6-K 1 d176527d6k.htm FORM 6-K Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2021

Commission File Number 1-14926

 

 

KT Corporation

(Translation of registrant’s name into English)

 

 

90, Buljeong-ro,

Bundang-gu, Seongnam-si,

Gyeonggi-do,

Korea

(Address of principal executive offices)

 

 

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

Form 20-F  ☒            Form 40-F  ☐

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

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

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

    Yes  ☐    No  ☒

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

 

 

 


SIGNATURES

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

 

Dated: May 28, 2021
KT Corporation
By:  

/s/ Seunghoon Chi

Name:   Seunghoon Chi
Title:   Vice President
By:  

/s/ Ginah Yun

Name:   Ginah Yun
Title:   Director


KT Corporation and Subsidiaries

Consolidated Interim Financial Statements

March 31, 2021 and 2020


KT Corporation and Subsidiaries

Index

March 31, 2021 and 2020

 

     Page(s)  

Report on Review of Interim Financial Statements

     1–2  

Consolidated Interim Financial Statements

  

Consolidated Interim Statements of Financial Position

     3–4  

Consolidated Interim Statements of Profit or Loss

     5  

Consolidated Interim Statements of Comprehensive Income

     6  

Consolidated Interim Statements of Changes in Equity

     7–8  

Consolidated Interim Statements of Cash Flows

     9–10  

Notes to the Consolidated Interim Financial Statements

     11–60  


  

Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

KT Corporation

Reviewed Financial Statements

We have reviewed the accompanying consolidated interim financial statements of KT Corporation and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at March 31, 2021, and the related consolidated interim statements of profit or loss, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020, 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.

 


Other Matters

We have audited the consolidated statement of financial position of the Group as at December 31, 2020, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 9, 2021. The consolidated statement of financial position as at December 31, 2020, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2020.

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.

 

May 17, 2021

Seoul, Korea

 

This report is effective as of May 17, 2021, 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


KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position    

March 31, 2021 and December 31, 2020

 

 

(in millions of Korean won)    Notes     

March 31, 2021

(Unaudited)

    

December 31, 2020

 

Assets

        

Current assets

        

Cash and cash equivalents

     4      W 2,753,077      W 2,634,624  

Trade and other receivables, net

     4,5        5,154,950        4,902,471  

Other financial assets

     4,6        1,024,390        1,202,840  

Current tax assets

        2,075        2,059  

Inventories, net

     7        591,882        534,636  

Current assets held for sale

     9        53,662        1,198  

Other current assets

     8        1,987,095        1,876,352  
     

 

 

    

 

 

 

Total current assets

        11,567,131        11,154,180  
     

 

 

    

 

 

 

Non-current assets

        

Trade and other receivables, net

     4,5        1,125,640        1,250,769  

Other financial assets

     4,6        584,087        544,347  

Property and equipment, net

     10        13,877,434        14,206,119  

Right-of-use assets

     17        1,255,127        1,217,179  

Investment properties, net

     10        1,347,533        1,368,453  

Intangible assets, net

     10        2,048,726        2,161,258  

Investments in associates and joint ventures

     11        540,153        557,881  

Deferred tax assets

        434,589        433,698  

Other non-current assets

     8        767,232        768,661  
     

 

 

    

 

 

 

Total non-current assets

        21,980,521        22,508,365  
     

 

 

    

 

 

 

Total assets

      W 33,547,652      W 33,662,545  
     

 

 

    

 

 

 

 

3


KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position    

March 31, 2021 and December 31, 2020

 

 

(in millions of Korean won)    Notes     

March 31, 2021

(Unaudited)

    December 31,
2020
 

Liabilities

       

Current liabilities

       

Trade and other payables

     4,12      W 5,969,570     W 6,210,099  

Borrowings

     4,13        1,448,951       1,418,114  

Other financial liabilities

     4, 6        1,709       2,493  

Current tax liabilities

        332,681       232,225  

Provisions

     14        158,630       165,990  

Deferred income

        51,885       60,252  

Other current liabilities

     8        1,308,085       1,103,299  
     

 

 

   

 

 

 

Total current liabilities

        9,271,511       9,192,472  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade and other payables

     4,12        690,443       807,540  

Borrowings

     4,13        6,275,693       5,898,184  

Other financial liabilities

     4,6        213,390       260,676  

Net defined benefit liabilities

     15        424,772       378,087  

Provisions

     14        89,238       86,202  

Deferred income

     20        140,013       149,050  

Deferred tax liabilities

        400,147       429,331  

Other non-current liabilities

     8        704,534       909,570  
     

 

 

   

 

 

 

Total non-current liabilities

        8,938,230       8,918,640  
     

 

 

   

 

 

 

Total liabilities

        18,209,741       18,111,112  
     

 

 

   

 

 

 

Equity attribute to owners of the Controlling Company

       

Share capital

        1,564,499       1,564,499  

Share premium

        1,440,258       1,440,258  

Retained earnings

     18        12,113,869       12,155,420  

Accumulated other comprehensive income

        80,708       86,051  

Other components of equity

     19        (1,401,706     (1,234,784
     

 

 

   

 

 

 
            13,797,628     14,011,444  

Non-controlling interests

        1,540,283       1,539,989  
     

 

 

   

 

 

 

Total equity

        15,337,911       15,551,433  
     

 

 

   

 

 

 

Total liabilities and equity

      W 33,547,652     W 33,662,545  
     

 

 

   

 

 

 

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

 

4


KT Corporation and Subsidiaries

Consolidated Interim Statements of Profit or Loss

Three-Month Periods Ended March 31, 2021 and 2020

 

 

            Three-Month Period Ended March 31  
(in millions of Korean won, except per share amounts)    Notes     

2021

(Unaudited)

    

2020

(Unaudited)

 

Operating revenue

     20      W 6,029,426      W 5,831,716  

Operating expenses

     21        5,585,271        5,446,886  
     

 

 

    

 

 

 

Operating profit

        444,155        384,830  

Other income

     22        58,620        50,171  

Other expenses

     22        54,035        58,993  

Finance income

     23        186,419        241,648  

Finance costs

     23        172,671        246,401  

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

     11        5,666        (3,453
     

 

 

    

 

 

 

Profit before income tax expense

        468,154        367,802  

Income tax expense

        141,679        140,596  
     

 

 

    

 

 

 

Profit for the period

      W 326,475      W 227,206  
     

 

 

    

 

 

 

Profit is attributable to:

        

Owners of the Controlling Company:

      W 302,624      W 208,935  

Non-controlling interest:

        23,851        18,271  

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

     25        

Basic earnings per share

      W 1,274      W 852  

Diluted earnings per share

        1,274        852  

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

 

5


KT Corporation and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three-Month Periods Ended March 31, 2021 and 2020

 

 

            Three-Month Period Ended March 31  
(in millions of Korean won)    Notes      2021
(Unaudited)
    2020
(Unaudited)
 

Profit for the period

      W 326,475     W 227,206  
     

 

 

   

 

 

 

Other comprehensive income

       

Items that will not be reclassified to profit or loss:

       

Remeasurements of the net defined benefit liabilities

     15        3,741       (573

Share of remeasurement of the net defined benefit liabilities of associates and joint ventures

        (336     840  

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

     6        4,577       (52,003

Items that may be subsequently reclassified to profit or loss:

       

Valuation gain on cash flow hedges

     6        40,251       95,558  

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

        (50,645     (110,029

Share of other comprehensive income from associates and joint ventures

        (4,466     (131

Exchange differences on translation of foreign operations

        7,939       2,047  
     

 

 

   

 

 

 

Other comprehensive income for the period, net of tax

        1,061       (64,291
     

 

 

   

 

 

 

Total comprehensive income for the period

      W 327,536     W 162,915  
     

 

 

   

 

 

 

Total comprehensive income is attributable to:

       

Owners of the Controlling Company

      W 300,091     W 162,980  

Non-controlling interests

        27,445       (65

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

 

6


KT Corporation and Subsidiaries

Consolidated Statements of Changes in Equity

Three-Month Periods Ended March 31, 2021 and 2020

 

 

 

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

Share

capital

     Share
premium
     Retained
earnings
    Accumulated
other comprehensive
income
    Other
components
of equity
    Total     Non-controlling
interest
   

Total

equity

 

Balance at January 1, 2020

      W 1,564,499      W 1,440,258      W 11,633,780     W 194,934     W (1,170,083   W 13,663,388     W 1,520,160     W 15,183,548  

Comprehensive income

                     

Profit for the period

        —          —          208,935       —         —         208,935       18,271       227,206  

Remeasurements of net defined benefit liabilities

     15        —          —          180       —         —         180       (753     (573

Share of remeasurement of the net defined benefit liabilities of associates and joint ventures

        —          —          840       —         —         840       —         840  

Share of other comprehensive income (loss) of associates and joint ventures

        —          —          —         (161     —         (161     30       (131

Valuation loss on cash flow hedge

     6        —          —          —         (14,370     —         (14,370     (101     (14,471

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

        —          —          —         (34,732     —         (34,732     (17,271     (52,003

Exchange differences on translation of foreign operations

        —          —          —         2,288       —         2,288       (241     2,047  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        —          —          209,955       (46,975     —         162,980       (65     162,915  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                —                            

Transactions with owners

                     

Dividends paid by the Controlling Company

        —          —          (269,766     —         —         (269,766     —         (269,766

Dividends paid to non-controlling interest of subsidiaries

        —          —          —         —         —         —         (40,753     (40,753

Change in ownership interest in subsidiaries

        —          —          —         —         7,257       7,257       23,986       31,243  

