Annual Report...Quality management for water and air purifiers 136-23 Yugumagoksa-ro., Yugu-eup,...

FY 2019

Annual Report

Jan. 01 ~ Dec. 31, 2019

Coway Co., Ltd.

1

- Table of Contents –

1. Overview

2. Progress and achievements

3. Parent and affiliate companies and business consolidation

4. Financial results and assets for the recent three years

5. Issues facing Coway

6. Board members and auditors

7. Major shareholders

8. Ownership status

9. Major creditors

10. Major events after 2019

11. Others

2

1. Overview

1) Company business

1. Manufacture and sale of water purifiers

2. Manufacture and sale of household appliances

3. Facility business for environmental pollution prevention e.g. water and air quality

4. Manufacture and sale of water purification and waste treatment facilities

5. Business management of environment-related technology and research, air and water quality analysis and

environmental impact assessment

6. Export/Import and trading business

7. Lease, development, management, investment and sale of real estate

8. Rental of various products imported or produced

9. Sale of miscellaneous goods

10. Manufacture and sale of piping materials

11. Export/Import, manufacture and sale of medical devices

12. Door-to-door sales, mail order sales, e-commerce and other related services

13. Manufacture and sale of kitchen systems and furniture

14. Manufacture and sale of ceramics used in hygiene and plastic products

15. Manufacture and sale of indoor air fresheners

16. Manufacture and sale of various security facilities and devices, e.g. door locks and warning systems

17. Manufacture, sale and rental of liquid filters

18. Export/Import, manufacture and sale of gym devices

19. Operation of social education centers

20. Manufacture of diodes, transistors and similar semiconductors

21. Manufacture of air conditioning equipment

22. Guard and other protective services

23. Residential environment improvement business, e.g. disinfection and extermination services, and general

clean-up

24. Import, processing and sale of coffee, food additives and general foods

25. Import and sale of coffee/tea makers

26. Design and construction of sewage, waste water, manure and waste treatment facilities

27. Business management of self-measurement

28. R&D and consulting on cosmetics manufacturing technologies

29. Design, construction and surveillance of facilities and equipment in the environmental industry

30. Construction of facilities for the industrial environment

31. Sale of and consultation on various financial products, e.g. credit card membership, insurance product

arrangement, issuance of members’ cards and services thereof

32. Service business including installation, maintenance, repair and safety qualification tests of products and

facilities sold, constructed, and designed or other products

33. Affiliated branch operation or sales consignment of communications devices

34. Market research and advertisement

3

35. Indoor construction business

36. Export/Import, manufacture and sale of skin cosmetic devices

37. Skincare business

38. Electrical construction business

39. Export/Import, manufacture and sale of health functional food

40. Manufacture of industrial refrigerators and freezers

41. Manufacture, distribution and sale of cosmetics

42. Manufacture and sale of home electrical appliances

43. Manufacture and sale of electric devices for kitchen

44. Manufacture and sale of healthcare products to be installed in bathrooms and other services

45. Manufacture, sale and rental of devices to improve water quality and make functional water

46. Service business to measure and analyze air quality

47. Manufacture and service business of air conditioning systems for multi-use facilities

48. Manufacture, import, sale, rental and maintenance of bed and bed-related products

49. House clean-up services

50. Development and provision of IT software

51. Professional services related to information processing technology

52. Electric utility including power generation and electricity sale

53. Miscellaneous businesses related to any of the above

2) Major business areas

1. Rental and wholesale/retail of water purifiers

2. Door-to-door sales

3. Manufacture and sale of water purifiers

4. Rental and wholesale/retail of household devices

5. Commissioned services for environmental technology research and water analysis

6. Export/Import

7. Business of environmental pollution prevention facilities, e.g. water and air quality

4

3) Local branches and manufacturing facilities

Name Major business and

products Address

Yugu factory Manufacture of water/air

purifiers, etc.

136-23 Yugumagoksa Rd., Yugu-eup, Gongju-si,

Chungcheongnam-do

Incheon factory Manufacture of bidets, water

softeners, etc.

Lot 14, Block 85, 155-98, Namdongdae-ro (Gojan-

dong) Namdong-gu, Incheon

Pocheon factory Refurbished product

manufacturing

2072 Hoguk-ro Sinbuk-myeon, Pocheon-si, Gyeonggi-

do

Environmental technology

lab. R&D for water and air purifiers

R&D Center, Seoul National Univ. Gwanak-ro 1

(Bongcheon-dong), Gwanak-gu, Seoul,

TQA center Quality management for water

and air purifiers

136-23 Yugumagoksa-ro., Yugu-eup, Gongju-si,

Chungcheongnam-do

665 branches and

subsidiaries including

Jamsil branch

Sales and services, e.g. water

and air purifiers, mattresses,

and so on

Ujeon B/D 5F 358 (286-9), Baekjegobun-ro (Seokcheon-

dong) Songpa-gu, Seoul, and etc.

4) Employees

(Unit: persons)

Classification Full-term employment Fixed-term employment Total

Male 1,728 81 1,809

Female 3,005 174 3,179

Total 4,733 255 4,988

5) Organizational chart

5

6) Stocks

① Outstanding shares

(Unit: shares, KRW million)

Type No. of shares Amount Portion Remarks

Common stocks 73,799,619 40,662 100% Registered stocks

Total 73,799,619 40,662 100%

② History of paid-in capital

“N/A”

③ Others

Year-end Dec. 31

Date of record Dec. 31

Notification

http://www.coway.co.kr

Posted on Maeil Business News Korea published in Seoul, in case computer system errors

occur or if it’s absolutely necessary

Kinds of stock

certificates

Pursuant to the Act on Electronic Registration of Stocks, Bonds, etc., ‘rights that should be

described in stock certificates and subscription warrants’ must be registered electronically.

