Samsung C&T Corporation and Subsidiaries
Consolidated Interim Financial Statements June 30, 2018 and 2017 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Index June 30, 2018 and 2017
Pages
Report on Review of Interim Financial Statements ………………………...... 1 - 2
Consolidated Interim Financial Statements
Consolidated Interim Statements of Financial Position …………………………………………….. 3 - 5
Consolidated Interim Statements of Comprehensive Income...... 6 - 8
Consolidated Interim Statements of Changes in Equity...... …………...... 9 - 10
Consolidated Interim Statements of Cash Flows…………………………………………………….. 11 - 12
Notes to the Consolidated Interim Financial Statements...... ……....……...... 13 - 107
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309
Report on Review of Interim Financial Statements
(English Translation of a Report Originally Issued in Korean)
To the Shareholders and Board of Directors of Samsung C&T Corporation
Reviewed Financial Statements We have reviewed the accompanying consolidated interim financial statements of Samsung C&T Corporation (the Company) and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at June 30, 2018, and the related consolidated interim statements of comprehensive income for the three-month and six-month periods ended June 30, 2018 and 2017, consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2018 and 2017, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility Our responsibility is to issue a report on these consolidated interim financial statements based on our review.
We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion Based on our review, nothing has come to our attention that causes us to believe the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting. WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309
Other Matters We have audited the consolidated statement of financial position of the Group as at December 31, 2017, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 14, 2018. The consolidated statement of financial position as at December 31, 2017, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2017.
The accompanying consolidated interim financial statements as at June 30, 2018 and December 31, 2017, and for the three-month and six-month periods ended June 30, 2018 and 2017, have been translated into U.S. dollars solely for the convenience of the reader and have been translated on the basis set forth in Note 3 to the consolidated interim financial statements.
Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.
Seoul, Korea
August 14, 2018
This report is effective as of August 14, 2018, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
2 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position June 30, 2018 and December 31, 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents 7 ஶGGGGGGGGGGGGG2,917,077 ஶGGGGGGGGGGGGG2,993,152 $ 2,600,586 $ 2,668,407 Short-term financial instruments 7 98,688 100,721 87,981 89,794 Financial assets at fair value through profit or loss 7,12 390,000 -347,687 - Financial assets at fair value through other comprehensive income 7,12 239 309 213 276 Trade receivables 7,8 4,217,707 4,992,459 3,760,103 4,450,797 Other current assets 7,8 2,869,806 2,628,872 2,558,444 2,343,650
3 Inventories 6 1,595,966 1,533,034 1,422,810 1,366,706 Total current assets 12,089,483 12,248,547 10,777,824 10,919,630 Assets held for sale 13,36 2,243,245 71,956 1,999,860 64,150 Non-current assets Financial assets at fair value through profit or loss 7,12 69,047 24,439 61,556 21,787 Financial assets at fair value through other comprehensive income 7,12 20,914,659 23,204,424 18,645,501 20,686,836 Investments in associates and joint ventures 13 3,339,495 5,741,754 2,977,173 5,118,797 Property, plant and equipment 14 4,991,736 4,985,944 4,450,152 4,444,989 Investment properties 15 594,870 671,661 530,329 598,788 Biological assets 16 2,173 2,204 1,937 1,965 Intangible assets 14 1,289,407 1,311,472 1,149,512 1,169,183 Deferred tax assets 78,059 75,376 69,590 67,198 Other non-current assets 7,8 773,087 711,126 689,210 633,972 Total non-current assets 32,052,533 36,728,400 28,574,960 32,743,515 Total assets ஶGGGGGGGGGGG46,385,261 ஶGGGGGGGGGGG49,048,903 $ 41,352,644 $ 43,727,295
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position June 30, 2018 and December 31, 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 (Unaudited) (Unaudited) Liabilities G Current liabilities Trade payables 7 ஶGGGGGGGGGGGGG1,839,686 ஶGGGGGGGGGGGGG1,785,617 $ 1,640,088 $ 1,591,885 Short-term borrowings 7,17 1,640,163 2,093,310 1,462,212 1,866,194 Current portion of long-term borrowings 7,17 2,001,227 1,346,801 1,784,102 1,200,678 Current tax liabilities 184,592 51,744 164,565 46,128 Other current liabilities 5,7,10,19 8,754,327 9,180,834 7,804,517 8,184,751 Total current liabilities 14,419,995 14,458,306 12,855,484 12,889,636
4 Non-current liabilities Debentures and long-term borrowings 7,17 1,947,508 2,594,095 1,736,211 2,312,646 Net defined benefit liability 18 90,167 58,357 80,384 52,025 Deferred tax liabilities 5,680,537 6,295,263 5,064,221 5,612,252 Provisions 5,19 309,061 257,025 275,529 229,139 Other non-current liabilities 7,10 297,552 234,607 265,269 209,153 Total non-current liabilities 8,324,825 9,439,347 7,421,614 8,415,215 Total liabilities 22,744,820 23,897,653 20,277,098 21,304,851
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position June 30, 2018 and December 31, 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 (Unaudited) (Unaudited) Equity Share capital 21 19,132 19,132 17,056 17,056 Consolidated capital surplus 10,468,265 10,468,265 9,332,500 9,332,500 Other components of equity 22 4,693,460 6,313,950 4,184,238 5,628,911 Consolidated retained earnings 6,008,216 5,755,405 5,356,348 5,130,966 Equity attributable to owners of the Parent Company 21,189,073 22,556,752 18,890,142 20,109,433 Non-controlling interests 1 2,451,368 2,594,498 2,185,404 2,313,011
5 Total equity 23,640,441 25,151,250 21,075,546 22,422,444 Total liabilities and equity ஶGGGGGGGGGGG46,385,261 ஶGGGGGGGGGGG49,048,903 $ 41,352,644 $ 43,727,295
The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.
The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month and Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2018 (Unaudited) 2017 (Unaudited) 2018 (Unaudited) 2017 (Unaudited) Three Six Three Six Three Six Three Six
months months months months months months months months ͑ ͑ Net sales 33 GG7,927,727 15,404,048 GG7,319,245 14,021,546 $ 7,371,612 $ 14,323,485 $ 6,805,814 $ 13,037,963 Cost of sales 25 6,868,239 13,416,835 6,389,119 12,214,025 6,386,445 12,475,670 5,940,935 11,357,236 Gross profit 1,059,488 1,987,213 930,126 1,807,521 985,167 1,847,815 864,879 1,680,727 Selling and administrative expenses 23,25 681,362 1,399,916 679,532 1,419,552 633,566 1,301,715 631,864 1,319,974 Operating profit 27,33 378,126 587,297 250,594 387,969 351,601 546,100 233,015 360,753 Other income 24 291,610 786,169 158,757 636,641 271,154 731,021 147,620 591,982 6 Other expenses 24 188,317 327,995 199,997 482,623 175,107 304,987 185,968 448,768 Financial income 28 79,478 118,046 27,674 118,126 73,903 109,765 25,732 109,839 Financial expenses 28 73,141 131,157 48,504 150,029 68,010 121,957 45,102 139,505 Share of profit of associates and joint ventures 13 7,939 13,897 1,856 13,924 7,382 12,923 1,726 12,947 Share of loss of associates and joint ventures 13 37,790 110,074 26,316 77,683 35,139 102,353 24,470 72,233 Profit before income tax 457,905 936,183 164,064 446,325 425,784 870,512 152,553 415,015 Income tax expense 29 114,704 229,871 54,381 149,001 106,658 213,746 50,566 138,549 Profit for the period GGGG343,201 GGGG706,312 GGGG109,683 GGGG297,324 $ 319,126 $ 656,766 $ 101,987 $ 276,466
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month and Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2018 (Unaudited) 2017 (Unaudited) 2018 (Unaudited) 2017 (Unaudited) Three Six Three Six Three Six Three Six
months months months months months months months months Other comprehensive income for the period, net of tax Items that may be subsequently reclassified to profit or loss Share of other comprehensive income of associates and joint ventures GGGGGG14,812 GGGGGG17,345 GGGGGG14,716 GGGG(10,073) $ 13,773 $ 16,128 $ 13,684 $ (9,366) Exchange differences 28,002 39,262 56,481 (68,426) 26,038 36,508 52,519 (63,626) Cash flow hedge (1,572) (12,451) (158) (1,203) (1,461) (11,578) (147) (1,118) 7 Items that will not be reclassified to profit or loss Gain (loss) on valuation of financial assets at fair value through other comprehensive income (1,626,476) (1,654,120) 2,184,051 3,209,806 (1,512,382) (1,538,087) 2,030,845 2,984,645 Remeasurements of the net defined benefit liabilities - - -11 - - -10 (1,585,234) (1,609,964) 2,255,090 3,130,115 (1,474,032) (1,497,029) 2,096,901 2,910,545 Total comprehensive income (loss) for the period (1,242,033) G (903,652) GG2,364,773 GG3,427,439 $ (1,154,906) $ (840,263) $ 2,198,888 $ 3,187,011
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month and Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2018 (Unaudited) 2017 (Unaudited) 2018 (Unaudited) 2017 (Unaudited) Three Six Three Six Three Six Three Six
months months months months months months months months Profit for the period attributable to: Owners of the Parent Company ஶ 365,809 ஶ 764,445 ஶ 119,091 ஶ 333,260 $ 340,148 $ 710,821 $ 110,736 $ 309,881 Non-controlling interest 1 (22,608) (58,133) (9,408) (35,936) (21,022) (54,055) (8,749) (33,415) Total comprehensive income (loss) for the period attributable to: Owners of the Parent Company (1,231,656) (856,365) 2,367,249 3,485,019 (1,145,257) (796,293) 2,201,191 3,240,551 Non-controlling interest (10,377) (47,287) (2,476) (57,580) (9,649) (43,970) (2,303) (53,540) 8
Earnings per share: 30 Basic earnings per share ஶ 2,218 ஶ 4,635 ஶ 722 ஶ 2,020 $ 2.06 $ 4.31 $ 0.67 $ 1.88
The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.
The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Changes in Equity Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3))
Consolidated Consolidated Other Non- Consolidated Consolidated Other Non- Share capital retained components controlling Share capital retained components controlling Notes capital surplus earnings of equity interests Total capital surplus earnings of equity interests Total
Balance at January 1, 2017 GGGG19,132 GG10,468,265 GGG5,229,978 GGG2,584,211 G2,804,124 21,105,710 $ 17,056 $ 9,332,501 $ 4,662,546 $ 2,303,835 $ 2,499,888 $ 18,815,826 Cumulative effect of changes in accounting policy 35 -G - (16,550) 551 - (15,999) - - (14,755) 491 - (14,264) Beginning balance after adjustments 19,132G 10,468,265 5,213,428 2,584,762 2,804,124 21,089,711 17,056 9,332,501 4,647,791 2,304,326 2,499,888 18,801,562 Total comprehensive income: Profit for the period - - 333,260 - (35,936) 297,324 - - 297,103 - (32,037) 265,066 Changes in the fair value of financial assets at fair value through other comprehensive income 12 - - - 3,209,806 - 3,209,806 - - - 2,861,555 - 2,861,555 Reclassification from disposal of 9 financial assets at fair value through other comprehensive income - - (1,105) 1,105 - -- - (985) 985 -- Share of other comprehensive income of associates and joint ventures 13 - - - (7,538) (2,535) (10,073) - - - (6,720) (2,260) (8,980) Exchange differences - - - (49,299) (19,127) (68,426) - - - (43,951) (17,052) (61,003) Cash flow hedge 20 - - - (1,222) 19 (1,203) - - - (1,089) 17 (1,072) Remeasurements of the net defined benefit liabilities - -11 -- 11 - - 10 - -10 Transactions with owners: Cash dividends - - (90,786) - (2,653) (93,439) - - (80,936) - (2,365) (83,301) Changes in the scope of consolidation - ---(3,986) (3,986) - - - - (3,554) (3,554) Others - - (113) - (182) (295) - - (101) - (162) (263) Balance at June 30, 2017 (Unaudited) GGGG19,132 GG10,468,265 GGG5,454,695 GGG5,737,614 G2,739,724 24,419,430 $ 17,056 $ 9,332,501 $ 4,862,882 $ 5,115,106 $ 2,442,475 $ 21,770,020
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Changes in Equity Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3))
Consolidated Consolidated Other Non- Consolidated Consolidated Other Non- Share capital retained components controlling Share capital retained components controlling Notes capital surplus earnings of equity interests Total capital surplus earnings of equity interests Total
Balance at January 1, 2018 GGGG19,132 GG10,468,265 GGG5,755,405 GGG6,313,950 G2,594,498 25,151,250 $ 17,056 $ 9,332,500 $ 5,130,966 $ 5,628,911 $ 2,313,011 $ 22,422,444 Cumulative effect of changes in accounting policy 35 -G - (181,400) - (88,024) (269,424) - - (161,719) - (78,474) (240,193) Beginning balance after adjustments 19,132G 10,468,265 5,574,005 6,313,950 2,506,474 24,881,826 17,056 9,332,500 4,969,247 5,628,911 2,234,537 22,182,251 Total comprehensive income: - Profit for the period - - 764,445 - (58,133) 706,312 - - 681,505 - (51,825) 629,680 Changes in the fair value of financial assets at fair value through other comprehensive income 12 - - - (1,654,120) - (1,654,120) - - - (1,474,654) - (1,474,654)
10 Reclassification from disposal of financial assets at fair value through other comprehensive income - - (319) 319 - -- - (285) 285 -- Share of other comprehensive income of associates and joint ventures 13 - - - 16,389 956 17,345 - - - 14,610 853 15,463 Exchange differences - - - 29,481 9,781 39,262 - - - 26,282 8,720 35,002 Cash flow hedge 20 - - - (12,559) 108 (12,451) - - - (11,196) 96 (11,100) Transactions with owners: Cash dividends - - (329,938) - (7,851) (337,789) - - (294,141) - (6,999) (301,140) Others - -23 -33 56 - - 22 - 22 44 Balance at June 30, 2018 (Unaudited) GGGG19,132 GG10,468,265 GGG6,008,216 GGG4,693,460 G2,451,368 23,640,441 $ 17,056 $ 9,332,500 $ 5,356,348 $ 4,184,238 $ 2,185,404 $ 21,075,546
The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.
The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Cash flows Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3)) Six-month period ended June 30 Notes 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Cash generated from operations 32 GGGGGGGGG892,141 GGGGGGGG491,476 $ 795,347 $ 438,153 Interest received 61,216 91,035 54,574 81,158 Interest paid (98,933) (101,345) (88,199) (90,350) Dividends received 386,677 300,250 344,724 267,674 Income taxes paid (54,958) (146,848) (48,995) (130,916) Net cash inflow from operating activities 1,186,143 634,568 1,057,451 565,719
Cash flows from investing activities Disposal of assets held for sale 9,141 -8,149 - Decrease in short-term financial instruments 2,246 948,288 2,002 845,403 Disposal of financial assets at fair value through profit or loss 12 73 11,477 65 10,232 Disposal of financial assets at fair value through other comprehensive income 12 503 47,661 449 42,490 Disposal of investments in subsidiaries - 208 - 186 Disposal of investments in associates and joint ventures 13 25,172 153,794 22,441 137,108 Decrease in long-term receivables 2,414 3,543 2,152 3,158 Decrease in deposits 23,319 24,725 20,789 22,042 Disposal of property, plant and equipment 14 151,501 21,738 135,064 19,380 Disposal of intangible assets 14 1,368 6,349 1,219 5,661 Disposal of investment properties 120,743 527 107,643 470 Decrease in other non-current assets 1,248 38 1,112 33 Increase in short-term loans (93,732) (69,077) (83,563) (61,583) Acquisition of financial assets at fair value through profit or loss 12 (390,109) (1,181) (347,783) (1,053) Acquisition of financial assets at fair value through other comprehensive income 12 (2,030) (374) (1,809) (334) Acquisition of investments in associates and joint ventures 13 (11,006) (248,695) (9,812) (221,712) Increase in long-term receivables (11,223) (118,390) (10,005) (105,545) Increase in deposits (30,600) (18,610) (27,280) (16,590) Acquisition of property, plant and equipment 14 (269,555) (333,245) (240,309) (297,089) Acquisition of intangible assets 14 (30,971) (32,660) (27,611) (29,116) Increase in other non-current assets (656) (2,879) (586) (2,567) Net cash inflow (outflow) from investing activities (502,154) 393,237 (447,673) 350,574
11 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Cash flows Six-Month Periods Ended June 30, 2018 and 2017
(in millions of Korean won and thousands of U.S. dollars (Note 3)) Six-month Period Ended June 30 Notes 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from financing activities Net increase in short-term borrowings - 348,582 - 310,762 Proceeds from bonds issuance 32 189,579 - 169,010 - Increase in long-term borrowings 32 160,512 30,536 143,097 27,223 Dividends paid to shareholders (329,938) (90,786) (294,141) (80,936) Net decrease in short-term borrowings 32 (440,833) - (393,005) - Repayment of current portion of long-term borrowings 32 (300,000) (1,090,169) (267,451) (971,890) Early redemption of long-term borrowings 32 (72,679) (247,790) (64,794) (220,906) Dividends paid to the non-controlling interests 1 (7,851) (2,653) (6,999) (2,365) Net decrease in other components of equity - (616) - (548) Net cash outflow from financing activities (801,210) (1,052,896) (714,283) (938,660) Net increase (decrease) in cash and cash equivalents (117,221) (25,091) (104,505) (22,367) Cash and cash equivalents at the beginning of the period 2,993,152 2,698,530 2,668,407 2,405,750 Effects of exchange rate changes on cash and cash equivalents 41,146 (85,477) 36,684 (76,203) Cash and cash equivalents at the end of the period GGGGGGG2,917,077 GGGGGG2,587,962 $ 2,600,586 $ 2,307,180
The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.
The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.
12 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
1. General Information
These consolidated financial statements are prepared in accordance with Korean IFRS 1110 Consolidated Financial Statements. Samsung C&T Corporation (the “Company” or the “Parent Company”) has 119 subsidiaries, including Samsung BioLogics Co., Ltd. (collectively referred to as the “Group”) and 53 associates and joint ventures, including Samsung Bioepis Co., Ltd. that are subject to the equity method of accounting.
1.1 The Company
The Company was established on December 23, 1963, for the purpose of engaging in tourist facilities business, and its corporate headquarters are located in Olympic-ro, Songpa-gu, Seoul. The Company primarily engages in tourist facilities, golf course services, construction, civil engineering, plant building, housing, development business, technology services, landscaping, energy conservation, environment development, fashion, retail business of various merchandise, and project organizing businesses in global market.
The Company sold its building management business of the construction division to S-1 Corporation on January 10, 2014. The Company, with the approval from the Board of Directors on June 19, 2014, changed its company name from Samsung Everland Inc. to Cheil Industries Inc. on July 4, 2014, and was listed on the stock market on December 18, 2014.
For the diversification of the business portfolio and enhancement of core competitiveness, the Company, with the approval from the Board of Directors on May 26, 2015, and from the shareholders on July 17, 2015, merged with Samsung C&T Corporation on September 1, 2015. The Company newly issued 56,317,483 shares (54,690,043 shares of ordinary shares and 1,627,440 shares of preferred shares) as consideration of the acquisition, and the new shares were listed on September 15, 2015.
Meanwhile, the Company changed its name from Cheil Industries Inc. to Samsung C&T Corporation on September 2, 2015, as approved by the Board of Directors on May 26, 2015.