Appropriations of loss on disposal of treasury stock

        —          —          (1,690     —         1,690       —         —         —    

Others

        —          —          —         —         1,599       1,599       —         1,599  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

        —          —          (271,456     —         10,546       (260,910     (16,767     (277,677
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2020 (Unaudited)

      W 1,564,499      W 1,440,258      W 11,572,279     W 147,959     W (1,159,537   W 13,565,458     W 1,503,328     W 15,068,786  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

7


KT Corporation and Subsidiaries

Consolidated Statements of Changes in Equity

Three-Month Periods Ended March 31, 2021 and 2020

 

 

 

            Attributable to owners of the Controlling Company              
(in millions of Korean won)    Notes      Share
capital
     Share
premium
     Retained
earnings
    Accumulated
other comprehensive
income
    Other
components
of equity
    Total     Non-controlling
interest
   

Total

equity

 

Balance as at January 1, 2021

      W 1,564,499      W 1,440,258      W 12,155,420     W 86,051     W (1,234,784   W 14,011,444     W 1,539,989     W 15,551,433  

Comprehensive income

                     

Profit for the period

        —          —          302,624       —         —         302,624       23,851       326,475  

Remeasurements of net defined benefit liabilities

     15        —          —          3,146       —         —         3,146       595       3,741  

Share of remeasurement of the net defined benefit liabilities of associates and joint ventures

        —          —          (336     —         —         (336     —         (336

Share of other comprehensive loss of associates and joint ventures

        —          —          —         (3,810     —         (3,810     (656     (4,466

Valuation gain (loss) on cash flow hedge

     6        —          —          —         (10,401     —         (10,401     7       (10,394

Gain on valuation of financial instruments at fair value

through other comprehensive income

        —          —          —         3,141       —         3,141       1,436       4,577  

Exchange differences on translation of foreign operations

        —          —          —         5,727       —         5,727       2,212       7,939  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        —          —          305,434       (5,343     —         300,091       27,445       327,536  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

                     

Dividends paid by the Controlling Company

        —          —          (326,487     —         —         (326,487     —         (326,487

Dividends paid to non-controlling interest of subsidiaries

        —          —          —         —         —         —         (23,762     (23,762

Change in ownership interest in subsidiaries

        —          —          —         —         1,388       1,388       (3,389     (2,001

Appropriations of loss on disposal of treasury stock

        —          —          (20,498     —         20,498       —         —         —    

Acquisition of treasury stock

        —          —          —         —         (190,105     (190,105     —         (190,105

Others

        —          —          —         —         1,297       1,297       —         1,297  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

        —          —          (346,985     —         (166,922     (513,907     (27,151     (541,058
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at March 31, 2021 (Unaudited)

      W 1,564,499      W 1,440,258      W 12,113,869     W 80,708     W (1,401,706   W 13,797,628     W 1,540,283     W 15,337,911  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

8


KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Three-Month Periods Ended March 31, 2021 and 2020

 

 

 

            Three-Month Period Ended March 31  
(in millions of Korean won)    Notes     

2021

(Unaudited)

   

2020

(Unaudited)

 

Cash flows from operating activities

       

Cash generated from operations

     26      W 1,198,670     W 952,724  

Interest paid

        (62,590     (72,130

Interest received

        66,984       62,969  

Dividends received

        29,315       3,188  

Income tax paid

        (69,065     (24,887
     

 

 

   

 

 

 

Net cash inflow from operating activities

        1,163,314       921,864  
     

 

 

   

 

 

 

Cash flows from investing activities

       

Collection of loans

        15,126       15,799  

Disposal of financial assets at fair value through profit or loss

        114,206       139,930  

Disposal of financial assets at amortized cost

        296,416       67,417  

Disposal of assets held-for-sale

        —         342  

Disposal of investments in associates and joint ventures

        5,100       109  

Disposal of property, equipment and investment properties

        38,244       9,559  

Disposal of intangible assets

        2,301       2,253  

Disposal of right-of-use assets

        331       153  

Loans granted

        (10,055     (10,367

Acquisition of financial assets at fair value through profit or loss

        (141,323     (203,072

Acquisition of financial assets at amortized cost

        (101,918     (122,579

Acquisition of financial assets at fair value through other comprehensive income

        (26,030     —    

Acquisition of investments in associates and joint ventures

        (5,600     (4,305

Acquisition of property and equipment and investment properties

        (928,607     (894,773

Acquisition of intangible assets

        (341,514     (373,895

Acquisition of right-of-use assets

        (1,152     (1,479

Decrease in cash due to business combination

        (445     —    
     

 

 

   

 

 

 

Net cash outflow from investing activities

        (1,084,920     (1,374,908
     

 

 

   

 

 

 

 

9


KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Three-Month Periods Ended March 31, 2021 and 2020

 

 

 

            Three-Month Period Ended March 31  
(in millions of Korean won)    Notes     

2021

(Unaudited)

    

2020

(Unaudited)

 

Cash flows from financing activities

        

Proceeds from borrowings

        729,838        199,035  

Cash inflow from consolidated capital transactions

        —          31,475  

Cash inflow from other financing activities

        365        614  

Repayments of borrowings

        (399,192      (372,841

Dividends paid

        (68      —    

Decrease in finance lease liabilities

        (99,820      (84,608

Cash outflow from consolidated capital transactions

        —          (101

Acquisition of treasury stock

        (192,608      —    
     

 

 

    

 

 

 

Net cash inflow (outflow) from financing activities

        38,515        (226,426
     

 

 

    

 

 

 

Effect of exchange rate change on cash and cash equivalents

 

     1,544        632  
  

 

 

    

 

 

 

Net increase (decrease) in cash and cash equivalents

        118,453        (678,838

Cash and cash equivalents

        

Beginning of the period

        2,634,624        2,305,894  
     

 

 

    

 

 

 

End of the period

      W 2,753,077      W 1,627,056  
     

 

 

    

 

 

 

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

 

10


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

1.

General Information

The consolidated financial statements include the accounts of KT Corporation, which is the controlling company as defined under Korean IFRS 1110 Consolidated Financial Statements, and its 64 controlled subsidiaries as described in Note 1.2 (collectively referred to as the “Group”).

 

  1.1

The Controlling Company

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

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

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

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

In 2002, the Controlling Company acquired the entire government-owned shares in accordance with the Korean government’s privatization plan. As at March 31, 2021, the Korean government does not own any shares in the Controlling Company.

 

  1.2

Consolidated Subsidiaries

The consolidated subsidiaries as at March 31, 2021 and December 31, 2020, are as follows:

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    March 31,
2021
     December 31,
2020
     Closing month

KT Powertel Co., Ltd. 2

   Trunk radio system business    Korea      44.80      44.80    December

KT Linkus Co., Ltd.

   Public telephone maintenance    Korea      92.40      92.40    December

KT Submarine Co., Ltd. 2,4

   Submarine cable construction and maintenance    Korea      39.30      39.30    December

KT Telecop Co., Ltd.

   Security service    Korea      86.80      86.80    December

KT Hitel Co., Ltd.

   Data communication    Korea      67.10      67.10    December

KT Service Bukbu Co., Ltd.

   Opening services of fixed line    Korea      67.30      67.30    December

KT Service Nambu Co., Ltd.

   Opening services of fixed line    Korea      77.30      77.30    December

KT Commerce Inc.

   B2C, B2B service    Korea      100.00      100.00    December

 

11


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    March 31,
2021
     December 31,
2020
     Closing month

KT Strategic Investment Fund No.2

   Investment fund    Korea      100.00      100.00    December

KT Strategic Investment Fund No.3

   Investment fund    Korea      100.00      100.00    December

KT Strategic Investment Fund No.4

   Investment fund    Korea      100.00      100.00    December

KT Strategic Investment Fund No.5

   Investment fund    Korea      100.00      100.00    December

BC-VP Strategic Investment

Fund No.1

   Investment fund    Korea      100.00      100.00    December

BC Card Co., Ltd.

   Credit card business    Korea      69.50      69.50    December

VP Inc.

   Payment security service for credit card, others    Korea      50.90      50.90    December

H&C Network

   Call center for financial sectors    Korea      100.00      100.00    December

BC Card China Co., Ltd.

   Software development and data processing    China      100.00      100.00    December

INITECH Co., Ltd. 4

   Internet banking ASP and security solutions    Korea      58.20      58.20    December

Smartro Co., Ltd.

   VAN (Value Added Network) business    Korea      64.50      64.50    December

KTDS Co., Ltd. 4

   System integration and maintenance    Korea      95.50      95.50    December

KT M Hows Co., Ltd.

   Mobile marketing    Korea      90.00      90.00    December

KT M&S Co., Ltd.

   PCS distribution    Korea      100.00      100.00    December

GENIE Music Corporation

(KT Music Corporation) 2,4

   Online music production and distribution    Korea      36.20      36.20    December

KT MOS Bukbu Co., Ltd. 4

   Telecommunication facility maintenance    Korea      100.00      100.00    December

KT MOS Nambu Co., Ltd. 4

   Telecommunication facility maintenance    Korea      98.40      98.40    December

KT Skylife Co., Ltd. 4

   Satellite broadcasting business    Korea      50.30      50.30    December

Skylife TV Co., Ltd.

   TV contents provider    Korea      92.60      92.60    December

KT Estate Inc.

   Residential building development and supply    Korea      100.00      100.00    December

KT AMC Co., Ltd.

   Asset management and consulting services    Korea      100.00      100.00    December

NEXR Co., Ltd.

   Cloud system implementation    Korea      100.00      100.00    December

KTGDH Co., Ltd.

