6-K 1 d193403d6k.htm FORM 6-K Form 6-K
Table of Contents

 

 

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 August 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-                     

 

 

 


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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: August 27, 2021
KT Corporation
By:  

  /s/ Seunghoon Chi

Name: Seunghoon Chi
Title:   Vice President
By:  

  /s/ Ginah Yun

Name: Ginah Yun
Title:   Director


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Financial Statements

June 30, 2021 and 2020


Table of Contents

KT Corporation and Subsidiaries

Index

June 30, 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 – 62  


Table of Contents
  

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 June 30, 2021, and the related consolidated interim statements of profit or loss and comprehensive income for the three-month and six-month periods ended June 30, 2021 and 2020, and consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 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.

Samil PricewaterhouseCoopers, 100 Hangang-daero, Yongsan-gu, Seoul 04386, Korea, www.samil.com


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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.

 

August 17, 2021

Seoul, Korea

 

This report is effective as of August 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


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2021 and December 31, 2020

 

 

(in millions of Korean won)    Notes   

June 30, 2021

(Unaudited)

     December 31, 2020  

Assets

        

Current assets

        

Cash and cash equivalents

   4    W 3,096,957      W 2,634,624  

Trade and other receivables, net

   4,5      4,990,287        4,902,471  

Other financial assets

   4,6      1,094,074        1,202,840  

Current tax assets

        864        2,059  

Inventories, net

   7      474,101        534,636  

Current assets held for sale

   9      53,662        1,198  

Other current assets

   8      1,985,375        1,876,352  
     

 

 

    

 

 

 

Total current assets

        11,695,320        11,154,180  
     

 

 

    

 

 

 

Non-current assets

        

Trade and other receivables, net

   4,5      1,143,243        1,250,769  

Other financial assets

   4,6      445,974        544,347  

Property and equipment, net

   10      13,627,330        14,206,119  

Right-of-use assets

   17      1,223,040        1,217,179  

Investment properties, net

   10      1,645,889        1,368,453  

Intangible assets, net

   10      2,595,428        2,161,258  

Investments in associates and joint ventures

   11      555,306        557,881  

Deferred tax assets

        441,534        433,698  

Other non-current assets

   8      765,886        768,661  
     

 

 

    

 

 

 

Total non-current assets

        22,443,630        22,508,365  
     

 

 

    

 

 

 

Total assets

      W 34,138,950      W     33,662,545  
     

 

 

    

 

 

 

 

3


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2021 and December 31, 2020

 

 

(in millions of Korean won)    Notes   

June 30, 2021

(Unaudited)

    December 31, 2020  

Liabilities

       

Current liabilities

       

Trade and other payables

   4,12    W 5,741,654     W 6,210,099  

Borrowings

   4,13      945,888       1,418,114  

Other financial liabilities

   4, 6      475       2,493  

Current tax liabilities

        355,145       232,225  

Provisions

   14      158,571       165,990  

Deferred income

        77,179       60,252  

Other current liabilities

   8      1,046,771       1,103,299  
     

 

 

   

 

 

 

Total current liabilities

        8,325,683       9,192,472  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade and other payables

   4,12      1,178,860       807,540  

Borrowings

   4,13      6,809,806       5,898,184  

Other financial liabilities

   4,6      207,610       260,676  

Net defined benefit liabilities

   15      449,644       378,087  

Provisions

   14      89,134       86,202  

Deferred income

   20      172,686       149,050  

Deferred tax liabilities

        366,837       429,331  

Other non-current liabilities

   8      874,917       909,570  
     

 

 

   

 

 

 

Total non-current liabilities

        10,149,494       8,918,640  
     

 

 

   

 

 

 

Total liabilities

        18,475,177       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      12,506,124       12,155,420  

Accumulated other comprehensive income

        35,940       86,051  

Other components of equity

   19      (1,398,232     (1,234,784
     

 

 

   

 

 

 
        14,148,589       14,011,444  

Non-controlling interests

        1,515,184       1,539,989  
     

 

 

   

 

 

 

Total equity

        15,663,773       15,551,433  
     

 

 

   

 

 

 

Total liabilities and equity

      W 34,138,950     W 33,662,545  
     

 

 

   

 

 

 

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

 

4


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Profit or Loss

Three-Month and Six-Month Periods Ended June 30, 2021 and 2020

 

 

          Periods Ended June 30  
(in millions of Korean won, except per share amounts)    Notes    2021
(Unaudited)
     2020
(Unaudited)
 
          Three months      Six months      Three months     Six months  

Operating revenue

   20    W 6,027,612      W 12,057,038      W 5,876,503     W 11,708,219  

Operating expenses

   21      5,551,732        11,137,003        5,532,990       10,979,876  
     

 

 

    

 

 

    

 

 

   

 

 

 

Operating profit

        475,880        920,035        343,513       728,343  

Other income

   22      75,163        133,783        63,493       113,664  

Other expenses

   22      62,281        116,316        78,024       137,017  

Finance income

   23      70,364        256,783        24,066       265,714  

Finance costs

   23      64,500        237,171        38,807       285,208  

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

   11      28,085        33,751        (4,886     (8,339
     

 

 

    

 

 

    

 

 

   

 

 

 

Profit before income tax expense

        522,711        990,865        309,355       677,157  

Income tax expense

   24      151,923        293,602        100,294       240,890  
     

 

 

    

 

 

    

 

 

   

 

 

 

Profit for the period

      W 370,788      W 697,263      W 209,061     W 436,267  
     

 

 

    

 

 

    

 

 

   

 

 

 

Profit for the period attributable to:

             

Owners of the Controlling Company

      W 338,817      W 641,441      W 178,091     W 387,026  

Non-controlling interest

        31,971        55,822        30,970       49,241  

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

   25           

Basic earnings per share

      W 1,446      W 2,719      W 726     W 1,578  

Diluted earnings per share

        1,445        2,717        726       1,577  

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

 

5


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KT Corporation and Subsidiaries

Consolidated Interim Statements of Comprehensive Income     

Three-Month and Six-Month Periods Ended June 30, 2021 and 2020                     

 

 

            Periods Ended June 30  
(in millions of Korean won)    Notes      2021
(Unaudited)
    2020
(Unaudited)
 
            Three months     Six months     Three months     Six months  

Profit for the period

      W 370,788     W 697,263     W 209,061     W 436,267  
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

           

Items that will not be reclassified to profit or loss:

           

Remeasurements of the net defined benefit liabilities

     15        5,403       9,144       (2,625     (3,198

Share of remeasurement gain of associates and joint ventures

        (2,250     (2,586     (768     72  

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

     6        11,296       15,873       92,972       40,969  

Items that may be subsequently reclassified to profit or loss:

           

Valuation gain (loss) on cash flow hedges

     6        9,604       49,855       (21,379     74,179  

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

        6,519       (44,126     32,820       (77,209

Share of other comprehensive income from associates and joint ventures

        (17,305     (21,771     709       578  

Exchange differences on translation of foreign operations

        (3,228     4,711       (11,954     (9,907
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income for the period, net of tax

        10,039       11,100       89,775       25,484  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      W 380,827     W 708,363     W 298,836     W 461,751  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period attributable to:

           

Owners of the Controlling Company

      W 347,487     W 647,578     W 252,178     W 415,158  

Non-controlling interests

        33,340       60,785       46,658       46,593  

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

 

6


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KT Corporation and Subsidiaries

Consolidated Statements of Changes in Equity

Six-Month Periods Ended June 30, 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

      —         —         387,026       —         —         387,026       49,241       436,267  

Remeasurements of net defined benefit liabilities

  15     —         —         (502     —         —         (502     (2,696     (3,198

Valuation loss on cash flow hedge

  6     —         —         —         (2,935     —         (2,935     (95     (3,030

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

      —         —         (13     —         —         (13     85       72  

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

      —         —         —         578       —         578       —         578  

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

      —         —         184,330       (149,086     —         35,244       5,725       40,969  

Exchange differences on translation of foreign operations

      —         —         —         (4,240     —         (4,240     (5,667     (9,907
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —         —         570,841       (155,683     —         415,158       46,593       461,751  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

Appropriations of loss on disposal of treasury stock

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

Change in ownership interest in subsidiaries

      —         —         —         —         11,934       11,934       25,219       37,153  

Disposal of treasury stock

      —         —         —         —         3,640       3,640       —         3,640  

Others

      —         —         —         —         (3,092     (3,092     —         (3,092
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

      —         —         (271,456     —         14,172       (257,284     (15,534     (272,818
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2020 (Unaudited)

    W 1,564,499     W 1,440,258     W 11,933,165     W 39,251     W (1,155,911   W 13,821,262     W 1,551,219     W 15,372,481  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

7


Table of Contents

KT Corporation and Subsidiaries     

Consolidated Statements of Changes in Equity     

Six-Month Periods Ended June 30, 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

      —         —         641,441       —         —         641,441       55,822       697,263  

Remeasurements of net defined benefit liabilities

    15       —         —         5,991       —         —         5,991       3,153       9,144  

Valuation gain on cash flow hedge

    6       —         —         —         5,698       —         5,698       31       5,729  

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

      —         —         —         (17,974     —         (17,974     (3,797     (21,771

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

      —         —         (2,795     —         —         (2,795     209       (2,586

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

      —         —         53,052       (40,185     —         12,867       3,006       15,873  

Exchange differences on translation of foreign operations

      —         —         —         2,350       —         2,350       2,361       4,711  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —         —         697,689       (50,111     —         647,578       60,785       708,363  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

Appropriations of loss on disposal of treasury stock

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

Change in consolidation scope

      —         —         —         —         —         —         (55,344     (55,344

Change in ownership interest in subsidiaries

      —         —         —         —         3,600       3,600       (6,484     (2,884

Acquisition of treasury stock

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

Others

      —         —         —         —         2,559       2,559       —         2,559  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

      —         —         (346,985     —         (163,448     (510,433     (85,590     (596,023
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at June 30, 2021 (Unaudited)

    W 1,564,499     W 1,440,258     W 12,506,124     W 35,940     W (1,398,232   W 14,148,589     W 1,515,184     W 15,663,773  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

8


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2021 and 2020

 

 

          Six-Month Period Ended June 30  
(in millions of Korean won)    Notes   

2021

(Unaudited)

   

2020

(Unaudited)

 

Cash flows from operating activities

       

Cash generated from operations

   26    W 2,858,006     W 2,407,736  

Interest paid

        (132,813     (125,831

Interest received

        131,300       125,013  

Dividends received

        36,298       13,019  

Income tax paid

        (235,372     7,092  
     

 

 

   

 

 

 

Net cash inflow from operating activities

        2,657,419       2,427,029  
     

 

 

   

 

 

 

Cash flows from investing activities

       

Collection of loans

        29,342       35,030  

Disposal of financial assets at fair value through profit or loss

        221,346       196,776  

Disposal of financial assets at amortized cost

        458,509       194,600  

Disposal of financial assets at fair value through comprehensive income

        206,840       350,964  

Disposal of assets held-for-sale

        —         342  

Disposal of investments in associates and joint ventures

        8,716       110  

Disposal of property and equipment and investment properties

        28,536       13,558  

Disposal of intangible assets

        5,545       5,795  

Disposal of right-of-use assets

        707       213  

Increase in cash due to business combination

        —         11,045  

Loans granted

        (20,659     (22,293

Acquisition of financial assets at fair value through profit or loss

        (253,533     (369,455

Acquisition of financial assets at amortized cost

        (222,314     (261,137

Acquisition of financial assets at fair value through other comprehensive income

        (16,130     (38

Acquisition of investments in associates and joint ventures

        (16,300     (59,408

Acquisition of property and equipment and investment properties

        (1,715,380     (1,650,921

Acquisition of intangible assets

        (536,264     (431,371

Acquisition of right-of-use assets

        (2,982     (5,228

Decrease in cash due to business combination

        (32,640     —    
     

 

 

   

 

 

 

Net cash outflow from investing activities

        (1,856,661     (1,991,418
     

 

 

   

 

 

 

 

9


Table of Contents

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2021 and 2020

 

 

            Six-Month Period Ended June 30  
(in millions of Korean won)    Notes     

2021

(Unaudited)

   

2020

(Unaudited)

 

Cash flows from financing activities

       

Proceeds from borrowings

        1,341,964       1,036,111  

Cash inflow from consolidated capital transactions

        35,250       33,457  

Cash inflow from other financing activities

        5,780       —    

Repayments of borrowings

        (972,346     (455,516

Dividends paid

        (350,249     (310,519

Decrease in finance lease liabilities

        (206,916     (88,484

Decrease in other financal liabilities

        —         (13,674

Transactions with non-controlling shareholders

        —         (1,128

Acquisition of treasury stock

        (193,625     —    
     

 

 

   

 

 

 

Net cash inflow (outflow) from financing activities

        (340,142     200,247  
     

 

 

   

 

 

 

Effect of exchange rate change on cash and cash equivalents

        1,717       484  
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        462,333       636,342  

Cash and cash equivalents

       

Beginning of the period

        2,634,624       2,305,894  
     

 

 

   

 

 

 

End of the period

      W 3,096,957     W 2,942,236  
     

 

 

   

 

 

 

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

 

10


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 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 62 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 June 30, 2021, the Korean government does not own any shares in the Controlling Company.

 

  1.2

Consolidated Subsidiaries

The consolidated subsidiaries as at June 30, 2021 and December 31, 2020, are as follows:

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    June 30,
2021
     December 31,
2020
     Closing month

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

KT Strategic Investment Fund No.2

  

Investment fund

   Korea      100.00      100.00    December

 

11


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    June 30,
2021
     December 31,
2020
     Closing month

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      88.70      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      100.00      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

PlayD Co., Ltd.
(N Search Marketing Co., Ltd.)

  

Advertising agency

   Korea      70.40      70.40    December

 

12


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

               Controlling percentage
ownership1 (%)
      
Subsidiary    Type of business    Location    June 30,
2021
     December 31,
2020
     Closing month

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

KT Dutch B.V.

  

East Telecom management

   Netherlands      100.00      100.00    December

East Telecom LLC

  

Fixed line internet business

   Uzbekistan      91.60      91.60    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

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

KHS Corporation

  

Operation and maintenance of facilities

   Korea      100.00      —        December

Lolab Co., Ltd.

  

Truck transportation and trucking arrangement business

   Korea      51.00      —        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


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  1.3

Changes in Scope of Consolidation

Subsidiaries newly included/merged in the consolidation during the six-month period ended June 30, 2021:

 

Changes

  

Location

  

Name of subsidiary

  

Reason

Included    Korea    KT Studio Genie Co., Ltd.    Newly established
Included    Korea    Lolab    Newly established
Included    Korea    KHS Corporation    Transferred
Excluded    Belgium    KT Belgium    Liquidated
Excluded    Korea    KT Powertel Co., Ltd.    Shares disposed
Excluded    China    Korea Telecom China Co., Ltd.    Liquidated
Excluded    Poland    KBTO Sp.z o. o.    Liquidated
Excluded    Korea    GE Premier 1st Corporate Restructuring Real Estate Investment Trust Co.    Liquidated

Summarized information for consolidated subsidiaries as at June 30, 2021 and December 31, 2020 and for the six-month periods ended June 30, 2021 and 2020, is as follows:

 

     June 30, 2021  
(in millions of Korean won)    Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT Linkus Co., Ltd.

   W 53,332      W 51,323      W 37,623      W (2,265

KT Submarine Co., Ltd.

     115,248        12,943        15,747        156  

KT Telecop Co., Ltd.

     343,523        217,358        249,878        1,201  

KT Hitel Co., Ltd.

     281,180        85,454        196,101        (4,747

KT Service Bukbu Co., Ltd.

     54,791        50,767        113,197        (247

KT Service Nambu Co., Ltd.

     61,299        54,802        134,043        (225

BC Card Co., Ltd. 1

     3,386,003        2,058,801        1,746,343        37,096  

H&C Network 1

     258,310        49,079        156,080        1,276  

Nasmedia Co., Ltd. 1

     423,677        218,524        56,915        11,756  

KTDS Co., Ltd. 1

     158,399        99,974        255,498        11,456  

KT M Hows Co., Ltd.

     95,082        63,675        27,364        2,928  

KT M&S Co., Ltd.

     234,113        197,969        316,036        2,190  

GENIE Music Corporation
(KT Music Corporation)

     255,318        86,109        122,128        6,144  

KT MOS Bukbu Co., Ltd.

     31,860        24,119        33,411        1,746  

KT MOS Nambu Co., Ltd.

     32,713        22,533        33,331        1,359  

KT Skylife Co., Ltd. 1

     943,388        175,328        341,996        38,559  

KT Estate Inc. 1

     1,702,537        333,412        129,434        4,896  

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

     11,339        1,739        2,189        267  

KT Sat Co., Ltd.

     603,088        54,482        84,898        10,196  

 

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Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

     June 30, 2021  
(in millions of Korean won)    Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT Sports Co., Ltd.

     36,476        26,354        24,123        (1,500

KT Music Contents Fund No.1

     5,136        1,505        329        312  

KT Music Contents Fund No.2

     14,925        150        178        38  

KT-Michigan Global Content Fund

     10,228        77        29        (56

Autopion Co., Ltd.

     4,895        4,352        2,083        (394

KT M Mobile Co., Ltd.

     127,628        36,169        95,199        (5,901

KT Investment Co., Ltd. 1

     107,714        85,584        12,988        197  

KTCS Corporation 1

     357,023        180,000        434,984        12,908  

KTIS Corporation

     321,490        143,863        225,491        8,777  

Next Connect PFV

     470,466        118,223        —          (4,754

KT Japan Co., Ltd.1

     1,379        2,528        698        (171

KT Dutch B.V. 1

     33,607        11,106        12,034        4,315  

KT America, Inc.

     4,536        56        3,158        118  

KT Rwanda Networks Ltd. 2

     115,317        207,937        11,613        (13,769

AOS Ltd. 2

     12,514        3,807        4,106        1,020  

KT Hong Kong Telecommunications Co., Ltd.

     6,804        2,720        8,034        335  

KT Huimangjieum 1

     5,301        2,875        5,194        419  

Storywiz

     20,399        10,559        8,900        (1,693

KT Engineering Co., Ltd.
(KT ENGCORE Co., Ltd.)

     87,201        48,616        82,944        (2,558

KT Studio Genie Co., Ltd.

     54,441        4,108        —          (2,313

Lolab Co., Ltd.

     4,299        567        —          —    

 

     December 31, 2020      June 30, 2020  
(in millions of Korean won)    Total assets      Total liabilities      Operating
revenues
    

Profit (loss)

for the period

 

KT Powertel Co., Ltd.

   W 119,694      W 18,833      W 27,690      W 2,153  

KT Linkus Co., Ltd.

     58,372        54,022        41,725        (2,566

KT Submarine Co., Ltd.

     116,813        14,032        36,023        1,698  

KT Telecop Co., Ltd.

     318,456        193,737        158,320        (1,125

KT Hitel Co., Ltd.

     288,949        92,599        161,998        (4,099

KT Service Bukbu Co., Ltd.

     60,825        56,554        105,215        (1,293

KT Service Nambu Co., Ltd.

     58,182        51,460        124,683        (3,282

BC Card Co., Ltd. 1

     3,084,398        1,778,751        1,666,561        53,789  

H&C Network 1

     269,651        61,365        160,284        462  

Nasmedia Co., Ltd. 1

     422,039        221,371        51,764        9,188  

KTDS Co., Ltd. 1

     183,297        133,129        207,060        3,340  

KT M Hows Co., Ltd.

     104,704        76,315        19,541        3,461  

 

15


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

     December 31, 2020      June 30, 2020  
(in millions of Korean won)    Total assets      Total liabilities      Operating
revenues
     Profit (loss)
for the period
 

KT M&S Co., Ltd.

     231,260        197,306        319,535        (1,244

GENIE Music Corporation

     250,538        88,488        122,348        4,143  

KT MOS Bukbu Co., Ltd.

     32,167        26,070        30,989        482  

KT MOS Nambu Co., Ltd.

     33,765        24,947        33,923        1,820  

KT Skylife Co., Ltd. 1

     919,476        175,039        345,584        39,637  

KT Estate Inc. 1

     1,689,601        325,429        211,102        8,436  

KTGDH Co., Ltd.

     11,003        1,669        2,097        276  

KT Sat Co., Ltd.

     630,740        92,791        86,674        5,126  

KT Sports Co., Ltd.

     26,572        14,940        20,260        (2,115

KT Music Contents Fund No.1

     4,844        1,525        222        175  

KT Music Contents Fund No.2

     15,021        285        39        (106

KT-Michigan Global Content Fund

     10,382        175        99        —    

Autopion Co., Ltd.

     4,903        4,961        3,663        (202

KT M Mobile Co., Ltd.

     129,011        27,281        82,150        (861

KT Investment Co., Ltd. 1

     115,627        93,695        1,466        556  

KTCS Corporation 1

     384,919        215,175        424,708        6,951  

KTIS Corporation

     294,289        126,894        223,054        8,519  

Next Connect PFV

     394,268        37,271        8        (288

KT Japan Co., Ltd.1

     2,694        2,622        905        (38

Korea Telecom China Co., Ltd.