13 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
1.2 Subsidiaries
(a) General information of subsidiaries as at June 30, 2018, is as follows:
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Seoul Lakeside Co., Ltd. Golf course service 1,176 117,600 117,600 - 117,600 100.00 Korea Samoo Architects & Engineers Architectural design 500 100,000 100,000 - 100,000 100.00 Korea Co., Ltd. service CVnet Corporation2 e-Business 3,200 6,400,000 2,569,155 - 2,569,155 40.14 Korea
14 Production of steel Myodo Metal Co., Ltd. 3,811 1,080,000 1,080,000 - 1,080,000 100.00 Japan products Samsung C&T Japan Trading 42,104 5,000,000 5,000,000 - 5,000,000 100.00 Japan Corporation Samsung C&T America, Inc. Trading 52,259 105 105 - 105 100.00 U.S.A. Natural resources Samsung C&T America, Inc. Samsung Oil & Gas USA Corp. 78,895 83,889 75,500 8,389 83,889 100.00 U.S.A. development 10% Samsung Renewable Energy, Renewable energy 22,867 2,000 2,000 - 2,000 100.00 Canada Inc. development Samsung Green Repower, Renewable energy Samsung C&T America, Inc. 2,863 - - - - 100.00 U.S.A. LLC.1 development 100% SCNT Power Norte S. de R.L. Thermal power 9,378 112,683,150 112,683,150 - 112,683,150 100.00 Mexico de C.V. generation Samsung E&C America, Inc. Construction 104 100,000 100,000 - 100,000 100.00 U.S.A. Samsung Solar Construction, Renewable energy Samsung C&T America, Inc. 65,000 - 5,000 5,000 100.00 U.S.A. Inc. development 100% Production of steel Samsung C&T America, Inc. QSSC, S.A, de C.V. 8,616 93,758,250 56,254,950 18,751,650 75,006,600 80.00 Mexico products 20% Samsung C&T Oil & Gas Natural resources 59,63011-1100.00 U.S.A. Parallel Corp. development
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Natural resources Parallel Petroleum LLC.1 837,480 ----51.00 U.S.A. PLL Holdings LLC. 61% development Renewable energy Samsung Renewable Energy, SRE GRW EPC GP, Inc.1 8 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE GRW EPC LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE GRW EPC GP, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE SKW EPC GP, Inc.1 11 - - - - 100.00 Canada development Inc. 100% 15 Samsung Renewable Energy, Renewable energy SRE SKW EPC LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE SKW EPC GP, Inc. 0.01% Samsung C&T Canada Ltd. Construction - 1 1 - 1 100.00 Canada Natural resources Samsung C&T Oil & Gas PLL Holdings LLC.1 238,537----83.61 U.S.A. development Parallel Corp. 83.61% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRW LP Holdings LP1 24,248 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE SKW LP Holdings LP1 5,309 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE WIND PA GP Inc.1 8 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE WIND PA LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE Wind PA GP Inc. 0.01%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Natural resources Samsung C&T Oil & Gas PLL E&P LLC.1 34,733 ----90.00 U.S.A. development Parallel Corp. 90% Renewable energy Samsung Renewable Energy, SRE GRS Holdings GP Inc.1 6 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRS Holdings LP1 3 - - - - 100.00 Canada development SRE GRS Holdings GP Inc. 0.01% Renewable energy Samsung Renewable Energy, 16 SRE K2 EPC GP Inc.1 6 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE K2 EPC LP1 -----100.00 Canada Inc. 99.99%, development SRE K2 EPC GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE KS Holdings GP Inc.1 7 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE KS Holdings LP1 515 - - - - 100.00 Canada development SRE KS Holdings GP, Inc. 0.01% Samsung Renewable Energy, SRE Belle River LP Holdings Renewable energy Inc. 99.99%, 32,706 - - - - 100.00 Canada LP1 development SRE Belle River GP Holdings Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Armow EPC GP Inc.1 8 - - - - 100.00 Canada development Inc. 100%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow EPC LP1 9 - - - - 100.00 Canada development SRE Armow EPC GP Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow LP Holdings LP1 5,353 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01%
17 Samsung Renewable Energy, SRE North Kent 1 LP Holdings Renewable energy Inc. 99.99%, 19,873 ----100.00 Canada LP1 development SRE North Kent 1 GP Holdings Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Wind GP Holdings, Inc.1 124 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, SRE North Kent 2 LP Holdings Renewable energy Inc. 99.99%, 200 - - - - 100.00 Canada LP1 development SRE North Kent 2 GP Holdings Inc. 0.01% SRE Solar Development GP Renewable energy Samsung Renewable Energy, 9 - - - - 100.00 Canada Inc.1 development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Solar Development LP1 277 - - - - 100.00 Canada development SRE Solar Development GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Windsor Holdings GP Inc.1 9 - - - - 100.00 Canada development Inc. 100% SRE Southgate Holdings GP Renewable energy Samsung Renewable Energy, 12 - - - - 100.00 Canada Inc.1 development Inc. 100%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
SRE Solar Construction Renewable energy Samsung Renewable Energy, 4 - - - - 100.00 Canada Management GP Inc.1 development Inc. 100% Samsung Renewable Energy, SRE Solar Construction Renewable energy Inc. 99.99%, 9 - - - - 100.00 Canada Management LP1 development SRE Solar Construction Management GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Development GP Inc.1 3 - - - - 100.00 Canada development Inc. 100%
18 Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Development LP1 184 - - - - 100.00 Canada development SRE Development GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE BRW EPC GP Inc.1 3 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE BRW EPC LP1 9 - - - - 100.00 Canada Inc. 99.99%, development SRE BRW EPC GP Inc. 0.01% SRE North Kent 1 GP Holdings Renewable energy Samsung Renewable Energy, 20 - - - - 100.00 Canada Inc.1 development Inc. 100% SRE North Kent 2 GP Holdings Renewable energy Samsung Renewable Energy, 4 - - - - 100.00 Canada Inc.1 development Inc. 100% SRE Belle River GP Holdings Renewable energy Samsung Renewable Energy, 17 - - - - 100.00 Canada Inc.1 development Inc. 100% Renewable energy Samsung Renewable Energy, SRE NK1 EPC GP Inc.1 3 - - - - 100.00 Canada development Inc. 100%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Samsung Renewable Energy, Renewable energy SRE NK1 EPC LP1 9 - - - - 100.00 Canada Inc. 99.99%, development SRE NK1 EPC GP Inc. 0.01% SRE Summerside Construction Renewable energy Samsung Renewable Energy, -----100.00 Canada GP Inc.1 development Inc. 100% Samsung Renewable Energy, SRE Summerside Construction Renewable energy Inc. 99.99%, 9 - - - - 100.00 Canada LP1 development SRE Summerside Construction
19 GP Inc. 0.01% Renewable energy Samsung C&T America, Inc. Samsung Solar Energy LLC.1 4,154 - - - - 100.00 U.S.A. development 100% Renewable energy Samsung Solar Energy LLC. Samsung Solar Energy 1 LLC.1 2,555 - - - - 100.00 U.S.A. development 100% Renewable energy Samsung Solar Energy LLC. Samsung Solar Energy 2 LLC.1 1,589 - - - - 100.00 U.S.A. generation 100% Samsung C&T Deutschland Trading 18,551 - - - - 100.00 Germany GmbH1 United Samsung C&T U.K. Ltd. Trading 59,415 27,950,000 27,950,000 - 27,950,000 100.00 Kingdom United Samsung C&T ECUK Limited Construction 27,814 19,033,000 19,033,000 - 19,033,000 100.00 Kingdom Industrial plant United Whessoe Engineering Limited -138138-138 100.00 engineering Kingdom Production of Samsung C&T Deutschland POSS-SLPC S.R.O.1 5,967 - - - - 70.00 Slovakia steel products GmbH 20% Renewable energy Samsung C&T Deutschland Solluce Romania 1 B.V.1 33,517 - - - - 100.00 Netherlands development GmbH 20%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Renewable energy Ecosolar OOD 6,647 13,868,610 13,868,610 - 13,868,610 100.00 Bulgaria development Renewable energy Ecoenergy Solar OOD 4,050 9,463,357 9,463,357 - 9,463,357 100.00 Bulgaria development Renewable energy Agriplam EOOD 1,315 26,577 26,577 - 26,577 100.00 Bulgaria development Renewable energy Fishtrade EOOD 3,260 27,249 27,249 - 27,249 100.00 Bulgaria development
20 Renewable energy Manageproject EOOD 2,274 305,785 305,785 - 305,785 100.00 Bulgaria development Renewable energy Solar Park EOOD 3,514 160,647 160,647 - 160,647 100.00 Bulgaria development Renewable energy Veselinovo Energy OOD 246 98,429 98,429 - 98,429 100.00 Bulgaria development Samsung C&T Construction Construction 2----100.00 Hungary Hungary Kft.1 Samsung C&T (KL) Sdn. Bhd. Construction 3,870 1,000,000 1,000,000 - 1,000,000 100.00 Malaysia Samsung C&T Malaysia Sdn. Trading 6,002 15,000,000 15,000,000 - 15,000,000 100.00 Malaysia Bhd. Samsung C&T Singapore Pte. Samsung Chemtech VINA1 Trading 3,554 - - - - 100.00 Vietnam Ltd. 48.33% Samsung C&T America, Inc. 24%, S-Print Inc.1 Production of textile 2,245 - - - - 80.00 Vietnam Samsung C&T Singapore Pte. Ltd. 16% Samsung C&T (Thailand) Co., Samsung C&T Hongkong Trading 126 409,600 180,000 54,000 234,000 57.13 Thailand Ltd. Limited 13.18%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Wholesale and retail of Samsung C&T Singapore Pte. PT. Insam Batubara Energy 1,037 1,000,000 900,000 100,000 1,000,000 100.00 Indonesia coal Ltd. 10% Samsung C&T India Private Ltd. Construction 2,748 126,500,000 126,500,000 - 126,500,000 100.00 India Samsung C&T Corporation Trading 3,45516,500,001 16,500,001 - 16,500,001 100.00 India India Private Ltd. Production of Samsung C&T Singapore Pte. MSSC Sdn.,Bhd. 4,928 44,974 31,482 13,492 44,974 100.00 Malaysia steel products Ltd. 30% Samsung C&T Singapore Pte. Trading 35,574 34,000,000 34,000,000 - 34,000,000 100.00 Singapore
21 Ltd. Natural resources Samsung C&T Singapore Pte. S&G Bio Fuel Pte. Ltd. 45,922 46,312,500 23,400,000 5,850,000 29,250,000 63.16 Singapore development Ltd. 12.63% Natural resources PT Gandaerah Hendana 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development Natural resources PT Inecda 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development SAMSUNG C&T Mongolia Construction 1,215 - - - - 70.00 Mongolia LLC.1 Samsung C&T Eng.&Const. Construction 598 - - - - 100.00 Mongolia Mongolia LLC.1 S&Woo Construction Construction 2399,400 3,760 - 3,760 40.00 Philippines Philippines, Inc.2 SAMOO DESIGNERS & Architectural design Samoo Architects & Engineers ENGINEERS INDIA PRIVATE 192 1,100,000 - 1,100,000 1,100,000 100.00 India service Co., Ltd. 100% LIMITED Samsung (Tianjin) International Samsung C&T Hongkong Trading 382 - - - - 100.00 China Trading Co., Ltd.1 Limited 100% Samsung Trading (Shanghai) Samsung C&T Hongkong Trading 498 - - - - 100.00 China Co., Ltd.1 Limited 100%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Samsung C&T Hongkong Trading 47,849 61,483 61,483 -61,483 100.00 Hong Kong Limited Samsung C&T Taiwan Co., Ltd. Trading 361 1,000,000 1,000,000 - 1,000,000 100.00 Taiwan Samsung Precision Stainless Production of Samsung C&T Hongkong 82,979 - - - - 100.00 China Steel (Pinghu) Co., Ltd.1 steel products Limited 45% Samsung C&T Co., Samsung C&T Hongkong Trading -----100.00 China (Guangzhou) Ltd.1 Limited 100% Samsung C&T (Shanghai) Co., 1 Construction 11,066 - - - - 100.00 China
22 Ltd. Samsung C&T (Xi'an) Co., Ltd.1 Construction 1,428 - - - - 100.00 China Samsung C&T Corporation Construction 2,658 - - - - 100.00 Saudi Arabia Saudi Arabia1 SAM Gulf Investment Limited Investment 12 38,912 38,912 - 38,912 100.00 Bahrain Samsung C&T Chile Copper Natural resources 12,918 11,535,517 11,535,517 - 11,535,517 100.00 Chile SpA development SCNT Power Kelar Inversiones Thermal power 42,705 100 100 - 100 100.00 Chile LTDA. generation Production of stainless Samsung C&T Deutschland S.C. Otelinox S.A. 56,148 33,078,479 - 31,179,05331,179,053 94.26 Romania steel plates and poles GmbH 94.26% Samsung Corporation Rus Construction 6,303 ----100.00 Russia LLC.1 Biopharmaceutical Samsung BioLogics Co., Ltd.3 165,413 66,165,000 28,742,466 - 28,742,466 43.44 Korea products manufacturing Manufacturing and Cheil Fashion Retail Co., Ltd. 10,000 2,000,000 2,000,000 - 2,000,000 100.00 Korea selling garments Manufacturing and Natural 9 Co., Ltd. 10,000 2,000,000 1,020,000 - 1,020,000 51.00 Korea selling garments
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries
Manufacturing and Cheil Industries Corp., USA 106 1 1 - 1 100.00 U.S.A. selling garments Manufacturing and Cheil Industries Italy S.R.L.1 8,813 - - - - 100.00 Italy selling garments Colombo Via della Spiga Manufacturing and Cheil Industries Italy S.R.L. 144 - - - - 100.00 Italy S.R.L.1 selling garments 100% Samsung Fashion Trading Manufacturing and 65,993 ----100.00 China (Shanghai) Co., Ltd.1 selling garments
23 Samsung Welstory Inc. Foodservice business 10,000 2,000,000 2,000,000 - 2,000,000 100.00 Korea Cheil Industries Inc. Vietnam Construction 1,143 ----100.00 Vietnam Co., Ltd.1 Welstory Vietnam Co., Ltd.1 Foodservice business 10,007 - - - - 90.00 Vietnam Samsung Welstory Inc. 90% Samsung C&T Corporation UEM Construction JV Sdn. Construction 205 750,000 450,000 - 450,000 60.00 Malaysia Bhd. Shanghai Ever Hongjun Business Management Foodservice business 2,536----85.00 China Samsung Welstory Inc. 85% Service Co., Ltd.1 Shanghai Welstory Food Foodservice business 4,861 - - - - 70.00 China Samsung Welstory Inc. 70% Company Limited1 Eight Seconds (Shanghai) Co., Samsung Fashion Trading Co., Selling garments 19,434 - - - - 100.00 China Ltd.1 Ltd. 100% Eight Seconds (Shanghai) Eight Seconds (Shanghai) Co., Selling garments 10,525 - - - - 100.00 China Trading Co., Ltd.1 Ltd. 100%
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
1 No share has been issued in accordance with the local laws and regulations. 2 The Parent Company has de facto control to appoint or dismiss more than 50% of the members of Board of Directors although it has less than 50% ownership interest. 3 Considering that the Parent Company holds significantly more voting rights than any other vote holders, the other shareholdings are widely dispersed, and taking into account the participation rate of previous shareholders’ meetings, the Parent Company is deemed to have de facto control although it has less than 50% ownership interest.
24
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(b) Summarized financial information of subsidiaries as at and for the six-month period ended June 30, 2018, is as follows:
(in millions of Korean won) Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)
Seoul Lakeside Co., Ltd. G G G 612,950 G G G 294,536 G G 22,797 G G G 2,611 GGGGGGG2,611 Samoo Architects & Engineers Co., Ltd. 129,889 79,316 117,059 6,525 6,618 CVnet Corporation 44,787 26,036 35,220 1,286 1,286 Myodo Metal Co., Ltd. 103,827 95,706 67,328 1,518 2,139 Samsung C&T Japan Corporation 275,186 207,085 586,222 2,484 6,791 Samsung C&T America, Inc. 544,098 321,713 365,794 (3,184) 6,329 Samsung Oil & Gas USA Corp. 8,335 5,211 - (310) (93) Samsung Renewable Energy, Inc. 139,742 92,978 - 17,150 16,909 Samsung Green Repower, LLC. 9,296 50 - (1) 87 SCNT Power Norte S. de R.L. de C.V. 51,942 42,258 - (412) (384) Samsung E&C America, Inc. 39,934 21,780 39,259 875 1,686 Samsung Solar Construction, Inc. 32 - - - 1 QSSC, S.A, de C.V. 82,007 70,405 76,986 1,259 1,775 Samsung C&T Oil & Gas Parallel Corp. 305,134 337,963 - (5,388) (16,532) Parallel Petroleum LLC. 493,524 45,671 41,279 14,772 41,305 SRE GRW EPC GP, Inc. - - - - - SRE GRW EPC LP 45 - - - - SRE SKW EPC GP, Inc. 2 - - - - SRE SKW EPC LP 36 - - - - Samsung C&T Canada Ltd. 175,577 235,843 78,055 (1,854) (1,580) PLL Holdings LLC. 522,893 261,878 - 6,357 (4,827) SRE GRW LP Holdings LP 29,982 2 - 874 734 SRE SKW LP Holdings LP 65,273 2 - 15,043 14,566 SRE WIND PA GP Inc. - 1 - - - SRE WIND PA LP 4,110 22 940 926 906 PLL E&P LLC. 18,074 3,921 1,273 294 963 SRE GRS Holdings GP Inc. 2 1 - - - SRE GRS Holdings LP 1,075 2 - 47 39 SRE K2 EPC GP Inc. - - - - - SRE K2 EPC LP 810 - - 7 - SRE KS Holdings GP Inc. 4 1 - - -
25 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)
SRE KS Holdings LP G G G G 1,481 GGGGGGGG2 GGGGGGG - GGGGGG60 GGGGGGGGG53 SRE Belle River LP Holdings LP 32,399 2 - 95 67 SRE Armow EPC GP Inc. 2 - - - - SRE Armow EPC LP 1,067 - - 9 - SRE Armow LP Holdings LP 55,155 2 - 10,623 10,025 SRE North Kent 1 LP Holdings LP 19,918 2 - - (26) SRE Wind GP Holdings, Inc. 112 5 - 2 2 SRE North Kent 2 LP Holdings LP 201 2 - - - SRE Solar Development GP Inc. 3 1 - - - SRE Solar Development LP 197 4 - 1 - SRE Windsor Holdings GP Inc. 7 1 - - - SRE Southgate Holdings GP Inc. 6 1 - - - SRE Solar Construction Management GP Inc. 3 1 - - - SRE Solar Construction Management LP 1,250 2 - 9 (1) SRE Development GP Inc. 1 1 - - - SRE Development LP 60 4 - 25 25 SRE BRW EPC GP Inc. 1 - - - - SRE BRW EPC LP 7,429 - - 59 2 SRE North Kent 1 GP Holdings Inc. 19 1 - - - SRE North Kent 2 GP Holdings Inc. 3 1 - - - SRE Belle River GP Holdings Inc. 16 1 - - - SRE NK1 EPC GP Inc. 1 - - - - SRE NK1 EPC LP 11,762 5,790 322 362 320 SRE Summerside Construction GP Inc. - - - - - SRE Summerside Construction LP 494 244 - - (2) Samsung Solar Energy LLC. 4,149 - - (4) (3) Samsung Solar Energy 1 LLC. 2,710 - - (2) 57 Samsung Solar Energy 2 LLC. 1,607 - - (72) 18 Samsung C&T Deutschland GmbH 451,429 220,615 350,366 25,118 27,481 Samsung C&T U.K. Ltd. 37,717 23,382 68,959 238 454 Samsung C&T ECUK Limited 86,937 134,877 70,679 4,440 3,021
Whessoe Engineering Limited 2,846 10,146 4,457 (1,320) (1,420)
POSS-SLPC S.R.O. 25,970 14,002 28,736 636 789
26 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)
Solluce Romania 1 B.V. G G 33,036 GGGGGGG353 GGGGGGG - GGGGG(40) GGGGGGGG(43)
Ecosolar OOD 28,446 20,884 2,914 1,070 1,024
Ecoenergy Solar OOD 17,668 13,195 1,895 693 653
Agriplam EOOD 7,408 5,850 877 365 312
Fishtrade EOOD 7,931 5,915 865 320 278
Manageproject EOOD 8,319 5,727 867 282 250
Solar Park EOOD 3,857 2,913 426 153 130
Veselinovo Energy OOD 5,897 5,045 847 390 336
Samsung C&T Construction Hungary Kft. 2,038 107 - (1) 26
Samsung C&T (KL) Sdn. Bhd. 134,275 120,404 150,355 22,568 22,471
Samsung C&T Malaysia Sdn. Bhd. 2,334 37 676 18 133
Samsung Chemtech VINA 54,825 46,314 72,526 3,500 3,793
S-Print, Inc. 7,837 11,401 8,493 302 178
Samsung C&T (Thailand) Co., Ltd. 24,540 17,051 28,856 1,144 1,341
PT. Insam Batubara Energy 17 2,057 - - (92)
Samsung C&T India Private Ltd. 190,572 187,486 255,554 8,153 8,238 Samsung C&T Corporation India Private Ltd. 1,918 1,990 1,798 (393) (399)
MSSC Sdn.,Bhd. 24,783 18,586 31,410 113 422
Samsung C&T Singapore Pte. Ltd. 224,704 206,343 618,970 1,752 2,168
S&G Bio Fuel Pte. Ltd. 120,872 62,370 - (1,925) (4,385)
PT Gandaerah Hendana 27,401 27,795 16,313 3,541 3,359
PT Inecda 34,507 7,814 12,825 2,639 2,134 G SAMSUNG C&T Mongolia LLC. 20,347 11,990 105 205 565
Samsung C&T Eng.&Const. Mongolia LLC. 32,194 15,568 19,248 10,914 11,706
S&Woo Construction Philippines, Inc. 9,654 8,601 - (643) (689) SAMOO DESIGNERS & ENGINEERS INDIA PRIVATE LIMITED 4,267 3,376 1,363 204 185 Samsung (Tianjin) International Trading Co., Ltd. 6,331 5 - 21 235
Samsung Trading (Shanghai) Co., Ltd. 57,244 32,143 106,075 4,959 5,656
Samsung C&T Hongkong Limited 245,581 132,958 1,531,940 14,179 17,200
Samsung C&T Taiwan Co., Ltd. 5,594 304 1,748 598 698 Samsung Precision Stainless Steel (Pinghu) Co., Ltd. 84,259 10,969 33,669 2,952 5,351
Samsung C&T Co., (Guangzhou) Ltd. 12 10 - 2 (120)
27 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)
Samsung C&T (Shanghai) Co., Ltd. G G G 94,086 G G G G 36,357 G G G 41,553 G G G G 7,557 GGGGGGG9,281
Samsung C&T (Xi'an) Co., Ltd. 52,403 39,044 81,967 10,256 10,387
Samsung C&T Corporation Saudi Arabia 72,994 436,456 69,462 19,717 3,347
SAM Gulf Investment Limited 12 69 - (4) (7)
Samsung C&T Chile Copper SpA 6,256 - - - 280
SCNT Power Kelar Inversiones LTDA. 72,377 29,367 - 333 351
S.C. Otelinox S.A. 59,099 7,047 22,455 767 1,433
Samsung Corporation Rus LLC. 88,996 44,174 20,625 8,811 7,076
Samsung BioLogics Co., Ltd. 8,234,113 3,758,558 261,331 4,505 4,561
Cheil Fashion Retail Co., Ltd. 3,162 1,527 10,513 (1,506) (1,506)
Natural 9 Co., Ltd. 2,223 791 588 (1,066) (1,066)
Cheil Industries Corp., USA 559 40 836 15 39
Cheil Industries Italy S.R.L. 19,840 10,264 22,413 39 16
Colombo Via della Spiga S.R.L. 7,617 3,774 2,291 14 66 Samsung Fashion (Shanghai) Trading Co., Ltd. 100,929 51,389 82,153 5,057 5,921
Samsung Welstory Inc. 592,012 202,984 892,146 37,109 37,120
Cheil Industries Inc. Vietnam Co., Ltd. 3,387 1,838 - (181) (127)
Welstory Vietnam Co., Ltd. 28,796 15,923 46,931 332 (361) Samsung C&T Corporation UEM Construction JV Sdn. Bhd. 97,697 141,378 41,651 (40,775) (41,650) Shanghai Ever Hongjun Business Management Service Co., Ltd. 12,857 8,816 30,079 286 136
Shanghai Welstory Food Company Limited 8,934 7,150 19,401 (861) (898)
Eight Seconds (Shanghai) Co., Ltd. 2,835 12,511 1,959 (1,075) (1,760) Eight Seconds (Shanghai) Trading Co., Ltd. 16,903 8,549 845 (10,408) (10,408)
1 Intercompany transactions, balances, and unrealized gains and losses on transactions between the Group companies are not eliminated in the summarized financial information above. Also, shares in controlled subsidiaries and associates, accounted for under the equity method which the controlled subsidiaries own, are recognized at acquisition cost.