Therefore, kinds of stock certificates are not specified herein.

Agency for stock-related

administrative affairs

Name of agency KEB Hana Bank

Address (Securities Agency), 72, Gukjegeumyung-ro, Yeongdeungpo-

gu, Seoul

7) Debentures

“N/A”

6

2. Progress and achievements

1) Business overview

- Overview

Based on the idea of offering high-end water purifiers at low costs to enable many people to drink clean

water, Coway has brought innovation to its business processes, achieving tangible results at home and

abroad. Since its founding in 1989, Coway has continuously grown, focusing on the water that we drink and

air that we breathe. Rather than competing and growing within the existing business framework, it has

created and developed new markets for home appliances for ceaseless growth. As a leader in the industry,

Coway has taken the lead in developing markets and technologies, employing Codys who are service

professionals and presenting new standards for the industry. Coway, which is peerless in the field of

purifying water and air, has heightened the value of clean water and air. In order to become a company that

clients can fully trust, Coway has put ‘Coway Trust’ before anything else in every business process including

development, design, quality management, and services.

- Competition

In the Korean markets for water and air purifiers and bidets, not only price and quality but also efficient

business networks and maintenance service teams have emerged as important business elements. In

particular, considering the characteristics of such product groups, continued maintenance services for filter

replacement and so forth are required, thereby leading customers to prefer companies that have set up

service networks across the nation and have maintained a high level of brand awareness. As a result, only a

few major businesses have dominated the markets.

In the Korean water purifier market, Coway and Chungho NAIS have released high-priced products and

expanded high-end markets while LG electronics, SK magic, and others have launched lower-priced products

for retail markets. In terms of marketing, rental business based on door-to-door sales, rather than retail sales,

has played a leading role in the market. With a rise in consumer needs for clean water, tankless water

purifiers and other high-end products with premium filters have enlarged the markets.

The Korean air purifier market has continuously grown through rental services based on door-to-door sales,

which is Coway’s main sales system. The retail market has been dominated by its competitors such as

Samsung Electronics and LG Electronics. In the market that has expanded fast due to particulate matter and

yellow sand, Coway and its competitors have focused on providing clients with customized solutions that

they can fully trust, rather than on offering simple air purifiers. In April 2015, Coway released IoT-based

smart air care services for the first time in the health appliance industry. The smart air care system checks

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indoor air quality in real time, offering customized solutions depending on the degree of pollution and

improving indoor air quality effectively.

The Korean bidet market has rapidly expanded since Coway launched a rental system via public TV networks

and its door-to-door sales teams in 2002 for the first time in the industry. Coway has focused on rental

services via door-to-door sales while Novita and SK Magic have dominated the retail market. Coway has also

diversified its sales channels by setting up sales shops in E-Mart, Lotte Mart, and Homeplus.

Coway launched its mattress business in October 2011 and has successfully solidified its position in the

market. Introducing rental services for the mattress market relying on lump-sum sales, it also added regular

maintenance services such as cleaning and sterilization, which have been positively evaluated by clients.

Along with water purifiers, bidets, and air purifiers, mattresses have been effectively positioned as one of

Coway’s main rental products.

Since August 2018, Coway has sold wear styling systems as a rental product. The innovative systems

efficiently take care of clothes and home spaces, offering both wear styling and air purification services for

reasonable monthly service fees. Such regular maintenance services are expected to continuously increase

demand for rental services.

Since January 2019, Coway has introduced and applied rental services to the electric range market, as well as

its existing lump-sum sales. Adding the service of replacing the range cooktop once during the contract

period for free, Coway’s products have been positively evaluated.

Since it launched its cosmetics business in September 2010, Coway has focused on selling high-function

premium cosmetics. Based on its customer base that has been set up through its existing health appliance

business, Coway has established sales networks relying on door-to-door sales and expanded its sales by

diversifying sales channels to include TV home shopping, duty free shops, and so forth.

- Market characteristics

With people’s interest in health and the environment heightening, customers have paid keen attention to

water purifiers, bidets, air purifiers, and other health appliances. Lump-sum sales closely relate to the

level of income and changes in the domestic economy while rental sales are not seriously affected by

fluctuations in economic conditions. The health appliance market is very sensitive to environmental issues

and government policies that may change the degree of interest in the environment

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2) Major operation and production

(Units)

Products Production (Quantity)

FY 2019 FY 2018

Water purifiers 1,175,713 1,183,819

Air purifiers 1,092,004 1,004,909

Filters 21,871,469 21,748,422

Bidets 379,511 395,663

Water softeners 52,140 49,973

Others 90,554 78,023

Total 24,661,391 24,460,809

3) Sales

(Unit: EA, KRW million)

Sales

Biz area

Quantity Amount

FY 2019 FY 2018 FY 2019 FY 2018

Rental and membership 6,281,531 5,900,042 1,930,587 1,823,982

Lump sum 194,194 197,767 579,938 548,123

Others - - 20,486 23,393

Total - - 2,531,012 2,395,499

Note 1) The rental business results above refer to the sum of figures for rental and membership accounts.

Note 2) Based on separate criteria

4) Capital expenditures and funding

(Unit: KRW million)

Index Remarks Amount Funding

Buildings Newly acquired 152

Self-funded

Structures // 14

Machinery and equipment // 2,159

Delivery equipment or

vehicles

// -

Tools // 14,275

Furniture and fixtures // 3,644

Rental assets // 475,100

Other tangible assets // 1,711

Construction in progress // 7,527

Usufruct // 15,919

Total 520,501

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3. Parent and affiliate companies and business consolidation

1) Parent company

“N/A”

2) Affiliates

(Unit: K shares, KRW million)

Affiliates Relations

Company Location Paid-in-

capital Main business

No. of shares

owned Ownership

Transaction

(purchase + sales)

Coway China Co., Ltd.

