
(d) Dividend income
Dividend income is recognized when the right to receive payment is established.
(e) Insurance premium income
Insurance premiums received in advance are deferred as unearned revenue at the time of receipt.
As the contract matures, a proportionate portion of the insurance premium is recognized as
revenue over the coverage period. A proportionate portion of the insurance premium is recognized
as revenue over the coverage period, even though the contract has matured but no insurance
premium has received.
2.28 Construction Contracts
A construction contract is defined by Korean IFRS 1011, Construction Contracts, as a contract
specifically negotiated for the construction of an asset.
When the outcome of a construction contract can be estimated reliably and it is probable that the
contract will be profitable, contract revenue is recognized over the period of the contract by
reference to the stage of completion. Contract costs are recognized as expenses by reference to
the stage of completion of the contract activity at the end of the reporting period. When it is
probable that total contract costs will exceed total contract revenue, the expected loss on the
construction contract is immediately recognized as an expense. When the outcome of a
construction contract cannot be estimated reliably, contract revenue is recognized only to the
extent of contract costs incurred that are likely to be recoverable. Variations in contract work,
claims and incentive payments are included in contract revenue to the extent that may have been
agreed with the customer and are capable of being reliably measured. Contract costs are
recognized as an expense in the period in which they are incurred.
The Group uses the ‘percentage-of-completion method’ to determine the appropriate amount to
recognize in a given period. The stage of completion is measured by reference to the contract
costs incurred up to the end of the reporting period as a percentage of total estimated costs for
each contract. Costs incurred in the year in connection with future activity on a contract are
excluded from contract costs in determining the stage of completion. These amounts are
recognized as inventory, prepaid expenses or other assets.
On the statement of financial position, the Group reports the net contract position for each contract
as either an asset or a liability. A contract represents an asset where costs incurred plus
recognized profits (less recognized losses) exceed progress billings (due from customers for
contract work); a contract represents a liability where the opposite is the case (due to customers for
contract work).
Meanwhile, the Group applies the percentage of completion method on the recognition of real
estate sales based on the Korea Accounting Institute Opinion “2011 - I – KQA”. This application is
effective pursuant to the Acts on Article 13.1.1 Korean International Financial Reporting Standards
(Korean-IFRS) on External Audit for Stock Companies in Korea.
68
2.29 Lease
A lease is an agreement, whereby the lessor conveys to the lessee, in return for a payment or
series of payments, the right to use an asset for an agreed period of time. Leases where all the
risks and rewards of ownership are not transferred to the Group are classified as operating leases.
Lease payments under operating leases are recognized as expenses on a straight-line basis over
the lease term.
Leases where the Group has substantially all the risks and rewards of ownership are classified as
finance leases and recognized as lease assets and liabilities at the lower of the fair value of the
leased property and the present value of the minimum lease payments on the opening date of the
lease period.
A lease other than a finance lease is classified as an operating lease. Lease income from operating
leases is recognized in income on a straight-line basis over the lease term. Initial direct costs
incurred by the lessor in negotiating and arranging an operating lease is added to the carrying
amount of the leased asset and recognized as an expense over the lease term on the same basis
as the lease income.
2.30 Segment Reporting
Operating segments are reported on the same basis as internal financial information is reported to
the chief operating decision-maker (Note 44). The chief operating decision-maker is responsible for
allocating resources and assessing performance of the operating segments.
2.31 Approval of Issuance of the Financial Statements
The issuance of the December 31, 2013 consolidated financial statements of the Company was
approved by the Board of Directors on February 26, 2014, which is subject to change with the
approval of the shareholders at their annual shareholders’ meeting.
3. Presentation of US dollar Amounts
The Group operates primarily in Korean won and its accounting records are maintained in Korean
won. The US dollars amounts, provided herein, represent supplementary information, solely for the
convenience of the reader. All Korean won amounts including the 2012 Korean won amounts are
expressed in US Dollars at US$ 1: ￦ 1,055.3, the exchange rate in effect on December 31, 2013.
Such presentation is not in accordance with Korean IFRS, and should not be construed as a
representation that the won amounts shown could be readily converted, realized or settled in US
dollars at this or any other rate.
69
4. Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future. The estimates and
assumptions are continuously evaluated with consideration to factors such as events reasonably
predictable in the foreseeable future within the present circumstance according to historical
experience. The resulting accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are
addressed below.
4.1 Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts
of cash-generating units have been determined based on value-in-use calculations (Note 17).
4.2 Income taxes
The Group is operating in numerous countries and the income generated from these operations is
subject to income taxes based on tax laws and interpretations of tax authorities in numerous
jurisdictions. There are many transactions and calculations for which the ultimate tax determination
is uncertain (Note 50).
4.3 Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. The Group uses its judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at the end of each reporting
period (Note 62).
4.4 Net defined benefit liability
The present value of net defined benefit liability depends on a number of factors that are
determined on an actuarial basis using a number of assumptions including the discount rate (Notes
22, 39).
70
5. Financial Instruments by Category (Non-Financial Business)
Categorizations of financial instruments as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Loans and
receivables
Assets at fair
value through
profit or loss
Hedging
derivative
financial
instruments
￦
￦
Available-forsale financial
assets
Total
Current asset
￦
1,350,376
Available-for-sale
financial assets
Trade and other
receivables
-
-
￦
-
￦
1,350,376
-
-
-
710
710
4,441,368
-
-
-
4,441,368
386,158
17,296
1,348
-
404,802
-
-
-
146,369
146,369
33,800
-
-
-
33,800
218,362
47
-
-
218,409
Non-current asset
Available-for-sale
financial assets
Trade and other
receivables
￦
6,430,064
￦
17,343
(in millions)
￦
1,348
￦
147,079
￦
6,595,834
US Dollars (Note 3)
2013
Assets at fair
value through
profit or loss
Loans and
receivables
Hedging
derivative
financial
instruments
assets
Total
Current asset
$
Available-for-sale
financial assets
Trade and other
receivables
1,280
$
-
$
-
$
-
$
1,280
-
-
-
1
1
4,209
-
-
-
4,209
366
16
1
-
383
-
-
-
139
139
32
-
-
-
32
207
-
-
-
207
Non-current asset
Available-for-sale
financial assets
Trade and other
receivables
$
6,094
$
16
71
$
1
$
140
$
6,251
(in millions)
Korean Won
2012
Assets at fair
value through
profit or loss
Loans and
receivables
Hedging
derivative
financial
instruments
assets
Total
Current asset
￦ 1,232,710
Available-for-sale
financial assets
Trade and other
receivables
￦
-
￦
-
￦
-
￦ 1,232,710
-
-
-
10,509
10,509
3,534,550
-
-
-
3,534,550
187,937
9,989
197
-
198,123
-
-
-
134,251
134,251
326,455
-
-
-
326,455
Non-current asset
Available-for-sale
financial assets
Trade and other
receivables
430,149
￦ 5,711,801
86
￦
10,075
(in millions)
136
￦
333
￦
-
430,371
144,760
￦ 5,866,969
US Dollars (Note 3)
2012
Assets at fair
value through
profit or loss
Loans and
receivables
Hedging
derivative
financial
instruments
assets
Total
Current asset
$
Available-for-sale financial
assets
1,168
$
-
$
-
$
-
$
1,168
-
-
-
10
10
3,349
-
-
-
3,349
178
9
1
-
188
-
-
-
127
127
Trade and other
receivables
309
-
-
-
309
408
1
-
-
409
Trade and other
receivables
Non-current asset
Available-for-sale financial
assets
$
5,412
$
10
72
$
1
$
137
$
5,560
Categorizations of financial liabilities as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Liabilities at fair
value through
profit or loss
Hedging
derivative
financial
instruments
Other financial
liabilities at
amortized cost
Total
Current liabilities
￦
-
￦
-
￦
2,850,835
￦
2,850,835
-
-
4,732,458
4,732,458
4,957
1,327
304,426
310,710
-
-
13,643
13,643
-
-
5,693,205
5,693,205
5,200
612
464,941
￦
10,157
￦
(in millions)
1,939
￦
14,059,508
470,753
￦
14,071,604
US Dollars (Note 3)
2013
Hedging
derivative
financial
instruments
Liabilities at fair
value through
profit or loss
Other financial
liabilities at
amortized cost
Total
Current liabilities
$
-
$
-
$
2,701
$
2,701
-
-
4,484
4,484
5
1
288
294
-
-
13
13
-
-
5,395
5,395
5
1
441
447
$
10
73
$
2
$
13,322
$
13,334
(in millions)
Korean Won
2012
Hedging
derivative
financial
instruments
Liabilities at fair
value through
profit or loss
Other financial
liabilities at
amortized cost
Total
Current liabilities
￦
-
￦
-
￦
2,628,457
￦
2,628,457
-
-
4,829,485
4,829,485
13,540
2,353
316,934
332,827
-
-
36,677
36,677
-
-
4,843,225
4,843,225
1,190
￦
14,730
￦
(in millions)
2,353
503,667
￦
13,158,445
504,857
￦
13,175,528
US Dollars (Note 3)
2012
Hedging
derivative
financial
instruments
Liabilities at fair
value through
profit or loss
Other financial
liabilities at
amortized cost
Total
Current liabilities
$
-
$
-
$
2,491
$
2,491
-
-
4,576
4,576
13
2
300
315
-
-
35
35
-
-
4,589
4,589
1
-
478
479
$
14
74
$
2
$
12,469
$
12,485
Income and loss from financial instruments by category for the years ended December 31, 2013
(in millions)
Korean Won
2013
US Dollars (Note 3)
2012
2013
2012
Financial assets or liabilities at fair
value through profit or loss
Gain (loss) on transactions
Gain (loss) on valuation
￦
￦
8,879
(2,568)
10,403
$
8
(2,253)
$
(2)
10
(2)
Loans and receivables
Interest income
41,640
52,362
39
50
(186,036)
(53,241)
(176)
(50)
(308,715)
121,015
(293)
115
112
514
-
-
(467,454)
(492,062)
(443)
(466)
(Other comprehensive income
and loss)1
Dividend income
Financial liabilities at amortized cost
Interest expenses2
1
Including gain (loss) on valuation of available-for-sale financial assets in financial business.
2
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset were
capitalized as part of the acquisition cost of that asset for the years ended December 31, 2013 and 2012
(Note 49).
6. Cash and Cash Equivalents (Non-Financial Business)
Cash and cash equivalents as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
￦
Cash on hand
Cash in bank
1
Other cash and cash equivalents
￦
2012
61,115
￦
867,041
273,756
297,779
1,350,376
(in millions)
￦
1,232,710
US Dollars (Note 3)
2013
$
Cash on hand
Cash in bank
67,890
1,015,505
2012
58
$
962
1
822
260
Other cash and cash equivalents
$
1
1,280
64
282
$
1,168
Deposits in foreign currency amounting to ￦ 187,443 million (equivalent to US$ 178 million) are subject to
withdrawal restrictions in relation to advanced payment of construction in Iraq as of December 31, 2012.
Since this deposit is highly liquid and satisfies the definition of cash and cash equivalents, it was classified as
cash and cash equivalents.
2
The maximum exposure to credit risk at the reporting date is the carrying value of the cash equivalents,
excluding cash on hand.
75
7. Available-for-sale Financial Assets (Non-Financial Business)
The changes in available-for-sale financial assets for the years ended December 31, 2013 and
2012, are as follows:
Korean Won
(in millions)
2013
Beginning
￦
US Dollars (Note 3)
2012
144,760
￦
2013
120,396
$
2012
137
$
114
Additions
32,963
40,788
31
39
Disposals
(19,111)
(9,029)
(18)
(9)
(385)
3,214
-
3
(12)
(690)
-
(1)
Evaluation
Effects of foreign
Exchange rate changes
Others
Ending
Less: Non-Current
(11,136)
￦
147,079
(9,919)
￦
144,760
(11)
$
(9)
139
$
137
(146,369)
(134,251)
(138)
(127)
710
10,509
1
10
Current
Available-for-sale financial assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Non-current
Total
Equity instruments
Listed stock
￦
-
Unlisted stock
Beneficiary certificate
￦
1,559
￦
1,559
-
139,852
139,852
-
342
342
36
2,368
2,404
Debt instruments
Government bonds
Unlisted debts
674
￦
710
2,248
￦
146,369
2,922
￦
147,079
US Dollars (Note 3)
(in millions)
2013
Current
Non-current
Total
Equity instruments
Listed stock
$
-
$
1
$
1
-
133
133
-
-
-
Government bonds
-
2
2
Unlisted debts
1
2
3
Unlisted stock
Debt instruments
$
1
76
$
138
$
139
Korean Won
(in millions)
2012
Current
Non-current
Total
Equity instruments
Listed stock
￦
-
Unlisted stock
￦
2,359
￦
2,359
-
128,551
128,551
5,300
357
5,657
Government bonds
2,209
2,811
5,020
Unlisted debts
3,000
173
3,173
Debt instruments
￦
10,509
￦
134,251
￦
144,760
US Dollars (Note 3)
(in millions)
2012
Current
Non-current
Total
Equity instruments
Listed stock
$
-
Unlisted stock
$
2
$
2
-
122
122
5
-
5
Government bonds
2
3
5
Unlisted debts
3
-
Debt instruments
$
10
$
127
3
$
The maximum exposure to credit risk at the reporting date is the carrying value of the debt
instruments classified as available-for-sale financial assets.
77
137
8. Trade and other receivables (Non-Financial Business)
Trade and other receivables as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Trade receivables
￦
Less: Provision for impairment
2012
Non-current
2,996,669
￦
(267,018)
Less: Present value discounts
Other receivables
Unbilled amount
￦
Current
34,414
￦
(2,263)
￦
(184,833)
115,593
(3,691)
-
(26)
(27)
(13)
293,734
319,881
294,481
324,848
(3,835)
(318,206)
(1,561)
(318,258)
1,421,819
-
682,840
207,976
4,441,369
￦
33,800
￦
3,534,550
￦
326,455
US Dollars (Note 3)
(in millions)
2013
Current
Trade receivables
Non-current
2,743,650
$
2012
Non-current
2,840
$
Current
33
$
Non-current
2,600
$
110
(253)
(2)
(176)
-
-
-
-
278
303
279
308
(3)
(302)
(1)
(302)
1,347
-
647
196
Other receivables
Unbilled amount
$
4,209
$
32
$
3,349
(3)
$
309
The maximum exposure of trade and other receivables to credit risk at the reporting date is the
carrying value of each asset.
The Group transferred receivable balances amounting to ￦ 192,175 million (equivalent to US$ 182
million) to a bank in exchange for cash during the year ended December 31,2013. The transaction
has been accounted for as a collateralized borrowing.
78
Changes in provision for impairment of trade and other receivables for the years ended December
31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Beginning
2012
Trade
receivables
Other
receivables
Trade
receivables
Other
receivables
￦
￦
￦
￦
188,524
319,819
153,095
112,780
Unused amounts reversed
(17,439)
(531)
-
(29)
Others
(14,584)
1,062
(24,472)
(1,992)
Ending
￦
269,281
1,691
￦
322,041
59,901
319,910
Provision for impairment
￦
188,524
￦
319,819
US Dollars (Note 3)
(in millions)
2013
Trade
receivables
Beginning
1,930
$
2012
Other
receivables
179
$
Trade
receivables
303
$
Other
receivables
145
$
303
Provision for impairment
107
2
57
2
(17)
(1)
-
-
Others
Ending
(14)
$
255
79
1
$
305
(23)
$
179
(2)
$
303
The aging analyses of trade and other receivables as of December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Receivables not past due
￦
2012
3,383,066
￦
2,801,216
Past due but not impaired
Up to 3 months
614,582
427,873
97,257
94,102
3 to 6 months
6 to 12 months
63,714
87,076
Over 12 months
118,179
144,871
893,732
753,922
Impaired
Up to 3 months
29,739
24,415
3 to 6 months
1,997
1,456
6 to 12 months
14,171
4,653
Over 12 months
743,812
783,726
789,719
￦
5,066,517
814,250
￦
US Dollars (Note 3)
(in millions)
2013
Receivables not past due
4,369,388
$
2012
3,206
$
2,654
Past due but not impaired
Up to 3 months
582
405
3 to 6 months
92
89
6 to 12 months
60
83
Over 12 months
113
137
847
714
Impaired
Up to 3 months
28
23
3 to 6 months
2
1
6 to 12 months
13
4
Over 12 months
705
744
748
$
4,801
772
$
4,140
There are no past due but not impaired financial assets except for the above trade and other
receivables.
80
9. Other Financial Assets (Non-Financial Business)
Other financial assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Deposits in bank and others
￦
Non-current
￦
128,498
Accrued income
Less: Allowance for doubtful
account
Loans
Guarantee deposits
Derivatives instruments
-
(11)
-
237,391
328,075
48,762
498,732
-
(150,101)
-
(104,096)
(6,597)
(25,415)
-
(30,370)
20,867
69,590
7,628
74,142
-
-
-
(177)
(169)
(8,963)
(148)
(9,867)
46
￦
404,802
218,409
10,186
￦
198,123
Loans
account
Guarantee deposits
account
Derivatives instruments
1
222
￦
430,371
US Dollars (Note 3)
Current
account
1,785
(285)
2013
Accrued income
￦
-
(in millions)
Deposits in bank and others
Non-current
127,296
4,410
18,645
￦
￦
-
account
Current
5,177
6,452
account
2012
$
2012
Non-current
122
$
Current
5
$
Non-current
121
$
2
6
-
4
-
-
-
-
-
225
311
46
473
-
(142)
-
(99)
(6)
(24)
-
(29)
20
66
7
70
-
-
-
-
-
(8)
-
(9)
18
-
10
-
$
385
$
208
$
188
$
408
The maximum exposure to credit risk at the reporting date is the carrying value of the other financial assets.
81
10. Derivatives Financial Instruments (Non-Financial Business)
Derivative financial instruments as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
2012
Assets
Liabilities
Assets
Liabilities
Trading
Currency forward
￦
￦
17,268
Currency swap
4,983
￦
10,075
￦
5,797
-
2,073
-
8,533
Interest swap
59
1,260
-
400
Physical commidity
16
1,840
-
-
Interest swap
-
1,000
-
-
Currency forward
-
-
-
-
1,348
177
-
-
Currency forward
-
150
333
-
Currency swap
-
-
-
2,090
Fair value hedge
Physical derivatives
Cash flow hedge
Interest swap
￦
162
￦
18,691
12,095
￦
10,408
263
￦
17,083
US Dollars (Note 3)
(in millions)
2013
Assets
2012
Liabilities
Assets
Liabilities
Trading
Currency forward
$
16
$
5
$
10
$
5
Currency swap
-
2
-
8
Interest swap
1
1
-
1
Physical commidity
1
2
-
-
Interest swap
-
1
-
-
Currency forward
-
-
-
-
Physical derivatives
1
1
-
-
Currency forward
-
1
-
-
Currency swap
-
-
-
2
Interest swap
-
1
-
1
Fair value hedge
Cash flow hedge
$
19
$
14
$
10
$
The maximum exposure to credit risk at the reporting date is the carrying value of financial
derivatives assets.
82
17
11. Other Assets (Non-Financial Business)
Other assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Advances
￦
accounts
2012
Non-current
￦
426,924
(116,666)
Prepaid construction costs
Prepaid expense
Prepaid VAT
￦
￦
-
(108,611)
208,228
-
217,883
-
72,415
32,224
47,516
42,382
101,791
-
71,711
-
-
23,060
-
7,217
￦
692,692
55,284
￦
632,047
-
￦
49,599
US Dollars (Note 3)
(in millions)
2013
Current
Advances
Non-current
403,548
-
Others
￦
Current
-
$
accounts
2012
Non-current
405
$
(111)
Prepaid construction costs
Current
-
$
Non-current
382
-
(103)
$
-
197
-
206
-
Prepaid expense
69
31
45
40
Prepaid VAT
96
-
68
-
Others
$
22
656
$
83
53
$
598
7
$
47
12. Inventories (Non-Financial Business)
Inventories as of December 31, 2013 and 2012, are as follows:
(in millions)
Finished goods
Less: Valuation allowance
Merchandise
Semi-finished Goods
Work in progress
Raw materials
Supplies
Materials-in-transit
Korean Won
2013
2012
￦
532,717
￦
721,471
(27,811)
(111,039)
292,996
293,271
(4,453)
(4,016)
34,533
19,401
(1,854)
(283)
1,103,723
754,458
(728)
(392)
422,889
290,109
(13,439)
(17,072)
49,189
44,799
118,910
138,326
￦ 2,506,672
￦
2,129,033
US Dollars (Note 3)
2013
2012
$
505
$
684
(26)
(105)
278
278
(4)
(4)
33
18
(2)
1,046
715
(1)
401
275
(13)
(16)
47
42
113
131
$
2,377
$
2,018
(in millions)
Finished goods
Merchandise
Semi-finished Goods
Work in progress
Raw materials
Supplies
Materials-in-transit
The cost of inventories recognized as expense and included in ‘Cost of sales’ amounted to
￦ 12,900,024 million (equivalent to US$ 12,224 million) for the year ended December 31, 2013,
and ￦ 11,405,456 million (equivalent to US$ 10,808 million) for the year ended December 31,
2012.
The Company recognized reverse of loss on inventory valuation of ￦ 84,517 million (equivalent to
US$ 80 million) and loss on inventory valuation of ￦ 23,099 million (equivalent to US$ 22 million)
for the years ended December 31, 2013 and 2012, respectively. The amount of loss on inventory
has been included in ‘Cost of sales’. In addition, the Company recognized obsolescence loss on
inventory included in ‘Other losses’ amounting to ￦ 510 million (equivalent to US$ 1 million) and
￦ 5,206 million (equivalent to US$ 5 million) for the years ended December 31, 2013 and 2012,
respectively.
The inventories are provided as collateral in relation to liabilities as of December 31, 2013.
84
13. Assets held for sale (Non-Financial Business)
Assets held for sale as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
Predicted
Date of Sale
2013
2012
Assets held for sale
￦
26,122
￦
94,934
Land
in 2014
Buildings
in 2014
11,553
18,507
Associates
in 2014
12,310
-
Machinery
-
-
-
49,985
113,441
Assets of disposal group
in 2014
6,809
￦
(in millions)
56,794
￦
113,441
US Dollars (Note 3)
Predicted
Date of Sale
2013
2012
Assets held for sale
Land
in 2014
$
25
$
90
Buildings
in 2014
11
18
Associates
in 2014
12
-
Machinery
-
-
-
48
108
in 2014
6
$
54
$
108
The Group decided to sell Gunpo Ecotech Co., Ltd., Seocheon Enviro Co., Ltd., Whasung Enviro
Co., Ltd. and Paju Enviro Co., Ltd. (part of the non-operating segment), as approved by the Board
of Directors and shareholders in 2013. The assets and liabilities related to these companies have
been presented as held-for-sale and since held-for-sale assets(Disposal group) are not assets from
a major business section, the profit and loss on the related operations have not been presented as
discontinued operations. The completion date for the sale is expected to be in 2014.
85
Assets of disposal group as of December 31, 2013 are as follows:
2013
(in millions)
US Dollars
(Note 3)
Korean Won
Cash and cash equivalent
￦
1,906
$
2
4,887
5
10
1
6
￦
1
6,809
$
13
$
9
Liabilities of disposal group
Borrowings and Debentures
￦
Other liabilities
Deferred tax liabilities
￦
86
1
2,422
2
4
1
6
1
25
1
5
1
248
1
2,723
$
8
14. Investment Property (Non-Financial Business)
Changes in investment property for the years ended December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Beginning
Land
Building
￦ 833,968
￦ 559,907
Acquisition
Disposal
Transfer1
Acquisition cost
￦
4,763
Total
Land
Building
￦1,398,638
￦ 843,920
￦ 561,131
Structures
￦ 4,388
Total
￦1,409439
863
443
-
1,306
988
543
-
1,531
(36,110)
(526)
(155,266)
(2,475)
(2,229)
-
(4,704)
-
(15,315)
(427)
(15,742)
-
(14,030)
(414)
(14,444)
(21,373)
-
-
(21,373)
-
-
-
-
(154,713)
56,304
528
(97,881)
11,520
15,330
789
27,639
Others
Ending
Structures
(118,630)
Depreciation
Impairment loss
2012
(3,842)
(73)
(13)
(3,928)
(19,985)
(838)
-
(20,823)
￦ 536,273
￦ 565,156
￦
4,325
￦1,105,754
￦ 833,968
￦ 559,907
￦
4,763
￦1,398,638
￦ 536,273
￦ 664,835
￦
8,972
￦1,210,080
￦ 833,968
￦ 641,098
￦
8,815
￦1,483,881
-
(99,679)
(4,647)
(104,326)
-
(81,191)
(4,052)
(85,243)
Accumulated
depreciation
(in millions)
US Dollars (Note 3)
2013
Land
Beginning
$
790
Acquisition
Disposal
Depreciation
Transfer
Acquisition cost
531
$
Total
Land
$
800
Building
Structures
$
$
532
Total
5
$ 1,326
1
-
-
1
1
1
4
-
$
1,336
2
(112)
(34)
-
(146)
(2)
(2)
-
(4)
-
(15)
-
(15)
-
(13)
-
(13)
-
-
(20)
-
-
-
-
(147)
54
(1)
(94)
10
14
1
25
(4)
-
-
(4)
(19)
(1)
-
(20)
Others
Ending
$
2012
Structures
(20)
Impairment loss
1
Building
$
508
$
536
$
4
$ 1,048
$
790
$
531
$
5
$
1,326
$
508
$
630
$
8
$ 1,146
$
790
$
608
$
8
$
1,406
(4)
(98)
Accumulated
depreciation
-
(94)
-
(77)
(3)
(80)
Land in investment property amounting to ￦ 159,320 million is transferred to ‘Work in process’
during the year 2013.
Fair value of investment property as of December 31, 2013, is ￦ 1,325,899 million (equivalent to
US$ 1,256 million).
Rent income and related expenses from investment property during the years ended December 31,
2013 and 2012, are as follows:
Korea Won
(in millions)
2013
Rent income
Related expense
￦
US Dollars (Note 3)
2012
77,280
(44,075)
87
￦
67,676
(38,572)
2013
$
2012
73
(42)
$
64
(37)
15. Property, plant and equipment (Non-Financial Business)
Changes in property, plant and equipment for the years ended December 31, 2013 and 2012, are
as follows:
(in millions)
Korean Won
2013
Land
Beginning
Building
￦ 3,169,923
￦ 1,868,175
9,429
13,005
Acquisition
Disposal
Structure
Machinery
￦
295,724
￦ 2,057,909
4,858
112,364
Vehicle
￦
70,149
4,007
(59,288)
(21,791)
(273)
(1,584)
(642)
Depreciation
-
(107,664)
(25,124)
(263,735)
(12,485)
Impairment loss
-
-
-
1,019
(5)
Changes in scope of
consolidation
-
-
627
(6,528)
147
Other1
88,965
13,305
Ending
￦ 3,209,029
￦ 1,765,030
￦
Acquisition cost
￦ 3,214,468
￦ 2,541,497
￦
-
(775,555)
(5,439)
(703)
-
(209)
Accumulated depreciation
Accumulated Impairment loss
Government grants
(in millions)
24,988
75,343
300,800
￦ 1,974,788
￦
62,953
1,782
535,541
￦ 4,252,344
￦
119,940
(234,741)
(2,269,681)
(56,987)
-
(7,655)
-
-
(220)
-
Korean Won
2013
Tool and
equipment
Beginning
￦
Construction in
progress
189,521
￦
Others
932,030
￦
Total
144,114
￦
8,727,545
Acquisition
37,821
751,490
54,076
987,050
Disposal
(4,609)
(1,902)
(12,547)
(102,636)
(53,272)
-
(21,109)
(483,389)
(11,668)
Depreciation
Impairment loss
Changes in scope of consolidation
Other1
Ending
￦
Acquisition cost
￦
Government grants
-
(12,682)
-
(586)
1,893
71
(4,376)
5,980
(411,286)
(31,697)
(232,620)
174,855
￦
1,295,543
￦
132,908
￦
8,879,906
601,625
￦
1,272,225
￦
202,888
￦
12,740,528
(426,696)
-
(62,920)
(3,826,580)
-
(12,682)
(7,060)
(33,539)
(74)
-
-
(503)
88
(in millions)
US Dollars (Note 3)
2013
Land
Beginning
$
Acquisition
Building
3,004
$
Structure
1,770
$
Machinery
280
$
Vehicle
1,950
$
66
9
12
5
106
4
(56)
(21)
-
(2)
(1)
Depreciation
-
(102)
(24)
(250)
(12)
Impairment loss
-
-
-
1
-
Changes in scope of
consolidation
-
-
1
(6)
-
Disposal
Other1
84
13
23
Ending
$
3,041
$
1,672
$
Acquisition cost
$
3,046
$
2,408
$
Government grants
71
285
$
507
$
2
1,870
$
59
4,030
$
114
-
(735)
(222)
(2,151)
(55)
(5)
(1)
-
(9)
-
-
-
-
-
-
(in millions)
US Dollars (Note 3)
2013
Tool and
equipment
Beginning
$
Construc-tion in
progress
180
$
883
Others
$
Total
137
$
8,270
Acquisition
36
712
51
Disposal
(4)
(2)
(12)
(98)
(50)
-
(20)
(458)
-
(12)
-
(11)
Depreciation
Impairment loss
Other1
935
(1)
2
-
(4)
5
(390)
(30)
(222)
Ending
$
166
$
1,193
$
126
$
Acquisition cost
$
570
$
1,206
$
192
$ 12,073
8,412
(404)
-
(60)
(3,627)
-
(13)
(6)
(34)
Government grants
-
-
-
-
89
(in millions)
Korean Won
2012
Land
Beginning
Building
Structure
￦ 3,267,469
￦ 1,805,494
1,823
75,800
Acquisition
Disposal
Changes in scope of
consolidation
Other1
282,432
￦ 1,829,427
5,829
31,550
Vehicle
￦
76,765
3,977
(16,049)
(3,613)
(705)
(52,717)
(797)
-
(80,975)
(23,206)
(256,126)
(11,361)
(7,648)
(988)
-
(12,868)
-
7,065
51,686
-
108,946
112
Depreciation
Impairment loss2
￦
Machinery
(82,737)
20,771
31,374
409,697
Ending
￦ 3,169,923
￦ 1,868,175
￦
295,724
￦ 2,057,909
￦
70,149
Acquisition cost
￦ 3,176,675
￦ 2,606,998
￦
507,484
￦ 4,138,758
￦
120,070
1,453
-
(737,712)
(211,760)
(2,060,269)
(6,752)
(872)
-
(20,261)
-
-
(239)
-
(319)
-
Government grants
(in millions)
(49,921)
Korean Won
2012
Tool and
equipment
Beginning
￦
Construction in
progress
177,451
￦
Others
718,244
￦
Total
145,683
￦
8,302,965
Acquisition
33,388
817,229
58,805
Disposal
(3,775)
(225)
(1,325)
(79,206)
(53,971)
-
(16,283)
(441,922)
-
-
-
(21,504)
Depreciation
Impairment loss2
1,028,401
12,879
9,097
1,460
191,245
Other1
23,549
(612,315)
(44,226)
(252,434)
Ending
￦
189,521
￦
932,030
￦
144,114
￦
8,727,545
Acquisition cost
￦
585,970
￦
932,030
￦
198,086
￦
12,266,071
Government grants
(396,350)
-
(53,972)
(3,509,984)
(99)
-
-
(27,984)
-
-
-
(558)
90
(in millions)
US Dollars (Note 3)
2012
Land
Beginning
$
Building
3,096
Acquisition
$
1,711
2
Disposal
$
Machinery
268
72
$
Vehicle
1,734
6
$
73
30
4
(15)
(3)
(1)
(50)
(1)
-
(77)
(23)
(243)
(11)
(7)
(1)
-
(12)
-
6
48
-
103
-
Depreciation
Impairment loss2
Changes in scope of
consolidation
Other1
Structure
(78)
20
30
Ending
$
3,004
$
1,770
$
Acquisition cost
$
3,010
$
2,470
$
Government grants
388
280
$
481
$
$
66
3,922
$
114
-
(699)
(6)
(1)
-
(20)
-
-
-
-
-
-
(in millions)
(201)
1
1,950
(1,952)
(48)
US Dollars (Note 3)
2012
Tool and
equipment
Beginning
$
Acquisition
Disposal
Depreciation
Impairment loss2
Construction in
progress
168
$
681
Others
$
Total
138
$
56
7,869
32
774
976
(4)
-
(1)
(75)
(51)
-
(15)
(420)
-
-
-
(20)
13
8
1
179
Other1
22
(580)
(42)
(239)
Ending
$
180
$
883
$
137
$
8,270
Acquisition cost
$
555
$
883
$
188
$
11,623
-
(51)
-
-
-
(27)
Government grants
-
-
-
-
(375)
(3,326)
1
Other includes the change from transfer and effects of changes in exchange rate.
During the year of 2012, the Group closed a service line for solar cell and recognized an impairment loss of
book value amount for machinery that are not recoverable.
2
Depreciation expense of ￦ 395,214 million (equivalent to US$ 375 million) was charged to ‘cost of
sales’, and ￦ 88,175 million (equivalent to US$ 84 million) to ‘selling and administrative expenses’
for the year ended December 31, 2013. Depreciation expense of ￦ 366,538 million (equivalent to
US$ 347 million) was charged to ‘cost of sales’, and ￦ 75,384 million (equivalent to US$ 71 million)
to ‘selling and administrative expenses’ for the year ended December 31, 2012.
Property, plant and equipment are provided as collateral for the Group’s debts (Note 60).