28 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
1.3 Investments in Associates and Joint Ventures
General information of associates and joint ventures as at June 30, 2018, is as follows (Note 13):
Number of shares Ownership Share capital Number of interest held (in millions of outstanding Samsung by the Group Associates Primary business Korean won) shares C&T Subsidiaries Total (%) Location
Dongducheon Dream Power Co., Integrated thermal power 330,658 66,131,621 20,600,000 - 20,600,000 31.15 Korea Ltd. generation Sino-Singapore Tianjin Eco-City
29 Investment and Development Co., Property development 48,274 - - - - 40.00 China Ltd.1 Qurayyah Investment Company1 Construction 1,608 - - - - 35.00 Saudi Arabia Songdo Landmark City Limited3 Property development 67,559 13,511,814 5,936,624 - 5,936,624 43.94 Korea Chongqing Shanxia Technology Cotton thread 77,223 - - - - 20.00 China Textile Co., Ltd.1,3 manufacturing Research and development Samsung Bioepis Co., Ltd.4 103,419 20,683,705 - 19,567,921 19,567,921 94.61 Korea on medicine and pharmacy
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Number of shares Ownership Share capital Number of interest held (in millions of outstanding Samsung by the Group Joint ventures Primary business Korean won) shares C&T Subsidiaries Total (%) Location
Natural resources Korea LNG Limited 14 12,000 2,400 - 2,400 20.00 Bermuda development Renewable energy SP Belle River LP1 63,661 - - - -42.49 Canada development Internal combustion JSC Balkhash Thermal Power Plant2 383,810 6,417,058 3,208,530 - 3,208,530 50.01 Kazakhstan power plant Renewable energy
30 LJG Green Source Energy Alpha development 29 - - - -78.00 Romania S.R.L.1,2 (Solar energy generation) G 1 No share has been issued in accordance with the local laws and regulations. 2 Excluded from the scope of consolidation as it is a joint venture under a contractual arrangement. 3 The investments in associates are classified as assets held for sale. 4 Although the Group holds 94.61% ownership interest of Samsung Bioepis Co., Ltd., it is classified as an associate since the potential voting right of non-controlling interest (Biogen Therapeutics Inc.) is substantive and the Group is unable to control the relevant activities unilaterally under the agreement. Since Biogen Therapeutics Inc. exercised a call option to purchase shares of Samsung Bioepis Co., Ltd. on June 29, 2018, the shares of Samsung Bioepis Co., Ltd. amounting to 2,193,617 million, which would be transferred at the completion date of share transaction, were reclassified to assets held for sale. As at June 30, 2018, Biogen Therapeutics Inc. plans to complete legal process of the share purchase until the completion date of share transaction (expected date: September 28, 2018) (Note 20).GG G
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
1.4 Changes in Scope of Consolidation
Subsidiary newly included in the consolidation for the six-month period ended June 30, 2018 is as follows:
Subsidiary Description
Samsung Solar Energy 2 LLC. Newly established
1.5 Information about Non-Controlling Interest
Profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are material to the Group, is as follows:
Accumulated non-controlling interests of subsidiaries as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Samsung BioLogics Co., Ltd. 2,249,065 2,387,321 Others 202,303 207,177 . G 2,451,368 G 2,594,498
Profit or loss attributed to the non-controlling interests for the three-month and six-month periods ended June 30, 2018 and 2017, is as follows:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Samsung BioLogics Co., Ltd. (11,348) (51,220) (17,241) (47,867) Others (11,260) (6,913) 7,833 11,931 (22,608) (58,133) (9,408) (35,936)
Dividends paid to the non-controlling interests for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Parallel Petroleum LLC. 7,755 1,559 Others 96 1,094 . G 7,851 G 2,653
31 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Summarized financial information for each subsidiary with non-controlling interests that are material to the Group as at June 30, 2018 and December 31, 2017, and for the six-month periods ended June 30, 2018 and 2017, is as follows. The subsidiary’s financial information was prepared using equity method for their associates and joint ventures.
Summarized Statement of Financial Position
(in millions of Korean won) Samsung BioLogics Co., Ltd. June 30, December 31, 2018 2017 G G Current assets (including assets held for sale) G 3,031,121 G 619,850 Non-current assets G 4,564,693 G 6,839,588 Current liabilities G 2,303,474 G 2,288,508 Non-current liabilities G 1,315,781 G 949,888 Equity G 3,976,559 G 4,221,042
Summarized Statement of Comprehensive Income
(in millions of Korean won) Samsung BioLogics Co., Ltd. 2018 2017 Three months Six months Three months Six months
Net sales GGGG125,430 GGGG261,331 GGGG63,217 GGGG170,865 Loss for the period (20,062)G (90,558)G (30,482)G (84,631)G Other comprehensive income 1,864 1,746 1,182 (4,482) Total comprehensive loss (18,198) (88,812) (29,300) (89,113)
Summarized Statement of Cash Flows
(in millions of Korean won) Samsung BioLogics Co., Ltd. 2018 2017 G G Cash flows from operating activities G (20,148) G 21,123 Cash flows from investing activities G (592,736) G 526,750 Cash flows from financing activities G 342,691 G (367,100) Increase (decrease) in cash and cash equivalents G (270,193) G 180,773 Cash and cash equivalents at the beginning of the period G 358,088 G 230,338 Cash and cash equivalents at the end of the period G 87,895 G 411,111
32 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
2. Significant Accounting Policies
The principal accounting policies applied in the preparation of these consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods 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 International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
The Group’s condensed consolidated interim financial statements for the six-month period ended June 30, 2018, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These condensed consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or early adopted as at June 30, 2018.
(a) New and Amended Standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2018.
- Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures
When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organization, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with Korean IFRS 1109. The amendment does not have a significant impact on the financial statements because the Group is not a venture capital organization.
- Amendment to Korean IFRS 1040 Transfers of Investment Property
Paragraph 57 of Korean IFRS 1040 clarifies that a transfer to, or from, investment property, including property under construction, can only be made if there has been a change in use that is supported by evidence, and provides a list of circumstances as examples. The Group does not expect the amendment to have a significant impact on the financial statements.
- Amendments to Korean IFRS 1102 Share-based Payment
Amendments to Korean IFRS 1102 clarify accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. Amendments also clarify that the measurement approach should treat the terms and conditions of a cash-settled award in the same way as for an equity-settled award. The amendment does not have a significant impact on the financial statements.
33 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
- Enactment of Interpretation 2122 Foreign Currency Transaction and Advance Consideration
According to the enactment, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. The enactment does not have a significant impact on the financial statements.
- Enactment of Korean IFRS 1115 Revenue from Contracts with Customers
The Group has elected to apply Korean IFRS 1115 Revenue from Contracts with Customers. In accordance with the transition provisions in Korean IFRS 1115, comparative figures have not been restated. The Group elected the modified retrospective approach, and recognized the cumulative impact of initially applying the revenue standard as an adjustment to retained earnings as at January 1 2018, the period of initial application. See Note 35 for further details on the impact of the application of the standard.
(b) New standards and interpretations not yet adopted by the Group
Certain new accounting standards and interpretations that have been published that are not mandatory for annual reporting period commencing January 1, 2018 and have not been early adopted by the Group are set out below.
- Enactment of Korean IFRS 1116 Leases
Korean IFRS 1116 Leases issued on May 22, 2017 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. This standard will replace Korean IFRS 1017 Leases. The Group will apply the standards for annual periods beginning on or after January 1, 2019.
Under the new standard, with implementation of a single lease model, lessee is required to recognize assets and liabilities for all lease which lease term is over 12 months and underlying assets are not low value assets. A lessee is required to recognize a right-of-use asset and a lease liability representing its obligation to make lease payments.
The Group performed an impact assessment to identify potential financial effects of applying Korean IFRS 1116. The Group is analyzing the effects on the financial statements based on available information as at June 30, 2018 to identify effects on 2018 interim financial statements; however, it is difficult to provide reasonable estimates of financial effects until the analysis is complete.
34 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
2.2 Accounting Policies
Significant accounting policies and method of computation used in the preparation of the consolidated interim financial statements are consistent with those of the consolidated financial statements for the year ended December 31, 2017, except for the changes due to the application of amendment and enactments of standards described in Note 2.1 and the ones described below.
2.2.1 Income tax expense
Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate is applied to the pre-tax income.
2.2.2 Revenue recognition
From January 1, 2018, the Group has applied Korean IFRS 1115 Revenue from Contracts with Customers.
(a) Identify performance obligation
The Group recognizes (i) goods or services (or a bundle of goods or services) that are distinct at inception of contract, or (ii) a series of distinct goods or services that are substantially the same, including the way they transfer to the customers, as separate performance obligations.
(b) A performance obligation is satisfied over time
The contract revenue is recognized over time by measuring progress only if i) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or ii) the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
(c) Input methods for measuring progress
The Group recognizes performance obligations satisfied over time based on percentage of completion by input methods after excluding the effects of any inputs that do not depict the performance. In addition, if the Group may not be able to reasonably measure the outcome of a performance obligation, but the Group expects to recover the cost incurred in satisfying the performance obligation, the Group will recognize revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.
Meanwhile, a faithful depiction of the Group’s performance might be to recognize revenue at an amount equal to the cost of a goods used to satisfy a performance obligation if the Group expects at contract inception that all of the following conditions would be met: i) the goods are not distinct; ii) the customer is expected to obtain control of the goods significantly before receiving services related to the goods; iii) the cost of the transferred goods is significant relative to the total expected costs to completely satisfy the performance obligation; and iv) the Group procures the goods from a third party and is not significantly involved in designing and manufacturing the goods.
35 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(d) Variable consideration
If the consideration promised in a contract includes a variable amount, the Group estimates the amount of consideration to which the Group will be entitled in exchange for transferring the promised goods or services to a customer. An amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties or other similar items. The promised consideration can also vary if an entity’s entitlement to the consideration is contingent on the occurrence or non-occurrence of a future event. For example, an amount of consideration would be variable if either a product was sold with a right of return or a fixed amount is promised as a performance bonus on achievement of a specified milestone.
(e) Incremental costs of obtaining a contract ٻ The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The costs to obtain a contract will be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. The Group reviews the incremental costs of obtaining a contract based on each incurred items and recognizes the capitalized costs as contract cost based on percentage of completion.
(f) Costs to fulfill a contract
If the costs incurred in fulfilling a contract with a customer are related directly to a contract or to an anticipated contract that the entity can specifically identify, generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy) performance obligations in the future, and are expected to be recovered, the costs are recognized as assets. And, the costs are recognized as contract costs based on percentage of completion.
(g) Contract assets and contract liabilities
A contract asset is an entitys right to consideration in exchange for goods or services that the entity has transferred to a customer, and a contract liability is an entitys obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. The Group presents contract assets and liabilities arising from a contract in the statements of financial position at net amount by offsetting each other.
3. United States Dollar Amounts ٻ The Company and its domestic subsidiaries operate primarily in Korean won and their official accounting records are maintained in Korean won. The U.S. dollar amounts, provided herein, represent supplementary information solely for the convenience of the reader. All Korean won amounts, other than those in statements of comprehensive income, have been translated into U.S. dollars at the exchange rate of G1,121.7 to US$ 1, while Korean won amounts in the statements of comprehensive income have been translated into U.S. dollars at the exchange rate of 1,075.44 to US$ 1. Such presentation is not in accordance with generally accepted accounting principles in either the Republic of Korea or the United States, and should not be construed as a representation that the Korean won amounts shown could be readily converted, realized or settled in U.S. dollars at this or any other rate.
36 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
4. Critical Accounting Estimates and Assumptions
The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.
Significant accounting estimates and assumptions applied in the preparation of these consolidated interim financial statements are the same as those that applied to the consolidated financial statements for the year ended December 31, 2017, except for the estimates used to determine income tax expense.
Meanwhile, significant accounting estimates and assumptions related to construction contracts are addressed below. The accounting estimates and assumptions, and method of computation applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual consolidated financial statements for the year ended December 31, 2017.
(a) Uncertainty of the estimated total contract revenue
Total contract revenue is measured based on the initial amount of revenue agreed in the contract. However, the measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future event; for example, the amount of contract revenue may increase as a result of variations in contract work, claims and incentive payments, on the other hand, the amount of contract revenue may decrease as a result of penalties arising from delays caused by the Group in the completion of the contract. The change in contract revenue is recognized when it is probable that the customer will approve the increase in revenue due to the changes in contract work, or when it is probable that the Group will be able to satisfy the performance requirements, and the amount can be estimated reliably.
(b) Uncertainty of the estimated total contract revenue due to construction delay
The measurement of contract revenue is affected by the uncertainty of the occurrence of future events. The contract revenue can be decreased by the claims of liquidated damages when the completion of contract is delayed due to the Group’s fault. Therefore, the damage claims for the delay are estimated based on historical experience in case the completion date is expected to be delayed.
(c) Uncertainty of the estimated total contract costs
Revenue from construction work is recognized by reference to the percentage of completion method. The stage of completion of a contract is determined in the proportion that contract costs incurred for work performed to date to the estimated total contract costs. Total contract costs are estimated based on future expectation of material costs, labor costs, construction period and others.
37 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
5. Construction Contracts
Details of recognized construction profit or loss for construction contracts for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Buildings 3,874,506 3,215,670 Civil engineering 1,151,507 1,272,733 Plant 914,833 1,321,919 Landscaping 78,232 86,204 6,019,078 5,896,526
As at June 30, 2018, the Group’s remaining balance of construction contracts amounts to G27,763,771 million.
The Group provides the certificates of payment from financial institutions to the customers or reserves certain amount for guarantees for bidding, performance, repayment of advance received and warranty relating to the construction contracts mentioned above, which are presented in the statement of financial position as guarantee deposits received. As at June 30, 2018, the Group has reserves of 354,738 million relating to the constructions in progress.
As at June 30, 2018, the Group has accumulated revenues1 and costs1 on the ongoing construction projects amounting to 27,518,203 million and 25,758,723 million, respectively. As at June 30, 2018, the total accumulated revenues1 and costs1 incurred on all construction projects, including those completed during the current period, are 36,389,325 million and 33,736,984 million, respectively.
1 The accumulated revenues and costs include the accumulated revenues and costs of the former Samsung C&T Corporation prior to the merger.
38 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
The account balances of outstanding construction contracts as at June 30, 2018 and December 31, 2017, are summarized as follows:
December 31, (in millions of Korean won) June 30, 2018 2017 Civil Buildings engineering Plant Landscaping Total Total
Receivables from construction contracts G1,287,285 G G 171,083 G137,287 G G G 42,848 1,638,503 G2,527,157 Due from customer for construction work 558,649 408,602 490,967 24,562 1,482,780 1,243,382 Advance payments 207,310 215,335 81,792 909 505,346 461,057 Prepaid expenses 96,692 1,987 268 191 99,138 296,421 Guarantee deposits 97,579 128,420 128,738 1 354,738 313,027 Long-term loans 184,105 - - - 184,105 193,330 Short-term loans 275,334 - - - 275,334 196,551 Advances received 151,825 314,504 456,010 3,056 925,395 544,706 Due to customer for contract work 1,083,856 239,531 168,200 597 1,492,184 2,078,644
The Group is provided with payment guarantees amounting to G10,312,298 million (December 31, 2017: G10,378,068 million), G1,291,266 million (December 31, 2017: G1,577,175 million), G19,535 million (December 31, 2017: G17,485 million), and 23,670 million (December 31, 2017: G26,211 million) from financial institutions, Construction Guarantee Cooperative, Software Guarantee Cooperative, and Engineering Guarantee Cooperative, respectively, in relation to the construction performance and others.
As at June 30, 2018, construction sites are covered by construction work insurance amounting to 9,345,124Gmillion with Samsung Fire & Marine Insurance Co., Ltd. and others.
The Group arranges housing finance for the members engaged in redevelopment and reconstruction projects that the Group manages. Advances on housing finance temporarily received but not executed amount to 1,202,002 million. The Group has provided a joint guarantee limit of 3,512,200Gmillion (balance of G3,329,891 million) with regard to the housing finance in accordance with the agreements with the relevant financial institutions.