China 1,795 Sale of air purifiers, etc. - 100% 1,371

WOONGJIN COWAY (Thailand) Co., Ltd.

Thailand 9,488 Rental and sale of water purifiers, etc.

2,687 100% 7,219

WOONGJIN COWAY (Malaysia) SDN.

BHD. Malaysia 122,022

Rental and sale of water purifiers, etc.

311,707 100% 201,078

WOONGJIN Coway USA. Inc.

USA 18,938 Rental and sale of water purifiers, etc.

1,750 100% 33,309

PT COWAY INTERNATIONAL

INDONESIA Indonesia 3,991

Rental and sale of water purifiers, etc.

5 100% 1,278

WOONGJIN Coway Entech

Korea 3,268

Manufacture of industrial equipment including water treatment systems

654 100% 2

Pocheon Malkunmul

Korea 3,095

Industrial water services for the Jangja Industrial Complex in Pocheon

- - -

Note 1) During this term, WOONGJIN Coway’s stake in Pocheon Malkunmul was transferred to WOONGJIN Coway Entech. (No. of shares owned: 433,200, stake: 70%) Note 2) During this term, WOONGJIN Coway acquired PT COWAY INTERNATIONAL INDONESIA through Payment in cash worth KRW 4.084 billion.

3) Concurrent positions of executives

Position Company Remarks

Name Title Company name Title Job

Ahn Ji-yong CEO & President WOONGJIN Coway Entech Auditor - -

Note 1) Based on registered executives

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4. Financial results and assets for the recent three years

1) Income statement

2) Balance sheet

(Unit: KRW)

Classification FY 2019 FY 2018 FY 2017

Revenue 2,531,011,640,613 2,395,498,525,541 2,320,503,713,876

COGS 906,420,701,539 831,664,055,827 774,759,697,855

Gross profits 1,624,590,939,074 1,563,834,469,714 1,545,744,016,021

SG&A 1,229,930,917,987 1,086,618,505,513 1,067,333,293,152

Operating income 394,660,021,087 477,215,964,201 478,410,722,869

Other income 37,314,532,619 18,854,075,665 10,404,717,173

Other expenses 25,967,569,653 19,340,403,038 40,958,906,787

Financial income 858,336,617 815,573,600 649,347,360

Financial expenses 20,757,603,309 16,804,186,060 11,448,267,308

Investment income from associated/affiliated companies- (15,687,000,000) (1,802,573,400)

Income before tax 386,107,717,361 445,054,024,368 435,255,039,907

Corporate tax expenses 99,567,163,967 112,776,435,642 112,849,657,889

Net income 286,540,553,394 332,277,588,726 322,405,382,018

(Unit: KRW)

Classification FY 2019 FY 2018 FY 2017

Current assets 907,437,958,127 897,525,210,730 774,275,232,408

Non-current assets 1,785,727,213,661 1,434,355,333,003 1,376,110,259,237

<Assets> 2,693,165,171,788 2,331,880,543,733 2,150,385,491,645

Current liabilities 1,440,436,154,763 1,150,693,666,202 1,063,053,207,141

Non-current liabilities 169,632,625,245 52,154,010,352 44,204,594,268

<Liabilities> 1,610,068,780,008 1,202,847,676,554 1,107,257,801,409

Paid-in capital 40,662,398,000 40,662,398,000 40,662,398,000

Capital in excess of par value 97,773,449,148 97,773,449,148 97,773,449,148

Retained earnings 955,468,294,707 998,995,251,032 1,013,406,333,531

Others (10,807,750,075) (8,398,231,001) (108,714,490,443)

<Equity> 1,083,096,391,780 1,129,032,867,179 1,043,127,690,236

<Liabilities and equity> 2,693,165,171,788 2,331,880,543,733 2,150,385,491,645

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5. Issues facing Coway

In 2019, Coway selected ‘the New Value of Cleanliness, Coway Trust Re:FUSION’ as its slogan and did its

utmost to earn consumer trust. ‘Cleanliness’ is the value that Coway has ceaselessly facilitated while ‘Trust’ is

the one that Coway has continuously promoted to fulfill its limitless responsibility for ensuring cleanliness.

Last year, Coway experienced diverse events at home and abroad including the replacement of the largest

shareholder. Despite that, Coway made all-out efforts to increase customer satisfaction, putting clients first.

Helped by such endeavors, Coway’s consolidated sales for 2019 reached KRW 3.0189 trillion, up 11.5% from

the previous year, the biggest in its history.

With Netmarble chosen as its new biggest shareholder, Coway is expected to undergo more changes in 2020.

Making a fresh start, Coway is projected to set up even more future-oriented business strategies and achieve

sustainable growth in local and global markets.

Coway plans to increase its consolidated sales and operating income to KRW 3.3073 trillion and KRW 569.9

billion, respectively, in 2020, outpacing its previous achievements. Releasing market-leading products and

facilitating its growth in global markets, Coway will focus on developing innovative products, technologies,

and services. Moreover, not content with its leading position in the rental market, Coway will promote new

values and expand its business.

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6. Board members and auditors

Internal

/External Name Position Major functions/jobs

Transactions

with

company

Remarks

Internal Lee Hae-

sun CEO

Executive Committee, Corporate Management

None CEO of Coway Co., Ltd.