(KTSB Data Service Co., Ltd.)

   Data center development and related service    Korea      100.00      100.00    December

KT Sat Co., Ltd.

   Satellite communication business    Korea      100.00      100.00    December

Nasmedia, Co., Ltd.3,4

   Solution provider and IPTV advertisement sales business    Korea      44.00      44.00    December

KT Sports Co., Ltd.

   Management of sports group    Korea      100.00      100.00    December

KT Music Contents Fund No.1

   Music contents investment business    Korea      80.00      80.00    December

KT Music Contents Fund No.2

   Music contents investment business    Korea      100.00      100.00    December

KT-Michigan Global Content Fund

   Content investment business    Korea      88.60      88.60    December

Autopion Co., Ltd.

   Information and communication service    Korea      100.00      100.00    December

KTCS Corporation 2,4

   Database and online information provider    Korea      32.20      31.90    December

KTIS Corporation 2,4

   Database and online information provider    Korea      31.40      30.80    December

KT M Mobile Co., Ltd.

   Special category telecommunications operator and sales of communication device    Korea      100.00      100.00    December

KT Investment Co., Ltd.

   Technology business finance    Korea      100.00      100.00    December

Whowho&Company Co., Ltd.

   Software development and supply    Korea      100.00      100.00    December

 

12


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    March 31,
2021
     December 31,
2020
     Closing month

PlayD Co., Ltd.

(N Search Marketing Co., Ltd.)

   Advertising agency    Korea      70.40      70.40    December

Next Connect PFV

   Residential building development and supply    Korea      100.00      100.00    December

KT Rwanda Networks Ltd.

   Network installation and management    Rwanda      51.00      51.00    December

AOS Ltd.

   System integration and maintenance    Rwanda      51.00      51.00    December

KT Japan Co., Ltd.

   Foreign telecommunication business    Japan      100.00      100.00    December

KBTO sp.zo.o.

   Electronic communication business    Poland      97.40      97.20    December

Korea Telecom China Co., Ltd.

   Foreign telecommunication business    China      100.00      100.00    December

KT Dutch B.V.

   East Telecom management    Netherlands      100.00      100.00    December

East Telecom LLC

   Fixed line internet business    Uzbekistan      91.60      91.00    December

KT America, Inc.

   Foreign investment business    USA      100.00      100.00    December

PT. BC Card Asia Pacific

   Software development and supply    Indonesia      99.90      99.90    December

KT Hong Kong Telecommunications

Co., Ltd.

   Fixed line telecommunication business    Hong Kong      100.00      100.00    December

Korea Telecom Singapore Pte. Ltd.

   Foreign investment business    Singapore      100.00      100.00    December

Texnoprosistem LLP

   Fixed line internet business    Uzbekistan      100.00      100.00    December

Nasmedia Thailand Company Limited

   Internet advertising solution    Thailand      99.90      99.90    December

KT Huimangjieum

   Manufacturing    Korea      100.00      100.00    December

GE Premier 1st Corporate Restructuring Real Estate Investment                Trust Co.

   Residential building investment and rent    Korea      68.10      68.10    December

K-REALTY RENTAL HOUSING

REIT 3

   Residential building    Korea      88.60      88.60    December

Storywiz

   Contents and software development and supply    Korea      100.00      100.00    December

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

  

Telecommunication facility construction and

maintenance

   Korea      100.00      100.00    December

KT Studio Genie Co., Ltd.

   Data communication service and data communication construction business    Korea      100.00      —        December

 

1 

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

2 

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

3 

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

4 

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

 

13


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

1.3

Changes in Scope of Consolidation

Subsidiaries newly included/merged in the consolidation during the three-month period ended March 31, 2021:

 

Changes

  

Location

  

Name of subsidiary

  

Reason

Included

   Korea    KT Studio Genie Co., Ltd.    Newly established

Excluded

   Belgium    KT Belgium    Liquidated

Summarized information for consolidated subsidiaries as at March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, is as follows:

 

(in millions of Korean won)    March 31, 2021  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT Powertel Co., Ltd.

   W 118,047      W 16,476      W 12,859      W 716  

KT Linkus Co., Ltd.

     53,046        50,791        18,319        (2,017

KT Submarine Co., Ltd.

     115,436        13,568        7,309        (288

KT Telecop Co., Ltd.

     335,512        210,486        121,309        239  

KT Hitel Co., Ltd.

     276,259        78,742        93,763        136  

KT Service Bukbu Co., Ltd.

     55,921        54,094        53,401        (2,443

KT Service Nambu Co., Ltd.

     57,402        53,287        64,023        (2,608

BC Card Co., Ltd. 1

     3,298,540        1,998,629        839,512        9,721  

H&C Network 1

     260,031        52,950        76,242        (631

Nasmedia Co., Ltd. 1

     420,490        221,339        27,447        5,303  

KTDS Co., Ltd. 1

     146,190        95,991        111,968        3,258  

KT M Hows Co., Ltd.

     93,842        63,109        13,350        2,344  

KT M&S Co., Ltd.

     229,954        195,569        158,385        430  

GENIE Music Corporation

(KT Music Corporation)

     252,653        86,359        60,981        3,675  

KT MOS Bukbu Co., Ltd.

     30,374        23,607        16,523        773  

KT MOS Nambu Co., Ltd.

     31,586        22,844        15,878        (78

KT Skylife Co., Ltd. 1

     929,677        183,785        166,946        17,209  

KT Estate Inc. 1

     1,690,368        324,062        62,634        2,104  

KTGDH Co., Ltd.

(KTSB Data Service Co., Ltd.)

     11,048        1,533        1,106        181  

KT Sat Co., Ltd.

     619,879        76,257        41,584        5,424  

KT Sports Co., Ltd.

     36,288        28,941        7,633        (4,284

KT Music Contents Fund No.1

     4,963        1,507        148        136  

KT Music Contents Fund No.2

     14,887        84        137        66  

KT-Michigan Global Content Fund

     10,225        38        17        (21

Autopion Co., Ltd.

     5,059        4,450        828        (327

KT M Mobile Co., Ltd.

     125,040        31,328        43,481        (3,649

KT Investment Co., Ltd. 1

     100,490        80,321        20,642        (1,763

 

14


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    March 31, 2021  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KTCS Corporation 1

     348,204        177,816        203,330        6,815  

KTIS Corporation

     296,414        123,171        112,250        4,972  

Next Connect PFV

     451,245        95,419        —          (1,171

KT Japan Co., Ltd.1

     1,451        2,558        292        (124

Korea Telecom China Co., Ltd.

     146        15        —          (240

KT Dutch B.V. 1

     34,924        11,110        6,692        3,204  

KT America, Inc.

     4,496        60        1,539        61  

KT Rwanda Networks Ltd. 2

     118,059        204,803        6,047        (6,946

KBTO sp.zo.o.

     302        59        5        (101

AOS Ltd. 2

     11,995        3,971        1,627        257  

KT Hong Kong Telecommunications Co., Ltd.

     6,647        2,752        3,774        141  

KT Huimangjieum

     3,193        2,333        1,038        (73

GE Premier 1st Corporate Restructuring Real Estate Investment Trust Co.

     6,410        1,195        899        761  

Storywiz

     20,378        10,141        4,059        (1,299

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

     84,192        44,485        37,727        (1,436

KT Studio Genie Co., Ltd.

     24,788        29        —          (151

 

(in millions of Korean won)    December 31, 2020      March 31, 2020  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT Powertel Co., Ltd.

   W 119,694      W 18,833      W 13,852      W 1,178  

KT Linkus Co., Ltd.

     58,372        54,022        21,133        (1,378

KT Submarine Co., Ltd.

     116,813        14,032        18,475        2,535  

KT Telecop Co., Ltd.

     318,456        193,737        76,786        (1,165

KT Hitel Co., Ltd.

     288,949        92,599        81,754        (5,070

KT Service Bukbu Co., Ltd.

     60,825        56,554        50,194        (1,229

KT Service Nambu Co., Ltd.

     58,182        51,460        59,484        (3,100

BC Card Co., Ltd. 1

     3,084,398        1,778,751        799,429        27,180  

H&C Network 1

     269,651        61,365        78,758        (319

Nasmedia Co., Ltd. 1

     422,039        221,371        26,224        3,756  

KTDS Co., Ltd. 1

     183,297        133,129        98,992        896  

KT M Hows Co., Ltd.

     104,704        76,315        9,395        1,586  

KT M&S Co., Ltd.

     231,260        197,306        171,588        (1,626

GENIE Music Corporation

(KT Music Corporation)

     250,538        88,488        60,510        1,845  

KT MOS Bukbu Co., Ltd.

     32,167        26,070        14,768        (995

 

15


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    March 31, 2021  
     Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT MOS Nambu Co., Ltd.

     33,765        24,947        14,963        (292

KT Skylife Co., Ltd. 1

     919,476        175,039        167,915        18,311  

KT Estate Inc. 1

     1,689,601        325,429        106,707        10,051  

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

     11,003        1,669        1,070        89  

KT Sat Co., Ltd.

     630,740        92,791        34,924        (271

KT Sports Co., Ltd.

     26,572        14,940        7,728        (3,632

KT Music Contents Fund No.1

     4,844        1,525        89        54  

KT Music Contents Fund No.2

     15,021        285        16        (52

KT-Michigan Global Content Fund

     10,382        175        84        38  

Autopion Co., Ltd.

     4,903        4,961        1,137        (230

KT M Mobile Co., Ltd.