     381        21        426        97  

KT Dutch B.V. 1

     29,585        10,109        14,679        3,231  

KT America, Inc.

     4,498        125        3,197        169  

KT Rwanda Networks Ltd. 2

     114,768        191,781        8,559        (16,470

KT Belgium

     87,608        —          —          1  

KBTO sp.zo.o.

     438        117        373        (2,230

AOS Ltd. 2

     11,812        3,875        2,787        265  

KT Hong Kong Telecommunications Co., Ltd.

     6,159        2,800        8,390        761  

KT Huimangjieum

     3,720        2,787        1,598        208  

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

     5,703        1,165        153        30  

Storywiz Co., Ltd.

     21,594        10,065        4,334        (567

KT Engineering Co., Ltd.
(KT ENGCORE Co., Ltd.)

     138,220        102,963        60,366        1,331  

 

  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 subsidiaries is included in liabilities.

 

16


Table of Contents

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 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 six-month periods ended June 30, 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 June 30, 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, and the amounts recognized in profit or loss as a result of applying this exemption should be disclosed. The amendments do 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.

 

  (2)

New standards and interpretations not yet adopted by the Group

Certain new accounting standard and interpretation that have been published but have not been early adopted by the Group, are set out below.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   

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

 

   

Korean IFRS 1116 Leases – Lease Incentives

 

   

Korean IFRS 1041 Agriculture – Measuring Fair Value

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   

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

Significant 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.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

3.

Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Group to make 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 global 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 interim 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 June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 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 3,096,957      W —        W —        W —        W  3,096,957  

Trade and other receivables1

     5,195,790        —          881,466        —          6,077,256  

Other financial assets

     396,705        1,018,059        102,198        23,086        1,540,048  

 

  1 

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

 

(in millions of Korean won)    June 30, 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 6,920,514      W —        W —        W 6,920,514  

Borrowings

     7,755,694        —          —          7,755,694  

Other financial liabilities

     139,978        5,058        63,049        208,085  

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 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 June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021  
(in millions of Korean won)    Total amounts      Provision for
impairment
     Present
value
discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 3,304,634      W (325,985    W (8,356    W 2,970,293  

Other receivables

     2,117,812        (95,061      (2,757      2,019,994  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 5,422,446      W (421,046    W (11,113    W 4,990,287  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

     721,407        (3,141      (23,885      694,381  

Other receivables

     568,425        (104,115      (15,448      448,862  
  

 

 

    

 

 

    

 

 

    

 

 

 
   W 1,289,832      W (107,256    W (39,333    W 1,143,243  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

     December 31, 2020  
(in millions of Korean won)    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 June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)   

June 30,

2021

     December 31,
2020
 

Loans

   W 106,274      W 116,082  

Receivables 1

     1,858,625        1,699,608  

Accrued income

     13,383        6,901  

Refundable deposits

     343,430        350,180  

Loans receivable

     223,362        150,527  

Finance lease receivables

     62,681        64,047  

Others

     60,277        60,416  

Less: Provision for impairment

     (199,176      (204,604
  

 

 

    

 

 

 
   W  2,468,856      W  2,243,157  
  

 

 

    

 

 

 

 

  1

As of June 30, 2021, the settlement receivables of BC Card Co., Ltd. of \ 1,120,297 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 June 30, 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.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

6.

Other Financial Assets and Liabilities

Details of other financial assets and liabilities as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)   

June 30,

2021

     December 31,
2020
 

Other financial assets

     

Financial assets at amortized cost 1

   W 396,705      W 671,068  

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

     1,018,059        809,919  

Financial assets at fair value through other comprehensive income 1

     102,198        258,516  

Derivatives used for hedging

     23,086        7,684  

Less: Non-current

     (445,974      (544,347
  

 

 

    

 

 

 

Current

   W  1,094,074      W  1,202,840  
  

 

 

    

 

 

 

Other financial liabilities

     

Financial liabilities at amortized cost

   W 139,978      W 132,558  

Financial liabilities at fair value through profit or loss

     5,058        2,682  

Derivatives used for hedging

     63,049        127,929  

Less: Non-current

     (207,610      (260,676
  

 

 

    

 

 

 

Current

   W 475      W 2,493  
  

 

 

    

 

 

 

 

  1

As at June 30, 2021, the Group’s other financial assets amounting to W 120,798 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 June 30, 2021, MMW(Money Market Wrap) and MMT(Money Market Trust) amounting to \ 641,501 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 June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)   

June 30,

2021

     December 31,
2020
 

Equity instruments (Listed)

   W 34,903      W 46,449  

Equity instruments (Unlisted)

     43,933        83,017  

Debt securities

     939,209        680,453  

Derivative held for trading

     14        —    
  

 

 

    

 

 

 
     1,018,059        809,919  

Less: Non-current

     (316,244      (276,109
  

 

 

    

 

 

 

Current

   W 701,815      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 June 30, 2021.

Investment in Korea Software Financial Cooperative amounting to W 5,416 million is provided as collateral.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Details of financial assets at fair value through other comprehensive income as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30,
2021
     December 31,
2020
 

Equity instruments (Listed)

   W 9,329      W 6,216  

Equity instruments (Unlisted)

     86,492        245,730  

Debt securities

     6,377        6,570  
  

 

 

    

 

 

 
     102,198        258,516  

Less: Non-current

     (102,198      (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.

During the period ended June 30, 2021, the Group sold all of Mastercard Inc. shares. The fair value of the shares sold is W 206,840 million, and the cumulative amount recognized in comprehensive income after tax is W 156,359 million. Of these, W 53,052 million is reclassified as retained earnings attributable to owners of the Controlling Company.

Details of valuation of derivatives used for hedging as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  
     Assets      Liabilities      Assets      Liabilities  

Interest rate swap 1

   W —        W 463      W —        W 1,078  

Currency swap 2

     22,541        62,586        7,684        126,189  

Currency forwards 3

     545        —          —          662  
  

 

 

    

 

 

    

 

 

    

 

 

 
     23,086        63,049        7,684        127,929  

Less: Non-current

     (21,201      (62,586      (2,111      (126,408
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 1,885      W 463      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.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The valuation gains and losses on the derivative contracts for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

     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 (2    W —        W  —        W (1,605 )

Currency swap

     82,573        14,703        67,412        108,063        7,062        102,824  

Currency forwards

     839        —          —          3,174        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W  83,412      W  14,703      W 67,410      W  111,237      W  7,062      W 101,219  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  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 6,681 Smillion for the period ended June 30, 2021 (six-month period ended June 30, 2020: valuation gain of W 2,537 million).

Details of financial liabilities at fair value through profit or loss at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30,
2021
     December 31,
2020
 

Financial liabilities at fair value through profit or loss

     

Derivative liabilities held for trading

   W 2,421      W 45  

Consideration for conversion rights

     2,637        2,637  
  

 

 

    

 

 

 
   W  5,058      W 2,682  
  

 

 

    

 

 

 

The valuation gain and loss on financial liabilities at fair value through profit or loss for the six-month periods ended June 30, 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  1,312      W  111      W  82      W  19  

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

7.

Inventories

Inventories as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021      December 31, 2020  
(in millions of Korean won)    Acquisition
cost
     Valuation
allowance
    

Carrying

amount

     Acquisition
cost
     Valuation
allowance
    

Carrying

amount

 

Merchandise

   W  534,433      W  (102,183)      W  432,250      W  650,856      W (133,224    W  517,632  

Others

     41,851        —          41,851        17,004        —          17,004  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 576,284      W (102,183)      W 474,101      W 667,860      W (133,224    W 534,636  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cost of inventories recognized as expenses for the six-month period ended June 30, 2021, amounts to \ 1,722,158 million (six-month period ended June 30, 2020: \ 1,752,959 million) and recovery of valuation loss on inventory amounts to \ 31,041 million for the six-month period ended June 30, 2021 (six-month period ended June 30, 2020: valuation loss of \ 10,495 million).

 

8.

Other Assets and Liabilities

Other assets and liabilities as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Other assets

     

Advance payments

   W 234,193      W 168,302  

Prepaid expenses 1

     116,965        66,578  

Contract cost 1

     1,726,733        1,804,948  

Contract assets 1

     660,991        586,438  

Others

     12,379        18,747  

Less: Non-current

     (765,886      (768,661
  

 

 

    

 

 

 

Current

   W  1,985,375      W  1,876,352  
  

 

 

    

 

 

 

Other liabilities

     

Advances received 1

   W 306,882      W 328,491  

Withholdings

     93,314        105,415  

Unearned revenue 1

     41,062        29,593  

Lease liabilities

     1,126,504        1,143,640  

Contract liabilities 1

     332,413        384,133  

Others

     21,513        21,597  

Less: Non-current

     (874,917      (909,570
  

 

 

    

 

 

 

Current

   W 1,046,771      W 1,103,299  
  

 

 

    

 

 

 

 

  1 

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

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

9.

Assets Held for Sale

During the first half of the year, the consolidated company decided to sell some real estate and other assets and classified them as assets held for sale. The specific details of assets held for sale are as follows.

 

(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 six-month periods ended June 30, 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

     1,028,690        1,106,069  

Disposal and termination

     (45,289      (37,208

Depreciation

     (1,293,979      (1,279,453

Transfer to investment property

     (171,137      (139,437

Scope change

     (5,040      —    

Transfer to assets held for sale

     (41,185      —    

Others

     (50,849      19,252  
  

 

 

    

 

 

 

Ending, net

   W 13,627,330      W 13,454,522  
  

 

 

    

 

 

 

Details of property and equipment provided as collateral as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021
(in millions of Korean won)    Carrying
amount
     Secured
amount
     Related line
item
   Related
amount
     Secured party

Land and Buildings

   W  11,536      W  15,587      Borrowings    W  3,072      Industrial Bank of
Korea/Korea
Development
Bank

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

     December 31, 2020
(in millions of Korean won)    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
     4,142        249      Deposits      249      K Bank Inc.

Changes in investment properties for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W  1,368,453      W  1,387,430  

Acquisition

     163,216        7,760  

Disposal

     (1,907      (654

Depreciation

     (24,262      (35,367

Transfer from (to) property and equipment

     171,137        139,437  

Scope change

     (91      —    

Transfer to assets held for sale

     (11,279      —    

Others

     (19,378      (7,072
  

 

 

    

 

 

 

Ending, net

   W 1,645,889      W 1,491,534  
  

 

 

    

 

 

 

As at June 30, 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 66,851 million for one year or less, W 95,765 million more than one year and less than five years, W 72,499 million over five years, and W 235,115 million in total.

Details of investment properties provided as collateral as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021  
(in millions of Korean won)    Carrying
amount
     Secured
amount
     Related
account
     Related
amount
 

Land and Buildings

   W  759,671      W  60,976        Deposits      W  54,624  

Land and Buildings

     2,818        3,513        Borrowings        2,928  

 

     December 31, 2020  
(in millions of Korean won)    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  

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Changes in intangible assets for the six-month periods ended June 30, 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

     739,639        91,604  

Disposal and termination

     (4,865      (6,810

Amortization

     (301,117      (320,672

Impairment

     (6,802      —    

Others

     7,315        49,377  
  

 

 

    

 

 

 

Ending, net

   W 2,595,428      W 2,647,536  
  

 

 

    

 

 

 

The carrying amount of membership rights and others, excluding goodwill, with indefinite useful life not subject to amortization is W 220,697 million as at June 30, 2021 (December 31, 2020: W 221,099 million).

In April 2021, the Group was reassigned with a portion of the 1.8GHz and 900MHz bands in accordance with Article 11 of the Radio Waves Act (frequency allocation based on consideration). The payment for the frequency use right is W 547,800 million and W 141,300 million for the 1.8GHz and 900MHz bands, respectively. The Group plans to pay a portion of the consideration paid in a lump sum in June 2021, and the remainder in installments every year for the next five years.

Goodwill is allocated to the Group’s cash-generating unit which is identified by operating segments. As at June 30, 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 Corporation1

     50,214  
  

PlayD Co., Ltd.1

     42,745  
  

KT Telecop Co., Ltd. 1

     15,418  
  

KT MOS Bukbu Co., Ltd. and others

     15,582  
     

 

 

 
      W   230,250  
  

 

 

 

 

  1

The recoverable amounts of telecom wireless business, BC Card Co., Ltd. and KT Telecop Co., Ltd. are calculated based on value-in use calculations. The recoverable amounts of GENIE Music Corporation and PlayD Co., Ltd. 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 risks of related operating segments are reflected in the discount rate.

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

11.

Investments in Associates and Joint Ventures

Details of associates as at June 30, 2021 and December 31, 2020, are as follows:

 

     Percentage of ownership (%)     Location    Closing month
  

June 30,

2021

    December 31,
2020
          

KIF Investment 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 six-month periods ended June 30, 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  

KIF Investment Fund

   W  170,155      W —       W 6,654     W (7,194   W  169,615  

KT-IBKC Future Investment Fund 1

     16,190        (4,500     1,888       —         13,578  

K Bank Inc.

     208,272        —         (3,477     (6,908     197,887  

Hyundai Robotics Co., Ltd.

     50,936        —         (298     81       50,719  

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     17,786        —         (271     —         17,515  

Others

     94,542        12,084       29,507       (30,141     105,992  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 557,881      W 7,584     W  34,003     W (44,162   W 555,306  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

     2020  
(in millions of Korean won)    Beginning     

Acquisition

(Disposal)

    Share of net profit
(loss) from associates
and joint ventures 1
    Others     Ending  

KIF Investment Fund

   W 163,975      W —       W (346   W (9,240   W 154,389  

KT-IBKC Future Investment Fund 1

     14,100        —         768       —         14,868  

KT-CKP New Media Investment Fund

     134        (134     —         —         —    

K Bank Inc.

     45,158        —         (9,920     8       35,246  

Hyundai Robotics Co., Ltd.

     —          50,000       —         —         50,000  

Others 1

     44,293        17,730       1,262       (2,359     60,926  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
   W 267,660      W 67,596     W (8,236   W (11,591   W 315,429  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

  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 W 252 million (six-month period ended June 30, 2020: net profit of W 103 million) recognized as operating revenue and expense during the period.

Summarized financial information of associates and joint ventures as at June 30, 2021 and December 31, 2020 and for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

     June 30, 2021  
(in millions of Korean won)    Assets      Liabilities      Operating
revenue
    

Profit (loss)

for the period

 

KIF Investment Fund

   W 508,844      W —        W —        W 19,961  

KT-IBKC Future Investment Fund 1

     27,155        —          4,390        3,776  

K Bank Inc.

     12,133,965        11,616,383        110,100        (8,027

Hyundai Robotics Co., Ltd.

     450,702        151,300        100,303        (2,984

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     116,308        66,680        —          (44

 

     December 31, 2020      June 30, 2020  
(in millions of Korean won)    Assets      Liabilities      Operating
revenue
    

Profit (loss)

for the period

 

KIF Investment Fund

   W 510,464      W —        W —        W (1,036

KT-IBKC Future Investment Fund 1

     32,379        —          1,901        1,538  

K Bank Inc

     4,329,813        3,840,993        34,567        (44,920

Hyundai Robotics Co., Ltd.

     441,505        139,939        1,805        1,047  

IGIS Professional investors Private Investment Real Estate Investment LLC No 395

     116,853        66,459        —          —    

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Due to the discontinuance of equity method of accounting, the Group has not recognized loss from associates and joint ventures of W 488 million for the six-month period ended June 30, 2021 (six-month period ended June 30, 2020: profit of W 2,599 million). The accumulated comprehensive loss of associates and joint ventures as at June 30, 2021, which was not recognized by the Group, is W 8,716 million (December 31, 2020: W 8,228 million).

 

12.

Trade and Other Payables

Details of trade and other payables as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Current liabilities

     

Trade payables

   W 1,094,511      W 1,239,717  

Other payables

     4,647,143        4,970,382  
  

 

 

    

 

 

 
   W 5,741,654      W 6,210,099  
  

 

 

    

 

 

 

Non-current liabilities

     

Trade payables

   W 1,510      W 1,528  

Other payables1

     1,177,350        806,012  
  

 

 

    

 

 

 
   W 1,178,860      W 807,540  
  

 

 

    

 

 

 

 

  1

As at June 30, 2021, other payables include residual considerations related to new frequency acquisitions (Note 10).

Details of other payables as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Non-trade payables 1

   W 3,731,859      W 3,841,227  

Accrued expenses

     1,117,570        933,978  

Operating deposits

     774,608        803,904  

Others

     200,456        197,285  

Less: Non-current

     (1,177,350      (806,012
  

 

 

    

 

 

 

Current

   W 4,647,143      W 4,970,382  
  

 

 

    

 

 

 

 

  1

Settlement payables of BC Card Co., Ltd., a subsidiary of the Group, of W 1,175,676 million related to credit card transactions are included as at June 30, 2021 (December 31, 2020: W 1,007,171 million).

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

13.

Borrowings

Details of borrowings as at June 30, 2021 and December 31, 2020, are as follows:

Debentures

 

(in millions of Korean won and foreign currencies in thousands)   June 30, 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        113,000        USD 100,000      W 108,800  

MTNP notes

   Jul. 18, 2026    2.500%     USD 400,000        452,000        USD 400,000        435,200  

MTNP notes

   Aug. 7, 2022    2.625%     USD 400,000        452,000        USD 400,000        435,200  

FR notes 2

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

MTNP notes

   Jul. 6, 2021    0.380%     JPY 16,000,000        163,539        JPY 16,000,000        168,682  

MTNP notes

   Jul. 19, 2022    0.220%     JPY 29,600,000        302,548        JPY 29,600,000        312,061  

MTNP notes

   Jul. 19, 2024    0.330%     JPY 400,000        4,088        JPY 400,000        4,217  

FR notes 2

   Nov. 1, 2024    LIBOR(3M)+0.980%     USD 350,000        395,500        USD 350,000        380,800  

FR notes 2

   Jun. 19, 2023    SOR(6M)+0.500%     SGD 284,000        238,549        SGD 284,000        233,510  

MTNP notes

   Sep. 1, 2025    1.000%     USD 400,000        452,000        USD 400,000        435,200  

The 180-2nd Public bond

   Apr. 26, 2021    —       —          —          —          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  

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won and foreign currencies in thousands)   June 30, 2021     December 31, 2020  
Type    Maturity    Annual interest rates  

Foreign

currency

    

Korean

won

   

Foreign

currency

    

Korean

won

 

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  

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 194-1st Public bond

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

The 194-2nd Public bond

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

The 194-3rd Public bond

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

The 194-4th Public bond

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

The 195-1st Public bond

   Jun. 10, 2024    1.387%     —          180,000       —          —    

The 195-2nd Public bond

   Jun. 10, 2026    1.806%     —          80,000       —          —    

The 195-3rd Public bond

   Jun. 10, 2031    2.168%     —          40,000       —          —    

The 148th MTN

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

The 149-1st MTN

   Mar. 08, 2024    1.440%     —          70,000       —          —    

The 149-2nd MTN

   Mar. 10, 2026    1.756%     —          30,000       —          —    

The 150-1st MTN

   Apr. 7, 2023    1.154%     —          20,000       —          —    

The 150-2nd MTN

   Apr. 8, 2024    1.462%     —          30,000       —          —    

The 151-1st MTN

   May. 12, 2023    1.191%     —          10,000       —          —    

The 151-2nd MTN

   May. 14, 2024    1.432%     —          40,000       —          —    
       

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

    —          7,306,224       —          6,962,470  

Less: Current portion

    —          (823,349     —          (1,228,283

Discount on bonds

    —          (19,883     —          (19,847
 

 

 

    

 

 

   

 

 

    

 

 

 

Total

    —        W 6,462,992       —        W 5,714,340  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

1 

As at June 30, 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 0.146% and 0.239% as at June 30, 2021.

 

34


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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Convertible bonds

 

(in millions of Korean won)  
Type    Issuance Date    Maturity   

Annual

Interest
Rate

    June 30, 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

             2,267       2,267  

Bond discount issuance

             (4,252     (4,644
          

 

 

   

 

 

 

Subtotal

             6,015       5,623  

Current portion

             —         —    
          

 

 

   

 

 

 

Total

           W 6,015     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%, respectively, and will be settled on maturity.