Expired on: Oct. 30, 2019

External Jay H. Bu Non-standing

director Executive Committee, Corporate

Management None

Partner, MBK Partners Resigned on: Mar. 22, 2019

External Park Tae-

hyun Non-standing

director

Executive Committee, External Director Candidate Recommendation Committee,

Corporate Management None

Partner, M BK Partners

Resigned on: Mar. 22, 2019

External Yoo Ki-seok

External director, Chairman of the audit committee

Executive Committee, Corporate Management

None Vice President of Hyundai Accounting Corporation


External Lee

Joong-seek

External director, auditor

Audit Committee, External Director Candidate Recommendation Committee,


Professor, Graduate School of Convergence Science and Technology, Seoul

National University Resigned on : Mar. 22,

2019

External Lee Joon-

ho External director,

auditor



Head of L.E.K Consulting Korea


External Choi In-beom

External director Corporate Management None CEO of Mahindra Korea


Internal Ahn Ji-yong

CEO & President (internal director)

Executive Committee, External Director Candidate Recommendation Committee,

Corporate Management None -

External Chae Jin-

ho Non-standing

director, auditor, Audit Committee, Executive Committee,


Team Leader (incumbent), STIC Investments

External Lee

Chang-se

External director, Chairman of the audit committee



Lawyer (incumbent), DongIn Law Group

External Tak Tae-moon

External director Corporate Management None Professor Emeritus (incumbent), Seoul National University

External Kim Shin-

ho External director Corporate Management None -

External Kim Ik-

rae External director,

auditor



Visiting Professor, Sungkyunkwan University

External Lee Heui-

beom External director Corporate Management None

Advisor (incumbent), LG International Corp.

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7. Major shareholders

(Unit: shares)

Name / Institution No. of shares owned Ownership Transaction with

company Remarks

WOONGJIN THINKBIG 18,512,485 25.1% Largest shareholder -

Korean National Pension Service 6,022,465 8.2% None -

GIC 2,911,759 3.9% None -

BlackRock Fund Advisors 2,690,551 3.6% None -

Pictet 2,409,265 3.3% None -

* The above information is based on the top 5 major shareholders on the shareholders list dated December 31, 2019.

* The stock ownership status of the Korean National Pension Service is based on the official disclosure on the Korea Financial

Supervisory Service

- Korean National Pension Service: As of notification on Jan. 06, 2020.

8. Ownership status

(Unit: shares)

Companies Shareholders Investment on Invested from

Shares Ownership Shares Ownership

Coway China Co., Ltd. WOONGJIN

Coway - 100.0% N/A

WOONGJIN Coway (Thailand)

Co., Ltd.

WOONGJIN

Coway 2,686,550 100.0% N/A

WOONGJIN Coway (Malaysia)

SDN. BHD.

WOONGJIN

Coway 311,706,888 100.0% N/A

WOONGJIN Coway USA. Inc. WOONGJIN

Coway 1,749,533 100.0% N/A

PT Coway INTERNATIONAL

INDONESIA

WOONGJIN

Coway 4,725 100.0% N/A

WOONGJIN Coway Entech WOONGJIN

Coway 653,570 100.0% N/A

Pocheon Malkunmul Co. Ltd. WOONGJIN

Coway Entech 433,200 70.0% N/A

WOONGJIN THINKBIG WOONGJIN

Coway N/A 18,512,485 25.08%

14

9. Major creditors

(Unit: shares, KRW million)

Institutions Amount No. of shares

owned

Ownership Remarks

Korea Investment &

Securities 430,000 36,838 0.05% -

KB Securities 250,000 42,340 0.06% -

KDB Bank 70,000 -

IBK Securities 50,000 - - -

Shinhan Bank 50,000 - - -

Woori Investment Bank 10,000 - - -

Total 860,000 - - -

* Quoted from the shareholder list as of Dec. 31, 2019.

10. Major events after 2019

- The largest shareholder WOONGJIN THINKBIG concluded a share trade contract to sell its stake (25.08%) to

Netmarble on Dec. 30, 2019, which was finalized on Feb. 07, 2020.

11. Others

- N/A

15

Consolidated Statement of Financial Position

2019 As of Dec. 31, 2019

2018 As of Dec. 31, 2018

2017 As of Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Assets

Current assets 766,943,433,301 843,718,066,082 791,471,166,861

Cash and cash equivalents 60,540,530,995 69,353,967,482 110,298,033,482

Trade receivables 310,190,424,300 301,799,501,321 314,571,050,598

Capital lease receivables 180,165,616,755 106,740,631,742 60,030,919,073

Other short-term financial assets 60,739,871,422 14,305,186,712 16,840,899,860

Other current assets 42,280,868,182 240,341,971,050 213,338,468,835

Inventories 112,845,477,767 102,919,052,058 74,861,005,631

Current tax assets 180,643,880 35,658,460 1,530,789,382

Assets held for sale - 8,222,097,257 -


Long-term trade receivables 21,594,721,694 28,401,949,423 36,497,327,105

Long-term capital lease receivables 487,364,051,476 293,507,930,785 169,862,438,005

Long-term financial assets 20,937,293,114 56,214,221,629 53,770,238,000

Other non-current assets 21,724,521,450 184,470,022,877 167,521,885,149

Available-for-sale financial assets - - 2,465,025,047

Financial assets measured at fair value through income and loss

1,232,702,566 1,218,198,390 -

Financial assets measured at fair value through other comprehensive income

365,501,064 365,431,064 -

Net defined benefit assets - - 7,353,053,942

Property, plant, and equipment 1,270,778,209,455 781,012,733,072 712,397,814,104

Intangible assets 168,401,886,170 160,292,435,000 183,920,093,694

Investment property 24,009,598,321 24,456,283,276 33,136,139,974

Deferred income tax assets 71,602,875,269 5,245,805,461 477,892,931

Total assets 2,854,954,793,880 2,378,903,077,059 2,158,873,074,812

Liabilities


Trade payable 57,967,769,416 62,483,455,345 54,187,945,950

Current lease liabilities 14,981,011,978 - -

Other short-term financial liabilities 212,388,285,386 189,043,248,063 196,387,097,171