     129,011        27,281        39,886        (385

KT Investment Co., Ltd. 1

     115,627        93,695        634        47  

KTCS Corporation 1

     384,919        215,175        187,599        2,053  

KTIS Corporation

     294,289        126,894        111,216        5,130  

Next Connect PFV

     394,268        37,271        8        (159

KT Japan Co., Ltd.1

     2,694        2,622        473        29  

Korea Telecom China Co., Ltd.

     381        21        —          (171

KT Dutch B.V. 1

     29,585        10,109        7,180        1,831  

KT America, Inc.

     4,498        125        1,579        70  

KT Rwanda Networks Ltd. 2

     114,768        191,781        4,187        (8,141

KT Belgium

     87,608        —          —          (33

KBTO sp.zo.o.

     438        117        127        (1,515

AOS Ltd. 2

     11,812        3,875        1,294        (292

KT Hong Kong Telecommunications Co., Ltd.

     6,159        2,800        4,155        322  

KT Huimangjieum

     3,720        2,787        518        (292

GE Premier 1st Corporate Restructuring Real Estate Investment Trust Co.

     5,703        1,165        64        (7

Storywiz

     21,594        10,065        —          (211

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

     138,220        102,963        80,286        (23,009

 

1 

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

2 

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

 

16


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

2.

Significant Accounting Policies

 

  2.1

Basis of Preparation

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

The consolidated interim financial statements of the Group as at and for the three-month periods ended March 31, 2021, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as at March 31, 2021.

 

  2.2

Changes in Accounting Policies and Disclosures

(1) New and amended standards and interpretations adopted by the Group

The Group has applied the following standards and interpretations for the first time for their annual reporting period commencing January 1, 2021.

- Amendments to Korean IFRS 1116 Lease – Practical expedient for COVID-19 – Related Rent Exemption, Concessions, Suspension

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. The amendment does not have a significant impact on the financial statements.

- Amendments to Korean IFRS 1109 Financial Instruments, Korean IFRS 1039 Financial Instruments: Recognition and Measurement, Korean IFRS 1107 Financial Instruments: Disclosure, Korean IFRS 1104 Insurance Contracts and Korean IFRS 1116 Lease – Interest Rate Benchmark Reform (Second revision)

In relation to interest rate benchmark reform, the amendments provide exceptions including adjust effective interest rate instead of book amounts when interest rate benchmark of financial instruments at amortized costs is replaced, and apply hedge accounting without discontinuance although the interest rate benchmark is replaced in hedging relationship. The Group does not expect that these amendments have a significant impact on financial statements.

 

17


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

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

The following new accounting standards and interpretations that have been published are not mandatory for March 31, 2021 reporting periods and have not been early adopted by the Group.

- Amendments to Korean IFRS 1103 Business Combination – Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korea IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets, and Korean IFRS 2121 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

- Amendments to Korean IFRS 1016 Property, Plant and Equipment – Proceeds Before Intended Use

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group is reviewing for the impact of these amendments on the financial statements

- Amendments to Korean IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

- Annual improvements to Korean IFRS 2018-2020

Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

 

   

Korean IFRS 1101 First time Adoption of Korean International Financial Reporting Standards – Subsidiaries That Are First-Time Adopters

 

   

Korean IFRS 1109 Financial Instruments – Fees Related to the 10% Test for Derecognition of Financial Liabilities

 

18


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   

Korean IFRS 1116 Leases – Lease Incentives

 

   

Korean IFRS 1041 Agriculture – Measuring Fair Value

- Amendments to Korean IFRS 1001 Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability include the transfer of the entity’s own equity instruments, however, it would be excluded if an option to settle them by the entity’s own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group is reviewing for the impact of these amendments on the financial statements.

- Amendments to Korean IFRS 1116 Lease – Concession on COVID-19—Related rent concessions beyond June 30, 2021

The application of the practical expedient where a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before June 30, 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendment should be applied for annual periods beginning on or after April 1, 2021, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

 

  2.3

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, 2020, except for the changes due to the application of amendment and enactments of standards described in Note 2.1 (1) and the one described below.

(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.

 

19


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

3.

Critical Accounting Estimates and Assumptions

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

The spread of COVID-19 has been a material impact on domestic and foreign economy. It may have a negative impact; such as, decrease in productivity, decrease or delay in sales, collection of existing receivables and others. Accordingly, it may have a negative impact on the financial position and financial performance of the Group, and the impact is expected to be continued to the consolidated annual financial statements in 2021.

Significant accounting estimates and assumptions applied in the preparation of the consolidated annual financial statements can be adjusted depending on changes in the uncertainty from COVID-19. Also, the ultimate effect of COVID-19 to the Group’s business, financial position and financial performance cannot presently determined.

 

4.

Financial Instruments by Category

Financial instruments by category as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021  
Financial assets    Financial assets
at amortized
cost
     Financial
assets at fair
value through
profit or loss
     Financial assets at
fair value through
other comprehensive
income
    

Derivatives

used for
hedging

     Total  

Cash and cash equivalents

   W 2,753,077      W —        W —        W —        W 2,753,077  

Trade and other receivables1

     4,555,515        —          1,665,812        —          6,221,327  

Other financial assets

     481,487        810,369        298,663        17,958        1,608,477  

1 Lease receivables and others which are not applied to financial instruments by category are excluded.

 

(in millions of Korean won)    March 31, 2021  
Financial liabilities    Financial liabilities
at amortized cost
    

Financial liabilities
at fair value through

profit and loss

    

Derivatives

used for hedging

     Total  

Trade and other payables

   W 6,660,013      W —        W —        W 6,660,013  

Borrowings

     7,724,644        —          —          7,724,644  

Other financial liabilities

     138,967        5,182        70,950        215,099  

 

20


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    December 31, 2020  
Financial assets    Financial assets
at amortized
cost
     Financial
assets at fair
value through
profit or loss
     Financial assets at
fair value through
other comprehensive
income
    

Derivatives

used for
hedging

     Total  

Cash and cash equivalents

   W 2,634,624      W —         W —        W —        W 2,634,624  

Trade and other receivables1

     4,976,423        —          1,118,619        —          6,095,042  

Other financial assets

     671,068        809,919        258,516        7,684        1,747,187  

 

1 

Lease receivables and others which are not applied to financial instruments by category are excluded.

 

(in millions of Korean won)    December 31, 2020  
Financial liabilities    Financial liabilities
at amortized cost
    

Financial liabilities
at fair value through

profit and loss

    

Derivatives

used for
hedging

     Total  

Trade and other payables

   W 7,017,639      W —        W —        W 7,017,639  

Borrowings

     7,316,298        —          —          7,316,298  

Other financial liabilities

     132,558        2,682        127,929        263,169  

 

5.

Trade and Other Receivables

Trade and other receivables as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021  
     Total amounts      Provision for
impairment
     Present value
discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 3,605,576      W (323,835    W (8,056    W 3,273,685  

Other receivables

     1,978,267        (96,849      (153      1,881,265  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,583,843      W (420,684    W (8,209    W 5,154,950  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 705,366      W (4,150    W (26,269    W 674,947  

Other receivables

     567,668        (103,485      (13,490      450,693  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,273,034      W (107,635    W (39,759    W 1,125,640  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

21


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    December 31, 2020  
     Total amounts      Provision for
impairment
     Present value
discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 3,388,099      W (322,992    W (8,977    W 3,056,130  

Other receivables

     1,948,108        (101,619      (148      1,846,341  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,336,207      W (424,611    W (9,125    W 4,902,471  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 892,992      W (4,323    W (34,716    W 853,953  

Other receivables

     513,926        (102,985      (14,125      396,816  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,406,918      W (107,308    W (48,841    W 1,250,769  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of other receivables as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Loans

   W 110,597      W 116,082  

Receivables 1

     1,724,747        1,699,608  

Accrued income

     13,044        6,901  

Refundable deposits

     341,891        350,180  

Loans receivable

     214,414        150,527  

Finance lease receivables

     65,549        64,047  

Others

     62,050        60,416  

Less: Provision for impairment

     (200,334      (204,604
  

 

 

    

 

 

 
   W 2,331,958      W 2,243,157  
  

 

 

    

 

 

 

 

1

As of March 31, 2021, the settlement receivables of BC Card Co., Ltd. of \ 1,041,172 million (December 31, 2020: \ 986,384 million) are included.

The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of receivables mentioned above as at March 31, 2021.

The Group classifies a certain portion of trade receivables as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.

 

22


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

6.

Other Financial Assets and Liabilities

Details of other financial assets and liabilities as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Other financial assets

     

Financial assets at amortized cost 1

   W 481,487      W 671,068  

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

     810,369        809,919  

Financial assets at fair value through other comprehensive income 1

     298,663        258,516  

Derivatives used for hedging

     17,958        7,684  

Less: Non-current

     (584,087      (544,347
  

 

 

    

 

 

 

Current

   W 1,024,390      W 1,202,840  
  

 

 

    

 

 

 

Other financial liabilities

     

Financial liabilities at amortized cost

   W 138,967      W 132,558  

Financial liabilities at fair value through profit or loss

     5,182        2,682  

Derivatives used for hedging

     70,950        127,929  

Less: Non-current

     (213,390      (260,676
  

 

 

    

 

 

 

Current

   W 1,709      W 2,493  
  

 

 

    

 

 

 

 

1

As at March 31, 2021, the Group’s other financial assets amounting to W 106,883 million (December 31, 2020: W 104,442 million), which consist of checking account deposits, time deposits and others, are subject to withdrawal restrictions.

 

2 

As at March 31, 2021, MMW(Money Market Wrap) and MMT(Money Market Trust) amounting to \ 485,655 million (December 31, 2020: W 509,068 million) are included in other financial assets.