39 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
As at June 30, 2018, information of each contract1 where contract revenue for the six-month period ended June 30, 2018, is more than 5% of the previous year’s revenues, is as follows:
(in millions of Korean won) Trade receivables (receivables from Due from customers3 construction contracts) Percentage Accumulated Contract Contractual of Gross impairment Gross Provision for date due date completion amount loss amount impairment
Turkey Kirikkale Oct. 2014 Jun. 2017 95.30% - - 26,222 - CCPP2 Pyeong-taek P-PJT May. 2015 Feb. 2018 100.00% - - - - Saudi RABIGH 2 IPP Nov. 2013 Feb. 2018 100.00% - - 45,943 - Qatar UHP IWPP2 May. 2015 Jun. 2018 93.90% - - - - Vietnam SDC May. 2016 Sep. 2018 86.80% - - 9,509 - Module 3 Saudi Riyadh Metro Oct. 2013 Oct. 2018 68.40% 37,969 - 22,047 - Pyeong-taek FAB 1 Apr. 2017 Dec. 2018 89.30% - - 1,760 - Garak Siyoung Oct. 2015 Dec. 2018 73.60% 52,924 - - - Complex 1 Australia Westconnex Jun. 2015 Mar. 2019 82.30% - - 17,806 - Stage 1b (M4 East) Singapore Changi Oct. 2015 Jul. 2019 77.00% 23,182 - 13,710 - Airport Pkg.1 Algeria Naama Feb. 2014 Feb. 2020 67.00% - - 6,277 - Australia Westconnex Stage2 (M5 Main Nov. 2015 Mar. 2020 52.00% - - 27,265 - Tunnel) UAE nuclear power Mar. 2010 May 2020 88.10% 26,777 - - - plant Algeria Mostaghanem Feb. 2014 Apr. 2021 35.70% - - 4,242 - Gangneung Anin Feb. 2014 Mar. 2022 6.80% 202,375 - - - coal-fired power plant Singapore Thomson Mar. 2016 Feb. 2024 28.60% 37,919 - 7,019 - East Coast Line T313 India Mumbai Dec. 2013 Dec. 2018 55.40% 29,178 - 29,884 - DAICEC(Overseas) Malaysia KL118 Tower Nov. 2015 Dec. 2019 23.20% 30,437 - - -
1 Construction projects that are practically completed as at June 30, 2018, are excluded. 2 As at June 30, 2018, the contractual due dates have passed but the construction is still in process due to the customer’s request for additional construction works. The Group is continuing the negotiation with the customer in relation to the extension of contractual due date. 3 Due from customers is the amount before offsetting contract liabilities.
40 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
As at December 31, 2017, information of each contract1 where contract revenue for the year ended December 31, 2017, is more than 5% of the previous year’s revenues, is as follows:
(in millions of Korean won) Trade receivables (receivables from Due from customers construction contracts) Percentage Accumulated Contract Contractual of Gross impairment Gross Provision for date due date completion amount loss amount impairment
Saudi RABIGH 2 IPP2 Nov. 2013 Jun. 2017 96.10% G - G - G 51,432 G - Turkey Kirikkale Oct. 2014 Jun. 2017 90.40% - - 30,441 - CCPP2 Pyeong-taek P-PJT May. 2015 Feb. 2018 96.40% - - 77,675 - Vietnam SDC May. 2016 Sep. 2018 78.70% - - 11,943 - Module 3 Pyeong-taek FAB 1 Apr. 2017 Oct. 2018 69.00% - - - - Qatar UHP IWPP May. 2015 Jun. 2018 89.30% - - - - Saudi Riyadh Metro Oct. 2013 Oct. 2018 65.50% - - 23,207 - Garak Siyoung Oct. 2015 Dec. 2018 53.60% - - - - Complex 1 Australia Westconnex Jun. 2015 Mar. 2019 63.70% - - 19,141 - Stage 1b (M4 East) Singapore Changi Oct. 2015 Jul. 2019 65.40% 33,769 - 20,612 - Airport Pkg.1 Algeria Naama Feb. 2014 Feb. 2020 58.70% - - 27,930 - Australia Westconnex Stage2 (M5 Main Nov. 2015 Mar. 2020 35.00% - - 23,466 - Tunnel) UAE nuclear power Mar. 2010 May 2020 85.10% 688 - - - plant Algeria Mostaghanem Feb. 2014 Apr. 2021 30.30% - - 15,446 - Gangneung Anin Feb. 2014 Mar. 2022 2.50% 37,884 - 12,970 - coal-fired power plant Singapore Thomson Mar. 2016 Feb. 2024 21.40% 29,648 - 7,557 - East Coast Line T313 India Mumbai Dec. 2013 Sep. 2017 44.70% 6,935 - 25,716 - DAICEC(Overseas)2 Malaysia KL118 Tower Nov. 2015 Dec. 2019 14.50% 29,025 - - -
1 Construction projects that are practically completed as at December 31, 2017, are excluded. 2 As at December 31, 2017, the contractual due dates have passed but the construction is still in process due to the customer’s request for additional construction works. The Group is continuing the negotiation with the customer in relation to the extension of contractual due date.
41 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Details of major joint venture construction as at June 30, 2018, are as follows:
(in millions of Korean won) Total contract Amount of Percentage of amount the Group ownership Representative company
Hyundai Engineering & UAE nuclear power plant G G 6,806,886 G G 3,063,099 45.00% Construction Co., Ltd. Saudi Riyadh Metro 9,266,859 2,609,918 28.16% FCC Austrailia Westconnex Stage2 3,307,885 992,366 30.00% CPB (M5 Main Tunnel) Austrailia Westconnex Stage 2,339,601 779,789 33.33% CPB 1b (M4 East) Singapore Changi Airport 888,323 621,826 70.00% Samsung C&T Corporation Expansion Pkg.1 Shin-Kori nuclear power plant 1,187,986 605,873 51.00% Samsung C&T Corporation #5, 6 Hong Kong Metro SCLC1109 923,360 554,016 60.00% Samsung C&T Corporation Hong Long Tung Chung New 921,643 451,605 49.00% BUILD KING Town reclamation Bujeon-Masan DoubleTrack 421,377 299,936 71.18% Samsung C&T Corporation Electric Railway Suseo-Pyeongtaek High-speed 304,716 274,244 90.00% Samsung C&T Corporation Railway Area 5 Hongkong 3RS C3202 372,139 260,497 70.00% Samsung C&T Corporation Hyundai Engineering & Singapore TuasFinger1 792,856 222,000 28.00% Construction Co., Ltd. Canada Site C 1,341,835 670,918 50.00% Acciona S.A. Malaysia KL118 Tower 1,558,678 935,207 60.00% Samsung C&T Corporation United Kingdom Mersey 742,809 247,578 33.33% FCC, S.A & Petroserv L Gateway Saudi Tadawul Tower PJT 512,038 307,223 60.00% Samsung C&T Corporation
42 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Changes in the estimated total contract revenue and estimated total contract costs by construction types for contracts in progress for the six-month period ended June 30, 2018, and its impact on the Group’s profit or loss for the period and in the succeeding periods, changes in balances of due from customers for contract work, and provisions for construction losses are as follows:
Impact on Changes in Changes in profit or loss Changes in estimated estimated Impact on for the due from (to) Provision for total contract total contract profit or loss succeeding customers for construction Construction type revenue costs for the period period contract work losses
Buildings 2,902,683 2,377,622 342,848 182,213 342,848 73,104
Civil engineering G 409,754 414,652 (9,397) 4,499 (9,397) 33,350
Plant G 166,359 126,090 31,679 8,590 31,679 24,274
Landscaping 5,050 2,504 3,581 (1,035) 3,581 -
3,483,846 2,920,868 368,711 194,267 368,711 130,728 Uncertainty of the estimated total contract revenue due to construction delay
The measurement of contract revenue is affected by the uncertainty of the occurrence of future events. The contract revenue can be decreased by the claims of liquidated damages when the completion of contract is delayed edue to th Group’s fault. Therefore, the damage claims for the delay are estimated based on historical experience in case the completion date is expected to be delayed. The Group strives to minimize damage claims by requesting extension of the completion date from the customers, and by giving evidence that the construction delay is not attributable to the Group. The Group will also undertake measures not to bear the damage claims from the delay. For the six-month period ended June 30, 2018, changes in provision for estimated warranty costs for the completed projects and provisions for construction losses from construction contracts are as follows:
Effect of Korean IFRS (in millions of Korean won) Beginning 1115 adoption Increase Decrease Ending
Provision for construction warranties G G G 180,633 GGGGG(640) G G G 12,546 G G G 9,266 G G G 183,273 Provision for construction losses 119,142 -52,399 40,813 130,728
43 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
6. Inventories
Inventories as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) June 30, 2018 December 31, 2017 Acquisition Valuation Book Acquisition Valuation Book cost allowance amount cost allowance amount ͑ ͑ ͑ Merchandise G G 650,606 (47,928) G G 602,678 G G 595,545 (42,082) G G 553,463 Finished goods 333,496 (36,348) 297,148 408,400 (45,081) 363,319 Raw materials 227,067 (7,504) 219,563 202,706 (7,986) 194,720 Land held for housing projects 63,991 (612) 63,379 62,827 (612) 62,215 Materials-in-transit 222,733 - 222,733 220,225 - 220,225 Semi-finished goods and work-in-progress 93,707 (1,665) 92,042 53,609 (7) 53,602 Others 99,066 (643) 98,423 86,168 (678) 85,490 G1,690,666 (94,700) G1,595,966 G1,629,480 (96,446) G1,533,034
7. Financial Instruments by Category
Details of financial instruments by category as at June 30, 2018, and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Financial assets at fair value through profit or loss 459,047 24,439 Financial assets at fair value through other comprehensive income 20,914,898 23,204,733 Financial assets at amortized cost Cash and cash equivalents1 2,917,077 2,993,152 Short-term financial instruments 98,688 100,721 Trade receivables2 3,293,088 3,839,631 Other current assets 1,606,137 1,426,890 Other non-current assets3 670,627 670,322 Derivative instruments Held for trading 43,313 18,149 Hedging instruments 16,749 6,351 30,019,624 32,284,388
1 Cash and cash equivalents amounting to G822 million (December 31, 2017: G909 million) are subject to withdrawal restrictions in relation to termination of Mongolian railroad project. 2 Due from customer for contract work (contract assets net of contract liabilities) amounting to 924,619 million (December 31, 2017: G1,152,828 million) is excluded. 3 Bank deposits amounting to 97 million (December 31, 2017: 97 million) are subject to withdrawal restrictions in relation to the Group’s loan facility agreement.
44 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) June 30, 2018 December 31, 2017
Liabilities at amortized cost Trade payables 1,839,686 1,785,617 Short-term borrowings 1,118,369 1,646,863 Current portion of long-term liabilities 2,001,227 1,346,801 Other current liabilities 4,050,884 3,820,107 Debentures and long-term borrowings 1,947,508 2,594,095 Other non-current liabilities 91,471 78,276 Derivative instruments Held for trading1 1,958,363 1,948,372 Hedging instruments 3,084 8,788 Other liabilities Short-term borrowings 521,794 446,447 Financial guarantee liabilities 28,334 36,420 13,560,720 13,711,786
1 Although Biogen Therapeutics Inc. exercised a call option to purchase shares of Samsung Bioepis Co., Ltd. on June 29, 2018, the derivative liabilities of 1,933,562 million is recognized until the completion date of share transaction, since it is not considered as a regular way purchase or sale of financial assets stipulated under Korean IFRS 1109 Financial Instruments.
Fair value of financial instruments is the same as book amount, except for those which do not have market prices in active market and whose fair value cannot be reliably measured.
45 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
8. Trade Receivables and Other Assets
Trade receivables and other assets as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017 Provision for Gross amount impairment Net amount Net amount
Trade receivables Financial assets at amortized cost 3,437,750 (144,662) 3,293,088 3,839,631 Due from customer for contract work 959,239 (34,620) 924,619 1,152,828 4,396,989 (179,282) 4,217,707 4,992,459 Other current assets Financial assets at amortized cost: Short-term loans 408,329 (111,016) 297,313 214,266 Current portion of long-term receivables (Note 9) 3,888 - 3,888 6,017 Non-trade receivables 603,029 (22,064) 580,965 559,119 Accrued income 225,526 (50,411) 175,115 167,659 Deposits 561,504 (12,648) 548,856 479,830 1,802,276 (196,139) 1,606,137 1,426,891 Derivative instruments 59,997 - 59,997 24,499 Advance payments 826,477 (26,126) 800,351 671,569 Prepaid expenses 255,137 (56,098) 199,039 271,172 Prepaid corporate income tax 160,370 - 160,370 191,665 Others 43,912 - 43,912 43,076 3,148,169 (278,363) 2,869,806 2,628,872 Other non-current assets Financial assets at amortized cost: Long-term receivables (Note 9) 667,320 (218,940) 448,380 454,262 Long-term financial instruments 550 - 550 533 Deposits 213,031 (1,806) 211,225 205,056 Overseas natural resources development 33,237 (22,765) 10,472 10,472 914,138 (243,511) 670,627 670,323 Derivative instruments 65 - 65 - Others 102,395 - 102,395 40,803 1,016,598 (243,511) 773,087 711,126 8,561,756 (701,156) 7,860,600 8,332,457
46 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) June 30, 2018 December 31, 2017 Provision for Gross amount impairment Net amount Net amount
Third party receivables 8,126,306 (693,077) 7,433,229 7,447,572 Related party receivables 435,450 (8,079) 427,371 884,885 8,561,756 (701,156) 7,860,600 8,332,457 ٻ As at June 30, 2018, trade receivables amounting to 521,794 million (December 31, 2017: 446,447 million), which were transferred to financial institutions but have not matured yet, are recognized as trade receivables and collateralized borrowings, respectively, due to a recourse in the event the debtor fails to pay (Note 17).
The Group classifies its financial assets as at amortized cost only if both of the following criteria are met:
the asset is held within a business model with the objective of collecting the contractual cash flows, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding
47 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Changes in provision for impairment for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) Effect of Korean Impairment January 1, IFRS 1115 loss / June 30, 2018 adoption reversal Write-off Others 1 2018
Trade receivables G G 180,528 GGGGGGG - G G (1,659) G G G (119) GGGGG532 G G 179,282 Other current assets Financial instruments: Short-term loans 97,459 - 13,557 - -111,016 Non-trade receivables 21,970 - (272) - 366 22,064 Accrued income 44,389 - 5,992 - 3050,411 Deposits 13,161 - (513) - -12,648 176,979 - 18,764 - 396 196,139 Advance payments 26,336 - (252) - 42 26,126 Prepaid expenses 173,756 (117,597) (266) - 205 56,098 377,071 (117,597) 18,246 - 643 278,363 Other non-current assets Financial instruments: Long-term receivables 219,018 - (159) - 81 218,940 Deposits 875 - 931 - -1,806 Overseas natural resources development 22,765 - - - -22,765 242,658 - 772 - 81 243,511 G G 800,257 G(117,597) G G 17,359 (119) G G 1,256 G G 701,156
1 Others include exchange differences, consolidation adjustments and others.
48 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) Effect of Korean Impairment January 1, IFRS 1109 loss / June 30, 2017 adoption reversal Write-off Others 1 2017
Trade receivables G G 192,561 G G G 12,059 G G G 13,099 G G (22,114) G G G (443) G G 195,162 Other current assets Financial instruments: Short-term loans 87,827 6,469 (1,476) - (1) 92,819 Non-trade receivables 30,788 - 445 (1,315) (713) 29,205 Accrued income 41,831 1,211 7,443 - (114) 50,371 Deposits 6,472 - 3,605 - -10,077 166,918 7,680 10,017 (1,315) (828) 182,472 Advance payments 25,926 - (647) - (95) 25,184 Prepaid expenses 159,555 - 10,588 - -170,143 352,399 7,680 19,958 (1,315) (923) 377,799 Other non-current assets Financial instruments: Long-term receivables 285,735 1,766 (529) (20,000) (192) 266,780 Deposits 875 - - - -875 Overseas natural resources development 22,765 - - - -22,765 309,375 1,766 (529) (20,000) (192) 290,420 G G 854,335 G G G 21,505 G G G 32,528 G G (43,429) G G (1,558) G G 863,381
1 Others include exchange differences, consolidation adjustments and others.
Impairment losses from trade receivables and other receivables are included in selling and administrative expenses, and other operating expenses, respectively, in the consolidated statement of comprehensive income. Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.
As at June 30, 2018 and December 31, 2017, fair values of trade receivables, other current assets and other non-current assets are equal to their book amount. The maximum exposure of trade and other receivables to credit risk is the book amount of each class of receivables mentioned above.
49 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
9. Long-Term Receivables
Details of long-term receivables (including current portion) as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Loans for others 56,501 34,263 Loans for redevelopment and reconstruction projects 397,824 422,761 Other long-term receivables 12,542 18,195 Less: Present value discount (14,599)(14,940) 452,268 460,279 Less: Current portion of long-term receivables (3,888)(6,017) 448,380 454,262
50 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
10. Other Liabilities
Details of other liabilities as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Other current liabilities Financial instruments at amortized cost: Non-trade payables 885,180 1,007,924 Accrued expenses 1,083,954 790,655 Guarantee deposits received 879,748 857,617 Advances received related to housing business 1,202,002 1,163,912 4,050,884 3,820,108 Other financial instruments: Derivative instruments 1,961,447 1,957,159 Finance guarantee contract 28,334 36,420 1,989,781 1,993,579 Advances received 2,283,726 2,962,568 Withholdings 265,431249,860 Provisions (Note 19) 110,782 122,191 Others 53,72332,528 8,754,327 9,180,834 Other non-current liabilities Financial instruments at amortized cost: Long-term non-trade payables 90,951 77,736 Leasehold deposits received 520 530 91,471 78,266 Derivative instruments 772 - Long-term unearned revenue 50,177 1,209 Contingent liabilities 155,132155,132 297,552 234,607 9,051,879 9,415,441
51 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
11. Contract Assets and Liabilities
As explained in Note 2, the Group has applied Korean IFRS 1115 Revenue from Contracts with Customers from January 1, 2018. See Note 35 for the impact of the changes in accounting policies on the financial statements.
The Group has recognized the following revenue-related contract assets and liabilities:
(in millions of Korean won) June 30, 2018 January 1, 2018
Contract assets relating to construction contracts – due from customers 1,482,780 1,243,382 Assets recognized for costs to fulfill contracts 172,571 129,832 Total contract assets 1,655,351 1,373,214 Contract liabilities relating to construction contracts – advance received for construction contracts 925,395 544,706 Contract liabilities relating to construction contracts – due to customers 1,492,184 2,078,644 Contract liabilities relating to customer loyalty program - advance received 19,149 17,926 Contract liabilities relating to subscription sales – advance payments and advance received 106,949 90,149 Total contract liabilities 2,543,677 2,731,425
Contract assets and contract liabilities for the construction contracts change significantly depending on the percentage of completion. Unsatisfied portion of the contract liabilities are expected to be recognized based on the percentage of completion until the contracts are terminated. Other contract liabilities are expected to be recognized as revenue when the performance obligations for customers are completed.
Assets recognized for costs incurred directly to fulfill contracts consists of (i) construction contracts with fixed-price, (ii) costs incurred during technology transfer and (iii) costs to produce test goods, while indirect costs were recognized as selling and administrative expenses for the six-month period ended June 30, 2018. The assets recognized are amortized over the term of the specific contract it relates to, consistent with the pattern of recognition of the associated revenue.
The revenue amounting to 1,701,423 million was recognized in the current reporting period in relation to carried-forward contract liabilities.
52 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
12. Financial Assets Measured at Fair Value
(a) Financial Assets at Fair Value through Profit or Loss
The Group classifies the following financial assets at fair value through profit or loss:
debt investments that do not qualify for measurement at either amortized cost or at fair value through other comprehensive income, equity investments that are held for trading, and equity investments for which the entity has not elected to recognize fair value gains and losses through other comprehensive income.
Changes in financial assets at fair value through profit or loss for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Beginning balance 24,439 39,449 Acquisition 390,109 1,181 Disposal (104) (5,737) Transfer and others 44,603 (223) Loss on valuation - (1,078) Ending balance 459,047 33,592
Details of financial assets at fair value through profit or loss as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Equity instruments Domestic listed equities 2,165 2,165 Foreign non-listed equities 6,220 6,319 Debt instruments Beneficiary certificates 390,157 157 SOC shares 15,798 15,798 Others 44,707 - 459,047 24,439
53 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Details of listed equity instruments measured at fair value through profit or loss as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of December 31, Korean won) June 30, 2018 2017 Number of Percentage shares of ownership Acquisition Market Book Book owned (%) cost value amount amount
Badaro No.19 Ship Investment Company 750,000 4.93 3,023 2,164 2,164 2,164 Sambu Construction Co.,Ltd. 182 - 9 1 1 1 3,032 2,165 2,165 2,165
Details of non-listed equity instruments and debt instruments measured at fair value through profit or loss as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of December 31, Korean won) June 30, 2018 2017 Number of Percentage Net asset shares of ownership Acquisition value Book Book owned (%) cost or fair value amount amount
ACWA GUC1 1,128,011 16.11 9,106 9,106 9,106 9,106 Smart Rail Co.,Ltd.1 1,000,000 8.70 6,692G 6,692G 6,692G 6,692G MMF - - 390,000 390,000 390,000 - POSCO INDIA CHENNAI STEEL PROCESSING CENTRE PVT.LTD. and others - - 47,430 51,084 51,084 6,476 453,228 456,882 456,882 22,274
1 Investments in ACWA GUC (acquisition cost: 9,106 million) and Smart Rail Co., Ltd. (acquisition cost: 6,692 million), which were classified as financial assets at fair value through profit or loss, are pledged as collateral against borrowings of investees.