Other current liabilities 220,359,071,696 118,877,087,416 102,109,904,700

Short-term borrowings 860,550,000,000 731,112,000,000 670,000,000,000

Current long-term borrowings 536,000,000 536,000,000

Income tax payable 97,119,200,461 73,247,259,989 62,311,427,327

Provisions and refund liabilities 2,751,180,293 59,011,097,150 39,753,791,700

Refund liabilities 120,170,915,196 - -


Non-current lease liabilities 16,300,850,883 - -

Other long-term financial liabilities 1,646,843,899 1,609,547,985 2,068,602,932

Other non-current liabilities 40,854,714,125 34,567,000,308 24,433,326,210

Long-term borrowings 9,449,000,000 9,985,000,000 12,303,000,000

Net defined benefit liabilities 15,604,406,200 8,404,847,680 1,334,678,191

Provisions 107,079,959,813 2,328,300,706 1,731,867,941

Deferred income tax liabilities - - 9,994,903,149

Total liabilities 1,777,759,209,346 1,291,204,844,642 1,176,616,545,271

Equity

Equity attributable to parent owners 1,078,307,584,664 1,088,075,741,812 982,204,321,431

Capital stock 40,662,398,000 40,662,398,000 40,662,398,000

Capital surplus 97,773,449,148 97,773,449,148 97,773,449,148

Retained earnings (deficiencies) 953,976,131,459 966,816,786,565 963,027,305,560

Other components of equity (14,104,393,943) (17,176,891,901) (119,258,831,277)

Non-controlling interests (1,112,000,130) (377,509,395) 52,208,110

Total equity 1,077,195,584,534 1,087,698,232,417 982,256,529,541

Total liabilities and equity 2,854,954,793,880 2,378,903,077,059 2,158,873,074,812

16

Consolidated Statement of Comprehensive Income

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Sales 3,018,912,502,707 2,707,315,204,077 2,516,772,498,930

COGS (1,010,411,575,802) (878,256,396,789) 798,486,300,322

Gross profits 2,008,500,926,905 1,829,058,807,288 1,718,286,198,608

Selling and administrative expenses (1,550,225,463,327) (1,309,231,592,487) 1,245,537,247,916

Operating income (loss) 458,275,463,578 519,827,214,801 472,748,950,692

Other income 47,989,744,467 23,461,552,800 27,760,922,985

Other expenses (34,218,846,210) (58,173,262,609) 49,282,233,491

Financial income 1,351,748,020 1,232,780,295 984,897,197

Financial expenses (21,979,551,633) (17,781,224,022) 12,336,806,182

Income and loss before income taxes 451,418,558,222 468,567,061,265 439,875,731,201

Income tax expenses (119,210,881,686) (118,755,572,156) 114,268,322,165

Net income (loss) 332,207,676,536 349,811,489,109 325,607,409,036

Net income (loss) attributable to

Parent owners 332,942,167,271 350,241,206,614 326,083,929,236

Non-controlling interests (734,490,735) (429,717,505) (476,520,200)

Other comprehensive income (2,329,637,408) (5,881,245,884) 6,898,792,742

Other comprehensive income that will be

reclassified as profit or loss 5,482,017,032 1,797,075,491 507,191,865

Change in value of available-for-sale financial

assets - - 10,528,381

Foreign currency translation differences 5,482,017,032 1,797,075,491 496,663,484

Other comprehensive income that will not be

reclassified as profit or loss (7,811,654,440) (7,678,321,375) 6,391,600,877

Re-measurement losses on net defined benefit

liabilities (7,811,654,440) (7,678,321,375) 6,391,600,877

Total comprehensive income for the year 329,878,039,128 343,930,243,225 332,506,201,778

Total comprehensive income for the period

attributable to

Parent owners 330,612,529,863 344,359,960,730 332,982,721,978

Non-controlling interests (734,490,735) (429,717,505) (476,520,200)

Earnings per share

Basic earnings per share 4,611 4,854 4,484

Diluted earnings per share 4,603 4,841 4,398

17

Consolidated Statement of Changes in Equity

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Capital stock Capital surplus Retained earnings Other

components Total

Balances as of Jan. 01, 2017 (amount 40,662,398,000 97,773,449,148 1,179,735,672,647 (135,356,489,548) 1,182,815,030,247 528,728,310 1,183,343,758,557

Changes in accounting policies

Balances at the beginning of the year

(Amount revised)40,662,398,000 97,773,449,148 1,179,735,672,647 (135,356,489,548) 1,182,815,030,247 528,728,310 1,183,343,758,557

Profit for the year (loss) 326,083,929,236 326,083,929,236 (476,520,200) 325,607,409,036

Changes in value of available-for-sale

financial assets10,528,381 10,528,381 10,528,381

Re-measurement losses on net defined

benefit liabilities6,391,600,877 6,391,600,877 6,391,600,877

Foreign currency translation differences 496,663,484 496,663,484 496,663,484

Comprehensive income 332,475,530,113 507,191,865 332,982,721,978 (476,520,200) 332,506,201,778

Annual and interim dividends (409,214,507,200) (409,214,507,200) (409,214,507,200)

Stock options (547,485,229) (547,485,229) (547,485,229)

Treasury stock (139,969,390,000) 16,137,951,635 (123,831,438,365) (123,831,438,365)

Others

Total transactions with owners (549,183,897,200) 15,590,466,406 (533,593,430,794) (533,593,430,794)

