NXC Corporation and Subsidiaries Consolidated Financial Statements December 31, 2014 and 2013 NXC Corporation and Subsidiaries Index December 31, 2014 and 2013 Page(s) Independent Auditor’s Report ·········································································· 1 – 2 Consolidated Financial Statements Consolidated Statements of Financial Position ······················································ 3 – 4 Consolidated Statements of Comprehensive Income ·············································· 5 Consolidated Statements of Changes in Equity ···················································· 6 Consolidated Statements of Cash Flows ······························································ 7 Notes to the Consolidated Financial Statements······················································ 8 – 69 Independent Auditor’s Report (English Translation of a Report Originally Issued in Korean) To the Shareholder and Board of Directors of NXC Corporation We have audited the accompanying consolidated financial statements of NXC Corporation and its subsidiaries (collectively “the Group”), which comprise the consolidated statements of financial position as of December 31, 2014 and 2013, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Korean Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Samil PricewaterhouseCoopers, LS Yongsan Tower, 92, Hangangdaero, Yongsan-gu, Seoul 140-702, Korea (Yongsan P.O Box 266, 140-600), www.samil.com Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of NXC Corporation and its subsidiaries as of December 31, 2014 and 2013, and their financial performance and cash flows for the years then ended in accordance with Korean IFRS. Other Matters The consolidated financial statements of the Group as of and for the year ended December 31, 2013 were audited in accordance with the previous Korean Standards on Auditing. We did not audit the financial statements of certain subsidiaries, whose financial statements represent 44% of the Group's consolidated total assets as of December 31, 2013, and 22% of the Group's consolidated total sale for the year ended December 31, 2013. These statements were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for certain subsidiaries, is based solely on the reports of the other auditors. Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Seoul, Korea March 19, 2015 This report is effective as of March 19, 2015, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any. 2 NXC Corporation and Subsidiaries Consolidated Statements of Financial Position December 31, 2014 and 2013 (in Korean won) Notes 2014 2013 Assets Current assets Cash and cash equivalents 4,6,7,9 \ 1,122,293,940,854 \ 1,523,549,370,620 Financial assets at fair value through profit or loss 4,5,6,13 177,591,952,141 213,262,664,965 Held-to-maturity investment 4,6 - 1,000,000,000 Trade receivables 4,6,8 315,203,617,243 217,833,015,653 Other financial assets 4,5,6,7,10,11 944,586,145,210 467,522,085,250 Other assets 12 44,688,761,232 54,430,751,742 Current tax assets 26 980,833,870 7,992,326,953 Inventories 14 22,769,609,217 264,415,726 Non-current asset held-for-sale 5,15 - 46,867,653,750 2,628,114,859,767 2,532,722,284,659 Non-current assets Available-for-sale financial assets 5,6,16 723,139,287,184 917,005,693,151 Other financial assets 4,6,10,11 149,868,702,363 85,075,280,473 Other assets 12 19,188,256,724 1,447,230,938 Property and equipment 17 263,951,210,795 259,302,110,657 Intangible assets 18 1,044,584,559,826 740,681,111,535 Investment property 19 53,868,653,912 56,354,495,406 Investment in associates 20 53,980,675,505 68,695,400,381 Deferred tax assets 26 47,221,415,841 30,183,333,827 2,355,802,762,150 2,158,744,656,368 Total assets \ 4,983,917,621,917 \ 4,691,466,941,027 3 NXC Corporation and Subsidiaries Consolidated Statements of Financial Position December 31, 2014 and 2013 (in Korean won) Notes 2014 2013 Liabilities Current liabilities Trade payables 4,6 46,845,187,834 26,116,487,010 Borrowings 4,6,22 386,268,079,347 139,889,329,549 Other financial liabilities 4,5,6,11,21,39 140,400,091,897 132,891,640,414 Other liabilities 23 126,824,092,496 125,516,960,602 Provisions 24 485,461,735 1,133,321,174 Current tax liabilities 26 145,621,785,802 85,850,276,392 846,444,699,111 511,398,015,141 Non-current liabilities Borrowings 4,6,22 371,417,297,143 352,186,916,223 Other financial liabilities 4,6,21,39 27,418,335,452 24,487,305,697 Other liabilities 23 22,223,403,380 47,779,496,743 Provisions 24 3,808,055,533 3,175,191,562 Defined benefit liabilities 25 2,016,154,803 3,577,897,732 Deferred tax liabilities 26 136,186,545,010 103,195,858,352 563,069,791,321 534,402,666,309 Total liabilities 1,409,514,490,432 1,045,800,681,450 Equity attributable to owners of the Parent Capital stock 27 2,023,659,000 2,023,659,000 Paid-in capital in excess of par value 27 5,257,138,814 5,257,138,814 Other components of equity 28 300,342,314,623 481,425,957,421 Retained earnings 29 2,032,073,319,848 1,912,287,368,320 Non-controlling interest 40 1,234,706,699,200 1,244,672,136,022 Total equity 3,574,403,131,485 3,645,666,259,577 Total liabilities and equity \ 4,983,917,621,917 \ 4,691,466,941,027 The accompanying notes are an integral part of these consolidated financial statements. 4 NXC Corporation and Subsidiaries Consolidated Statements of Comprehensive Income Years ended December 31, 2014 and 2013 (in Korean won) Notes 2014 2013 Revenue 31 \ 1,948,525,292,306 \ 1,749,761,693,456 Cost of sales Cost of service 547,413,610,432 485,844,817,146 Cost of finished goods sold 99,834,404,483 - 647,248,014,915 485,844,817,146 Gross profit 1,301,277,277,391 1,263,916,876,310 Selling and administrative expenses 32,33 685,065,581,185 565,476,024,305 Operating profit 616,211,696,206 698,440,852,005 Other income 34 65,667,434,333 86,080,420,116 Other expenses 34 228,794,214,484 188,602,248,185 Financial income 35 112,504,445,522 68,926,170,929 Financial expenses 35 75,314,386,303 64,548,442,526 Share of profit(loss) 20 (7,491,136,614) (128,832,302) Profit before income tax 482,783,838,660 600,167,920,037 Income tax expense 26 258,595,247,309 205,446,762,434 Profit for the year \ 224,188,591,351 \ 394,721,157,603 Attributable to: Equity holders of the Parent Company \ 119,983,962,726 \ 256,316,629,303 Non-controlling interest 104,204,628,625 138,404,528,300 Other comprehensive income (loss) Items that will not be reclassfied to profit or loss Remeasurements of the net defined benefit liabilities 25 \ (284,687,155) \ (269,960,167) Items that may be subsequently reclassified to profit or loss Changes in fair value of available-for-sale financial assets 16 (97,283,455,052) 277,310,060,986 Gain on valuation of derivatives 457,252,589 1,469,279,827 Changes in equity method investees 20 1,701,182,096 (2,395,244,545) Exchange differences on translating foreign operations (131,291,302,862) (219,829,264,276) (226,701,010,384) 56,284,871,825 Total comprehensive income (loss) for the year \ (2,512,419,033) \ 451,006,029,428 Attributable to: Equity holders of the Parent Company \ (37,416,696,553) \ 293,004,276,801 Non-controlling interest 34,904,277,520 158,001,752,627 The accompanying notes are an integral part of these consolidated financial statements.