91
16. Intangible Assets (Non-Financial Business)
Changes in intangible assets for the years ended December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Development
costs
Goodwill
Beginning
￦
281,701
￦
Membership
rights
87,236
￦
Others
72,261
￦
Total
226,236
￦
667,434
Acquisition
-
9,420
2,921
21,457
33,798
Disposal
-
-
(9,456)
(10,332)
(19,788)
Amortization
-
(10,393)
(258)
(25,606)
(36,257)
Impairment loss
Business combination1
Other2
(7,017)
(5,480)
(1,585)
(17,138)
(31,220)
(17,680)
685
(160)
6,070
(11,085)
6,018
7,197
(122)
6,842
19,935
Ending
￦
263,022
￦
88,665
￦
63,601
￦
207,529
￦
Acquisition cost
￦
265,403
￦
127,392
￦
64,271
￦
301,783
￦
Accumulated amortization
Accumulated impairment loss
622,817
758,849
-
(31,942)
-
(80,470)
(112,412)
(2,381)
(5,480)
(670)
(13,784)
(22,315)
-
(1,305)
-
-
(1,305)
Government grants
(in millions)
US Dollars (Note 3)
2013
Development
costs
Goodwill
Beginning
$
267
$
Membership
rights
83
$
Others
68
$
Total
214
$
632
Acquisition
-
9
3
20
32
Disposal
-
-
(9)
(10)
(19)
Amortization
Impairment loss
Other2
-
(10)
-
(24)
(34)
(7)
(5)
(2)
(16)
(30)
(17)
1
-
6
(10)
6
7
-
6
19
Ending
$
249
$
85
$
60
$
196
$
Acquisition cost
$
251
$
121
$
61
$
286
$
Government grants
-
590
719
(30)
-
(76)
(106)
(2)
(5)
(1)
(14)
(22)
-
(1)
-
-
(1)
92
(in millions)
Korean Won
2012
Development
costs
Goodwill
￦
Beginning
￦
121,752
Membership
rights
￦
83,906
Others
￦
83,396
Total
￦
210,666
499,720
Acquisition
-
17,465
1,918
7,051
Disposal
-
-
(315)
(2,847)
(3,162)
Amortization
-
(7,008)
(562)
(22,655)
(30,225)
-
(7,061)
(4)
-
(7,065)
157,177
379
-
34,654
192,210
Impairment loss
Other2
2,772
(445)
(12,172)
26,434
(633)
(10,478)
Ending
￦
281,701
￦
87,236
￦
72,261
￦
226,236
￦
667,434
Acquisition cost
￦
284,010
￦
109,568
￦
72,424
￦
286,674
￦
752,676
-
(20,597)
-
(60,438)
(81,035)
(2,309)
-
(163)
-
(2,472)
-
(1,735)
-
-
(1,735)
Government grants
(in millions )
US Dollars (Note 3)
2012
Development
costs
Goodwill
Beginning
$
115
$
Membership
rights
80
$
Others
79
$
Total
200
$
474
Acquisition
-
17
1
7
26
Disposal
-
-
-
(3)
(3)
Amortization
-
(7)
(1)
(21)
(29)
Impairment loss
-
(7)
-
-
(7)
149
-
-
32
181
3
-
(11)
(1)
(10)
Other2
Ending
$
267
$
83
$
68
$
214
$
Acquisition cost
$
269
$
104
$
68
$
272
$
Government grants
-
(20)
632
713
-
(58)
(78)
(2)
-
-
-
(2)
-
(1)
-
-
(1)
1
Potential amount which was recognized in a business combination in 2012, is adjusted in measurement
period (Note 66).
2
Other includes effect of changes in exchange rate and changes in transfer.
Amortization expense of ￦ 16,678 million (equivalent to US$ 16 million) was charged to ‘cost of
sales’, and ￦ 19,579 million (equivalent to US$ 19 million) to ‘selling and administrative expenses’
for the year ended December 31, 2013. Amortization expense of ￦ 12,305 million (equivalent to
US$ 12 million) was charged to ‘cost of sales’, and ￦ 17,920 million (equivalent to US$ 17 million)
to ‘selling and administrative expenses’ for the year ended December 31, 2012.
93
Research and development costs recognized for the years ended December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Cost of sales
￦
Selling and administration
expenses
US Dollars (Note 3)
2012
￦
62,635
115,088
￦
2013
23,189
59
92,177
￦
177,723
115,366
2012
$
$
109
$
168
22
87
$
109
Intangible assets are provided as collateral of the Group’s debts (Note 60).
17. Impairment Tests for Goodwill
Goodwill is monitored by the management at the cash-generating unit or group of cash-generating
unit level. The following is a summary of goodwill allocation for each CGU or group of CGU and the
Group used the same goodwill allocation method as of December 31, 2013 and 2012:
Korean Won
2013
(in millions)
Hanwha General Insurance Co., Ltd.
￦
2012
160,187
Hanwha Savings Bank Co., Ltd.
￦
160,187
84,330
84,330
Q CELLS division
132,335
150,629
SolarOne division
78,346
77,352
Golden Bay Golf & Resort
12,061
12,061
-
5,189
Silent Power Inc.
Dreampharma Corp.
Others
￦
892
2,605
50,992
47,757
519,143
￦
540,110
US Dollars (Note 3)
2013
(in millions)
$
2012
152
Hanwha Savings Bank Co., Ltd.
$
152
80
80
Q CELLS division
125
143
SolarOne division
74
73
Golden Bay Golf & Resort
11
11
Silent Power Inc.
-
5
Dreampharma Corp.
1
2
Others
48
$
491
94
45
$
511
The recoverable amounts of CGU have been determined based on value-in-use calculations. The
key assumptions used for value-in-use calculations as of December 31, 2013 are as follows:
Key assumptions
Operating profit ratio
Growth rate
1
2
Hanwha
Savings Bank
Co., Ltd.
Q CELLS
division
SolarOne
division
Golden Bay
Golf & Resort
20.1%
17.5%
20.1%
13.2%
9.1%
19.3%
11.1%
4.3%
Pre-tax discount rate
10.0%
14.4%
13.5%
10.0%
Operating profit ratio is a weighted average operating profit to revenue ratio used to extrapolate cash flows
for certain budget period
2
Growth rate is a compounded annual growth rate used to extrapolate cash flows for certain budget period.
1
Key assumptions
Growth rate of Deferred policy acquisition costs1
5%
Pre-tax discount rate
12%
1
Growth rate of deferred policy acquisition costs for calculating the expectation of cash flow for the next five
years.
The impairment test suggests that, except for Dreampharma Corp. and Silent Power Inc. operating
segments, the carrying value of cash generating units does not exceed the recoverable amount.
The carrying values of Dreampharma Corp. and Silent Power Inc. segments that exceed their
respective recoverable amounts are all attributed to goodwill. The Group recognized impairment
loss on goodwill amounting to ￦ 1,713 million(equivalent to US$ 2 million) and ￦ 5,304
million(equivalent to US$ 5 million) for Dreampharma Corp. and Silent Power Inc., respectively.
95
18. Trade and Other Payables (Non-Financial Business)
Trade and other payables as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Trade payables
￦
Non-current
2,286,724
Other payables
2012
￦
564,111
￦
2,850,835
Current
-
￦
13,643
￦
13,643
￦
-
515,499
￦
2,628,457
36,677
￦
36,677
US Dollars (Note 3)
(in millions)
2013
Current
Trade payables
Non-current
2,112,958
$
Non-current
2,167
Other payables
2012
$
535
$
Current
-
$
13
2,702
$
13
Non-current
2,002
$
-
488
$
2,490
35
$
35
19. Borrowings and Debentures (Non-Financial Business)
Details of borrowings and debentures as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Bank borrowings
￦
Debentures
2012
Non-current
￦
3,112,701
1,619,757
￦
2,975,134
Current
￦
2,718,071
￦
4,732,458
5,693,205
￦
1,327,802
￦
4,829,485
1,949,441
2,893,784
￦
4,843,225
US Dollars (Note 3)
(in millions)
2013
Current
Bank borrowings
Non-current
3,501,683
$
Debentures
2012
Non-current
2,950
$
1,535
$
2,819
Current
$
2,576
4,485
$
96
5,395
3,318
Non-current
$
1,258
$
4,576
1,847
2,742
$
4,589
Details of short-term borrowings(including current portion of long-term borrowings) as of December
Korean Won
(in millions)
Creditor
Annual interest
rate (%)
Korea Development
Bank and others
2.50 ~ 4.96
Usance
Woori Bank and
others
Libor + 0.30 ~ 2.50
General borrowings
Woori Bank and
others
0.80 ~ 6.90
Bank overdraft
2013
￦
￦
13,786
￦
19,883
57,852
84,375
3,041,063
3,397,425
3,112,701
￦
3,501,683
US Dollars (Note 3)
(in millions)
Creditor
Annual interest
rate (%)
Korea Development
Bank and others
2.50 ~ 4.96
Usance
Woori Bank and
others
Libor + 0.30 ~ 2.50
General borrowings
Woori Bank and
others
0.80 ~ 6.90
Bank overdraft
2012
2013
$
$
97
2012
13
$
19
55
80
2,882
3,219
2,950
$
3,318
Details of long-term borrowings of non-financial business as of December 31, 2013 and 2012, are
as follows:
(in millions)
Korean Won
Creditor
Annual interest
Rate (%)
General loan(longterm)
Kookmin Bank and
others
2.92 ~ 4.70
Loan for industrial
facilities
Korea Development
Bank and others
1.75 ~ 5.31
Fund for development
of overseas mineral
resources
Korea Resources
Corporation
of overseas forest
2013
￦
2012
590,220
￦
904,266
2,127,281
930,342
0.75
3,585
3,799
National Forestry
Cooperative
Federation
1.5
4,678
1,522
Project financing
Woori Bank and
others
5.5
200,795
58,404
Loan for special
operating funds
Korea Development
Bank and others
1.00 ~ 2.00
3,186
4,448
Hanwha Hotels and
Resorts the first Asset
Securitization Co, Ltd
4.65
40,000
40,000
Fund for energy
Korea Development
Bank and others
1.75 ~ 3.00
5,366
6,608
Others
Korea Development
Capital and others
1.00 ~ 6.30
23
52
ABS1
￦
98
2,975,134
￦
1,949,441
(in millions)
US Dollars (Note 3)
Creditor
Annual interest
Rate (%)
General loan(longterm)
Kookmin Bank and
others
2.92 ~ 4.70
Loan for industrial
facilities
Korea Development
Bank and others
1.75 ~ 5.31
of overseas mineral
resources
Korea Resources
Corporation
of overseas forest
2013
$
2012
559
$
857
2,016
882
0.75
3
4
National Forestry
Cooperative
Federation
1.5
4
1
Project financing
Woori Bank and
others
5.5
190
55
Loan for special
operating funds
Korea Development
Bank and others
1.00 ~ 2.00
3
4
Hanwha Hotels and
Resorts the first Asset
Securitization Co, Ltd
4.65
38
38
Fund for energy
Korea Development
Bank and others
1.75 ~ 3.00
5
6
Others
Korea Development
Capital and others
1.00 ~ 6.30
1
1
ABS1
$
1
2,819
$
1,848
The Group deposits future receivables and issued asset-backed securities(ABS) based on credit card receivables and
future receivables through Hanwha Hotels and Resorts the first Asset Securitization Co., Ltd., which is a subsidiary of the
Group. The Group borrowed ￦40,000 million (equivalent to US$ 38 million) from Hanwha Hotels and Resorts the first
Asset Securitization Co., Ltd.
99
Details of debentures as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
Creditor
Latest
maturity date
Annual
interest rate
(%)
Hanwha Corp.
196th Public
subscription bond
2013-02-11
-
Hanwha Corp.
197th Public
subscription bond
2013-05-07
-
-
150,000
2013-08-06
-
-
100,000
2014-02-21
4.74
110,000
110,000
2014-06-21
4.41
200,000
200,000
2014-09-29
4.53
200,000
200,000
2013
￦
2012
-
￦
100,000
th
Hanwha Corp.
198 Public
subscription bond
th
Hanwha Corp.
199 Public
subscription bond
th
Hanwha Corp.
200 Public
subscription bond
st
Hanwha Corp.
201 Public
subscription bond
nd
Hanwha Corp.
202 Public
subscription bond
2014-11-17
4.39
180,000
180,000
Hanwha Corp.
203rd Public
subscription bond
2015-07-25
3.45
150,000
150,000
2015-12-12
3.47
150,000
150,000
2016-05-03
3.07
200,000
-
150,000
-
th
Hanwha Corp.
204 Public
subscription bond
th
Hanwha Corp.
205 Public
subscription bond
th
Hanwha Corp.
206 Public
subscription bond
2016-10-25
3.79
Hanwha Engineering
and Construction
Corp.
47th Public
subscription bond
2013-04-29
-
-
40,000
Hanwha Engineering
and Construction
Corp.
48-1st Public
subscription bond
2013-07-28
-
-
58,700
Hanwha Engineering
and Construction
Corp.
48-2nd Public
subscription bond
2013-07-28
-
-
9,100
Hanwha Engineering
and Construction
Corp.
51-1st Public
subscription bond
2013-09-16
-
-
165,000
Hanwha Engineering
and Construction
Corp.
51-2nd Public
subscription bond
2013-09-16
-
-
28,700
Hanwha Engineering
and Construction
Corp.
53rd Public
subscription bond
2013-12-14
-
-
100,000
Hanwha Engineering
and Construction
Corp.
57th Public
subscription bond
2014-04-21
5.80
210,000
210,000
Hanwha Engineering
and Construction
Corp.
61st Public
subscription bond
2014-11-29
5.95
80,000
80,000
Hanwha Engineering
and Construction
Corp.
62nd Private
subscription bond
2014-01-21
5.84
100,000
100,000
100
(in millions)
Korean Won
Creditor
Latest
maturity date
Annual
interest rate
(%)
Hanwha Engineering
and Construction
Corp.
63rd Private
subscription bond
2013-03-22
-
Hanwha Engineering
and Construction
Corp.
64th Private
subscription bond
2014-04-19
Hanwha Engineering
and Construction
Corp.
65th Public
subscription bond
Hanwha Engineering
and Construction
Corp.
2013
2012
-
20,000
5.64
30,000
30,000
2015-07-04
4.90
200,000
200,000
66th Private
subscription bond
2013-07-27
-
-
20,000
Hanwha Engineering
and Construction
Corp.
67th Private
subscription bond
2013-09-06
-
-
30,000
Hanwha Engineering
and Construction
Corp.
68th Private
subscription bond
2014-03-22
4.65
20,000
-
Hanwha Engineering
and Construction
Corp.
69th Private
subscription bond
2016-04-26
4.26
150,000
-
Hanwha Engineering
and Construction
Corp.
70th Private
subscription bond
2014-07-26
4.92
20,000
-
Hanwha Engineering
and Construction
Corp.
71st Public
subscription bond
2016-08-12
5.17
230,000
-
Hanwha Engineering
and Construction
Corp.
72nd Public
subscription bond
2015-12-06
5.05
80,000
-
Hanwha Engineering
and Construction
Corp.
73rd Public
subscription bond
2015-06-16
4.99
20,000
-
Hanwha Hotels &
Resorts Co., Ltd.
21st Private
subscription bond
2013-04-29
-
-
32,133
Hanwha Hotels &
Resorts Co., Ltd.
22nd Private
subscription bond
2013-08-31
-
-
10,000
2013-10-21
-
-
20,000
2013-02-11
-
-
9,000
2014-06-03
1.44
31,659
32,133
2014-07-10
4.88
10,000
10,000
-
20,000
20,000
-
-
32,133
20,000
20,000
Hanwha Hotels &
Resorts Co., Ltd.
Hanwha Hotels &
Resorts Co., Ltd.
Hanwha Hotels &
Resorts Co., Ltd.
Hanwha Hotels &
Resorts Co., Ltd.
rd
23 Public
subscription bond
th
24 Public
subscription bond
th
26 Private
subscription bond
th
27 Private
subscription bond
th
Hanwha Hotels &
Resorts Co., Ltd.
28 Private
subscription bond
2013-08-24
-
Hanwha Hotels &
Resorts Co., Ltd.
29th Private
subscription bond
2015-08-26
4.37
Hanwha Galleria Co.,
Ltd.
SCB Hong Kong
2013-10-18
-
2014-12-20
4.70
Ltd.
th
60 Public
subscription bond
101
(in millions)
Korean Won
Creditor
Latest
maturity date
Annual
interest rate
(%)
Ltd.
61-1st Public
subscription bond
2015-09-19
3.66
50,000
50,000
Ltd.
61-2nd Public
subscription bond
2017-09-19
4.34
30,000
30,000
Ltd.
62nd Public
subscription bond
2016-10-15
3.98
50,000
-
FRN
2016-11-21
3.00
31,659
-
9 Private
subscription bond
2014-12-07
5.38
65,000
65,000
2015-12-07
5.52
70,000
70,000
-
30,000
Ltd.
2013
2012
th
Asan Techno Valley
th
Asan Techno Valley
10 Private
subscription bond
th
Hanwha L&C
Corporation
43 Public
subscription bond
2013-09-13
-
Hanwha L&C
Corporation
44th Public
subscription bond
2014-02-18
5.98
30,000
30,000
Hanwha L&C
Corporation
46th Public
subscription bond
2014-10-27
5.58
40,000
40,000
2015-01-26
5.32
40,000
40,000
2016-06-27
2.45
31,659
-
2013-02-25
-
-
200,000
Hanwha L&C
Corporation
Hanwha L&C
Corporation
Hanwha Chemical
Corporation
th
47 Public
subscription bond
th
48 Private
subscription bond
th
227 Public
subscription bond
th
Hanwha Chemical
Corporation
228 Private
subscription bond
2013-04-09
-
-
32,133
Hanwha Chemical
Corporation
229th Private
subscription bond
2013-09-02
-
-
32,133
Hanwha Chemical
Corporation
230-1st Public
subscription bond
2013-11-11
-
-
50,000
2015-11-11
4.77
100,000
100,000
2014-05-27
4.26
100,000
100,000
2014-07-21
2.24
84,424
85,688
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
nd
230-2 Public
subscription bond
st
231 Public
subscription bond
nd
232 Private
subscription bond
st
Hanwha Chemical
Corporation
233-1 Public
subscription bond
2014-10-14
4.20
90,000
90,000
Hanwha Chemical
Corporation
233-2nd Public
subscription bond
2016-10-14
4.43
60,000
60,000
Hanwha Chemical
Corporation
234-1st Public
subscription bond
2015-02-07
4.05
50,000
50,000
2017-02-07
4.42
100,000
100,000
2015-04-23
3.86
50,000
50,000
2017-04-23
4.14
100,000
100,000
2015-06-20
3.64
150,000
150,000
2016-02-25
3.10
150,000
-
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
nd
234-2 Public
subscription bond
st
235-1 Public
subscription bond
nd
235-2 Public
subscription bond
th
236 Public
subscription bond
th
237 Public
subscription bond
102
(in millions)
Korean Won
Creditor
Latest
maturity date
Annual
interest rate
(%)
Hanwha Chemical
Corporation
238th Private
subscription bond
2016-04-11
1.94
73,871
-
Hanwha Chemical
Corporation
239th Private
subscription bond
2016-09-12
2.04
52,765
-
Hanwha SolarOne
Co., Ltd.
Convertible
Bond1
2018-01-15
3.50
80,214
59,021
Hanwha SolarOne
Co., Ltd.
FRN
2016-01-15
2.48
105,530
-
4,346,781
4,230,874
Less: present value discounts
Less: current portion (including discount on bonds)
103
2013
2012
(8,953)
(9,288)
(1,619,757)
(1,327,802)
￦ 2,718,071
￦ 2,893,784
(in millions)
Hanwha Corp.
US Dollars (Note 3)
Creditor
Latest
maturity date
Annual
interest rate
(%)
196th Public
subscription bond
2013-02-11
-
2013
$
2012
-
$
95
th
Hanwha Corp.
197 Public
subscription bond
2013-05-07
-
-
142
Hanwha Corp.
198th Public
subscription bond
2013-08-06
-
-
95
2014-02-21
4.74
104
104
2014-06-21
4.41
190
190
2014-09-29
4.53
190
190
2014-11-17
4.39
171
171
th
Hanwha Corp.
199 Public
subscription bond
th
Hanwha Corp.
200 Public
subscription bond
st
Hanwha Corp.
201 Public
subscription bond
nd
Hanwha Corp.
202 Public
subscription bond
rd
Hanwha Corp.
203 Public
subscription bond
2015-07-25
3.45
142
142
Hanwha Corp.
204th Public
subscription bond
2015-12-12
3.47
142
142
2016-05-03
3.07
190
-
142
-
th
Hanwha Corp.
205 Public
subscription bond
th
Hanwha Corp.
206 Public
subscription bond
2016-10-25
3.79
Hanwha Engineering
and Construction
Corp.
47th Public
subscription bond
2013-04-29
-
-
38
Hanwha Engineering
and Construction
Corp.
48-1st Public
subscription bond
2013-07-28
-
-
56
Hanwha Engineering
and Construction
Corp.
48-2nd Public
subscription bond
2013-07-28
-
-
9
Hanwha Engineering
and Construction
Corp.
51-1st Public
subscription bond
2013-09-16
-
-
156
Hanwha Engineering
and Construction
Corp.
51-2nd Public
subscription bond
2013-09-16
-
-
27
Hanwha Engineering
and Construction
Corp.
53rd Public
subscription bond
2013-12-14
-
-
95
Hanwha Engineering
and Construction
Corp.
57th Public
subscription bond
2014-04-21
5.80
199
199
Hanwha Engineering
and Construction
Corp.
61st Public
subscription bond
2014-11-29
5.95
76
76
Hanwha Engineering
and Construction
Corp.
62nd Private
subscription bond
2014-01-21
5.84
95
95
Hanwha Engineering
and Construction
Corp.
63rd Private
subscription bond
2013-03-22
-
-
19
104
(in millions)
US Dollars (Note 3)
Creditor
Latest
maturity date
Annual
interest rate
(%)
Hanwha Engineering
and Construction
Corp.
64th Private
subscription bond
2014-04-19
5.64
28
28
Hanwha Engineering
and Construction
Corp.
65th Public
subscription bond
2015-07-04
4.90
190
190
Hanwha Engineering
and Construction
Corp.
66th Private
subscription bond
2013-07-27
-
-
19
Hanwha Engineering
and Construction
Corp.
67th Private
subscription bond
2013-09-06
-
-
28
Hanwha Engineering
and Construction
Corp.
68th Private
subscription bond
2014-03-22
4.65
19
-
Hanwha Engineering
and Construction
Corp.
69th Private
subscription bond
2016-04-26
4.26
142
-
Hanwha Engineering
and Construction
Corp.
70th Private
subscription bond
2014-07-26
4.92
19
-
Hanwha Engineering
and Construction
Corp.
71st Public
subscription bond
2016-08-12
5.17
218
-
Hanwha Engineering
and Construction
Corp.
72nd Public
subscription bond
2015-12-06
5.05
76
-
Hanwha Engineering
and Construction
Corp.
73rd Public
subscription bond
2015-06-16
4.99
19
-
Hanwha Hotels &
Resorts Co., Ltd.
21st Private
subscription bond
2013-04-29
-
-
30
2013-08-31
-
-
9
2013-10-21
-
-
19
2013-02-11
-
-
9
Hanwha Hotels &
Resorts Co., Ltd.
Hanwha Hotels &
Resorts Co., Ltd.
Hanwha Hotels &
Resorts Co., Ltd.
2013
2012
nd
22 Private
subscription bond
rd
23 Public
subscription bond
th
24 Public
subscription bond
th
Hanwha Hotels &
Resorts Co., Ltd.
26 Private
subscription bond
2014-06-03
1.44
30
30
Hanwha Hotels &
Resorts Co., Ltd.
27th Private
subscription bond
2014-07-10
4.88
9
9
Hanwha Hotels &
Resorts Co., Ltd.
28th Private
subscription bond
2013-08-24
-
-
19
19
-
-
30
th
Hanwha Hotels &
Resorts Co., Ltd.
29 Private
subscription bond
2015-08-26
4.37
Ltd.
SCB Hong Kong
2013-10-18
-
2014-12-20
4.70
19
19
2015-09-19
3.66
47
47
Ltd.
Ltd.
th
60 Public
subscription bond
st
61-1 Public
subscription bond
105
(in millions)
US Dollars (Note 3)
Creditor
Latest
maturity date
Annual
interest rate
(%)
Ltd.
61-2nd Public
subscription bond
2017-09-19
4.34
28
28
Ltd.
62nd Public
subscription bond
2016-10-15
3.98
47
-
FRN
2016-11-21
3.00
30
-
9 Private
subscription bond
2014-12-07
5.38
62
62
2015-12-07
5.52
66
66
2013-09-13
-
-
28
Ltd.
2013
2012
th
Asan Techno Valley
th
Asan Techno Valley
Hanwha L&C
Corporation
10 Private
subscription bond
th
43 Public
subscription bond
th
Hanwha L&C
Corporation
44 Public
subscription bond
2014-02-18
5.98
28
28
Hanwha L&C
Corporation
46th Public
subscription bond
2014-10-27
5.58
38
38
Hanwha L&C
Corporation
47th Public
subscription bond
2015-01-26
5.32
38
38
2016-06-27
2.45
30
-
2013-02-25
-
-
190
2013-04-09
-
-
30
Hanwha L&C
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
th
48 Private
subscription bond
th
227 Public
subscription bond
th
228 Private
subscription bond
th
Hanwha Chemical
Corporation
229 Private
subscription bond
2013-09-02
-
-
30
Hanwha Chemical
Corporation
230-1st Public
subscription bond
2013-11-11
-
-
47
Hanwha Chemical
Corporation
230-2nd Public
subscription bond
2015-11-11
4.77
95
95
2014-05-27
4.26
95
95
2014-07-21
2.24
80
81
2014-10-14
4.20
85
85
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
st
231 Public
subscription bond
nd
232 Private
subscription bond
st
233-1 Public
subscription bond
nd
Hanwha Chemical
Corporation
233-2 Public
subscription bond
2016-10-14
4.43
57
57
Hanwha Chemical
Corporation
234-1st Public
subscription bond
2015-02-07
4.05
47
47
Hanwha Chemical
Corporation
234-2nd Public
subscription bond
2017-02-07
4.42
95
95
2015-04-23
3.86
47
47
2017-04-23
4.14
95
95
2015-06-20
3.64
142
142
2016-02-25
3.10
142
-
2016-04-11
1.94
70
-
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
Hanwha Chemical
Corporation
st
235-1 Public
subscription bond
nd
235-2 Public
subscription bond
th
236 Public
subscription bond
th
237 Public
subscription bond
th
238 Private
subscription bond
106
(in millions)
US Dollars (Note 3)
Creditor
Latest
maturity date
Annual
interest rate
(%)
Hanwha Chemical
Corporation
239th Private
subscription bond
2016-09-12
2.04
50
-
Hanwha SolarOne
Co., Ltd.
Convertible
Bond1
2018-01-15
3.50
76
56
Hanwha SolarOne
Co., Ltd.
FRN
2016-01-15
2.48
100
-
4,119
4,009
2013
Less: current portion (including discount on bonds)
$
107
2012
(8)
(9)
(1,535)
(1,258)
2,576
$
2,742
1
As of December 31, 2013, details of convertible bonds issued by the Group, are as follows:
Issuance company
Par value
USD 100,600,000
Coupon rate
3.50%
Maturity
2018-01-15
Book value
\ 80,214 million
Condition of debt conversion
Convertible to USD 19.125 per ADS(American Depositary Shares)
at any time prior to maturity.
Book value and fair value of non-current borrowings of non-financial business as of December 31,
Korean Won
(in millions)
2013
2012
Book value
Bank borrowings
￦
Fair value
2,975,134
￦
2,955,425
2,718,071
Debentures
￦
5,693,205
￦
Book value
￦
2,767,708
2,893,784
5,723,133
￦ 4,843,225
￦
1,911,741
2,950,188
￦
4,861,929
US Dollars (Note 3)
(in millions)
2013
Book value
Bank borrowings
Fair value
1,949,441
$
Debentures
2012
Fair value
2,819
$
2,576
$
5,395
2,801
Book value
$
2,623
$
5,424
1,847
Fair value
$
2,742
$
4,589
1,812
2,796
$
4,608
The fair value of current borrowings is the same as the book value as the effect of the discount is
not significant.
108
20. Other Financial Liabilities (Non-Financial Business)
Other financial liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Derivatives
￦
Non-current
6,284
Deposits received
Accrued expenses
Financial guarantee contract
1
liabilities
Others
2012
￦
108,824
681,931
￦
Non-current
15,893
734,753
(238,724)
(443)
(243,785)
4,134
208,255
3,035
19,041
480
15,764
63
310,710
17,120
￦
470,753
134
￦
332,827
9,601
￦
504,857
US Dollars (Note 3)
2013
Current
Accrued expenses
Financial guarantee contract
liabilities 1
6
$
Current
6
$
Non-current
15
$
1
103
646
88
696
(1)
(226)
(1)
(231)
164
4
197
3
18
1
15
1
3
16
1
9
Others
$
2012
Non-current
$
Deposits received
1
1,190
93,224
(124)
(in millions)
Derivatives
￦
173,022
3,663
￦
Current
5,812
293
$
447
$
315
$
479
The Group provides credit guarantees for developers on housing project loans and others (Note 60).
Book value and fair value of non-current deposits received of non-financial business as of
December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
2012
Book value
Deposits received
￦
Fair value
443,207
￦
501,581
Book value
Fair value
￦
￦
490,968
US Dollars (Note 3)
(in millions)
2013
2012
Book value
Deposits received
545,574
$
Fair value
420
$
475
Book value
Fair value
$
$
465
The fair value is calculated at the present value of estimated future cash flows discounted at the
borrowing interest rate (2013: 4.93%; 2012: 5.38%).
109
517
21. Other Liabilities (Non-Financial Business)
Details of other liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Current
Advances from customers
￦
Non-current
494,681
￦
Total
957,964
￦
1,452,645
Withholdings
102,955
-
VAT payables
19,349
-
19,349
Deferred revenues
35,760
174,269
210,029
Overbilled amount
324,532
￦
977,277
102,955
￦
1,132,233
324,532
￦
2,109,510
US Dollars (Note 3)
(in millions)
2013
Current
$
Non-current
468
$
Total
908
$
1,376
Withholdings
98
-
98
VAT payables
18
-
18
Deferred revenues
34
165
199
Overbilled amount
308
-
$
926
$
1,073
308
$
1,999
Korean Won
(in millions)
2012
Current
￦
Non-current
470,563
￦
Total
1,077,403
￦
1,547,966
Withholdings
102,794
-
102,794
VAT payables
18,939
-
18,939
Deferred revenues
36,075
172,037
208,112
Overbilled amount
278,881
-
￦
907,252
￦
1,249,440
278,881
￦
2,156,692
US Dollars (Note 3)
(in millions)
2012
Current
$
Non-current
447
$
Total
1,021
$
1,468
Withholdings
97
-
97
VAT payables
18
-
18
Deferred revenues
34
163
197
Overbilled amount
264
-
$
860
110
$
1,184
264
$
2,044
22. Post-employment Benefits (Non-Financial Business)
Details of net defined benefit liabilities recognized in the statements of financial position as of
Korean Won
(in millions)
2013
Present value of
defined benefit obligations
￦
785,603
￦
726,631
Fair value of plan assets
US Dollars (Note 3)
2012
2013
￦
756,927
￦
697,179
(58,972)
2012
$
744
$
689
(59,748)
$
717
$
661
(55)
(56)
Changes in the defined benefit obligations for the years ended December 31, 2013 and 2012, are
as follows:
Korean Won
(in millions)
2013
￦
Beginning balance
1
Current service cost
US Dollars (Note 3)
2012
756,927
￦
2013
640,534
$
2012
717
$
607
105,309
92,006
100
87
Interest expense
33,209
33,920
31
32
Remeasuments
(48,046)
62,514
(45)
59
46
-
-
-
(60,111)
(73,277)
(57)
(69)
(1,084)
-
(1)
-
-
(13)
-
-
(647)
1,243
(1)
1
Contributions
Payments from plans:
- Benefit payments
- Settlements
Other2
Ending balance
￦
785,603
1
￦
756,927
$
744
$
Current service cost amounting to ￦ 1,086 million(equivalent to US$ 1,029 thousand) is transferred to
‘Construction in progress’ for the year ended December 31, 2013. Current service cost amounting to ￦ 338
million(equivalent to US$ 320 thousand) was transferred to ‘Construction in progress’ for the year ended
December 31, 2012.
2
Other includes effect of changes in exchange rate.
111
717
The movements in the fair value of plan assets for the years ended December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Beginning balance
￦
Interest income
Remeasurements
1
Contributions
US Dollars (Note 3)
2012
￦
59,748
2013
72,464
$
2012
57
$
69
4,962
8,371
5
8
(208)
(1,128)
-
(1)
2,143
831
1
1
(8,084)
(18,419)
(8)
(17)
(457)
-
(1)
(1)
Payments from plans:
- Benefit payments
- Settlements
Other2
Ending balance
1
2
￦
-
(337)
-
868
(2,034)
1
￦
58,972
59,748
$
55
(3)
$
Excluded the amount which included in interest income.
Other includes effect of changes in exchange rate.
The principal actuarial assumptions as of December 31, 2013 and 2012, are as follows:
2013
2012
Discount rate
3.67~5.88%
3.55~5.88%
Salary growth rate
3.16~6.00%
1.30~6.24%
The sensitivity of the defined benefit obligations as of December 31, 2013, to changes in the
weighted principal assumptions is:
Discount rate
Salary growth rate
Changes in
principal
assumption
Effect on defined
benefit obligation
1% increase
5.06% decrease
1% decrease
5.83% increase
1% increase
5.94% increase
1% decrease
5.25% decrease
112
56
Plan assets as of December 31, 2013 and 2012, consist of:
Korean Won
(in millions)
2013
Amount
Equity instruments
￦
Debt instruments
Other
￦
2012
Composition
7,075
12.00%
3,108
Amount
￦
2.97%
5.27%
36,989
61.91%
48,789
82.73%
20,985
35.12%
58,972
100.00%
59,748
100.00%
￦
US Dollars (Note 3)
(in millions)
2013
Amount
Equity instruments
Composition
1,774
$
Debt instruments
Other
$
2012
Composition
7
12.00%
3
Amount
Composition
2
2.97%
5.27%
35
61.91%
46
82.73%
20
35.12%
56
100.00%
57
100.00%
113
$
$
23. Provisions (Non-Financial Business)
Details and changes in the provisions for other liabilities and charges for the years ended
Korean Won
(in millions)
2013
Beginning balance
Provision for
construction
warranties
Provision for
product
warranties
￦
￦
Additional provisions
49,174
49,721
￦
79,036
Provision for
long-term
performance
incentive
Others
￦
31,085
23,072
2,029
23,797
Total
￦
183,092
1,383
76,205
Used during year
(29,963)
(9,482)
(712)
-
(40,157)
(14,432)
(33,159)
(890)
(15,760)
(64,241)
(12)
2,757
256
-
Others
1
Ending balance
￦
Current
Non-current
54,488
￦
￦
62,224
￦
31,768
9,420
3,001
￦
157,900
-
40,794
30,343
9,420
80,557
54,488
21,430
1,425
-
77,343
US Dollars (Note 3)
(in millions)
2013
Provision for
construction
warranties
Beginning balance
$
47
Provision for
product
warranties
$
75
Provision for
long-term
performance
incentive
Others
$
29
$
23
Total
$
174
47
22
2
1
72
Used during year
(28)
(9)
(1)
-
(38)
(14)
(31)
(1)
(15)
(61)
-
2
-
-
Others1
Ending balance
Current
Non-current
$
52
$
59
$
29
$
9
2
$
149
-
39
28
9
76
52
20
1
-
73
114
Korean Won
(in millions)
2012
Beginning balance
Provision for
construction
warranties
Provision for
product
warranties
￦
￦
32,217
￦
34,367
Provision for
long-term
performance
incentive
Others
￦
34,260
13,439
Total
￦
114,283
21,867
9,265
1,980
10,466
43,578
Used during year
(6,068)
(1,433)
(2,314)
-
(9,815)
(12)
(3,121)
(1,263)
-
(4,396)
1,170
39,958
(1,578)
(108)
39,442
Others1
Ending balance
￦
Current
Non-current
49,174
￦
￦
49,174
￦
79,036
44,547
￦
￦
31,085
30,093
￦
34,489
23,797
￦
183,092
￦
108,452
￦
992
23,797
74,640
US Dollars (Note 3)
(in millions)
2012
Provision for
construction
warranties
Beginning balance
$
31
Provision for
product
warranties
$
33
Provision for
long-term
performance
incentive
Others
$
32
$
13
Total
$
109
21
8
2
10
41
Used during year
(6)
(1)
(2)
-
(9)
-
(3)
(1)
-
(4)
1
38
(2)
-
37
Others
1
Ending balance
Current
$
47
$
75
-
43
$
29
28
$
23
Non-current
$
47
$
32
$
1
$
23
Other includes changes in scope of consolidation and effect of changes in exchange rate.