The amounts recognized in profit or loss from financial assets at fair value through profit or loss for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Profit or loss related to equity instruments at fair value through profit or loss GGGGGGGGGGGG - 5,677 Profit or loss related to debt instruments at fair value through profit or loss 3,235 4,160 3,235 9,837
54 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(b) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets at fair value through other comprehensive income comprise:
equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value through other comprehensive income rather than profit or loss as these are strategic investments and the group considered this to be more relevant, and debt securities where the contractual cash flows are solely principal and interest and the objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets.
Changes in equity and debt instruments at fair value through other comprehensive income for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Beginning balance GGGGG23,204,733 GGGGG17,459,780 Acquisition 2,030 374 Disposal (890) (1,376) Exchange differences and others (43,883) (589) Gain (loss) on valuation (2,247,092) 4,236,176 Ending balance GGGGG20,914,898 GGGGG21,694,365
Details of financial instruments at fair value through other comprehensive income as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Equity instruments Listed equities GGGGG20,638,489 GGGGG22,883,966 Non-listed equities 275,676 319,952 Debt instruments 733 815 GGGGG20,914,898 GGGGG23,204,733 Current portion GGGGGGGGGGGG239 GGGGGGGGGGGG309 Non-current portion 20,914,659 23,204,424
55 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Details of listed equities, including preferred shares, measured at fair value through other comprehensive income as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of December 31, Korean won) June 30, 2018 2017 Number of Percentage shares of ownership Acquisition Market Book Book owned (%) cost value amount amount
Samsung Electronics Co., Ltd. 298,818,100 4.08 G6,484,353 G13,939,864 G13,939,864 G15,227,770 Samsung Life Insurance Co., Ltd. 38,688,000 19.34 34,819G 3,806,899G 3,806,899G 4,816,656G Samsung SDS Co., Ltd. 13,215,822 17.08 3,396,466G 2,649,772G 2,649,772G 2,643,164G Samsung Heavy Industries Co., Ltd. and others - - 199,965 241,954 241,954 196,376 G10,115,603 G20,638,489 G20,638,489 G22,883,966
Details of non-listed equities measured at fair value through other comprehensive income as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of December 31, Korean won) June 30, 2018 2017 Number of Percentage shares of ownership Acquisition Market Book Book owned (%) cost value amount amount
Domestic Companies HAN ALL Co., Ltd. 1,128,011 16.11 G G G 11,280G G G G 15,098G G G G 15,098G G G G 15,098G SECUI Co., Ltd. 1,000,000 8.70 500G 13,709G 13,709G 13,709G The Korea Economic Daily 1,187,563 6.35 7,095G 7,656G 7,656G 7,656G Samsung Economics Research Institute 120,000 1.00 903G 903G 903G 903G YOUNGJIN Global Co., Ltd. and others - - 43,235G 40,367G 40,367G 84,941G 63,013G 77,733G 77,733G 122,307G Overseas Companies G G G G Korea Ras laffan LNG Ltd. 2,783,333 10.00 80,279G 72,601G 72,601G 72,601G iMaketAsia Co., Ltd. 772,657 19.32 8,941G 20,217G 20,217G 20,217G Samsung SDI (Hongkong) Limited 5,500,000 2.44 4,477G 4,477G 4,477G 4,477G Beijing Samsung Real Estate Co., Ltd and others - - 103,877G 100,648G 100,648G 100,350G 197,574G 197,943G 197,943G 197,645G G G 260,587 G G 275,676 G G 275,676 G G 319,952
56 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Changes in gain or loss on valuation of equity instruments measured at fair value through other comprehensive income for the six-month period ended June 30, 2018, recorded as other component of equity, consist of the following:
Balance at Change for the Income tax Balance at (in millions of Korean won) January 1, 2018 period allocated June 30, 2018
Gain (loss) on valuation of financial assets at fair value 8,711,376 (2,247,092) 593,291 7,057,575
Upon disposal of these equity investments, any balance in the accumulated other comprehensive income for these equity investments is reclassified to retained earnings and is not reclassified to profit or loss.
Dividend income recognized from financial assets at fair value through other comprehensive income for the six-month period ended June 30, 2018, amounts to G339,728 million (2017: G265,232 million).
As at June 30, 2018 and December 31, 2017, debt instruments at fair value through other comprehensive income are as follows and the contractual cash flows under the instruments solely represent payments of principal and interest.
(in millions of Korean won) June 30, 2018 December 31, 2017
Current portion Government bonds 239 309 Non-current portion Government bonds 494 506 733 815
Upon disposal of these debt investments, any balance in the accumulated other comprehensive income for these debt investments is reclassified to profit or loss.
57 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
13. Investments in Associates and Joint Ventures
Details of investments in associates and joint ventures as at June 30, 2018 and December 31, 2017, are as follows (Note 1.3):
(in millions of Korean won) Percentage June 30, 2018 December 31, 2017 of Acquisition Book Acquisition Book
Location ownership(%) cost Net assets amount cost Net assets amount
Associates Dongducheon Dream Power Co., Ltd.2 Korea 31.15 G G G 81,191 G G G 61,319 G G G 36,169 G G G 81,191 G G G 68,698 G G G 43,548 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. China 40.00 10,968 12,954 10,718 10,968 12,424 10,189 Songdo Landmark City Limited 3 Korea 43.94 20,522 20,522 20,522 20,522 20,522 20,522 KST POWER NORTE S.A. DE C.V. Mexico 34.00 6,229 24,83623,586 6,229 23,122 21,847 Chongqing Shanxia Technology Textile Co., Ltd.6 China 20.00 30,461 29,068 29,105 30,461 27,998 29,105 Samsung Bioepis Co., Ltd.4 Korea 94.61 5,208,496 268,009 4,652,527 5,208,496 465,298 4,882,445 Others5 363,325 623,341 358,145 363,325 558,052 359,652 5,721,192 1,040,049 5,130,772 5,721,192 1,176,114 5,367,308 Joint ventures Korea LNG Limited Bermuda 20.00 83,507 38,971 38,971 83,507 35,837 35,837 SP Belle River LP Canada 42.49 24,381 29,725 26,671 26,243 28,706 25,570 Others 460,816 407,743386,324 453,287 358,548 362,666 568,704 476,439451,966 563,037 423,091 424,073 6,289,896 1,516,488 5,582,7386,284,229 1,599,205 5,791,381 Less : Asset held for sale Samsung Bioepis Co., Ltd. 4,7 Korea (2,455,750)(126,363) (2,193,617) - - - Songdo Landmark City Limited3 Korea (20,522)(20,522)(20,522)(20,522) (20,522)(20,522) Chongqing Shanxia Technology Textile Co., Ltd.6 China (30,461)(29,068)(29,104)(30,461) (27,998)(29,105)
3,783,163 1,340,535 3,339,495 6,233,246 1,550,685 5,741,754
1 The investments in associates and joint ventures are all non-listed. 2 As at June 30, 2018, investments in Dongducheon Dream Power Co., Ltd., (acquisition cost: G81,191 million), are pledged as collateral to a financial institution against the borrowings (total borrowing limit of G1,285,000 million) of Dongducheon Dream Power Co., Ltd. (Note 31). In addition, the Group provides fund supplement commitment on expected working capital deficit of Dongducheon Dream Power Co., Ltd. up to G8,100 million. 3 The Group has entered into a contract to sell equity interests, receivables, and others of Songdo Landmark City Limited to joint venture partners and classified the investee as asset held for sale. 4 Although the Group holds 94.61% ownership interest of Samsung Bioepis Co., Ltd., it is classified as an associate since the potential voting right of non-controlling interest (Biogen Therapeutics Inc.) is substantive and the Group is unable to control the relevant activities unilaterally under the agreement (Note 20).
58 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
5 Investments in Gaziantep SPV (acquisition cost: G5,569 million), Rabigh 2 Investment Company (acquisition cost: G373 million) and Qurayyah Investment Company (acquisition cost: G52,215 million), are pledged as collateral against borrowings of investees (Note 31). 6 The investment in the associate was classified as an asset held for sale since the Group plans to sell the equity interests to joint shareholders. 7 Since Biogen Therapeutics Inc. exercised a call option to purchase shares of Samsung Bioepis Co., Ltd. on June 29, 2018, the shares of Samsung Bioepis Co., Ltd. amounting to 2,193,617 million, which would be transferred at the completion date of share transaction, were reclassified to assets held for sale. As at June 30, 2018, Biogen Therapeutics Inc. plans to complete legal process of the share purchase until the completion date of share transaction (expected date: September 28, 2018) (Note 36).
Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Beginning balance GGGGGG5,741,754 GGGGGG5,699,709 Effect of Korean IFRS 1115 adoption (143,959) - Acquisition 10,712 248,695 Disposal and others (5,045) (34,841) Share of profit (53,188) (13,278) Transfer (2,193,617) - Others1 (17,162) (47,585) Ending balance GGGGGG3,339,495 GGGGGG5,852,700
1 Others include dividends, transfer, exchange differences, and others.
59 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Summarized financial information of major associates and joint ventures, including dividends received by the Group, as at and for the six-month period ended June 30, 2018, is as follows:
(in millions of Korean won) Summarized financial information Total Non- Profit (loss) Other comprehen- Current Non-current Current Non-current controlling for the comprehen- sive income Dividends assets assets liabilities liabilities interests Revenue period sive income (loss) received
Associates Dongducheon Dream Power Co., Ltd. 64,144 1,408,039 1,220,708 G G 76,278 GGGGGG - G344,159 G G 15,292 GGGGGG - G G 15,292 GGGGGG -G Sino-Singapore Tianjin Eco-City Investment and
60 Development Co., Ltd. 33,224 - 842 - - - 230 - 230 - KST POWER NORT E S.A. DE C.V. 118,472 445,459 62,099 428,786 - 61,718 5,109 555 5,664 - Chongqing Shanxia Technology Textile Co., Ltd. 374,503 85,943 315,106 - - 89,786 136 - 136 - Samsung Bioepis Co., Ltd.1 623,293 641,552 612,661 368,893 - 157,729 (59,399) (41) (59,440) - Joint ventures Korea LNG Limited 600 194,335 4 78 - 26,855 26,036 7,019 33,055 5,247 SP Belle River LP 14,131 260,162 10,136 194,199 - 17,267 5,652 1,634 7,286 -
1 Based on consolidated financial information.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Summarized financial information of major associates and joint ventures, including dividends received by the Group, as at December 31, 2017 and for the six-month period ended June 30, 2017, is as follows:
(in millions of Korean won) Summarized financial information December 31, 2017 2017 Total Non- Profit (loss) Other comprehen- Current Non-current Current Non-current controlling for the comprehen- sive income Dividends assets assets liabilities liabilities interests Revenue period sive income (loss) received
Associates Dongducheon Dream Power Co., Ltd. 110,624 1,460,293 305,650 1,068,987 GGGGGG - 366,083 (13,809) GGGGGG - (13,809) GGGGGG -G 61 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 31,980 1 922 - - - 383 - 383 - KST POWER NORT E S.A. DE C.V. 69,017 477,226 61,715 416,521 - 57,177 8,377 - 8,377 - Chongqing Shanxia Technology Textile Co., Ltd. 339,239 89,645 286,495 2,398 - 66,913 544 - 544 - Samsung Bioepis Co., Ltd.1 608,052 631,088 510,873 236,438 - 121,500 (52,033) (4) (52,037) - Joint ventures Korea LNG Limited 670 178,598 3 83 - 20,639 19,602 11,287 30,889 3,848 Southgate Solar LP - - - - - 5,602 326 1,625 1,951 - SP Belle River LP 31,442 264,785 17,198 211,468 - - (35) 715 680 -
1 Based on consolidated financial information.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Reconciliation of financial information to book amount of the major investments in associates and joint ventures as at June 30, 2018 and December 31, 2017, is as follows:
(in millions of Korean won) June 30, 2018 Difference between the cost Percentage of the investment of ownership Share in net and share in the Intergroup Net assets (%) assets investee’s equity transactions Book amount
Associates Dongducheon Dream Power Co., Ltd. 1 G 175,197 31.15 61,319 (1,175) (23,975) 36,169 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 32,382 40.00 12,954 (2,235) (1) 10,718 KST POWER NORTE S.A. DE C.V. 73,046 34.00 24,836 -(1,250) 23,586 Chongqing Shanxia Technology Textile Co., Ltd. 145,340 20.00 29,068 - 37 29,105 Samsung Bioepis Co., Ltd. 283,291 94.61 268,009 4,404,208 (20,571) 4,651,646 Joint ventures Korea LNG Limited 194,853 20.00 38,971 - - 38,971 SP Belle River LP 69,957 42.49 29,725 - (3,054) 26,671
1 Since the disproportionate capital increase by external investor was classified as financial liabilities, the Group applied 35% of ownership interest when calculating share of profit or loss of the associate.
62 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) December 31, 2017 Difference between the cost Percentage of the investment of ownership Share in net and share in the Intergroup Net assets (%) assets investee’s equity transactions Book amount
Associates Dongducheon Dream Power Co., Ltd. 1 196,280 31.15 68,698 (1,175) (23,975) 43,548 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 31,059 40.00 12,424 (2,235) - 10,189 KST POWER NORTE S.A. DE C.V. 68,007 34.00 23,122 - (1,275) 21,847 Chongqing Shanxia Technology Textile Co., Ltd. 139,991 20.00 27,998 - 1,107 29,105 Samsung Bioepis Co., Ltd. 491,829 94.61 465,298 4,417,147 - 4,882,445 Joint ventures Korea LNG Limited 179,183 20.00 35,837 - - 35,837 SP Belle River LP 67,560 42.49 28,706 - (3,136) 25,570
1 Since the disproportionate capital increase by external investor was classified as financial liabilities, the Group applied 35% of ownership interest when calculating share of profit or loss of the associate.
63 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
14. Property, Plant and Equipment, and Intangible Assets
Changes in property, plant and equipment for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 Buildings and Animals& Construction in Land structures plants Others progress Total Beginning balance Acquisition cost 1,833,890G 2,361,047 69,108G 1,952,215G 288,863G 6,505,123G Accumulated impairment and depreciation (7,349) (624,151) (6,429) (878,268) - (1,516,197) Beneficiary's share of construction cost - - - (2,982) - (2,982)
64 1,826,541 1,736,896 62,679 1,070,965 288,863 4,985,944 Changes during the period Acquisition - 8,698 1,035 53,746 149,017 212,496 Disposal and others (65,223) (22,259) (27) (15,767) (183) (103,459) Depreciation - (36,538) (1,175) (95,581) - (133,294) Transfer - 4,056 78 13,226 (25,009) (7,649) Impairment (4,249) - - - - (4,249) Others 1 536 4,863 (458) 44,864 (7,858) 41,947 1,757,605 1,695,716 62,132 1,071,453 404,830 4,991,736 Ending balance Acquisition cost 1,769,203 2,352,291 69,540 2,002,701 404,830 6,598,565 Accumulated impairment and depreciation (11,598) (656,575) (7,408) (928,398) - (1,603,979) Beneficiary's share of construction cost - - - (2,850) - (2,850) 1,757,605 1,695,716 62,132 1,071,453 404,830 4,991,736
1 Others include exchange differences, changes in scope of consolidation and others.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) 2017 Buildings and Animals& Construction in Land structures plants Others progress Total Beginning balance Acquisition cost 2,232,229G 2,211,981 72,042G 1,792,328G 287,496G 6,596,076G Accumulated impairment and depreciation - (575,226) (4,459) (731,932) - (1,311,617) Beneficiary's share of construction cost - - - (3,250) - (3,250) 2,232,229 1,636,755 67,583 1,057,146 287,496 5,281,209 Changes during the period Acquisition 7,540 4,578 693 33,886 310,159 356,856 Disposal and others (1,520) (5,860) (110) (25,252) (399) (33,141) 65 Depreciation - (33,078) (1,254) (100,500) - (134,832) Transfer (384,528) (150,351) 16 54,012 (81,288) (562,139) Impairment (7,349) - - - - (7,349) Others 1 126 1,440 (1,806) 4,400 (234) 3,926 1,846,498 1,453,484 65,122 1,023,692 515,734 4,904,530 Ending balance Acquisition cost 1,853,847 2,047,659 70,704 1,832,700 515,734 6,320,644 Accumulated impairment and depreciation (7,349) (594,175) (5,582) (805,892) - (1,412,998) Beneficiary's share of construction cost - - - (3,116) - (3,116) 1,846,498 1,453,484 65,122 1,023,692 515,734 4,904,530
1 Others include exchange differences, changes in scope of consolidation and others.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Changes in intangible assets for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 Mineral Right to use Customer Orders on rights Memberships Software property Goodwill relationships Brands hand Others Total
Beginning balance G439,694 G G 52,995 G G 78,309 G G 5,374 G G 60,132 G G 48,452 G188,828 G380,803 G G 56,885 1,311,472 Acquisition 15,147 485 5,206 - - - - - 16,296 37,134 Disposal - (881) (13) (2) - - - - (7) (903) Amortization (7,886) (6) (24,642) (549) (38) (2,744) (264) (51,902) (4,288) (92,319) Impairment - (11) - - - - - - - (11)
66 Transfer - 2,127 6,856 - - - - - (4,934) 4,049 Others 1 29,255 28 111 5 102 - 10 - 474 29,985 Ending balance G476,210 G G 54,737 G G 65,827 G G 4,828 G G 60,196 G G 45,708 G188,574 G328,901 G G 64,426 1,289,407
1 Others include exchange differences, changes in scope of consolidation and others.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) 2017 Mineral Right to use Customer Orders on rights Memberships Software property Goodwill relationships Brands hand Others Total
Beginning balance G543,519 G G 81,307 G118,837 G G 7,116 G G 60,758 G G 53,939 G189,553 G484,608 G G 61,666 1,601,303 Acquisition 19,712 52 3,219 - - - - - 9,677 32,660 Disposal - (3,463) (11) (5) - - - - (600) (4,079) Amortization (6,097) (6) (29,702) (574) - (2,744) (445) (51,902) (11,072) (102,542) Transfer - - 5,482 - (285) - - - (4,293) 904 Others 1 (50,675) (219) (1,245) (45) (29) - - - (1,859) (54,072) Ending balance G506,459 G G 77,671 G G 96,580 G G 6,492 G G 60,444 G G 51,195 G189,108 G432,706 G G 53,519 1,474,174
67 1 Others include exchange differences, changes in scope of consolidation and others.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Goodwill is monitored by the management at the operating segment level. The following is a summary of goodwill allocation for each operating segment (cash-generating unit or groups of cash-generating units) as at June 30, 2018 and December 31, 2017:
(in millions of Korean won) June 30, 2018 December 31, 2017
Fashion segment: acquisition of fashion business segment of Samsung SDI Co., Ltd. 56,262 56,262 Others 3,934 3,870G 60,196 60,132G
The Group entered into a Collateral Trust Agreement with KB Real Estate Trust Co., Ltd., which the Group provided its land and building located in Yongin-si, Gyeonggi-do as trust property. Simultaneously, the Group pledged the primary beneficiary certificate of the trust property as collateral to Woori Bank in relation to the short-term borrowings.
15. Investment Properties
Changes in investment properties for the six-month periods ended June 30, 2018 and 2017, are as follows:
2018 2017 (in millions of Korean won) Land Building Total Land Building Total ͑ ͑ ͑ Beginning balance 475,184 196,477 671,661 88,197 28,084 116,281 Disposal (57,244) (17,515) (74,759) - (527) (527) Depreciation - (2,314) (2,314) - (1,501) (1,501) Transfer - - - 384,528 174,616 559,144 Others 1 - 282 282 - (862) (862) Ending balance 417,940 176,930 594,870 472,725 199,810 672,535
1 Others include adjustments due to exchange difference.
As at June 30, 2018, the Group provided land and buildings, which are located in Seocho-gu, Seoul, Republic of Korea, as collateral to Samsung Fire & Marine Insurance Co., Ltd. and Samsung Life Insurance Co., Ltd. for establishment of the right to collateral security according to lease agreements, with total secured amount of G31,037 million.