Details of financial assets at fair value through profit or loss as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Equity instruments (Listed)

   W 24,707      W 46,449  

Equity instruments (Unlisted)

     76,640        83,017  

Debt securities

     708,999        680,453  

Derivative held for trading

     23        —    
  

 

 

    

 

 

 
     810,369        809,919  

Less: Non-current

     (265,255      (276,109
  

 

 

    

 

 

 

Current

   W 545,114      W 533,810  
  

 

 

    

 

 

 

The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to credit risk is the carrying amount as at March 31, 2021.

Investment in Korea Software Financial Cooperative amounting to W 5,358 million is provided as collateral.

 

23


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Details of financial assets at fair value through other comprehensive income as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Equity instruments (Listed)

   W 7,189      W 6,216  

Equity instruments (Unlisted)

     285,088        245,730  

Debt securities

     6,386        6,570  
  

 

 

    

 

 

 
     298,663        258,516  

Less: Non-current

     (298,663      (258,516
  

 

 

    

 

 

 

Current

   W —        W —    
  

 

 

    

 

 

 

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

Details of valuation of derivatives used for hedging as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  
     Assets      Liabilities      Assets      Liabilities  

Interest rate swap 1

   W —        W 757      W —        W 1,078  

Currency swap 2

     17,083        70,193        7,684        126,189  

Currency forwards 3

     875        —          —          662  
  

 

 

    

 

 

    

 

 

    

 

 

 
     17,958        70,950        7,684        127,929  

Less: Non-current

     (15,411      (70,193      (2,111      (126,408
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 2,547      W 757      W 5,573      W 1,521  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1

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

2

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

3

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

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

 

24


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The valuation gains and losses on the derivative contracts for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)  
     2021     2020  

Type of

transaction

   Valuation
gain
     Valuation
loss
    

Other

comprehensive
income1

    Valuation
gain
     Valuation
loss
    

Other

comprehensive
income1

 

Interest rate swap

   W —        W —        W (1   W —        W —        W (1,744

Currency swap

     89,850        12,493        54,435       152,506        661        132,113  

Currency forwards

     1,345        —          —         4,520        —          —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
   W 91,195      W 12,493      W 54,434     W 157,026      W 661      W 130,369  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

1 

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

The ineffective portion recognized in profit or loss on the cash flow hedge is valuation gain of W 6,158 million for the period ended March 31, 2021 (three-month period ended March 31, 2020: valuation gain of W 2,039 million).

Details of financial liabilities at fair value through profit or loss at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Financial liabilities at fair value through profit or loss

     

Derivative liabilities held for trading

   W 2,545      W 45  

Consideration for conversion rights

     2,637        2,637  
  

 

 

    

 

 

 
   W 5,182      W 2,682  
  

 

 

    

 

 

 

The valuation gain and loss on financial liabilities at fair value through profit or loss for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Valuation

gain

    

Valuation

loss

    

Valuation

gain

    

Valuation

loss

 

Derivative liabilities held for trading

   W 35      W 1      W 117      W 24  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

25


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

7. Inventories

Inventories as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)  
     March 31, 2021      December 31, 2020  
     Acquisition
cost
     Valuation
allowance
   

Carrying

amount

     Acquisition
cost
     Valuation
allowance
   

Carrying

amount

 

Merchandise

   W 663,625      W (113,891   W 549,734      W 650,856      W (133,224   W 517,632  

Others

     42,148        —         42,148        17,004        —         17,004  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 
   W 705,773      W (113,891   W 591,882      W 667,860      W (133,224   W 534,636  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Cost of inventories recognized as expenses for the three-month period ended March 31, 2021, amounts to \ 916,533 million (three-month period ended March 31, 2020: \ 885,084 million) and recovery of valuation loss on inventory amounts to \ 19,333 million for the three-month period ended March 31, 2021 (three-month period ended March 31, 2020: valuation loss of \ 5,122 million).

8. Other Assets and Liabilities

Other assets and liabilities as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Other assets

     

Advance payments

   W 192,712      W 168,302  

Prepaid expenses 1

     173,103        66,578  

Contract cost 1

     1,758,996        1,804,948  

Contract assets 1

     625,228        586,438  

Others

     4,288        18,747  

Less: Non-current

     (767,232      (768,661
  

 

 

    

 

 

 

Current

   W 1,987,095      W 1,876,352  
  

 

 

    

 

 

 

Other liabilities

     

Advances received 1

   W 297,187      W 328,491  

Withholdings

     123,591        105,415  

Unearned revenue 1

     38,773        29,593  

Lease liabilities

     1,163,896        1,143,640  

Contract liabilities 1

     371,207        384,133  

Others

     17,965        21,597  

Less: Non-current

     (704,534      (909,570
  

 

 

    

 

 

 

Current

   W 1,308,085      W 1,103,299  
  

 

 

    

 

 

 

 

1 

The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue from Contracts with Customers (Note 20).

 

26


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

9. Assets Held for Sale

In the prior period, the Group has decided to sell all of the equity holdings of ISU-kth Content Investment Cooperative, with the approval of the Board of Directors and shareholders and classified them as assets held for sale. As at March 31, 2021, the Group is in the process of selling these assets with the approval of general meeting of members.

 

(in millions of Korean won)    2021  

Land

   W 36,676  

Building

     16,898  

Others

     88  
  

 

 

 

Total

   W 53,662  
  

 

 

 

The price of sale was expected to exceed the carrying amount of net assts, and as a result, no impairment was recognized for the segment classified as held for sale.

10. Property and Equipment, Investment Properties, and Intangible Assets

Changes in property and equipment for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 14,206,119      W 13,785,299  

Acquisition and capital expenditure

     379,520        498,732  

Disposal and termination

     (25,870      (14,640

Depreciation

     (647,336      (639,748

Transfer from (to) investment property

     33,347        (108,377

Transfer to assets held for sale

     (41,185      —    

Others

     (27,161      (23,834
  

 

 

    

 

 

 

Ending, net

   W 13,877,434      W 13,497,432  
  

 

 

    

 

 

 

Details of property and equipment provided as collateral as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021
     Carrying
amount
     Secured
amount
     Related line
item
     Related
amount
     Secured party

Land and Buildings

   W 11,590      W 15,587        Borrowings      W 3,072      Industrial Bank of Korea/Korea Development Bank

 

27


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    December 31, 2020
     Carrying
amount
     Secured
amount
     Related line
item
     Related
amount
     Secured party

Land and Buildings

   W 11,644      W 15,502        Borrowings      W 3,072      Industrial Bank of
Korea/Korea
Development
Bank

Others

     4,142        249        Deposits        249      K Bank

Changes in investment properties for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 1,368,453      W 1,387,430  

Acquisition

     55,026        1,605  

Disposal

     —          (654

Depreciation

     (11,951      (18,002

Transfer from (to) property and equipment

     (33,347      108,377  

Transfer to assets held for sale

     (11,279      —    

Others

     (19,369      5,220  
  

 

 

    

 

 

 

Ending, net

   W 1,347,533      W 1,483,976  
  

 

 

    

 

 

 

As at March 31, 2021, the Group (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease fee under this contract is W 65,490 million for one year or less, W 92,570 million more than one year and less than five years, W 75,228 million over five years, and W 233,288 million in total.

Details of investment properties provided as collateral as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021  
     Carrying
amount
     Secured
amount
     Related
account
     Related
amount
 

Land and Buildings

   W 775,161      W 68,894        Deposits      W 55,578  

Land and Buildings

     2,840        3,513        Borrowings        2,928  

 

(in millions of Korean won)    December 31, 2020  
     Carrying
amount
     Secured
amount
     Related
account
     Related
amount
 

Land and Buildings

   W 790,414      W 62,968        Deposits      W 56,247  

Land and Buildings

     2,861        3,434        Borrowings        2,928  

 

28


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Changes in intangible assets for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 2,161,258      W 2,834,037  

Acquisition and capital expenditure

     33,783        39,744  

Disposal and termination

     (1,744      (3,405

Amortization

     (149,164      (158,686

Impairment

     (105      —    

Others

     4,698        4,556  
  

 

 

    

 

 

 

Ending, net

   W 2,048,726      W 2,716,246  
  

 

 

    

 

 

 

The carrying amount of membership rights and others, excluding goodwill, with indefinite useful life not subject to amortization is W 222,586 million as at March 31, 2021 (December 31, 2020: W 221,099 million).

Goodwill is allocated to the Group’s cash-generating unit which is identified by operating segments. As at March 31, 2021, goodwill allocated to each cash-generating unit is as follows:

 

(In millions of Korean won)  
Operating Segment    Cash-Generating Unit    Amount  

ICT

  

Mobile services1

   W 65,057  

Finance

  

BC Card Co., Ltd.1

     41,234  

Others

  

GENIE Music Corporation (KT Music Corporation) 1

     50,214  
  

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

     42,745  
  

KT Telecop Co., Ltd. 1

     15,418  
  

KT MOS Bukbu Co., Ltd. and others

     15,417  
     

 

 

 
     W230,085  
  

 

 

 

 

1

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

 

29


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

11. Investments in Associates and Joint Ventures

Details of associates as at March 31, 2021 and December 31, 2020, are as follows:

 

     Percentage of ownership (%)     Location      Closing month  
  

March 31,

2021

    December 31,
2020
              

Korea Information & Technology Fund

     33.3     33.3     Korea        December 31  

KT-IBKC Future Investment Fund 1 1

     50.0     50.0     Korea        December 31  

K Bank Inc.