1
115
$
-
174
71
$
103
24. Construction contracts (Non-Financial Business)
Changes in the remaining balance of construction contracts for the year ended December 31, 2013,
are as follows:
Korean Won
(in millions)
2013
Beginning
balance
Domestic architecture
construction
￦
Recognized
construction
revenue
Changes
￦
1,011,486
498,836
￦
(712,942)
Ending
balance
￦
797,380
Domestic housing construction
1,346,533
339,790
(690,890)
995,433
Domestic civil construction
1,638,681
274,443
(408,532)
1,504,592
132,123
310,082
(201,610)
240,595
9,759,100
963,508
(1,804,861)
8,917,747
2,386,659
￦ (3,818,835)
￦ 12,455,747
Domestic plant construction
Overseas subcontract
￦ 13,887,923
￦
US Dollars (Note 3)
(in millions)
2013
Beginning
balance
construction
$
Changes
958
$
474
Recognized
construction
revenue
$
(676)
Ending
balance
$
756
1,276
322
(655)
943
1,553
260
(387)
1,426
125
294
(191)
228
9,248
$
912
13,160
$
116
2,262
(1,710)
$
(3,619)
8,450
$
11,803
Details of in-progress construction contracts such as recognized construction profit or loss as of
Korean Won
(in millions)
2013
construction
Accumulated
construction
revenue
Accumulated
construction
cost
Accumulated
revenue
￦
￦
￦
3,118,818
2,811,389
307,429
Deferred
revenue
￦
48,693
3,579,225
3,073,394
505,831
9,847
2,588,822
2,328,288
260,534
16,099
706,974
668,492
38,482
29,400
4,160,388
3,867,825
￦ 14,154,227
￦ 12,749,388
292,563
￦
1,404,839
841,463
￦
945,502
US Dollars (Note 3)
(in millions)
2013
Accumulated
construction
revenue
construction
$
2,955
Accumulated
construction
cost
$
2,664
Accumulated
revenue
$
291
Deferred
revenue
$
47
3,392
2,912
480
9
2,453
2,206
247
15
670
634
36
28
3,942
$
3,665
13,412
$
117
12,081
277
$
1,331
797
$
896
Korean Won
(in millions)
2012
construction
Accumulated
construction
revenue
Accumulated
construction
cost
Accumulated
revenue
￦
￦
￦
2,587,233
2,322,937
264,296
Deferred
revenue
￦
47,713
2,793,484
2,374,427
419,057
19,570
2,001,652
1,778,581
223,071
14,985
816,386
779,841
36,545
10,008
2,295,016
2,123,350
171,666
1,072,937
9,379,136
￦ 1,114,635
￦ 1,165,213
￦ 10,493,771
￦
US Dollars (Note 3)
(in millions)
2012
Accumulated
construction
revenue
construction
$
Accumulated
construction
cost
2,451
$
2,201
Accumulated
revenue
$
250
Deferred
revenue
$
45
2,647
2,250
397
19
1,897
1,686
211
14
$
774
739
35
9
2,175
2,012
163
1,017
9,944
$
118
8,888
$
1,056
$
1,104
Details of unbilled and overbilled amounts related to construction as of December 31, 2013 and
Korean Won
(in millions)
2013
Unbilled
1
amount
construction
￦
2012
Overbilled
2
amount
111,644
￦
52,376
Unbilled
1
amount
￦
Overbilled
2
amount
106,746
￦
36,536
305,388
73,314
203,725
39,443
116,559
26,059
94,270
28,660
8,497
36,763
12,956
6,457
806,059
￦ 1,348,147
67,204
￦
255,716
370,881
￦
788,578
258,348
US Dollars (Note 3)
(in millions)
2013
Unbilled
amount1
construction
147,252
￦
$
2013
Overbilled
amount2
106
$
50
Unbilled
amount1
$
Overbilled
amount2
101
$
35
289
69
193
37
111
24
90
27
8
35
12
6
764
64
351
140
$
1
2
1,278
$
242
$
Included in ‘Trade and other receivables’ in the statements of financial position.
Included in ‘Other current liabilities’ in the statements of financial position.
119
747
$
245
25. Real-estate Construction (Incheon Factory Site Development)
On May 25, 2005, the Group concluded a business agreement, selling 50% of the Company-owned
Incheon factory development site to Fine-Partners Corp. and carrying out a 50:50 joint
development with Fine-Partners Corp. In addition, the joint venture concluded comprehensive
development contracts and development agency contracts with Hanwha Engineering &
Construction Corp. As of the December 31, 2013, the development project of the Group is ongoing.
The Group’s balance of real-estate construction contracts and the related revenues recognized for
the year ended December 31, 2013, are as follows:
Korean Won
(in millions)
2013
Increase
(Decrease)
Beginning
and others
￦
￦
221,759
Revenue
recognized
(34,344)
￦
Ending
(88,917)
￦
98,498
US Dollars (Note 3)
(in millions)
2013
Increase
(Decrease)
Beginning
and others
$
210
$
(33)
Revenue
recognized
$
Ending
(84)
$
93
Details of real-estate revenue and cost for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
and others
2012
Real-estate
revenue
Real-estate
cost
Real-estate
revenue
Real-estate
cost
￦
￦
￦
￦
88,917
67,654
78,132
US Dollars (Note 3)
(in millions)
2012
and others
53,880
2011
Real-estate
revenue
Real-estate
cost
Real-estate
revenue
Real-estate
cost
$
$
$
$
84
120
64
74
51
The following table presents the breakdown of unbilled/overbilled amount related to construction as
of December 31, 2013 and 2012:
Korean Won
(in millions)
2013
Unbilled
1
amount
and others
￦
2012
Overbilled
amount
￦
-
Unbilled
1
amount
-
￦
28,668
2013
Unbilled
1
amount
1
￦
-
US Dollars (Note 3)
(in millions)
and others
Overbilled
amount
$
2012
Overbilled
amount
-
$
Unbilled
1
amount
-
$
Included in ‘Trade and other receivables’ in the statements of financial position.
121
Overbilled
amount
27
$
-
26. Financial Instruments by Category (Financial Business)
Categorizations of financial assets as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Financial
assets at fair
value through
profit or loss
Cash and cash
equivalents
￦
Deposits
-
Loans and
receivables
assets
￦
￦
327,550
-
Held-tomaturity
financial
assets
￦
-
Hedging
derivative
financial
instruments
Derivatives
held for
trading
￦
￦
-
Total
-
￦
327,550
-
667,772
-
-
-
-
667,772
2,928,904
-
23,130,109
17,761,812
-
-
43,820,825
Loans and other
receivables
-
20,379,573
-
-
-
-
20,379,573
Derivative financial
assets
-
-
-
-
131,376
17,748
149,124
-
1,845,461
-
-
-
-
1,845,461
￦ 2,928,904
￦ 23,220,356
￦ 23,130,109
￦ 17,761,812
17,748
￦ 67,190,305
Securities
(in millions)
￦
131,376
￦
US Dollars (Note 3)
2013
Financial
assets at fair
value through
profit or loss
Cash and cash
equivalents
$
Deposits
Securities
-
assets
Loans and
receivables
$
Held-tomaturity
financial
assets
310
$
-
$
Hedging
derivative
financial
instruments
-
$
-
Derivatives
held for
trading
$
Total
-
$
310
-
633
-
-
-
-
633
2,775
-
21,918
16,832
-
-
41,525
Loans and other
receivables
-
19,312
-
-
-
-
19,312
assets
-
-
-
-
124
17
141
$
2,775
1,749
$
22,004
$
21,918
122
$
16,832
$
124
$
17
1,749
$
63,670
(in millions)
Korean Won
2012
Financial
assets at fair
value through
profit or loss
Cash and cash
equivalents
￦
Deposits
-
Loans and
receivables
assets
￦
￦
577,064
-
Held-tomaturity
financial
assets
￦
-
Hedging
derivative
financial
instruments
Derivatives
held for
trading
￦
￦
-
Total
-
￦
577,064
-
2,271,999
-
-
-
-
2,271,999
2,693,891
-
23,230,233
11,919,215
-
-
37,843,339
Loans and other
receivables
-
18,122,099
-
-
-
-
18,122,099
assets
-
-
-
-
96,410
11,563
107,973
Securities
-
1,599,534
-
-
￦ 2,693,891
22,570,696
￦ 23,230,233
￦ 11,919,215
(in millions)
￦
96,410
￦
-
1,599,534
11,563
￦ 60,522,008
US Dollars (Note 3)
2012
Financial
assets at fair
value through
profit or loss
Cash and cash
equivalents
$
Deposits
-
$
Held-tomaturity
financial
assets
assets
Loans and
receivables
547
$
-
$
Hedging
derivative
financial
instruments
-
$
-
Derivatives
held for
trading
$
Total
-
$
547
-
2,153
-
-
-
-
2,153
2,553
-
22,013
11,294
-
-
35,860
Loans and other
receivables
-
17,172
-
-
-
-
17,172
assets
-
-
-
-
91
11
102
-
1,516
-
-
-
-
1,516
Securities
$
2,553
$
21,388
$
22,013
123
$
11,294
$
91
$
11
$
57,350
Categorizations of financial liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Financial
liabilities
designated as
hedging
instruments
￦
13,136
￦
￦
Hedging
derivative
financial
instruments
Financial
liabilities at
amortized cost
13,136
-
￦
18,234
1,323,095
￦
1,323,095
Total
￦
￦
18,234
31,370
1,323,095
￦
1,354,465
US Dollars (Note 3)
(in millions)
2013
Financial
liabilities
designated as
hedging
instruments
Financial
liabilities at
amortized cost
$
12
$
-
$
12
$
1,254
-
Hedging
derivative
financial
instruments
Total
$
17
$
17
1,254
$
29
-
1,254
$
1,283
Korean Won
(in millions)
2012
Financial
liabilities
designated as
hedging
instruments
Financial
liabilities at
amortized cost
￦
18,355
￦
￦
18,355
-
-
Hedging
derivative
financial
instruments
￦
305
￦
305
1,375,478
￦
1,375,478
Total
￦
-
18,660
1,375,478
￦
1,394,138
US Dollars (Note 3)
(in millions)
2012
Financial
liabilities
designated as
hedging
instruments
$
17
Financial
liabilities at
amortized cost
Hedging
derivative
financial
instruments
$
$
$
17
124
1,303
$
1,303
Total
1
$
$
1
18
1,303
$
1,321
Details of the Group’s maturity analysis on financial assets as of December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Less than 1 year
￦
Debt securities
Overseas securities
Loans
1
2
￦
Over 1 year
Total
3
2,453,090
￦ 32,736,772
￦ 35,189,862
377,797
2,256,298
2,634,095
2,824,624
11,439,387
14,264,011
5,655,511
￦ 46,432,457
￦ 52,087,968
US Dollars (Note 3)
(in millions)
2013
Less than 1 year
Debt securities
$
2,325
Overseas securities1
Loans
2
$
Total3
Over 1 year
$
31,021
$
33,346
358
2,138
2,496
2,677
10,840
13,517
5,360
$
43,999
$
49,359
Korean Won
(in millions)
2012
Less than 1 year
Debt securities
￦
Loans2
￦
Over 1 year
Total
3
2,848,364
￦ 28,188,655
246,246
1,567,677
￦ 31,037,019
1,813,923
2,557,164
9,627,399
12,184,563
5,651,774
￦ 39,383,731
￦ 45,035,505
US Dollars (Note 3)
(in millions)
2012
Less than 1 year
Debt securities
$
2,699
Loans2
$
1
2
3
$
26,712
$
29,411
233
1,486
1,719
2,423
9,123
11,546
5,355
Only bond-type overseas securities are subject to calculation.
Policy loans are excluded.
Calculated based on the amount of face value.
125
Total3
Over 1 year
$
37,321
$
42,676
Net gains or net losses on each category of financial instruments for the years ended December 31,
(in millions)
Korean Won
2013
Interest
income
Commission
income
Gain (loss) on
valuation and
transaction
Bad debts
expense
Gain (loss) on
foreign
currency
transaction
and valuation
Total
Deposits
￦
64,451
Loans
￦
￦
-
-
￦
-
￦
349
￦
64,800
1,290,844
15,933
(40,902)
(3,651)
6,271
1,268,495
3,686
845
(30,250)
(1,576)
(2,179)
(29,474)
39,832
5
-
77,117
(4,338)
112,616
893,263
1,635
-
202,860
(57,648)
1,040,110
Held-to-maturity financial assets
647,481
-
-
-
-
647,481
-
-
-
80,549
1,755
82,304
(55,790)
￦ 3,186,332
Securities
Financial assets at fair value
through profit or loss
Derivative financial instruments
￦
2,939,557
￦
￦
18,418
(in millions)
(71,152)
￦
355,299
￦
US Dollars (Note 3)
2013
Interest
income
Commission
income
Gain (loss)
on
valuation and
transaction
Bad debts
expense
Gain (loss)
on foreign
currency
transaction
and valuation
Total
Deposits
$
Loans
61
$
-
$
-
$
-
$
-
$
61
1,224
14
(38)
(3)
6
1,203
3
1
(29)
(1)
(2)
(28)
38
-
-
73
(4)
107
846
2
-
192
(55)
985
614
-
-
-
-
614
-
-
-
76
2
78
Securities
$
2,786
$
17
$
126
(67)
$
337
$
(53)
$
3,020
(in millions)
Korean Won
2012
Interest
income
Commission
income
Gain (loss) on
valuation and
transaction
Bad debts
expense
Gain (loss) on
foreign
currency
transaction
and valuation
Total
Deposits
￦
Loans
136,340
￦
￦
-
-
￦
-
￦
(651)
￦
135,689
1,293,030
8,277
(28,571)
23,446
(35)
1,296,147
(20,458)
-
(18,069)
(29,275)
(858)
(68,660)
37,073
-
-
127,647
(24,051)
140,669
933,865
-
-
166,865
(85,918)
1,014,812
484,834
-
-
-
-
484,834
-
-
-
169,963
(1,002)
168,961
(112,515)
￦ 3,172,452
Securities
￦
2,864,684
￦
￦
8,277
(in millions)
(46,640)
￦
458,646
￦
US Dollars (Note 3)
2012
Interest
income
Commission
income
Gain (loss)
on
valuation and
transaction
Bad debts
expense
Gain (loss)
on foreign
currency
transaction
and valuation
Total
Deposits
$
Loans
129
$
-
$
-
$
-
$
(1)
$
128
1,225
8
(27)
22
-
1,228
(19)
-
(17)
(28)
(1)
(65)
-
121
(23)
133
962
Securities
35
-
885
-
-
158
(81)
459
-
-
-
-
459
-
-
-
161
(1)
160
$
2,714
$
8
$
127
(44)
$
434
$
(107)
$
3,005
27. Cash and Cash Equivalents, and Deposits (Financial Business)
Details of cash and cash equivalents, and deposits as of December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
Financial
Institution
Annual
interest rate(%)
Cash and demand deposits
Kookmin Bank
and others
0.00 ~ 0.10
Money market deposit accounts
and others
Hana Bank
and others
0.10 ~ 3.10
2013
2012
￦
105,772
￦
175,655
221,778
401,409
327,550
577,064
Deposits
Structured deposits
HSBC
and others
5.05 ~ 6.87
313,422
300,000
Time deposits
Woori Bank
and others
2.75 ~ 4.17
149,330
1,666,720
Others
Shinhan Bank
and others
3.65 ~ 5.33
205,020
305,279
￦
667,772
2,271,999
995,322
￦ 2,849,063
US Dollars (Note 3)
(in millions)
Financial
Institution
Annual
interest rate(%)
Cash and demand deposits
Kookmin Bank
and others
0.00 ~ 0.10
Money market deposit accounts
and others
Hana Bank
and others
0.10 ~ 3.10
2013
2012
$
100
$
166
210
381
310
547
Deposits
Structured deposits
HSBC
and others
5.05 ~ 6.87
297
284
Time deposits
Woori Bank
and others
2.75 ~ 4.17
142
1,579
Others
Shinhan Bank
and others
3.65 ~ 5.33
194
290
633
$
128
943
2,153
$
2,700
Details of restricted deposits as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
Financial
Institution
Other deposits
Hanwha
Investment &
Securities Co.,
Ltd. and others
Checking account
Korea Exchanges
Bank and others
2013
2012
Reason for restrictions
￦ 20,089
￦ 43,985
Guarantees for derivatives
transaction and others
31
32
Guarantees for deposit for
opening of checking
account
￦ 20,120
￦ 44,017
US Dollars (Note 3)
(in millions)
Financial
Institution
Other deposits
Hanwha
Investment &
Securities Co.,
Ltd. and others
Checking account
Korea Exchanges
Bank and others
2013
$
2012
19
$
1
$
20
$
Reason for restrictions
42
Guarantees for derivatives
transaction and others
1
Guarantees for deposit for
opening of checking
account
43
28. Securities (Financial Business)
Details of securities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
￦
2012
2,928,904
23,130,109
17,761,812
￦
43,820,825
￦
23,230,233
11,919,215
￦
37,843,339
US Dollars (Note 3)
(in millions)
2013
2,693,891
$
2012
2,775
$
2,553
21,918
22,013
16,832
11,294
$
129
41,525
$
35,860
Details of financial assets at fair value through profit or loss as of December 31, 2013 and 2012, are
as follows:
Korean Won
(in millions)
2013
2012
Trading securities
Equity securities
Stocks
￦
236,064
￦
447,653
614,258
785,490
850,322
1,233,143
Government and public bonds
122,932
188,794
Special bonds
247,874
287,271
-
65,120
Debt securities
Financial bonds
Corporate bonds
119,525
70,921
490,331
612,106
Overseas securities
650,311
47,123
Other securities
627,919
391,734
2,618,883
2,284,106
51,712
144,370
258,309
265,415
Financial assets designated as at fair value
Overseas securities
Other securities
310,021
￦
130
2,928,904
409,785
￦
2,693,891
US Dollars (Note 3)
(in millions)
2013
2012
Trading securities
Equity securities
Stocks
$
224
$
424
582
744
806
1,168
116
179
Special bonds
235
272
-
62
Debt securities
Financial bonds
Corporate bonds
113
67
464
580
Overseas securities
616
45
Other securities
595
371
2,481
2,164
49
137
245
252
Financial assets designated as at fair value
Overseas securities
Other securities
294
$
131
2,775
389
$
2,553
Details of available-for-sale financial assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
2012
Equity securities
￦
Stocks
Investments
Loaned securities
274,818
￦
364,041
124,467
118,761
2,133,459
2,218,656
1
339
8,293
2,533,083
2,709,751
5,060,057
6,574,428
Special bonds
5,883,083
6,321,698
Financial bonds
1,610,722
1,441,354
Corporate bonds
3,547,296
2,640,577
Debt securities
Loaned securities
1
Overseas securities
Other securities
932,107
1,201,781
17,033,265
18,179,838
3,135,024
2,154,090
428,737
￦
23,130,109
186,554
￦
23,230,233
US Dollars (Note 3)
(in millions)
2013
2012
Equity securities
Stocks
$
Investments
Loaned Securities1
260
$
345
118
113
2,022
2,102
-
8
2,400
2,568
4,795
6,230
Special bonds
5,575
5,990
Financial bonds
1,526
1,366
Corporate bonds
3,361
2,502
Debt securities
Loaned securities1
Overseas securities
Other securities
883
1,139
16,140
17,227
2,971
2,041
407
$
1
21,918
177
$
22,013
Loaned securities are the transfer deals that do not meet the elimination requirements of K-IFRS 1039. The
Group receives the commission through the loan of financial assets currently held in the Securities Depository
as of December 31, 2013.
132
Details of held-to-maturity financial assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
￦
Special bonds
6,122,764
￦
4,348,854
10,770,507
6,979,656
257,474
30,000
581,033
509,446
Financial bonds
Corporate bonds
Loaned securities
2012
1
30,034
￦
17,761,812
51,259
￦
11,919,215
US Dollars (Note 3)
(in millions)
2013
$
2012
5,802
Special bonds
$
4,121
10,206
6,614
Financial bonds
244
28
Corporate bonds
551
483
Loaned securities1
29
$
16,832
48
$
11,294
1
Loaned securities are the transfer deals that do not meet the elimination requirements of K-IFRS 1039. The
Group receives the commission through the loan of financial assets currently held in the Securities Depository
as of December 31, 2013.
29. Loans and Receivables (Financial Business)
Details of loans and receivables as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
US Dollars (Note 3)
2012
2013
2012
Call loans
Principal
￦
46,153
￦
120,547
$
44
$
114
Policy loans
Principal
Allowance
6,303,134
6,135,570
5,973
5,814
(123,375)
(127,471)
(117)
(121)
6,179,759
6,008,099
5,856
5,693
282,529
388,406
268
368
-
(74)
-
-
Loans secured by securities
Principal
Loan Origination Cost & Fee
(LOCF)
Allowance
(44,940)
(50,954)
(43)
(48)
237,589
337,378
225
320
5,387,819
4,996,825
5,105
4,735
34,098
31,730
32
31
Loans secured by real estate
Principal
LOCF
133
(in millions)
Korean Won
2013
Present value discount
US Dollars (Note 3)
2012
2013
2012
(2,594)
(2,703)
(2)
(3)
(15,891)
(21,741)
(15)
(21)
5,403,432
5,004,111
5,120
4,742
6,838,082
5,498,797
6,480
5,211
(20,545)
(12,435)
(20)
(12)
(1,159)
(1,105)
(1)
(1)
Allowance
(8,357)
(8,762)
(8)
(8)
6,808,021
5,476,495
6,451
5,190
Allowance
Unsecured loans
Principal
LOCF
Loans secured by third-party
guarantee
Principal
265,166
327,711
252
311
LOCF
(786)
(1,014)
(1)
(1)
(663)
(885)
(1)
(1)
263,717
325,812
250
309
1,477
1,796
1
2
-
(1)
-
-
1,477
1,795
1
2
41,706
35,319
39
33
(497)
(46)
-
-
41,209
35,273
39
33
1,401,079
815,162
1,328
772
(1,910)
(1,588)
(1)
(2)
Loans secured by deposit and
instalment savings
Principal
Allowance
Loans secured by discounting of
bill
Principal
Allowance
Other loans
Principal
LOCF
Allowance
(52)
(85)
-
-
(901)
(900)
(1)
(1)
1,398,216
Total loans
￦
20,379,573
134
812,589
￦
18,122,099
1,326
$
19,312
769
$
17,172
(in millions)
Korean Won
2013
US Dollars (Note 3)
2012
2013
2012
Reinsurance assets
Principal
￦
412,000
￦
371,270
$
390
$
352
Insurance receivables
Principal
440,389
328,857
417
Allowance
(64,867)
(36,539)
(61)
312
(35)
375,522
292,318
356
277
Other accounts receivable
Principal
175,472
175,263
166
166
(116,269)
(118,574)
(110)
(112)
59,203
56,689
56
54
686,079
700,731
650
664
(1,204)
(976)
(1)
(1)
684,875
699,755
649
663
319,236
185,317
302
176
(2,816)
(3,151)
(3)
(3)
Allowance
(2,610)
(2,678)
(2)
(3)
313,810
179,488
297
170
52
42
1
-
-
(28)
-
-
52
14
1
Allowance
Accrued income
Principal
Allowance
Deposits received for guarantees
Principal
Trade receivables
Principal
Allowance
Total receivables 1
1
￦
1,845,462
￦
1,599,534
$
1,749
Receivables are classified as ‘Other financial assets’ in the statement of financial position.
135
$
1,516
Loan types and customer categories of loans as of December 31, 2013 and 2012, consist of the
following:
(in millions)
Korean Won
2013
2012
Customer category
Individual
Call loans
￦
Policy loans
Total
Corporate
-
￦
Customer category
46,153
￦
Individual
46,153
￦
Total
Corporate
-
￦
120,547
￦
120,547
6,293,669
9,465
6,303,134
6,126,030
9,540
166,064
116,465
282,529
231,064
157,342
388,406
3,598,729
1,789,090
5,387,819
3,354,497
1,642,328
4,996,825
Unsecured loans
1,637,137
5,200,945
6,838,082
1,409,093
4,089,704
5,498,797
61,853
203,313
265,166
38,373
289,338
327,711
instalment savings
1,477
-
1,477
1,787
9
1,796
Loans secured by discounting
of bill
-
41,706
41,706
6
35,313
35,319
guarantee
Other loans
3,433
￦ 11,762,362
￦
1,397,646
1,401,079
6,111
8,804,783
￦ 20,567,145
￦ 11,166,961
(in millions)
￦
809,051
815,162
7,153,172
￦ 18,320,133
US Dollars (Note 3)
2013
2012
Customer category
Individual
Call loans
6,135,570
$
Policy loans
-
$
5,964
Customer category
Total
Corporate
44
$
9
Individual
44
$
5,973
Total
Corporate
-
$
5,805
114
$
9
114
5,814
157
111
268
219
149
368
3,410
1,695
5,105
3,179
1,556
4,735
Unsecured loans
1,551
4,929
6,480
1,335
3,876
5,211
59
193
252
36
275
311
instalment savings
1
-
1
2
-
2
Loans secured by discounting
of bill
-
39
39
-
33
33
guarantee
Other loans
4
$
11,146
1,324
$
8,344
1,328
$
136
19,490
6
$
10,582
766
$
6,778
772
$
17,360
Changes in allowance for possible losses on loans and receivables for the years ended December
(in millions)
Korean Won
2013
Loans
Beginning balance
2012
Receivables
Total
Loans
Receivables
Total
￦ 209,875
￦ 158,795
￦ 368,670
￦ 245,960
￦ 164,822
￦ 410,782
39,756
59,353
99,109
(5,147)
48,472
43,325
(±)Transfer
(+)Recovery of impairment loss
22,135
19
22,154
18,828
42
18,870
(-)Loans written-off and others
(76,037)
(33,167)
(109,204)
(44,287)
(54,504)
(98,791)
(-)Unwinding
Ending balance
(1,768)
(50)
(1,818)
(5,479)
(37)
(5,516)
￦ 193,961
￦ 184,950
￦ 378,911
￦ 209,875
￦ 158,795
￦ 368,670
(in millions)
US Dollars (Note 3)
2013
Loans
Beginning balance
$
(±)Transfer
2012
Receivables
199
$
Total
151
38
$
Loans
350
56
$
Receivables
233
94
$
(5)
Total
156
$
46
389
41
(+)Recovery of impairment loss
21
-
21
18
-
18
(-)Loans written-off and others
(72)
(33)
(105)
(42)
(51)
(93)
(-)Unwinding
(2)
Ending balance
$
184
$
(2)
174
$
358
(5)
$
-
199
$
(5)
151
$
Changes in Loan Origination Cost & Fee (LOCF) on loans for the years ended December 31, 2013
Korean Won
(in millions)
2013
Beginning balance
￦
Increase
Amortization
Ending balance
￦
US Dollars (Note 3)
2012
￦
16,619
2013
8,925
$
2012
16
$
8
3,699
23,636
4
22
(9,461)
(15,942)
(10)
(14)
￦
10,857
16,619
$
10
$
16
Details of loans that are impaired and overdue as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
US Dollars (Note 3)
2013
2012
￦ 20,084,744
￦ 17,770,748
Loans past due but not impaired
227,617
275,427
216
Impaired loans
254,784
273,958
242
￦ 20,567,145
￦ 18,320,133
Loans that are neither past due
nor impaired
1
The amount is classified on the basis of principal of loans.
137
2013
$
$
2012
19,032
19,490
$
16,840
261
259
$
17,360
350
Aging of loans that are not impaired as of December 31, 2013, are as follows:
(in millions)
Less than 30 days
Korean Won
US Dollars
(Note 3)
2013
2013
￦
192,450
$
182
30–60 days
14,259
60–90 days
7,366
7
13,542
13
More than 90 days
￦
227,617
14
$
216
30. Other Financial Assets (Financial Business)
Details of other financial assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Reinsurance assets
￦
2012
412,000
￦
371,270
375,522
292,318
59,203
56,689
Accrued income
684,875
699,755
313,810
179,488
Trade receivables
52
￦
1,845,462
14
￦
US Dollars (Note 3)
(in millions)
2013
Reinsurance assets
1,599,534
$
2012
390
$
356
352
277
56
54
Accrued income
649
663
297
170
Trade receivables
1
$
138
1,749
$
1,516
Changes in reinsurance assets for the years ended December 31, 2013 are as follows:
(in millions)
Korean Won
1
Increase(Decrease)
2012
Reinsurance assets
￦
(in millions)
2013
￦
40,730
US Dollars (Note 3)
1
Increase(Decrease)
2012
Reinsurance assets
￦
371,270
$
352
$
412,000
2013
38
$
1
390
The Group recognized impairment losses on reinsurance assets amounting to ￦ 11,697 million (equivalent
to US$ 11,084 thousand) during the current accounting period. Changes in reinsurance assets are
recognized as change in reserves for insurance contracts in the consolidated statements of comprehensive
income.
Details of accrued income as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
￦
Interest on deposits
2012
14,126
￦
77,353
Interest on securities
526,494
486,104
Interest on loans
130,809
110,956
Dividend income
6,833
10,150
7,817
16,168
Others
Allowance
(1,204)
￦
684,875
(976)
￦
699,755
US Dollars (Note 3)
(in millions)
2013
Interest on deposits
$
2012
13
$
73
Interest on securities
499
461
Interest on loans
124
105
Dividend income
6
10
Others
8
15
(1)
(1)
Allowance
$
139
649
$
663
31. Derivative financial instruments and hedge accounting (Financial Business)
Details of derivative financial instruments as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Assets
2012
Liabilities
Assets
Liabilities
Currency
Currency forward
Currency swap
￦
1
22,299
￦
￦
17,137
22,125
￦
411
113,943
10,862
79,080
15,300
-
-
-
2,949
Stock index
Stock index futures
Credit
Credit derivative
12,882
￦
￦
149,124
3,370
6,768
31,369
￦ 107,973
￦
18,660
US Dollars (Note 3)
(in millions)
2013
Assets
2012
Liabilities
Assets
Liabilities
Currency
Currency forward
$
Currency swap1
21
$
16
$
21
$
1
108
10
75
14
-
-
-
3
12
3
6
-
Stock index
Stock index futures
Credit
Credit derivative
$
141
1
$
29
$
102
$
The Group entered into a currency swap contract to hedge future cash flow risk of Korea Highway
Corporation bonds and others. The anticipated hedging period by the currency swap is 9.7 years from
January 1, 2014 to August 30, 2023.
140
18
Details of gains and losses from derivative financial instruments for the years ended December 31,
Korean Won
(in millions)
2013
2012
Hedging
Trading
Hedging
Trading
￦
￦
￦
￦
Currency
Currency forward
1
(6,290)
Currency swap
5,796
88,357
1,923
90,689
(8,368)
71,162
3,446
Stock index option
-
(3,448)
-
(1,347)
Stock index futures
-
(2,953)
-
(330)
-
5,618
-
6,768
-
(789)
-
(16)
(4,144)
￦ 159,519
Stock index
Credit
Credit derivative
Interest rate
Treasury bond futures
￦
￦
84,399
￦
10,444
US Dollars (Note 3)
(in millions)
2013
Hedging
2012
Trading
Hedging
Trading
Currency
Currency forward
1
$
Currency swap
(6)
$
5
$
84
$
2
86
(8)
67
3
Stock index option
-
(3)
-
(1)
Stock index futures
-
(3)
-
-
-
6
-
6
Stock index
Credit
Credit derivative
Interest rate
Treasury bond futures
$
(1)
80
$
(4)
$
151
$
10
1
Losses amounting to ￦ 294 million (equivalent to US$ 279 thousand) arose from currency forward contracts,
to which cash flow hedge accounting is applied, is included in other comprehensive income.
The securities are provided as collateral for derivative instruments transactions of the Group (Note
60).