68 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
16. Biological Assets
Changes in biological assets for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017
Beginning balance GGGGGGGG2,204 GGGGGGGG2,505 Exchange differences (31)(120) Ending balance GGGGGGGG2,173 GGGGGGGG2,385
17. Debentures and Borrowings
Details of debentures and borrowings as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Current liabilities Short-term borrowings GGGG1,640,163 GGGG2,093,310 Current portion of long-term borrowings 671,852 327,319 Current portion of debentures 1,330,000 1,020,000 Less: Discount on debentures (625)(518) 3,641,390 3,440,111 Non-current liabilities Long-term borrowings 759,902 987,270 Debentures 1,190,000 1,610,000 Less: Discount on debentures (2,394)(3,174) 1,947,508 2,594,096 GGGG5,588,898 GGGG6,034,207
69 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Short-term borrowings as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) Annual interest June 30, December 31, Creditors rate (%) 2018 2017
Samsung C&T and domestic subsidiaries Loans in local currency 1 Woori Bank and others 1.40 - 2.55 168,723 681,223 Loans in foreign currency SMBC and others 2.17 ~ 2.65 49,104 135,294 Banker’s usance Woori Bank and others L+0.4~1.60 47,126 38,810 Secured loans (Note 8) Woori Bank and others L+0.4~1.95 517,380 445,049 782,333 1,300,376 Foreign subsidiaries General loans Citibank and others 0.29 - 5.51 853,416 791,536 Secured loans (Note 8) - 3.375 4,414 1,398 857,830 792,934 G G 1,640,163 G G 2,093,310
1 In relation to the borrowings, the land and building of the Group are provided as collateral to Woori Bank (Note 14).
As at June 30, 2018, the Group has entered into bank overdraft facility agreements amounting to 158,500 million and credit facility agreements amounting to 818,000 million with 11 banks, including Woori Bank. Also, the Group has entered into credit agreements using its notes receivables which are guaranteed, as collateral for up to 154,000 million with four banks, including Shinhan Bank.
70 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Debentures as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) Annual interest June 30, December 31, Issue date Maturity rate (%) 2018 2017 Non-guaranteed and publicly listed No. 101-2 Mar. 8, 2013 Mar. 8, 2018 - GGGGGGGGGG - 150,000 No. 102-1 Jul. 23, 2013 Jul. 22, 2018 3.64 50,000 50,000 No. 102-2 Jul. 23, 2013 Jul. 23, 2018 3.64 50,000 50,000 No. 103-2 Sep. 5, 2013 Sep. 5, 2018 3.71 120,000 120,000 No. 104-2 Mar. 7, 2014 Mar. 7, 2019 3.59 150,000 150,000 No. 105-2 Oct. 6, 2014 Oct. 6, 2019 2.69 150,000 150,000 No. 106-2 1 Apr. 25, 2013 Apr. 25, 2018 - -150,000 No. 107-2 1 Aug. 29, 2013 Aug. 29, 2018 3.52 350,000 350,000 No. 108-2 1 Apr. 3, 2014 Apr. 3, 2019 3.41 260,000 260,000 No. 109-1 Dec. 1, 2015 Dec. 1, 2018 2.24 100,000 100,000 No. 109-2 Dec. 1, 2015 Dec. 1, 2020 2.50 100,000 100,000 No. 110-1 Jun. 16, 2016 Jun. 16, 2019 1.74 200,000 200,000 No. 110-2 Jun. 16, 2016 Jun. 16, 2021 1.89 100,000 100,000 No. 111-1 Nov. 3, 2016 Nov. 3, 2019 1.99 210,000 210,000 No. 111-2 Nov. 3, 2016 Nov. 3, 2021 2.19 190,000 190,000 No. 112-1 Nov. 3, 2017 Nov. 3, 2020 2.59 150,000 150,000 No. 112-2 Nov. 3, 2017 Nov. 3, 2022 2.94 50,000 50,000 Private bonds Oct. 24, 2014 Oct. 24, 2019 3.48 50,000 50,000 Private bonds Dec. 21, 2017 Dec. 21, 2018 2.43 50,000 50,000 Private bonds Apr. 27, 2018 Apr. 27, 2021 3.10 150,000 - Private bonds Apr. 27, 2018 Apr. 27, 2023 3.53 40,000 - 2,520,000 2,630,000 Less: Current portion of debentures (1,330,000)(1,020,000) 1,190,000 1,610,000
1 Publicly listed debentures of former Cheil Industries Inc. (numbered from No. 42 to No. 44) were renamed as publicly listed debentures of Samsung C&T Corporation, numbered from No. 106 to No. 108, due to business combination and change of the Company’s name.
71 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Long-term borrowings (including foreign currency) as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) Annual interest June 30, December 31, Creditors rate (%) 2018 2017
Denominated in Korean won Samsung C&T and domestic subsidiaries Korea Development Bank and others 2.43 - 3.53 490,800 380,800 (Facility loans) Korea Housing & Urban Guarantee Corporation - 7,537 7,537 (Working capital loans) Shinhan Bank and others 1.95 - 2.14 400,000 400,000 (Long-term commercial paper) 898,337 788,337 Less: Current portion of long-term borrowings (354,128) (49,028) 544,209 739,309 Denominated in foreign currency Samsung C&T and domestic subsidiaries Korea Energy Agency 1.50 - 5.00 32,964 32,064 (Condition loans) Citi Bank and others Libor + 0.75 111,322 106,330 (General borrowings) ~ 0.80 SMBC Libor + 0.70 171,620 163,924 (General borrowings) The Export-Import Bank of Korea and others 3.42 ~ 4.01 71,236 25,186 (Facility loans) Foreign subsidiaries SC Bank and others 0.80 - 8.89 146,275 198,748 (General borrowings) 533,417 526,252 Less: Current portion of long-term borrowings (317,724) (278,291) 215,693 247,961 759,902 987,270
72 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
The annual maturities of long-term debts outstanding (excluding current portion) as at June 30, 2018, are as follows:
Borrowings in Debentures Borrowings in foreign (in millions of Korean won) (Face value) Korean Won currencies Total
July 1, 2019 ~ June 30, 2020 G G G G 410,000 G G G 220,679 GGGGG87,826 G G G G 718,505 July 1, 2020 ~ June 30, 2021 500,000 316,829 16,923 833,752 July 1, 2021 ~ June 30, 2022 190,000 279 5,706 195,985 After July 1, 2022 90,000 6,422 105,238 201,660 G G 1,190,000 G G G 544,209 G G G 215,693 G G 1,949,902
Long-term borrowings and debentures by currencies as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) Long-term borrowings Debentures June 30, December 31, June 30, December 31, 2018 2017 2018 2017
US Dollars G G G 125,057 G G G 160,152 GGGGGGGGGGG- GGGGGGGGGGG- Korean Won 544,209 739,309 1,187,606 1,606,826 Euro 60,284 62,610 - - Japanese Yen 7,908 6,641 - - Others 22,444 18,558 - - G G G 759,902 G G G 987,270 G G 1,187,606 G G 1,606,826
73 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
18. Net Defined Benefit Liabilities
Details of net defined benefit liabilities as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Defined benefit obligation GGGGGGGG733,071 GGGGGGGG748,931 Less: Plan assets (642,163) (689,776) Less: Contribution to National Pension Fund (741)(798) GGGGGGGGG90,167 GGGGGGGGG58,357
The Group under defined benefit plans is required to pay post-employment benefits to any employee who has provided one year or more of services as at reporting date, in accordance with the Group's policies on payment of post-employment benefits (in accordance with local regulations for overseas subsidiaries). Additionally, as at June 30, 2018, the Group is under contracts with Samsung Life Insurance Co., Ltd. and others for operations management and asset management of their defined benefit pension plans.
Details of defined benefit liabilities recognized in the consolidated statements of financial position as at June 30, 2018 and December 31, 2017, are determined as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Present value of funded defined benefit obligations GGGGGGGG733,071 GGGGGGGG748,931 Fair value of plan assets1 (642,904)(690,574) Net defined benefit liabilities GGGGGGGGG90,167 GGGGGGGGG58,357
1 The amount includes contributions to the National Pension Fund of 741 million (December 31, 2017: 798 million).
74 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
The amounts recognized in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Defined benefit plan Current service cost GGGGG23,043 GGGGG46,993 GGGGG24,693 GGGGG48,976 Interest expense 6,106 12,212 5,361 10,722 Return on plan assets (excluding amounts included in interest expenses/income) (5,494) (11,014) (4,451) (8,832) Defined contribution plan Post-employment benefits 804 2,019 737 1,373 Others 3,799 43,847 28,499 67,869 GGGGG28,258 GGGGG94,057 GGGGG54,839 G G 120,108
Details of allocation of expenses for the three-month and six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Cost of sales GGGGG14,982 GGGGG36,141 GGGGG17,850 GGGGG37,661 Selling and administrative expenses (post-employment benefits) 10,674 48,647 32,879 73,378 Selling and administrative expenses (research and development) 1,191 6,089 3,285 7,282 Other assets 1,411 3,180 825 1,787 GGGGG28,258 GGGGG94,057 GGGGG54,839 G G 120,108
75 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
19. Provisions
Changes in provisions for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 Construction warranties1 Restoring cost2 Others3 Total
January 1, 2018 G G G G 180,633 GGGGGG43,369 G G G G 155,214 G G G G 379,216 Effect arising from adoption of Korean IFRS 1115 (640)G -G 3,223G 2,583G Additional provisions 12,546G 2,382G 86,290G 101,218G Used and reversal (10,551)G (1,520)G (43,290)G (55,361)G Exchange differences 1,285 1,409 2,608 5,302 Other changes - (13,115) - (13,115) June 30, 2018 G G G G 183,273 GGGGGG32,525 G G G G 204,045 G G G G 419,843 Current (Note 10) GGGGGGGGGG - GGGGGGGGGGG - G G G G 110,782 G G G G 110,782 Non-current 183,273G 32,525G 93,263G 309,061G
1 The Group recognizes expenses, which are expected to be spent for future repairs, as a provision based on historical experience. 2 The Group recognizes amounts discounted at present value, which are expected to be spent for future dismantling and removing of the equipment of oil and gas subsidiaries or restoring the site, as a provision. 3 Others include provisions for product warranty and provisions reflecting risk of business.
(in millions of Korean won) 2017 Construction warranties1 Restoring cost2 Others3 Total
January 1, 2017 G G G G 176,855 GGGGGG43,078 G G G G 114,268 G G G G 334,201 Additional provisions 17,591G 5,983G 35,148G 58,722G Used and reversal (11,655)G (411)G (23,230)G (35,296)G Exchange differences (1,769)G (2,459)G (4,469)G (8,697)G June 30, 2017 G G G G 181,022 GGGGGG46,191 G G G G 121,717 G G G G 348,930 Current (Note 10) GGGGGGGGGG - GGGGGGGGGGG - GGGGG51,792 GGGGG51,792 Non-current 181,022G 46,191G 69,925G 297,138G
1 The Group recognizes expenses, which are expected to be spent for future repairs, as a provision based on historical experience. 2 The Group recognizes amounts discounted at present value, which are expected to be spent for future dismantling and removing of the equipment of oil and gas subsidiaries or restoring the site, as a provision. 3 Others include provisions for product warranty and provisions reflecting risk of business.
76 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
20. Contingencies and Commitments
As at June 30, 2018, the Group has agreements with several financial institutions, including Woori Bank, for the guarantees of letters of credit related to the Group’s export and import, totaling USD 543,598 thousand, for the guarantee of the performance of export contracts amounting to USD 372,289 thousand and for the guarantee of various trade finance with a limit of USD 2,314,317 thousand. The receivables from export transactions sold to financial institutions, which amount to USD 505,944 thousand, are not yet due as at June 30, 2018.
As at June 30, 2018, the Group has provided a note amounting to ͑500 million, and 21 blank checks and notes as collateral to related institutions for borrowings, performance guarantees, construction payment guarantees, and others.
As at June 30, 2018, the Group is contingently liable for loan guarantees, principally for foreign associates and joint ventures amounting to USD 165,373 thousand (Note 31). The Group provides performance guarantees on the construction contracts of its foreign operations limited to USD 199,434 thousand, and the Group provides guarantees for the performance of other construction companies’ projects amounting to 269,455 million. Conversely, other construction companies provide guarantees for the performance of the Group’s projects amounting to 1,036,416 million.
As at June 30, 2018, the Group has short-term export insurance with Korea Trade Insurance Corporation. The certificates issued by Korea Trade Insurance Corporation (insured amount of 99,711 million) relating to guarantees provided by financial institutions are pledged as collateral.
As at June 30, 2018, the Group has been named as the defendant in certain lawsuits brought against it in the normal course of business. The aggregate amount of 186 claims brought against the Group, is approximately 386,357 million and USD 391,038 thousand. The Group also files 90 counterclaims amounting to 395,747 million and USD 839,031 thousand. The Group's management believes that the ultimate resolution of these cases will not have a material adverse effect on the operations or financial position of the Group.
As at June 30, 2018, the Group has 1,261 forward exchange contracts amounting to USD 590,715 thousand, EUR 24,759 thousand, JPY 75,271 thousand, CNY 1,922 thousand, SGD 1,247 thousand, GBP 35 thousand, KWD 31 thousand, and SEK 2,027 thousand, and 18 interest rate swap contracts with financial institutions whose contracts amount to 400,000 million, USD 44,375 thousand and EUR 37,218 thousand. These forward exchange contracts and interest rate swap contracts are intended to hedge foreign exchange risk and interest risk exposures of the Group. In addition, the Group has entered into 151 commodity futures contracts with financial institutions with contract prices amounting to USD 161,443 thousand and three currency swap contracts with contract prices amounting to USD 129,244 thousand. For the six-month period ended June 30, 2018, realized gains and losses from the contracts mentioned above, included in ‘foreign exchange gain and loss’, amount to approximately 43,146 million and 35,906 million, respectively.
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As at June 30, 2018 and for the period ended June 30, 2018, details of gain (loss) on valuation of derivative instruments are as follows:
Accumulated other Gain on Loss on comprehensive (in millions of Korean won) valuation valuation income
Currency forward contractsG GGGGGG11,673G GGGGG(6,246)G GGGGGGGG(78)G Interest swap contractsG -G -G (1,994)G Currency swaps contractsG 5,058G (9)G (33)G Commodity futures contracts 12,255 (3,120) -
As at June 30, 2018, the Group has corporate purchase card agreements and collateral loan agreements using the trade receivables with a limit of 351,000 million with financial institutions, including Woori Bank.
On February 14, 2012, the Group entered into a share purchase agreement with JSC Samruk-Energy to purchase its shares related to the construction of and business investment in the coal-fired electrical power plant located in Kazakhstan. On August 31, 2016, the Group exercised the put option against JSC Samruk-Energy to re-sell the shares purchased from JSC Samruk-Energy considering the uncertainty of the investment (exercise price amount to USD 192,452 thousand). In addition, on August 31, 2016, the Group notified the customer of construction contract termination considering the uncertainty of the business. The Group is continuing the negotiation with the customer in relation to the termination of contract, and the outcome cannot be estimated reliably.
On April 30, 2015, the former Samsung C&T Corporation sold 22.99% of equity shares of Hanwha General Chemicals Co., Ltd. (formerly Samsung General Chemical Co., Ltd.) to Hanwha Chemical Co., Ltd. and Hanwha Energy Corporation (collectively “Acquirers”). According to the Share Purchase Agreement, the Group has the right to receive additional proceeds depending on the subsequent operating performance of Hanwha Total Petrochemical Co., Ltd. (formerly Samsung Total Petrochemical Co., Ltd.). The Group also has a priority right to request the Acquirers to purchase the remaining equity shares when Hanwha General Chemicals Co., Ltd. is publically listed. However, if Hanwha General Chemicals Co., Ltd. is not listed within 6 years (7 years if requested by Acquirers) from the closing date of the transaction, the Group and the Acquirers have the right to exercise put option and call option, respectively, on the remaining equity shares. In addition, the Acquirers have the right of first refusal when the Group attempts to dispose of the remaining equity shares. Also, if the Acquirers attempt to dispose of the equity shares of Hanwha General Chemicals Co., Ltd., the Group and the Acquirers respectively have tag-along right and drag-along right.
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In accordance with the joint venture agreement between Biogen Therapeutics Inc. and the Group, Biogen Therapeutics Inc. had a call option to purchase additional shares of Samsung BioEpis Co., Ltd. that would allow Biogen Therapeutics Inc. to increase its ownership interest up to 50% minus one share, and the option was exercised on June 29, 2018. The exercise price of the option is a sum of the acquisition price of the investment (proportion attributable to 50% minus one share of amount invested in biosimilar development less the amounts already invested in Biogen Therapeutics Inc.) and the cumulative interests on the investment (interests calculated based on return on equity according to the agreement). The differences between the exercise price of the option and fair value of the shares for call option will be recognized as derivative liabilities (option liability of 1,933,562 million) until the completion date of share transactions, since it is deemed as a forward contract.
The Group has entered into agreements for long-term borrowings with financial institutions. If the Group fails to meet conditions specified below, the Group could lose benefit of time which could lead to early redemption of the borrowings.
Financial institution Condition Description The Group shall remain as an affiliate of Samsung Group and Kookmin Bank Retainment of control current major shareholders shall hold control over the Group Retain Component The proportion of shares held by Samsung Group and the SMBC ratio of shareholders Group shall remain over 50% and 30%, respectively
In relation to the land lease agreement with Incheon Metropolitan City (“Incheon”), the Group receives exemption of rent from Incheon since the Group fulfilled the requirements set by the Public Property Management Ordinance of Incheon. The Group recognizes the fair value of exempt rent as intangible assets, and at the same time, the Group recognizes the same amount of government grants as a deduction of the carrying amount of the asset. Details of the lease agreement are as follows:
(a) Period With the total lease period of 50 years, the initial lease period is 20 years from April 28, 2011, and can be extended on a 10-year basis.
(b) Exemption requirement In order to remain qualified for rent exemption in accordance with Article 32 of Shared Assets Management Act of Incheon Metropolitan City, the Group has to meet certain requirements such as it shall maintain foreign direct investment of USD 20 million for the first 5 years of the lease period, and for the period thereafter the Group shall remain as foreign investment enterprise with employees over 300.
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Lease agreements
(a) Operating lease- The Group as a lessee
As at June 30, 2018, the Group has entered into operating lease agreements related to the domestic headquarters buildings and details are as follows:
Lessor Lessee Leased Premises
Headquarters of ALPADOHM CITY CO.,LTD. Alpharium Tower I, II construction segment Headquarters of trading Korean Veterans Association Korva Tower segment Headquarters of fashion Military Mutual Aid Military Mutual Aid Association segment Association Building SAMSUNG ENGINEERING Headquarters of Global Engineering
CO.,LTD construction segment Center Headquarters of East Central Tower NongHyup Bank1 construction segment Building
1 As at June 30, 2018, the Group has entered into lease agreement on East Central Tower Building (the “Building”) with NongHyup Bank, a trust agent of Inmark Professional Investment Type Real Estate Investment Company 10. The agreement will expire on February 26, 2028. The Group and Mirae Asset Daewoo Co., Ltd. possess the right of first refusal on the Building, which gives the Group and Mirae Asset Daewoo Co., Ltd. the preference right to purchase the building or sell the Building to a third party. When the rights of the Group and Mirae Asset Co., Ltd compete, the right of Mirae Asset Co., Ltd has priority.
If the building is not sold until the expiration of the agreement, the agreement will be extended for 10 years.
The total of future minimum lease payments to be payable to the lessor and sublessor according to the lease agreements of the Building as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Within one year 66,514 39,944 Later than one year but not later than five years 207,539116,808 Later than five years but not later than ten years 82,090 - 356,143 156,752
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The estimated future rent revenue that could be earned by sublease contract of the Building as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Within one year 15,408 - Later than one year but not later than five years 23,929 - 39,337 -
(b) Operating lease- The Group as a lessor
The Group has entered into an operating lease agreement with Samsung Fire & Marine Insurance Co., Ltd (a lessee) for Samsung Town Building B (leased premises). The future minimum lease payments expected to be received in relation to the operating lease agreement for the leases premises as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 December 31, 2017
Within one year 41,697 30,875 Later than one year but not later than five years 91,552 87,011 133,249 117,886
21. Share Capital
The Group is authorized to issue 500 million shares with a par value of 100 per share. As at June 30, 2018, 189,690,043 shares of ordinary share and 1,627,440 shares of preferred share are issued and outstanding.
