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Consolidated Reports IFRS Vision DOOSAN ENGINEERING & CONSTRUCTION CO., LTD. AND SUBSIDIARIES Consolidated Financial Statements December 31, 2014 (With Independent Auditors’ Report Thereon) Contents Page Independent Auditors’ Report 1 Consolidated Statements of Financial Position 3 Consolidated Statements of Loss 5 Consolidated Statements of Comprehensive Income (Loss) 6 Consolidated Statements of Changes in Equity 7 Consolidated Statements of Cash Flows 9 Notes to the Consolidated Financial Statements 10 Independent Auditors’ Report Based on a report originally issued in Korean The Board of Directors and Shareholders Doosan Engineering & Construction Co., Ltd.: We have audited the accompanying consolidated financial statements of Doosan Engineering & Construction Co., Ltd. and its subsidiaries (the “Group”), which comprise the consolidated statements of financial position as at December 31, 2014 and 2013, the consolidated statements of loss, comprehensive income (loss), changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2014 and 2013 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards. Emphasis of Matter Without qualifying our opinion, we draw attention to Note 19 to the consolidated financial statements which states that the Group reduced its share capital, by 10:1 for common shareholders, without consideration on January 13, 2014. Losses per shares was adjusted accordingly. As a result, share capital amount and the number of shares for common shares were reduced to W285,926 million and 55,185,231 shares, respectively. Other Matter The accompanying consolidated statement of financial position of the Group as of December 31, 2013, and the related consolidated statements of loss and other comprehensive income, changes in equity and cash flows for the year then ended, were audited by us in accordance with the previous auditing standards generally accepted in the Republic of Korea. The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries. Seoul, Korea March 6, 2015 This report is effective as of March 6, 2015, 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 accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any. 2 DOOSAN ENGINEERING & CONSTRUCTION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Financial Position As of December 31, 2014 and 2013 (In millions of won) December 31, December 31, Note 2014 2013 Assets Cash and cash equivalents 5,11 W 167,498 158,121 Short-term financial instruments 11 - 304 Short-term investments in securities 6,11,16 9,944 11,907 Accounts and notes receivable 7,11,26,35,36 573,241 601,826 Receivables from unbilled construction contracts 7,26,36 790,259 655,210 Other accounts receivables 7,11,36 143,152 165,941 Advances payments 7,36 62,680 34,653 Short-term loans 7,11,36 520,565 591,951 Short-term derivative instruments 10,11 3,654 10,487 Firm commitments 10 2,720 89 Inventories 8 28,514 32,097 Other current assets 7,11 254,894 272,050 Current assets 2,557,121 2,534,636 Long-term financial instruments 5,11 54 57 Long-term investments in securities 9,11,16,35 135,677 135,688 Investments in associates 12,16,35 85,221 103,099 Property, plant and equipment 13,16,35 1,062,152 1,066,221 Intangible assets 14 327,440 332,617 Investment property 15,16,35 68,725 69,834 Long-term derivative instruments 10,11 794 897 Firm commitments 10 1,088 37 Deferred tax assets 31 208,533 236,184 Other non-current assets 7,11 686,286 471,146 Non-current assets 2,575,970 2,415,780 Total assets 24 W 5,133,091 4,950,416 See accompanying notes to the consolidated financial statements. 3 DOOSAN ENGINEERING & CONSTRUCTION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Financial Position, Continued As of December 31, 2014 and 2013 (In millions of won) December 31, December 31, Note 2014 2013 Liabilities Accounts payable 11,36 W 798,585 668,863 Short-term borrowings 11,16,35 608,813 559,276 Asset backed liabilities 11,16,36 397,348 270,000 Current portion of long-term liabilities 11,16 403,346 323,097 Short-term advances 13,762 14,985 Advances from construction contracts 26,36 142,482 231,672 Other accounts payable 11,36 106,495 97,538 Accrued expenses 11 38,298 56,564 Income taxes payable 31 105 877 Short-term derivative instrument liabilities 10,11 7,691 1,152 Firm commitments 10 797 3,120 Other current liabilities 11 130,945 81,083 Current liabilities 2,648,667 2,308,227 Bonds 11,16,35 242,475 235,682 Long-term borrowings 11,16,35 26,136 153,156 Asset backed liabilities 11,16,35,36 42,678 - Defined benefit obligations 17 42,282 57,019 Long-term other accounts payable 11 7,584 3,364 Long-term derivative instrument liabilities 10,11 3,435 290 Firm commitments 10 190 520 Provision - others 18 64,614 74,561 Deferred tax liabilities 31 13,313 30,424 Long-term guarantee deposits received 11 45,518 51,316 Other non-current liabilities 11 33,603 20,414 Non-current liabilities 521,828 626,746 Total liabilities 24 3,170,495 2,934,973 Equity Capital stock 19 399,563 2,882,898 Capital surplus 20 601,215 614 Other capital adjustments 21 (6,784) (676,395) Accumulated other comprehensive income 9,10,22 164,653 160,800 Retained Earnings (Accumulated deficit) 23 803,949 (352,474) Total equity 1,962,596 2,015,443 Total equity and liabilities W 5,133,091 4,950,416 See accompanying notes to the consolidated financial statements. 4 DOOSAN ENGINEERING & CONSTRUCTION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Loss For the years ended December 31, 2014 and 2013 (In millions of won except losses per share) Note 2014 2013 Revenue 24,25,26,36 W 2,363,893 2,355,215 Cost of sales 26,27,36 (2,094,578) (2,107,411) Gross profit 269,315 247,804 Selling, general and administrative expenses 27,28,36 (126,347) (190,434) Operating income (loss) 24 142,968 57,370 Financial income 11,29 34,912 49,752 Financial costs 11,29 (178,832) (190,924) Non-operating income 30 21,384 98,976 Non-operating expenses 30 (61,669) (55,642) Losses on equity method investments 12 (18,893) (31,467) Loss before income taxes (60,130) (71,935) Income tax benefits(expense) 31 (8,450) 11,610 Loss for the year 24 W (68,580) (60,325) Losses per share 32 Basic losses per share W (1,249) (1,370) Diluted losses per share W (1,249) (1,370) See accompanying notes to the consolidated financial statements. 5 DOOSAN ENGINEERING & CONSTRUCTION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) For the years ended December 31, 2014 and 2013 (In millions of won) 2014 2013 Loss for the year W (68,580) (60,325) Other comprehensive income (loss) Items that will never reclassified to profit or loss Defined benefit plan actuarial losses, net of tax 5,150 4,608 Revaluation of property, plant and equipment - 157,505 5,150 162,113 Items that may be reclassified subsequently to profit or loss Net change in unrealized fair value of available-for-sale financial assets, net of tax 1,591 (20,274) Unrealized gains and losses on valuation of derivative Instrument, net of tax 1,466 (513) Changes in equity for the comprehensive income of investments in associates, net of tax 747 (38) Foreign operations-foreign currency translation differences 1,102 (1,385) 4,906 (22,210) Other comprehensive income for the year, net of income tax 10,056 139,903 Total comprehensive income (loss) for the year W (58,524) 79,578 See accompanying notes to the consolidated financial statements.
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