141
32. Other Assets (Financial Business)
Details of other assets as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Deferred policy acquisition costs
2012
￦ 3,460,042
￦ 3,415,728
20,112
22,369
Prepaid expenses
Prepaid VAT
3,435
26
Advance payments
11,813
14,907
Compensation receivables
10,923
11,747
Others
2,795
2,828
￦ 3,509,120
￦ 3,467,605
US Dollars (Note 3)
(in millions)
2013
$
Prepaid expenses
2012
3,280
$
18
Prepaid VAT
3,236
22
3
-
Advance payments
11
14
Compensation receivables
10
11
Others
3
$
142
3,325
3
$
3,286
Changes in deferred policy acquisition costs for the years ended December 31, 2013 and 2012, are
as follows
(in millions)
Korean Won
2013
Individual insurance
Endowment
Beginning
￦
742,341
Term
Mixed
￦ 1,526,277
￦ 210,569
Group
insurance
Long-term
￦
￦
2,703
904,827
Pension
￦
Total
29,011
￦ 3,415,728
Increase
305,141
755,200
149,982
1,306
385,720
5,470
1,602,819
Decrease
(337,873)
(718,123)
(120,779)
(1,273)
(369,780)
(10,677)
(1,558,505)
709,609
￦ 1,563,354
￦ 239,772
23,804
￦ 3,460,042
Ending
￦
(in millions)
￦
2,736
￦
920,767
￦
US Dollars (Note 3)
2013
Endowment
Beginning
$
Increase
703
$
$
716
(320)
$
672
1,482
200
$
228
(in millions)
$
1
(114)
$
Long-term
3
142
(680)
$
Group
insurance
Mixed
1,446
289
Decrease
Ending
Term
3
$
873
$
5
(350)
$
Total
27
366
(1)
$
857
Pension
(10)
$
22
3,236
1,519
(1,475)
$
3,280
Korean Won
2012
Endowment
Mixed
Group
insurance
Long-term
￦
￦
Pension
745,198
￦ 1,491,864
￦ 159,702
350,939
684,682
141,027
1,180
435,295
13,433
1,626,556
Decrease
(353,796)
(650,269)
(90,160)
(1,270)
(319,056)
(11,242)
(1,425,793)
742,341
￦ 1,526,277
￦ 210,569
29,011
￦ 3,415,728
Ending
￦
(in millions)
￦
2,793
2,703
￦
788,588
904,827
￦
Total
Increase
Beginning
￦
Term
￦
26,820
￦ 3,214,965
US Dollars (Note 3)
2012
Endowment
Beginning
$
706
Term
$
Group
insurance
Mixed
1,414
$
151
$
Long-term
3
$
747
Pension
$
25
Total
$
3,046
Increase
333
649
134
1
412
13
1,542
Decrease
(336)
(617)
(85)
(1)
(302)
(11)
(1,352)
Ending
$
703
$
1,446
$
200
143
$
3
$
857
$
27
$
3,236
33. Property, plant and equipment, Investment Property, and Intangible Assets (Financial
Business)
Details of property, plant and equipment, investment property, and intangible assets as of
(in millions)
Korean Won
2013
Acquisition cost
Accumulated
impairment
losses
Accumulated
depreciation
Carrying
amount
Land
￦
Building
763,813
￦
-
￦
(31,616)
￦
732,197
1,008,755
(245,957)
(24,769)
589
(219)
(54)
316
5,642
(3,658)
-
1,984
268,814
(201,668)
-
67,146
Others
52,090
(19,911)
(9,331)
22,848
Construction in progress
17,333
-
-
17,333
2,117,036
(471,413)
(65,770)
1,579,853
Structures
Vehicles
Tools and equipment
738,029
Investment Property
Land
1,491,781
-
(10,490)
1,481,291
Building
1,405,910
(237,203)
(7,949)
1,160,758
2,897,691
(237,203)
(18,439)
2,642,049
Intangible assets
Goodwill
265,584
-
(9,462)
256,122
Development costs
186,959
(135,621)
-
51,338
Membership rights
58,001
-
(3,381)
54,620
104,056
(86,998)
(12,340)
4,718
Others
614,600
￦
(222,619)
￦
5,629,327
144
(931,235)
(25,183)
￦
(109,392)
366,798
￦
4,588,700
(in millions)
US Dollars (Note 3)
2013
Acquisition cost
Accumulated
impairment
losses
Accumulated
depreciation
Carrying
amount
Land
$
Building
724
$
-
$
(30)
$
694
956
(233)
(23)
Structures
1
-
-
-
Vehicles
5
(3)
-
2
Tools and equipment
699
255
(191)
-
64
Others
49
(19)
(9)
22
16
-
-
16
2,006
(447)
(62)
1,497
Investment Property
Land
1,414
-
(10)
1,404
Building
1,332
(225)
(8)
1,100
2,746
(225)
(17)
2,504
Intangible assets
Goodwill
252
-
(9)
243
Development costs
177
(129)
-
49
Membership rights
55
-
(3)
52
99
(82)
(12)
4
582
(211)
(24)
348
Others
$
5,334
$
145
(882)
$
(104)
$
4,348
(in millions)
Korean Won
2012
Acquisition cost
Accumulated
impairment
losses
Accumulated
depreciation
Carrying
amount
Land
￦
Building
Structures
Vehicles
Tools and equipment
￦
758,933
-
￦
(31,569)
￦
727,364
977,253
(220,261)
(24,733)
596
(208)
(54)
732,259
334
5,719
(3,594)
-
2,125
251,767
(181,754)
-
70,013
Others
46,992
(14,514)
(9,332)
23,146
38,903
-
-
38,903
2,080,163
(420,331)
(65,688)
1,594,144
Investment Property
Land
1,314,484
-
(10,537)
1,303,947
Building
1,402,030
(204,135)
(7,983)
1,189,912
2,716,514
(204,135)
(18,520)
2,493,859
Intangible assets
Goodwill
267,871
-
(9,462)
258,409
Development costs
165,116
(122,540)
-
42,576
Membership rights
62,297
-
(3,155)
59,142
92,163
(77,534)
(12,340)
2,289
587,447
(200,074)
(24,957)
362,416
Others
￦
￦
5,384,124
146
(824,540)
￦
(109,165)
￦
4,450,419
(in millions)
US Dollars (Note 3)
2012
Acquisition cost
Accumulated
impairment
losses
Accumulated
depreciation
Carrying
amount
Land
$
Building
719
$
-
$
(30)
$
689
926
(209)
(23)
Structures
1
-
-
-
Vehicles
5
(3)
-
2
Tools and equipment
694
239
(172)
-
66
Others
45
(14)
(9)
22
37
-
-
37
1,971
(398)
(62)
1,511
Investment Property
Land
1,246
-
(10)
1,236
Building
1,329
(193)
(8)
1,128
2,574
(193)
(18)
2,363
Intangible assets
Goodwill
254
-
(9)
245
Development costs
156
(116)
-
40
Membership rights
59
-
(3)
56
87
(73)
(12)
2
557
(190)
(24)
343
Others
$
5,102
$
147
(781)
$
(103)
$
4,217
Changes in property, plant and equipment, investment property, and intangible assets for the years
ended December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Beginning
Acquisition
Disposal
Transfer
￦
￦
Amortization
Other1
Ending
Land
Building
Structures
Vehicles
Tools and equipment
￦
727,364
￦
3,915
(4,272)
5,190
￦
-
￦
-
￦
732,197
732,259
11,388
(1)
18,334
(23,923)
(28)
334
-
(3)
-
(15)
-
738,029
316
2,125
825
(96)
31
(901)
-
1,984
70,013
29,650
(53)
26,710
(59,389)
215
67,146
22,848
Others
23,146
114
(229)
514
(746)
49
38,903
19,570
(274)
(40,890)
-
24
17,333
1,594,144
65,462
(4,928)
9,889
(84,974)
260
1,579,853
Land
1,303,947
219,939
(3,319)
(5,177)
-
(34,099)
1,481,291
Building
1,189,912
53,795
-
25,103
(39,164)
(68,888)
1,160,758
2,493,859
273,734
(3,319)
19,926
(39,164)
(102,987)
2,642,049
Investment Property
Intangible assets
Goodwill
258,409
-
-
-
-
(2,287)
256,122
Development costs
42,576
19,137
-
2,706
(13,081)
-
51,338
Membership rights
59,142
3,908
(2,218)
(4,303)
(972)
(937)
54,620
2,289
6,311
(64)
4,872
(8,664)
(26)
4,718
Others
362,416
29,356
(2,282)
3,275
(22,717)
(3,250)
366,798
￦ 4,450,419
￦ 368,552
￦ (10,529)
￦ 33,090
￦ (146,855)
￦ (105,977)
￦ 4,588,700
148
(in millions)
US Dollars (Note 3)
2013
Beginning
Acquisition
Disposal
Transfer
Other1
Amortization
Ending
Land
$
Building
689
$
694
4
$
(4)
Structures
-
-
-
Vehicles
2
1
-
66
28
-
Tools and equipment
11
$
5
$
17
-
25
-
$
-
(23)
-
$
694
699
-
-
-
(1)
-
2
(56)
-
64
22
Others
22
-
-
(1)
-
37
19
-
(39)
-
-
16
1,511
62
(5)
9
(81)
-
1,497
Land
1,236
208
(3)
(5)
-
(32)
1,404
Building
1,128
51
-
24
(37)
(65)
1,100
2,363
259
(3)
19
(37)
(98)
2,504
Investment Property
Intangible assets
Goodwill
245
-
-
-
-
(2)
243
Development costs
40
18
-
3
(12)
-
49
Membership rights
56
4
(2)
(4)
(1)
(1)
52
Others
$
2
6
-
5
(8)
-
4
343
28
(2)
3
(22)
(3)
348
4,217
$
349
$
(10)
149
$
31
$
(139)
$
(100)
$
4,348
(in millions)
Korean Won
2012
Beginning
Acquisition
Disposal
Transfer
Amortization
Other1
Ending
Land
Building
￦
747,448
￦
2,527
￦
-
￦
(22,611)
￦
-
￦
-
￦
727,364
726,906
12,826
-
14,967
(23,044)
604
349
-
-
-
(15)
-
334
2,031
867
(9)
-
(846)
82
2,125
Tools and equipment
48,782
35,895
(235)
4,561
(19,150)
160
70,013
Others
16,731
12,827
(206)
-
(6,176)
(30)
23,146
74,151
30,389
-
(65,634)
-
(3)
38,903
1,616,398
95,331
(450)
(68,717)
(49,231)
813
1,594,144
1,282,707
-
(706)
21,946
-
-
1,303,947
912,365
260,899
(334)
51,097
(29,553)
(4,562)
1,189,912
2,195,072
260,899
(1,040)
73,043
(29,553)
(4,562)
2,493,859
Structures
Vehicles
732,259
Investment Property
Land
Building
Intangible assets
Goodwill
261,173
-
-
-
-
(2,764)
258,409
Development costs
44,788
12,072
-
2,204
(16,488)
-
42,576
Membership rights
61,947
523
(173)
-
-
(3,155)
59,142
Others
11,143
766
(4,731)
3,171
(8,025)
(35)
2,289
379,051
13,361
￦ 4,190,521
￦ 369,591
(4,904)
￦
(6,394)
150
￦
5,375
(24,513)
(5,954)
362,416
9,701
￦ (103,297)
￦ (9,703)
￦ 4,450,419
(in millions)
US Dollars (Note 3)
2012
Beginning
Acquisition
Disposal
Transfer
Other1
Amortization
Ending
Land
$
Building
708
$
2
$
-
$
(21)
689
12
-
14
-
-
2
1
-
46
34
-
Others
16
12
70
29
1,532
90
1,215
865
2,080
Structures
Vehicles
Tools and equipment
$
-
$
-
$
689
(22)
1
694
-
-
-
-
(1)
-
2
4
(18)
-
66
-
-
(6)
-
22
-
(62)
-
-
37
-
(65)
(47)
1
1,511
-
(1)
21
-
-
1,236
247
-
48
(28)
(4)
1,128
247
(1)
69
(28)
(4)
2,363
Investment Property
Land
Building
Intangible assets
Goodwill
247
-
-
-
-
(3)
245
Development costs
42
11
-
2
(16)
-
40
Membership rights
59
-
-
-
-
(3)
56
11
1
(4)
3
(8)
-
2
359
13
(5)
5
(23)
(6)
343
Others
$
3,971
$
350
$
(6)
$
9
$
(98)
$
(9)
$
1
Includes increase(decrease) due to changes of exchange rate and effects of changes in scope of
consolidation.
Fair value of investment property as of December 31, 2013, is ￦ 2,659,050 million (equivalent to
US$ 2,520 thousand). Rent income and expenses from investment property during the years
ended December 31, 2013 and 2012, are as follows:
Korea Won
(in millions)
2013
Rent income
Related expense
￦
US Dollars (Note 3)
2012
87,253
(50,154)
151
￦
74,882
(41,282)
2013
$
2012
83
(48)
$
71
(39)
4,217
34. Insurance contract liabilities (Financial Business)
Details of insurance contract liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
2012
Premium reserve
Endowment
￦
19,315,519
￦
17,107,846
Term
28,974,358
27,303,723
Mixed
5,739,734
4,329,594
Group
793,907
726,678
6,693,515
5,549,842
61,517,033
55,017,683
Endowment
387,129
354,491
Term
745,767
709,122
Mixed
110,222
81,711
Group
25,717
26,065
IBNR
226,275
220,128
General
225,366
194,350
Automobile
133,640
144,503
Long-term
275,356
222,493
2,129,472
1,952,863
Long-term
Reserve for outstanding claims
Reserve for unearned premium
Endowment
Term
439
57
2,131
2,322
Mixed
26
355
Group
2,401
2,768
General
138,737
137,233
Automobile
315,956
277,256
Long-term
6,104
13,314
465,794
433,305
Reserve for minimum guaranteed benefit
Endowment
Term
Mixed
52,499
48,025
334,541
203,297
878
890
387,918
252,212
Reserves for policyholders’ dividends
Endowment
187,880
162,788
Term
82,989
90,747
Mixed
5,672
7,669
Group
5,643
4,862
Long-term
9,790
7,365
291,974
273,431
7,560
22,753
Reserve for policyholders’ profit dividends
Reserve for loss preservation
10,342
￦
152
64,810,093
3,510
￦
57,955,757
US Dollars (Note 3)
(in millions)
2013
2012
Premium reserve
Endowment
$
18,303
$
16,211
Term
27,456
25,873
Mixed
5,439
4,103
Group
752
689
6,343
5,259
58,293
52,135
Endowment
367
336
Term
707
672
Mixed
104
77
Long-term
Reserve for outstanding claims
Group
24
25
IBNR
214
209
General
214
184
Automobile
127
137
Long-term
261
211
2,018
1,851
Reserve for unearned premium
Endowment
-
-
Term
2
2
Mixed
-
-
Group
2
3
General
131
130
Automobile
299
263
Long-term
6
13
440
411
50
46
317
193
Reserve for minimum guaranteed benefit
Endowment
Term
Mixed
1
1
368
240
178
154
Term
79
86
Mixed
5
7
Group
5
5
Long-term
9
7
276
259
7
22
Reserves for policyholders’ dividends
Endowment
Reserve for policyholders’ profit dividends
Reserve for loss preservation
10
$
153
61,412
3
$
54,921
35. Insurance contract liabilities and investment contract liabilities (Financial Business)
Details of insurance contract liabilities and investment contract liabilities as of December 31, 2013
Korean Won
(in millions)
2013
2012
General account
￦
64,810,093
￦
57,955,757
Separate account
13,820,168
Investment contract liabilities
2,907,536
2,235,686
16,727,704
14,964,464
￦
81,537,797
12,728,778
￦
72,920,221
US Dollars (Note 3)
(in millions)
2013
2012
General account
$
61,414
$
54,919
Separate account
13,096
Investment contract liabilities
2,755
2,119
15,851
14,181
$
154
77,265
12,062
$
69,100
36. Policyholders’ equity adjustment (Financial Business)
Details of policyholders’ equity adjustment as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Net change in fair value of available-for-sale
financial assets
￦
91,849
Net change in non-controlling interests of
associates
Net change in property revaluation surplus
1
￦
2012
￦
6,476
12,031
165,973
185,052
264,298
￦
466,717
US Dollars (Note 3)
(in millions)
2013
Net change in fair value of available-for-sale
financial assets
$
Net change in non-controlling interests of
associates
Net change in property revaluation surplus
269,634
1
$
1
2012
87
$
256
6
11
157
175
250
$
442
The Group uses fair value in its opening IFRS consolidated statements of financial position as deemed cost
for an item of property, plant and equipment, and investment property. Aggregate property revaluation surplus
is allocated based on the portion of average insurance contract’s liability of dividend insurance policies and
non-dividend insurance policies for the fiscal year.
155
37. Separate account (Financial Business)
Separate account assets and liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Separate account assets before netting
￦
Separate account payables before netting
2012
16,971,434
￦
15,503,445
(594,107)
(682,141)
Separate account assets after netting
￦
16,377,327
￦
14,821,304
Separate account liabilities before netting
￦
16,874,689
￦
15,384,267
Separate account receivables before netting
(72,055)
(436,137)
Separate account liabilities after netting
￦
16,802,634
￦
14,948,130
Separate account accumulated other
comprehensive income
￦
(1,143)
￦
9,338
US Dollars (Note 3)
(in millions)
2013
Separate account assets before netting
2012
$
16,082
$
14,691
Separate account assets after netting
$
15,519
$
14,045
Separate account liabilities before netting
$
15,990
$
14,578
Separate account liabilities after netting
$
15,922
$
14,165
Separate account accumulated other
comprehensive income
$
(1)
$
9
Separate account payables before netting
(563)
Separate account receivables before netting
(646)
(68)
156
(413)
Statements of financial position of separate accounts as of December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
2012
Assets
I. Cash and deposits
￦
II. Securities
III. Loans
113,623
￦
351,382
14,875,528
13,280,530
1,179,748
1,012,685
IV. Other assets
802,535
858,848
￦
16,971,434
￦
15,503,445
￦
146,985
￦
419,803
Liabilities
I. Other liabilities
II. Insurance contract liabilities
13,820,168
III. Investment contract liabilities
12,728,778
2,907,536
2,235,686
16,874,689
15,384,267
(1,143)
￦
16,873,546
9,338
￦
15,393,605
US Dollars (Note 3)
(in millions)
2013
2012
Assets
I. Cash and deposits
$
II. Securities
III. Loans
IV. Other assets
$
108
$
333
14,096
12,585
1,118
960
760
813
16,082
$
139
$
14,691
Liabilities
I. Other liabilities
$
II. Insurance contract liabilities
13,096
III. Investment contract liabilities
2,755
2,118
15,990
14,578
(1)
$
157
398
12,062
15,989
9
$
14,587
Income statements of separate accounts for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Trust accounts
guaranteeing
the repayment
of principal
2012
Performance
based trust
accounts
Trust accounts
guaranteeing
the repayment
of principal
Performance
based trust
accounts
Revenues
2,947
￦ 3,590,011
5,772
￦ 3,799,084
Interest income
75,157
168,503
81,441
158,745
Gain on disposal and valuation
of securities
33,701
551,635
18,361
740,378
of derivatives
1,779
59,361
8,909
126,379
Gain on exchange differences
3,039
15,484
336
13,702
-
57,694
6,094
69,269
￦
116,623
￦ 4,442,688
￦
120,913
￦ 4,907,557
￦
53,231
￦ 1,118,265
￦
(175,947)
￦ 1,611,667
Insurance claims paid
32,173
1,885,940
269,381
1,981,442
Separate account commission
18,032
863,759
12,191
904,205
41
19,808
19
19,949
Premium income
￦
Other income
￦
Expenses
Change in reserves for
insurance contracts
Commission expense
Taxes and dues
2
11,661
11
15,226
Loss on disposal and valuation
of securities
3,796
406,460
3,877
201,769
Loss on disposal and
valuation of derivatives
1,038
91,858
6,912
-
Loss on exchange differences
2,948
828
491
130,988
Other expenses
2,434
44,109
210
42,311
113,695
￦ 4,442,688
117,145
￦ 4,907,557
￦
158
￦
US Dollars (Note 3)
(in millions)
2013
Trust accounts
guaranteeing
the repayment
of principal
2012
Trust accounts
guaranteeing
the repayment
of principal
Performance
based trust
accounts
Performance
based trust
accounts
Revenues
Premium income
$
3
$
3,402
$
5
$
3,600
Interest income
71
160
77
150
of securities
32
523
17
702
of derivatives
2
56
9
120
Gain on exchange differences
3
15
-
13
Other income
-
54
7
65
$
111
$
4,210
$
115
$
4,650
$
50
$
1,060
$
(167)
$
1,527
Expenses
Change in reserves for
insurance contracts
30
1,787
255
1,878
Separate account commission
17
818
12
857
Commission expense
-
19
-
19
Taxes and dues
-
11
-
14
Loss on disposal and valuation
of securities
4
385
4
191
Loss on disposal and
valuation of derivatives
1
87
7
-
Loss on exchange differences
3
1
-
124
Other expenses
3
42
-
$
108
$
4,210
$
111
40
$
4,650
Revenue and expenses on performance-based trust accounts (variable insurance contract) are not
reflected in the general account comprehensive income statement. However, revenue and
expenses on trust accounts guaranteeing the repayment of principal are accounted for as separate
account revenue and expenses in the general account in the consolidated statements of
comprehensive income.
159
Restricted separate account assets as of December 31, 2013, are as follows:
(in millions)
Korean Won
Stocks
Hanwha Variable indemnity life insurance - Bond type(III)
￦
Bonds
-
￦
10,500
Hanwha Variable CI Life Insurance (non-participating) - Mixed type
7,445
800
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Index Mixed
type (II)
2,991
3,700
Hanwha Variable indemnity life insurance - Index mixed type(III)
4,594
-
Hanwha Variable CI Life Insurance (non-participating) - Bond type
-
4,300
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Growth Stock
Mixed type (II)
-
4,100
Hanwha Variable Universal Saving Life Insurance (non-participating)(II) Valuable Stock Mixed type
-
3,500
Hanwha Variable Universal Whole Life Insurance (non-participating) – Valuable
Stock Mixed type
-
1,300
Hanwha Variable Annuity Life Insurance (non-participating)(II) - BRICs Star
Stock Mixed type (II)
-
1,050
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Mixed type (II)
-
1,000
Hanwha retirement pension (non-participating)- Bond type A
-
950
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Plus up V
derivative mixed type
-
900
481
100
Hanwha Variable Annuity Life Insurance (non-participating) - Bond type
-
550
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Bond type(II)
-
500
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Valuable Stock
Mixed type (II)
-
412
Hanwha Variable Universal Saving Life Insurance (non-participating) - Bond
type
-
400
Hanwha Variable Universal Saving Life Insurance (non-participating) - Global
mixed type
-
400
Hanwha Variable Universal Saving Life Insurance (non-participating) - Growh
Stock Mixed type
-
350
Hanwha Variable Annuity Life Insurance (non-participating) - Represnetative
-
1,000
Hanwha Variable Universal Saving Life Insurance (non-participating)(II) - Alpha
index Mixed type
￦
160
15,511
￦
35,812
(in millions)
Korean Won
Stocks
Hanwha Variable indemnity life insurance - Bond type(III)
$
Bonds
-
$
10
Hanwha Variable CI Life Insurance (non-participating) - Mixed type
7
1
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Index Mixed
type (II)
3
4
Hanwha Variable indemnity life insurance - Index mixed type(III)
4
-
Hanwha Variable CI Life Insurance (non-participating) - Bond type
-
4
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Growth Stock
Mixed type (II)
-
4
Hanwha Variable Universal Saving Life Insurance (non-participating)(II) Valuable Stock Mixed type
-
3
Hanwha Variable Universal Whole Life Insurance (non-participating) – Valuable
Stock Mixed type
-
1
Hanwha Variable Annuity Life Insurance (non-participating)(II) - BRICs Star
-
1
Hanwha Variable Annuity Life Insurance (non-participating) (II) - Mixed type (II)
-
1
Hanwha retirement pension (non-participating)- Bond type A
-
1
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Plus up V
derivative mixed type
-
1
Hanwha Variable Universal Saving Life Insurance (non-participating)(II) - Alpha
index Mixed type
1
-
Hanwha Variable Annuity Life Insurance (non-participating) - Bond type
-
1
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Bond type(II)
-
1
Hanwha Variable Annuity Life Insurance (non-participating)(II) - Valuable Stock
Mixed type (II)
-
-
Hanwha Variable Universal Saving Life Insurance (non-participating) - Bond
type
-
-
Hanwha Variable Universal Saving Life Insurance (non-participating) - Global
mixed type
-
-
Hanwha Variable Universal Saving Life Insurance (non-participating) - Growh
Stock Mixed type
-
-
Hanwha Variable Annuity Life Insurance (non-participating) - Represnetative
-
1
$
15
$
34
Restricted separate account assets are provided as collateral in relation to derivatives transaction
of separate account.
161
38. Withheld Liabilities (Financial Business)
Details of withheld liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
Interest rate (%)
Ordinary deposits
2013
2012
￦
1.0
1,897
￦
2,550
Time deposits
2.0 ~ 6.7
631,008
631,662
Installment deposits
2.0 ~ 11.5
24,722
18,774
23
2,846
Others
￦
657,650
￦
655,832
US Dollars (Note 3)
(in millions)
Interest rate (%)
Ordinary deposits
2013
1.0
$
2012
2
$
2
Time deposits
2.0 ~ 6.7
598
599
Installment deposits
2.0 ~ 11.5
23
18
Others
-
$
623
3
$
622
39. Defined Benefit Liability (Financial Business)
Details of defined benefit liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Present value of
defined benefit liability
￦
Fair value of plan assets
Liability on the statement of
financial position
466,842
￦
(356,070)
￦
US Dollars (Note 3)
2012
110,772
452,635
2013
$
442
(290,894)
￦
161,741
2012
$
429
(337)
$
105
(276)
$
153
Changes in the carrying amount of defined benefit liability for the years ended December 31, 2013
Korean Won
(in millions)
2013
Beginning
￦
US Dollars (Note 3)
2012
452,635
￦
340,335
2013
$
2012
429
$
323
Current service cost
51,939
44,665
50
42
Interest expense
21,227
21,088
20
20
Remeasurements
(39,755)
71,673
(38)
68
Payments from plan
(21,716)
(26,447)
(21)
(25)
Others1
Ending
2,512
￦
466,842
1
1,321
￦
452,635
2
$
442
1
$
Includes the impact of changes in consolidations scope, exchange gains and losses and changes in
associates.
162
429
The movements in the fair value of plan assets for the years ended December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
￦
Beginning
Interest income
Remeasurements
1
US Dollars (Note 3)
2012
￦
290,894
2013
228,426
$
2012
275
$
216
13,651
9,907
13
9
(2,582)
(701)
(2)
(1)
Contribution
61,998
63,916
58
61
Payments from plan
(9,636)
(10,560)
(9)
(10)
Others
2
Ending
1
2
1,745
￦
(94)
￦
356,070
290,894
2
$
337
$
275
Excludes amounts included in interest income.
Includes the impact of changes in consolidations scope, and others.
The principal actuarial assumptions as of December 31, 2013 and 2012, are as follows:
Discount rate
2013
3.51 ~ 5.50%
2012
4.00 ~ 5.67%
Salary growth rate
4.39 ~ 5.96%
4.52 ~ 5.45%
The sensitivity of the defined benefit obligations as of December 31, 2013, to changes in the
weighted principal assumptions is:
Effect on defined benefit obligation
Changes in principal
assumption
Increase in principal
assumption
Decrease in principal
assumption
Discount rate
1%
9.47% decrease
11.26% increase
Salary growth rate
1%
11.68% increase
9.88% decrease
163
Plan assets as of December 31, 2013 and 2012, consist of:
Korean Won
(in millions)
2013
Amount
Principal guaranteed financial
instruments, and others
￦
Transferred to National Pension
Fund
￦
2012
Composition
354,444
99.54%
1,626
0.46%
356,070
100.00%
Amount
￦
￦
289,233
99.43%
1,661
0.57%
290,894
100.00%
US Dollars (Note 3)
(in millions)
2013
Amount
Principal guaranteed financial
instruments, and others
Composition
$
Transferred to National Pension
Fund
$
2012
Composition
336
99.54%
2
0.46%
338
100.00%
164
Amount
$
$
Composition
274
99.43%
2
0.57%
276
100.00%
40. Provisions for other liabilities and charges (Financial Business)
Changes in the provisions for other liabilities and charges for the years ended December 31, 2013
(in millions)
2013
Korean Won
Provision for
rehabilitation
Beginning
￦
12,993
Increase
Decrease
Other
Ending
￦
US Dollars (Note 3)
Provision for
unused credit
limit
￦
Provision for
rehabilitation
Total
￦
479
13,472
$
12
Provision for
unused credit
limit
$
Total
-
$
12
747
23
770
1
-
1
(1,217)
(371)
(1,588)
(1)
-
(1)
619
-
619
1
-
1
13,142
￦
￦
131
13,273
(in millions)
$
13
$
-
$
13
2012
Korean Won
Provision
for
rehabilitation
Provision
for unused
credit limit
Provision
for other
￦
￦
Total
Provision
for
rehabilitation
Provision
for unused
credit limit
Provision
for other
Total
-
￦ 14,721
Increase
1,450
-
20
1,470
1
-
-
1
Decrease
(3,224)
(394)
(20)
(3,638)
(3)
-
-
(3)
919
-
-
919
1
-
-
-
￦ 13,472
Beginning
Other
Ending
￦ 13,848
US Dollars (Note 3)
￦ 12,993
￦
873
479
￦
165
$
$
13
12
$
$
-
-
$
$
-
-
$
13
1
$
12
41. Other Financial Liabilities (Financial Business)
Details of other liabilities as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
￦
Insurance benefits payable
US Dollars (Note 3)
2012
￦
324,895
2013
227,976
$
2012
308
$
216
Accounts payable
163,677
278,546
155
264
Accrued expenses
243,381
254,922
231
242
Leasehold deposits received
138,445
104,058
131
99
285,181
285,077
270
270
Others
167,516
￦
224,899
￦
1,323,095
1,375,478
159
$
212
1,254
$
1,303
Details of borrowings as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
Creditor
Collateralized borrowings
Samsung Fire & Marine
Insurance Co., Ltd.
Loan for operating funds
Woori Bank
Shinhan Bank
Annual
interest rate
-
2013
￦
6.25%
2012
-
￦
15,653
5,825
14,110
-
-
5,793
Kookmin Bank
-
-
963
Factoring trade
receivables
Hana Bank
-
-
51
Borrowings from
government
Korea Deposit Insurance
Corporation
-
-
5,506
Sale of PF (borrowings)
Korea Asset
Management
Corporation
3.90 ~
4.19%
38,766
49,011
Loans on land and
buildings
Tong Yang Life Insurance
Co., Ltd.
4.30%
23,400
-
Loans on land and
buildings
Shinhan Life Insurance
Co., Ltd.
4.30%
23,000
-
￦
166
90,991
￦
91,087
(in millions)
US Dollars (Note 3)
Creditor
Annual
interest rate
Collateralized borrowings
Samsung Fire & Marine
Insurance Co., Ltd.
-
Woori Bank
2013
$
2012
-
$
15
6.25%
5
13
Shinhan Bank
-
-
5
Kookmin Bank
-
-
1
Factoring trade
receivables
Hana Bank
-
-
-
Borrowings from
government
Korea Deposit Insurance
Corporation
-
-
5
Sale of PF (borrowings)
Korea Asset
Management
Corporation
3.90 ~
4.19%
37
47
Loans on land and
buildings
Tong Yang Life Insurance
Co., Ltd.
4.30%
22
-
Loans on land and
buildings
Shinhan Life Insurance
Co., Ltd.
4.30%
22
-
$
86
$
86
Repayment schedules of borrowings for the year ended December 31, 2013, are as follows:
Korean Won
Less than
1 year
Expected repayment amount
￦
Between
1 and 5 years
44,591
￦
46,400
Over 5 years
￦
Total
-
￦
90,991
US Dollars (Note 3)
Less than
1 year
Expected repayment amount
$
Between
1 and 5 years
42
$
167
44
Over 5 years
$
Total
-
$
86
Details of debentures as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
Creditor
Date of issue
Date of maturity
Annual
interest rate(%)
Hanwha General
Insurance Co., Ltd.
3rd Public
subscription bond
2006-08-10
2012-02-10
-
Hanwha General
Insurance Co., Ltd.
4th Public
subscription bond
2010-03-25
2015-09-25
6.80%
30,000
30,000
Hanwha General
Insurance Co., Ltd.
5th Public
subscription bond
2011-03-23
2016-09-23
6.30%
40,000
40,000
2013
￦
2012
-
￦
-
th
Hanwha General
Insurance Co., Ltd.
6 Public
subscription bond
2011-12-16
2017-06-16
5.90%
35,000
35,000
Hanwha General
Insurance Co., Ltd.
7th Public
subscription bond
2012-06-28
2019-06-28
5.80%
90,000
90,000
195,000
195,000
(810)
(1,010)
￦ 194,190
￦ 193,990
(in millions)
US Dollars (Note 3)
Creditor
Date of issue
Date of maturity
Annual
interest rate(%)
Hanwha General
Insurance Co., Ltd.
3rd Public
subscription bond
2006-08-10
2012-02-10
-
Hanwha General
Insurance Co., Ltd.
4th Public
subscription bond
2010-03-25
2015-09-25
6.80%
29
29
Hanwha General
Insurance Co., Ltd.
5th Public
subscription bond
2011-03-23
2016-09-23
6.30%
38
38
Hanwha General
Insurance Co., Ltd.
6th Public
subscription bond
2011-12-16
2017-06-16
5.90%
33
33
Hanwha General
Insurance Co., Ltd.
7th Public
subscription bond
2012-06-28
2019-06-28
5.80%
85
85
185
185
2013
$
2012
-
$
(1)
$
168
184
-
(1)
$
184
42. Other Liabilities (Financial Business)
Details of other financial liabilities as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
￦
VAT payables
￦
1,298
Advanced receipts
US Dollars (Note 3)
2012
3,175
36,534
Deferred revenues
Deferred insurance income
2012
$
1
33,795
$
3
35
32
14,461
7,238
14
7
127,049
91,659
120
87
3,421
4,547
3
4
Others
￦
2013
￦
182,763
140,414
$
173
$
133
43. Associates
Changes in investments in associates for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
￦
Beginning balance
￦
1,117,035
1,262,513
2013
$
2012
1,058
$
1,196
Acquisition
22,309
76,273
21
72
Disposal
(1,178)
(25,818)
(1)
(24)
Equity income (loss) on
investments
20,833
22,936
20
22
Comprehensive income and loss
Other
1
Closing balance
Financial business
Non-Financial business
1
US Dollars (Note 3)
2012
(1,554)
(9,027)
(1)
(9)
(119,948)
(209,842)
(114)
(199)
￦
1,037,497
￦
1,117,035
$
983
$
1,058
￦
889,752
147,745
￦
983,043
133,992
$
843
140
$
932
126
Includes dividends received and a decrease in book value due to changes in consolidation scope.
Details of major associates as of December 31, 2013 and 2012, are as follows:
Percentage of ownership
Location
Closing month
Kind of business
50.00%
Republic of Korea
December
Manufacture of
basic compound
33.76%
32.89%
Republic of Korea
December
Stock broking
International Polymers
Company
25.00%
25.00%
Saudi Arabia
December
Manufacture of
basic compound
Korea Ras Laffan LNG1
3.00%
3.00%
United States of
America
December
Resources
development
2013
2012
Yeochun NCC Co., Ltd.
50.00%
Hanwha Investment &
Securities Co., Ltd.
1
Although the Group’s ownership percentage is less than 20%, equity method is applied since all entities of
Hanwha have agreed to exercise joint voting right as a group.