     34.0     34.0     Korea        December 31  

Hyundai Robotics Co., Ltd. 2

     10.0     10.0     Korea        December 31  

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     35.3     35.3     Korea        December 31  

 

1

At the end of the reporting period, although the Group has 50% ownership, the equity method of accounting has been applied as the Group, which is a limited partner of the investment fund, cannot participate in determining the operating and financial policies.

2

At the end of the reporting period, although the Group has less than 20% ownership in ordinary share, this entity is included in investments in associates as the Group has a significant influence in determining the operating and financial policies.

Changes in investments in associates and joint ventures for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

     2021  
(in millions of Korean won)    Beginning      Acquisition
(Disposal)
    Share of net profit
(loss) from associates
and joint ventures 1
    Others     Ending  

Korea Information & Technology Fund

   W 170,155      W     W 7     W     W 170,162  

KT-IBKC Future Investment Fund 1

     16,190        (4,500     (163           11,527  

K Bank Inc.

     208,272        —         (4,554     (278     203,440  

Hyundai Robotics Co., Ltd.

     50,936        —         (57     56       50,935  

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     17,786        —         (21     —         17,765  

Others

     94,542        5,000       10,430       (23,648     86,324  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 557,881      W 500     W 5,642     W (23,870   W 540,153  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

     2020  
(in millions of Korean won)    Beginning      Acquisition
(Disposal)
     Share of net profit
(loss) from associates
and joint ventures 1
    Others      Ending  

Korea Information & Technology Fund

   W 163,975      W      W 70     W      W 164,045  

KT-IBKC Future Investment Fund 1

     14,100        —          (75     —          14,025  

 

30


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

KT-CKP New Media Investment Fund

     134        (134     —         —         —    

K Bank Inc.

     45,158        —         (5,304     70       39,924  

Others

     44,293        12,630       1,845       (3,195     55,573  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 267,660      W 12,496     W (3,464   W (3,125   W 273,567  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

1

KT Investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit (loss) from associates and joint ventures as operating revenue and expense. These include its share in net loss from associates and joint ventures of \ 22 million (three-month period ended March 31, 2020: net loss of \ 10 million) recognized as operating revenue and expense during the period.

Summarized financial information of associates and joint ventures as at March 31, 2021 and December 31, 2020 and for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021  
     Assets      Liabilities      Operating
revenue
    

Profit (loss)

for the period

 

Korea Information & Technology Fund

   W 510,487      W —        W —        W 23  

KT-IBKC Future Investment Fund 1

     23,055        —          20        (325

K Bank Inc.

     9,413,431        8,937,722        38,804        (12,294

Hyundai Robotics Co., Ltd.

     436,420        134,860        44,655        (572

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     113,140        62,807        —          (62

 

(in millions of Korean won)    December 31, 2020      March 31, 2020  
     Assets      Liabilities      Operating
revenue
    

Profit (loss)

for the period

 

Korea Information & Technology Fund

   W 510,464      W —        W —        W 212  

KT-IBKC Future Investment Fund 1

     32,379        —          4        (150

K Bank Inc

     4,329,813        3,840,993        18,972        (24,018

Hyundai Robotics Co., Ltd.

     441,505        139,939        —          —    

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     116,853        66,459        —          —    

Due to the discontinuance of equity method of accounting, the Group has not recognized loss from associates and joint ventures of W 206 million for the three-month period ended March 31, 2021 (three-month period ended March 31, 2020: loss of W 1,259 million). The accumulated comprehensive loss of associates and joint ventures as at March 31, 2021, which was not recognized by the Group, is W 8,434 million (December 31, 2020: W 8,228 million).

 

31


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

12.

Trade and Other Payables

Details of trade and other payables as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Current liabilities

     

Trade payables

   W 1,197,063      W 1,239,717  

Other payables

     4,772,507        4,970,382  
  

 

 

    

 

 

 
   W 5,969,570      W 6,210,099  
  

 

 

    

 

 

 

Non-current liabilities

     

Trade payables

   W 1,516      W 1,528  

Other payables

     688,927        806,012  
  

 

 

    

 

 

 
   W 690,443      W 807,540  
  

 

 

    

 

 

 

Details of other payables as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Non-trade payables 1

   W 3,460,237      W 3,841,227  

Accrued expenses

     1,016,211        933,978  

Operating deposits

     786,188        803,904  

Others

     198,798        197,285  

Less: Non-current

     (688,927      (806,012
  

 

 

    

 

 

 

Current

   W 4,772,507      W 4,970,382  
  

 

 

    

 

 

 

 

1

Settlement payables of BC Card Co., Ltd., a subsidiary of the Group, of W 1,110,435 million related to credit card transactions are included as at March 31, 2021 (December 31, 2020: W 1,007,171 million).

 

32


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

13.

Borrowings

Details of borrowings as at March 31, 2021 and December 31, 2020, are as follows:

Debentures

 

(in millions of Korean won and foreign currencies in thousands)   March 31, 2021      December 31, 2020  
Type    Maturity    Annual interest
rates
 

Foreign

currency

    

Korean

won

    

Foreign

currency

    

Korean

won

 

MTNP notes 1

   Sep. 7, 2034    6.500%     USD  100,000        113,350        USD  100,000      W 108,800  

MTNP notes

   Jul. 18, 2026    2.500%     USD  400,000        453,400        USD  400,000        435,200  

MTNP notes

   Aug. 7, 2022    2.625%     USD  400,000        453,400        USD  400,000        435,200  

FR notes 2

   Aug. 23, 2023    LIBOR(3M)+0.900%     USD  100,000        113,350        USD  100,000        108,800  

MTNP notes

   Jul. 6, 2021    0.380%     JPY  16,000,000        164,373        JPY  16,000,000        168,682  

MTNP notes

   Jul. 19, 2022    0.220%     JPY  29,600,000        304,090        JPY  29,600,000        312,061  

MTNP notes

   Jul. 19, 2024    0.330%     JPY  400,000        4,109        JPY  400,000        4,217  

FR notes 2

   Nov. 1, 2024    LIBOR(3M)+0.980%     USD   350,000        396,725        USD  350,000        380,800  

FR notes 2

   Jun. 19, 2023    SOR(6M)+0.500%     SGD   284,000        238,835        SGD  284,000        233,510  

MTNP notes

   Sep. 1, 2025    1.000%     USD  400,000        453,400        USD  400,000        435,200  

The 180-2nd Public bond

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

The 181-3rd Public bond

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

The 182-2nd Public bond

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

The 183-2nd Public bond

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

The 183-3rd Public bond

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

The 184—2nd Public bond

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

The 184—3rd Public bond

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

The 186—3rd Public bond

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

The 186—4th Public bond

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

The 187—3rd Public bond

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

The 187—4th Public bond

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

The 188-2nd Public bond

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

The 188-3rd Public bond

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

The 189-2nd Public bond

   Jan. 28, 2021    —       —          —          —          130,000  

The 189-3rd Public bond

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

The 189-4rd Public bond

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

The 190-1st Public bond

   Jan. 29, 2021    —       —          —          —          110,000  

The 190-2nd Public bond

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

The 190-3rd Public bond

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

The 190-4th Public bond

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

The 191-1st Public bond

   Jan. 14, 2022    2.048%     —          220,000        —          220,000  

The 191-2nd Public bond

   Jan. 15, 2024    2.088%     —          80,000        —          80,000  

The 191-3rd Public bond

   Jan. 15, 2029    2.160%     —          110,000        —          110,000  

The 191-4th Public bond

   Jan. 14, 2039    2.213%     —          90,000        —          90,000  

The 192-1st Public bond

   Oct. 11, 2022    1.550%     —          340,000        —          340,000  

The 192-2nd Public bond

   Oct. 11, 2024    1.578%     —          100,000        —          100,000  

The 192-3rd Public bond

   Oct. 11, 2029    1.622%     —          50,000        —          50,000  

 

33


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won and foreign currencies in thousands)     March 31, 2021     December 31, 2020  
Type    Maturity    Annual interest
rates
   

Foreign

currency

    

Korean

won

   

Foreign

currency

    

Korean

won

 

The 192-4th Public bond

   Oct. 11, 2039      1.674     —          110,000       —          110,000  

The 193-1st Public bond

   Jun. 16, 2023      1.174     —          150,000       —          150,000  

The 193-2nd Public bond

   Jun. 17, 2025      1.434     —          70,000       —          70,000  

The 193-3rd Public bond

   Jun. 17, 2030      1.608     —          20,000       —          20,000  

The 193-4th Public bond

   Jun. 15, 2040      1.713     —          60,000       —          60,000  

The 194-1th Public bond

   Jan. 26, 2024      1.127     —          130,000       —          —    

The 194-2th Public bond

   Jan. 27, 2026      1.452     —          140,000       —          —    

The 194-3th Public bond

   Jan. 27, 2031      1.849     —          50,000       —          —    

The 194-4th Public bond

   Jan. 25, 2041      1.976     —          80,000       —          —    

The 148th MTN

   Jun. 23, 2023      1.513     —          100,000       —          100,000  

The 149-1th MTN

   Mar. 08, 2024      1.440     —          70,000          —    

The 149-2th MTN

   Mar. 10, 2026      1.756     —          30,000          —    
       

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

 

       7,295,032          6,962,470  

Less: Current portion

 

       (1,203,978        (1,228,283

Discount on bonds

 

       (20,436        (19,847
    

 

 

      

 

 

 

Total

 

     W 6,070,618        W 5,714,340  
    

 

 

      

 

 

 

 

1 

As at March 31, 2021, the Group has outstanding notes in the amount of USD 100 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 2,000 million. However, the MTNP has been terminated since 2007.