Short-term borrowings

 

(in millions of Korean won)                  
Type    Financial institution    Annual interest rates   June 30, 2021      December 31, 2020  

Operational

   NongHyup Bank    1.760%~1.800%   W 10,998      W 40,189  
   Shinhan Bank    2.370%~2.960%     11,000        —    
   Shinhan Bank    —       —          22,500  
   Shinhan Bank    —       —          10,000  
   Woori Bank    —       —          1,900  
   Woori Bank    4.500%     700        —    
   Woori Bank    CD(3M) + 1.900%~1.970%     15,000        —    
   Korea Development Bank    1.640%~3.340%     35,000        10,000  
   Industrial Bank of Korea    1.740%     200        200  
   Hana Bank    —       —          11,000  
   Hana Bank    2.280%     1,000        —    
       

 

 

    

 

 

 
  W 73,898      W 95,789  
       

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Long-term borrowings

 

(in millions of Korean won and thousands of foreign currencies)     June 30, 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%       USD 4,470        5,051       —          5,000  
     Facility loans 2       LIBOR(3M)+1.340%       USD 25,918        29,287       USD 25,918        28,199  
     General loans 2       LIBOR(3M)+1.650%       USD 8,910        10,068       USD 8,910        9,694  
     General loans 2       LIBOR(3M)+1.847%       USD 13,000        14,690       —          —    
     General loans 2       LIBOR(3M)+2.130%       USD 25,000        28,250       USD 25,000        27,200  

CA-CIB

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

NongHyup Bank

     Facility loans       2.000%       —          43       —          54  

Korea Development Bank

     General loans       —         —          —         —          30,000  
     General loans       —         —          —         —          10,000  
     General loans       3.000%       —          30,000       —          —    
     General loans       1.920%       —          9,000       —          —    

Woori Bank

     PF loans       2.420%       —          14,069       —          —    
     PF loans       2.000%       —          3,644       —          —    

Others

    
NongHyup Bank
and others
 
 
    1.860%       —          103,500       —          —    

Others

    
Kookmin Bank
and others2
 
 
    LIBOR(3M)+1.850%       USD 29,313        33,124       USD 48,855        53,155  
         

 

 

   

 

 

    

 

 

 

Subtotal

            389,440          272,263  

Less: Current portion

            (48,641        (94,042
    

 

 

      

 

 

 
          W 340,799        W 178,221  
         

 

 

      

 

 

 

 

1 

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

2 

LIBOR(3M) is approximately 0.146% as at June 30, 2021.

Repayment schedule of the Group’s debentures and borrowings including the portion of current liabilities as at June 30, 2021, is as follows:

 

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

Sub-

total

     In local
currency
     In foreign
currency
    

Sub-

total

        

Jul. 1, 2021~ Jun. 30, 2022

   W 660,000      W 163,540      W 823,540      W 89,416      W 33,123      W 122,539      W 946,079  

Jul. 1, 2022~ Jun. 30, 2023

     960,000        993,096        1,953,096        115,512        82,296        197,808        2,150,904  

Jul. 1, 2023~ Jun. 30, 2024

     640,000        113,000        753,000        133,993        5,051        139,044        892,044  

Jul. 1, 2024~ Jun. 30, 2025

     580,000        399,588        979,588        493        —          493        980,081  

After Jul. 1, 2025

     1,788,000        1,017,000        2,805,000        3,454        —          3,454        2,808,454  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W 4,628,000      W 2,686,224      W 7,314,224      W 342,868      W 120,470      W 463,338      W 7,777,562  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

14.

Provisions

Changes in provisions for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

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

Beginning balance

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

Increase (transfer)

     1,227        6,044        1,328        8,599  

Usage

     (2,460      (799      (1,037      (4,296

Reversal

     —          (1,025      (7,017      (8,042

Change in consolidation scope

     —          (748      —          (748
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 75,267      W 109,239      W 63,199      W 247,705  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 75,267      W 23,344      W 59,960      W 158,571  

Non-current

     —          85,895        3,239        89,134  

 

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

Beginning balance

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

Increase (transfer)

     112        (257      8,294        8,149  

Usage

     (261      (888      (3,856      (5,005

Reversal

     (50      (348      (2,346      (2,744

Change in consolidation scope

     —          195        54,892        55,087  
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 64,042      W 111,991      W 133,615      W 309,648  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 64,042      W 21,177      W 99,944      W 185,163  

Non-current

     —          90,814        33,671        124,485  

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

15.

Net Defined Benefit Liabilities

The amounts recognized in the statements of financial position as at June 30, 2021 and December 31, 2020, are determined as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Present value of defined benefit obligations

   W 2,624,840      W 2,556,712  

Fair value of plan assets

     (2,175,196      (2,189,375
  

 

 

    

 

 

 

Liabilities

   W 449,644      W 378,087  
  

 

 

    

 

 

 

Assets

   W —        W 10,750  
  

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Changes in the defined benefit obligations for the six-month periods ended June 30, 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

     124,229        123,693  

Interest expense

     21,650        21,365  

Past service cost

     —          971  

Benefits paid

     (59,895      (104,303

Remeasurements

     (9,725      5,011  

Change in consolidation scope

     (8,529      1,268  

Others

     398        2,864  
  

 

 

    

 

 

 

Ending

   W 2,624,840      W 2,478,220  
  

 

 

    

 

 

 

Changes in the fair value of plan assets for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 2,189,375      W 2,069,710  

Interest income

     19,087        18,695  

Remeasurements on plan assets

     (374      1,289  

Employer contributions

     15,177        13,105  

Benefits paid

     (42,645      (92,874

Change in consolidation scope

     (7,665      —    

Others

     2,241        (777
  

 

 

    

 

 

 

Ending

   W 2,175,196      W 2,009,148  
  

 

 

    

 

 

 

Amounts recognized in the consolidated statement of profit or loss for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Current service cost

   W 124,229      W 123,693  

Net interest cost

     2,563        2,670  

Historical service cost

     —          971  

Account transfers

     (7,224      (8,230
  

 

 

    

 

 

 

Total expenses

   W 119,568      W 119,104  
  

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

16.

Commitments and Contingencies

As at June 30, 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        3,000  

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        1,731  

Collateralized loan on electronic

accounts receivable-trade

     Kookmin Bank and others        KRW        475,097        23,520  

Plus electronic notes payable

     Industrial Bank of Korea        KRW        50,000        —    

Loans for working capital

    

Korea Development Bank

and others

Shinhan Bank

 

 

 

    

KRW

USD

 

 

    

225,340

39,298

 

 

    

130,965

39,298

 

 

Facility loans

     Shinhan Bank and others        KRW        144,123        17,756  
     Kookmin Bank and others        USD        212,000        29,313  

Derivatives transaction limit

     Korea Development Bank        KRW        100,000        6,888  
     Woori Bank and others        USD        69,054        36,453  
     

 

 

    

 

 

    

 

 

 

Total

        KRW        2,477,500        186,574  
        USD        320,352        105,064  
     

 

 

    

 

 

    

 

 

 

As at June 30, 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

Hana Bank


 

 

   KRW      204,176  
      USD      1,200  

Guarantee for payment in foreign currency

     Kookmin Bank and others      USD      27,390  

Guarantee for payment in Korean currency

     Shinhan Bank      KRW      6,840  

Refund guarantee for advances received

     Korea Development Bank and others      USD      8,536  

Comprehensive credit line

     Hana Bank and others      KRW      44,100  
      USD      8,700  

Bid guarantee

     Hana Bank      USD      400  

Bid guarantee

    
Korea Software Financial
Cooperative and others
 
 
   KRW      125,483  

Performance guarantee / warranty guarantee

      KRW      483,991  

Guarantee for advance payments / others

      KRW      522,655  

Warranty guarantee

     Seoul Guarantee Insurance      KRW      746  

Performance guarantee

      KRW      8,046  

Guarantees for licensing

      KRW      5,488  

Guarantees for depositions

      KRW      2,846  

Merchant business guarantee insurance

      KRW      237  

Construction fund guarantee insurance

      KRW      14,464  
     

 

  

 

 

 

Total

      KRW      1,419,072  
      USD      46,226  
  

 

  

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

As at June 30, 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        1,203        Jan. 8, 2025  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   SPP Inc.    Suhyup Bank      3,250        757        Feb. 16, 2024  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   Korea Cell Inc.    Suhyup Bank      3,250        748        Feb. 16, 2024  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

   San-Ya Agricultural

Association Corporation

   Suhyup Bank      3,250        757        Feb. 16, 2024  

KT Hitel Co., Ltd.

   Shinhan Bank    Cash payers      860        —         

Apr. 16, 2021

~ Apr. 15, 2022


 

Nasmedia Co., Ltd.

   Stockholders Association

Members

   Korea Securities Finance Corp      5,654        1,396        —    

 

  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 June 30, 2021, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of W 773 million.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

For the six-month period ended June 30, 2021, the Controlling Company entered into agreements with Securitization Specialty Companies (2021: Giga LTE Fifty fifth to Fifty seventh 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 entered into asset management agreements with each securitization specialty company and in accordance with the agreements the Group shall receive asset management fees upon liquidation of the securitization specialty company.

As at June 30, 2021, the Group is a defendant in 210 lawsuits with the total claimed amount of W 114,829 million (2020: W 110,409 million). As at June 30, 2021, litigation provisions of W 75,267 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.

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 June 30, 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 June 30, 2021, the contracted amount of property and equipment acquisition agreements made but not yet recognized amounts to W 817,660 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)    June 30, 2021      December 31, 2020  

Right-of-use assets

     

Property and buildings

   W 1,063,400      W 1,073,207  

Machinery and track facilities

     74,497        42,127  

Others

     85,143        101,845  
  

 

 

    

 

 

 
   W 1,223,040      W 1,217,179  
  

 

 

    

 

 

 

Investment property (buildings)

   W 1,506      W 19,456  

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Lease liabilities1

     

Current

   W 344,943      W 345,224  

Non-current

     781,561        798,416  
  

 

 

    

 

 

 
   W 1,126,504      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).

For the six-month periods ended June 30, 2021, and June 30, 2020, increase of right-of-use assets was W 213,441 million and W 167,397 million.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The consolidated statement of profit or loss relating to leases for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      June 30, 2020  

Depreciation of right-of-use assets

     

Property and buildings

   W 149,680      W 145,731  

Machinery and track facilities

     22,912        33,439  

Others

     26,568        27,516  
  

 

 

    

 

 

 
   W 199,160      W 206,686  
  

 

 

    

 

 

 

Depreciation of investment properties

   W 1,515      W 10,356  

Interest expense relating to lease liabilities

     16,803        22,479  

Expenses relating to short-term leases

     4,460        4,911  

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

     14,445        12,856  

Expenses relating to variable lease payments not included in lease liabilities

     4,230        4,063  

Total cash outflow from leases was W 230,051 million and W 110,314 million during the six-month period ended June 30, 2021 and 2020, respectively.

 

18.

Retained Earnings

Details of retained earnings as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 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

     7,072,513        6,721,809  
  

 

 

    

 

 

 

Total

   W 12,506,124      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.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

19.

Other Components of Equity

The Group’s other components of equity as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 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

     10,349        5,901  

Equity transactions within consolidated entities 1

     (339,172      (340,882
  

 

 

    

 

 

 

Total

   W (1,398,232    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.

As at June 30, 2021 and December 31, 2020, the details of treasury stock are as follows:

 

     June 30, 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 as 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 and six-month periods ended June 30, 2021 and 2020:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Revenue from contracts with customers

   W 5,983,049      W 11,967,997      W 5,828,576      W 11,609,405  

Revenue from other sources

     44,563        89,041        47,927        98,814  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,027,612      W 12,057,038      W 5,876,503      W 11,708,219  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating revenues for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Services provided

   W 5,260,181      W 10,419,999      W 5,099,682      W 10,131,947  

Sales of goods

     767,431        1,637,039        776,821        1,576,272  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 6,027,612      W 12,057,038      W 5,876,503      W 11,708,219  
  

 

 

    

 

 

    

 

 

    

 

 

 

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.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

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

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Contract assets 1

   W 738,857      W 672,672  
  

 

 

    

 

 

 

Contract liabilities 1

     362,526        413,707  
  

 

 

    

 

 

 

Deferred revenue 2

     88,931        89,694  
  

 

 

    

 

 

 

 

  1 

The Group recognized contract assets of W 77,866 million and contract liabilities of W 30,113 million for long-term construction contracts as at June 30, 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)    June 30, 2021      December 31, 2020  

Incremental costs of contract establishment

   W 1,642,197      W 1,726,191  
  

 

 

    

 

 

 

Costs of Contract performance

     84,536        78,757  
  

 

 

    

 

 

 

The Group recognized W 943,635 million of operating expenses for the six-month period ended June 30, 2021(six-month period ended June 30, 2020: W 884,052 million) which relate to contract cost assets.

For the three and six-month periods ended June 30, 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  
    

Three

months

    

Six

months

    

Three

months

    

Six

months

 

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

           

Allocation of the transaction price

   W 83,097      W 171,001      W 70,725      W 146,983  

Deferred revenue of joining/installment fees

     11,025        23,505        12,137        22,728  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 94,122      W 194,506      W 82,862      W 169,711  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

21. Operating Expenses

Operating expenses for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months     Six months  

Salaries and wages

   W  1,025,527      W 2,049,770      W 983,652     W 1,987,599  

Depreciation

     649,287        1,299,677        647,609       1,298,901  

Depreciation of right-of-use assets

     96,842        199,160        103,438       206,686  

Amortization of intangible assets

     151,145        299,589        160,182       317,997  

Commissions

     263,800        513,793        234,348       480,036  

Interconnection charges

     122,368        246,841        134,347       265,648  

International interconnection fees

     49,171        100,471        45,210       90,089  

Purchase of inventories

     676,135        1,630,582        858,175       1,717,540  

Changes of inventories

     117,781        60,535        (5,917     24,924  

Sales commissions

     589,115        1,183,710        565,003       1,096,281  

Service costs

     536,817        1,028,004        519,023       973,866  

Utilities

     82,871        171,800        81,829       168,447  

Taxes and dues

     72,277        139,944        74,034       134,168  

Rent

     32,574        63,276        33,776       65,585  

Insurance premiums

     10,747        27,489        16,296       34,617  

Installation fees

     34,774        70,650        33,426       58,171  

Advertising expenses

     43,798        75,163        29,438       55,574  

Research and development expenses

     39,789        79,903        36,165       76,116  

Card service costs

     782,947        1,507,822        749,056       1,431,802  

Others

     173,967        388,824        233,900       495,829  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   W 5,551,732      W  11,137,003      W  5,532,990     W  10,979,876  
  

 

 

    

 

 

    

 

 

   

 

 

 

Details of employee benefits for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three
months
     Six months  

Short-term employee benefits

   W 946,118      W  1,890,535      W  906,286      W  1,829,666  

Post-employment benefits (defined benefits)

     59,696        119,568        60,367        119,104  

Post-employment benefits (defined contributions)

     15,922        31,222        13,329        28,124  

Share-based payments

     1,280        2,584        994        2,594  

Others

     2,511        5,861        2,676        8,111  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W  1,025,527      W 2,049,770      W 983,652      W 1,987,599  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Other Income and Other Expenses

22. Other income for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Gain on disposal of property and equipment and investment properties

   W 7,424      W 14,820      W 3,205      W 10,873  

Gain on disposal of intangible assets

     150        1,066        217        1,932  

Gain on disposal of right-of-use assets

     1,393        3,221        2,441        4,134  

Compensation on property and equipment

     40,440        73,839        44,833        73,781  

Gain on government subsidies

     7,657        9,384        2,551        6,728  

Others

     18,099        31,453        10,246        16,216  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W  75,163      W  133,783      W  63,493      W  113,664  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other expenses for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Loss on disposal of property and equipment

   W  13,609      W 33,480      W  20,835      W 36,435  

Loss on disposal of intangible assets

     227        386        228        900  

Loss on disposal of right-of-use assets

     365        10,009        4,898        5,938  

Loss on disposal of investments in associates

     —          —          8        33  

Donations

     630        3,520        13,054        13,311  

Other allowance for bad debts

     6,713        12,776        9,476        18,540  

Others

     40,737        56,145        29,525        61,860  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 62,281      W  116,316      W  78,024    W  137,017  
  

 

 

    

 

 

    

 

 

    

 

 

 

23. Financial Income and Costs

Details of financial income for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months     Six months      Three months     Six months  

Interest income

   W  65,264     W  133,078      W 65,262     W  133,806  

Gain on foreign currency transactions

     1,989       5,374        2,664       8,727  

Gain on foreign currency translation

     1,423       18,847        (604     7,729  

Gain on settlement of derivatives

     246       605        1,816       2,172  

Gain on valuation of derivatives

     (6,506     84,724        (45,824     111,319  

Others

     7,948       14,155        752       1,961  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   W 70,364     W 256,783      W 24,066     W 265,714  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Details of financial costs for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months     Six months      Three months     Six months  

Interest expenses

   W  59,670     W  124,518      W 70,774     W  141,580  

Loss on foreign currency transactions

     2,446       4,468        2,952       7,904  

Loss on foreign currency translation

     (5,954     85,194        (44,665     121,567  

Loss on settlement of derivatives

     23       35        23       37  

Loss on valuation of derivatives

     2,320       14,814        6,396       7,081  

Loss on disposal of trade receivables

     5,935       7,377        2,511       4,728  

Others

     60       765        816       2,311  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   W 64,500     W 237,171      W 38,807     W 285,208  
  

 

 

   

 

 

    

 

 

   

 

 

 

24. Income Tax Expense

Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. As at June 30, 2021, the estimated average annual income tax rate used for the year ending December 31, 2021 is 29.63%.

25. Earnings per Share

Basic earnings per share is calculated by dividing the profit from operations attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares purchased by the Group and held as treasury stock.

Basic earnings per share from operations for the three and six-month periods ended June 30, 2021 and 2020, are calculated as follows:

 

     2021      2020  
     Three months      Six months      Three months      Six months  

Profit attributable to ordinary shares

(in millions of Korean won)

   W 338,817      W 641,441      W 178,091      W 387,026  

Weighted average number of ordinary shares outstanding

(in number of shares)

     234,276,810        235,874,816        245,244,229        245,242,889  

Basic earnings per share

(in Korean won)

   W 1,446      W 2,719      W 726      W 1,578  

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares from convertible bonds and other share-based payments.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Diluted earnings per share from operations for the three and six-month periods ended June 30, 2021 and 2020, are calculated as follows:

 

     2021      2020  
     Three months      Six months      Three months      Six months  

Profit attributable to ordinary shares (in millions of Korean won)

   W 338,817      W 641,441      W 178,091      W 387,026  

Adjusted net income attributable to ordinary shares (in millions of Korean won)

     —          —          —          —    

Diluted profit attributable to ordinary shares (in millions of Korean won)

     338,817        641,441        178,091        387,026  

Number of dilutive potential ordinary shares outstanding (in number of shares)

     195,616        213,301        127,797        129,136  

Weighted average number of ordinary shares outstanding (in number of shares)

     234,472,426        236,088,117        245,372,026        245,372,025  

Diluted earnings per share (in Korean won)

     1,445        2,717        726        1,577  

Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the year by the sum of the number of ordinary shares and dilutive potential ordinary shares.

 

26.

Cash Generated from Operations

Cash flows from operating activities for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

1. Profit for the period

   W 697,263      W 436,267  

2. Adjustments for:

     

Income tax expense

     293,602        240,891  

Interest income 1

     (145,625      (143,368

Interest expense 1

     126,305        141,920  

Dividend income 2

     (2,853      (2,312

Depreciation

     1,318,241        1,314,820  

Amortization of intangible assets

     301,117        320,672  

Depreciation of right-of-use assets    

     199,160        206,686  

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Provisions for severance benefits (defined benefits)

     126,792        127,333  

Allowance for bad debts

     51,366        62,004  

Share of net profit or loss of associates and joint ventures

     (33,750      8,339  

Loss on disposal of associates and joint ventures

     7,605        33  

Loss on disposal of property, equipment

and investment properties

     18,660        25,562  

Impairment loss on property, equipment and investment properties

     883        1,535  

Loss on disposal of right-of-use assets

     6,788        1,804  

Gain on disposal of intangible assets

     (680      (1,032

Impairment loss on intangible assets

     1,775        1,023  

Loss on foreign currency translation 3

     66,347        113,838  

Gain on valuation of derivatives

     (70,480      (106,373

Loss on disposal of financial assets at amortized cost

     1        1  

Gain (loss) on disposal of financial assets at fair value

through profit or loss

     (11,337      428  

Loss on valuation of financial assets at fair value 4

through profit or loss

     10,471        725  

Others

     76,538        47,079  

3. Changes in operating assets and liabilities

     (180,183      (390,139

Decrease (increase) in trade receivables

     207,034        (120,126

Decrease (Increase) in other receivables

     (335,941      203,982  

Decrease (Increase) in other current assets

     (298,359      45,419  

Increase in other non-current assets

     (48,979      (47,824

Decrease in inventories

     105,271        39,095  

Decrease in trade payables

     (156,662      (139,309

Increase (decrease) in other payables

     388,519        (364,261

Increase (decrease) in other current liabilities

     (3,789      12,167  

Decrease in other non-current liabilities

     (1,349      (604

Increase (decrease) in provisions

     (2,171      2,983  

Increase in deferred revenue

     2,532        53  

Decrease in plan assets

     92,642        79,605  

Payment of severance benefits

     (128,931      (101,319
  

 

 

    

 

 

 

4. Cash generated from operations (1+2+3)

   W 2,858,006      W 2,407,736  
  

 

 

    

 

 

 

 

  1 

BC Card Co., Ltd. and other subsidiaries of the Group recognize interest income and expense as operating revenue and expense, respectively, including interest income of W 12,547 million (six-month period ended June 30, 2020: W 9,562 million) and interest expense of W 1,787 million (six-month period ended June 30, 2020: W 340 million) that are recognized as operating revenue and expense, respectively, for the six-month period ended June 30, 2021.