169
Summary of financial information of major associates as of and for the years ended December 31,
2013 and 2012, is as follows:
(in millions)
Korean Won
2013
Current assets
￦
1,389,755
Non-current
asset
￦
Financial
business asset
974,892
￦
-
Current
liabilities
￦
Financial
business
liabilities
Non-current
liabilities
856,253
￦
542,893
￦
-
Hanwha Investment &
-
-
7,921,443
-
-
7,159,979
Company
196,313
663,625
-
96,061
566,120
-
Korea Ras Laffan LNG
12,408
1,207,298
-
7,361
15,532
-
(in millions)
US Dollars (Note 3)
2013
Current assets
$
1,317
Non-current
asset
$
Financial
business asset
924
$
-
Current
liabilities
$
Financial
business
liabilities
Non-current
liabilities
811
$
514
$
-
Hanwha Investment &
-
-
7,506
-
-
6,785
Company
186
629
-
91
536
-
12
1,144
-
7
15
-
170
(in millions)
Korean Won
2013
Gain or loss
from continuing
operations
Revenue
￦
7,692,248
￦
99,778
Profit or loss
after tax of
discontinued
operations
￦
Other
comprehensive
income(loss)
￦
-
1,188
Total
comprehensive
income(loss)
￦
100,966
Receipts of
dividends from
associates
￦
75,000
Hanwha Investment &
1,016,600
(62,100)
(13,159)
(2,402)
(77,661)
-
Company
-
574
-
(2,971)
(2,397)
-
177,094
177,094
-
(17,683)
159,411
5,320
Total
comprehensive
income(loss)
Receipts of
dividends from
associates
(in millions)
US Dollars (Note 3)
2013
Gain or loss
from continuing
operations
Revenue
$
7,289
$
95
Profit or loss
after tax of
discontinued
operations
$
Other
comprehensive
income(loss)
-
$
1
$
96
$
71
Hanwha Investment &
963
(59)
(12)
(2)
(74)
-
Company
-
1
-
(3)
(2)
-
168
168
-
(17)
151
5
171
(in millions)
Korean Won
2012
Current assets
￦
1,310,335
Non-current
asset
￦
Financial
business asset
1,066,794
￦
-
Current
liabilities
￦
Financial
business
liabilities
Non-current
liabilities
828,618
￦
533,976
￦
-
Hanwha Investment &
-
-
7,405,970
-
-
6,558,310
Company
121,522
473,009
-
109,678
284,698
-
12,594
1,225,374
-
7,471
15,764
-
(in millions)
US Dollars (Note 3)
2012
Current assets
$
1,242
Non-current
asset
$
Financial
business asset
1,011
$
-
Current
liabilities
$
Financial
business
liabilities
Non-current
liabilities
785
$
506
$
-
Hanwha Investment &
-
-
7,018
-
-
6,215
Company
115
448
-
104
270
-
12
1,161
-
7
15
-
172
(in millions)
Korean Won
2012
Gain or loss
from continuing
operations
Revenue
￦
7,842,600
￦
152,007
Profit or loss
after tax of
discontinued
operations
￦
Other
comprehensive
income(loss)
￦
-
(673)
Total
comprehensive
income(loss)
￦
151,334
Receipts of
dividends from
associates
￦
150,000
Hanwha Investment &
1,135,831
(67,393)
-
9,335
(58,058)
1,416
Company
-
384
-
(15,375)
(14,991)
-
160,813
158,317
-
(77,465)
80,852
4,828
Total
comprehensive
income(loss)
Receipts of
dividends from
associates
(in millions)
US Dollars (Note 3)
2012
Gain or loss
from continuing
operations
Revenue
$
7,432
$
144
Profit or loss
after tax of
discontinued
operations
$
Other
comprehensive
income(loss)
-
$
(1)
$
143
$
142
Hanwha Investment &
1,076
(64)
-
9
(55)
1
Company
-
-
-
(15)
(14)
-
152
150
-
(73)
77
5
173
Changes in investments in associates by associate for the years ended December 31, 2013 and
(in millions)
Korean Won
2013
Beginning
￦
469,510
Acquisition
￦
-
Equity
gain(loss) on
investments
Disposal
￦
-
￦
53,890
Other
comprehensive
income and
loss
￦
-
Other 1
￦
Ending
(74,406)
￦
448,994
Hanwha Investment &
277,516
-
-
(25,475)
(1,228)
4,875
255,688
Company
51,699
-
-
144
(767)
-
51,076
Others
36,763
-
-
5,313
(530)
(5,321)
36,225
281,547
22,309
(1,178)
(13,039)
971
(45,096)
245,514
(1,554)
￦ (119,948)
￦ 1,037,497
￦ 1,117,035
￦
22,309
￦
(1,178)
(in millions)
￦
20,833
￦
US Dollars (Note 3)
2013
Beginning
$
445
Acquisition
$
-
Equity
gain(loss) on
investments
Disposal
$
-
$
51
Other
comprehensive
income and
loss
$
-
Other 1
$
Ending
(71)
$
425
Hanwha Investment &
263
-
-
(24)
(1)
4
242
Company
49
-
-
-
(1)
-
48
Others
$
35
-
-
5
(1)
(5)
34
267
21
(1)
(12)
1
(43)
233
1,059
$
21
$
(1)
174
$
20
$
(2)
$
(115)
$
982
(in millions)
Korean Won
2012
Beginning
￦
542,538
Acquisition
￦
-
Equity
gain(loss) on
investments
Disposal
￦
-
￦
77,308
Other
comprehensive
income and
loss
￦
Other 1
Ending
-
￦ (150,336)
￦
469,510
Hanwha Investment &
323,182
-
-
(21,608)
3,130
(27,188)
277,516
Company
55,575
-
-
96
(3,972)
-
51,699
Others
39,165
-
-
4,750
(2,324)
(4,828)
36,763
302,053
76,273
(25,818)
(37,610)
(5,861)
(27,490)
281,547
(9,027)
￦ (209,842)
￦ 1,117,035
￦ 1,262,513
￦
76,273
￦
(25,818)
(in millions)
￦
22,936
￦
US Dollars (Note 3)
2012
Beginning
$
514
Acquisition
$
-
Equity
gain(loss) on
investments
Disposal
$
-
$
73
Other
comprehensive
income and
loss
$
-
Other 1
$
Ending
(142)
$
445
Hanwha Investment &
306
-
-
(20)
3
(26)
263
Company
53
-
-
-
(4)
-
49
Others
$
1
37
-
-
5
(2)
(5)
35
286
72
(24)
(36)
(6)
(25)
267
1,196
$
72
$
(24)
$
22
$
Includes dividends received and changes in consolidation scope, and others.
175
(9)
$
(198)
$
1,059
Details of adjustments from financial information of major associates to the book value of
investments in associates for the years ended December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Net assets
Percentage
of
ownership
Interests in
net assets
Goodwill
￦ 965,501
50.00%
￦ 482,750
￦
Hanwha Investment &
758,773
33.76%
Company
197,758
1,196,814
Intercompany
transactions
Book value
-
￦ (33,756)
￦ 448,994
256,129
-
(441)
255,688
25.00%
49,440
1,636
-
51,076
3.00%
35,904
321
-
36,225
(in millions)
US Dollars (Note 3)
2013
Net assets
$
Percentage
of
ownership
Interests in
net assets
$
$
-
$
(32)
Book value
915
50.00%
Hanwha Investment &
719
33.76%
243
-
(1)
242
Company
187
25.00%
47
1
-
48
1,134
3.00%
34
-
-
34
176
457
Intercompany
transactions
Goodwill
$
425
(in millions)
Korean Won
2012
Net assets
Percentage
of
ownership
Interests in
net assets
￦1,014,535
50.00%
￦ 507,267
Hanwha Investment &
844,767
32.89%
Company
200,155
1,214,733
Intercompany
transactions
Book value
-
￦ (37,757)
￦ 469,510
277,847
-
(331)
277,516
25.00%
50,039
1,660
-
51,699
3.00%
36,442
321
-
36,763
(in millions)
Goodwill
￦
US Dollars (Note 3)
2012
Net assets
$
Percentage
of
ownership
Interests in
net assets
$
481
Intercompany
transactions
Goodwill
$
-
$
Book value
961
50.00%
(36)
$
445
Hanwha Investment &
800
32.89%
263
-
-
263
Company
190
25.00%
47
2
-
49
1,151
3.00%
35
-
-
35
Fair value and book value of marketable shares of associates held by the Group as of December
(in millions, except market price
per share)
Korean Won
2013
Number of
shares held
Market price
per share
Hanwha Investment & Securities
Co., Ltd.(ordinary shares)
27,589,621
Co., Ltd.(preference share)
364,652
￦
Fair value
3,400
￦
93,805
1,820
per share)
Book value
￦
664
252,352
3,336
US Dollars (Note 3)
2013
Number of
shares held
Market price
per share
27,589,621
364,652
177
$
3.22
1.72
Fair value
$
Book value
89
1
$
239
3
per share)
Korean Won
2012
Number of
shares held
Market price
per share
27,589,621
364,652
￦
Fair value
4,215
￦
116,290
2,150
per share)
Book value
￦
784
273,896
3,620
US Dollars (Note 3)
2012
Number of
shares held
Market price
per share
27,589,621
364,652
$
Fair value
3.99
$
Book value
110
2.04
$
1
260
3
Unrecognized accumulated loss as discontinued use of equity method for the years ended
December 31, 2013 and 2012, is as follows:
Korean Won
(in millions)
2013
Unrealized
losses
Galleriaforet Corp.
Jeju Ocean Science Center
Corp.
OneRoof Energy, Inc.
￦
2012
Non-reflected
other capital
￦
9,653
-
Unrealized
losses
￦
8,953
￦
-
3,872
-
-
-
9,162
-
-
-
US Dollars (Note 3)
(in millions)
2013
Unrealized
losses
Galleriaforet Corp.
Jeju Ocean Science Center
Corp.
Non-reflected
other capital
$
2012
Non-reflected
other capital
9
$
-
Unrealized
losses
$
Non-reflected
other capital
8
$
-
4
-
-
-
9
-
-
-
Investments in associates are provided as collateral for payables of the Group as of December 31,
2013 (Note 60).
178
44. Revenue
Details of non-financial business’s revenue for the years ended December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Finished goods
￦
US Dollars (Note 3)
2012
￦
6,610,639
2013
5,783,495
$
2012
6,264
$
5,480
Merchandise
7,484,936
7,003,432
7,093
6,636
Construction
3,818,835
3,027,835
3,619
2,869
Real estate
Service and Others
￦
88,917
78,132
84
74
1,344,106
1,263,436
1,274
1,197
￦
19,347,433
17,156,330
$
18,334
$
16,256
Details of financial business’s revenue for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Premium income
￦
Reinsurance income
Other income
￦
US Dollars (Note 3)
2012
￦
13,324,500
2013
13,126,751
$
2012
12,626
$
12,439
713,884
642,863
677
609
5,339,152
4,726,031
5,059
4,478
￦
19,377,536
18,495,645
$
18,362
$
17,526
Details of premium income from financial business by category for the years ended December 31,
Korean Won
(in millions)
2013
US Dollars (Note 3)
2012
2013
2012
Individual
Endowment insurance
￦
￦
2,878,620
2,924,769
$
2,728
$
2,772
Term insurance
4,174,629
3,979,734
3,956
3,771
Mixed insurance
2,034,455
2,153,100
1,928
2,040
Primary premium
General
Long-term
Motor vehicles
234,924
298,027
223
282
3,255,558
3,126,054
3,085
2,962
620,833
576,019
588
546
16,042
110
15
-
Assumed reinsurance premium
General
Cancellation refund
General
Motor vehicles
(2,164)
(1,697)
(2)
(2)
(24,869)
(24,747)
(24)
(23)
Group
Group insurance
136,472
￦
13,324,500
95,382
￦
179
13,126,751
129
$
12,626
90
$
12,438
Other income from financial business for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Commission income
￦
US Dollars (Note 3)
2012
50,159
￦
42,525
2013
$
2012
48
$
40
Investment operation income
4,228,568
3,607,887
4,007
3,419
Other financial income
1,038,583
1,074,556
984
1,018
21,842
1,063
21
1
Others
￦
5,339,152
￦
4,726,031
$
5,060
$
4,478
45. Cost of sales
Details of non-financial business’s cost of sales for the years ended December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Finished goods
￦
US Dollars (Note 3)
2012
5,999,629
￦
5,320,466
2013
$
2012
5,685
$
5,042
Merchandise
6,650,463
6,034,941
6,302
5,719
Construction
3,152,345
2,608,827
2,987
2,472
67,654
53,880
64
51
1,262,732
1,093,554
1,197
1,036
￦ 17,132,823
￦ 15,111,668
Real estate
Service and Others
$
16,235
$
14,320
Details of financial business’s cost of sales for the years ended December 31, 2013 and 2012, are
as follows:
Korean Won
(in millions)
2013
￦
7,101,580
US Dollars (Note 3)
2012
￦
6,775,996
2013
$
6,729
2012
$
6,421
Business expenses
1,338,648
1,314,802
1,268
1,246
Responsibility reserve
6,815,121
6,766,364
6,458
6,412
Others
3,570,089
￦
18,825,438
2,737,099
￦
180
17,594,261
3,383
$
17,838
2,594
$
16,673
Insurance claims paid for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Insurance expenses
￦
Refund expenses
Dividend expenses
￦
US Dollars (Note 3)
2012
2,207,091
￦
2,097,951
2013
$
2012
2,091
4,867,744
4,647,008
4,613
26,745
31,037
25
7,101,580
￦
6,775,996
$
6,729
$
1,988
4,403
29
$
6,420
Business expenses of financial business for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
￦
79,087
US Dollars (Note 3)
2012
￦
135,076
2013
$
2012
75
$
128
Wages and salaries
454,528
429,245
431
407
Severance benefits
68,298
115,378
65
109
Employee welfare
114,669
93,092
109
88
General administrative expense
251,680
189,885
238
180
Others
370,386
￦
1,338,648
352,126
￦
181
1,314,802
351
$
1,269
334
$
1,246
46. Selling and Administrative Expenses
Selling and administrative expenses for the years ended December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Salaries
￦
Bad debts expense
US Dollars (Note 3)
2012
￦
502,865
477,883
2013
$
2012
477
$
453
95,183
90,264
90
86
Freight expense
190,576
150,569
181
143
Commission expense
122,083
119,554
116
113
Rental expense
41,071
40,577
39
38
Employees benefits
82,780
66,725
78
63
Severance benefits
52,199
49,643
49
47
Sales commission expense
89,517
62,075
85
59
Advertising expense
65,255
77,780
62
74
Taxes and dues
43,329
39,419
41
37
Entertainment expense
23,199
22,752
22
22
Transportation fees
32,573
33,077
31
31
Outsourcing fees
77,083
51,677
73
49
7,337
7,482
7
7
Overseas branch maintenance
fees
Insurance expense
Others
￦
11,550
8,618
11
8
466,376
421,844
442
400
1,902,976
￦
182
1,719,939
$
1,804
$
1,630
47. Expenses by Nature
Details of expenses by nature for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Changes in inventories
1
￦
US Dollars (Note 3)
2012
(236,836)
￦
(227,845)
2013
$
2012
(224)
$
(216)
Raw materials and supplies used
6,129,492
5,278,807
5,808
5,002
Merchandise purchased
6,630,335
6,007,557
6,283
5,693
2,114,041
1,970,658
2,003
1,867
Other employee benefit expense
362,065
299,940
343
284
Rental expense
279,346
276,158
265
262
Depreciation3
623,268
535,150
591
507
Amortization
58,975
54,739
56
52
Tax and dues
305,926
178,812
290
169
Salary and wages
2
Research and development
95,212
57,722
90
55
6,815,121
6,766,364
6,458
6,412
Refund expense
4,867,744
4,647,009
4,613
4,403
Other expenses
9,816,547
8,580,797
9,301
8,132
￦ 37,861,236
￦ 34,425,868
Responsibility reserve
$
35,877
$
32,622
1
Changes in raw materials and supplies are excluded.
Severance benefits are included.
3
Depreciation of investment property is included.
2
48. Other gains and losses
Details of other gains for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Gains on foreign currency
transaction and translation
￦
Gains on transactions of
derivatives
￦
303,712
54,491
Gains on valuation of derivatives
Others
￦
US Dollars (Note 3)
2012
209,405
2013
$
41,988
2012
288
$
52
198
40
22,253
16,714
21
16
243,413
313,387
230
297
￦
623,869
183
581,494
$
591
$
551
Details of other losses for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Losses on foreign currency
transaction and translation
￦
US Dollars (Note 3)
2012
￦
299,964
2013
179,118
$
2012
284
$
170
Losses on transaction of
derivatives
45,612
44,556
43
42
Losses on valuation of
derivatives
11,850
18,967
11
18
Commission
Others
￦
8,893
12,107
8
11
321,773
331,173
306
314
￦
688,092
585,921
$
652
$
555
49. Finance Income and Costs
Details of finance income for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
US Dollars (Note 3)
2012
2013
2012
Interest income
Cash and cash equivalents,
deposit, instalment savings
￦
Others
27,780
$
22
$
26
18,044
24,582
17
23
9,794
7,297
9
7
112
514
-
Dividend income
￦
￦
23,596
￦
51,546
60,173
$
48
1
$
57
Details of financial costs for the years ended December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
US Dollars (Note 3)
2012
2013
2012
Interest expense
￦
Others
Less: Amounts on qualifying
assets capitalized 1
￦
￦
444,316
474,435
$
421
$
450
79,531
61,842
75
58
523,847
536,277
496
508
(56,393)
(44,215)
(53)
(42)
￦
467,454
1
492,062
$
443
$
466
Borrowing costs were capitalized at the weighted average rate of 2.34~6.72% (2012: 3.29~6.72%) for the
year ended December 31, 2013.
184
50. Tax Expense and Deferred Income Tax
The details of deferred tax assets and deferred tax liabilities as of December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
US Dollars (Note 3)
2012
2013
2012
Deferred tax assets
Deferred tax asset to be
recovered after more than 12
months
￦
Deferred tax asset to be
recovered within 12 months
￦
507,498
568,419
$
481
$
539
171,289
204,811
162
194
678,787
773,230
643
733
(1,427,852)
(1,952,187)
(1,353)
(1,850)
(281,748)
(213,397)
(267)
(202)
Deferred tax liabilities
Deferred tax liability to be
recovered after more than 12
months
Deferred tax liability to be
recovered within 12 months
(1,709,600)
(2,165,584)
Deferred tax assets(liabilities), net ￦ (1,030,813)
￦ (1,392,354)
(1,620)
$
(2,052)
(977)
$
(1,319)
The difference between the number above and the amount in the statements of financial position is
due to the deferred tax effect regarding accumulated other comprehensive income, which was
accounted for as other assets or liabilities in the special account in the statements of financial
position of separate accounts.
Income tax expense for the years ended December 31, 2013 and 2012, consists of:
Korean Won
(in millions)
2013
US Dollars (Note 3)
2012
2013
2012
Current tax
Current tax on profits for the
year
￦
Adjustments in respect of prior
years
￦
692,675
331,350
$
656
$
314
(53,907)
9,570
(51)
9
638,768
340,920
605
323
(380,616)
(35,379)
(361)
(34)
19,075
2,051
18
2
(361,541)
(33,328)
(343)
(32)
(97,462)
8,628
(92)
8
Deferred tax
Origination and reversal of
temporary differences
Impact of change in tax rate
Income tax effect charged
directly to equity
Income tax expense
￦
179,765
￦
185
316,220
$
170
$
299
The income tax charged or credited directly to equity for the years ended December 31, 2013 and
(in millions)
2013
Korean Won
Before tax
US Dollars (Note 3)
Tax effect
After tax
Before tax
Tax effect
After tax
Deferred tax
Gain(loss) on valuation of availablefor-sale financial securities
￦
Gain(loss) on valuation of investments
in associates
(308,715)
￦
100,220
￦
(208,495)
$
(293)
$
95
$
(198)
4,667
5,922
10,589
4
6
10
77
(262)
(185)
-
-
-
1,568
3,146
4,714
1
3
4
The remeasurements of the net
81,702
(22,165)
59,537
77
(21)
56
seprate accounts
(34,451)
10,601
(23,850)
(33)
10
(23)
Gain(loss) on valuation of derivatives
qualifying cash flow hedge
Current tax
￦
(255,152)
￦
97,462
￦
(157,690)
(in millions)
$
(244)
$
93
$
(151)
2012
Korean Won
Before tax
US Dollars (Note 3)
Tax effect
After tax
Before tax
Tax effect
After tax
Deferred tax
Gain(loss) on valuation of availablefor-sale financial securities
￦
Gain(loss) on valuation of investments
in associates
121,015
￦
(48,721)
￦
72,294
$
115
$
(46)
$
69
(16,992)
37
(16,955)
(16)
-
(16)
478
(266)
212
-
-
-
(112,134)
6,523
(105,611)
(106)
6
(100)
The remeasurements of the net
(135,234)
38,739
(96,495)
(128)
37
(91)
separate accounts
15,722
(4,940)
10,782
15
(5)
10
Current tax
￦
(127,145)
￦
(8,628)
186
￦
(135,773)
$
(120)
$
(8)
$
(128)
The differences between profit before tax and income tax expense for the years ended December
Korean Won
(in millions)
2013
Profit before tax
Tax calculated at tax rates
applicable to profits
US Dollars (Note 3)
2012
2013
2012
￦
404,434
￦
812,726
$
383
$
770
￦
239,731
￦
350,837
$
227
$
332
Adjustments:
Income not subject to tax
11,917
17,952
11
17
Expenses not deductible for
tax purposes
(17,875)
(24,660)
(17)
(23)
Tax credit and tax reduction
(27,812)
(44,925)
(26)
(43)
Impact of change in tax rate
19,075
2,051
18
2
(45,271)
14,965
(43)
14
Others
Income tax expense
Average valid tax rate
￦
179,765
44%
187
￦
316,220
39%
$
170
44%
$
229
39%
The gross movements of the deferred income tax account for the years ended December 31, 2013
(in millions)
Korean Won
2013
Beginning
Trade receivables
￦
117,633
Charged to
profit or loss
Charged to
equity
￦
￦
49,076
Changes in
scope of
consolidation
￦
-
-
Exchange
difference
￦
Ending
(16)
￦
166,693
Accumulated deficit, and others
20,792
(2,755)
-
-
11
18,048
Appropriated retained earnings
15,322
45,581
-
-
-
60,903
4,862
(288)
-
-
22
4,596
Securities
(433,207)
479,650
104,509
-
-
150,952
Revaluation reserve
(171,208)
3,780
-
-
-
(167,428)
Accrued income
(184,620)
(97,128)
-
-
-
(281,748)
(39,052)
-
-
-
-
(39,052)
(767,950)
21,421
13,914
-
-
(732,615)
Inventories
Gain on business spin-off
Investments in subsidiaries, others
Others
45,074
￦ (1,392,354)
(227,642)
￦
271,695
(20,961)
￦
(in millions)
(2,167)
￦
97,462
(2,167)
￦
(5,466)
(211,162)
(5,449)
￦ (1,030,813)
US Dollars (Note 3)
2013
Charged to
profit or loss
Beginning
Trade receivables
$
111
$
47
Changes in
scope of
consolidation
Charged to
equity
$
-
$
-
Exchange
difference
$
Ending
-
$
158
Accumulated deficit, and others
20
(3)
-
-
-
17
15
43
-
-
-
58
5
(1)
-
-
-
4
Securities
(411)
455
99
-
-
143
Revaluation reserve
(162)
3
-
-
-
(159)
Accrued income
(175)
(92)
-
-
-
(267)
Inventories
Others
(37)
-
-
-
-
(37)
(728)
21
13
-
-
(694)
(5)
(200)
(5)
(977)
43
$
(1,319)
(216)
$
257
188
(20)
$
92
(2)
$
(2)
$
(in millions)
Korean Won
2012
Charged to
profit or loss
Beginning
Trade receivables
￦
121,860
￦
(4,208)
Changes in
scope of
consolidation
Charged to
equity
￦
￦
-
-
Exchange
difference
￦
Ending
(19)
￦
117,633
Accumulated deficit, others.
29,000
(8,051)
-
-
(157)
20,792
11,517
3,805
-
-
-
15,322
6,840
(1,948)
-
-
(30)
4,862
Securities
(397,840)
10,190
(45,557)
-
-
(433,207)
Revaluation reserve
(171,391)
183
-
-
-
(171,208)
Accrued income
(145,330)
(39,290)
-
-
-
(184,620)
(39,052)
-
-
-
-
(39,052)
(742,719)
(57,815)
32,584
-
-
(767,950)
(98,566)
140,018
4,345
383
(1,106)
45,074
(1,312)
￦ (1,392,354)
Inventories
Others
￦ (1,425,681)
￦
42,884
￦
(in millions)
￦
(8,628)
383
￦
US Dollars (Note 3)
2012
Charged to
profit or loss
Beginning
Trade receivables
$
115
$
(4)
Changes in
scope of
consolidation
Charged to
equity
$
-
$
-
Exchange
difference
$
Ending
-
$
111
Accumulated deficit, others.
28
(8)
-
-
-
20
11
4
-
-
-
15
Inventories
7
(2)
-
-
-
5
Securities
(378)
10
(43)
-
-
(411)
Revaluation reserve
(162)
-
-
-
-
(162)
Accrued income
(138)
(37)
-
-
-
(175)
(37)
-
-
-
-
(37)
(704)
(55)
31
-
-
(728)
(93)
133
4
-
(1)
Others
$
(1,351)
$
41
189
$
(8)
$
-
$
(1)
43
$
(1,319)
51. Capital stock
The Company’s number of authorized shares is 200,000,000 shares. Total number of common
stocks issued is 75,438,029 shares (2012: 75,438,029 shares), and the par value per share is
￦ 5,000 (equivalent to US$ 4.70). The preferred stock of 479,294 shares, which is non-cumulative,
is eligible to receive cash dividends, if declared, equal to that declared for common shares plus an
additional 1%. There is no change in paid-in capital in 2013 and 2012.
52. Capital Surplus
Details of capital surplus as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Share premium
￦
2012
79,568
￦
79,568
Revaluation reserve
65,742
65,872
Other capital surplus
327,540
332,351
￦
￦
477,791
US Dollars (Note 3)
2013
2012
(in millions)
Share premium
472,850
$
76
$
75
Revaluation reserve
62
63
Other capital surplus
310
315
$
448
$
453
53. Capital Adjustments
Details of capital adjustments as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Treasury stock
￦
Other capital adjustments
2012
(20,751)
￦
￦
38,711
54,326
￦
33,575
US Dollars (Note 3)
(in millions)
2013
Treasury stock
(20,751)
59,462
$
Other capital adjustments
2012
(20)
$
(20)
$
32
57
$
190
37
52
54. Accumulated other comprehensive income
Accumulated other comprehensive income as of December 31, 2013 and 2012, consists of:
Korean Won
(in millions)
2013
Gain(loss) on valuation of available-for-sale
financial assets
￦
2012
71,666
Gain(loss) on valuation of investment in
associates
statements
(25,712)
10,646
10,950
(34,900)
(36,157)
(1,143)
9,338
32,862
￦
116,753
US Dollars (Note 3)
(in millions)
2013
Gain(loss) on valuation of available-for-sale
financial assets
158,334
(13,407)
Accumulated other comprehensive income of
separate accounts
￦
￦
$
Gain(loss) on valuation of investment in
associates
Gain(loss) on valuation of derivatives qualifying
cash flow hedge
statements
Accumulated other comprehensive income of
separate accounts
$
191
2012
68
$
150
(13)
(24)
10
10
(33)
(34)
(1)
9
31
$
111
55. Retained Earnings
Retained earnings as of December 31, 2013 and 2012, consist of:
Korean Won
(in millions)
2013
Legal reserves
￦
Discretionary reserves
2012
31,700
￦
Unappropriated retained earnings
1,297,800
2,017,252
￦
3,378,452
1,948,983
￦
3,275,283
US Dollars (Note 3)
(in millions)
2013
Legal reserves
28,500
1,329,500
$
2012
30
$
27
Discretionary reserves
1,260
1,230
Unappropriated retained earnings
1,911
1,847
$
192
3,201
$
3,104
56. Earnings per Share
Basic earnings per share for the years ended December 31, 2013 and 2012, is computed as
follows:
Korean Won
2013
Common shares
Profit attributable to equity holders of
the Company
Common shares
Preferred shares
129,084,726,959
919,602,629
284,554,936,808
1,998,312,868
69,078,735
479,294
69,078,735
479,294
Weighted average number of
ordinary shares in issue
Basic earnings per share1
2012
Preferred shares1
￦
￦
1,869
1,919
￦
￦
4,119
4,169
US Dollars (Note 3)
2013
Common shares
Profit attributable to equity holders of
the Company
$
Weighted average number of
ordinary shares in issue
Basic earnings per share1
2012
Preferred shares
122,320,408
$
69,078,735
$
1
871,413
Common shares
Preferred shares
$
$
479,294
1.77
$
1.82
269,643,643
69,078,735
$
3.90
1,893,597
479,294
$
3.95
1
Preferred shares are issued under the former commercial law before amendments in 1997. These preferred
shares hold the same priority as common shares in terms of dividends pay out and distribution of residual
properties; thus, earnings per share was calculated accordingly.
For the years ended December 31, 2013 and 2012, there was no adjustment for number of
ordinary share in issue; thus, the weighted average number of common stocks in issue is identical
to the number of issued shares at the beginning.
Since there is no potential common stocks in 2013 and 2012, diluted earnings per share is identical
to the earnings per share.
193
57. Related Party Transactions
Year-end balances of receivables arising from sales of goods and services as of December 31,
(in millions)
Korean Won
2013
2012
Trade
Receivables
Other
Receivables
￦
￦
Loans
Trade
Receivables
Other
Receivables
￦
￦
Loans
Associates
Galleria Foret1
Kyoungju enviroment
The Ulsan harbour bridge Co., Ltd.
Wonju Green Corporation
161,214
-
￦
-
267,174
-
￦
-
-
1,457
-
-
2,583
-
71,579
122
-
12,419
90
-
1,412
6,053
-
1,599
5,015
-
-
1,956
-
-
2,689
-
1,310
-
-
16,712
-
-
Hanwha Investment&Securities Co.,
Ltd,
100
52,124
-
345
4,304
-
Gulf Advanced Cables Insulation
Company
945
540
18,995
-
-
16,067
International Polymers Company
-
866
22,425
-
-
25,974
Luxbon Solar S.A.
-
1,282
8,738
-
1,651
8,498
OneRoof Energy, Inc. 2
-
-
5,561
-
-
5,356
Jeju Ocean Science Center Corp.
PT. Nantoy Bara Lestari
Others
-
307
4,438
-
-
3,352
625
2
528
2,699
194
3,088
227
53
-
305
711
-
Others
SNS Co., Ltd.
Taekyung Chemical Co., Ltd
4,926
-
-
3,007
-
-
Hancomm Inc.
2,854
34
-
2,846
24
-
Hanwha Energy Corporation
3,087
-
-
4,358
41
-
795
31
-
353
940
-
-
-
-
119
6,796
-
Sol Caltivante III S.A.
2,335
-
-
6,813
-
-
Sol Caltivante VI S.A.
-
-
-
6,813
-
-
27
-
-
4,570
27
HW S&C Co., Ltd.
Hanwha Bank Magyarorszag ZRt.
Others
￦
251,436
￦
64,827
194
￦
60,685
￦
330,132
￦
25,065
￦
62,335
(in millions)
US Dollars (Note 3)
2013
2012
Trade
Receivables
Other
Receivables
$
$
Trade
Receivables
Loans
Other
Receivables
Loans
Associates
Galleria Foret1
Kyoungju enviroment
153
-
$
-
$
253
$
-
$
-
-
1
-
-
2
-
68
-
-
12
-
-
1
6
-
2
5
-
-
2
-
-
3
-
Jeju Ocean Science Center Corp.
1
-
-
16
-
-
Hanwha Investment&Securities
Co., Ltd,
-
49
-
-
4
-
Gulf Advanced Cables Insulation
Company
1
1
18
-
-
15
International Polymers Company
-
1
21
-
-
25
Luxbon Solar S.A.
-
1
8
-
2
8
OneRoof Energy, Inc.2
-
-
5
-
-
5
-
-
4
-
-
3
Others
1
-
1
3
-
3
SNS Co., Ltd.
-
-
-
-
1
-
Taekyung Chemical Co., Ltd.
5
-
-
3
-
-
Hancomm Inc.
3
-
-
3
-
-
3
-
-
4
-
-
HW S&C Co., Ltd.
1
-
-
-
1
-
Hanwha Bank Magyarorszag ZRt.
-
-
-
-
6
-
2
-
-
6
-
-
-
-
-
6
-
-
Others
-
-
-
4
-
The Ulsan harbour bridge Co., Ltd.
Others
$
239
$
61
1
$
57
$
312
$
24
$
The figures represent amounts before deduction of provision for impairment of receivables from
construction contract for the years ended December 31, 2013 and 2012, is ￦46,843 million (equivalent to
US$ 44 million) and ￦34,843 million (equivalent to US$ 33 million), respectively.
2
Recognized impairment of ￦4,004 million (equivalent to US$ 4 million) and ￦ 1,817 million (equivalent to
US$ 2 million) for the years ended December 31, 2013 and 2012, respectively, for long-term loans receivable
as equity loss on investment.
195
59
Year-end balances of payables arising from sales of goods and services as of December 31, 2013
Korean Won
(in millions)
2013
Payables
2012
Other payables
Payables
Other payables
Associates
Yeochun NCC Co., Ltd
￦
￦
337,754
19,763
￦
￦
301,761
28,934
Jeju Ocean Science Museum
Corporation
-
71
-
7,598
Co., Ltd.
-
37,639
-
27,679
Others
-
11
-
200
1,659
15,281
298
15,235
53
414
171
381
4,810
23,268
9,610
29,370
13,110
22,530
11,679
1,867
20,835
31,158
27,555
28,995
Others
SNS Co., Ltd.
Taekyung Chemical Co., Ltd
Han Comm. Inc.
-
Others
1,012
￦ 378,221
￦
151,147
￦
1,136
￦
351,074
141,395
US Dollars (Note 3)
(in millions)
2013
Payables
2012
Other payables
Payables
Other payables
Associates
$
320
$
19
$
286
$
27
Corporation
-
-
-
7
Co., Ltd.
-
36
-
26
Others
-
-
-
-
SNS Co., Ltd.
2
14
-
14
Taekyung Chemical Co., Ltd.
-
-
-
28
Others
Han Comm. Inc.
5
22
9
12
21
11
2
19
30
27
28
-
1
-
2
Others
$
358
196
$
143
$
333
$
134
Sales and purchases of goods and services for the years ended December 31, 2013 and 2012, are
as follows:
(in millions)
Korean Won
2013
2012
Proceeds
from disposal
of property,
plant and
equipment
Sales
Purchases
Sales
Proceeds
from disposal
of property,
plant and
equipment
Acquisition of
property,
plant and
equipment
Purchases
Associates
-
￦ 10,079
Kyoungju Environment
11,212
-
-
13,903
-
-
-
619,081
-
2,638,042
494,158
-
2,636,182
-
Ulsan Harbor Bridge Co.,
Ltd.
27,102
-
-
28,711
-
-
-
19,032
-
-
4,090
-
-
-
Jeju Ocean Science
Museum Corporation
19,912
-
884
30,815
-
305
-
Jeju Academy Co., Ltd.
2,238
-
-
8,448
-
-
-
Hanwha Investment &
9,749
837
5,026
13,011
1,231
2,512
-
Others
6,893
-
-
7,096
-
-
-
2,429
-
59,477
2,444
-
73,317
-
Taekyung Chemical Co.,
Ltd.
48,043
-
416
72,264
-
662
-
Han Comm. Inc.
14,237
420
45,790
16,825
-
63,763
-
Hanwha Energy
Corporation1
370,823
-
149,358
134,378
-
124,155
-
7,086
420
215,883
8,059
-
261,278
42
GunJang Cogeneration
Co., Ltd.1
-
-
-
51,300
-
915
-
-
-
-
7,023
-
-
-
-
-
-
6,969
-
-
-
1,328
-
2,251
5,944
-
1,606
-
￦ 1,159,165
￦ 1,677
￦ 3,117,127
￦ 915,517
1,231
￦ 3,164,695
Galleria Foret
￦
-
￦
-
￦
￦
-
￦
-
￦
-
Others
SNS Co., Ltd.
Others
197
￦
￦
42
(in millions)
US Dollars (Note 3)
2013
2012
Proceeds
from disposal
of property,
plant and
equipment
Sales
Purchases
Proceeds
from disposal
of property,
plant and
equipment
Sales
Acquisition of
property,
plant and
equipment
Purchases
Associates
Galleria Foret
$
-
$
-
$
-
$
10
$
-
$
-
$
-
11
-
-
13
-
-
-
587
-
2,500
468
-
2,498
-
Ulsan Harbor Bridge Co.,
Ltd.