2 

The Libor (3M) and SOR (6M) is approximately 0.194% and 0.34% as at March 31, 2021.

Convertible bonds

 

(in millions of Korean won)  
Type    Issuance Date      Maturity      Annual Interest Rate     March 31, 2021      December 31, 2020  

The 1st CB(Private) 1,2

     Jun. 5, 2020        Jun. 5, 2025        0.000   W 8,000      W 8,000  

Redemption premium

             2,266        2,267  

Bond discount issuance

             (4,452      (4,644
          

 

 

    

 

 

 
     Subtotal             5,814        5,623  

Current portion

             —          —    
          

 

 

    

 

 

 
     Total           W 5,814      W 5,623  
          

 

 

    

 

 

 

 

1 

Common shares of Storywiz are subject to conversion (appraisal period: June 5, 2021~ May 4, 2025).

2 

Nominal interest rate and maturity yield is approximately 0% and 5% and will be settled on maturity.

 

34


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Short-term borrowings

 

(in millions of Korean won)                        
Type    Financial institution    Annual interest rates    March 31, 2021      December 31, 2020  

Operational

   NongHyup Bank    1.860%~1.870%    W 103,884      W 40,189  
   Shinhan Bank    3.050%      8,000        22,500  
   Shinhan Bank    CD91 + 1.430%      10,000        10,000  
   Woori Bank    4.710%      2,070        1,900  
   Woori Bank    CD(3M) + 1.900%~1.970%      15,000        —    
   Korea Development Bank    3.340%      10,000        10,000  
   Industrial Bank of Korea    1.740%      200        200  
   Hana Bank    —        —          11,000  
        

 

 

    

 

 

 
         W 149,154      W 95,789  
        

 

 

    

 

 

 

Long-term borrowings

 

(in millions of Korean won and thousands of foreign currencies)    March 31, 2021     December 31, 2020  
Financial institution    Type   

Annual interest

rates

  

Foreign

currency

    

Korean

won

   

Foreign

currency

    

Korean

won

 

Export-Import
Bank of Korea

   Inter-Korean
Cooperation Fund 1
   1.500%      —        W 2,714       —        W 2,961  

Industrial Bank of Korea

   General loans    2.980%      —          6,000       —          6,000  

Shinhan Bank

   General loans    1.940%      —          5,000       —          5,000  
   Facility loans 2    LIBOR(3M)+1.340%      USD 25,918        29,378       USD 25,918        28,199  
   General loans 2    LIBOR(3M)+1.650%      USD 8,910        10,099       USD 8,910        9,694  
   General loans 2    LIBOR(3M)+1.847%      USD 13,000        14,736       —          —    
   General loans 2    LIBOR(3M)+2.130%      USD 25,000        28,338       USD 25,000        27,200  

CA-CIB

   Long-term CP    1.260%      —          100,000       —          100,000  

NongHyup Bank

   Facility loans    2.000%      —          49       —          54  

Korea Development Bank

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

Woori Bank

   PF loans    2.420%      —          13,294       —          —    
   PF loans    2.000%      —          1,170       —          —    

Others

  

Kookmin Bank

and others 2

   LIBOR(3M)+1.850%      USD  39,084        44,302       USD  48,855        53,155  
        

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

              295,080          272,263  

Less: Current portion

              (95,819        (94,042
           

 

 

      

 

 

 
            W 199,261        W 178,221  
           

 

 

      

 

 

 

 

1 

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

 

35


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

2 

LIBOR(3M) is approximately 0.194% as at March 31, 2021.

Repayment schedule of the Group’s debentures and borrowings including the portion of current liabilities as at March 31, 2021, is as follows:

 

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

Sub-

total

     In local
currency
     In foreign
currency
    

Sub-

total

        

Apr. 1, 2021~ Mar. 31, 2022

   W  1,040,000      W 164,373      W ı 1,204,373      W  200,671      W  44,302      W  244,973      W  1,449,346  

Apr. 1, 2022~ Mar. 31, 2023

     490,000        757,490        1,247,490        11,799        72,451        84,250        1,331,740  

Apr. 1, 2023~ Mar. 31, 2024

     720,000        352,185        1,072,185        103,676        10,100        113,776        1,185,961  

Apr. 1, 2024~ Mar. 31, 2025

     620,000        400,834        1,020,834        493        —          493        1,021,327  

After Apr. 1, 2025

     1,738,000        1,020,150        2,758,150        742        —          742        2,758,892  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     W 4,608,000      W 2,695,032      W 7,303,032      W 317,381      W 126,853      W 444,234      W 7,747,266  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

14.

Provisions

Changes in provisions for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Litigation      Restoration cost      Others      Total  

Beginning balance

   W 76,500      W  105,767      W 69,925      W 252,192  

Increase (transfer)

     —          3,535        1,243        4,778  

Usage

     (2,321      (282      (664      (3,267

Reversal

     —          (278      (5,557      (5,835
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W  74,179      W 108,742      W  64,947      W  247,868  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 74,179      W 22,790      W 61,661      W 158,630  

Non-current

     —          85,952        3,286        89,238  

 

(in millions of Korean won)    2020  
     Litigation      Restoration cost      Others      Total  

Beginning balance

   W 64,241      W 113,289      W 76,631      W 254,161  

Increase (transfer)

     112        3,505        2,080        5,697  

Usage

     —          (512      (864      (1,376

Reversal

     —          (288      (950      (1,238
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W  64,353      W  115,994      W 76,897      W 257,244  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 64,241      W 20,326      W  73,702      W  158,269  

Non-current

     112        95,668        3,195        98,975  

 

36


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

15.

Net Defined Benefit Liabilities

The amounts recognized in the statements of financial position as at March 31, 2021 and December 31, 2020, are determined as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Present value of defined benefit obligations

   W 2,595,682      W 2,556,712  

Fair value of plan assets

     (2,174,066      (2,189,375
  

 

 

    

 

 

 

Liabilities

   W 424,772      W 378,087  
  

 

 

    

 

 

 

Assets

   W 3,156      W 10,750  
  

 

 

    

 

 

 

Changes in the defined benefit obligations for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 2,556,712      W 2,427,351  

Current service cost

     61,587        60,545  

Interest expense

     11,111        10,817  

Benefits paid

     (29,987      (83,307

Remeasurements

     (3,827      2,707  

Others

     86        1,894  
  

 

 

    

 

 

 

Ending

   W  2,595,682      W  2,420,007  
  

 

 

    

 

 

 

Changes in the fair value of plan assets for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 2,189,375      W 2,069,710  

Interest income

     9,525        9,213  

Remeasurements on plan assets

     613        1,727  

Employer contributions

     3,805        1,640  

Benefits paid

     (30,955      (73,305

Others

     1,703        (538
  

 

 

    

 

 

 

Ending

   W  2,174,066      W  2,008,447  
  

 

 

    

 

 

 

Amounts recognized in the consolidated statement of profit or loss for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Current service cost

   W 61,587      W 60,545  

Net interest cost

     1,586        1,604  

Account transfers

     (3,301      (3,412
  

 

 

    

 

 

 

Total expenses

   W  59,872      W 58,737  
  

 

 

    

 

 

 

 

37


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

16.

Commitments and Contingencies

As at March 31, 2021, major commitments with local financial institutions are as follows:

 

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

Bank overdraft

   Kookmin Bank and others    KRW      1,442,000        —    

Inter-Korean Cooperation Fund

   Export-Import Bank of Korea    KRW      37,700        2,714  

Insurance for Economic

Cooperation project

   Export-Import Bank of Korea    KRW      3,240        1,732  

Collateralized loan on electronic

accounts receivable-trade

   Kookmin Bank and others    KRW      497,983        15,581  

Plus electronic notes payable

   Industrial Bank of Korea    KRW      50,000        —    

Loans for working capital

  

Korea Development Bank

and others

Shinhan Bank

  

KRW

USD

    

242,073

34,828

 

 

    

141,511

34,828

 

 

Facility loans

   Shinhan Bank and others    KRW      144,123        14,513  
   Kookmin Bank and others    USD      212,000        39,084  

Derivatives transaction limit

   Korea Development Bank    KRW      100,000        6,888  
   Woori Bank and others    USD      69,054        38,095  

Total

      KRW      2,517,119        182,939  
   USD      315,882        112,007  

As at March 31, 2021, guarantees received from financial institutions are as follows:

 

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

Performance guarantee

  

Seoul Guarantee Insurance

and others

     KRW        178,518  
   Korea Development Bank and others      USD        8,570  

Guarantee for payment in foreign currency

   Kookmin Bank and others      USD        37,302  

Guarantee for payment in Korean currency

   Shinhan Bank      KRW        75,750  

Refund guarantee for advances received

   Korea Development Bank and others      USD        8,536  

Comprehensive credit line

   KEB Hana Bank and others     
KRW
USD
 
 
    
36,100
8,700
 
 

Bid guarantee

   KEB Hana Bank      USD        400  

Bid guarantee

        KRW        119,826  

Performance guarantee / warranty guarantee

   Korea Software Financial Cooperative and others      KRW        461,506  

Guarantee for advance payments/others

     KRW        396,151  

Warranty guarantee

   Seoul Guarantee Insurance      KRW        950  

Performance guarantee

        KRW        8,392  

Guarantees for licensing

        KRW        5,393  

Guarantees for depositions

        KRW        2,879  

Merchant business guarantee insurance

        KRW        237  

Construction fund guarantee insurance

        KRW        14,464  

Total

        KRW        1,300,166  
     USD        63,508  

 

38


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

As at March 31, 2021, guarantees provided by the Group to a third party, are as follows:

 

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

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   Gasan solar power plant Inc.    Shinhan Bank      4,700        1,315      Jan. 08, 2025

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   SPP Inc.    Suhyup Bank      3,250        866      Feb. 16, 2024

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   Korea cell Inc.    Suhyup Bank      3,250        815      Feb. 16, 2024

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

  

San-ya agricultural

association corporation

   Suhyup
Bank
     3,250        823      Feb. 16, 2024

KT Hitel Co., Ltd.