 

  2 

BC Card Co., Ltd. recognized dividend income as operating revenue, including dividend income of W 866 million (six-month period ended June 30, 2020: W 1,401 million) that is recognized as operating revenue for the six-month period ended June 30, 2021.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  3 

BC Card Co., Ltd. and other subsidiaries of the Group recognize gains or losses on foreign currency translation as operating revenue and expenses, respectively. There were no foreign currency translation gains or losses recognized as operating revenue or expenses for the six-month period ended June 30, 2021, W 57 million is included in operating revenue and expenses for the six-month period ended June 30, 2020.

  4

KT Investment Co., Ltd. and other subsidiaries of the Group recognize gains or losses on valuation of financial assets measured at fair value through profit or loss as operating revenue and expenses, respectively, including a loss on valuation of financial assets measured at fair value through profit or loss of W 10,402 million that is recognized as operating expense for the six-month period ended June 30, 2021 (six-month period ended June 30, 2020: gain of W 1 million recognized in operating revenue).

Significant transactions not affecting cash flows for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Reclassification of the current portion of borrowings

   W 220,049      W 619,783  

Reclassification of construction-in-progress to property and equipment

     1,122,649        683,053  

Reclassification of other payables from property and equipment

     (523,474      (534,636

Reclassification of other payables from intangible assets

     203,375        (343,012

Reclassification of other payables from defined net benefit liabilities

     (3,862      2,820  

 

27.

Changes in Liabilities Arising from Financing Activities

 

(in millions of Korean won)    Six months ended June 30, 2021  
     Beginning      Cash flows      Non-cash      Ending  
     Newly
acquired
     Exchange
differences
     Fair value
changes
     Others  

Borrowings

   W 7,316,298      W 369,618      W 21,700      W 67,055      W —        W (18,977    W 7,755,694  

Lease liabilities

     1,143,640        (206,916      204,376        —          22        (14,618      1,126,504  

Derivative liabilities

     130,573        (1,028      —          29,932        (13,454      (77,928      68,095  

Derivative assets

     (7,606      —          —          29,298        (1,475      (43,303      (23,086
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 8,582,905      W 161,674      W 226,076      W 126,285      W (14,907    W (154,826    W 8,927,207  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(in millions of Korean
won)
   Six months ended June 30, 2020  
     Beginning      Cash flows      Non-cash      Ending  
     Newly
acquired
     Exchange
differences
     Fair value
changes
     Others  

Borrowings

   W 7,298,867      W 580,595      W —        W 109,296      W —        W (1,141    W 7,987,617  

Lease liabilities

     1,211,351        (88,484      162,169        5        20        (24,886      1,260,175  

Other financial liabilities

     —          (13,674      13,674        —          —          —          —    

Derivative liabilities

     20,096        (483      —          (14,713      18,173        (7,980      15,093  

Derivative assets

     (58,576      (862      —          (87,321      (15,047      8,965        (152,841
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 8,471,738      W 477,092      W 175,843      W 7,267      W 3,146      W (25,042    W 9,110,044  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

51


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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

28.

Segment Information

The Group’s operating segments are as follows:

 

Details    Business service

ICT

  

Mobile/fixed line telecommunication service and

convergence business, B2B business and others

Finance

   Credit card business and others

Satellite TV

   Satellite TV business

Others

   IT, facility security and global business, and others

Details of operating revenues and profit by each segment for the three and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Operating
revenues
    Operating
profit
    Depreciation
and amortization 1
 
    

Three

months

   

Six

months

   

Three

months

    

Six

months

   

Three

months

   

Six

months

 

ICT

   W 4,478,801     W 9,053,254     W 351,189      W 717,164     W 808,195     W 1,615,869  

Finance

     960,707       1,880,731       42,966        75,523       13,955       27,974  

Satellite TV

     175,050       341,996       23,161        44,830       20,631       40,965  

Others

     1,455,248       2,783,982       58,427        89,590       83,273       167,728  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 
     7,069,806       14,059,963       475,743        927,107       926,054       1,852,536  

Elimination

     (1,042,194     (2,002,925     137        (7,072     (28,780     (54,110
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Consolidated amount

   W 6,027,612     W 12,057,038     W 475,880      W 920,035     W 897,274     W 1,798,426  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(in millions of Korean won)      2020  
     Operating
revenues
    Operating
profit
    Depreciation
and amortization 1
 
    

Three

months

   

Six

months

   

Three

months

   

Six

months

   

Three

months

   

Six

months

 

ICT

   W 4,339,675     W 8,768,742     W 254,352     W 555,710     W 816,912     W 1,624,586  

Finance

     868,137       1,668,387       34,525       67,827       10,776       18,674  

Satellite TV

     177,669       345,584       26,122       50,333       21,265       43,005  

Others

     1,453,855       2,760,581       38,756       67,355       89,829       179,929  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     6,839,336     13,543,294     353,755     741,225     938,782     1,866,194  

Elimination

     (962,833     (1,835,075     (10,242     (12,882     (21,701     (42,610
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated amount

   W 5,876,503     W 11,708,219     W 343,513     W 728,343     W 917,081     W 1,823,584  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  1 

Sum of depreciation of property and equipment, investment properties, right-of-use assets and amortization of intangible assets.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Operating revenues for the three and six-month periods ended June 30, 2021 and 2020, and non-current assets as at June 30, 2021 and December 31, 2020, by geographical region, are as follows:

 

(in millions of Korean won)    2021  
     Operating revenues      Non-current assets1  
     Three months      Six months      June 30, 2021  

Domestic

   W 6,009,502      W 12,019,074      W 19,066,487  

Overseas

     18,110        37,964        25,200  
  

 

 

    

 

 

    

 

 

 

Total

   W 6,027,612      W 12,057,038      W 19,091,687  
  

 

 

    

 

 

    

 

 

 

 

(in millions of Korean won)    2020  
     Operating revenues      Non-current assets1  
     Three months      Six months      December 31, 2020  

Domestic

   W 5,856,982      W 11,670,505      W 18,934,766  

Overseas

     19,521        37,714        18,243  
  

 

 

    

 

 

    

 

 

 

Total

   W 5,876,503      W 11,708,219      W 18,953,009  
  

 

 

    

 

 

    

 

 

 

 

  1 

Non-current assets include property and equipment, intangible assets, investment properties, and right-of-use-assets

 

29.

Related Party Transactions

The list of related parties of the Group as at June 30, 2021, is as follows:

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Relationship    Name of Entity
Associates and joint ventures    KIF Investment Fund, K-REALTY CR REITs No.1, Boston Global Film & Contents Fund L.P., QTT Global (Group) Company Limited, CU Industrial Development Co., Ltd, KD Living, Inc., LoginD Co., Ltd., K-REALTY CR-REIT 6, K Bank Inc., ISU-kth Contents Investment Fund, Daiwon Broadcasting Co., Ltd., KT-DSC creative economy youth start-up investment fund, Korea Electronic Vehicle Charging Service, K-REALTY RENTAL HOUSING REIT 2, AI RESEARCH INSTITUTE, KT-IBKC Future Investment Fund 1, Gyeonggi-KT Yoojin Superman Fund, FUNDA Co., Ltd, CHAMP IT Co., Ltd., Alliance Internet Corp., Little big pictures, Virtua Realm Sendirian Berhad, KT Philippines, KT-Smart Factory Investment Fund, Studio Discovery Co., Ltd., KT Young Entrepreneurs DNA Investment Fund, Hyundai Robotics Co., Ltd., IGIS Professional investors Private Investment Real Estate Investment LLC No 395, Sweet&Sour Limited Company Specializing in the Cultural Industry, Maruee Limited Company Specializing in the Cultural Industry, Mogyo Limited Company Specializing in the Cultural Industry, Mission Limited Company Specializing in the Cultural Industry, Trustay Co., Ltd., The skyk Co., Ltd., StorySoop Inc., Mastern No.127 Logispoint Daegu Co., Ltd.

Outstanding balances of receivables and payables in relation to transactions with related parties as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021  
          Receivables      Payables  
          Trade
receivables
     Other
receivables
     Trade
payables
    

Other

payables

    

Lease

liabilities

 

Associates and joint ventures

   K- Realty CR-REITs No.1    W 397      W 14,800      W —        W —        W 9,904  
   K Bank, Inc.      1,024        38,912        —          303        —    
   IGIS Professional Investors Private Investment Real Estate Investment LLC No 395      4,614        —          —          —          —    

Others

        148        409        1        1,267        —    
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  

Total

   W 6,183      W 54,121      W 1      W 1,570      W 9,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(in millions of Korean won)    December 31, 2020  
          Receivables      Payables  
          Trade
receivables
     Other
receivables
     Trade
payables
     Other
payables
    

Lease

liabilities

 

Associates and joint ventures

   K- Realty CR-REITs No.1    W 457      W 16,200      W —        W —        W 20,857  
   K Bank, Inc.      775        32,964        —          891        —    
   Others      72        1,147        —          858        —    

Others

   KHS Corp.      7        —           —          —          —     
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  

Total

   W 1,311      W 50,311      W —        W 1,749      W 20,857  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Significant transactions with related parties for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
          Sales      Purchases  
          Operating
revenue
    

Other

income

     Operating
expenses
     Others1  

Associates and joint ventures

   K- Realty CR-REITs No.1    W 694      W —        W —        W —    
   K Bank, Inc      11,468        —          6,770        —    
   IGIS Professional Investors Private Investment Real Estate Investment LLC No 395      4,500        —          —          —    
   Others2      991        73        8,505        236  

Others

   KHS Corporation3      14        —          1,744        —    
     

 

 

    

 

 

    

 

 

    

 

 

 
  

Total

   W 17,667      W 73      W 17,019      W 236  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1 

Amounts include acquisition of property and equipment, and others.

2

Includes transactions of Oscar Ent. Co., Ltd. before it was excluded from associates and joint ventures.

3 

Includes transactions of the entity before it was included as a subsidiary of the Group.

 

(in millions of Korean won)    2020  
          Sales      Purchases  
          Operating
revenue
    

Other

income

     Operating
expenses
     Others 1  

Associates and joint ventures

   K- Realty CR-REITs No.1    W 813      W —        W 262      W —   
   KIF Investment Fund      —          —          —          —    
   K Bank, Inc.      8,430        —          4,040        —    
   Others      310        37        4,885        —    

Others

  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)2

     2,385        —          25,862        61,491  
   KHS Corporation      50        —          6,208        —    
     

 

 

    

 

 

    

 

 

    

 

 

 
  

Total

   W 11,988      W 37      W 41,257      W 61,491  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  1 

Amounts include acquisition of property and equipment, and others.

  2 

Includes transactions of the entity before it was included as a subsidiary of the Group.

 

(in millions of Korean won)    2021      2020  
          Finance
income
     Finance
costs
    

Dividend

income

     Finance
income
     Finance
costs
    

Dividend

income

 

Associates and joint ventures

   K- Realty CR-REITs No.1    W —        W 143      W 28,208      W —        W 703      W 2,261  
   KIF Investment Fund      —          —          —          —          —          9,241  
   K Bank, Inc      60        —          —          —          —          —    
   Others      —          —          7,890        —          —          43  

Others

  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)1

     —          —          —          —          1        —    
   KHS Corp.      —          —          —          —          —          —    
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  

Total

   W 60      W 143      W 36,098      W —        W 704      W 11,545  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  1 

Includes transactions of the entity before it was included as a subsidiary of the Group.

Key management compensation for the six-month periods ended June 30, 2021 and 2020, consists of:

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    2021      2020  

Salaries and other short-term benefits

   W 1,082      W 1,033  

Post-employment benefits

     209        179  

Stock-based compensation

     338        312  
  

 

 

    

 

 

 

Total

   W 1,629      W 1,524  
  

 

 

    

 

 

 

Fund transactions with related parties for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Repayments1
    

Equity contributions

in cash and others

 

Associates and Joint ventures

     

K- Realty CR-REITs No.1

   W 9,577      W —    

KT-IBKC Future Investment fund 1

     —          (4,500

Trustay Co., Ltd.

     —          3,000  

KT-Smart Factory Investment Fund

     —          1,400  

KT Young Entrepreneurs DNA Investment Fund

     —          8,400  

KT-DSC Creative Economy Youth Start-up Investment Fund

     —          (2,200

StorySoop Inc.

     —          2,000  

Mastern No.127 Logispoint Daegu Co., Ltd.

     —          1,900  

The skyk Co., Ltd.

     —          581  

Mogyo Limited Company Specializing in the Cultural Industry

     —          700  
  

 

 

    

 

 

 

Total

   W 9,577      W 11,281  
  

 

 

    

 

 

 

 

  1 

Amounts include lease transactions.

 

(in millions of Korean won)    2020  
     Repayments1
    

Equity contributions

in cash and others

 

Associates and Joint ventures

     

K- Realty CR-REITs No.1

   W 13,593      W —    

Studio&New Co., Ltd

     —          8,333  

Studio Discovery Co., Ltd.

     —          3,000  

KT Young Entrepreneurs DNA Investment Fund

     —          3,600  

KT-Smart Factory Investment Fund

     —          2,800  

KT-CKP New Media Investment Fund

     —          (148

Hyundai Robotics Co., Ltd.

     —          50,000  

Others

     

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.) 2

     34        —    
  

 

 

    

 

 

 

Total

   W 13,627      W 67,585  
  

 

 

    

 

 

 

 

  1 

Amounts include lease transactions.

  2 

Includes transactions of the entity before it was included as a subsidiary.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

At the end of the reporting period, there are no collateral and payment guarantee provided by the related parties.

 

30.

Fair Value

(1) Fair Value of Financial Instruments by Category

Carrying amount and fair value of financial instruments by category as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021      December 31, 2020  
(in millions of Korean won)    Carrying
amount
     Fair value      Carrying
amount
     Fair value  

Financial assets

           

Cash and cash equivalents

   W 3,096,957        1       W 2,634,624        1   

Trade and other receivables

           

Financial assets measured at amortized cost 2

     5,195,790        1         4,976,423        1   

Financial assets at fair value through other comprehensive income

     881,466        881,466        1,118,619        1,118,619  

Other financial assets

           

Financial assets measured at amortized cost

     396,705        1         671,068        1   

Financial assets at fair value through profit or loss

     1,018,059        1,018,059        809,919        809,919  

Financial assets at fair value through other comprehensive income

     102,198        102,198        258,516        258,516  

Derivative financial assets for hedging

     23,086        23,086        7,684        7,684  
  

 

 

       

 

 

    

Total

   W 10,714,261         W 10,476,853     
  

 

 

       

 

 

    

Financial liabilities

           

Trade and other payables

     6,920,514        1         7,017,639        1   

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Borrowings

     7,755,694        1         7,316,298        1   

Other financial liabilities

           

Financial liabilities at amortized cost

     139,978        1         132,558        1   

Financial liabilities at fair value through profit or loss

     5,058        5,058        2,682        2,682  

Derivative financial liabilities for hedging

     63,049        63,049        127,929        127,929  
  

 

 

       

 

 

    

Total

   W 14,884,293         W 14,597,106     
  

 

 

       

 

 

    

 

  1 

The Group did not conduct a fair value estimation since the book amount is a reasonable approximation of fair value.

  2 

With the application of Korean IFRS 1107, lease receivables are excluded from fair value disclosure.

 

  (2)

Fair Value Hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:

 

   

Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

 

   

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

 

   

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as at June 30, 2021 and December 31, 2020, are as follows:

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    June 30, 2021  
     Level 1      Level 2      Level 3      Total  

Assets

           

Trade and other receivables

           

Financial assets at fair value through other comprehensive income

   W —        W 881,466      W —        W 881,466  

Other financial assets

           

Financial assets at fair value through profit or loss

     34,903        561,973        421,183        1,018,059  

Financial assets at fair value through other comprehensive income

     7,409        7,488        87,301        102,198  

Derivative financial assets for hedging

     —          11,727        11,359        23,086  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 42,312      W 1,462,654      W 519,843      W 2,024,809  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Other financial liabilities

           

Financial liabilities at fair value through profit or loss

   W —        W 2,421      W 2,637      W 5,058  

Derivative financial liabilities for hedging

     —          63,049        —          63,049  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W —        W 65,470      W 2,637      W 68,107  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(in millions of Korean won)    December 31, 2020  
     Level 1      Level 2      Level 3      Total  

Assets

           

Trade and other receivables

           

Financial assets at fair value through other comprehensive income

   W —        W 1,118,619      W —        W 1,118,619  

Other financial assets

           

Financial assets at fair value through profit or loss

     46,449        330,961        432,509        809,919  

Financial assets at fair value through other comprehensive income

     5,606        202,121        50,789        258,516  

Derivative financial assets for hedging

     —          7,684        —          7,684  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 52,055      W 1,659,385      W 483,298      W 2,194,738  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Other financial liabilities

           

Financial liabilities at fair value through profit or loss

   W —        W 45      W 2,637      W 2,682  

Derivative financial liabilities for hedging

     —          123,735        4,194        127,929  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W —        W 123,780      W 6,831      W 130,611  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  (3)

Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements.

Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements are as follows:

 

     June 30, 2021  
     Financial assets      Financial
liabilities
 
(In millions of Korean won)    Financial assets
at fair value
through profit or
loss
     Financial assets
at fair value
through other
comprehensive
income
     Derivative
financial
assets for
hedging
     Financial
liabilities at
fair value
through profit
or loss
 

Beginning balance

   W 432,509      W 50,789      W (4,194    W 2,637  

Purchases

     155,331        22,425        —          —    

Reclassifications

     (23,454      14,299        —          —    

Changes in consolidation scope

     (15      —          —          —    

Disposals

     (145,221      —          —          —    

Amount recognized in profit or loss

     2,033        31        20,925        —    

Amount recognized in other comprehensive income

     —          (243      (5,372      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 421,183      W 87,301      W 11,359      W 2,637  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     June 30, 2020  
     Financial assets  
(In millions of Korean won)    Financial
assets at fair
value
through
profit or loss
     Financial
assets at fair
value through
other
comprehensive
income
     Derivative
financial
assets
(liabilities)
for
hedging
 

Beginning balance

   W 495,141      W 42,054      W 17,788  

Purchases

     97,556        4,809        —    

Reclassifications

     (1,585      —          —    

Disposals

     (137,658      (431      —    

Amount recognized in profit or loss

     206        (463      16,448  

Amount recognized in other comprehensive income

     —          (1,302      6,317  
  

 

 

    

 

 

    

 

 

 

Ending balance

   W 453,660      W 44,667      W 40,553  
  

 

 

    

 

 

    

 

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  (4)

Valuation Techniques and Inputs

Valuation techniques and inputs used in recurring and non-recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021  
(in millions of Korean won)    Fair value      Level      Valuation techniques  

Assets

        

Trade and other receivables

        

Financial assets at fair value through other comprehensive income

   W 881,466        2        DCF Model  

Other financial assets

        

Financial assets at fair value through profit or loss

     983,156        2,3       

DCF Model,

Adjusted Net Asset model

 

 

Financial assets at fair value through other comprehensive income

     94,789        2,3       

DCF Model

Comparable Company Analysis


 

Derivative financial assets for hedging

     23,086        2,3       

DCF Model,

Hull-White model

 

 

Liabilities

        

Other financial liabilities

        

Financial liabilities at fair value through profit or loss

   W 5,058        2,3       

DCF Model,

Binomial Option Pricing

 

 

Derivative financial liabilities for hedging

     63,049        2        DCF Model  
     December 31, 2020  
(in millions of Korean won)    Fair value      Level      Valuation techniques  

Assets

        

Trade and other receivables

        

Financial assets at fair value through other comprehensive income

   W 1,118,619        2        DCF Model  

Other financial assets

        

Financial assets at fair value through profit or loss

     763,470        2,3       

DCF Model,

Adjusted Net Asset model

 

 

Financial assets at fair value through other comprehensive income

     252,910        2,3       

DCF Model,

Comparable Company Analysis

 

 

Derivative financial assets for hedging

     7,684        2        DCF Model  

Liabilities

        

Other financial liabilities

        

Financial liabilities at fair value through profit or loss

   W 2,682        2,3       

DCF Model,

Binomial Option Pricing Model

 

 

Derivative financial liabilities for hedging

     127,929        2,3       

DCF Model,

Hull-White model

 

 

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  (5)

Valuation Processes for Fair Value Measurements Categorized Within Level 3

The Group uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the Chief Financial Officer (CFO), and discuss valuation processes and results with the CFO in line with the Group’s closing dates.

 

  (6)

Gains and Losses on Valuation at the Transaction Date

In the case that the Group values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by valuation methods using such data differs from the transaction price, then the fair value of the financial instrument is recognized at the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case that the inputs of the valuation methods become observable in markets, the remaining deferred difference is immediately recognized in full in profit or loss.

In relation to this, details and changes of total deferred differences for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

     2021      2020  
(in millions of Korean won)    Derivatives used for
hedging
     Derivatives used for
hedging
 

Beginning balance

   W 2,257      W 3,682  

New transactions

     —          —    

Recognized at fair value through profit or loss

     (713      (713
  

 

 

    

 

 

 

Ending balance

   W 1,544      W 2,969  
  

 

 

    

 

 

 

 

31.

Changes in Accounting Policies - Determination of Lease Term Considering Economic Penalty

The Group has changed its accounting policy by adopting accounting treatments in accordance with the agenda decisions for ‘Lease Term and Useful Life of Leasehold Improvements’ issued by the IFRS Interpretations Committee on December 16, 2019. The change in accounting policy has been firstly retrospectively applied to the 2020 annual consolidated financial statements in accordance with Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors. The Group adjusted the comparative consolidated financial statements for the six-month period ended June 30, 2020.