26
-
-
27
-
-
-
18
-
-
4
-
-
-
Jeju Ocean Science
Museum Corporation
19
-
1
29
-
-
-
Jeju Academy Co., Ltd.
2
-
-
8
-
-
-
Hanwha Investment &
9
2
5
12
1
2
-
Others
7
-
-
7
-
-
-
2
-
56
2
-
69
-
Taekyung Chemical Co.,
Ltd.
46
-
-
68
-
1
-
Han Comm. Inc
13
-
43
16
-
60
-
Hanwha Energy
Corporation1
351
-
142
127
-
118
-
7
-
205
8
-
248
-
GunJang Cogeneration
Co., Ltd.1
-
-
-
49
-
1
-
-
-
-
7
-
-
-
-
-
-
7
-
-
-
Others
-
-
2
6
-
2
-
Others
SNSACE Co., Ltd.
$
1,098
$
2
$
2,954
1
$
868
$
1
$
2,999
GunJang Cogeneration merged with Yeosu Cogeneration and the merged enterprise was renamed as
Hanwha Energy Corporation on November 1, 2012. The above disclosed amount of GunJang Cogeneration
corresponds to the amount before GunJang Cogeneration merged with Yeosu Cogeneration.
198
$
-
Changes in loans to related parties for the years ended December 31, 2013 and 2012, are as
follows:
(in millions)
Korean Won
2013
Beginning
Increase
Decrease
Others
Ending
Associates
Crystal Solar Inc.
￦
Gulf Advanced Cables
Insulation Company
-
￦
556
￦
-
￦
(28)
￦
528
16,067
3,174
-
(246)
18,995
3,182
-
(3,182)
-
-
25,974
-
(3,213)
(336)
22,425
Luxbon Solar S.A.
8,979
786
-
255
10,020
5,356
295
-
(90)
5,561
3,352
1,533
-
(140)
4,745
Health Planet Management
(Thailand) Co., Ltd.
Company
(in millions)
US Dollars (Note 3)
2013
Beginning
Increase
Decrease
Others
Ending
Associates
Crystal Solar Inc.
Insulation Company
$
-
$
1
$
-
$
-
$
1
15
3
-
-
18
3
-
(3)
-
-
25
-
(3)
-
22
Luxbon Solar S.A.
9
1
-
-
10
5
-
-
-
5
3
1
-
-
4
Company
199
(in millions)
Korean Won
2012
Beginning
Increase
Decrease
Others
Ending
Associates
￦
Galleria Foret
42,009
￦
-
￦
(42,009)
￦
-
￦
-
Insulation Company
-
16,697
-
(630)
16,067
-
3,288
-
(106)
3,182
27,968
23,515
(24,256)
(1,253)
25,974
Luxbon Solar S.A.
-
9,324
-
(345)
8,979
-
5,635
-
(279)
5,356
-
3,401
-
(49)
3,352
7,191
494
-
(7,685)
-
Company
PT. Nantoy Resources
(in millions)
US Dollars (Note 3)
2012
Beginning
Increase
Decrease
Others
Ending
Associates
Galleria Foret
$
40
$
-
$
(40)
$
-
$
-
Insulation Company
-
16
-
(1)
15
-
3
-
-
3
27
22
(23)
(1)
25
-
9
-
-
9
Company
Luxbon Solar S.A.
3
-
5
-
-
5
-
3
-
-
3
PT. Nantoy Resources
7
-
-
(7)
-
1
Changes in loans to related parties include accrued interest income.
No provisions are made for loans to related parties.
3
The Group recognized an equity loss on investments of ￦ 4,004 million (2012: ￦ 1,817 million) in regard to
long-term loan receivables.
2
200
There has been no change in borrowings to related parties for the year ended December 31, 2013.
Changes in borrowings to a related party for the year ended December 31, 2012, were as follows:
Korean Won
(in millions)
2012
Beginning
Hanwha Bank
Magyarorszag ZRt.
￦
2,882
Increase
￦
Decrease
-
￦
(2,882)
Others
￦
Ending
-
￦
-
US Dollars (Note 3)
(in millions)
2012
Beginning
Hanwha Bank
Magyarorszag ZRt.
$
3
Increase
$
Decrease
-
201
$
(3)
Others
$
Ending
-
$
-
Details of equity contributions in cash to related parties for the years ended December 31, 2013 and
(in millions)
Korean Won
Equity contributions in cash
2013
2012
Associates
￦
Seoul Global Bio Medical New Growth Power
Investment Fund
194
5,250
SaltOne Co., Ltd.
￦
2,100
585
-
-
2,355
Jeju Eco Energy Co., Ltd.
10
-
KoFC Kyobo Hanwha Growth Champ 2010-6
Private Investment Company
5,680
3,524
Hanwha Newly- development Force Fund
8,400
6,300
Hanwha Investment & Securities Co., Ltd.
-
1,636
1,320
660
Arabia One For Clean Energy Investments
PSC
235
-
Gulf Advanced Cables Insulation Company
-
5,639
Health Planet Management (Thailand) Co.,
Ltd.
-
9
HongKong YongWang Silicon Investment Co.,
Ltd.
-
701
10
231
Luxbon Solar S.A.
-
984
-
846
2011KIF-Hanwha IT Specialized Investment
Fund
Korea Waterbury Uranium Limited
Partnership.
202
US Dollars (Note 3)
(in millions)
Equity contributions in cash
2013
2012
Associates
$
-
$
-
Seoul Global Bio Medical New Growth Power
Investment Fund
5
SaltOne Co., Ltd.
1
-
-
2
Jeju Eco Energy Co., Ltd.
-
-
KoFC Kyobo Hanwha Growth Champ 2010-6
Private Investment Company
5
3
Hanwha Newly- development Force Fund
8
6
Hanwha Investment & Securities Co., Ltd.
-
2
2011KIF-Hanwha IT Specialized Investment
Fund
1
1
Arabia One For Clean Energy Investments
PSC
-
-
Gulf Advanced Cables Insulation Company
-
5
Health Planet Management (Thailand) Co.,
Ltd.
-
-
HongKong YongWang Silicon Investment Co.,
Ltd.
-
1
Korea Waterbury Uranium Limited
Partnership.
-
-
Luxbon Solar S.A.
-
1
-
1
2
Details of payment guarantee provided by the Group for a related party as of December 31, 2013,
are as follows:
Associate
Guarantee
Currency
Guaranteed
amount
Description
International
Polymers
USD
32,000,000
Financial institution
borrowings
203
Details of Cash Deficiency Support agreements provided by the Group for related parties as of
December 31, 2013, are as follows:
2013
(in millions)
Korean Won
US Dollars (Note 3)
Associates
Gyungbook Eco, Edu Co., Ltd.
￦
11,740
$
11
5,606
8,554
8
Jeju Enviro Corporation
18,896
18
Jeju Ocean Science Museum Corporation
83,222
79
Paju Enviro. Co., Ltd.
Luxbon Solar S.A.
￦
5
168
-
35,445
34
163,631
$
155
As of December 31, 2013, the Group provides payment guarantees (loan deposits amounting to
￦ 21,784 million) for loans of directors and employees from financial institutions.
204
Details of collateral provided by the Group for the funding sources of related parties as of
(in millions)
Korean Won
Pledged
asset
Book
value
Maximum
collateral
Mortgagee
Associates
Seocheon Enviro Co., Ltd.
Shares
￦ 3,077
Whasung Enviro. Co., Ltd.
Shares
7,571
Shares
Shares
Shares
362
49,598
KBTL
Ulsan Harbor Bridge Co., Ltd.
Shares
16,353
390,000
Kookmin bank
Shares
2,364
54,860
Nonghyup bank
4,717
Jeju ocean science museum
private special asset trust
security I, Nonghyup bank
Corporation
Shares
￦
5,669
Hana Bank
32,500
Kookmin bank
1,662
6,045
Korea exchange bank
2,352
27,300
Nonghyup bank
4,717
(in millions)
Korean Won
Pledged
asset
Book
value
Maximum
collateral
Mortgagee
Associates
Seocheon Enviro Co., Ltd.
Shares
5
Hana Bank
Whasung Enviro. Co., Ltd.
Shares
$
3
7
$
31
Kookmin bank
Shares
2
6
Korea exchange bank
Shares
2
26
Nonghyup bank
Shares
-
47
KBTL
Ulsan Harbor Bridge Co., Ltd.
Shares
15
370
Kookmin bank
Shares
2
52
Nonghyup bank
Corporation
Shares
4
4
Jeju ocean science museum
private special asset trust
security I, Nonghyup bank
The compensation paid or payable to key management for employee services for the years ended
December 31, 2013 and 2012, consists of:
Korean Won
(in millions)
2013
Salaries and other short-term
employee benefits1
Retirement benefits
Other long-term benefits
￦
US Dollars (Note 3)
2012
￦
101,832
93,316
2013
$
2012
96
$
88
27,400
21,159
26
20
2,371
10,450
2
10
1
The Group has provided the long-term performance-related pay system which pays incentives to the
executives based on the financial performance over the three years from 2011. The Group recognized
provisions for the expenditures expected to be required to settle the obligation.
205
58. Dividends
Dividends of ￦ 450 per ordinary share and ￦ 500 per preference share for the year ended
December 31, 2012, were paid in April 2013. Dividends of ￦ 400 per ordinary share and ￦ 450
per preference share for the year ended December 31, 2013, which amount to a total dividend of
￦ 27,847 million, are to be proposed at the annual general shareholders’ meeting on March 21,
2014. These financial statements do not reflect this dividend payable.
59. Transfers of Financial Assets (Non-financial business)
Transferred financial assets that are not derecognized in their entirety as of December 31, 2013
Loans and receivables(Trade receivables)
(in millions)
Korean Won
2013
Book value of assets
Book value of relevant liabilities
￦
US Dollars (Note 3)
2012
￦
155,140
(192,175)
257,488
(297,171)
2013
$
2012
147
(182)
$
244
(282)
There are no transferred financial assets that are derecognized in their entirety as of December 31,
2013 and 2012.
206
60. Contingencies and Commitments
The outstanding borrowing agreements with banks as of December 31, 2013, are as follows:
(in millions of Korean won,
in thousands of foreign currencies)
Bank overdraft
Usance related to imports
D/A, D/P, Local and trade bills
related to exports
Other borrowings
2013
KRW
363,800
USD
42,000
EUR
6,000
JPY
200,000
USD
1,393,640
JPY
570,000
KRW
118,730
USD
664,786
JPY
400,000
KRW
4,354,483
USD
317,160
JPY
8,352,800
CNY
8,000
As of December 31, 2013, 27 blank promissory notes, 14 blank checks, 49 promissory notes
amounting to ￦ 182,393 million (equivalent to USD 173 million) and three checks amounting to
￦ 29,556 million (equivalent to USD 28 million) have been provided as collateral for short-term and
long-term debts, agreements for discounting notes receivable, performance guarantees and others.
As of December 31, 2013, the Group applies for a procedure of a public summon of seven notes
provided by Standard Chartered Bank since issuance and collection of the notes are uncertain.
207
Details of guarantees provided to others as of December 31, 2013, are as follows:
2013
(in millions)
Guarantee breakdown
Vendee in lot sale contracts
Joint surety of loan
Operation developers
Developer's lot sale
guarantee
POSCO Engineering &
Construction Co., Ltd. and
31 other companies
1
Korean Won
US Dollars
(Note 3)
￦
$
1,058,377
1,003
1,852,374
1,755
4,468
4
Performance guarantee for
Solar power plant
construction and others
The maximum exposure to credit risk at the reporting date is the maximum value of guarantee provided.
In addition to above guarantees, the Group invested in Gyeonggi Expressway Co., Ltd. and 22
investees for private sector investment projects and environmental water-treatment projects under
the Act on Private Investment for Social Overhead Capital. As of December 31, 2013, the Group
provides available-for-sale financial assets amounting to ￦ 50,792 million (equivalent to USD 48
million) as the right of pledge to the lenders of investees. Further, the Group provides investment
securities in associates as collateral for financing related parties (Note 57).
Credit enhancements provided to others on project financing (including related parties)
Details of credit enhancements provided by the Group to developers for their borrowings as of
Korean Won
(in millions)
Guarantee balances
at 2013
ABCP
￦
379,300
Loan balances at
2013
￦
376,300
Loan balances at
2012
￦
611,300
ABSTB
324,700
282,700
-
Other PF Loan
594,902
526,848
850,278
￦
1,298,902
1,185,848
￦
1,461,578
US Dollars (Note 3)
(in millions)
Guarantee balances
at 2013
ABCP
￦
359
$
ABSTB
Loan balances at
2013
$
308
Other PF Loan
1,231
208
$
268
564
$
357
Loan balances at
2012
-
499
$
1,124
579
806
$
1,385
Details of outstanding balances of major projects as of December 31, 2013, are as follows:
(in millions)
Korean Won
Area1
Lender
Loan amount
Loan balances
Content of
guaranty
Period
Assumption of
debt
2013.02.18~
2016.08.18
Loan, ABSTB
Type
Gyeonggi Province
Bank and others
￦ 295,000
￦ 295,000
Gyeonggi Province
Bank and others
220,000
220,000
Solidarity
guarantee
2013.06.08~
2015.06.10
Loan, ABSTB
Gyeonggi Province
Securities Companies
and others
180,000
180,000
Assumption of
debt
2013.04.30~
2014.04.29
Loan, ABCP
Gyeonggi Province
135,000
135,000
Assumption of
debt
2013.03.05~
2014.03.04
ABCP
Gyeonggi Province
Bank and others
120,000
120,000
Solidarity
guarantee
2013.06.08~
2015.06.10
Loan, ABSTB
￦ 950,000
￦ 950,000
(in millions)
US Dollars (Note 3)
Area1
Lender
Loan amount
Loan balances
Content of
guaranty
Period
Type
280
Assumption of
debt
2013.02.18~
2016.08.18
Loan, ABSTB
208
208
Solidarity
guarantee
2013.06.08~
2015.06.10
Loan, ABSTB
and others
171
171
Assumption of
debt
2013.04.30~
2014.04.29
Loan, ABCP
Gyeonggi Province
128
128
Assumption of
debt
2013.03.05~
2014.03.04
ABCP
Gyeonggi Province
Bank and others
113
113
Solidarity
guarantee
2013.06.08~
2015.06.10
Loan, ABSTB
Gyeonggi Province
Bank and others
Gyeonggi Province
Bank and others
Gyeonggi Province
$
$
1
280
900
$
900
$
Areas are expressed in the name of the province.
209
Details of assets provided as collateral for the Group’s liabilities as of December 31, 2013, are as
follows:
(in millions of Korean won,
in thousands of foreign
currencies)
Intangible assets
Financial instruments and
investment in subsidiaries and
associates
Mortgage amount
KRW
3,499,658
USD
10,201
Hana bank
JPY
2,600,000
CNY
1,397,445
Chinese bank
MYR
388,085
USD
8,907
Chinese bank
Chinese bank
MOF
CNY
79,351
MYR
753
KRW
516,528
Shinhan Bank and
others
USD
51,657
CA Division of Oil &
Gas and others
EUR
4,750
Commerzbank and
others
MYR
237,975
AED
540
KRW
549,179
USD
9,674
MYR
220,188
USD
3,290
Purpose of
Mortgage
Woori Bank
Industrial bank of
Korea and others
Inventories
Other assets
Mortgagee
MOF
Collateral for
Borrowings and
debentures
MOF
Emirates NBD Bank
The Korea
Development Bank
and others
The Korea
Development Bank
and others
MOF
The Korea
Development Bank
and others
Shares of Hanwha Chemical Corporation and the Group's subsidiaries are provided as collateral
for trading purposes such as borrowings and collateral for advance payments, as of December 31,
2013. The maximum value of guarantee by collateral provided amounts to ￦ 1,286,752 million
(equivalent to USD 1,219 million)
The Group provided as collateral for the borrowings of subsidiaries, which are engaged in private
sector investment projects or environmental water-treatment projects under the Act on Private
Investment for Social Overhead Capital, their bank deposits, certain rights from insurance contracts
they entered into and their management rights on project-related properties. The maximum value of
guarantee by collateral provided amounts to ￦ 42,900 million (equivalent to USD 41 million).
The Group entered into a bilateral Memorandum of Understanding (MOU) with Korea Development
Bank on November 14, 2008, to acquire Daewoo Shipbuilding & Marine Engineering Co., Ltd. and
paid an execution deposit of ￦ 315 billion (equivalent to USD 298 million) on November 19, 2008.
The Group received a notification of MOU cancellation and forfeiture of execution deposit from
Korea Development Bank on January 22, 2009. The Group applied for the return of the execution
deposit with Seoul Central District Court on June 19, 2009. Due to the failure by Seoul Central
District Court to settle the case out of court as per its notice on November 20, 2009, the case
210
became a civil suit.
The case was decided against the Group at the first trial on February 10, 2011. As a result, the
Group established a full allowance against the long-term other accounts receivable related to the
execution deposit. The Company appealed on March 2, 2011 and lost the suit on June 14, 2012, at
the High Court. Thereafter, the Company appealed to the Supreme Court on July 3, 2012 and
financial effects of this case could not be reasonably determined.
The Group sold its shares in Korea Independent Energy Co., Ltd. to POSCO on July 11, 2005.
According to the stock sale agreement, if a buyer, within a year from transfer of stocks, suffers
damages as a result of the breach of contract with the Group and where 50% of individual losses
are over ￦ 50 million and also exceed 3% of stock price, 10% of stock price must be provided as
compensation for the amount exceeded. Further, the Group is also liable for the 25% of third party
claims for damages related to the water facilities and drainages until the termination of the electric
power supply agreement between Korea Independent Energy Co., Ltd. and Korea Electric Power
Corporation, or until the cause of such damage is remedied.
As of December 31, 2013, the Group has 895 pending cases, including the aforementioned cases.
The Group is the plaintiff in 351 cases aggregating to ￦ 171,561 million (equivalent to USD 163
million) USD 289 million and CNY 75 million, and a defendant in 544 cases aggregating to
￦ 310,336 million (equivalent to USD 294 million) and EUR 50 million. Management believes that
the final outcome of these cases will not materially affect the Group’s consolidated financial
statements.
The Group granted stock options (put back options) amounting to ￦ 26,676 million (equivalent to
USD 25 million) to the financial investors in relation to the Second West Coast Highway Inc.
As of December 31, 2013, the Group provides a Cash Deficiency Support agreement amounting to
￦ 629,512 million (equivalent to USD 597million) to developers including, S.D.Y Development Co.,
Ltd. and SOC corporations, including Yeongdeok Environment Corporation. Additional losses can
incur in relation to this agreement. However, the accompanying consolidated financial statements
do not include any effect from the possible losses because the losses are not probable to be
realized. The Group provides a Cash Deficiency Support agreement to its related parties.
211
Reinsurance agreement
Details of outward and inward reinsurance agreements for individual and group insurances as of
2013
Proportion of
outward agreement
and inward
agreement (%)
Insurance
products
Korean Reinsurance Company
5 ~ 50
Casualty
Meijiyasuda Life Insurance Company and
three others
6 ~ 20
Cancer
50 ~ 100
Below standard
10 ~ 30
Whole life
100
Over standard
SCOR Global Life
50
Long-term care
RGA Reinsurance Group of America and
two others
30 ~ 35
Large amount
contract
RGA Reinsurance Group of America and
5 others
5 ~ 25
Critical illness
10 ~ 30
Medical expense
special contract
50 ~ 100
Below standard
Reinsurance company
Proportional
Individual
Group
General long-term and
motor vehicles
100
Over standard
10 ~ 30
Motor vehicles
insurance
30 ~ 70
Fire insurance
15 ~ 70
Marine insurance
30 ~ 80
Casualty
10 ~ 65
Disease, property,
long-term and other
insurance
70
Casualty and
sickness insurance
Unlimited coverage
in excess of ￦ 1
billion
Vehicles (people
covered)
Up to ￦ 5.5 billion in
excess of ￦ 1.3
billion
Vehicles (pledged
vehicles)
Cooper Gay
Unlimited coverage
in excess of ￦ 1
billion
Vehicles (people
covered)
JLT
Unlimited coverage
in excess of ￦ 1
billion (30%)
Vehicles (people
covered)
￦ 600 million ~
￦ 19.4 billion
Long-term (Property
and casualty)
0 ~ 100% of
excessive amount
Long-term and other
general insurance
Transamerica Life Insurance Co., Ltd.
Surplus
General long-term and
motor vehicles
SWISS RE and others
212
61. Cash Generated from Operations
Cash generated from operations for the years ended of December 31, 2013 and 2012, are as
follows:
Korean Won
(in millions)
2013
Income before income tax
￦
US Dollars (Note 3)
2012
￦
404,434
812,726
2013
$
2012
383
$
770
Adjustments for:
Finance income (Non-financial
business)
(51,546)
(60,173)
(49)
(57)
Finance cost (Non-financial
business)
467,454
492,062
443
466
(3,113,343)
(2,976,177)
(2,950)
(2,820)
Finance income (Financial
business)
Finance cost (Financial business)
50,439
55,180
48
52
Bad debts expense
257,289
137,789
244
131
Depreciation
568,362
491,154
539
465
54,906
43,997
52
42
Depreciation of investment
property
Amortization
Severance benefits
Provision
58,975
54,739
56
52
191,984
173,063
182
164
76,976
45,048
73
43
Losses on foreign currency
translation
229,880
158,624
218
150
Gains on foreign currency
transaction
(193,136)
(88,624)
(183)
(84)
Gains and losses on valuation of
equity-method investment
(20,833)
(22,936)
(20)
(22)
Gains and losses on valuation of
financial instruments
(105,622)
(247,946)
(100)
(235)
Gains and losses on the disposal
of financial instruments
(310,116)
(302,390)
(294)
(287)
6,815,121
(4,422)
6,766,364
(3,714)
6,458
6,412
Gains on bargain purchases
(4)
(4)
Others
1,643,327
1,631,140
1,557
1,546
Trade receivables
(598,952)
(205,537)
(568)
(195)
Other receivables
(277,698)
(106,813)
(263)
(101)
Inventories
(184,292)
(47,150)
(175)
(45)
Reserves
Changes in working capital:
(4,853)
(300,689)
(5)
(285)
Loan receivables and other
receivables
(811,149)
(806,484)
(769)
(764)
Assets at fair value through profit
or loss
(185,026)
(226,980)
(175)
(215)
(33,955)
(1,086,667)
(32)
(1,030)
213
Korean Won
(in millions)
2013
Other assets
Trade payables
Other payables
US Dollars (Note 3)
2012
2013
2012
(458,926)
(494,097)
(435)
(468)
160,401
(138,684)
152
(131)
65,341
189,713
62
180
(128,875)
(150,747)
(122)
(143)
Provisions for liabilities and
charges
(104,423)
(14,478)
(99)
(14)
20,160
8,856
19
8
Other liabilities
79,724
854,154
76
809
(1,599,887)
(2,189,509)
(1,516)
(2,075)
1,855,222
1,825,546
1,758
1,730
(1,211,629)
21,702
(1,148)
21
9,184
106,801
9
101
Separate assets
Separate liabilities
Others
Cash generated from
operations
￦
3,610,496
￦
4,398,863
$
3,421
$
4,168
62. Financial Risk Management
62.1 Financial Risk Factors of Non-Financial Businesses
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk,
interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program seeks
to minimize potential adverse effects on the Group’s financial performance.
The objects of financial risk management are financial assets, including cash and cash equivalents,
available-for-sale financial instruments, trade receivables and other receivables, and financial
liabilities, including trade payables and other payables, borrowings, and debentures.
214
(a) Market risk
i) Foreign exchange risk
Foreign exchange risk of the Group arises when future commercial transactions or recognized assets
or liabilities are denominated in a currency that is not the Group’s functional currency. The Group is
exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
the US dollar, the Euro and the Japanese Yen. The Group operates hedging policies for each
company within the Group, considering the nature of business and the existence of instruments to
cope with the risks of exchange rate fluctuation. Additionally, the Group periodically evaluates and
handles such risks exposed through managing system for receivables and payables denominated in
foreign currencies, and reports the results to the management.
As of December 31, 2013, if the Korea won had weakened/strengthened by 10% against the
currencies with all other variables held constant, pre-tax profit for the year would have been
higher/lower for the following amounts:
10% increase
(in millions)
USD
￦
76,319
10% decrease
￦
(76,319)
EUR
(4,828)
4,828
JPY
(879)
879
The above sensitivity analysis is performed based on monetary assets and liabilities denominated in a
currency that is not the Group’s functional currency.
ii) Interest rate risk
The Group’s interest rate risk arises mainly from borrowings. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk which is partially offset by currency swap. Also, fixed
rate borrowings expose the Group to fair value interest rate risk. The Group analyzes and manages
its interest rate exposure through various manners, such as to share excess cash within the Group to
minimize external borrowings, to avoid high rate borrowings, to reform capital structure, to manage an
appropriate ratio of fixed rate borrowings and variable rates borrowings, to monitor a fluctuation of
domestic and foreign interest rate.
As of December 31, 2013, if interest rates on borrowings denominated in Korean won had been 1%
higher/lower with all other variables held constant, pre-tax profit for the year would have been
￦ 44,512 million (equivalent to USD 42 million) lower/higher, mainly as a result of higher/lower
interest expense on floating rate borrowings.
(b) Credit Risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative
financial instruments and deposits with banks and financial institutions, as well as credit exposures to
retail customers, including outstanding receivables and committed transactions. In order to manage
credit risk, the Group opens and maintains its business only with customers whose credit qualities
exceed a required minimum rating, and periodically revaluate credit qualities of customers to amend a
credit limit, if necessary. As of December 31, 2013, management does not expect any losses from
non-performance by counterparties. The maximum exposure to credit risk in relation to the financial
guarantees provided to related parties is ￦ 219,185 million (equivalent to USD 208 million), as of
December 31, 2013 (Note 57).
215
(c) Liquidity Risk
The Group finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has
sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn
committed borrowing facilities at all times. Group treasury invests surplus cash in time deposits,
interest bearing money market deposits, choosing instruments with appropriate maturities or
sufficient liquidity to provide sufficient head-room.
Details of the Group’s maturity analysis on financial liabilities as of December, 2013 and 2012, are
as follows. The amounts disclosed in the table are the contractual undiscounted cash flows.
Korean Won
(in millions)
2013
Less than 1
year
Bank borrowings
Debentures
1
￦
1
2, 3
￦
Between 1 and
5 years
￦
3,120,109
2,829,434
Over 5 years
￦
Total
316,870
￦
6,266,413
1,731,671
2,882,624
-
4,614,295
2,850,835
13,643
-
2,864,478
6,372
7,097
-
13,469
251,379
347,550
351,620
950,549
668,490
￦ 14,709,204
￦
7,960,366
6,080,348
￦
US Dollars (Note 3)
(in millions)
2013
Less than 1
year
Bank borrowings1
Debentures
$
1
2, 3
Between 1 and
5 years
2,957
$
$
Total
300
$
5,938
1,641
2,731
-
4,372
2,701
13
-
2,714
6
7
-
13
238
$
2,681
Over 5 years
330
7,543
$
216
5,762
333
$
633
901
$
13,938
Korean Won
(in millions)
2012
Less than 1
year
Bank borrowings
Debentures
1
￦
1
2, 3
Between 1 and
5 years
￦
3,504,055
1,764,078
Over 5 years
￦
Total
301,232
￦
5,569,365
1,465,419
3,044,753
-
4,510,172
2,628,456
36,677
-
2,665,133
15,911
2,925
-
18,836
543,199
844,431
1,014,772
￦ 13,778,278
270,038
￦ 7,883,879
￦
201,535
5,049,968
￦
US Dollars (Note 3)
(in millions)
2012
Less than 1
year
Bank borrowings1
Debentures
$
1
Other financial liabilities2, 3
$
Between 1 and
5 years
3,320
$
1,672
Over 5 years
$
Total
285
$
5,277
1,389
2,885
-
4,274
2,491
35
-
2,526
15
3
-
18
256
190
515
961
7,471
$
4,785
$
800
$
1
Includes cash flows of related interest expenses.
Excludes cash flows of accrued interest and interest expenses.
3
Excludes cash flows of financial guarantee contract.
2
The Group has entered into both financial guarantee contracts and performance guarantee
contracts, which are not considered in the above table. If a principal debtor fails to meet an
obligation, additional cash outflows from the Group may be incurred within a year (Note 60).
217
13,056
62.2 Fair Value Measurement of Non-financial Businesses
Fair value of financial instruments by category
Book values and fair values of financial instruments by category as of December 31, 2013 and
(in millions)
Korean Won
2013
2012
Book value
Fair value
Book value
Fair value
Financial assets
Cash and cash equivalents1
￦
1,289,261
￦
1,289,261
￦
1,164,820
￦
1,164,820
Available-for-sale financial assets2
75,033
75,033
90,458
90,458
18,691
18,691
10,408
10,408
4,475,169
4,475,169
3,861,005
3,861,005
604,520
604,520
618,086
Other financial assets3
618,086
￦
6,462,674
￦
6,462,674
￦
5,744,777
￦
5,744,777
￦
2,864,478
￦
2,864,478
￦
2,665,134
￦
2,665,134
Financial liabilities
10,425,663
10,455,591
9,672,710
12,095
12,095
17,083
17,083
769,368
827,742
820,601
875,207
￦ 14,071,604
￦ 14,159,906
￦ 13,175,528
￦ 13,248,838
Other financial liabilities3
(in millions)
9,691,414
US Dollars (Note 3)
2013
2012
Book value
Fair value
Book value
Fair value
Financial assets
Cash and cash equivalents1
$
Available-for-sale financial assets2
1,222
$
71
Other financial assets3
$
1,222
$
71
1,104
$
86
1,104
86
18
18
10
10
4,241
4,241
3,659
3,659
572
572
585
585
6,124
$
6,124
$
5,444
$
5,444
2,714
2,714
2,525
2,525
9,879
9,908
9,166
9,184
11
11
16
16
730
785
778
830
Other financial liabilities3
$
13,334
1
$
13,418
$
12,485
$
12,555
Cash on hand is not included.
Equity instruments that do not have a quoted price in an active market are measured at cost because their
fair value cannot be measured reliably and excluded from the fair value disclosures.
3
Excludes derivative financial instruments.
2
218
Fair value hierarchy
The table below analyzes financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:



Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (Level 3).
Fair value hierarchy classifications of the financial assets and financial liabilities that are measured
at fair value or its fair value is disclosed as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
Level 1
Level 2
Level 3
Total
Recurring fair value measurements
Financial assets
￦
￦
1,559
-
5,667
￦
67,807
18,691
￦
1,559
￦
24,358
￦
-
￦
12,095
￦
￦
75,033
18,691
67,807
￦
93,724
-
￦
12,095
(in millions)
￦
US Dollars (Note 3)
2013
Level 1
Level 2
Level 3
Total
Financial assets
$
1
$
-
5
$
18
64
$
-
71
18
$
1
$
23
$
64
$
89
$
-
$
11
$
-
$
11
219
(in millions)
Korean Won
2012
Level 1
Level 2
Level 3
Total
Financial assets
￦
￦
2,359
-
24,561
￦
63,538
10,408
￦
90,458
-
10,408
￦
2,359
￦
34,969
￦
63,538
￦
100,866
￦
-
￦
17,083
￦
-
￦
17,083
(in millions)
US Dollars (Note 3)
2012
Level 1
Level 2
Level 3
Total
Financial assets
$
2
$
23
-
$
60
10
$
85
-
10
$
2
$
33
$
60
$
95
$
-
$
16
$
-
$
16
The following table presents the changes in Level 3 instruments for the years ended December 31,
2013 and 2012, as follows:
(in millions)
Korean Won
2013
Opening balance
￦
Purchases
US Dollars (Note 3)
2012
￦
63,538
2013
64,844
$
2012
60
$
61
4,186
1,001
4
1
(181)
(3,277)
-
(3)
Gains and losses recognized in
profit or loss
47
-
-
-
Gains and losses recognized in
other comprehensive income
229
970
-
1
Sales
Others
Ending balance
(12)
￦
￦
67,807
220
63,538
$
64
$
60
Valuation techniques and inputs
Valuation techniques and inputs used in the recurring, non-recurring fair value measurements and
disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as of
(in millions)
Korean Won
2013
Fair value
Valuation
techniques
Level
Inputs
Range of inputs
(weighted
average)
N/A
N/A
N/A
N/A
N/A
Assets for nonfinancial business
￦
Debt instruments
Equity instruments
2,776
2
2,549
2
Present value
technique
Market approach
342
2
Market approach
N/A
3
Present value
technique
Risk free interest
rate
Market risk rate
13.41%
Inflation rate
2.78%
44,308
3.59%
23,499
3
Market approach
N/A
N/A
17,268
2
Market approach
N/A
N/A
1,364
2
Market approach
N/A
N/A
59
2
Option-pricing model
N/A
N/A
liabilities
Currency forward
5,133
2
Market approach
N/A
N/A
Currency swap
2,073
2
Market approach
N/A
N/A
Commodity derivatives
2,017
2
Market approach
N/A
N/A
Interest swap
2,872
2
N/A
N/A
assets
Currency forward
Interest swap
221
(in millions)
US Dollars (Note 3)
2013
Level
Valuation
techniques
Inputs
Range of inputs
(weighted
average)
3
2
Present value
technique
N/A
N/A
2
2
Market approach
N/A
N/A
-
2
Market approach
N/A
N/A
Risk free interest
rate
3.59%
3
Present value
technique
Market risk rate
13.41%
Inflate rate
2.78%
Fair value
Assets for nonfinancial business
Debt instruments
Equity instruments
assets
Currency forward
$
42
22
3
Market approach
N/A
N/A
16
2
Market approach
N/A
N/A
1
2
Market approach
N/A
N/A
Interest swap
-
2
N/A
N/A
liabilities
Currency forward
5
2
Market approach
N/A
N/A
Currency swap
2
2
Market approach
N/A
N/A
2
2
Market approach
N/A
N/A
Interest swap
3
2
N/A
N/A
222
Financial instruments measured at cost
The following table presents available-for-sale financial assets that are valued at historical cost as
of December 31, 2013 and 2012, as follows:
(in millions)
Korean Won
2013
Equity instruments
￦
US Dollars (Note 3)
2012
72,046
￦
54,302
2013
$
2012
68
$
51
Above financial instruments do not have quoted market prices in active market and fair value
cannot be reliably measured. Therefore these instruments are measured at cost. The Group does
not have any plans to dispose of the above-mentioned in the near future. These instruments will be
measured at fair value when the Group can develop a reliable estimate of the fair value (Note 7).
62.3 Financial Risk Management of Financial Business
62.3-1 Risk management policy
(a) Life insurance business
Insurance companies have important role in the financial market as they provide risk mitigation.