Balances as of Dec. 31, 2017 40,662,398,000 97,773,449,148 963,027,305,560 (119,258,831,277) 982,204,321,431 52,208,110 982,256,529,541

Amount reported as of Jan. 01, 2018 40,662,398,000 97,773,449,148 963,027,305,560 (119,258,831,277) 982,204,321,431 52,208,110 982,256,529,541

Changes in accounting policies (6,434,016,164) (670,629,700) (7,104,645,864) (7,104,645,864)

Amount revised as of Jan. 01, 2018 40,662,398,000 97,773,449,148 956,593,289,396 (119,929,460,977) 975,099,675,567 52,208,110 975,151,883,677

Comprehensive income

Profit for the year 280,451,956,672 280,451,956,672 (318,486,341) 280,133,470,331


benefit liabilities(3,735,536,794) (3,735,536,794) (3,735,536,794)

Foreign currency translation differences 1,658,199,099 1,658,199,099 1,658,199,099

Transactions with owners

Annual and quarterly dividends (173,142,108,000) (173,142,108,000) (173,142,108,000)

Stock options (3,533,691,344) (3,533,691,344) (3,533,691,344)

Treasury stock (100,084,456,200) 103,342,599,822 3,258,143,622 3,258,143,622

As of Dec. 31, 2018 40,662,398,000 97,773,449,148 960,083,145,074 (18,462,353,400) 1,080,056,638,822 (266,278,231) 1,079,790,360,591

Amount reported as of Jan. 01, 2019 40,662,398,000 97,773,449,148 966,816,786,565 (17,176,891,901) 1,088,075,741,812 (377,509,395) 1,087,698,232,417

Changes in accounting policies (78,054,313,937) (78,054,313,937) (78,054,313,937)

Amount revised as of Jan. 01, 2019 40,662,398,000 97,773,449,148 888,762,472,628 (17,176,891,901) 1,010,021,427,875 (377,509,395) 1,009,643,918,480

Comprehensive income:

Profit for the year 332,942,167,271 332,942,167,271 (734,490,735) 332,207,676,536


benefit liabilities(7,811,654,440) (7,811,654,440) (7,811,654,440)

Foreign currency translation differences 5,482,017,032 5,482,017,032 5,482,017,032

Transactions with owners:

Annual and quarterly dividends (259,916,854,000) (259,916,854,000) (259,916,854,000)

Stock options (4,851,860,462) (4,851,860,462) (4,851,860,462)

Treasury stock 2,442,341,388 2,442,341,388 2,442,341,388

As of Dec. 31, 2019 40,662,398,000 97,773,449,148 953,976,131,459 (14,104,393,943) 1,078,307,584,664 (1,112,000,130) 1,077,195,584,534

Total equityClassification

Interests of parent owners Non-

controlling

interests

18

Consolidated Statement of Cash Flows

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Net cash flows generated by operating activities 539,259,580,627 539,129,777,646 553,585,083,431

Profit (loss) for the year 332,207,676,536 349,811,489,109 325,607,409,036

Adjustments 662,410,876,386 541,446,990,584 476,065,988,945

Changes in operating assets and liabilities (305,898,135,198) (236,542,697,749) (148,493,956,875)

Dividends received (sales) 6,715,000 8,740,000 7,390,000

Income tax paid (refund) (149,467,552,097) (115,594,744,298) (99,601,747,675)

Net cash flows generated by investing activities (383,103,614,579) (393,514,165,282) (289,677,467,354)

Increase in other short-term financial assets (4,214,146,141) - (100,046,425,484)

Decrease in other short-term financial assets 10,040,635,400 2,816,411 142,020,905,280

Increase in other long-term financial assets (5,584,640,140) (8,438,881,050) (8,696,259,407)

Decrease in other long-term financial assets 469,104,196 7,307,466,177 7,632,536,280

Decrease in available-for-sale financial assets - - 12,500,000

Acquisition of property, plant and equipment (390,623,930,756) (400,967,448,598) (336,799,127,271)

Disposal of property, plant and equipment 24,651,666,591 13,434,464,662 13,595,055,523

Acquisition of intangible assets (3,373,909,221) (6,353,993,714) (8,779,308,953)

Disposal of intangible assets 633,836,317 - 405,149,481

Disposal of assets held for sale 23,940,000,000 - -

Expenditures from business combination (40,110,586,000) - -

Interests received 1,068,355,175 1,501,410,830 977,507,197

Net cash flows generated by financial activities (164,892,746,307) (186,778,624,295) (218,284,527,064)

Increase in short-term borrowings 129,438,000,000 60,000,000,000 330,000,000,000

Increase in long-term borrowings (536,000,000) (670,000,000) 491,000,000

Decrease in lease liabilities (14,914,558,066) - -

Payment of dividends (259,916,854,000) (230,886,664,000) (409,214,507,200)

Purchase of treasury stocks - - (142,055,230,500)

Stock option exercising 2,176,571,800 2,727,420,000 14,829,108,000

Interest paid (21,139,906,041) (17,949,380,295) (12,334,897,364)

Increase (decrease) in cash and cash equivalents (8,736,780,259) (41,163,011,931) 45,623,089,013

Cash and cash equivalents on Jan. 01 69,353,967,482 110,298,033,482 66,306,978,853

Exchange income (loss) on cash and cash equivalents (76,656,228) 218,945,931 (1,632,034,384)

Cash and cash equivalents on Dec. 31 60,540,530,995 69,353,967,482 110,298,033,482