 

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Notes to the Consolidated Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

In relation to the changes in accounting policy, the adjusted amounts recognized in each line item in the consolidated financial statements are as follows:

Consolidated statements of profit or loss

 

(in millions of Korean won)    Periods ended June 30, 2020  
     Amount based on previous policy      Adjustment     Amount based on changed policy  
    

Three

Months

    

Six

Months

    

Three

Months

   

Six

Months

   

Three

Months

    

Six

Months

 

Operating expenses

   W 5,534,640      W 10,983,278      W (1,650   W (3,402   W 5,532,990      W 10,979,876  

Other income

     61,273        110,130        2,220       3,534       63,493        113,664  

Other expenses

     78,024        137,017        —         —         78,024        137,017  

Finance income

     24,066        265,714        —         —         24,066        265,714  

Finance cost

     36,423        280,378        2,384       4,830       38,807        285,208  

Income tax expense

     100,294        240,890        —         —         100,294        240,890  

Profit for the period

     207,575        434,161        1,486       2,106       209,061        436,267  

Basic earnings per share

     720        1,570        6       8       726        1,578  

Diluted earnings per share

     720        1,569        6       8       726        1,577  

32. Events After the Reporting Period

 

(1) 

The Group has issued the following bonds after the end of the reporting period.

 

(in thousands of USD)    Issue date      Face value      Interest rate     Redemption date  

2021 Global

     2021-07-21        USD 300,000        1.375     2027-01-21  

 

(2) 

On July 9, 2021, the Group acquired 65,377,980 shares of common stock of K-Bank Co., Ltd. for W425 billion.

(3) 

On July 2, 2021, the Group issued W100 billion of the 18th unsecured publicly offered bonds and the 18th-2nd unsecured public bonds to the value of W50 billion for the purpose of using the funds to acquire securities of another company (Hyundai HCN Co., Ltd.).

 

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KT Corporation

Separate Interim Financial Statements

June 30, 2021 and 2020


Table of Contents

KT Corporation

Index

June 30, 2021 and 2020

 

 

     Page(s)  

Report on Review of Interim Financial Statements

     1 – 2  

Separate Interim Financial Statements

  

Separate Interim Statements of Financial Position

     3 – 4  

Separate Interim Statements of Profit or Loss

     5  

Separate Interim Statements of Comprehensive Income

     6  

Separate Interim Statements of Changes in Equity

     7  

Separate Interim Statements of Cash Flows

     8  

Notes to the Separate Interim Financial Statements

     9 – 49  


Table of Contents
  

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 separate interim financial statements of KT Corporation (the “Company”). These financial statements consist of the separate interim statement of financial position as at June 30, 2021, and the related separate interim statements of profit or loss and comprehensive income for the three-month and six-month periods ended June 30, 2021 and 2020, and separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 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 separate 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 separate 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 separate 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 Standard 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 separate interim financial statements do not present fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

Samil PricewaterhouseCoopers, 100 Hangang-daero, Yongsan-gu, Seoul 04386, Korea, www.samil.com


Table of Contents

Other Matters

We have audited the separate statement of financial position of the Company as at December 31, 2020, and the related separate 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 separate 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.

 

Seoul, Korea

August 17, 2021

 

This report is effective as of August 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 separate 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


Table of Contents

KT Corporation

Separate Interim Statements of Financial Position

June 30, 2021 and December 31, 2020

 

 

(in millions of Korean won)    Notes      June 30, 2021      December 31, 2020  
            (Unaudited)         

Assets

 

  

Current assets

 

  

Cash and cash equivalents

     4      W 1,926,655      W 1,541,210  

Trade and other receivables, net

     4,5        3,069,777        3,127,040  

Other financial assets

     4,6        73,859        268,046  

Inventories, net

     7        262,161        353,310  

Other current assets

     8        1,922,061        1,866,128  
     

 

 

    

 

 

 

Total current assets

        7,254,513        7,155,734  
     

 

 

    

 

 

 

Non-current assets

        

Trade and other receivables, net

     4,5        906,809        1,080,282  

Other financial assets

     4,6        266,565        180,780  

Property and equipment, net

     9        11,511,689        11,999,717  

Right-of-use assets

     16        1,168,882        1,152,153  

Investment properties, net

     9        901,870        735,563  

Intangible assets, net

     9        2,032,561        1,583,456  

Investments in subsidiaries, associates and joint ventures

     10        3,510,526        3,505,017  

Other non-current assets

     8        650,013        635,224  
     

 

 

    

 

 

 

Total non-current assets

        20,948,915        20,872,192  
     

 

 

    

 

 

 

Total assets

      W 28,203,428      W 28,027,926  
     

 

 

    

 

 

 

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

 

3


Table of Contents

KT Corporation

Separate Interim Statements of Financial Position

June 30, 2021 and December 31, 2020

 

 

 

(in millions of Korean won)    Notes      June 30, 2021     December 31, 2020  
            (Unaudited)        

Liabilities

       

Current liabilities

       

Trade and other payables

     4,11      W 3,687,531     W 4,276,962  

Borrowings

     4,12        823,842       1,228,777  

Current tax liabilities

        237,097       76,036  

Provisions

     13        150,037       152,971  

Deferred income

        67,730       53,836  

Other current liabilities

     8        801,658       819,385  
     

 

 

   

 

 

 

Total current liabilities

        5,767,895       6,607,967  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade and other payables

     4,11        1,110,010       738,275  

Borrowings

     4,12        6,265,535       5,716,991  

Other financial liabilities

     4,6        62,153       120,349  

Net defined benefit liabilities

     14        328,622       270,290  

Provisions

     13        83,307       79,774  

Deferred income

     19        165,979       141,554  

Deferred tax liabilities

        242,492       271,454  

Other non-current liabilities

     8        851,642       877,715  
     

 

 

   

 

 

 

Total non-current liabilities

        9,109,740       8,216,402  
     

 

 

   

 

 

 

Total liabilities

        14,877,635       14,824,369  
     

 

 

   

 

 

 

Equity

       

Share capital

        1,564,499       1,564,499  

Share premium

        1,440,258       1,440,258  

Retained earnings

     17        11,517,464       11,233,714  

Accumulated other comprehensive income

        48,440       42,906  

Other components of equity

     18        (1,244,868     (1,077,820
     

 

 

   

 

 

 

Total equity

        13,325,793       13,203,557  
     

 

 

   

 

 

 

Total liabilities and equity

      W 28,203,428     W 28,027,926  
     

 

 

   

 

 

 

 

 

4


Table of Contents

KT Corporation

Separate Interim Statements of Profit or Loss

Three-Month and Six-Month Periods Ended June 30, 2021 and 2020

 

 

 

          Periods Ended June 30  
(in millions of Korean won, except per share amounts)    Notes    2021
(Unaudited)
     2020
(Unaudited)
 
          Three months      Six months      Three months      Six months  

Operating revenue

   19    W 4,478,801      W 9,053,254      W 4,339,675      W 8,768,742  

Operating expenses

   20      4,127,611        8,336,090        4,085,323        8,213,032  
     

 

 

    

 

 

    

 

 

    

 

 

 

Operating profit

        351,190        717,164        254,352        555,710  

Other income

   21      82,998        198,653        66,696        230,583  

Other expenses

   21      41,359        85,828        81,970        111,432  

Finance income

   22      65,602        239,246        17,695        244,126  

Finance costs

   22      56,997        215,558        30,578        258,357  
     

 

 

    

 

 

    

 

 

    

 

 

 

Profit before income tax expense

        401,434        853,677        226,195        660,630  

Income tax expense

        104,615        222,469        58,941        172,731  
     

 

 

    

 

 

    

 

 

    

 

 

 

Profit for the period

      W 296,819      W 631,208      W 167,254      W 487,899  
     

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share

              

Basic earnings per share

   24    W 1,267      W 2,676      W 682      W 1,989  

Diluted earnings per share

   24      1,266        2,674        682        1,988  

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

 

5


Table of Contents

KT Corporation

Separate Interim Statements of Comprehensive Income

Three-Month and Six-Month Periods Ended June 30, 2021 and 2020

 

 

 

            Periods Ended June 30  
(in millions of Korean won)    Notes      2021
(Unaudited)
    2020
(Unaudited)
 
            Three months     Six months     Three months     Six months  

Profit for the period

      W 296,819     W 631,208     W 167,254     W 487,899  
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

           

Items that will not be subsequently reclassified to profit or loss:

           

Remeasurements of the net defined benefit liability

     14        (796     (473     (498     543  

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

        359       520       311       (481

Items that may be subsequently reclassified to profit or loss:

           

Valuation gain (loss) on cash flow hedge

     6        9,423       49,621       (21,568     75,404  

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

        6,306       (44,607     32,820       (77,209
     

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income for the period, net of tax

        15,292       5,061       11,065       (1,743
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      W 312,111     W 636,269     W 178,319     W 486,156  
     

 

 

   

 

 

   

 

 

   

 

 

 

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

 

6


Table of Contents

KT Corporation

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2021 and 2020

 

 

 

(in millions of Korean won)                               Accumulated     Other        
            Share      Share      Retained     other comprehensive     components     Total  
     Notes      capital      premium      earnings     income     of equity     equity  

Balance as at January 1, 2020

      W 1,564,499      W 1,440,258      W 10,866,581     W 23,449     W (1,001,492   W 12,893,295  

Comprehensive income

                 

Profit for the period

        —          —          487,899       —         —         487,899  

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

     6        —          —          —         (481     —         (481

Remeasurements of net defined benefit liabilities

     14        —          —          543       —         —         543  

Valuation loss on cash flow hedge

     6        —          —          —         (1,805     —         (1,805
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        —          —          488,442       (2,286     —         486,156  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

                 

Dividends paid

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

Appropriation of retained earnings related to loss on disposal of treasury stock

        —          —          (1,690     —         1,690       —    

Disposal of treasury stock

        —          —          —         —         3,640       3,640  

Others

        —          —          —         —         (3,092     (3,092
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

        —          —          (271,456     —         2,238       (269,218
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at June 30, 2020 (Unaudited)

      W 1,564,499      W 1,440,258      W 11,083,567     W 21,163     W (999,254   W 13,110,233  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at January 1, 2021

      W 1,564,499      W 1,440,258      W 11,233,714     W 42,906     W (1,077,820   W 13,203,557  

Comprehensive income

                 

Profit for the period

        —          —          631,208       —         —         631,208  

Gain on valuation of financial assets at fair value through other comprehensive income

     6        —          —          —         520       —         520  

Remeasurements of net defined benefit liabilities

     14        —          —          (473     —         —         (473

Valuation gain on cash flow hedge

     6        —          —          —         5,014       —         5,014  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        —          —          630,735       5,534       —         636,269  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

                 

Dividends paid

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

Appropriation of retained earnings related to loss on disposal of treasury stock

        —          —          (20,498     —         20,498       —    

Acquisition of treasury stock

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

Others

        —          —          —         —         2,559       2,559  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

        —          —          (346,985     —         (167,048     (514,033
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at June 30, 2021 (Unaudited)

      W 1,564,499      W 1,440,258      W 11,517,464     W 48,440     W (1,244,868   W 13,325,793  
     

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

 

7


Table of Contents

KT Corporation

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2021 and 2020

 

 

 

            Six-Month Periods Ended June 30  
(in millions of Korean won)    Notes      2021
(Unaudited)
    2020
(Unaudited)
 

Cash flows from operating activities

       

Cash generated from operations

     25      W 2,843,203     W 1,835,846  

Interest paid

        (120,408     (117,177

Interest received

        112,020       108,824  

Dividends received

        64,695       126,233  

Income tax refund (paid)

        (79,354     67,686  
     

 

 

   

 

 

 

Net cash inflow from operating activities

        2,820,156       2,021,412  
     

 

 

   

 

 

 

Cash flows from investing activities

       

Collection of loans

        26,918       33,283  

Disposal of current financial assets at amortized cost

        189,954       —    

Disposal of financial assets at fair value through profit or loss

        13,797       361  

Disposal of financial assets at fair value through other comprehensive income

        —         187  

Disposal of investments in subsidiaries, associates and joint ventures

        49,436       1,378  

Disposal of assets held for sale

        —         —    

Disposal of property and equipment

        19,299       10,240  

Disposal of intangible assets

        1,680       2,472  

Disposal of right-of-use assets

        577       50  

Loans granted

        (15,884     (18,851

Acquisition of financial assets at fair value through profit or loss

        (49,463     (32,881

Acquisition of financial assets at fair value through other comprehensive income

        (22,680     —    

Acquisition of investments in subsidiaries, associates and joint ventures

        (44,614     (79,521

Acquisition of property and equipment

        (1,473,829     (1,507,804

Acquisition of intangible assets

        (492,124     (365,777

Acquisition of right-of-use assets

        (2,402     (2,304
     

 

 

   

 

 

 

Net cash outflow from investing activities

        (1,799,335     (1,959,167
     

 

 

   

 

 

 

Cash flows from financing activities

       

Proceeds from borrowings

        697,797       645,314  

Dividends paid

        (326,487     (269,766

Repayments of borrowings

        (620,247     (160,247

Acquisition of treasury stock

        (190,105     —    

Decrease in lease liabilities

        (197,002     (183,739
     

 

 

   

 

 

 

Net cash inflow (outflow) from financing activities

     26        (636,044     31,562  
     

 

 

   

 

 

 

Effect of exchange rate change on cash and cash equivalents

        668       (134
     

 

 

   

 

 

 

Net increase in cash and cash equivalents

        385,445       93,673  

Cash and cash equivalents

       

Beginning of the period

        1,541,210       1,328,397  
     

 

 

   

 

 

 

End of the period

      W 1,926,655     W 1,422,070  
     

 

 

   

 

 

 

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

 

8


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

1.

General Information

KT Corporation (the “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 address of the Company’s registered office is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province, Korea.

On October 1, 1997, upon the announcement of the Act on the Management of Government-Invested Institutions and the Privatization Law, the Company became a government-funded institution under the Commercial Code of Korea.

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

On May 29, 1999, the 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-shares were issued at the New York Stock Exchange.

In 2002, the Company acquired the entire government-owned shares in accordance with the Korean government’s privatization plan. As at June 30, 2021, the Korean government does not own any shares in the Company.

 

2.

Significant Accounting Policies

 

  2.1

Basis of Preparation

The Company 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 separate interim financial statements have been translated into English from the Korean language financial statements.

The Company’s separate interim financial statements for the six-month period ended June 30, 2021, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as at June 30, 2021.

 

  2.2

Changes in Accounting Policies and Disclosures

 

  (1)

New and amended standards and interpretations adopted by the Company

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

 

 

9


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   

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, and the amounts recognized in profit or loss as a result of applying this exemption should be disclosed. The Company does not expect that these amendments 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 Company does not expect that these amendments have a significant impact on financial statements.

 

  (2)

New standards and interpretations not yet adopted by the Company

Certain new accounting standard and interpretation that have been published but have not been early adopted by the Company, are set out below.

 

   

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 Company 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 Company is reviewing for the impact of these amendments on the financial statements

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   

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 Company 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 Company 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

 

   

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 Company 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 Company does not expect that these amendments have a significant impact on the financial statements.

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  2.3

Significant Accounting Policies

Significant accounting policies and method of computation used in the presentation of the separate interim financial statements are consistent with those of the separate 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.

 

  (2)

Subsidiaries, Associates and Joint Ventures

The financial statements of the Company are the separate financial statements prepared in accordance with Korean IFRS 1027 Separate Financial Statements. Investments in subsidiaries, joint ventures and associates are recognized at cost under the direct equity method. Management applied the carrying amounts under the previous K-GAAP at the time of transition to Korean IFRS as deemed cost of investments. The Company recognizes dividend income from subsidiaries, joint ventures and associates in profit or loss when its right to receive the dividend is established.

 

3.

Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Company to make 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 global 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 Company, and the impact is expected to be continued to the separate annual financial statements in 2021.

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

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

4.

Financial Instruments by Category

Financial instruments by category as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 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 1,926,655      W —        W —        W —        W 1,926,655  

Trade and other receivables 1

     3,089,668        —          881,466        —          3,971,134  

Other financial assets

                 72,522                184,829                    60,532                22,541                340,424  

 

  1

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

 

(in millions of Korean won)    June 30, 2021  
Financial liabilities    Financial liabilities
at amortized cost
    

Derivatives

used for hedging

     Total  

Trade and other payables

   W 4,797,541      W —        W 4,797,541  

Borrowings

     7,089,377        —          7,089,377  

Other financial liabilities

                   —                  62,153                62,153  

 

(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 1,541,210      W —        W —        W —        W 1,541,210  

Trade and other receivables1

     3,085,047        —          1,118,619        —          4,203,666  

Other financial assets

             262,477                155,805                22,860                7,684                448,826  

 

  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
    

Derivatives

used for hedging

     Total  

Trade and other payables

   W 5,015,237      W —        W 5,015,237  

Borrowings

     6,945,768        —          6,945,768  

Other financial liabilities

                   —                      120,349                120,349  

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

5.

Trade and Other Receivables

Trade and other receivables as at June 30, 2021 and December 31, 2020, are as follows:

 

     June 30, 2021  
(in millions of Korean won)    Total amounts      Provision for
impairment
     Present value
discount
    

Carrying

amount

 

Current assets

           

Trade receivables

   W 2,930,579      W (262,528    W (8,137    W 2,659,914  

Other receivables

     458,663        (46,118      (2,682      409,863  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 3,389,242      W (308,646    W (10,819    W 3,069,777  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 695,347      W (2,722    W (23,360    W 669,265  

Other receivables

     251,909        —          (14,365      237,544  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 947,256      W (2,722    W (37,725    W 906,809  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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

Carrying

amount

 

Current assets

           

Trade receivables

   W 2,990,693      W (259,917    W (8,631    W 2,722,145  

Other receivables

     464,889        (53,824      (6,170      404,895  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 3,455,582      W (313,741    W (14,801    W 3,127,040  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current assets

           

Trade receivables

   W 874,032      W (3,833    W (33,836)      W 836,363  

Other receivables

     257,443        (5      (13,519      243,919  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W  1,131,475      W (3,838    W (47,355)      W 1,080,282  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of other receivables as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Loans

   W 48,162      W 58,799  

Receivables

     310,972        313,073  

Accrued income

     1,808        1,355  

Refundable deposits

     327,187        325,545  

Others

     5,396        3,871  

Less: Provision for impairment

     (46,118      (53,829
  

 

 

    

 

 

 

Total

   W         647,407      W         648,814  
  

 

 

    

 

 

 

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of receivables mentioned above as at June 30, 2021.

The Company classifies a portion of the 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.

 

6.

Other Financial Assets and Liabilities

Details of other financial assets and liabilities as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Other financial assets

     

Financial assets at amortized cost 1

   W 72,522      W 262,477  

Financial assets at fair value through profit or loss 2

     184,829        155,805  

Financial assets at fair value through other comprehensive income

     60,532        22,860  

Derivatives used for hedging

     22,541        7,684  

Less: Non-current

     (266,565      (180,780
  

 

 

    

 

 

 

Current

   W 73,859      W 268,046  
  

 

 

    

 

 

 

Other financial liabilities

     

Derivatives used for hedging

   W 62,153      W 120,349  

Less: Non-current

     (62,153      (120,349
  

 

 

    

 

 

 

Current

   W                 —        W             —    
  

 

 

    

 

 

 

 

  1

As at June 30, 2021, the Company’s financial instruments amounting to W 22,501 million (December 31, 2020: W 22,501 million), which consist of checking account deposits, time deposits and others, are subject to withdrawal restrictions.

  2 

Investment in Korea Software Financial Cooperative amounting to W 1,136 million is provided as collateral.

Details of financial assets at fair value through profit or loss as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Equity instruments (Listed)

   W 187      W 110  

Equity instruments (Unlisted)

     —          —    

Debt securities

     184,642        155,695  

Less: Non-current

     (184,829      (155,805
  

 

 

    

 

 

 

Current

   W —        W —    
  

 

 

    

 

 

 

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 June 30, 2021.

Details of financial assets at fair value through other comprehensive income as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Equity instruments (Listed)

   W 2,460      W 1,825  

Equity instruments (Unlisted)

     58,072        21,035  

Less: Non-current

     (60,532      (22,860
  

 

 

    

 

 

 

Current

   W —        W —    
  

 

 

    

 

 

 

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

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 June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  
     Assets      Liabilities      Assets      Liabilities  

Currency swap 1

   W 22,541      W 62,153      W 7,684      W 120,349  

Less: Non-current

     (21,201      (62,153      (2,111      (120,349
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W 1,340      W —        W 5,573      W —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1

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

The full fair 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.

The valuation gains and losses on the derivative contracts for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)                       
     2021      2020  
Type of transaction    Valuation
gain
     Valuation
loss
    

Other

comprehensive
income 1

     Valuation
gain
     Valuation
loss
    

Other

comprehensive
income 1

 

Currency swap

   W 81,040      W 14,703      W 67,110      W 106,933      W 5,912      W 102,216  

 

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 6,655 million for the current period (six-month period ended June 30, 2020: valuation gain of W 2,518 million).