The Company does its best to make stable growth and profit for shareholders and policyholders as
managing insurance risk, interest rate risk, credit risk, market risk, liquidity risk and operation risk in
accordance with its principle of risk management.
a) Objectives of risk management
The Company’s objectives of the risk management are to maximize its value and sustain its stable
growth by preventing, evaluating and managing uncertainty and possibility of loss.
b) Risk management strategy
In the short term, the Group establish and manage maximum permissible limit to maintain entire
risk level below within a certain level of available capital. In addition, the Group operates risk
management process for investment activity and insurance product development. In the middle and
long term, the Group seeks to maximize its value and profit-oriented business strategy, which
reflects asset and liability management (ALM) investment strategy (the characteristics of insurance
asset management strategy) in its management plan and asset management plan. Also, risk
management organization and management’s reporting system maintain independence and
principle of checks and balances.
c) Structure and function of risk management organization
The Group has risk management committee, risk management action officers committee for both
insurance division and investment division and risk management team. The Group operates asset
committee, product committee, operating expense management committee and reinsurance
management committee with regard to work site operations.
i) Risk management committee
Risk management committee is composed of more than three directors who are elected at
the board of directors. Risk management committee establishes standards and measures
of risk management, approves the permissible risk limit and others.
223
ii) Risk management action officers committee
Risk management action officers committee is composed of chairman who is chief
operating officer of risk management and members who are managers of each
departments. Risk management action officers committee perform pre-deliberation on
plans of insurance division and investment division, checking running state, establishment
and revision of detailed regulations for risk management and others.
Categories and function of subcommittees:
Name of subcommittee
Major function
Asset committee
Establishment of quarterly asset management strategy and
target portfolio, transaction of investment and loan, choice
of asset management companies and others
Product committee
Development and sale of insurance product, sales analysis,
determination of announced interest rate and others
Operating expense management
committee
Discussion between divisions for operating expense and
management of operating expense
Reinsurance management
committee
Management of reinsurance ceded and assumed, selection
of reinsurer, analysis for reinsurance transaction and others
d) Activity to build a risk management structure
Risk measurement system and maximum permissible limit for each risk category are as
follows:
i) Risk measurement system and measurement method
System
Standard
Date of built
Measurement method
Market risk
measurement
Delta-Normal Method
March 2004
Market VaR, Stress
test, Back test, others
Credit risk
measurement
Credit MetricsTM
March 2004
Credit VaR, Stress test,
others
Insurance risk
measurement
Probabilistic operating
expense VaR
June 2004
Operating expense
VaR
Interest rate risk
measurement
Probabilistic interest
rate VaR
May 2007
Interest rate VaR
Internal control
standard
March 2004
MVS, PVDE
BIS standard
November 2009/
March 2010
RCSA, KRI, Op-VaR
ALM system
Non-financial risk
management
224
ii) Maximum permissible limit by risk categories and cycle of management
Risk category
Insurance risk
Interest rate risk
Maximum permissible limit
Operating expense VaR
Target duration, Interest rate
VaR
Measurement method
Annually→monthly or quarterly
management by objective
Annually→daily, monthly or quarterly
management by objective
Market risk
Market VaR
Quarterly→daily or monthly management
by objective
Credit risk
Credit VaR
Quarterly→monthly management by
objective
Liquidity risk
Annually→daily or monthly management
by objective
62.3-2 Insurance risk management
(a) Concept
Insurance risk is the risk, other than financial risk, transferred from the holder of a contract to the
issuer. It is composed of insurance value risk and reserve risk. Insurance value risk is the risk of
loss due to difference between premium which is received from policyholders and actual claims
paid. Reserve risk is the risk of loss due to difference between reserve for outstanding claims and
actual claims paid in the future. To life insurance companies, actual benefit of reserve risk
measurement is less because it is short from the time of the incident to the time of the
actual claims paid.
225
(b) Status of exposure of insurance risk
Exposure pursuant to the risk-based capital (RBC) standard as of December 31, 2013 and 2012,
are as follows:
a) Life insurance business
Korean Won
(in millions)
2013
Death
￦
2012
581,946
Disability
￦
558,561
58,267
58,047
Hospitalization
310,142
299,008
Operation/diagnosis
603,583
564,925
Medical expense
141,275
112,275
Other life insurance
66,304
￦
Possession rate
1,761,517
63,135
￦
91.77%
91.00%
US Dollars (Note 3)
(in millions)
2013
Death
1,655,951
$
2012
551
Disability
$
529
55
55
Hospitalization
294
283
Operation/diagnosis
572
535
Medical expense
134
106
Other life insurance
63
$
Possession rate
1,669
91.77%
226
60
$
1,568
91.00%
b) General insurance business
Korean Won
(in millions)
2013
2012
General insurance
Fire∙Burglary insurance
￦
11,201
Technical∙Comprehensive insurance
￦
8,807
38,242
Other general insurance
41,585
54,763
52,446
104,206
102,838
480,833
440,564
Death, Sequela
84,763
124,496
Disease survival
84,923
114,518
Medical expense
111,769
153,764
Other long-term insurance
124,032
138,115
Automobile insurance
Long-term insurance
405,487
￦
990,526
530,893
￦
1,074,295
US Dollars (Note 3)
(in millions)
2013
2012
General insurance
$
11
$
8
Technical∙Comprehensive insurance
36
39
52
50
99
97
456
417
Death, Sequela
80
118
Disease survival
80
109
Medical expense
106
146
Other long-term insurance
118
131
Long-term insurance
384
$
227
939
504
$
1,018
(c) Status of reserve for outstanding claims value risk
Reserve for outstanding claims risk as of December 31, 2013 and 2012, are as follows:
a) General insurance business
Korean Won
(in millions)
2013
Exposure
￦
Technical∙Comprehensive
insurance
￦
2012
Insurance
value risk
￦
2,861
34
14,157
4,856
46,042
110,462
￦
173,522
￦
3,922
￦
47
14,861
5,097
33,609
36,662
26,649
30,231
120,638
68,730
￦
176,083
32,702
￦
64,495
US Dollars (Note 3)
(in millions)
2013
$
Technical∙Comprehensive
insurance
$
2012
Insurance
value risk
Exposure
Insurance
value risk
Exposure
3
$
-
13
5
44
105
165
$
228
Insurance
value risk
Exposure
$
4
$
-
14
5
32
35
25
29
114
31
66
$
167
$
61
(d) Chain-ladder of general insurance as of December 31, 2013, is as follows:
(in millions)
Korean Won
Development year
1 year
2 years
3 years
4 years
5 years
Accumulated
insurance claims
paid
FYD-4
￦
107,612
￦
184,608
￦
198,863
￦
201,002
￦
201,389
FYD-3
76,429
126,357
130,828
134,893
-
FYD-2
128,547
177,222
185,076
-
-
FYD-1
158,991
214,405
-
-
-
71,669
-
-
-
-
FYD
Estimated
accumulated
insurance claims
FYD-4
￦
213,743
￦
215,393
￦
219,519
￦
209,339
￦
207,544
FYD-3
135,256
141,605
141,062
149,924
-
FYD-2
175,932
201,457
204,025
-
-
FYD-1
279,721
239,199
-
-
-
FYD
190,327
-
-
-
-
Difference
￦
118,658
￦
24,794
(in millions)
￦
18,949
￦
15,031
￦
6,155
US Dollars (Note 3)
Development year
1 year
2 years
3 years
4 years
5 years
$
$
Accumulated
insurance claims
paid
FYD-4
$
102
$
175
$
188
190
191
FYD-3
72
120
124
128
-
FYD-2
122
168
175
-
-
FYD-1
151
203
-
-
-
68
-
-
-
-
FYD
Estimated
accumulated
insurance claims
FYD-4
$
203
$
204
$
208
$
198
$
197
FYD-3
128
134
134
142
-
FYD-2
167
191
193
-
-
FYD-1
265
227
-
-
-
FYD
180
-
-
-
Difference
$
112
$
24
229
$
18
$
14
$
6
(e) Chain-ladder of automobile insurance as of December 31, 2013, is as follows:
(in millions)
Korean Won
Development year
1 year
Accumulated insurance
claims paid
FYD-4
￦
2 years
388,649
￦
3 years
458,079
￦
4 years
471,717
￦
5 years
481,205
￦
484,896
FYD-3
420,112
484,360
498,408
504,644
-
FYD-2
365,474
415,673
427,581
-
-
345,028
409,306
-
-
-
354,590
-
-
-
-
FYD-1
FYD
Estimated accumulated
insurance claims
FYD-4
￦
472,267
￦
482,061
￦
486,229
￦
490,038
￦
490,531
FYD-3
498,463
508,542
511,467
512,222
-
FYD-2
426,220
434,513
434,847
-
-
FYD-1
414,119
428,238
-
-
-
FYD
421,264
-
-
-
￦
Difference
66,674
￦
18,931
(in millions)
￦
7,266
￦
7,577
￦
5,635
US Dollars (Note 3)
Development year
1 year
Accumulated
claims paid
2 years
3 years
4 years
5 years
insurance
FYD-4
$
368
$
434
$
447
$
456
$
459
FYD-3
398
459
472
478
-
FYD-2
346
394
405
-
-
FYD-1
327
388
-
-
-
FYD
336
-
-
-
-
Estimated
accumulated
insurance claims
FYD-4
$
448
$
457
$
461
$
464
$
465
FYD-3
472
482
485
485
-
FYD-2
404
412
412
-
-
FYD-1
392
406
-
-
-
FYD
Difference
399
$
63
$
230
18
$
7
$
7
$
6
(f) Chain-ladder of long-term insurance as of December 31, 2013, is as follows:
(in millions)
Korean Won
Development year
1 year
2 years
3 years
4 years
5 years
Accumulated
insurance claims
paid
FYD-4
￦
287,023
￦
382,481
￦
392,941
￦
394,658
￦
395,229
FYD-3
397,740
507,392
520,318
522,835
-
FYD-2
466,633
582,978
598,114
-
-
FYD-1
532,719
679,982
-
-
-
FYD
596,256
-
-
-
-
Estimated
accumulated
insurance claims
FYD-4
￦
303,562
￦
387,685
￦
395,301
￦
395,638
￦
395,864
FYD-3
419,866
513,185
523,494
524,856
-
FYD-2
489,067
588,499
600,765
-
-
FYD-1
560,504
685,693
-
-
-
FYD
628,549
-
-
-
Difference
￦
32,293
￦
5,711
(in millions)
￦
2,651
￦
2,021
￦
635
US Dollars (Note 3)
Development year
1 year
2 years
3 years
4 years
5 years
Accumulated
insurance claims
paid
FYD-4
$
272
$
362
$
372
$
374
$
375
FYD-3
377
481
493
495
-
FYD-2
442
552
567
-
-
FYD-1
505
644
-
-
-
FYD
565
-
-
-
-
Estimated
accumulated
insurance claims
FYD-4
$
288
$
367
$
375
$
375
$
376
FYD-3
398
486
496
497
-
FYD-2
463
558
569
-
-
FYD-1
531
650
-
-
-
FYD
596
-
-
-
Difference
$
31
$
6
231
$
2
$
2
$
1
(g) Measurement method
Both standard measurement method and internal model are used to measure the insurance
risk. Standard measurement method (Article 7-2 of the Supervisory Regulation on Insurance
Industry) means calculation of insurance risk by risk-based capital (RBC) standard provided
by FSC. Reserve risk is excluded from the measure because it is calculated on non-life
insurance contracts under Article 1-2 of the Supervisory Regulation on Insurance Industry.
The amount of insurance risk calculated using an internal model is calculated by estimating
risky insurance premium for the next ten years, which is applied by experimental statics to
contracts held measurement insurance risk, which is the difference between maximum
probability and average level of insurance claims paid and applying VaR, which applies
experimental scenario.
Insurance value risk and reserve risk are computed separately, with an assumption that they
are independent from each other, for the calculation of insurance risk under RBC(Risk Based
Capital) standard. Insurance value risk is equivalent to the sum of general non-life insurance
value risk and long-term non-life insurance value risk and reserve risk is calculated by using
general insurance (including motor vehicles).
(h) Management method
The Group operates ALM system and insurance risk measurement system to measure the
amount of insurance risk. The amount of insurance risk, which is calculated quarterly, is
reported to the risk management committee in a risk analysis report.
The Group establishes limits on insurance risk using insurance risk as basis which is
computed under RBC standard and uses an internal model for evaluation of insurance risk,
critical incident analysis, transition analysis of rate of loss and reserve, case by case
management of reinsurance and so on. Further, the risk management organization operates
Premium View plans for monitoring adequacy of value of long-term insurance and
reinsurance of general insurance. The insurance transfer and reinsurance divisions establish
and use guidelines for retention and transfers to maintain the insurance risks at an
appropriate level. Prior to the start of the financial year, risk management division reviews the
adequacy of reinsurance strategy which is subsequently approved by the risk management
committee. Determination and decision on the critical matters regarding development and
amendments to products are made by product development committee and its adequacy is
monitored on a per cycle basis.
232
(i) Reinsurance policy
The Group manage reinsurance for improving ability to pay claims as concerned risk
exposure level and effective diversification of risks.
The Group establishes a reinsurance management strategy every year by categories(Longterm, motor vehicles, marine, fire) and receives an approval from risk management committee
and adequacy of the strategy is regularly inspected and managed. Reinsurance management
strategy uses underlying assets, degree of insurance risk and reinsurance expenses of parent
company as basis for adequacy tests and it discloses following information:




Purpose of reinsurance transactions
Risk retention and reinsurance treaty outward agreement plan: by categories of
insurance types, risk of collateral and insured accident, scale of transfer as whole
account criterion, retention criterion(limit)
Monitoring method for adequacy of reinsurance performance(Internal control system)
Evaluation guidelines for selection method and security of reinsurer and reinsurance
agent
In a transaction of reinsurance, a substantial risk of possession of the parent company
resulting from an outward agreement is decreased by using other reinsurance programs,
such as XOL. Instruments with a risk of new type, are reviewed by the risk management
committee if its risk of possession is over ￦1 billion, taking the outward agreement and XOL
into account.
The concentration level to top 5 reinsurers as of December 31, 2013, is as follows:
Korean Won
(in millions)
December 31, 2013
More than AAPremium for reinsurance
ceded
￦
Percentage
A+ ~ A￦
154,172
Below BBB+
-
98%
￦
-
Total
-
￦
154,172
-
98%
US Dollars (Note 3)
(in millions)
December 31, 2013
ceded
Percentage
$
A+ ~ A-
146
$
98%
Below BBB+
-
233
$
Total
-
$
146
98%
Korean Won
(in millions)
December 31, 2013
More than AA-
A+ ~ A-
Below BBB+
Total
General insurance
Premium for
reinsurance ceded
￦
Percentage
￦
256,351
-
100%
￦
-
-
￦
-
256,351
100%
Long-term insurance
Premium for
reinsurance ceded
￦
Percentage
￦
366,594
-
100%
￦
-
-
￦
-
366,594
100%
US Dollars (Note 3)
(in millions)
December 31, 2013
More than AA-
A+ ~ A-
Below BBB+
Total
General insurance
Premium for
reinsurance ceded
$
Percentage
243
$
-
100%
$
-
-
$
-
243
100%
Long-term insurance
Premium for
reinsurance ceded
$
Percentage
347
$
-
100%
$
-
-
$
-
347
100%
Premium for reinsurance ceded for reinsurer category as of December 31, 2013, is as follows:
Korean Won
(in millions)
December 31, 2013
ceded
￦
Percentage
A+ ~ A￦
158,011
Below BBB+
-
100%
￦
-
Total
-
￦
-
158,011
100%
US Dollars (Note 3)
(in millions)
December 31, 2013
ceded
Percentage
$
A+ ~ A-
150
$
100%
Below BBB+
-
234
$
Total
-
$
150
100%
Korean Won
(in millions)
December 31, 2013
More than AA-
A+ ~ A-
Below BBB+
Others
Total
General insurance
Premium for
reinsurance ceded
￦
Percentage
287,385
￦
4,288
99%
￦
19
1%
￦
158
￦ 291,850
-
100%
-
￦ 366,594
-
100%
-
Long-term insurance
Premium for
reinsurance ceded
￦
Percentage
366,594
￦
-
100%
￦
-
-
￦
-
US Dollars (Note 3)
(in millions)
December 31, 2013
More than AA-
A+ ~ A-
Below BBB+
Others
Total
General insurance
Premium for
reinsurance ceded
$
Percentage
272
$
4
99%
$
1%
-
$
-
-
$
-
276
100%
Long-term insurance
Premium for
reinsurance ceded
Percentage
$
347
$
-
100%
-
235
$
-
$
-
$
347
100%
(j) The amount of guarantee risk to variable insurance
The amount of guarantee risk to variable insurance as of December 31, 2013, is as follows:
Korean Won
(in millions)
December 31, 2013
Premium
income
Variable whole life
insurance
￦
Variable annuity life
insurance
Policyholders’
reserve
￦
57,896
311,496
Amount of risk
to minimum
guaranteed
benefit
Reserve for
guaranteed
benefit
￦
58,426
￦
-
2,182,091
6,999,831
52,499
97,997
Variable universal
indemnity life insurance
772,000
1,242,473
90,761
70,210
Variable universal saving
life insurance
407,277
1,756,121
878
1,757
Others
909,616
3,243,903
185,354
-
￦ 4,328,880
￦ 13,553,824
￦
387,918
￦
169,964
US Dollars (Note 3)
(in millions)
December 31, 2013
Premium
income
Variable whole life
insurance
$
Variable annuity life
insurance
Policyholders’
reserve
55
$
295
Reserve for
guaranteed
benefit
Amount of risk
to minimum
guaranteed
benefit
$
$
55
-
2,068
6,633
50
93
Variable universal
indemnity life insurance
732
1,177
86
67
Variable universal saving
life insurance
386
1,664
1
2
Others
862
$
3,074
4,103
$
236
12,843
176
$
368
$
162
62.3-3 Interest rate risk management
(a) Concept
Interest rate risk is risk of loss due to fluctuation of interest rate in the future market and the
difference between the maturity structure of asset and liability.
(b) Status of interest rate exposure
Exposure of interest rate assets and liabilities by RBC standard as of December 31, 2013 and 2012,
is as follows:
Korean Won
(in millions)
2013
2012
Interest rate assets
Deposits
￦
Financial assets at fair value through
profit or loss
646,095
￦
2,377,377
240,955
58,836
18,581,066
18,248,465
16,314,952
11,917,441
Loans
16,529,179
￦
14,881,270
52,312,247
￦
47,483,389
29,313,454
￦
28,701,357
Interest rate liabilities
Fixed rate type
￦
Floating rate type
23,885,735
￦
(in millions)
53,199,189
19,251,162
￦
47,952,519
US Dollars (Note 3)
2013
2012
Deposits
$
Financial assets at fair value through
profit or loss
612
$
2,253
228
56
17,607
17,292
15,460
11,293
Loans
15,663
14,101
$
49,570
$
44,995
$
27,777
$
27,197
$
45,439
Fixed rate type
Floating rate type
22,634
$
237
50,411
18,242
Korean Won
(in millions)
2013
2012
Deposits
￦
244,529
￦
342,823
1,629,164
1,429,077
-
Loans
2,378,893
1,871,266
￦
2,184,645
5,681,663
￦
488,598
￦
4,398,734
Fixed rate type
￦
Floating rate type
483,857
5,200,598
￦
5,689,196
4,081,234
￦
4,565,091
US Dollars (Note 3)
(in millions)
2013
2012
Deposits
$
232
$
325
1,544
1,354
-
Loans
2,254
1,773
$
2,070
5,384
$
463
$
4,168
Fixed rate type
$
Floating rate type
4,928
$
238
5,391
459
3,867
$
4,326
(c) Status of floating-rate-type liabilities for minimum guaranteed interest rate
Exposure of floating-rate-type liabilities for minimum guaranteed interest rate level by RBC
standard as of December 31, 2013, is as follows:
Korean Won
(in millions)
2013
1
Below 0%
Floating-rate-type liabilities
2
￦
329,936
0%~2%
2%~3%
3%~4%
More than 4%
Total
￦ 3,982,897
￦ 7,975,759
￦ 8,361,382
￦ 3,235,761
￦ 23,885,735
More than 4%
Total
US Dollars (Note 3)
(in millions)
2013
1
Below 0%
Floating-rate-type liabilities2
$
313
0%~2%
$
2%~3%
3,774
$
3%~4%
7,558
$
7,923
$
3,066
$
22,634
1
Liabilities without minimum guarantee option, are presented as “Below 0%”.
Liabilities which have fixed rate type and floating rate type are classified as the type at the time of closing
date of the fiscal year.
2
Korean Won
(in millions)
2013
Below 0%
￦
93,459
0%~2%
￦ 1,438,139
2%~3%
3%~4%
￦ 562,729
￦ 3,032,504
More than 4%
￦
73,767
Total
￦ 5,200,598
US Dollars (Note 3)
(in millions)
2013
Below 0%
$
89
0%~2%
$
2%~3%
1,363
$
239
533
3%~4%
$
2,874
More than 4%
$
70
Total
$
4,929
62.3-4 Credit risk management
(a) Concept
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation.
(b) Measurement method
Both standard measurement method and internal model are used to measure the credit risk.
Standard measurement method (Article 7-2 of the Supervisory Regulation on Insurance
Industry) means calculation of credit risk by RBC standard provided from Korean Financial
Services Commission (“FSC”). If the Group uses an internal model, it calculates portfolio
credit risk using Credit Manager (Credit Metrics measurement method), which is a credit risk
measurement engine provided by MSCI. JP Morgan, Moody’s, S&P, KMV, Royal Bank of
Canada and other 20 companies use Credit Manager to calculate their risk.
Both RBC model (standard measurement method) and internal model are used to measure
the credit risk. RBC model (Article 7-2 of the Supervisory Regulation on Insurance Industry)
refers to the calculation of credit risk by risk-based capital (RBC standard provided by FSC).
VaR, an internal model used by the Group, which is derived by using Default Model method,
refers to correlation among the parameters and dispersion effect of portfolio. Correlation
coefficient between insolvency rates, recovery rate and industries is used as measurement
parameters for credit VaR and these parameters are regularly monitored for adequacy and
are amended. When defaults, with potential exposures taken into account, credit VaR is
calculated by applying 99% one-sided confidence interval.
240
(c) Management method
i) Management by permissible limit
The Group calculates VaR on a monthly basis, which is the maximum unsuspected loss
(99% confidence level) to investment portfolio due to the deterioration of credit rating or
bankruptcy of lender and investment instrument. The Group manages to keep VaR less
than the available capital by providing permissible limit to the VaR.
ii) Management by individual evaluation to lender and investment instrument
When operating an asset, the Group evaluates individual lender and investment instrument
at asset RM division. As a result of the evaluation, the Group invests in lender and
investment instrument.
iii) Management by diversified investment and operating limit
The Group manages limits for industry, group, lender and product to prevent credit risk.
iv) Overlapping management to high-risk asset
When the Group invests in high-risk assets (derivative and alternative investment), the risk
management team analyzes credit risk and the asset RM division analyzes capability to
repay the principal and pay interest.
The Group checks credit risk data which is accumulated by types on a monthly basis and
manages it under a limit. In particular, equity instrument, property PF, and structured
receivable with substantial risks, are managed under separate limits.
Expected loss and unexpected loss (credit VaR) of credit risk are regularly calculated and
managed. For the purpose of measuring credit risk under extreme circumstances and
managing its tolerability, the Group regularly performs critical situation analyses.
The follow-up procedures for loan are performed regularly to discover signs of defaults in
early stage. The Group manages and inspects the value of collateral and creditability of
owners and monitors assets with the probability of defaults by performing credit review on a
monthly basis.
241
(d) Status of assets evaluated credit risk
Exposure as of December 31, 2013 and 2012, is as follows:
Korean Won
(in millions)
2013
2012
Operating assets
Cash and deposits
￦
646,242
￦
2,377,513
Loans
17,295,558
14,933,030
Securities
39,998,688
34,776,335
Properties
3,555,711
3,437,895
61,496,199
55,524,773
Non-operating assets
Reinsurance assets
Others
Derivatives
24,888
25,922
1,149,929
1,006,459
1,174,817
1,032,381
543,866
￦
63,214,882
366,336
￦
56,923,490
US Dollars (Note 3)
(in millions)
2013
2012
Operating assets
Cash and deposits
$
612
$
2,253
Loans
16,389
14,151
Securities
37,903
32,954
Properties
3,369
3,258
58,273
52,616
Reinsurance assets
Others
Derivatives
24
25
1,090
954
1,114
979
515
$
242
59,902
347
$
53,942
Korean Won
(in millions)
2013
2012
Operating assets
Cash and deposits
￦
289,663
￦
380,845
Securities
3,668,290
2,688,174
Loans
2,527,028
1,939,489
-
347,615
6,484,981
5,356,123
-
345,348
429,640
330,975
429,640
676,323
Properties
Reinsurance assets
Others
Derivatives
9,828
￦
6,924,449
10,652
￦
6,043,098
US Dollars (Note 3)
(in millions)
2013
2012
Operating assets
Cash and deposits
$
274
$
361
Securities
3,476
2,547
Loans
2,395
1,838
-
329
6,145
5,075
Properties
Reinsurance assets
Others
Derivatives
-
327
407
314
407
641
9
$
6,561
243
10
$
5,726
(e) Status of exposure for credit rating
a) Bonds
i) Life insurance business
(in millions)
Korean Won
2013
Risk free
Government and
public bonds
AAA
￦11,180,971
Special bonds
￦
6,218,502
Financial bonds
AA+~AA-
￦
A+~BBB￦
-
9,283,504
-
21,029
Below BBB-
Non-rating
￦
￦
-
Total
-
￦ 11,180,971
-
-
-
15,523,035
-
775,164
684,809
-
-
-
1,459,973
40,088
1,760,417
1,956,549
201,274
-
-
3,958,328
396,145
179,253
836,923
416,555
24,770
667,836
2,521,482
￦17,835,706
￦11,998,338
￦ 3,499,310
￦ 617,829
24,770
￦ 667,836
￦ 34,643,789
Below BBB-
Non-rating
Total
Corporate bonds
Overseas securities
(in millions)
￦
US Dollars (Note 3)
2013
Risk free
Government and
public bonds
$
Special bonds
Financial bonds
Corporate bonds
Overseas securities
$
AAA
10,595
$
AA+~AA-
$
A+~BBB-
$
-
$
-
$
-
$
10,595
5,893
8,797
20
-
-
-
14,710
-
735
649
-
-
-
1,384
38
1,668
1,854
191
-
-
3,751
375
170
793
395
23
633
16,901
$
11,370
$
3,316
244
$
586
$
23
$
633
2,389
$
32,829
ii) General insurance business
Korean Won
2013
(in millions)
Risk free
Government and
public bonds
￦
AAA
939,079
Special bonds
￦
AA+~AA-
￦
A+~BBB-
￦
Total
-
￦
939,079
666,064
451,140
13,352
-
1,130,556
Financial bonds
-
100,178
252,317
16,961
369,456
Corporate bonds
-
40,372
70,941
110,848
222,161
591,690
￦ 336,610
127,809
￦ 2,661,252
￦ 1,605,143
￦
￦
US Dollars (Note 3)
2013
(in millions)
Risk free
Government and
public bonds
$
Special bonds
AAA
890
$
AA+~AA-
$
A+~BBB-
$
Total
-
$
890
631
427
13
-
1,071
Financial bonds
-
95
239
16
350
Corporate bonds
-
38
67
105
210
$
1,521
$
245
560
$
319
$
121
$
2,521
b) Loans
(in millions)
Korean Won
2013
Risk free
AAA
AA+~AA-
A+~BBB-
￦ 70,712
￦ 308,823
￦ 113,701
-
404,836
-
Policy loans
-
-
Other loans
80,000
-
￦2,325,766
￦475,548
￦ 365,206
Call loans, Unsecured
loans, CP, Loans
￦2,245,766
secured by third-party
guarantee
Loans secured by real
estate
Non-rating
Others
Total
￦ 5,000
￦1,727,074
￦ 2,313,875
￦ 6,784,951
-
-
983,493
2,766,446
4,154,775
-
-
-
-
5,959,172
5,959,172
56,383
159,020
-
96,829
4,428
396,660
￦ 272,721
￦ 5,000
￦2,807,396
￦11,043,921
￦17,295,558
(in millions)
Below BBB-
US Dollars (Note 3)
2013
Risk free
Call loans, Unsecured
loans, CP, Loans
secured by third-party
guarantee
$
Loans secured by
real estate
AAA
2,128
$
AA+~AA-
67
-
384
Policy loans
-
-
Other loans
76
-
$
2,204
$
451
$
A+~BBB-
293
$
-
$
108
Below BBB-
$
5
-
-
-
-
53
151
346
$
246
259
$
Non-rating
$
1,637
Others
$
Total
2,193
$
6,431
932
2,621
3,937
-
-
5,647
5,647
-
92
4
376
5
$
2,661
$
10,465
$
16,391
(in millions)
Korean Won
2013
Risk free
Policy loans
￦
AAA
-
￦
AA+~AA-
￦
A+~BBB-
￦
Non-rating
-
￦
Others
Total
-
￦ 343,962
￦ 343,962
Loans secured
by securities
-
-
-
-
-
31,305
31,305
Loans secured by
real estate
-
36,018
-
-
636,217
439,655
1,111,890
Unsecured loans
-
-
-
10,000
2,254
31,506
43,760
Loans secured by
third-party guarantee
-
12,700
-
-
-
-
12,700
602,951
-
12,606
19,509
320,360
27,985
983,411
￦ 602,951
￦ 48,718
￦ 12,606
￦ 29,509
￦ 958,831
￦ 874,413
￦ 2,527,028
Other loans
(in millions)
US Dollars (Note 3)
2013
Risk free
Policy loans
$
AAA
-
$
AA+~AA-
$
A+~BBB-
$
Non-rating
-
$
Others
-
$
Total
326
$
326
Loans secured
by securities
-
-
-
-
-
30
30
Loans secured by
real estate
-
34
-
-
603
417
1,054
Unsecured loans
-
-
-
9
2
30
41
Loans secured by
third-party guarantee
-
12
-
-
-
-
12
Other loans
571
$
571
$
46
12
$
12
247
18
$
27
304
$
909
27
$
830
932
$
2,395
c) Reinsurance assets
(in millions)
Korean Won
December 31, 2013
More than AA-
A+~A-
Below BBB-
Total
Domestic1
Reinsurance receivables
2
￦
445
￦
-
￦
-
￦
445
Reserve for unearned
reinsurance premium
5,902
-
-
5,902
Reserve for outstanding
reinsurance claims
18,026
-
-
18,026
Overseas
2
￦
971
￦
-
￦
-
￦
971
reinsurance premium
559
-
-
559
reinsurance claims
401
-
-
401
(in millions)
US Dollars (Note 3)
December 31, 2013
More than AA-
A+~A-
Below BBB-
Total
Domestic1
Reinsurance receivables2
$
-
$
-
$
-
$
-
reinsurance premium
6
-
-
6
reinsurance claims
18
-
-
18
Overseas
1
2
2
$
1
$
-
$
-
$
1
reinsurance premium
1
-
-
1
reinsurance claims
-
-
-
-
“Domestic” means permitted reinsurers and domestic branches.
If it is satisfied with per RBC standard, it is presented as net amount of reinsurance payables.
248
Korean Won
(in millions)
December 31, 2013
More than AA-
A+~A-
Below BBB-
Others
Total
Domestic
￦
36,964
￦
536
￦
-
￦
706
￦
38,206
reinsurance premium
132,988
-
-
1
132,989
reinsurance claims
184,415
553
-
-
184,968
Overseas
￦
64,554
￦
671
￦
2
￦
90,122
￦
155,349
reinsurance premium
14,994
1,111
9
173
16,287
reinsurance claims
49,048
927
268
2,145
52,388
US Dollars (Note 3)
(in millions)
December 31, 2013
More than AA-
A+~A-
Below BBB-
Others
Total
Domestic
$
35
$
1
$
-
$
1
$
37
reinsurance premium
126
-
-
-
126
reinsurance claims
175
1
-
-
176
Overseas
$
61
$
1
$
-
$
85
$
147
reinsurance premium
14
1
-
-
15
reinsurance claims
46
1
-
2
49
249
d) OTC Derivatives
Korean Won
(in millions)
2013
Risk free
Related to foreign currency
￦
AAA
AA+~AA-
A+~BBB-
Total
-
￦ 24,346
￦ 176,879
￦ 4,486
￦ 205,711
187,761
-
150,394
-
338,155
￦ 187,761
￦ 24,346
￦ 327,273
￦ 4,486
￦ 543,866
Related to credit
US Dollars (Note 3)
(in millions)
2013
Risk free
Related to foreign currency
$
Related to credit
AAA
-
$
23
178
$
178
AA+~AA$
$
23
250
168
A+~BBB$
143
$
311
Total
4
$
195
$
516
$
4
321
(f) Concentration level for industry
The concentration level by industries of bonds and loans as of December 31, 2013, is as follows:
a) Bonds
(in millions)
Governmental and Public Institutions
(Government bonds, Municipal bonds)
Korean Won
US Dollars (Note 3)
Bonds
Bonds
￦
10,966,436
Financial and Insurance
$
10,392
10,081,576
9,553
Other Community and Personal Service
Activities
5,357,293
5,077
Electricity, Gas, Steam and Water Supply
2,417,661
2,291
Construction
1,865,413
1,768
Others
3,955,410
￦
34,643,789
3,748
$
32,829
(in millions)
Korean Won
US Dollars (Note 3)
Bonds
Bonds
￦
Manufacturing
Construction
Wholesale and Retail Trade, Transportation,
Hotels and Restaurants
Government Bonds and Public corporation
bonds
￦
251
40,811
$
39
80,445
76
9,992
9
575,307
545
1,954,697
1,852
2,661,252
$
2,521
b) Loans
Korean Won
(in millions)
US Dollars (Note 3)
Loans
￦
Loans
1,602,998
$
1,519
Real estate and Leasing service
1,198,856
1,136
1,081,387
1,025
Construction
662,044
627
Other Community and Personal Service
Activities
532,917
505
Others
12,217,356
￦
17,295,558
11,577
$
16,389
Korean Won
(in millions)
US Dollars (Note 3)
Loans
￦
Manufacturing
Electricity, Gas, Steam and Water Supply
Loans
37,373
$
35
99,801
95
Construction
202,217
192
230,186
218
9,373
9
646,138
612
325,906
309
Publication, Image, Broadcasting and
Information Service Industry
Real estate and Leasing service
Others
1,004,637
￦
252
2,555,631
952
$
2,422
62.3-5 Market risk management
(a) Concept
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices.
(b) Status of market risk
Market risk under RBC standard is composed of exposure to general market risk and
exposure to variable annuity insurance guarantee risk. Exposure to general market includes
stocks, bonds and beneficiary certificates in available-for-sale financial assets, which are
marketable assets. Exposure to variable annuity insurance guarantee risk is calculated on
policyholders’ reserve in variable annuity insurance.
Assets subject to the control of the Group include such as domestic shares, domestic
receivables, foreign marketable securities and derivative financial instruments, which contain
market risk. Items which are subject to the measurement of market risk under RBC are heldfor-trading stocks, bonds, beneficiary certificates, derivatives held for trading and net asset
exchange position (includes overseas assets which exceeds exchange hedge derivatives).
(c) Measurement method
Both standard measurement method and internal model are used to measure the market risk.