On September 14, 2015, the Group issued 56,317,483 shares (54,690,043 shares of ordinary share and 1,627,440 shares of preferred share) of new share for the merger with the former Samsung C&T Corporation.
As authorized in its Articles of Incorporation, the Group is able to issue convertible bonds which can be converted into ordinary shares and preferred shares of the Group, and bonds with warrants which grant the right to purchase new preferred shares up to 850 billion each. As at June 30, 2018, there are no convertible bonds and bonds with warrants issued under these terms.
Details of treasury shares as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won, except number of shares) June 30, 2018 December 31, 2017 Preferred share Ordinary share Preferred share Ordinary share
Number of shares 159,849 26,225,503 159,849 26,225,503 Acquisition cost G G G G 16,978 G G 1,895,517 G G G G 16,978 G G 1,895,517
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22. Other Components of Equity
Other components of equity as at June 30, 2018 and December 31, 2017, consist of:
(in millions of Korean won) June 30, 2018 December 31, 2017
Treasury shares (Note 21) GGGGG(1,912,495) GGGGG(1,912,495) Other capital adjustments (245,045)(245,045) Financial assets at fair value through other comprehensive income (Note 12) 7,057,575 8,711,376 Share of other comprehensive income of associates and joint ventures 43,989 27,441 Share of other comprehensive loss of associates and joint ventures (91,037)(92,859) Share of other comprehensive loss of associates and joint ventures – held for sale (Note 36) (1,982) - Exchange differences (155,700)(185,181) Gain (loss) on valuation of derivative instruments, net (Note 20) (1,845) 10,714 GGGGGG4,693,460 GGGGGG6,313,951
23. Selling and Administrative Expenses
Selling and administrative expenses for the three-month and six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Salaries and others G G G G 174,124 G G G G 409,075 G G G G 182,177 G G G G 395,250 Welfare 28,904 56,125 25,505 53,450 Depreciation 40,958 80,332 45,149 90,642 Travel 12,593 23,158 12,393 23,424 Commission 175,854 362,437 173,556 384,067 Rent 52,185 107,057 52,344 108,850 Freight 79,626 144,858 65,634 132,179 Taxes and dues 11,502 5,419 10,196 22,062 Advertising 17,435 27,016 8,619 20,909 Research and development 21,076 44,057 27,670 51,945 Impairment loss (reversal) (Note 8) (2,839) (1,468) 4,732 (8,052) Computational service fee 11,873 23,583 12,708 25,876 Sales promotion cost 7,378 16,428 7,113 17,528 Others 50,693 101,839 51,736 101,422 G G G G 681,362 G G 1,399,916 G G G G 679,532 G G 1,419,552
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24. Other Income and Expenses
Other income and expenses for the three-month and six-month periods ended June 30, 2018 and 2017, consist of:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Other income Share of profit of associates and joint ventures (Note 13) GGGGGG9,962 GGGGG42,992 GGGGG23,655 GGGGG56,190 Dividend income 106,501 341,499 42,502 266,498 Foreign exchange gain 47,037 94,471 62,443 154,960 Gain on translation of foreign currency 98,946 134,165 8,198 84,902 Gain on disposal of investments (260) 19,725 (5) 6,273 Gain on disposal of property, plant and equipment 1,627 50,251 640 1,165 Gain on disposal of investment properties 8 45,984 - - Gain on disposal of intangible assets 72 197 325 2,359 Reversal of provision for impairment (Note 8) 1,615 2,766 (301) 6,283 Gain on insurance settlement 138 147 2 62 Others 25,964 53,972 21,298 57,949 G G G G 291,610 G G G G 786,169 G G G G 158,757 G G G G 636,641 Other expenses Share of loss of associates and joint ventures (Note 13) GGGGGGG(79) GGGGGGGGGG3 GGGGGG1,881 GGGGGG5,710 Foreign exchange loss 53,231 98,254 77,544 178,916 Loss on translation of foreign currency 54,421 84,991 (6,525) 96,648 Loss on valuation of financial assets at fair value through profit or loss - - - 8 Impairment loss on investments - - 89 89 Loss on disposal of investments 5 109 344 1,243 Impairment loss on property, plant and equipment 4,249 4,249 7,349 7,349 Loss on disposal of property, plant and equipment 1,294 2,876 6,055 12,568 Impairment loss on intangible assets 11 11 - - Loss on disposal of intangible assets 39 63 74 88 Loss on disposal of trade receivables 6,203 12,484 3,681 7,539 Donations 7,926 10,235 6,343 10,661 Other impairment loss (Note 8) 11,298 21,591 12,164 24,307 Others 49,719 93,129 90,998 137,497 G G G G 188,317 G G G G 327,995 G G G G 199,997 G G G G 482,623
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25. Breakdown of Expenses by Nature
Expenses recorded by nature as cost of sales, selling and administrative expenses in the consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2018 and 2017, consist of:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Changes in finished goods and work-in-process G G 4,190,678 G G 8,146,512 G G 3,554,431 G G 7,113,476 Construction outsourcing 1,638,142 3,140,946 1,668,142 2,785,444 Employee benefit expenses 575,062 1,241,157 617,320 1,272,796 Commission 428,983 747,344 389,767 807,999 Freight 80,653 146,720 66,037 134,500 Research and development 21,076 44,057 27,662 51,937 Heavy construction equipment usage 50,362 100,761 51,966 95,142 Rent 85,043 169,705 83,815 181,825 Taxes and dues 47,212 80,554 55,527 97,750 Depreciation and amortization 59,017 196,825 107,701 219,229 Insurance 15,082 27,909 14,199 32,149 Outsourcing fee 85,067 200,303 80,156 198,521 Others 273,224 573,958 351,928 642,810 G G 7,549,601 G14,816,751 G G 7,068,651 G13,633,578
26. Employee Benefits
Employee benefits for the three-month and six-month periods ended June 30, 2018 and 2017, consist of:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Wages and salaries G G G 456,133 G G G 972,893 G G G 478,966 G G G 985,599 Welfare 93,274 183,477 87,625 176,158 Post-employment benefits 25,655 84,787 50,729 111,039 G G G 575,062 G G 1,241,157 G G G 617,320 G G 1,272,796
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27. Adjusted Operating Profit and Loss
Details of adjusted operating profit that are voluntarily classified based on the Group’s own criteria by adjusting other income or expense items reflecting the operating performance of the Group from items that are not included within operating profit in the consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Operating profit in the consolidated statement of comprehensive income G G G 378,126 G G G 587,297 G G G 250,594 G G G 387,969 Share of profit of associates and joint ventures (other income/ expenses) 10,041 42,989 21,774 50,480 Dividends income 106,501 341,499 42,502 266,498 Foreign exchange loss (6,194) (3,783) (15,101) (23,956) Gain (loss) on translation of foreign currency 44,525 49,174 14,723 (11,746) Loss on valuation of financial assets at fair value through profit or loss - - - (8) Impairment loss on investments - - (89) (89) Gain (loss) on disposal of investments (265) 19,616 (349) 5,030 Impairment loss on property, plant and equipment (4,249) (4,249) (7,349) (7,349) Gain (loss) on disposal of property, plant and equipment 333 47,375 (5,415) (11,403) Gain on disposal of investment properties 8 45,984 - - Impairment loss on intangible assets (11) (11) - - Gain on disposal of intangible assets 33 134 251 2,271 Other impairment loss (9,683) (18,825) (12,465) (18,024) Donations (7,926) (10,235) (6,343) (10,661) Loss on disposal of trade receivables (6,203) (12,484) (3,681) (7,539) Others (23,617) (39,010) (69,698) (79,486) Adjusted operating profit G G G 481,419 G G 1,045,471 G G G 209,354 G G G 541,987
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28. Financial Income and Expenses
Financial income and expenses for the three-month and six-month periods ended June 30, 2018 and 2017, consist of:
(in millions of Korean won) 2018 2017 Three months Six months Three months Six months
Interest income: Deposits in bank G G G G 11,224 G G G G 20,547 GGGGGG9,117 G G G G 22,652 Securities 1,175 2,351 1,175 2,351 Loans 5,209 10,937 5,648 11,161 Overdue interest 4 8 10 18 Present value discounts 533 1,197 861 1,700 Others 5,649 11,092 4,065 11,340 Foreign exchange gain 10,017 13,382 14,569 24,913 Gain on translation of foreign currency 45,667 58,532 (7,771) 43,991 Total financial income 79,478 118,046 27,674 118,126
Interest expenses: Short-term borrowings 13,143 26,646 13,722 25,209 Long-term borrowings 8,513 14,618 7,236 14,707 Debentures 16,872 35,391 19,676 43,915 Others 3,815 9,202 3,718 6,958 Capitalized interests (3,950) (6,493) (2,959) (5,147) Foreign exchange loss 5,314 10,220 6,059 12,810 Loss on translation of foreign currency 29,434 41,573 1,052 51,577 Total financial expenses 73,141 131,157 48,504 150,029 Financial expenses (income), net G G G G (6,337) G G G G 13,111 G G G G 20,830 G G G G 31,903
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29. Income Tax Expense
Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year.
30. Earnings per Share
Basic earnings per ordinary share for the six-month periods ended June 30, 2018 and 2017, is as follows:
(in Korean won and in shares) 2018 2017 ͑ ͑ Profit for the period 1 764,444 million 333,260 million Profit for the period attributable to ordinary shares 757,606 million 330,258 million Weighted average number of ordinary shares outstanding 163,464,540 shares 163,464,540 shares Basic earnings per ordinary share 4,635 2,020
1 The amount is the profit attributable to the owners of the Parent Company for the period.
Basic earnings per preferred share for the six-month periods ended June 30, 2018 and 2017, is as follows:
(in Korean won and in shares) 2018 2017 ͑ ͑ Profit for the period 1 764,444 million 333,260 million Profit for the period attributable to preferred shares 6,838 million 3,002 million Weighted average number of preferred shares outstanding 1,467,591 shares 1,467,591 shares Basic earnings per preferred share 4,660 2,044
1 The amount is the profit attributable to the owners of the Parent Company for the period.
Since there is no dilutive potential ordinary share, the diluted earnings per ordinary share and the basic earnings per ordinary share are the same for the six-month periods ended June 30, 2018 and 2017.
31. Related Party Transactions
As at June 30, 2018, the Group's related parties consist of 53 associates and joint ventures, including Samsung Bioepis Co., Ltd. and other related parties (Note 1.3). Meanwhile, the Enterprise Group, which the Group belongs to, in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea, consists of 62 entities including Samsung Electronics Co., Ltd., as at June 30, 2018.
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Significant transactions between the Parent Company and related parties (associates, joint ventures and other related party) for the six-month periods ended June 30, 2018 and 2017, and the related account balances as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) Sales2 Purchases Receivables2 Payables2 June 30, December 31, June 30, December 31, 2018 2017 2018 2017 2018 2017 2018 2017
Associates Samsung Bioepis Co., Ltd. G G G 3,701 G G G 7,637 G G G G G G - G G G G G G - G G G 1,818 G G G 3,614 GGGGGGGG - GGGGGGGG - Waris Gigih Engineering & Technology Sdn. Bhd. 48 86 ------Chongqing Shanxia Technology Textile Co., Ltd. -19,468 ------Dongducheon Dream Power Co., Ltd. - 119 - 35 30,817 30,817 - - Busan Green Energy Co., Ltd. - 30,447 ------Gangneung Eco Power Co.,Ltd. 4,069 4,182 - - 37,343 12,970 375,438 - Gaziantep Hospital Management Investment Company 2,160 - - - 60 34 - - Rabigh Investment Company - - - -52,111 49,774 - - Others 296 290 681 382 - 159 - 1
Joint ventures FCC Saudi LLC 17,320 9,979 - - 4,487 80 - - Others 5,694 - 5 - 1,141 912 - -
Other related party Samsung Electronics Co., Ltd. 1,375,680 1,149,175 57,064 64,425 113,581 617,069 217,541 218,983
Others1 Samsung Display Co., Ltd. 490,822 106,573 1,412 20,672 521,600 99,398 23,333 23,350 Samsung Heavy Industries Co., Ltd. 7,500 7,53526 73,349 104 4,398 4,398 Samsung Life Insurance Co., Ltd.3 33,776 20,323 688 2,9302,273 17,771 41,767 41,767 Others 55,211 54,480 98,500 82,650 443,566 972,531213,889 213,636
1 The entities are not included in the scope of related parties in accordance with Korean IFRS 1024, but are included in the scope of Enterprise Group in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea. 2 Unbilled revenue from construction contracts based on the percentage of completion of 284,571 Due from customer for contractٻ,million (2017: G337,054 million) is excluded from sales. In addition work amounting to 369,505 million (December 31, 2017: G352,712 million) and due to 549,233ٻ :customers for contract work amounting to 282,489 million (December 31, 2017 million) are excluded from receivables and payables, respectively. 3 As at June 30, 2018, the Group deposited G461,627 million (December 31, 2017: G515,323 million) in Samsung Life Insurance Co., Ltd. as plan assets.
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Significant transactions between the Group and related parties (associates, joint ventures and other related parties) (the above transactions are excluded) for the six-month periods ended June 30, 2018 and 2017, and the related account balances as at June 30, 2018 and December 31, 2017, consist of the following:
(in millions of Korean won) Sales2 Purchases Receivables2 Payables2 June 30, December 31, June 30, December 31, 2018 2017 2018 2017 2018 2017 2018 2017
Associates Samsung Bioepis Co., Ltd. G100,895 G G G 6,210 GGGGGGG1 G G G G G G - G G G 1,314 G G G 3,682 G G G 18,667 GGGGGGG - Chongqing Shanxia Technology Textile Co., Ltd. - - -103 116 111 - - KST POWER NORTE S.A. DE C.V. 955 1,002 - - 40,487 37,720 - - Others 42 - - - 2 25 - -
Joint ventures South Kent Wind LP 224 230 - - 42 42 - - SP Belle River LP 205 3,828 - - 321,077 - - Windsor Solar LP -298 ------LJG Green Source Energy Alpha S.R.L. 718 362 - - 19,218 18,966 - - Kelar S.A. 1,014 976 - - 29,367 27,099 - - Others 30,416 5,051 9 - 1,267 1,702 108 5
Other related party Samsung Electronics Co., Ltd. 233,198 112,523 5,877 9,53194,168 79,0327,725 8,247
Others1 Samsung Display Co., Ltd. 49,691 29,597 25 18 18,954 22,790 473 481 Samsung Heavy Industries Co., Ltd. 151,809 79,564 8 9 85,651 42,922 360 360 Samsung Life Insurance Co., Ltd.3 7,100 4,467 2,332 3,259 975 4,7361,410 1,410 Others 174,482 152,552 95,137213,620 35,01332,845 54,292 102,523
1 The entities are not included in the scope of related parties in accordance with Korean IFRS 1024, but are included in the scope of Enterprise Group in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea. 2 Unbilled revenue from construction contracts based on the percentage of completion of 1,199 Due from customer for contractٻ,million (2017: G22,369 million) is excluded from sales. In addition work amounting to 7,155 million (December 31, 2017: G9,996 million) and due to customers for million) are excluded 22,481ٻ :contract work amounting to 21,632 million (December 31, 2017 from receivables and payables, respectively. 3 As at June 30, 2018, the Group (except for the Parent Company) deposited G148,691 million (December 31, 2017: G138,339 million) andGG27,461 million (December 31, 2017: G35,445 million) as plan assets in Samsung Life Insurance Co., Ltd. and Samsung Fire & Marine Insurance Co., Ltd., respectively.
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Major fund transactions with a related party for the six-month periods ended June 30, 2018 and 2017, are as follows:
(in millions of Korean won) 2018 2017 Loans Repayments Loans Repayments
Kelar S.A. GGGGGGGGG- GGGGGGGGG- G G G G 27,495 -
Payment guarantees for the liabilities of associates and joint ventures provided by the Group as at June 30, 2018 are as follows:
(in thousands of US dollars) Guaranteed amount Guaranteed Actual Guaranteed Principal debtor period borrowings amount
Associates Terminal KMS de GNL, S. de Santander and others Sep. 1, 2029 $ 87,248 $ 87,248 R.L. de C.V. G KST Electric Power Company, KEB Hana Bank and Dec. 30, 2018 G 13,035 13,035 SAPI de C.V. others Joint venture G Kelar S.A. BTMU and others Apr. 30, 2031 G 13,654 34,654 $ 113,937 $ 134,937
As at June 30, 2018, the Group provided land and buildings, which are located in Seocho-gu, Seoul, Republic of Korea, as collateral to Samsung Fire & Marine Insurance Co., Ltd. and Samsung Life Insurance Co., Ltd. for establishment of the right to collateral security according to lease agreements, with total secured amount of G31,037 million (Note 15).
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As at June 30, 2018, investments in Dongducheon Dream Power Co., Ltd., (acquisition cost: G81,191 million), are pledged as collateral to a financial institution against the borrowings (total Inٻ.(borrowing limit of 1,285,000 million) of Dongducheon Dream Power Co., Ltd. (Note 13 addition, the Group provides fund supplement commitment on expected working capital deficit of Dongducheon Dream Power Co., Ltd. up to G8,100 million.
As at June 30, 2018, investments in Gaziantep SPV (acquisition cost: G5,569 million), Rabigh 2 Investment Company (acquisition cost: G373 million) and Qurayyah Investment Company (acquisition cost: G52,215 million), are pledged as collateral against borrowings of investees (Note 13).
The Group has entered into a lease agreement in relation to use of land with Incheon Metropolitan City and entered into sublease agreements with Samsung Bioepis Co., Ltd. with the consent of Incheon Metropolitan City.
The Group recognized salaries and post-employment benefits for the key management as expenses, amounting to G2,798 million and G441 million, respectively. The key management includes directors (executive and non-executive), auditors and other managements. Meanwhile, the Group introduced long-term incentive plans for its executives based on a three-year management performance criteria and has made a provision for the cumulative estimated incentive cost for the past periods. For the six-month period ended June 30, 2018, the Group recognized expenses amounting to 1,208 million.
91 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
32. Cash Generated from Operations
Reconciliation between operating profit and net cash inflow (outflow) from operating activities, for the six-month periods ended June 30, 2018 and 2017, is as follows:
(in Korean won) 2018 2017
Profit for the period 706,311,639,707 297,323,934,319 Addition Income tax expense 229,870,823,824 149,000,844,780 Interest expense 79,364,889,404 85,642,375,841 Depreciation and amortization 227,926,737,379 238,874,609,611 Post-employment benefits 48,190,952,125 50,866,301,141 Impairment loss (1,468,325,445) (8,051,515,006) Other impairment loss 21,591,414,385 24,307,561,266 Transfer in provision for construction losses 46,886,694,557 54,718,441,545 Transfer in provision for construction warranties 12,871,488,163 17,591,124,301 Loss on foreign currency translation 126,563,193,777 148,224,783,505 Loss on valuation of financial assets at fair value through profit or loss - 8,190,000 Loss on disposal of investments 108,566,485 1,242,800,393 Impairment loss on investments - 88,487,642 Loss on disposal of property, plant and equipment 2,875,682,760 12,567,968,467 Impairment loss on property, plant and equipment 4,248,869,620 7,348,500,000 Loss on disposal of intangible assets 62,663,864 88,316,419 Impairment loss on intangible assets 10,756,000 - Share of loss of associates and joint ventures 110,076,875,092 83,392,070,902 Others expenses 120,878,443,414 20,450,045,051 1,030,059,725,404 886,360,905,858 Deduction Interest income (46,131,765,442) (49,222,199,839) Dividend income (341,498,653,823) (266,498,061,092) Gain on foreign exchange translation (192,696,146,103) (128,892,272,458) Reversal of provision for construction losses (37,598,038,840) (105,742,297,656) Reversal of provision for impairment (2,766,354,661) (6,283,184,538) Gain on disposal of investments (19,724,635,383) (6,272,548,697) Gain on disposal of property, plant and equipment (50,250,900,080) (1,165,282,400) Gain on disposal of intangible assets (197,237,367) (2,358,976,281) Reversal of impairment loss on intangible assets (3,547,716) - Gain on disposal of investment properties (45,984,420,963) - Share of profit of associates and joint ventures (56,889,319,585) (70,114,203,418) Other income (4,855,864,981) (3,169,071,858) (798,596,884,944) (639,718,098,237)
92 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in Korean won) 2018 2017
Changes in operating assets and liabilities Decrease in trade receivables 987,873,191,577 691,562,402,223 Increase in other current assets (247,445,700,274) (175,358,877,211) Increase in inventories (38,206,206,316) (93,205,160,441) Decrease in trade payables (9,653,412,205) (62,974,738,627) Decrease in other current liabilities (697,188,563,114) (381,234,258,074) Decrease in provisions for construction warranties (10,550,871,637) (11,652,223,206) Increase in long-term unearned income 5,049,654,032 - Increase (decrease) in long-term non-trade payables 20,039,515,693 (922,376,214) Payment of defined benefit liability (76,919,490,169) (44,515,450,007) Decrease in plan assets 59,538,296,089 28,424,422,174 Transfer in (out) of defined benefit liability (854,098,950) 2,255,420 Others (37,316,000,458) (2,616,481,565) (45,633,685,732) (52,490,485,528) Cash generated from operations G G 892,140,794,435 G G 491,476,256,412
Changes in liabilities arising from financial activities for the six-month period ended June 30, 2018, are as follows:
(in millions of Korean won) Transactions without cash flows Cash flows At January 1, from financial At June 30, 2018 activities Amortization Others2 2018
Short-term borrowings G G 2,093,310 G G (440,833) GGGGGGGGG - G G G (12,314) G G 1,640,163 1 Long-term borrowings 1,314,589 87,833 - 29,332 1,431,754 Debentures 2,626,308 (110,421) 1,094 - 2,516,981 G G 6,034,207 G G (463,421) GGGGG1,094 G G G G 17,018 G G 5,588,898
1 Long-term borrowings include current portion of borrowings and debentures. 2 Others include changes due to exchange differences and others.