 

7.

Inventories

Inventories as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)                
     June 30, 2021      December 31, 2020  
     Acquisition
cost
     Valuation
allowance
    

Carrying

amount

     Acquisition
cost
     Valuation
allowance
    

Carrying

amount

 

Merchandise

   W 360,669      W (98,508    W 262,161      W 481,829      W (128,519    W 353,310  

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Cost of inventories recognized as expenses for the six-month period ended June 30, 2021, amounts to W 1,390,574 million (six-month period ended June 30, 2020: W 1,413,127 million) and valuation gain on inventory amounts to W 30,011 million for the six-month period ended June 30, 2021 (six-month period ended June 30, 2020: valuation gain of W 9,912 million).

 

8.

Other Assets and Liabilities

Other assets and liabilities as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)   

June 30,

2021

     December 31,
2020
 

Other assets

     

Advance payments

   W 70,457      W 44,405  

Prepaid expenses 1

     1,891,324        1,920,574  

Contract assets 1

     610,293        536,373  

Less: Non-current

     (650,013      (635,224
  

 

 

    

 

 

 

Current

   W 1,922,061      W 1,866,128  
  

 

 

    

 

 

 

Other liabilities

     

Advances received 1

   W 210,445      W 224,079  

Withholdings

     18,590        20,871  

Unearned revenue

     19,831        14,610  

Lease liabilities

     1,064,923        1,066,144  

Contract liabilities 1

     339,511        371,396  

Less: Non-current

     (851,642      (877,715
  

 

 

    

 

 

 

Current

   W 801,658      W 819,385  
  

 

 

    

 

 

 

 

1 

The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue from Contracts with Customers (Note 19).

 

9.

Property and Equipment, Investment Properties, and Intangible Assets

Changes in property and equipment for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 11,999,717      W 11,447,952  

Acquisition and capital expenditure

     956,757        1,024,462  

Disposal and termination

     (37,453      (32,605

Depreciation

     (1,171,500      (1,149,595

Transfer

     (184,286      (21,348

Others

     (51,546      (18,220
  

 

 

    

 

 

 

Ending, net

   W 11,511,689      W 11,250,646  
  

 

 

    

 

 

 

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Changes in investment properties for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 735,563      W 769,019  

Depreciation

     (17,979      (26,789

Transfer

     184,286        10,585  
  

 

 

    

 

 

 

Ending, net

   W 901,870      W 752,815  
  

 

 

    

 

 

 

As at June 30, 2021, the Company (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 94,169 million for one year or less, W 60,707 million more than one year and less than five years, W 54,166 million over five years, and W 209,042 million in total.

Details of investment properties provided as collateral as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021  
    

Carrying

amount

    

Secured

amount

     Related account      Related
amount
 

Land and Buildings

   W 123,484      W 36,434        Deposits received      W 32,829  

 

(in millions of Korean won)    December 31, 2020  
    

Carrying

amount

    

Secured

amount

     Related account     

Related

amount

 

Land and Buildings

   W 135,070      W 39,250        Deposits received      W 35,258  

Changes in intangible assets for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning, net

   W 1,583,456      W 2,239,882  

Acquisition and capital expenditure

     702,771        26,582  

Disposal and termination

     (1,119      (2,778

Amortization

     (252,385      (269,679

Others

     (162      -    
  

 

 

    

 

 

 

Ending, net

   W 2,032,561      W 1,994,007  
  

 

 

    

 

 

 

The carrying amount of goodwill with indefinite useful life not subject to amortization is W 65,057 million as at June 30, 2021 (December 31, 2020: W 65,057 million). The carrying amount of membership rights with indefinite useful life not subject to amortization is W 72,361 million as at June 30, 2021 (December 31, 2020: W 72,361 million).

In April 2021, the Company was reassigned with a portion of the 1.8GHz and 900MHz bands in accordance with Article 11 of the Radio Waves Act (frequency allocation based on consideration). The payment for the frequency use right is W 547,800 million and W 141,300 million for the 1.8GHz and 900MHz bands, respectively. The Company plans to pay a portion of the consideration in lump sum in June 2021, and the remainder in installments every year for the next five years.

 

18


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

10.

Investments in Subsidiaries, Associates and Joint Ventures

Carrying amount in investments in subsidiaries, associates and joint ventures as at June 30, 2021 and December 31, 2020, is as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Subsidiaries

   W 3,271,202      W 3,269,173  

Associates and joint ventures

     239,324        235,844  
  

 

 

    

 

 

 

Total

   W 3,510,526      W 3,505,017  
  

 

 

    

 

 

 

Investments in subsidiaries as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    Location      Percentage of
ownership (%)
    Carrying amount  
   

June 30,

2021

    

December 31,

2020

 

KT Estate Inc.

     Korea        100.0   W 1,084,522      W 1,084,522  

KT Sat Co., Ltd.

     Korea        100.0     390,530        390,530  

KTCS Corporation 1

     Korea        7.9     6,427        6,427  

KTIS Corporation 1

     Korea        31.4     30,633        30,633  

KT Skylife Co., Ltd.

     Korea        50.3     311,696        311,696  

BC Card Co., Ltd.

     Korea        69.5     633,004        633,004  

KT M&S Co., Ltd.

     Korea        100.0     26,764        26,764  

KT Hitel Co., Ltd.

     Korea        63.7     120,078        120,078  

KT Belgium

     Belgium        0.0     —          5,489  

KT Powertel Co., Ltd.

     Korea        0.0     —          37,419  

Genie Music Corporation 1

     Korea        36.2     37,417        37,417  

KT Dutch B.V.

     Netherlands        100.0     32,359        32,359  

KT Telecop Co., Ltd.

     Korea        86.8     134,308        134,308  

KT Submarine Co., Ltd. 1

     Korea        39.3     24,370        24,370  

Nasmedia Co., Ltd.2

     Korea        44.0     23,051        23,051  

KTDS Co., Ltd.

     Korea        95.5     19,616        19,616  

KTGDH Co., Ltd.

     Korea        100.0     7,544        7,544  

KT Strategic Investment Fund No.2

     Korea        90.9     13,221        10,245  

KT Sports

     Korea        66.0     14,520        14,520  

KT M Mobile Co., Ltd.

     Korea        100.0     102,237        102,237  

KT Service Bukbu Co., Ltd.

     Korea        67.3     7,092        7,092  

KT Service Nambu Co., Ltd.

     Korea        76.4     10,160        10,160  

KT Strategic Investment Fund No.3

     Korea        86.7     2,947        4,507  

KT Strategic Investment Fund No.4

     Korea        95.0     19,000        19,000  

PlayD Co., Ltd. 3

     Korea        23.5     20,000        20,000  

KT MOS Bukbu Co., Ltd.

     Korea        100.0     6,334        6,334  

KT MOS Nambu Co., Ltd.

     Korea        98.4     4,267        4,267  

Next Connect PFV

     Korea        100.0     24,250        24,250  

KT Strategic Investment Fund No.5

     Korea        95.0     19,000        12,540  

 

19


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

                  Carrying amount  
(in millions of Korean won)    Location      Percentage of
ownership (%)
   

June 30,

2021

     December 31,
2020
 

Storywiz Co., Ltd. 4

     Korea        0.0     —          14,000  

KT Engineering (KT ENGCORE Co., Ltd.)

     Korea        59.8     28,000        28,000  

KT Studio Genie Co., Ltd.4

     Korea        100.0     45,687        —    

Others

     —          —         72,168        66,794  
       

 

 

    

 

 

 
        W 3,271,202      W 3,269,173  
       

 

 

    

 

 

 

 

1 

At the end of the reporting period, although sum of percentage of ownership of the Company and its subsidiaries is less than 50% ownership in this entity, this entity is included in investments in subsidiaries due to the dispersion of the non-controlling interests and voting patterns at the shareholders’ meetings in the past.

 

2 

At the end of the reporting period, although the Company owns less than 50% ownership in this entity, this entity is included in investments in subsidiaries as the Company holds the majority of voting right based on an agreement with other investors.

 

3

At the end of the reporting period, this entity is included in investments in subsidiaries as the Nasmedia Co., Ltd., holds ownership of 46.9% the Company and subsidiary holds ownership of 70.4%.

 

4

During the current period, the Company invested its shares of Storywiz Co., Ltd. and Skylife TV Co., Ltd., subsidiaries, in KT Studio Genie Co., Ltd.

Investments in associates and joint ventures as at June 30, 2021 and December 31, 2020, are as follows:

 

                  Carrying amount  
(in millions of Korean won)    Location      Percentage of
ownership (%)
    June 30,
2021
     December 31,
2020
 

KIF Investment Fund

     Korea        33.3   W 115,636      W 115,636  

KT-IBKC Future Investment Fund 1

     Korea        43.3     8,190        12,090  

Hyundai Robotics Co., Ltd. 1

     Korea        10.0     50,000        50,000  

Others

          65,498        58,118  
       

 

 

    

 

 

 
        W 239,324      W 235,844  
       

 

 

    

 

 

 

 

1

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

Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 3,505,017      W 3,501,391  

Acquisition

     44,614        107,521  

Disposal

     (49,820      (1,495

Reversal of impairment loss

     7,028        —    

Other 1

     3,687        (50,950
  

 

 

    

 

 

 

Ending

   W 3,510,526      W 3,556,467  
  

 

 

    

 

 

 

 

1 

During the current period, the Company invested convertible bonds for Skylife TV Co., Ltd. in KT Studio Genie Co., Ltd.

 

20


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

11.

Trade and Other Payables

Details of trade and other payables as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Current liabilities

     

Trade payables

   W 638,947      W 672,179  

Other payables

     3,048,584        3,604,783  
  

 

 

    

 

 

 

Total

   W 3,687,531      W 4,276,962  
  

 

 

    

 

 

 

Non-current liabilities

     

Other payables1

   W 1,110,010      W 738,275  
  

 

 

    

 

 

 

 

1

As at June 30, 2021, other payables include residual considerations related to new frequency acquisitions (Note 9).

Details of other payables as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Non-trade payables

   W 2,728,081      W 3,086,595  

Accrued expenses

     850,497        642,388  

Operating deposits

     437,371        460,379  

Others

     142,645        153,696  

Less: Non-current

     (1,110,010      (738,275
  

 

 

    

 

 

 

Current

   W 3,048,584      W 3,604,783  
  

 

 

    

 

 

 

 

12.

Borrowings

Details of borrowings as at June 30, 2021 and December 31, 2020, are as follows:

Debentures

 

(in millions of Korean won and foreign currencies in thousands)     June 30, 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      W     113,000        USD 100,000      W     108,800  

MTNP notes

     Jul. 18, 2026        2.500     USD 400,000        452,000        USD 400,000        435,200  

MTNP notes

     Aug. 7, 2022        2.625     USD 400,000        452,000        USD 400,000        435,200  

FR notes 2

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

MTNP notes

     Jul. 6, 2021        0.380     JPY 16,000,000        163,539        JPY 16,000,000        168,682  

MTNP notes

     Jul. 19, 2022        0.220     JPY 29,600,000        302,548        JPY 29,600,000        312,061  

 

21


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won and foreign currencies in thousands)     June 30, 2021      December 31, 2020  
Type    Maturity      Annual interest rates    

Foreign

currency

    

Korean

won

    

Foreign

currency

    

Korean

won

 

MTNP notes

     Jul. 19, 2024        0.330     JPY 400,000        4,088        JPY 400,000        4,217  

MTNP notes

     Sep.1,2025        1.000     USD 400,000        452,000        USD 400,000        435,200  

FR notes 2

     Nov. 1, 2024        LIBOR(3M)+0.980     USD 350,000        395,500        USD 350,000        380,800  

FR notes 2

     Jun.19.2023        SOR(6M)+0.500     SGD 284,000        238,549        SGD 284,000        233,510  

The 180-2nd Public bond

     Apr. 26, 2021        —         —          —          —          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 189-4th 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  

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 194-1st Public bond

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

The 194-2nd Public bond

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

The 194-3rd Public bond

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

The 194-4th Public bond

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

The 195-1st Public bond

     Jun. 10, 2024        1.387     —          180,000        —          —    

The 195-2nd Public bond

     Jun. 10, 2026        1.806     —          80,000        —          —    

 

22


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won and foreign currencies in thousands)     June 30, 2021     December 31, 2020  
Type    Maturity    Annual
interest
rates
   

Foreign

currency

    

Korean

won

   

Foreign

currency

    

Korean

won

 

The 195-3rd Public bond

   Jun. 10, 2031      2.168     —          40,000       —          —    
       

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal

 

    —          7,006,224       —          6,862,470  

Less: Current portion

 

    —          (823,349     —          (1,228,284

Discount on bonds

 

    —          (19,561     —          (19,663
 

 

 

    

 

 

   

 

 

    

 

 

 

Total

 

    —        W     6,163,314       —        W     5,614,523  
 

 

 

    

 

 

   

 

 

    

 

 

 

 

1 

As at June 30, 2021, the Company 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 MTN program has been terminated since 2007.

2 

The Libor (3M) and the SOR (6M) is approximately 0.146% and 0.239% as at June 30, 2021, respectively.

Long-term borrowings

 

(in millions of Korean won)                              
Financial institution    Type   Maturity     

Annual

interest
rates

    June 30, 2021     December 31,
2020
 

Export-Import Bank of Korea

   Inter-Korean Cooperation Fund 1     July 10, 2026        1.500   W 2,714     W 2,961  

CA-CIB

   Long-term commercial papers     May 15, 2023        1.260     100,000       100,000  
         

 

 

   

 

 

 

Subtotal

 

    102,714       102,961  

Less: Current portion

 

    (493     (493
 

 

 

   

 

 

 

Total

 

  W     102,221     W     102,468  
 

 

 

   

 

 

 

 

1 

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

Repayment schedule of the Company’s debentures and borrowings including the portion of current liabilities as at June 30, 2021, is as follows:

 

(in millions of Korean won)    Bonds                
     In local currency      In foreign
currency
    

Sub-

total

     Borrowings      Total  

Jul.1, 2021 ~ Jun. 30, 2022

   W 660,000      W 163,539      W 823,539      W 493      W 824,032  

Jul.1, 2022 ~ Jun. 30, 2023

     830,000        993,096        1,823,096        100,493        1,923,589  

Jul.1, 2023 ~ Jun. 30, 2024

     500,000        113,000        613,000        493        613,493  

Jul.1, 2024 ~ Jun. 30, 2025

     580,000        399,589        979,589        493        980,082  

After Jul.1, 2025

     1,750,000        1,017,000        2,767,000        742        2,767,742  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   W     4,320,000      W     2,686,224      W     7,006,224      W     102,714      W     7,108,938  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

23


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

13.

Provisions

Changes in provisions for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

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

Beginning balance

   W 74,179      W 97,039      W 61,527      W 232,745  

Increase (transfer)

     1,226        5,149        1,343        7,718  

Usage

     (138      (516      (377      (1,031

Reversal

     —          (390      (5,698      (6,088
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 75,267      W 101,282      W 56,795      W 233,344  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W       75,267      W       21,084      W       53,686      W       150,037  

Non-current

     —          80,198        3,109        83,307  

 

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

Beginning balance

   W 64,042      W 103,895      W 69,782      W 237,719  

Increase (transfer)

     —          (1,192      7,317        6,125  

Usage

     —          (730      (3,408      (4,138

Reversal

     —          (502      —          (502
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

   W 64,042      W 101,471      W 73,691      W 239,204  
  

 

 

    

 

 

    

 

 

    

 

 

 

Current

   W       64,042      W       20,034      W       70,992      W       155,068  

Non-current

     —          81,437        2,699        84,136  

 

14.

Net Defined Benefit Liabilities

The amounts recognized in the statements of financial position as at June 30, 2021 and December 31, 2020, are determined as follows:

 

(in millions of Korean won)   

June 30,

2021

     December 31,
2020
 

Present value of defined benefit obligations

   W 1,885,542      W 1,809,843  

Fair value of plan assets

     (1,556,920      (1,539,553
  

 

 

    

 

 

 

Liabilities, net

   W 328,622      W 270,290  
  

 

 

    

 

 

 

 

24


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Changes in the defined benefit obligations for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 1,809,843      W 1,774,582  

Current service cost

     69,165        71,466  

Interest expense

     16,669        16,824  

Benefit paid

     (10,135      (68,072
  

 

 

    

 

 

 

Ending

   W         1,885,542      W         1,794,800  
  

 

 

    

 

 

 

Changes in the fair value of plan assets for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Beginning

   W 1,539,553      W 1,499,984  

Interest income

     14,180        14,221  

Remeasurements on plan assets

     (640      735  

Benefit paid

     3,827        (60,646
  

 

 

    

 

 

 

Ending

   W         1,556,920      W         1,454,294  
  

 

 

    

 

 

 

Amounts recognized in the separate statement of profit or loss for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Current service cost

   W 69,165      W 71,466  

Net interest cost

     2,489        2,603  

Account transfers

     (7,235      (8,315
  

 

 

    

 

 

 

Total expenses

   W         64,419      W         65,754  
  

 

 

    

 

 

 

 

15.

Commitments and Contingencies

As at June 30, 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      1,430,000        —    

Inter-Korean Cooperation Fund

  

Export-Import Bank of Korea

   KRW      37,700        2,714  

Economic Cooperation Business Insurance

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

Collateralized loan on electronic accounts receivable-trade

   Kookmin Bank and others    KRW      297,000        7,643  

Plus electronic notes payable

  

Industrial Bank of Korea

   KRW      50,000        —    

Derivatives transaction limit

  

Korea Development Bank

Woori Bank and others

   KRW USD     
100,000
69,054
 
 
    
6,888
36,453
 
 
     

 

  

 

 

    

 

 

 

Total

      KRW      1,917,940        18,977  
      USD      69,054        36,453  
     

 

  

 

 

    

 

 

 

 

25


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

As at June 30, 2021, guarantees received from financial institutions are as follows:

 

(in millions of Korean won and

foreign currencies in thousands)

   Financial institution    Currency    Limit  

Comprehensive credit line

   Hana Bank    KRW      4,100  
      USD      8,700  

Bid guarantee

   Korea Software Financial Cooperative    KRW      80,307  

Performance guarantee / warranty guarantee

      KRW      385,837  

Guarantee for advances received / others

      KRW      475,323  

Guarantee for payment in foreign currency

   Kookmin Bank    USD      7,390  
   Shinhan Bank    USD      5,000  
   Woori Bank    USD      15,000  

Guarantee for payment in local currency

   Shinhan Bank    KRW      6,840  

Refund guarantee for advances received

   Korea Development Bank    USD      8,536  

Performance guarantee

   Seoul Guarantee Insurance    KRW      7,938  

Guarantees for licensing

      KRW      3,280  

Guarantee for deposits

      KRW      1,456  
     

 

  

 

 

 

Total

      KRW      965,081  
      USD      44,626  
     

 

  

 

 

 

The 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 June 30, 2021, the Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of \ 733 million.

For the six-month period ended June 30, 2021, the Company made agreements with Securitization Specialty Companies (2021: First 5G Fifty fifth to Fifty seventh Securitization Specialty Co., Ltd., 2020: First 5G Forty ninth to Fifty fourth Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Company also made asset management agreements with each securitization specialty company and in accordance with the agreements, the Company will receive asset management fees upon liquidation of the securitization specialty company.

As at June 30, 2021, the Company is a defendant in 192 lawsuits with the total claimed amount of \ 95,052 million. As at June 30, 2021, litigation provisions of \ 75,267 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated at the end of the reporting period.

According to financial and other covenants included in certain debentures and borrowings, the Company 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 restriction on provision of additional collateral and disposal of certain assets.

As at June 30, 2021, the Company participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at June 30, 2021, the contracted amount of property and equipment and intangible assets acquisition agreement made but not yet recognized amounts to \ 644,606 million (December 31, 2020: \ 595,145 million).

 

26


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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

16.

Leases

Set out below is information for leases when the Company is a lessee. Information for when the Company is a lessor is provided in Note 9.

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

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Right-of-use assets

     

Property and buildings

   W 1,064,664      W 1,069,993  

Machinery and track facilities

     70,644        38,073  

Others

     33,574        44,087  
  

 

 

    

 

 

 
   W         1,168,882      W         1,152,153  
  

 

 

    

 

 

 

Investment properties (buildings)

   W 1,848      W 19,730  

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Lease liabilities 1

     

Current

   W 300,073      W 291,470  

Non-current

     764,850        774,674  
  

 

 

    

 

 

 
   W         1,064,923      W         1,066,144  
  

 

 

    

 

 

 

 

1 

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

Increases in right-of-use assets for the six-month periods ended June 30, 2021 and 2020 was W 213,555 million and W 233,985 million, respectively.

The separate statement of profit or loss for the six-month periods ended June 30, 2021 and 2020 shows the following amounts relating to leases:

 

(in millions of Korean won)    2021      2020  

Depreciation of right-of-use assets

     

Property and buildings

   W 159,319      W 151,319  

Machinery and track facilities

     22,675        33,150  

Others

     11,226        10,527  
  

 

 

    

 

 

 
   W         193,220      W         194,996  
  

 

 

    

 

 

 

Depreciation of investment properties

   W 1,447      W 10,288  

Interest expense relating to lease liabilities

     15,424        21,091  

Expense relating to short-term leases

     1,734        1,881  

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

     8,860        7,688  

The total cash outflow for leases for the six-month periods ended June 30, 2021 and 2020 was W 207,596 million and W 193,308 million, respectively.