19

Separate Statement of Financial Position

2019 As of Dec. 31, 2019

2018 As of Dec. 31, 2018

2017 As of Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Assets

Current assets 907,437,958,127 897,525,210,730 774,275,232,408

Cash and cash equivalents 27,528,937,645 40,120,551,699 76,964,752,778

Trade receivables 591,378,362,056 508,456,451,973 413,060,944,522

Capital lease receivables 150,738,100,072 98,532,099,073 60,030,919,073

Other short-term financial assets 62,061,337,093 14,632,143,183 16,721,947,783

Other current assets 15,105,416,164 173,349,029,005 162,914,912,075

Inventories 60,625,805,097 54,212,838,540 44,581,756,177

Assets held for sale - 8,222,097,257 -


Long-term trade receivables 18,353,221,694 28,401,949,423 36,497,327,105

Long-term capital lease receivables 351,137,065,984 243,142,574,195 169,862,438,005

Other long-term financial assets 17,366,894,872 53,364,964,164 52,262,937,624

Other non-current assets 21,685,910,339 141,477,425,573 142,722,778,510

Available-for-sale financial assets 1,238,208,489

Financial assets measured at fair value through

income and loss 5,300,000 5,300,000 -

Financial assets measured at fair value through other comprehensive income

337,611,734 337,541,734 -

Net defined benefit assets - - 7,422,424,350

Investments in subsidiaries 169,160,571,106 165,076,519,606 180,763,519,606

Property, plant and equipment 979,725,963,332 635,191,266,827 603,007,123,884

Intangible assets 153,134,536,481 142,901,508,205 149,197,361,690

Investment property 24,009,598,321 24,456,283,276 33,136,139,974

Deferred tax assets 50,810,539,798 - -

Total assets 2,693,165,171,788 2,331,880,543,733 2,150,385,491,645

Liabilities


Trade payable 50,928,360,198 58,054,169,092 46,379,801,297

Current lease liabilities 10,551,423,558 - -

Other short-term financial liabilities 180,781,859,852 162,367,748,346 180,385,530,667

Other current liabilities 154,043,934,767 77,500,431,447 64,312,296,677

Short-term borrowings 860,000,000,000 730,000,000,000 670,000,000,000

Income tax payable 88,201,713,514 73,247,259,989 62,311,427,327

Current provisions 2,126,448,914 - 39,664,151,173

Refund liabilities 93,802,413,960 49,524,057,328 -


Non-current lease liabilities 7,133,505,837 - -

Other long-term financial liabilities 1,950,784,961 1,915,934,961 1,846,034,961

Other non-current liabilities 40,109,238,846 33,668,255,222 23,117,378,681

Net defined benefit liabilities 13,467,713,590 6,986,960,555 -

Non-current provisions 106,971,382,011 2,108,019,369 1,442,019,369

Deferred tax liabilities - 7,474,840,245 17,799,161,257

Total liabilities 1,610,068,780,008 1,202,847,676,554 1,107,257,801,409

Equity

Capital stock 40,662,398,000 40,662,398,000 40,662,398,000

Capital surplus 97,773,449,148 97,773,449,148 97,773,449,148

Retained earnings (deficiencies) 955,468,294,707 998,995,251,032 1,013,406,333,531

Other components of equity (10,807,750,075) (8,398,231,001) (108,714,490,443)

Total equity 1,083,096,391,780 1,129,032,867,179 1,043,127,690,236

Total liabilities and equity 2,693,165,171,788 2,331,880,543,733 2,150,385,491,645

20

Separate Statement of Comprehensive Income

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Sales 2,531,011,640,613 2,395,498,525,541 2,320,503,713,876

COGS (906,420,701,539) (831,664,055,827) 774,759,697,855

Gross profit 1,624,590,939,074 1,563,834,469,714 1,545,744,016,021

Selling and administrative expenses (1,229,930,917,987) (1,086,618,505,513) 1,067,333,293,152

Operating income (loss) 394,660,021,087 477,215,964,201 478,410,722,869

Other income 37,314,532,619 18,854,075,665 10,404,717,173

Other expenses (25,967,569,653) (19,340,403,038) 40,958,906,787

Financial income 858,336,617 815,573,600 649,347,360

Financial expenses (20,757,603,309) (16,804,186,060) 11,448,267,308

Investment income (loss) of subsidiaries and

associates - (15,687,000,000) (1,802,573,400)

Profit (loss) before income tax 386,107,717,361 445,054,024,368 435,255,039,907

Income tax expenses (99,567,163,967) (112,776,435,642) 112,849,657,889


Other comprehensive income (loss) (7,419,322,968) (7,876,600,613) 6,189,615,376

Other comprehensive income that will be

reclassified as profit or loss

Other comprehensive income that will not be

reclassified as profit or loss (7,419,322,968) (7,876,600,613) 6,189,615,376

Re-measurement loss on net defined benefit

liabilities (7,419,322,968) (7,876,600,613) 6,189,615,376

Total comprehensive income for the year 279,121,230,426 324,400,988,113 328,594,997,394

Earnings per share

Basic earnings per share 3,968 4,605 4,433

Diluted earnings per share 3,962 4,593 4,349

21

Separate Statement of Changes in Equity

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Account Capital stock Capital surplus Retained earnings Other components Total

Balances as of Jan. 01, 2017 (amount

reported)40,662,398,000 97,773,449,148 1,233,995,233,337 (124,304,956,849) 1,248,126,123,636

Changes in accounting policies

Amount revised as of Jan. 01, 2017

Total comprehensive income

Profit for the year 322,405,382,018 322,405,382,018


benefit liabilities6,189,615,376 6,189,615,376


Annual dividend (409,214,507,200) (409,214,507,200)

Stock options (547,485,229) (547,485,229)

Treasury stock (139,969,390,000) 16,137,951,635 (123,831,438,365)

Balances as of Dec. 31, 2017 40,662,398,000 97,773,449,148 1,013,406,333,531 (108,714,490,443) 1,043,127,690,236