93 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
33. Segment Information
The strategic steering committee is the Group’s chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the strategic steering committee for the purposes of allocating resources and assessing performance.
Also, a summary of information on the Group’s operations by business segment as at and for the six-month periods ended June 30, 2018 and 2017, is prepared after elimination of intercompany transactions in operating profit, and liabilities of operating segments are not included as those are not periodically reported to the Group’s management.
Summary of information on the Group’s operations by business segment as at and for the six-month periods ended June 30, 2018 and 2017, is as follows:
94 (in millions of Korean won) 2018 Food and Construction Trading Fashion Resort beverages Bio Common Total
External sales 6,154,723 8,565,138 913,976 313,501 988,558 261,331 GGGGGGGGG - 17,197,227 Internal sales (26,824) (1,688,840)(38,038) (2,141)(37,336) - - (1,793,179) Net sales 6,127,899 6,876,298 875,938 311,360 951,222 261,331 - 15,404,048 Operating profit (loss) 401,461 114,298 5,511 (1,407) 53,586 13,848 - 587,297 Adjusted operating profit 600,761 256,342 101,365 28,43047,824 10,749 - 1,045,471 Total assets1 8,456,187 4,265,375 1,115,124 2,402,581 628,524 7,595,813 21,921,657 46,385,261
1 For total assets, the common amount is separately presented.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) 2017 Food and Construction Trading Fashion Resort beverages Bio Common Total
External sales 5,907,985 7,328,583 906,384 336,517 938,917 170,865 GGGGGGGGG - 15,589,251 Internal sales (34,240) (1,455,856) (39,727) (1,017) (36,865) - - (1,567,705) Net sales 5,873,745 5,872,727 866,657 335,500 902,052 170,865 - 14,021,546 Operating profit (loss) 238,185 90,418 8,000 10,453 68,856 (27,943) - 387,969 Adjusted operating
95 profit (loss) 248,089 193,212 42,354 28,581 60,328 (30,577) - 541,987 Total assets1 9,681,381 4,035,322 1,206,327 2,489,826 629,563 7,416,285 21,696,789 47,155,493
1 For total assets, the common amount is separately presented.
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Summary of information on the Group’s operations by geographic areas, where the Parent Company and its subsidiaries are located respectively, for the six-month periods ended June 30, 2018 and 2017, is as follows:
(in millions of Korean won) 2018 Domestic Asia Europe The Americas Total
Total revenue G G 11,765,137 G G 3,961,447 G G G 599,672 G G G 870,971 G G 17,197,227 Intercompany revenue (1,170,167) (450,236) (119,853) (52,923) (1,793,179) Revenue from external customers G G 10,594,970 G G 3,511,211 G G G 479,819 G G G 818,048 G G 15,404,048
(in millions of Korean won) 2017 Domestic Asia Europe The Americas Total
Total revenue G G 11,265,239 G G 2,941,894 G G 603,104 G G 779,014 G G 15,589,251 Intercompany revenue (1,044,946) (362,439) (124,714) (35,606) (1,567,705) Revenue from external customers G G 10,220,293 G G 2,579,455 G G 478,390 G G 743,408 G G 14,021,546
34. Financial Risk Management
34.1 Financial Risk Management
The Group is exposed to various financial risks such as market risk, credit risk and liquidity risk while performing various activities. Market risk arises from currency risk, fair value interest rate risk, cash flow interest rate risk and price risk.
As these interim financial statements do not include all the financial risk management and disclosures required for the annual financial statements, please refer to the December 31, 2017 annual financial statements.
There has been no significant change in the risk management department and other risk management policy of the Group since December 31, 2017.
96 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
34.2 Fair Value Measurement
The fair value of the financial instruments traded in wide market, such as available-for-sale financial assets and others, are estimated based on the publicly announced market price as at the reporting date. If there is no market for such financial instruments, the fair value is estimated by using certain valuation methods. For assessing the fair value, the Group uses various valuation methods, and establishes the assumptions based on the market condition as at the reporting date. For long-term liabilities, the official market price or dollar-asking price of the similar instruments is used. In addition, the Group uses various valuation methods such as estimated cash flows discount method to estimate fair value. Fair values of interest rate swap and currency swap are calculated by discounting future estimated cash flows. The fair values of metal futures and currency forward contract are estimated by using the official price and the official forward exchange rate as at the reporting date, respectively. The Group records the net book amount after deducting the provision for impairment from the gross amount as the approximate value of the trade receivables and trade payables. The fair value of the financial liabilities is the discounted amount of the future cash flow under the terms of the contract by using current market interest rate applied on similar financial instruments.
Fair value hierarchy classifications of the financial instruments that are measured at fair value or its fair value is disclosed as at June 30, 2018 and December 31, 2017, are as follows:
(in millions of Korean won) June 30, 2018 Level 1 Level 2 Level 3 Total Assets measured at fair value Financial assets at fair value through other comprehensive income G20,638,489 GGGGGGGG733 G G G G 275,676 G20,914,898 Financial assets at fair value through profit or loss 2,165 390,000 66,882 459,047 Derivative financial instruments: - Held for trading - 16,920 26,393 43,313 Hedging - 16,749 - 16,749 G20,640,654G G G G G 424,402G G G G G 368,951G G21,434,007G Liabilities measured at fair value ͑ ͑ ͑ ͑ Derivative financial instruments: ͑ ͑ ͑ ͑ Held for trading -͑ GGGGG24,801͑ G G 1,933,562͑ G G 1,958,363͑ Hedging -͑ 3,084͑ -͑ 3,084͑ -͑ GGGGG27,885͑ G G 1,933,562͑ G G 1,961,447͑
97 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(in millions of Korean won) December 31, 2017 Level 1 Level 2 Level 3 Total Assets measured at fair value Financial assets at fair value through other comprehensive income G22,883,966 GGGGGGGG815 G G G G 319,952 G23,204,733 Financial assets at fair value through profit or loss 2,165 - 22,274 24,439 Derivative financial instruments: Held for trading - 18,149 - 18,149 Hedging - 6,351 - 6,351 G22,886,131G GGGGG25,315G G G G G 342,226G G23,253,672G Liabilities measured at fair value ͑ ͑ ͑ ͑ Derivative financial instruments: ͑ ͑ ͑ ͑ Held for trading -͑ GGGGG14,810͑ G G 1,933,562͑ G G 1,948,372͑ Hedging -͑ 8,788͑ -͑ 8,788͑ -͑ GGGGG23,598͑ G G 1,933,562͑ G G 1,957,160͑
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). All inputs other than quoted prices included in level 1 that are observable (either directly that is, prices, or indirectly that is, derived from prices) for the asset or liability (Level 2). Unobservable inputs for the asset or liability (Level 3).
During the six-month period ended June 30, 2018, there has been no significant change in the business or economic circumstances that affect the fair value of the entity's financial assets and financial liabilities.
There are no reclassification of the financial assets during the six-month period ended June 30, 2018.
98 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Valuation techniques and the inputs used in the fair value measurement related to recurring and non-recurring fair value measurements categorized within Level 2 and Level 3 of the fair value ٻ:hierarchy and disclosed fair value are as follows
(in millions of Korean won) Fair value Level Fair value measurements Inputs
Financial assets measured at fair value Net asset value method, discounted Growth rate, discount rate Energy industry equities 72,601 3 cash flow method and others and others Net asset value method, discounted Growth rate, discount rate Cooperative contribution 44,707 3 cash flow method and others and others Net asset value method, discounted Growth rate, discount rate Other equities 225,250 3 cash flow method and others and others Counterparty credit risk Investment bonds 390,733 2 Discounted cash flow method and others Derivatives (assets) Currency forwards and Currency forwards rate , 33,669 2 Market approach others discount rate and others Fair value of underlying Option 26,393 3 LSMC model asset (East Central Tower Building) Derivatives (liabilities) Currency forwards and Currency forwards rate , 27,885 2 Market approach others discount rate and others Fair value of underlying Option1 1,933,562 3 Binomial option pricing model asset (Samsung Bioepis Co., Ltd.)
1 As the Group determined that changes in fair value of derivative liabilities are not significant, fair market valuation was not performed for the six-month period ended June 30, 2018.
Valuation process of fair value measurements classified in level 3
The finance department of the Group’s divisions is responsible for fair value measurements which contain fair value measurement categorized in Level 3 for the purpose of financial report and the said department reports periodically the fair value valuation process and its outcome on reporting schedule at the end of every year.
99 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
35. Changes in Accounting Policies
As explained in Note 2, The Group has applied Korean IFRS 1115 Revenue from Contracts with Customers from January 1, 2018. In accordance with the transitional provisions in Korean IFRS 1115, comparative figures have not been restated. The application of Korean IFRS 1115 has impact on the financial statements as follows.
In summary, the following adjustments were made to the amounts recognized in the statements of financial position at the date of initial application (January 1, 2018):
December 31, 2017 January 1, 2018 (before (after (in millions of Korean won) adjustments)1 Adjustments adjustments)1 G G G Trade receivables G 4,992,459 G (170,035) G 4,822,424 Other current assets 2,628,872 (81,225) 2,547,647 Inventories 1,533,034 3,222 1,536,256 Investments in associates and joint ventures 5,741,754 (143,959) 5,597,795 Other non-current assets 711,126 31,702 742,828 Total assets 49,048,903 (360,295) 48,688,608 Other current liabilities 9,180,835 (91,888) 9,088,947 Deferred tax liabilities 6,295,263 (44,286) 6,250,977 Provisions 257,025 2,583 259,608 Other non-current liabilities 234,607 42,720 277,327 Total liabilities 23,897,653 (90,871) 23,806,782 Retained earnings 5,755,405 (181,400) 5,574,005 Non-controlling interests 2,594,498 (88,024) 2,506,474 Total equity 25,151,250 (269,424) 24,881,826
(i) Accounting for returns and refunds
Under the previous standard, when the customer has a right to return the product within a given period, the Group previously recognized a provision for returns which was measured on a net basis at the margin on the sale. Under Korean IFRS 1115, if a customer returns a product, the gross amount for the expected refunds to customers is recognized.
(ii) Accounting for costs to fulfil a contract
Under the previous standard, the cost of obtaining a contract was recognized as asset based on the possibility of obtaining the contract without considering the nature or recoverability of contract amount. Under Korean IFRS 1115, if the costs incurred in fulfilling a contract with a customer are related directly to a contract that the entity can specifically generate resources of the entity that will be used in satisfying performance obligations in the future, and are expected to be recovered, the costs are recognized as assets, and the related trade receivables (due from customer for contract .advances received (due to customer for contract ewor k) ar adjustedٻwork) and
100 WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
(iii) Offsetting of contract assets and contract liabilities
Under the previous standard, due from customers and advance payments (due to customers) from single contract were reported in gross amounts. Under Korean IFRS 1115, as due from customers and advance payments (due to customers) are contract asset and contract liabilities, respectively, due from customers and advance payments (due to customers) from a single contract were subject to offset and reported in net amounts.
(iv) Accounting for CMO business
Under the previous standards, for sales of biomedical supplies, revenue was recognized considering that the significant risks and rewards of ownership was transferred to customer when the produced goods have obtained quality release from the customer; and for services, revenue was recognized when service was transferred. Under Korean IFRS 1115, only sales of biomedical supplies was identified as performance obligation and accordingly revenue was allocated and recognized over the period of time control over the goods transfer to customers. Due to such changes, contract assets and contract liabilities were newly recognized.
(v) Accounting for CDO business
Under the previous standards, revenue was recognized by allocating the considerations received for each research steps based on period of time spent on each research. Under Korean IFRS 1115, whole research activities are considered as a single performance obligation, which total contract amounts are recognized based on the percentage of completion. Due to such changes, contract assets and contract liabilities are newly recognized.
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Financial statement line items affected by the adoption of the new rules in the current period are as follows:
Consolidated statement of financial position
Amount before application of (in millions of Korean won) Reported amount Adjustments Korean IFRS 1115 G G G Trade receivables G 4,217,707 G 406,250 G 4,623,957 Other current assets 2,869,806 102,013 2,971,819 Inventories 1,595,966 16,556 1,612,522 Investments in associates and joint ventures 3,339,495 127,519 3,467,014 Other non-current assets 773,087 (59,531) 713,556 Total assets 46,385,261 592,807 46,978,068 Other current liabilities 8,754,327 363,544 9,117,871 Deferred tax liabilities 5,680,537 34,986 5,715,523 Provisions 309,061 (2,106) 306,955 Other non-current liabilities 297,552 (49,074) 248,478 Total liabilities 22,744,821 347,350 23,092,171 Retained earnings 6,008,216 167,316 6,175,532 Non-controlling interests 2,451,368 78,141 2,529,509 Total equity 23,640,440 245,457 23,885,897
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Consolidated statement of comprehensive income
Amount before application of (in millions of Korean won) Reported amount Adjustments Korean IFRS 1115 G G G Net sales G 15,404,048 G 24,452 G 15,428,500 Cost of sales 13,416,835 34,632 13,451,467 Gross profit 1,987,213 (10,180) 1,977,033 Selling and administrative expenses 1,399,916 6,645 1,406,561 Operating profit 587,297 (16,825) 570,472 Non-operating income and expenses 348,885 (16,440) 332,445 Income tax expenses 229,871 (9,300) 220,571 Profit for the period 706,312 (23,965) 682,347 Total comprehensive income (loss) (903,652) (23,965) (927,617)
Consolidated statement of cash flows
Amount before application of (in millions of Korean won) Reported amount Adjustments Korean IFRS 1115 G G G Profit for the period G 706,312 G (23,966) G 682,346 Adjustments for 231,463 (29,074) 202,389 Income tax expenses 229,871 (9,300) 220,571 Other expenses 120,878 (1,667) 119,211 Share of profit or loss of associates and joint ventures 53,188 (16,440) 36,748 Other income (4,856) (1,667) (6,523) Changes in operating assets and liabilities (45,634) 16,825 (28,809) Decrease in trade receivables 987,873 (8,199) 979,674 Increase in inventories (38,206) (20,878) (59,084) Increase in other current assets (247,446) 8,177 (239,269) Decrease in other current liabilities (697,189) 37,816 (659,373) Decrease in provisions for construction warranties (10,551) (91) (10,642)
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Theٻ.The Group has applied Korean IFRS 1109 on January 1, 2017, the date of initial application application of Korean IFRS 1109 has following impacts on the financial statements as at June 30, 2017.
Consolidated statement of comprehensive income (for the six-month period ended June 30, 2017)
Amount before Amount after application of application of (in millions of Korean won) Korean IFRS 1109 Korean IFRS 1109 Difference G G G Selling and administrative expenses G 1,415,072 G 1,419,552 G 4,480 Operating profit 392,449 387,969 (4,480) Other income 636,570 636,641 71 Other expenses 486,560 482,623 (3,937) Profit before income tax 446,797 446,325 (472) Income tax expense 149,665 149,001 (664) Profit for the period 297,132 297,324 192 Items that may be subsequently reclassified to profit or loss Changes in the fair value of available-for-sale securities 3,212,010 - (3,212,010) Items that will not be reclassified to profit or loss Gain on valuation of financial assets at fair value through other comprehensive income - 3,209,817 3,209,817 Total comprehensive income 3,429,451 3,427,439 (2,012) Earnings per share Basic earnings per share (in Korean won) 2,019 2,020 1
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Consolidated statement of changes in equity (for the six-month period ended June 30, 2017)
(in millions of Korean won) Amount before application of Korean IFRS 1109 Amount after application of Korean IFRS 1109 Difference Attributable to owners of the Parent Attributable to owners of the Parent Attributable to owners of the Parent Company Company Company Consolidated Other Consolidated Other Consolidated Other share components Total share components Total share components Total premium of equity Total equity premium of equity Total equity premium of equity Total equity
Cumulative effect of changes GGGGGGGGG- GGGGGGGG - G G G G G G - G G G G G G - G G G (16,550) G G G G G 551 G(15,999) G(15,999) (16,550) G G G G G 551 (15,999) (15,999) in accounting policy Profit for the period 333,068 - 333,068 297,132 333,260 - 333,260 297,324 192 - 192 192
105 Changes in the fair value of available-for-sale financial - 3,212,010 3,212,010 3,212,010 - - - - - (3,212,010) (3,212,010) (3,212,010) assets Gain (loss)on valuation of financial assets at fair value - - - - (1,105) 3,210,911 3,209,806 3,209,806 (1,105) 3,210,911 3,209,806 3,209,806 through other comprehensive income Balance at June 30, 2017 5,472,158 5,738,163 21,697,719 24,437,442 5,454,694 5,737,615 21,679,707 24,419,431 (17,464) (548) (18,012) (18,011)
WorldReginfo - 4ee79018-3a3f-405c-90c8-3563e82f7309 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements June 30, 2018 and 2017 (Unaudited), and December 31, 2017
Consolidated statement of cash flows (for the six-month period ended June 30, 2017)
Amount before Amount after application of application of (in millions of Korean won) Korean IFRS 1109 Korean IFRS 1109 Difference G G G Profit for the period G 297,132 297,324 G 192 Addition of expenses without cash outflows 886,482 886,361 (121) Deduction of revenues without cash inflows (639,647) (639,718) (71) Disposal of available-for-sale financial assets 59,138 - (59,138) Disposal of financial assets at fair value through profit or loss - 11,477 11,477 Disposal of financial assets at fair value through other comprehensive income - 47,661 47,661 Acquisition of available-for-sale financial assets (1,555) - 1,555 Acquisition of financial assets at fair value through profit or loss - (1,181) (1,181) Acquisition of financial assets at fair value through other comprehensive income - (374) (374)
Notes Influence of the standards adopted by the Group in 2017 is applied to relevant notes.
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36. Assets Held for Sale
Details of assets held for sale and accumulated other comprehensive income classified as held for sale as at June 30, 2018, are as follows:
(in millions of Korean won) 2018
Assets held for sale: Investments in associates and joint ventures (Note 13) Samsung Bioepis Co., Ltd. 1 2,193,617 Songdo Landmark City Limited 20,522 Chongqing Shanxia Technology Textile Co., Ltd. 29,104 Accumulated other comprehensive income classified as held for sale: Share of other comprehensive income of associates and joint ventures (Note 22) Samsung Bioepis Co., Ltd. 1 (1,315) Chongqing Shanxia Technology Textile Co., Ltd. (667)
1 In accordance with the joint venture agreement between Biogen Therapeutics Inc. and the Group, Biogen Therapeutics Inc. had a call option to purchase additional shares of Samsung BioEpis Co., Ltd. that would allow Biogen Therapeutics Inc. to increase its ownership interest up to 50% minus one share, and the option was exercised on June 29, 2018. Accordingly, the Group determined that the contract was committed and classified the related investments as held for sale. As at June 30, 2018, Biogen Therapeutics Inc. plans to complete legal process of the share purchase until the completion date of share transaction (expected date: September 28, 2018).
The assets held for sale are measured the lower of fair value less costs of disposal and its book amount, and no impairment loss was recognized for the six-month period ended June 30, 2018.
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