 

27


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

17.

Retained Earnings

Details of retained earnings as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 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

     6,083,853        5,800,103  
  

 

 

    

 

 

 

Total

   W          11,517,464      W          11,233,714  
  

 

 

    

 

 

 

 

  1 

The Commercial Code of the Republic of Korea requires the 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 Company’s Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the 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.

 

18.

Other Components of Equity

The Company’s other components of equity as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Treasury stock

   W (1,072,328    W (882,224

Loss on disposal of treasury stock

     —          (20,498

Share-based payments

     8,351        5,901  

Others

     (180,891      (180,999
  

 

 

    

 

 

 

Total

   W         (1,244,868)      W          (1,077,820)  
  

 

 

    

 

 

 

As at June 30, 2021 and December 31, 2020, the details of treasury stock are as follows:

 

     June 30, 2021      December 31, 2020  

Number of shares (in 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 as stock compensation for the Company’s directors, employees and other purposes.

 

28


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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

19.

Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities

The Company has recognized the following amounts relating to revenue in the statement of profit or loss for the three-month and six-month periods ended June 30, 2021 and 2020:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Revenue from contracts with customers

   W 4,434,266      W 8,966,410      W 4,296,227      W 8,678,978  

Revenue from other sources

     44,535        86,844        43,448        89,764  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   W      4,478,801      W      9,053,254      W      4,339,675      W      8,768,742  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating revenues for the three-month and six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Services provided

   W 3,866,312      W 7,690,323      W 3,743,608      W 7,493,492  

Sales of goods

     612,489        1,362,931        596,067        1,275,250  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W      4,478,801      W      9,053,254      W      4,339,675      W      8,768,742  
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenues from services provided are recognized over time, and sales of goods are recognized at a point of time.

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

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  

Contract assets 1

   W      688,159      W  622,608  

Contract liabilities 1

     369,624        400,971  

Deferred revenue 2

     76,135        76,198  

 

  1

The Company recognized contract assets of W 77,866 million and contract liabilities of W 30,113 million for long-term construction contracts as at June 30, 2021 (2020: contract assets of W 86,234 million and contract liabilities of W 29,574 million). The Company 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)    June 30, 2021      December 31, 2020  

Incremental costs of contract establishment

   W      1,651,482      W  1,722,451  

Costs of contract performance

     138,918        139,252  

The Company recognized W 979,502 million of operating expenses for the six-month period ended June 30,2021 (2020: W 900,609 million) which relate to contract cost assets.

The Company did not recognize an impairment loss in anticipation of full recovery of costs recognized as assets.

 

29


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

For the three-month and six-month periods ended June 30, 2021 and 2020, the recognized revenue arising from carried-forward contract liabilities and deferred revenue from prior year are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

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

           

Allocation of the transaction price

   W  71,444      W  154,933      W  67,392      W  141,887  

Deferred revenue of joining/installment fees

     9,875        21,072        10,179        20,726  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W        81,319      W        176,005      W        77,571      W        162,613  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

20.

Operating Expenses

Operating expenses for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Three

months

    

Six

months

    

Three

months

    

Six

months

 

Salaries and wages

   W 567,097      W  1,136,083      W 535,381      W  1,090,476  

Depreciation

     585,770        1,171,050        578,923        1,160,978  

Depreciation of right-of-use assets

     95,688        193,220        98,036        194,996  

Amortization of intangible assets

     126,738        251,600        134,100        268,612  

Commissions

     418,539        803,203        385,339        747,574  

Interconnection charges

     122,390        246,729        134,393        265,747  

International interconnection fees

     49,180        100,491        45,236        90,142  

Purchase of inventories

     508,270        1,269,415        662,575        1,385,567  

Changes of inventories

     87,629        91,148        (20,112      17,646  

Sales commissions

     641,827        1,272,837        618,953        1,194,736  

Service costs

     196,198        370,943        172,143        337,108  

Purchase of contents

     140,621        284,352        146,088        299,666  

Utilities

     80,265        161,366        77,140        154,662  

Taxes and dues

     64,379        120,923        51,408        104,403  

Rent

     27,534        52,858        28,265        54,147  

Insurance premiums

     12,611        25,905        15,232        30,442  

Installation fees

     113,070        225,712        105,199        206,351  

Advertising expenses

     34,973        59,311        27,928        52,262  

Research and development expenses

     39,210        78,711        36,378        78,141  

Others

     215,622        420,233        252,718        479,376  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W      4,127,611      W      8,336,090      W      4,085,323      W      8,213,032  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

30


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Details of employee benefits for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
     Three months      Six months      Three months      Six months  

Short-term employee benefits

   W 520,998      W 1,041,755      W 488,893      W 993,501  

Post-employment benefits (defined benefits)

     31,992        64,419        32,952        65,754  

Post-employment benefits (defined contributions)

     10,870        22,025        10,299        21,091  

Share-based payments

     1,261        2,558        995        2,594  

Others

     1,976        5,326        2,242        7,536  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W      567,097      W      1,136,083      W      535,381      W      1,090,476  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

21.

Other Income and Other Expenses

Other income for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Three

months

    

Six

months

    

Three

months

    

Six

months

 

Gain on disposal of property and equipment

   W 6,497      W 13,712      W 2,951      W 9,613  

Gain on disposal of right-of-use assets

     721        1,109        2,411        4,080  

Gain on disposal of intangible assets

     —          808        22        84  

Compensation on property and equipment

     40,441        73,839        44,833        73,781  

Gain on disposal of investments in Subsidiaries, Associates and Joint Ventures

     2,243        2,243        —          —    

Reversal of impairment loss on investments in Subsidiaries

     7,027        7,027        —          —    

Dividends received

     6,120        64,688        9,240        126,225  

Gain on government subsidies

     7,657        9,384        2,551        6,728  

Others

     12,292        25,843        4,688        10,072  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W      82,998      W      198,653      W      66,696      W      230,583  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other expenses for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Three

months

    

Six

months

    

Three

months

    

Six

months

 

Loss on disposal of property and equipment

   W 12,608      W 31,864      W 19,495      W 31,978  

Loss on disposal of right-of-use assets

     843        9,192        4,770        5,808  

Loss on disposal of intangible assets

     180        247        204        390  

Loss on disposal of investments in Subsidiaries, Associates and Joint Ventures

     2,627        2,627        100        117  

Impairment loss on assets held for sale

     —          —          14,629        14,629  

Donations

     270        3,127        11,445        11,445  

Others

     24,831        38,771        31,327        47,065  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W      41,359      W      85,828      W      81,970      W      111,432  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

31


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

22.

Finance Income and Costs

Details of finance income for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Three

months

    

Six

months

    

Three

months

    

Six

months

 

Interest income

   W 61,573      W 125,027      W 60,569      W 123,555  

Gain on foreign currency transactions

     1,618        3,813        1,686        6,672  

Gain on foreign currency translation

     1,314        17,958        (684      6,959  

Gain on valuation of derivatives

     (6,020      81,040        (43,883      106,933  

Gain on disposal of financial assets

     7,048        11,326        —          —    

Others

     69        82        7        7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W  65,602      W  239,246      W  17,695      W  244,126  
  

 

 

    

 

 

    

 

 

    

 

 

 

Details of finance costs for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  
    

Three

months

    

Six

months

    

Three

months

   

Six

months

 

Interest expenses

   W 54,070      W 112,370      W 64,399     W 129,003  

Loss on foreign currency transactions

     1,625        2,773        1,652       5,462  

Loss on foreign currency translation

     (6,990      78,334        (44,515     112,494  

Loss on valuation of derivatives

     2,356        14,703        5,912       5,912  

Loss on disposal of trade receivables

     5,936        7,378        2,511       4,728  

Others

     —          —          619       758  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   W  56,997      W  215,558      W  30,578     W  258,357  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

23.

Income Tax Expense

Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual income tax rate used for the year ending December 31, 2021 is 26.06%.

 

32


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

24.

Earnings per Share

Basic earnings per share is calculated by dividing the profit from operations attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares purchased by the Company and held as treasury stock.

Basic earnings per share from operations for the six-month periods ended June 30, 2021 and 2020, are calculated as follows:

 

     2021      2020  
     Three months      Six months      Three months      Six months  

Profit attributable to ordinary shares (in millions of Korean won)

   W 296,819      W 631,208      W 167,254      W 487,899  

Weighted average number of ordinary shares outstanding (in number of shares)

     234,276,810        235,874,816        245,244,229        245,242,889  

Basic earnings per share (in Korean won)

   W     1,267      W     2,676      W     682      W     1,989  

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares from other share-based payments.

Diluted earnings per share from operations for the six-month periods ended June 30, 2021 and 2020, are calculated as follows:

 

     2021      2020  
     Three months      Six months      Three months      Six months  

Profit attributable to ordinary shares (in millions of Korean won)

   W 296,819      W 631,208      W 167,254      W 487,899  

Diluted profit attributable to ordinary shares (in millions of Korean won)

   W 296,819      W 631,208      W 167,254      W 487,899  

Number of dilutive potential ordinary shares outstanding (in number of shares)

     195,616        213,301        127,797        129,136  

Weighted average number of ordinary shares outstanding (in number of shares)

     234,472,426        236,088,117        245,372,026        245,372,025  

Diluted earnings per share (in Korean won)

   W     1,266      W     2,674      W     682      W     1,988  

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the period by the sum of the number of ordinary shares and dilutive potential ordinary shares excluding other share-based payments without dilutive effect.

 

25.

Cash Generated from Operations

Cash flows from operating activities for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

1. Profit for the period

   W 631,208      W 487,899  

2. Adjustments for:

     

Income tax expense

     222,469        172,731  

Interest income

     (125,027      (123,555

Interest expense

     112,370        129,003  

Dividend income

     (64,695      (126,233

Depreciation

     1,189,479        1,176,384  

Amortization of intangible assets

     252,385        269,679  

Depreciation of right-of-use assets

     193,220        194,996  

Provisions for severance benefits (defined benefits)

     71,654        74,069  

Allowance for bad debts

     34,216        42,123  

Loss on disposal of investments in subsidiaries, associates and joint ventures

     384        117  

Loss on disposal of property and equipment

     18,152        22,365  

Loss (gain) on disposal of intangible assets

     (561      306  

Loss on disposal of right-of-use assets

     8,083        1,728  

Loss on foreign currency translation

     60,376        105,535  

Gain on valuation of derivatives, net

     (66,337      (101,021

Loss (gain) on valuation of financial assets at fair value through profit or loss

     (77      67  

Loss (gain) on disposal of financial assets at fair value through profit or loss

     (11,326      576  

Others

     (30,941      (12,444

3. Changes in operating assets and liabilities

     

Decrease (increase) in trade receivables

     218,538        (160,453

Increase in finance lease receivables

     (1,795      (2,298

Increase in other receivables

     (18,853      (24,723

Decrease (increase) in other current assets

     (55,703      554  

Increase in other non-current assets

     (14,790      (18,936

Decrease in inventories

     117,460        26,729  

Decrease in trade payables

     (35,089      (142,313

 

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Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    2021      2020  

Increase (decrease) in other payables

     162,498        (170,165

Increase (decrese) in other current liabilities

     (26,442      21,330  

Decrease in other non-current liabilities

     (16,250      (2,124

Increase in provisions

     1,992        4,323  

Increase (decrease) in deferred revenue

     38,320        (2,699

Post-employment benefits paid (defined benefits)

     (80,653      (68,187

Decrease in plan assets

     58,938        60,483  
  

 

 

    

 

 

 

4. Cash generated from operations (1+2+3)

   W 2,843,203      W 1,835,846  
  

 

 

    

 

 

 

Significant transactions not affecting cash flows for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021      2020  

Reclassification of the current portion of borrowings

   W 219,995      W 619,771  

Reclassification of construction-in-progress to property and equipment

     1,167,032        835,957  

Reclassification of other payables from property and equipment

     (555,392      (507,904

Reclassification of other payables from intangible assets

     210,242        (339,208

Reclassification of other payables from net defined benefit liabilities

     (7,752      (278

 

26.

Cash Generated from Financing Activities

Changes in liabilities arising from financial activities for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Beginning     Cash flows     Non-cash     Ending  
    Newly
acquired
     Exchange
differences
     Fair value
changes
    Others  

Borrowings

   W 6,945,768     W 77,550     W —        W 63,351      W —       W 2,708     W 7,089,377  

Financial lease liabilities

     1,066,144       (197,002     205,070        —          —         (9,289     1,064,923  

Derivative liabilities

     120,349       —         —          31,096        (11,338     (77,954     62,153  

Derivative assets

     (7,684     —         —          29,298        (2,033     (42,122     (22,541
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

   W 8,124,577     W (119,452   W 205,070      W 123,745      W (13,371   W (126,657   W 8,193,912  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(in millions of Korean won)    2020  
     Beginning     Cash flows     Non-cash     Ending  
    Newly
acquired
     Exchange
differences
    Fair value
changes
    Others  

Borrowings

   W 7,028,040     W 485,067     W  —        W 105,708     W  —       W 3,210     W 7,622,025  

Financial lease liabilities

     1,120,825       (183,739     224,677        —         —         (8,312     1,153,451  

Derivative liabilities

     18,632       —         —          (14,751     15,852       (7,962     11,771  

Derivative assets

     (55,423     —         —          (89,902     (15,933     14,114       (147,144
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   W 8,112,074     W 301,328     W 224,677      W 1,055     W (81   W 1,050     W 8,640,103  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

35


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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

27.

Related Party Transactions

The list of related parties of the Company as at June 30, 2021, is as follows:

 

Relationship    Name of Entity
Subsidiaries    KT Hitel Co., Ltd., KTCS Corporation, KTIS Corporation, KT Service Bukbu Co., Ltd., KT Service Nambu Co., Ltd., KT Linkus Co., Ltd., KT Telecop Co., Ltd., KTDS Co., Ltd., Nasmedia, Co., Ltd., KT M Hows Co., Ltd., KT M&S Co., Ltd., GENIE Music Corporation, KT Estate Inc., KT Skylife Co., Ltd., H&C Network, KTGDH Co., Ltd., KT Sat Co., Ltd., KT Submarine Co., Ltd., KT Sports Co., Ltd., KT Strategic Investment Fund No.2, KT Music Contents Fund 1, KT America, Inc., KT Japan Co., Ltd., KT Dutch B.V., KT AMC, KT Commerce Inc., BC Card Co., Ltd., VP Inc., Skylife TV Co., Ltd., Initech Co., Ltd., BC Card Science and Technology (Shanghai) Co., Ltd., Smartro Co., Ltd., East Telecom LLC, KT NEXR Co., Ltd., KT Rwanda Networks Ltd., Autopion Co., Ltd., KT-Michigan Global Contents Fund, AOS Ltd., KT M Mobile Co., Ltd., KT investment Co., Ltd, PT. BC Card Asia Pacific, Whowho&Company Co., Ltd., KT Hongkong Telecommunications Co., Ltd., KT Strategic Investment Fund No.3, PlayD Co., Ltd., Korea Telecom Singapore Pte, Ltd., Texnoprosistem LLP, KT Music Contents Fund No.2, KT Strategic Investment Fund No.4, BC-VP Strategic Investment Fund No.1, KT MOS Bukbu Co., Ltd., KT MOS Nambu Co., Ltd., Nasmedia Thailand Co., Ltd., Next Connect PFV, KT Huimangjieum, KT Strategic Investment Fund No.5, K-REALTY RENTAL HOUSING REIT 3, Storywiz Co., Ltd., KT Engineering Co., Ltd.(KT ENGCORE Co., Ltd.), KT Studio Genie Co., Ltd., Lolab Co., Ltd., KHS Corporation
Associates   

KIF Investment Fund, K-REALTY CR REITs No.1, Boston Global Film & Contents Fund L.P., QTT Global (Group) Company Ltd., CU Industrial Development Co., Ltd, KD Living, Inc., LoginD Co., Ltd., K-REALTY CR-REIT 6, K Bank Inc., ISU-kth Contents Investment Fund, Daiwon Broadcasting Co., Ltd., KT-DSC Creative Economy Youth Start-up Investment Fund, Korea Electronic Vehicle Charging Service, K-REALTY RENTAL HOUSING REIT 2, AI RESEARCH INSTITUTE, KT-IBKC Future Investment Fund 1, Gyeonggi-KT Yoojin Superman Fund, FUNDA Co., Ltd, CHAMP IT Co., Ltd., Alliance Internet Corp., Little big pictures, Virtua Realm Sendirian Berhad, KT Philippines, KT-Smart Factory Investment Fund, Studio Discovery Co., Ltd., KT Young Entrepreneurs DNA Investment Fund, Hyundai Robotics Co., Ltd., IGIS Professional Investors Private Investment Real Estate Investment LLC No 395, , Mogyo Limited Company Specializing in the Cultural Industry, Mission Limited Company Specializing in the Cultural Industry,

 

Maruee Limited Company Specializing in the Cultural Industry, Sweet&Sour Limited Company Specializing in the Cultural Industry, Trustay Co., Ltd., The skyk Co., Ltd., StorySoop Inc., Mastern No.127 Logispoint Daegu Co., Ltd.

 

36


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

The amount of installment handset sales receivable inherited from KTIS Corporation, KTCS Corporation and KT M&S Co., Ltd. for the six-month period ended June 30, 2021 is \ 260,440 million.

The Company has entered into an additional agreement with KT M Mobile Co., Ltd. regarding wholesale provision of telecommunication services. In connection with the agreement, the Company offsets receivables, partially or in-full, against payables for joining mobile telecommunications services and network usage arising from telecommunication operations.

Outstanding balances of receivables and payables in relation to transactions with related parties as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021  
     Receivables      Payables  
     Trade
receivables
     Loans and
others
     Other
receivables
    

Lease

receivables

     Trade
payables
     Other
payables
    

Lease

liabilities

 

Subsidiaries

                    

KT Linkus Co., Ltd.

   W —        W —        W 36      W —        W —        W 12,628      W —    

KT Telecop Co., Ltd.

     681        —          343        11        1,913        28,937        13  

KTCS Corporation

     257        —          6,559        480        —          52,473        —    

KTIS Corporation

     730        —          5,089        1,862        —          39,097        —    

KT Service Bukbu Co., Ltd.

     12        —          —          78        —          17,555        —    

KT Service Nambu Co., Ltd.

     1        —          —          —          —          21,447        —    

KT Skylife Co., Ltd.

     3,389        —          6,293        28        —          8,333        —    

KTDS Co., Ltd.

     990        —          144        —          —          89,762        —    

KT Estate Inc.

     1,032        —          45,592        —          —          10,944        51,002  

Skylife TV Co., Ltd

     349        —          24        60        —          1,349        —    

BC Card Co., Ltd.1

     586        —          5,545        —          —          847        6  

KT Sat Co., Ltd.

     1,681        —          —          —          —          1,191        —    

KT Hitel Co., Ltd.

     3,461        —          210        —          9,890        10,931        —    

KT Commerce Inc.

     64        —          —          —          1,563        25,314        —    

KT M Hows Co., Ltd.

     190        —          —          —          —          3,014        —    

KT M&S Co., Ltd.

     102        5,025        462        2        —          103,532        —    

GENIE Music Corporation

     603        —          16        —          —          41,660        —    

 

37


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   
(in millions of Korean won)    June 30, 2021  
     Receivables      Payables  
     Trade
receivables
     Loans and
others
     Other
receivables
    

Lease

receivables

     Trade
payables
     Other
payables
    

Lease

liabilities

 

KT M Mobile Co., Ltd.

     22,430        —          238        —          —          213        —    

Nasmedia, Co., Ltd.

     4,088        —          —          —          —          1,115        —    

KT MOS Bukbu Co., Ltd.

     —          —          —          —          —          8,244        —    

KT MOS Nambu Co., Ltd.

     —          —          —          —          —          8,001        —    

KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.)

     1        —          1,032        15        60        46,264        7  

KHS Corporation

     —          —          —          —          —          50        —    

Others

     8,210        513        10,659        519        411        5,641        35  

Associates and joint ventures

                    

K—REALTY CR REITs No.1

     —          —          14,800        —          —          —          9,904  

K Bank Inc.

     459        —          62        —          —          —          —    

Others

     43        —          1        —          —          201        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W  49,359      W  5,538      W 97,105      W 3,055      W 13,837      W 538,743      W 60,967  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   
(in millions of Korean won)    December 31, 2020  
     Receivables      Payables  
     Trade
receivables
     Loans and
others
     Other
receivables
    

Lease

receivables

     Trade
payables
     Other
payables
    

Lease

liabilities

 

Subsidiaries

                    

KT Powertel Co., Ltd

   W 796      W —        W 931      W —        W —        W 5,365      W —    

KT Linkus Co., Ltd.

     605        —          —          —          —          10,339        —    

KT Telecop Co., Ltd.