Under the standard measurement method (Article 7-2 of the Supervisory Regulation on
Insurance Industry), both general market risk and variable annuity insurance guarantee risk
are measured using risk index by RBC standard. If the Group uses an internal model, they
calculate portfolio credit risk by Credit Manager (Credit Metrics measurement method), which
is a credit risk measurement engine provided by MSCI.
Both standard measurement method (RBC model) and internal model are used to measure
the market risk. RBC model (Article 7-2 of the Supervisory Regulation on Insurance Industry)
refers to the calculation of market risk by risk-based capital (RBC standard provided by FSC).
The internal model computes the market risk by using parametric measurements as basis
which is derived from the Delta-Normal method. Further, the risk is determined on the nonparametric measurements such as historical simulations and Montel Carlo simulation. Items
which have an impact on equity, such as held-for-trading, available-for-sale financial assets
and derivative financial instruments, are subject to the measurement of the risk and market
risk is measured using correlation coefficient between risk factors such as interest rate, stock
prices and exchange rate, and each factors. The holding period of one day and 95%
confidence interval are used.
253
(d) Management method
i) Management by permissible limit of VaR
The Group calculates VaR daily, which is maximum unsuspected loss (99% confidence
level) to investment portfolio due to fluctuation of stock prices, interest rate and exchange
rate. The Group manages to keep VaR less than the available capital by providing
permissible limit to the VaR.
ii) Management by loss limit
The Group establishes loss limit for trading assets and high-risk assets. If loss from trading
assets and high-risk assets are exceeding the limit, the Group sells them to prevent
additional loss. The Group manages to keep loss from trading assets and high-risk assets
less than loss limit.
iii) Management by operating limit
The Group establishes operating limit for investment category to prevent from excessive
investment on specific investment category.
The market risk is measured and managed by accumulating securities data on a daily basis.
The Group establishes and conforms to the limits such as operating limit, permissible limit
and loss limit and regularly reports the relevant information to management.
The Group performs the Stress Test to improve the VaR model and prevent itself from
extreme circumstances. The Group regularly performs tests for adequacy of measurement
models of market risk by using the results from the Stress Test.
254
(e) Status of exposure
Exposure by RBC standard as of December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
2012
General market risk
￦
Financial assets held for trading
Assets and liabilities denominated in foreign currency
Derivatives
1,323,962
￦
1,253,873
3,285,912
2,344,307
(3,516,730)
(2,495,741)
1,093,144
1,102,439
Variable insurance guarantee risk
Variable whole life insurance
311,496
297,201
Variable annuity life insurance
6,999,831
6,339,410
Variable universal indemnity life insurance
1,242,473
1,013,433
Variable universal saving life insurance
1,756,121
1,773,264
Others
￦
3,243,903
3,001,014
13,553,824
12,424,322
14,646,968
(in millions)
￦
13,526,761
US Dollars (Note 3)
2013
2012
General market risk
Financial assets held for trading
$
Assets and liabilities denominated in foreign currency
Derivatives
1,255
$
1,188
3,114
2,221
(3,332)
(2,365)
1,037
1,044
Variable insurance guarantee risk
Variable whole life insurance
295
282
Variable annuity life insurance
6,633
6,007
Variable universal indemnity life insurance
1,177
960
Variable universal saving life insurance
1,664
1,680
Others
$
255
3,074
2,844
12,843
11,773
13,880
$
12,817
(in millions)
Korean Won
2013
Financial assets at fair value through profit or
loss
￦
2012
286,213
Assets and liabilities denominated in foreign
currency
￦
468,336
65,829
Derivatives
71,765
(53,124)
￦
298,918
￦
540,101
US Dollars (Note 3)
(in millions)
2013
Financial assets at fair value through profit or
loss
$
Assets and liabilities denominated in foreign
currency
2012
271
$
62
Derivatives
68
(50)
$
256
283
444
$
512
(f) Sensitive analysis to risk factors
The Group operates daily, weekly, monthly and quarterly sensitive analysis for 50 scenarios, which
are historical scenario and user-designated scenario, and others. The results of sensitive analysis
are as follows:
Korean Won
(in millions)
Effect on
2
profit (loss)
Variable factors
Exchange rate
1
￦100 increase against won-dollar
exchange rate
￦100 decrease against won-dollar
exchange rate
Interest rate
Stock index
Stock index
￦
4,219
(4,219)
100bp increase
(17,409)
(731,940)
100bp decrease
18,080
759,827
10% increase
2,388
145,957
10% decrease
(2,388)
(145,957)
US Dollars (Note 3)
Variable factors
Interest rate
(1,376)
1,376
(in millions)
Exchange rate
￦
Effect on
equity
1
exchange rate
exchange rate
Effect on
2
profit (loss)
$
(1)
Effect on
equity
$
4
1
(4)
100bp increase
(16)
(694)
100bp decrease
17
720
2
138
10% increase
10% decrease
(2)
(138)
1
Sensitive to fluctuation of exchange rate including effects on profit and equity from fluctuation of assets
and liabilities denominated foreign currency and derivatives.
2
The Company separately manages the owned assets and financial assets at fair value through profit or
loss and derivatives held for trading are managed at income level, and available for sale financial asset
is managed at equity level.
257
Korean Won
(in millions)
Effect on
2
profit (loss)
Variable factors
Exchange rate
1
Interest rate
Stock index
exchange rate
exchange rate
Stock index
￦
1,204
(1,204)
100bp increase
(148)
(2,501)
100bp decrease
148
2,501
10% increase
-
5,420
10% decrease
-
(5,420)
US Dollars (Note 3)
Variable factors
Interest rate
1,204
(1,204)
(in millions)
Exchange rate1
￦
Effect on
equity
exchange rate
exchange rate
Effect on
2
profit (loss)
$
Effect on
equity
1
$
1
(1)
(1)
100bp increase
-
(2)
100bp decrease
-
2
10% increase
-
5
10% decrease
-
(5)
258
62.3-6 Liquidity risk management
(a) Concept
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities.
(b) Status of liquidity
(in millions)
Korean Won
2013
Less than
3 months
3 months ~
6 months
6 months ~
1 year
￦ 219,060
￦
￦
1 year ~
5 years
5 years ~
10 years
More than
10 years
Total
Assets
Cash and deposits
Securities
1
-
42,212
￦
270,000
￦
-
￦
-
￦
531,272
2,135,659
855,619
1,702,547
11,804,860
13,864,097
10,896,679
41,259,461
243,118
516,664
1,066,188
2,597,514
837,959
11,274,564
16,536,007
Derivative assets
23,308
44,615
28,438
27,222
10,631
-
134,214
Others2
96,731
-
-
62,897
-
7,062,952
7,222,580
2,717,876
1,416,898
2,839,385
14,762,493
14,712,687
29,234,195
65,683,534
136,127
130,007
421,133
3,056,597
7,740,629
41,710,189
53,194,682
Loans
Liabilities
Insurance contract
liabilities3
Derivative liabilities
Liquidity gap
3,393
1,461
1,606
9,256
-
-
15,716
139,520
131,468
422,739
3,065,853
7,740,629
41,710,189
53,210,398
￦ 2,578,356
￦ 1,285,430
￦ 2,416,646
￦11,696,640
￦ 6,972,058
￦ (12,475,994)
￦ 12,473,136
259
(in millions)
US Dollars (Note 3)
2013
Less than
3 months
3 months ~
6 months
6 months ~
1 year
1 year ~
5 years
5 years ~
10 years
More than
10 years
Total
Assets
Cash and deposits
$
Securities1
Loans
Derivative assets
Others
2
208
$
-
$
40
$
256
$
-
$
-
$
504
2,024
811
1,613
11,186
13,138
10,326
39,098
230
490
1,010
2,461
794
10,684
15,669
22
42
27
26
10
-
127
92
-
-
60
-
6,693
6,845
2,576
1,343
2,690
13,989
13,942
27,703
62,243
129
123
399
2,896
7,335
39,524
50,406
Liabilities
Insurance contract
liabilities3
Derivative liabilities
Liquidity gap
$
3
1
2
9
-
-
15
132
124
401
2,905
7,335
39,524
50,421
6,607
$ (11,821)
2,444
$
1,219
$
2,289
1
$
11,084
$
Securities include amount of investing in associates and subsidiary.
Reinsurance assets are classified as “1 year–5 years”. Real estate assets and other assets, whose
realization is uncertain, are classified as “More than 10 years”.
3
The amount of insurance contract liabilities is calculated based on termination reserve.
2
260
$
11,822
Korean Won
(in millions)
December 31, 2013
Less than
3 months
3 months ~
6 months
6 months ~
1 year
Total
Assets
Cash and deposits
￦
13,601
Securities
Loans
￦
71,400
￦
4,650
￦
89,651
251,016
-
100,200
351,216
44,306
107,460
40,125
191,891
308,923
178,860
144,975
632,758
Liabilities
Insurance contract
Liquidity gap
40,329
￦
50,066
￦
268,594
128,794
101,769
￦
43,206
192,164
￦
440,594
US Dollars (Note 3)
(in millions)
December 31, 2013
Less than
3 months
3 months ~
6 months
6 months ~
1 year
Total
Assets
Cash and deposits
$
Securities
Loans
13
$
68
238
-
42
293
$
4
$
85
95
333
102
38
182
170
137
600
Liabilities
Insurance contract
Liquidity gap
38
$
47
255
$
123
96
$
41
182
$
418
(c) Management method
The Group manages liquidity by considering the total monthly cash flows of daily insurance cash
flows.
62.3-7 Operating risk management
(a) Concept
Operating risk is the risk of financial risk and non-financial risk due to inappropriate internal
processes, manpower, external events, reputation and regulations. Operating risk management
improves safety and soundness of the Company by identifying weaknesses in the internal process
and systematic complement.
(b) Management method
The Group collects data by event types, causes, and task types. Based on the accumulated data,
the Group measures Op-VaR and reports to the risk management committee.
In addition, the Group monitors the KPI-like unqualified contract index, incomplete selling rate,
number of internal complaints and others, and reporting these to the risk management committee
on a quarterly basis.
261
62.4 Fair Value Measurement (Financial Business)
Assets measured at fair value or for which the fair value is disclosed are categorized within the fair
value hierarchy, and the defined levels are as follows:



Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, prices) or indirectly (that is, derived from prices) (Level 2).
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (Level 3).
Fair value hierarchy classifications of the financial assets and financial liabilities that are measured
at fair value or its fair value is disclosed as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Level 1
Level 2
Level 3
Total
Financial assets
Securities
￦
7,431,767
￦
17,137,905
￦
1,474,030
￦
26,043,702
-
149,124
-
149,124
-
31,369
-
31,369
US Dollars (Note 3)
(in millions)
2013
Level 1
Level 2
Level 3
Total
Financial assets
Securities
$
7,042
$
16,240
$
1,397
$
24,679
-
141
-
141
-
30
-
30
262
Korean Won
(in millions)
2012
Level 1
Level 2
Level 3
Total
Financial assets
Securities
￦
9,791,097
￦
15,385,706
￦
727,726
￦
25,904,529
-
107,973
-
107,973
-
18,660
-
18,660
US Dollars (Note 3)
(in millions)
December 31, 2012
Level 1
Level 2
Level 3
Total
Financial assets
Securities
$
9,278
$
14,579
$
690
$
24,547
-
102
-
102
-
18
-
18
263
Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements
are as follows:
(in millions)
Korean Won
2013
Beginning balance
￦
Purchases
2012
727,726
￦
595,530
1,532,340
422,191
(864,724)
(365,909)
Transfer into Level 3
13,455
-
Transfer out of Level 3
(1,020)
-
(223)
(5,234)
66,476
81,148
Sales
Amount recognized in profit or loss
Amount recognized in other comprehensive
income
Ending balance
￦
(in millions)
1,474,030
￦
US Dollars (Note 3)
2013
Beginning balance
727,726
$
Purchases
2012
690
$
564
1,452
400
(820)
(346)
Transfer into Level 3
13
-
Transfer out of Level 3
(1)
-
-
(5)
63
77
Sales
Amount recognized in profit or loss
Amount recognized in other comprehensive
income
Ending balance
$
1,397
$
690
The equity securities measured at cost of ￦15,311 million (equivalent to US$ 15 million) and
￦19,594 million (equivalent to US$ 19 million) as of December 31, 2013 and 2012, respectively,
are those whose fair value cannot be reliably measured and do not have quoted market price in an
active market.
264
62.5 Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital.
Net borrowings is calculated as total borrowings (including ‘borrowings and debentures’ as shown
in the consolidated statements of financial position) less cash and cash equivalents. Total capital is
calculated as ‘equity’ as shown in the consolidated statement of financial position plus net
borrowings.
The gearing ratios as of December 31, 2013 and 2012, are as follows:
Korean Won
(in millions)
2013
Total borrowings
￦
Less: cash and cash equivalents
￦
Total equity (B)
￦
(1,809,774)
9,032,918
8,148,014
10,775,956
10,585,957
19,808,874
Gearing ratio (A/(A+B))
￦
18,733,971
45.60%
43.49%
US Dollars (Note 3)
(in millions)
2013
Total borrowings
2012
$
10,150
Less: cash and cash equivalents
Total equity (B)
Gearing ratio (A/(A+B))
$
(1,590)
Net debt (A)
Total capital (A+B)
9,957,788
(1,677,926)
Net debt (A)
Total capital (A+B)
2012
10,710,844
$
(1,715)
8,560
7,721
10,211
10,031
18,771
45.60%
265
9,436
$
17,752
43.49%
63. Segment Information
The Group’s reportable segments and details are as follows:
Business section
Main business
Explosives & Production
Manufacturing and selling of explosives
Trading & Wholesale Retails
Trading and retails
Petrochemical Production
Manufacturing and selling of petrochemicals
Construction
Engineering and construction services for building, plant, and
environment facilities and others
Leisure & Service
Operating athletic facilities, tourism, hotel and catering business
Photovoltaic business
Manufacturing and selling of product related sunlight,
photovoltaic power generation
Financial business
Insurance business and management of deposits and instalment
savings
Others
Other manufacturing and selling business
266
A profit or loss by each segment for the years ended December 31, 2013 and 2012, are as follows:
(in millions)
Korean Won
2013
2012
Total segment
revenue
Inter-segment
revenue
Revenue from
external
customers
￦
￦
￦
1,213,455
4,898
1,208,557
Total segment
revenue
Inter-segment
revenue
Revenue from
external
customers
￦
￦
￦
1,136,713
6,014
1,130,699
Trading & Wholesale
Retails
7,784,543
1,307,866
6,476,677
6,822,863
891,890
5,930,973
Petrochemical
Production
5,555,702
1,073,639
4,482,063
5,308,258
1,198,987
4,109,271
Construction
4,163,179
274,481
3,888,698
3,576,846
485,247
3,091,599
Leisure & Service
1,269,291
204,804
1,064,487
1,214,876
174,541
1,040,335
1,888,107
982,832
905,275
798,840
178,433
620,407
19,547,479
169,943
19,377,536
18,625,987
130,342
18,495,645
Financial business
Others
1,601,432
￦
43,023,188
279,757
￦
4,298,220
1,321,675
￦
38,724,968
(in millions)
1,550,015
￦
39,034,398
316,970
￦
1,233,045
￦
35,651,974
US Dollars (Note 3)
2013
3,382,424
2012
Total segment
revenue
Inter-segment
revenue
$
$
1,150
5
Revenue from
external
customers
$
1,145
Total segment
revenue
$
1,077
Inter-segment
revenue
$
6
Revenue from
external
customers
$
1,071
Trading & Wholesale
Retails
7,376
1,239
6,137
6,465
845
5,620
Petrochemical
Production
5,265
1,018
4,247
5,030
1,136
3,894
Construction
3,945
260
3,685
3,390
460
2,930
Leisure & Service
1,203
194
1,009
1,151
165
986
1,789
931
858
757
169
588
18,523
161
18,362
17,650
124
17,526
1,518
265
1,253
1,469
300
1,169
Financial business
Others
$
40,769
$
4,073
$
36,696
267
$
36,989
$
3,205
$
33,784
(in millions)
Korean Won
2013
Operating
profit (loss)
Explosives &
Production
￦
Trading & Wholesale
Retails
124,352
2012
Finance
income and
costs
￦
Net
Income(loss)
(24,107)
￦
Operating profit
(loss)
￦
77,350
101,143
Finance
income and
costs
￦
Net
Income(loss)
(3,180)
￦
69,050
76,691
(1,545)
22,879
91,067
(22,660)
10,759
135,662
(8,967)
101,004
165,781
61,139
100,301
Construction
22,590
(60,129)
4,147
158,558
(49,664)
33,796
Leisure & Service
44,123
(37,242)
68,561
81,324
(52,332)
1,571
(115,833)
(70,806)
(148,559)
(255,158)
(48,517)
(182,401)
509,038
-
399,860
808,432
-
633,577
83,892
(21,841)
62,662
69,404
(25,809)
7,767
(16,783)
(191,271)
(363,235)
5,556
(290,866)
(177,914)
Petrochemical
Production
Financial business
Others
Consolidation
adjustments
￦
863,732
￦
(415,908)
￦
224,669
(in millions)
￦
1,226,107
￦
￦
496,506
US Dollars (Note 3)
2013
Explosives &
Production
(431,889)
2012
Operating
profit (loss)
Finance
income and
costs
$
$
Trading & Wholesale
Retails
118
Net
Income(loss)
(23)
$
73
Operating profit
(loss)
$
96
Finance
income and
costs
Net
Income(loss)
$
$
(3)
65
73
(1)
22
86
(21)
10
129
(8)
96
157
58
95
Construction
21
(57)
4
150
(47)
32
Leisure & Service
42
(35)
65
77
(50)
1
(110)
(67)
(141)
(242)
(46)
(173)
482
-
379
766
-
600
79
(21)
59
66
(24)
8
(16)
(182)
(344)
6
(276)
(168)
Petrochemical
Production
Financial business
Others
Consolidation
adjustments
$
818
$
(394)
$
213
268
$
1,162
$
(409)
$
470
The information of other gains(losses) by each operating segment for the years ended December 31,
2013 and 2012, is as follows:
(in millions)
Korean Won
2013
Explosives &
Production
2012
Depreciation
Amortization
Depreciation
of investment
property
￦
￦
￦
Trading & Wholesale
Retails
Petrochemical
Production
Construction
38,123
6,924
Depreciation
237
￦
Depreciation of
investment
property
Amortization
38,557
￦
7,905
￦
109
37,002
721
78
37,333
549
-
199,165
2,205
2,089
192,636
2,949
2,260
4,901
1,549
1,589
4,548
1,961
1,615
64,575
2,576
2
62,820
2,268
2
105,315
10,432
-
81,675
4,256
-
Financial business
85,049
22,722
39,164
48,519
24,514
29,553
Others
35,898
4,630
11,747
33,186
3,094
10,458
Consolidation
adjustments
(1,666)
7,216
-
(8,120)
7,243
-
Leisure & Service
￦
568,362
￦
58,975
￦
(in millions)
54,906
￦
491,154
￦
￦
43,997
US Dollars (Note 3)
2013
Depreciation
Explosives &
Production
54,739
$
Trading & Wholesale
Retails
Petrochemical
Production
Construction
Leisure & Service
2012
Depreciation
of investment
property
Amortization
36
$
7
$
-
Depreciation
Amortization
$
$
37
Depreciation of
investment
property
7
$
-
35
1
-
35
1
-
189
2
2
183
3
2
5
1
2
4
2
2
61
2
-
60
2
-
100
10
-
77
4
-
Financial business
81
22
37
46
23
28
Others
34
4
11
31
3
10
Consolidation
adjustments
(2)
7
-
(8)
7
-
$
539
$
56
$
269
52
$
465
$
52
$
42
Assets and liabilities by each operating segment as of December 31, 2013 and 2012, are as
follows:
(in millions)
Korean Won
2013
Reportable
Segment
Asset1
￦
2012
Reportable
Segment
Liability1
4,887,046
￦
2,741,736
Reportable
Segment
Asset1
￦
4,743,370
￦
2,586,692
4,186,106
2,595,775
3,608,593
2,118,396
8,630,359
4,465,773
8,487,462
4,393,985
Construction
6,785,599
5,093,894
6,222,332
4,507,603
Leisure & Service
2,591,020
1,671,626
2,597,774
1,769,641
3,867,744
1,882,096
2,956,452
1,515,645
92,275,964
84,549,193
83,760,469
76,273,341
2,408,639
1,261,620
2,424,492
1,330,948
Financial business
Others
Consolidation adjustments
(12,309,867)
(1,715,059)
(10,715,296)
(996,560)
￦ 113,322,610
￦ 102,546,654
￦ 104,085,648
￦ 93,499,691
(in millions)
US Dollars (Note 3)
2013
Reportable
Segment
Asset1
$
2012
Reportable
Segment
Liability1
4,631
$
2,598
Reportable
Segment
Asset1
$
4,495
Reportable
Segment
Liability1
$
2,451
3,967
2,460
3,419
2,007
8,178
4,232
8,043
4,164
Construction
6,430
4,827
5,896
4,271
Leisure & Service
2,455
1,584
2,462
1,677
3,665
1,783
2,802
1,436
87,441
80,119
79,371
72,276
Financial business
Others
Consolidation adjustments
$
1
Reportable
Segment
Liability1
2,282
1,196
2,297
1,261
(11,665)
(1,626)
(10,154)
(943)
107,384
$
97,173
$
98,631
$
88,600
The reportable segment assets and liabilities reported to the management are measured in a manner
consistent with that in the financial statements and they are allocated based on each segment’s operation.
270
Details of additions to non-current assets by each operating segment for the years ended December
Korean Won
(in millions)
2013
2012
Additions to non1
current asset
Additions to non1
current asset
￦
113,665
96,596
142,501
76,941
424,581
708,154
6,064
14,800
Construction
Leisure & Service
80,852
65,060
112,505
103,988
Financial business
388,732
471,389
64,352
101,557
Others
Adjustment of consolidated
79,764
￦
1,413,016
(136,255)
￦
1,502,230
US Dollars (Note 3)
(in millions)
2013
2012
Additions to noncurrent asset1
Additions to noncurrent asset1
$
108
$
92
135
73
402
671
Construction
6
14
77
62
107
99
Financial business
368
447
Leisure & Service
Others
61
96
Adjustment of consolidated
75
(130)
$
1
￦
1,339
$
1,424
Financial instruments and deferred income tax assets are excluded from ‘Additions to non-current assets’.
271
The Group’s revenue for the years ended December 31, 2013 and 2012, and book value of noncurrent assets as of December 31, 2013 and 2012, by regional groups, are as follows:
Korean Won
(in millions)
2013
Sales
Domestic
￦
America
2012
Non-current
asset1
33,744,842
￦
12,851,688
￦
31,691,664
￦
13,355,129
648,876
599,454
624,299
Asia
3,225,983
573,507
2,530,215
597,785
Others
1,105,267
2,210,025
805,796
1,832,870
￦
38,724,968
￦
16,234,674
￦
35,651,974
2013
￦
16,361,072
$
America
2012
Non-current
1
asset
Sales
Domestic
575,288
US Dollars (Note 3)
(in millions)
31,977
$
12,178
Non-current
1
asset
Sales
$
30,031
$
12,655
615
568
592
Asia
3,057
543
2,398
566
Others
1,047
2,095
763
1,738
$
1
Non-current
asset1
Sales
36,696
$
15,384
$
33,784
Financial instruments and deferred income tax assets are excluded from ‘Non-current assets’.
272
545
$
15,504
64. Information on Non-controlling Interests
Changes in Accumulated Non-controlling Interests
The profit or loss allocated to non-controlling interests and accumulated non-controlling interests
of subsidiaries that are material to the Group for the years ended December 31, 2013 and 2012,
is as follows:
Korean Won
2013
2012
Hanwha Life
Insurance
Co., Ltd.
Hanwha
Chemical Corp.
Hanwha Life
Insurance
Co., Ltd.
Hanwha
Chemical Corp.
51.7%
57.9%
49.7%
57.9%
Percentage of voting rights
50.2%
57.9%
48.2%
57.9%
Accumulated non-controlling
interests at the beginning of
the year
￦
￦
3,330,073
2,379,673
￦
3,138,006
￦
2,454,256
Profit or loss allocated to noncontrolling interests
218,212
(9,650)
315,671
14,205
Dividends paid to non-controlling
interests
(63,464)
(20,522)
(93,401)
(36,894)
32,997
30,232
(30,203)
(51,894)
Others
interests at the end of the year
￦
￦
3,517,818
2,379,733
￦
3,330,073
￦
2,379,673
US Dollars (Note 3)
2013
2012
Hanwha Life
Insurance
Co., Ltd.
Hanwha
Chemical Corp.
Hanwha Life
Insurance
Co., Ltd.
Hanwha
Chemical Corp.
51.7%
57.9%
49.7%
57.9%
Percentage of voting rights
50.2%
57.9%
48.2%
57.9%
interests at the beginning of
the year
$
3,156
$
2,255
$
2,974
$
2,326
Profit or loss allocated to noncontrolling interests
207
(9)
299
13
Dividends paid to non-controlling
interests
(60)
(19)
(89)
(35)
30
28
(28)
(49)
Others
interests at the end of the year
$
3,333
273
$
2,255
$
3,156
$
2,255
The summarized financial information for each subsidiary with non-controlling interests that are
material to the Group before inter-company eliminations is as follows:
Summarized consolidated statements of financial position as of December 31, 2013 and 2012,
are as follows:
Korean Won
(in millions)
2013
Equity
￦
2012
82,371,485
￦
75,315,474
75,385,019
68,431,377
6,986,466
6,884,097
US Dollars (Note 3)
(in millions)
2013
Equity
$
2012
78,055
$
71,369
71,435
64,845
6,620
6,524
Korean Won
(in millions)
2013
Current assets
Non-current assets
Current liabilities
Equity
￦
2012
4,469,659
￦
3,582,567
8,337,404
8,824,128
4,396,997
4,249,334
3,953,341
3,591,941
4,456,725
4,565,420
US Dollars (Note 3)
(in millions)
2013
Current assets
Non-current assets
Current liabilities
Equity
$
274
2012
4,235
$
3,395
7,901
8,362
4,167
4,027
3,746
3,404
4,223
4,326
Summarized consolidated statements of comprehensive income for the years ended December
Korean Won
(in millions)
2013
Operating revenue
￦
2012
14,407,965
Profit for the year
￦
13,753,138
439,893
589,896
(211,462)
87,088
Total comprehensive income (loss)
228,431
676,984
US Dollars (Note 3)
(in millions)
2013
Operating revenue
$
2012
13,653
Profit for the year
$
13,032
417
559
(201)
83
216
642
Korean Won
(in millions)
2013
Sales
￦
2012
7,863,554
Profit (loss) for the year
￦
(79,540)
6,962,213
(112,066)
(1,475)
(69,385)
(81,015)
(181,451)
(in millions)
US Dollars (Note 3)
2013
Sales
$
Profit (loss) for the year
2012
7,451
(75)
$
6,597
(106)
(2)
(66)
(77)
(172)
275
Summarized consolidated statements of cash flows for the years ended December 31, 2013 and
Korean Won
(in millions)
2013
￦
2012
5,496,525
￦
5,112,667
(5,635,681)
(4,806,225)
(80,448)
(29,359)
Net (decrease)/increase in cash and cash
equivalents
(219,604)
277,083
Cash and cash equivalents at beginning of
year
535,700
258,922
Exchange gains/(losses) on cash and cash
equivalents
(2,604)
(305)
Cash and cash equivalents at end of year
￦
313,492
￦
535,700
US Dollars (Note 3)
(in millions)
2013
$
2012
5,208
$
4,845
(5,340)
(4,554)
(76)
(28)
equivalents
(208)
263
year
508
245
equivalents
(3)
-
$
276
297
$
508
Korean Won
(in millions)
2013
￦
2012
404,340
￦
279,346
(259,938)
(698,239)
190,137
178,887
equivalents
334,539
(240,006)
year
594,315
848,723
equivalents
(8,372)
(14,402)
￦
920,482
￦
594,315
US Dollars (Note 3)
(in millions)
2013
$
2012
383
$
265
(246)
(662)
180
170
equivalents
317
(227)
year
563
804
equivalents
(8)
(14)
$
277
872
$
563
Transactions with Non-controlling Interests
Disposal of interest in a subsidiary without loss of control is summarized as follows:
Korean Won
(in millions)
2013
Carrying amount of the non-controlling
interests on the date of disposal
Consideration received
￦
1
(142,289)
Net effect on parent’s equity
￦
-
122,597
-
(19,692)
-
US Dollars (Note 3)
(in millions)
2013
Carrying amount of the non-controlling
interests on the date of disposal
Consideration received
2012
$
Net effect on parent’s equity
1
1
2012
(135)
$
-
116
-
(19)
-
A ￦ 142,092 million (equivalent to US$ 134,646 thousand) increase in non-controlling interests and
￦ 19,692 million (equivalent to US$ 18,660 thousand) decrease in equity attributable to owners of the parent
resulting from the disposal of the interest of Hanwha Life Insurance Co., Ltd. in 2013 are included.
278
65. Interests in Unconsolidated Structured Entities
Details of information about its interests in unconsolidated structured entities, which the Group
does not have control over, including the nature, purpose and activities of the structured entity and
how the structured entity is financed, are as follows:
Remarks
(nature, purpose, activities and others)
Non-financial Business
Social Overhead
Capital (SOC)
Unconsolidated structured entity that is classified as SOC is granted a
right to manage and operate, and receives management fee.
Management fee is used to recover costs associated with investment in
infrastructure such as roads, ports, railroads, schools and environmental
infrastructure which are donated to the government by civilians. In other
words, SOC, a SPC, is a corporation for business enforcement which
manages construction and operations of the SOC and the management
fee received is used to recover cost incurred by civilians for investment
in SPC. The Group, after receiving the right to construct for structured
finance, generates return of investment and income from providing
construction service and equity investment.
Financial Business
Structured finance
Unconsolidated structured entity which is classified as a structured entity
includes SPE such as property project financing investment entity,
developer of infrastructure facilities business, ships (aircraft) finance.
Structured finance is a way of funding large scale businesses with risks.
Investment decisions on the projects are made based on the economic
feasibilities of the specific project, not on credit or physical collateral of
the company leading the project. The Group provides loans and equity
investments as funds to structured entities for structured finance.
Investment funds
Unconsolidated structured entities which are classified as investment
funds include investment trust company and private equity fund. An
investment trust company, a form of collective investment organization,
where a consignor delegates responsibility to trustee to invest and
manage a fiduciary estate. PEF, a form of collective investment
organization under the Capital Market Consolidation Act, invests in
shares using the company's assets in order to enhance the value of the
company in which the organization invests by participating in
management, improving business structure and governance. PEF is a
limited partnership company under the commercial law as it distributes
income from investment to the investors through private placement. The
Group, an investor to the investment fund, recognizes income from
valuation of equity investments and dividend income in proportion to its
share ratio. If the value of the investment fund decreases, the Group will
be exposed to the risk of principal losses.
279
Korea Won
Social Overhead
Capital (SOC)
Structured
finance
Investment
funds
Assets in the statements of financial
position
￦
25,034
-
174
76,378
1
1,103,111
-
Loans receivable
￦
￦
704,877
-
Maximum loss exposures
￦
28,431
53,465
95,067
￦
2,365,055
￦
705,051
705,051
3,544,544
4,510,577
US Dollars (Note 3)
Social Overhead
Capital (SOC)
Assets in the statements of financial
position
$
Structured
finance
Investment
funds
24
668
27
-
-
-
-
72
Loans receivable
-
-
2,242
51
668
90
668
$
Maximum loss exposures1
1
$
$
1,045
3,359
4,274
Maximum loss exposures of financial assets and financial liabilities are measured at carrying amount, and
financial guarantees contract and loan agreements are measured by limits provided under the agreement.
Further, the above maximum exposure amounts do not reflect the impact of hedging activities of the Group
which aims to reduce the exposed risks related to the unconsolidated structured entity.
280
66. Business Combinations
On August 26, 2012, Hanwha Solar Germany, a subsidiary of the Group, entered into an asset
purchase agreement (“APA”) with Q.CELLS, a manufacturer of solar cells and modules. Q.CELLS
operates manufacturing plants in Germany and Malaysia as well as the sales divisions in USA,
Australia and Japan.
In 2012, Hanwha Q CELLS Investment Co., Ltd. became a subsidiary of the Group after its
establishment. Hanwha Q CELLS Investment Co., Ltd. acquired 100% ownership of Hanwha
Q.CELLS GmbH (formerly Hanwha Solar Germany) and Hanwha Q.CELLS GmbH also acquired
100% ownership of four companies, namely, Hanwha Q CELLS Malaysia Sdn Bhd, Hanwha Q
CELLS Australia Pty Ltd, Q CELLS NORTH AMERICA and Q CELLS Japan K.K.
In 2012, Hanwha Q CELLS Investment Co., Ltd. also acquired 100% ownership of Hanwha Q
CELLS Australia Pty Ltd. from Hanwha Q.CELLS GmbH. Hanwha SolarEnergy America Holdings
and Hanwha Japan Co., Ltd. acquired 100% ownership of Q-CELLS NORTH AMERICA and QCells Japan K.K, respectively, also from Hanwha Q.CELLS GmbH.
The Group expects synergy effects through the business combination with Hanwha SolarOne Co.,
Ltd., which was acquired in September 2010.
The following table summarizes the consideration paid, identifiable assets, liabilities and goodwill at
the acquisition date:
1
i. Consideration transferred
Korean Won
US Dollars
(Note 3)
￦
$
ii. Recognized amounts of identifiable
assets acquired and liabilities assumed
95
(48,365)
iii. Difference (ii – i)
(46)
(148,739)
￦
Goodwill
100,374
148,739
(141)
$
141
1
Payment for acquisitions paid or to be paid on the basis of the asset acquisition agreement are as
follows:
Korean Won
US Dollars
(Note 3)
￦
$
Inventory
Additional payment by revised agreement of
asset acquisition
2
Negative EBITDA
￦
2
57,781
55
19,709
19
1,790
2
21,094
19
100,374
$
95
According to Clause 13.2 in the APA, the Group shall pay negative EBITDA occurring from October 1
through the execution of agreement to the counterparty of the agreement. As of December 31, 2012, Hanwha
Q.CELLS GmbH paid the amount in full.
281
The following table summarizes the identifiable assets acquired and liabilities assumed at the
acquisition date:
Korean Won
US Dollars
(Note 3)
￦
$
Assets
2
84,735
80
9,882
9
13,089
12
116,432
111
Long-term receivables
6,796
6
Long-term loans
5,038
5
189,789
181
Negative EBITDA
Inventories
34,091
32
Guarantee deposits
139
-
204
-
460,195
436
Intangible assets
Liabilities
Borrowings
Accrued expenses
Provision for sales warranty
Net Assets
￦
(75,352)
(71)
(373,323)
(355)
(10,698)
(10)
(5,254)
(5)
(459)
-
(43,474)
(41)
(508,560)
(482)
(48,365)
$
(46)
The Group reflected ￦ 17,470 million (equivalent to US$ 16,554 thousand) as goodwill as a result
of the recognized amount in the above business combination in measurement period.
282

Hanwha Corporation and Subsidiaries

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