Amount reported as of Jan. 01, 2018 40,662,398,000 97,773,449,148 1,013,406,333,531 (108,714,490,443) 1,043,127,690,236

Changes in accounting policies (7,840,950,412) (671,256,457) (8,512,206,869)

Amount revised as of Jan. 01, 2018 40,662,398,000 97,773,449,148 1,005,565,383,119 (109,385,746,900) 1,034,615,483,367




benefit liabilities(7,876,600,613) (7,876,600,613)


Annual dividend (230,886,664,000) (230,886,664,000)

Stock options (2,355,083,923) (2,355,083,923)

Treasury stock (100,084,456,200) 103,342,599,822 3,258,143,622

Balances as of Dec. 31, 2018 40,662,398,000 97,773,449,148 998,995,251,032 (8,398,231,001) 1,129,032,867,179

Amount reported as of Jan. 01, 2019 40,662,398,000 97,773,449,148 998,995,251,032 (8,398,231,001) 1,129,032,867,179

Changes in accounting policies (note 2) (62,731,332,751) (62,731,332,751)

Amount revised as of Jan. 01, 2019 40,662,398,000 97,773,449,148 936,263,918,281 (8,398,231,001) 1,066,301,534,428




benefit liabilities(7,419,322,968) (7,419,322,968)


Annual and quarterly dividends (259,916,854,000) (259,916,854,000)

Stock options (4,851,860,462) (4,851,860,462)

Treasury stock 2,442,341,388 2,442,341,388

Balances as of Dec. 31, 2019 40,662,398,000 97,773,449,148 955,468,294,707 (10,807,750,075) 1,083,096,391,780

22

Separate Statement of Cash Flows

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017

(Unit: KRW)

Accounts 2019 2018 2017

Net cash flows generated by operating activities 450,660,368,506 435,698,842,995 467,078,621,663


Adjustments 546,164,196,537 441,212,766,125 442,971,429,459

Changes in operating assets and liabilities (257,894,101,026) (230,945,804,246) (199,840,347,925)

Income tax paid (refund) (124,150,280,399) (106,845,707,610) (98,457,841,889)

Net cash flows generated by investing activities (306,472,847,398) (287,573,875,555) (213,358,302,060)

Increase in other short-term financial assets (4,112,240,400) - (101,688,700,000)

Decrease in other short-term financial assets 10,040,635,400 1,607,100,000 142,028,884,300

Increase in other long-term financial assets (5,182,580,000) (7,089,660,600) (8,566,570,100)

Decrease in other long-term financial assets 750,697,500 7,204,234,060 6,722,673,700

Disposal of available-for-sale financial assets - - -

Purchase of subsidiaries (4,084,051,500) - -

Acquisition of property, plant, and equipment (296,682,440,449) (296,741,089,690) (257,009,719,580)

Disposal of property, plant, and equipment 10,720,842,185 11,892,336,734 12,485,214,423

Acquisition of intangible assets (3,013,182,288) (5,262,369,659) (8,211,781,644)

Disposal of intangible assets 614,545,455 - 232,349,481

Disposal of assets held for sale 23,940,000,000 - -

Expenditures from business combination (40,110,586,000) - -

Interest received 645,512,699 815,573,600 649,347,360

Net cash flows generated by financial activities (156,738,136,893) (184,963,430,060) (217,888,897,008)

Increase in short-term borrowings 130,000,000,000 60,000,000,000 330,000,000,000

Purchase of treasury stock (8,629,446,380) - (142,055,230,500)

Exercising of stock options (259,916,854,000) 2,727,420,000 14,829,108,000

Dividends paid 2,176,571,800 (230,886,664,000) (409,214,507,200)

Interest paid (20,368,408,313) (16,804,186,060) (11,448,267,308)

Increase (decrease) in cash and cash equivalents (12,550,615,785) (36,838,462,620) 35,831,422,595

Cash and cash equivalents on Jan. 01 40,120,551,699 76,964,752,778 41,122,380,818

Exchange income (loss) on cash and cash equivalents (40,998,269) (5,738,459) 10,949,365

Cash and cash equivalents on Dec. 31 27,528,937,645 40,120,551,699 76,964,752,778

23

Separate Statement (Plan) of Appropriation of Retained Earnings

2019 Jan. 01 ~ Dec. 31, 2019

2018 Jan. 01 ~ Dec. 31, 2018

2017 Jan. 01 ~ Dec. 31, 2017 (Unit: KRW)

Accounts 2019 2018 2017

Retained earnings before appropriations 43,089,933,087 43,284,689,412 14,110,871,911

Unappropriated retained earnings carried over from the previous year

55,412 87,911 168,517

Changes in accounting policies (62,731,332,751) (7,840,950,412) -

Re-measurement loss on net defined benefit

liabilities (7,419,322,968) (7,876,600,613) 6,189,615,376

Profit for the year 286,540,553,394 332,277,588,726 322,405,382,018

Interim dividend (173,300,020,000) (173,190,980,000) (174,514,904,000)

Retirement of stocks - (100,084,456,200) (139,969,390,000)

Transfer from voluntary reserves - 43,332,200,000 43,584,900,000

Voluntary reserve - 43,332,200,000 43,584,900,000

Appropriations 43,089,900,000 86,616,834,000 57,695,684,000

Voluntary reserve 43,089,900,000 - -

Dividends - 86,616,834,000 57,695,684,000

A. Cash dividends

Common stock (%):

4th quarter of 2018: 1,200 (240%)

2017: 3,200(640%)

Unappropriated retained earnings carried forward to the succeeding year

33,087 55,412 87,911

Annual Report...Quality management for water and air purifiers 136-23 Yugumagoksa-ro., Yugu-eup,...

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