     1,228        —          401        —          1,942        25,707        —    

KTCS Corporation

     172        —          7,044        —          —          50,363        14  

KTIS Corporation

     688        —          3,474        —          —          40,189        —    

KT Service Bukbu Co., Ltd.

     15        —          —          22        —          21,678        —    

KT Service Nambu Co., Ltd.

     3        —          —          —          —          23,742        —    

KT Skylife Co., Ltd.

     1,899        —          5,507        —          —          9,762        —    

KTDS Co., Ltd.

     10,210        —          3,072        —          —          96,644        —    

KT Estate Inc.

     8,687        —          46,338        —          —          21,276        35,880  

Skylife TV Co., Ltd 2

     —          3,687        —          —          —          1,849        —    

BC Card Co., Ltd.1

     494        —          4,858        —          —          612        6  

KT Sat Co., Ltd.

     1,750        —          —          —          —          1,206        —    

 

38


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

   
(in millions of Korean won)    June 30, 2021  
     Receivables      Payables  
     Trade
receivables
     Loans and
others
     Other
receivables
    

Lease

receivables

     Trade
payables
     Other
payables
    

Lease

liabilities

 

KT Hitel Co., Ltd.

     2,071        —          461        —          13,335        11,393        —    

KT Commerce Inc.

     107        —          —          —          9,243        46,708        —    

KT M Hows Co., Ltd.

     157        —          —          —          —          2,799        —    

KT M&S Co., Ltd.

     153        3,650        567        6        —          114,262        —    

GENIE Music Corporation

     81        —          285        —          —          26,680        —    

KT M Mobile Co., Ltd.

     14,170        —          96        —          —          498        —    

Nasmedia, Co., Ltd.

     5,355        —          —          —          —          1,263        —    

KT MOS Bukbu Co., Ltd.

     8        —          713        —          —          9,293        —    

KT MOS Nambu Co., Ltd.

     —          —          —          —          —          9,174        —    

KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.)

     5        —          3,298        32        1,327        99,173        7  

Others

     3,271        700        2,048        —          462        3,686        40  

Associates and joint ventures

                    

K-REALTY CR REITs No.1

     —          —          16,200        —          —          —          20,857  

K Bank Inc.

     274        —          —          —          —          2        —    

Others

     45        —          16        —          —          5        —    

Others

                    

KHS Corporation

     6        —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 52,250      W 8,037      W 95,309      W 60      W 26,309      W 633,668      W 56,804  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  1

As at June 30, 2021, W 833 million of the unsettled amount (December 31, 2020: W 580 million) in credit card transactions with BC Card Co., Ltd. is included in trade payables.

  2 

As at June 30, 2020, the convertible bonds issued by Skylife TV Co., Ltd. amounting to W 3,000 million is classified as financial assets at fair value through profit or loss.

 

39


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Significant transactions with related parties for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Sales      Purchases      Acquisition
of lease
receivables
    

Acquisition

of right-of-
use assets

    

Finance

income

    

Finance

costs

     Dividends
received
 
     Operating
revenue
    

Other

income

     Operating
expenses
     Others 1  

Subsidiaries

                          

KT Powertel Co., Ltd 2

   W 3,233      W  —        W 508      W —        W  —        W  —        W 1      W  —        W —    

KT Linkus Co., Ltd.

     3,258        —          28,211        —          —          —          —          —          —    

KT Telecop Co., Ltd.

     6,704        —          74,726        —          —          —          —          —          —    

KTCS Corporation 2

     44,371        54        156,770        —          —          —          6        —          254  

KTIS Corporation

     27,773        —          143,506        —          —          —          29        —          816  

KT Service Bukbu Co., Ltd.

     10,359        2        101,395        —          —          —          —          —          —    

KT Service Nambu Co., Ltd.

     7,402        5        121,907        —          —          —          2        —          —    

KT Skylife Co., Ltd.

     22,736        7        16,712        —          —          —          1        —          8,368  

KTDS Co., Ltd.

     7,261        16        195,033        59        —          —          1        —          3,000  

KT Estate Inc.

     6,742        —          31,455        —          —          38        —          501        —    

Skylife TV Co., Ltd.

     1,790        —          3,835        —          —          —          25        —          —    

BC Card Co., Ltd.

     6,135        3        15,379        —          —          —          2        —          14,686  

KT Sat Co., Ltd.

     9,931        —          5,328        —          —          —          —          —          —    

KT Hitel Co., Ltd.

     14,270        —          37,976        —          —          —          —          —          —    

KT Commerce Inc.

     471        —          49,039        23,445        —          —          —          —          —    

KT M Hows Co., Ltd.

     861        —          460        —          —          —          —          —          —    

KT M&S Co., Ltd.

     208,423        18        101,145        —          —          —          —          —          —    

GENIE Music Corporation

     943        —          29,849        —          —          —          —          —          —    

KT M Mobile Co., Ltd.

     60,352        —          8,874        —          —          —          —          —          —    

Nasmedia, Co., Ltd.

     334        —          3,060        —          —          —          —          —          2,994  

KT MOS Nambu Co., Ltd.

     909        —          32,394        367        —          —          —          —          —    

KT MOS Bukbu Co., Ltd.

     1,270        —          33,225        —          —          —          —          —          —    

KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.)

     278        —          21,855        52,671        —          —          —          —          —    

KHS Corporation

     4        —          1,135        —          —          —          —          —          —    

Others

     10,327        5        24,044        —          557        —          —          —          4,294  

Associates and joint ventures

                          

K-REALTY CR REITs No.1

     —          —          —          —          —          —          —          143        28,208  

K Bank Inc.

     1,916        —          4        —          —          —          —          —          —    

Others

     492        73        2,438        —          —          —          —          —          6,120  

Others

                          

KHS Corporation3

     8        —          1,744        —          —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 458,553      W 183      W 1,242,007      W 76,542      W 557      W 38      W 67      W 644      W 68,740  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  1 

Amounts include acquisition of property, equipment and others.

  2 

Transaction amount before being excluded from subsidiaries.

  3

Transaction amount before being included as a subsidiary.

 

40


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    2020  
     Sales      Purchases     

Acquisition
of right-of-

use assets

    

Finance

income

    

Finance

costs

     Dividends
received
 
     Operating
revenue
    

Other

income

     Operating
expenses
     Others 1  

Subsidiaries

                       

KT Powertel Co., Ltd

   W 3,925      W  —        W 488      W —        W  —        W —        W —        W —    

KT Linkus Co., Ltd.

     5,287        —          29,960        511        —          —          —          —    

KT Telecop Co., Ltd.

     4,838        —          9,110        —          —          —          1        —    

KTCS Corporation

     34,318        75        158,921        1,453        —          —          —          254  

KTIS Corporation

     23,314        —          143,914        —          —          1        —          918  

KT Service Bukbu Co., Ltd.

     6,852        2        100,727        —          —          1        —          —    

KT Service Nambu Co., Ltd.

     5,844        2        116,742        —          —          —          —          —    

KT Skylife Co., Ltd.

     15,175        13        20,486        —          —          —          2        8,368  

KTDS Co., Ltd.

     7,052        1        151,232        3        —          1        —          5,208  

KT Estate Inc.

     5,906        —          73,514        —          1        —          994        42,680  

Skylife TV Co., Ltd.

     1,765        —          3,510        —          —          45        —          —    

BC Card Co., Ltd.

     4,917        24        14,843        —          —          2        —          52,013  

KT Sat Co., Ltd.

     6,751        —          6,926        —          —          —          —          —    

KT Hitel Co., Ltd.

     12,259        —          30,070        —          —          —          —          —    

KT Commerce Inc.

     467        —          73,295        22,492        —          —          —          —    

KT M Hows Co., Ltd.

     703        —          493        —          —          —          —          1,520  

KT M&S Co., Ltd.

     182,378        50        100,343        —          —          —          —          —    

GENIE Music Corporation

     2,754        —          27,404        —          —          —          —          —    

KT M Mobile Co., Ltd.

     40,448        —          5,247        —          —          —          —          —    

Nasmedia, Co., Ltd.

     245        —          3,326        —          —          —          —          2,470  

KT MOS Nambu Co., Ltd.

     883        5        29,871        3,368        —          —          —          —    

KT MOS Bukbu Co., Ltd.

     1,202        —          30,786        —          —          —          —          —    

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

     59        —          7,490        36,238        —          —          —          —    

Others

     7,695        5        23,027        —          —          —          1        1,293  

Associates and joint ventures

 

                    

K-REALTY CR REITs No.1

     —          —          262        —          —          4        703        2,261  

K Bank Inc.

     1,050        —          2        —          —          —          —          —    

KIF Investment Fund

     —          —          —          —          —          —          —          9,240  

Others

     226        37        1,623        —          —          —          —          —    

Others

                       

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.) 2

     149        —          25,082        61,409        —          —          1        —    

KHS Corporation

     18        —          6,180        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 376,480      W 214      W 1,194,874      W 125,474      W 1      W 54      W 1,702      W 126,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  1 

Amounts include acquisition of property, equipment and others.

  2

Transaction amount before being included as a subsidiary.

 

41


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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

Key management compensation for the six-month periods ended June 30, 2021 and 2020, consists of:

 

(in millions of Korean won)    2021      2020  

Salaries and other short-term benefits

   W 1,082      W 1,033  

Post-employment benefits

     209        179  

Stock-based compensation

     338        312  
  

 

 

    

 

 

 

Total

   W 1,629      W 1,524  
  

 

 

    

 

 

 

Fund transactions with related parties for the six—month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021  
     Loan transactions      Borrowing transactions1      Equity
contributions
in cash
 
     Loans      Collections      Borrowings      Refunds  

Subsidiaries

              

KT Strategic Investment Fund No.5

   W —        W —        W  —        W —        W 6,460  

KTIS Corporation

     —          —          —          7        —    

KT Estate Inc

     —          —          38        13,691        —    

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

     —          —          —          2        —    

KT Studio Genie Co., Ltd.

     102        102        —          —          45,687  

KT M&S Co., Ltd.

     19,500        18,125        —          —          —    

Skylife TV Co., Ltd

     —          —          —          —          (3,000

KT Linkus Co., Ltd.

     —          —          —          1        —    

Others

     2        —          —          6        (8,610

Associates and joint ventures

              

KT-Smart Factory Investment Fund

     —          —          —          —          1,000  

K-REALTY CR REIT 1

     —          —          —          9,577        —    

KT Young Entrepreneurs DNA Investment Fund

     —          —          —          —          7,700  

KT-IBKC Future Investment Fund 1

     —          —          —          —          (3,900

Other

     —          —          —          —          (1,320
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 19,604      W 18,227      W 38      W 23,284      W 44,017  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  1 

Borrowing transactions include lease transactions.

 

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Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    2020  
     Loan transactions      Borrowing transactions1     

Equity

contributions

 
     Loans      Collections      Borrowings      Refunds      in cash  

Subsidiaries

              

KTIS Corporation

   W  —        W —        W  —        W 13      W —    

KT Estate Inc.

     —          —          1        13,899        —    

KBTO Sp.z o.o.

     —          —          —          —          1,681  

KT M&S Co., Ltd.

     —          1,545        —          —          —    

Storywiz Co., Ltd.

     —          —          —          —          14,000  

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

     —          —          —          21        28,000  

Others

     —          —             82        7,172  

Associates and joint ventures

              

KT-Smart Factory Investment Fund

     —          —          —          —          2,000  

K-REALTY CR REITs No.1

     —          —          —          13,593        —    

KT-CKP New Media Investment Fund

     —          —          —          —          (148

KT Young Entrepreneurs DNA Investment Fund

     —          —          —          —          3,300  

Hyundai Robotics Co., Ltd.

                 50,000  

Others

              

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.). 2

     —          —          —          34        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W —        W  1,545      W 1      W 27,642      W 106,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  1 

Borrowing transactions include lease transactions.

  2

Transaction amount before being included as a subsidiary.

At the end of the reporting period, the Company entered into a credit card agreement with a limit of W 4,733 million (December 31, 2020: W 4,731 million) with BC Card Co., Ltd.

At the end of reporting period, there are no collateral and payment guarantees provided by the related parties.

 

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KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

28.

Fair Value

During the period ended June 30, 2021, there have been no significant changes in the business or economic environment that affect the fair value of the Company’s financial assets and liabilities.

 

  (1)

Fair Value of Financial Instruments by Category

Carrying amount and fair value of financial instruments by category as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021      December 31, 2020  
     Carrying
amount
     Fair value      Carrying
amount
     Fair value  

Financial assets

           

Cash and cash equivalents

   W 1,926,655            1       W 1,541,210            1   

Trade and other receivables

           

Financial assets measured at amortized cost 2

     3,089,668            1         3,085,047            1   

Financial assets at fair value through other comprehensive income

     881,466      W 881,466        1,118,619      W 1,118,619  

Other financial assets

           

Financial assets measured at amortized cost

     72,522            1         262,477            1   

Financial assets at fair value through profit or loss

     184,829        184,829        155,805        155,805  

Financial assets at fair value through other comprehensive income

     60,532        60,532        22,860        22,860  

Derivative financial assets for hedging

     22,541        22,541        7,684        7,684  
  

 

 

       

 

 

    

Total

   W 6,238,213         W 6,193,702     
  

 

 

       

 

 

    

Financial liabilities

           

Trade and other payables

   W 4,797,541            1       W 5,015,237            1   

Borrowings

     7,089,377            1         6,945,768            1   

Other financial liabilities

           

Derivative financial liabilities for hedging

     62,153        62,153        120,349        120,349  
  

 

 

       

 

 

    

Total

   W 11,949,071         W 12,081,354     
  

 

 

       

 

 

    

 

  1 

The Company did not conduct a fair value estimation since the book amount is a reasonable approximation of fair value.

  2 

With the application of Korean IFRS 1107, lease receivables and lease liabilities are excluded from fair value disclosure.

 

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Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

  (2)

Fair Value Hierarchy

To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:

 

   

Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

 

   

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

 

   

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Fair value hierarchy classifications of financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021  
     Level 1      Level 2      Level 3      Total  

Assets

           

Trade and other receivables

           

Financial assets at fair value through other comprehensive income

   W —        W 881,466      W —        W 881,466  

Other financial assets

           

Financial assets at fair value through profit or loss

     187        —          184,642        184,829  

Financial assets at fair value through other comprehensive income

     2,460        —          58,072        60,532  

Derivative financial assets for hedging

     —          11,182        11,359        22,541  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 2,647      W 892,648      W 254,073      W 1,149,368  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Other financial liabilities

           

Derivative financial liabilities for hedging

   W —        W 62,153      W —        W 62,153  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W —        W 62,153      W —        W 62,153  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

45


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    December 31, 2020  
     Level 1      Level 2      Level 3      Total  

Assets

           

Trade and other receivables

           

Financial assets at fair value through other comprehensive income

   W —        W 1,118,619      W —        W 1,118,619  

Other financial assets

           

Financial assets at fair value through profit or loss

     110        —          155,695        155,805  

Financial assets at fair value through other comprehensive income

     1,825        —          21,035        22,860  

Derivative financial assets for hedging

     —          7,684        —          7,684  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W 1,935      W 1,126,303      W 176,730      W 1,304,968  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Other financial liabilities

           

Derivative financial liabilities for hedging

   W —        W 116,155      W 4,194      W 120,349  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   W —        W 116,155      W 4,194      W 120,349  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (3)

Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements.

Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements are as follows:

 

(in millions of Korean won)    2021  
     Financial assets  
     Financial assets
at fair value
through profit
or loss
    

Financial assets
at fair value

through other
comprehensive

income

    

Derivative
financial
assets for

hedging

 

Beginning balance

   W 155,695      W 21,035      W (4,194

Amount recognized in profit or loss

     —          —          20,925  

Amount recognized in other comprehensive income

     —          —          (5,372

Acquisition amount

     49,463        22,680        —    

Transfers

     (18,044      14,357        —    

Disposal Amount

     (2,472      —          —    
  

 

 

    

 

 

    

 

 

 

Ending balance

   W 184,642      W 58,072      W 11,359  
  

 

 

    

 

 

    

 

 

 

 

46


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    2020  
     Financial assets  
    

Financial assets

at fair value
through profit
or loss

    

Financial assets

at fair value

through other

comprehensive

income

    

Derivative

financial
assets for
hedging

 

Beginning balance

   W 131,112      W 18,964      W 17,642  

Amount recognized in profit or loss

     —          —          16,447  

Amount recognized in other comprehensive income

     —          —          6,463  

Acquisition amount

     32,881        —          —    

Transfers

     (28,000      —          —    

Disposal Amount

     (936      (302      —    
  

 

 

    

 

 

    

 

 

 

Ending balance

   W 135,057      W 18,662      W 40,552  
  

 

 

    

 

 

    

 

 

 

 

  (4)

Valuation Techniques and Inputs

Valuation techniques and inputs used in recurring and non-recurring fair value measurements and disclosed fair value categorized within Level 2 and Level 3 of the fair value hierarchy as at June 30, 2021 and December 31, 2020, are as follows:

 

(in millions of Korean won)    June 30, 2021
     Fair value      Level      Valuation techniques
Assets                   

Trade and other receivables

        

Financial assets at fair value through other comprehensive income

   W 881,466        2      DCF Model

Other financial assets

        

Financial assets at fair value through profit or loss

     184,642        3      DCF Model,

Adjusted net asset model

Financial assets at fair value through other comprehensive income

    
58,072
11,182
 
 
    
3
2
 
 
   DCF Model

DCF Model

Derivative financial assets for hedging

     11,359        3      Hull-White Model,

DCF Model

Liabilities

        

Other financial liabilities

        

Derivative financial liabilities for hedging

   W 62,153        2      DCF Model

 

47


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

(in millions of Korean won)    December 31, 2020
     Fair value      Level      Valuation techniques

Assets

        

Trade and other receivables

        

Financial assets at fair value through other comprehensive income

   W  1,118,619        2      DCF Model

Other financial assets

        

Financial assets at fair value through profit or loss

     155,695        3      DCF Model,

Adjusted net asset model

Financial assets at fair value through other comprehensive income

     21,035        3      DCF Model

Derivative financial assets for hedging

     7,684        2      DCF Model

Liabilities

        

Other financial liabilities

     116,155        2      DCF Model

Derivative financial liabilities for hedging

     4,194        3      Hull-White Model,

DCF Model

 

  (5)

Valuation Processes for Fair Value Measurements Categorized Within Level 3

The Company uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the Chief Financial Officer (CFO), and discuss valuation processes and results with the CFO in line with the Company’s closing dates.

 

  (6)

Gains and Losses on Valuation at the Transaction Date

In the case that the Company values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by valuation methods using such data differs from the transaction price, then the fair value of the financial instrument is recognized at the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case that the inputs of the valuation method become observable in markets, the remaining deferred difference is immediately recognized in full in profit or loss.

In relation to this, details and changes of the total deferred difference for the six-month periods ended June 30, 2021 and 2020, are as follows:

 

(in millions of Korean won)    2021     2020  
    

Derivatives used

for hedging

   

Derivatives used

for hedging

 

I. Beginning balance

   W 2,257     W 3,682  

II. New transactions

     —         —    

III. Recognized at fair value through profit or loss

     (713     (713
  

 

 

   

 

 

 

IV. Ending balance (I+II+III)

   W 1,544     W 2,969  
  

 

 

   

 

 

 

 

48


Table of Contents

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2021 and 2020 (Unaudited), and December 31, 2020

 

 

 

29.

Changes in Accounting Policies - Determination of Lease Term Considering Economic Penalty

The Company has changed its accounting policy by adopting accounting treatments in accordance with the agenda decisions for ‘Lease Term and Useful Life of Leasehold Improvements’ issued by the IFRS Interpretations Committee on December 16, 2019. The changes in accounting policy have been firstly retrospectively applied to the 2020 annual consolidated financial statements in accordance with Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors. The Company adjusted the comparative consolidated financial statements for the three and six-month period ended June 30, 2020.

In relation to the changes in accounting policy, the adjusted amounts recognized in each line item in the financial statements are as follows:

Statements of Profit or Loss

 

(in millions of Korean won)    Periods ended June 30, 2020  
     Amount based on previous
policy
     Adjustment     Amount based on changed
policy
 
    

Three

Months

    

Six

Months

    

Three

Months

   

Six

Months

   

Three

Months

    

Six

Months

 

Operating expenses

   W 4,086,973      W 8,216,435      W (1,650   W (3,403   W 4,085,323      W 8,213,032  

Other income

     64,477        227,049        2,219       3,534       66,696        230,583  

Other expenses

     81,970        111,432        —         —         81,970        111,432  

Finance income

     17,695        244,126        —         —         17,695        244,126  

Finance cost

     28,195        253,526        2,383       4,831       30,578        258,357  

Income tax expense

     58,941        172,731        —         —         58,941        172,731  

Profit for the period

     165,768        485,793        1,486       2,106       167,254        487,899  

Basic earnings per share

     676        1,981        6       8       682        1,989  

Diluted earnings per share

     676        1,980        6       8       682        1,988  

 

30.

Events After the Reporting Period

The Company has issued the following bonds after the end of the reporting period.

 

(in thousands of USD)    Issue date      Face value      Interest rate     Redemption date  

2021 Global

     2021-07-21        USD 300,000        1.375     2027-01-21  

 

49