   Shinhan Bank    Cash payers      700        —       

Apr. 17, 2020

~ Apr. 16, 2021

Nasmedia Co., Ltd.

  

Stockholders Association

Members

   Korea Securities
Finance Corp
     5,654        2,418      —  

 

1 

KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.), a subsidiary of the Group is subject to payment, depending on the reimbursement of principal debtor.

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd., to pay KT Sat Co., Ltd.’s liabilities incurred prior to spin-off. As at March 31, 2021, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of W 756 million.

For the three-month period ended March 31, 2021, the Group made agreements with Securitization Specialty Companies (2021: Giga LTE Fifty fifth to Fifty third Securitization Specialty Co., Ltd., 2020: Giga LTE Forty ninth to Fifty fourth Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreements the Group will receive asset management fees upon liquidation of the securitization specialty company.

As at March 31, 2021, the Group is a defendant in 210 lawsuits with the total claimed amount of W 111,924 million (2020: W 110,409 million). As at March 31, 2021, litigation provisions of W 74,179 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcome of the cases cannot be estimated as at the end of the reporting period.

 

39


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

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

As at March 31, 2021, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at March 31, 2021, the contracted amount of property and equipment acquisition agreements made but not yet recognized amounts to W 643,517 million (December 31, 2020: W 596,983 million).

 

17.

Leases

Set out below is information for leases when the Group is a lessee. Information when the Group is a lessor is described in Note 10.

The consolidated statement of financial position shows the following amounts relating to leases:

 

(In millions of Korean won)    March 31, 2021      December 31, 2020  

Right-of-use assets

     

Property and buildings

   W 1,074,159      W 1,073,207  

Machinery and track facilities

     85,373        42,127  

Others

     95,595        101,845  
  

 

 

    

 

 

 

Total

   W 1,255,127      W 1,217,179  
  

 

 

    

 

 

 

Investment property (buildings)

   W 2,728      W 19,456  

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Lease liabilities1

     

Current

   W 560,336      W 345,224  

Non-current

     603,560        798,416  
  

 

 

    

 

 

 
   W 1,163,896      W 1,143,640  
  

 

 

    

 

 

 

 

1 

Included in the line items ‘other current liabilities and other non-current liabilities’ in the consolidated statement of financial position (Note 8).

Right-of-use assets related to leases were increased by W121,953 million and W133,096 million for the periods ended March 31, 2021 and 2020.

 

40


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The consolidated statement of profit or loss relating to leases for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      March 31, 2020  

Depreciation of right-of-use assets

     

Property and buildings

   W 76,783      W 72,641  

Machinery and track facilities

     11,653        16,699  

Others

     13,882        13,908  
  

 

 

    

 

 

 
   W 102,318      W 103,248  
  

 

 

    

 

 

 

Depreciation of investment properties

   W 933      W 5,638  

Interest expense relating to lease liabilities

     8,505        11,226  

Expenses relating to short-term leases

     2,210        2,653  

Expenses relating to leases of low-value assets that are not short-term leases

     6,035        4,898  

Expenses relating to variable lease payments not included in lease liabilities

     2,068        1,903  

Total cash outflow from leases was W 110,133 million and W 94,062 million during the current quarter and previous quarter, respectively.

 

18.

Retained Earnings

Details of retained earnings as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Legal reserve 1

   W 782,249      W 782,249  

Voluntary reserves 2

     4,651,362        4,651,362  

Unappropriated retained earnings

     6,680,258        6,721,809  
  

 

 

    

 

 

 

Total

   W 12,113,869      W 12,155,420  
  

 

 

    

 

 

 

 

1 

The Commercial Code of the Republic of Korea requires the Controlling Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital with the approval of the Controlling Company’s Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the Controlling Company’s majority shareholders.

2 

In accordance with the Restrictions on Special Taxation Act, R&D and HR related reserves under the voluntary reserves are separately accumulated when retained earnings from tax reserve funds are disposed, when income tax is recalculated from tax return adjustments.

 

19.

Other Components of Equity

The Group’s other components of equity as at March 31, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Treasury stock

   W (1,072,328    W (882,224

Gain or Loss on disposal of treasury stock

     2,919        (17,579

Share-based payments

     9,087        5,901  

Equity transactions within consolidated entities 1

     (341,384      (340,882
  

 

 

    

 

 

 

Total

   W (1,401,706    W (1,234,784
  

 

 

    

 

 

 

 

1

Includes profit or loss from transactions with non-controlling interests and investment differences from changes in equity ratios of subsidiaries.

 

41


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

As at March 31, 2021 and December 31, 2020, the details of treasury stock are as follows:

 

     March 31, 2021      December 31, 2020  

Number of shares

     26,870,564        19,269,678  

Amount (in millions of Korean won)

   W 1,072,328      W 882,224  

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

 

20.

Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities

The Group has recognized the following amounts relating to revenue in the statement of profit or loss for the three-month periods ended March 31, 2021 and 2020:

 

(in millions of Korean won)    2021      2020  

Revenue from contracts with customers

   W 5,984,947      W 5,780,830  

Revenue from other sources

     44,479        50,886  
  

 

 

    

 

 

 

Total

   W 6,029,426      W 5,831,716  
  

 

 

    

 

 

 

Operating revenues for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Services provided

   W 5,159,818      W 5,032,265  

Sales of goods

     869,608        799,451  
  

 

 

    

 

 

 

Total

   W 6,029,426      W 5,831,716  
  

 

 

    

 

 

 

Revenues from services provided are recognized over time, and sales of goods are recognized at a point in time. Revenues from construction commitments included in sales of goods are recognized using the percentage of completion method.

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

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Contract assets 1

   W 706,446      W 672,672  
  

 

 

    

 

 

 

Contract liabilities 1

     401,468        413,707  
  

 

 

    

 

 

 

Deferred revenue 2

     89,368        89,694  
  

 

 

    

 

 

 

 

42


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

1 

The Group recognized contract assets of W 81,218 million and contract liabilities of W 30,261 million for long-term construction contracts as at March 31, 2021 (2020: contract assets of W 86,234 million and contract liabilities of W 29,574 million). The Group recognizes contract assets as trade and other receivables, and contract liabilities as other current liabilities.

2 

Deferred revenue recognized relating to government grants is excluded.

The contract costs recognized as assets are as follows:

 

(in millions of Korean won)    March 31, 2021      December 31, 2020  

Incremental costs of contract establishment

   W 1,674,974      W 1,726,191  
  

 

 

    

 

 

 

Costs of Contract performance

     84,023        78,757  
  

 

 

    

 

 

 

The Group recognized W 483,434 million of operating expenses in the current reporting period (2020: W 432,740 million) which relate to contract cost assets.

For the three-month periods ended March 31, 2021 and 2020, the recognized revenue arising from carried-forward contract liabilities from prior year is as follows:

 

(in millions of Korean won)    2021      2020  

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

     

Allocation of the transaction price

   W 87,904      W 76,259  

Deferred revenue of joining/installment fees

     12,480        10,591  
  

 

 

    

 

 

 

Total

   W 100,384      W 86,850  
  

 

 

    

 

 

 

 

21.

Operating Expenses

Operating expenses for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Salaries and wages

   W 1,024,243      W 1,003,946  

Depreciation

     650,390        651,292  

Depreciation of right-of-use assets

     102,318        103,248  

Amortization of intangible assets

     148,444        157,814  

Commissions

     249,992        245,688  

Interconnection charges

     124,473        131,302  

International interconnection fees

     51,300        44,879  

Purchase of inventories

     954,446        859,365  

Changes of inventories

     (57,246 )        30,841  

Sales commissions

     594,595        531,278  

Service costs

     491,187        454,843  

Utilities

     88,929        86,618  

Taxes and dues

     67,666        60,135  

Rent

     30,702        31,810  

Insurance premiums

     16,742        18,322  

Installation fees

     35,875        24,745  

Advertising expenses

     31,365        26,136  

Research and development expenses

     40,115        39,951  

Card service costs

     724,877        682,746  

Others

     214,858        261,927  
  

 

 

    

 

 

 

Total

   W 5,585,271      W 5,446,886  
  

 

 

    

 

 

 

 

43


KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

March 31, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Details of employee benefits for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Short-term employee benefits

   W 944,417      W 923,380  

Post-employment benefits (defined benefits)

     59,872        58,737  

Post-employment benefits (defined contributions)

     15,300        14,795  

Share-based payments

     1,304        1,599  

Others

     3,350        5,435  
  

 

 

    

 

 

 

Total

   W 1,024,243      W 1,003,946  
  

 

 

    

 

 

 

 

22.

Other Income and Other Expenses

Other income for the three-month periods ended March 31, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Gain on disposal of property, equipment and investment properties

   W 7,396      W 7,668  

Gain on disposal of intangible assets

     916        1,715  

Gain on disposal of right-of-use assets

     1,828        1,693  

Compensation on property and equipment

     33,399        28,948  

Gain on government subsidies

     1,727        4,177  

Others

     13,354        5,970