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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 ATTACHMENT: INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
INNOCEAN WORLDWIDE INC.
Contents
INDEPENDENT ACCOUNTANTS’ REVIEW REPORT --------------------------------------------------- 1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION -------------- 4 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ------ 6 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY -------------- 7 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------- 8 NOTES ---------------------------------------------------------------------------------------------------------- 9
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Independent Accountants’ Review Report
English Translation of a Report Originally Issued in Korean on May 22, 2015
To the Shareholders and the Board of Directors of
INNOCEAN WORLDWIDE INC.:
We have reviewed the accompanying condensed consolidated financial statements of Innocean Worldwide Inc. (the
“Company”) and its subsidiaries. The condensed consolidated financial statements consist of the condensed
consolidated statements of financial position as of March 31, 2015, the related condensed consolidated statements of
comprehensive income, changes in equity and cash flows for the three months ended March 31, 2015 and 2014,
respectively, all expressed in Korean Won, and a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated Financial Statements
The Company’s management is responsible for the preparation and fair presentation of the accompanying consolidated
financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) and for such
internal control as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Independent Accountants’ Responsibility
Our responsibility is to express a conclusion on the accompanying condensed consolidated financial statements based
on our review. We conducted our review in accordance with standards for review of interim financial statements in the
Republic of Korea. A review is limited primarily to inquiries of the Company personnel and analytical procedures
applied to financial data, and this provides less assurance than an audit. We have not performed an audit, and
accordingly, we do not express an audit opinion.
Review conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed
consolidated financial statements of the Company and its subsidiaries are not presented fairly, in all material respects, in
accordance with Korean International Financial Reporting Standards 1034, Interim Financial Reporting.
Others
We audited the consolidated statement of financial position as of December 31, 2014, and the related
consolidated statements of comprehensive income, changes in equity and cash flows for the year ended
December 31, 2014 (not presented in the accompanying consolidated financial statements), in accordance with
auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our
independent auditors’ report dated on March 22, 2015. The consolidated statement of financial position as of
December 31, 2014, presented as a comparative purpose in the accompanying financial statements does not
differ, in all material respects, from the audited consolidated statement of financial position as of December 31,
2014.
Accounting principles and review standards and their application in practice vary among countries. The
accompanying consolidated financial statements are not intended to present the financial position, results of
operations, changes in equity and cash flows in accordance with accounting principles and practices generally
accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the
Republic of Korea to review such financial statements may differ from those generally accepted and applied in
other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by
those knowledgeable about Korean accounting procedures and review standards and their application in practice.
May 22, 2015
Notice to Readers
This report is effective as of May 22, 2015, the independent accountants’ review report date. Certain subsequent
events or circumstances may have occurred between the independent accountants’ review report date and the time
the independent accountants’ review report is read. Such events or circumstances could significantly affect the
accompanying consolidated financial statements and may result in modifications to the independent accountants’
review report.
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES (the “Group”) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
The accompanying condensed consolidated financial statements, including all footnote
disclosures, were prepared by, and are the responsibility of, the management of the Company.
Ahn, Kun Hee
Chief Executive Officer
INNOCEAN WORLDWIDE INC.
Headquarters address : 308, Gangnam-daero, Gangnam-gu, Seoul
Headquarters telephone number : +82-2-2016-2300
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
CONDEDNSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
ASSETS Notes March 31, 2015 December 31, 2014
(In Korean won)
Current assets:
Cash and cash equivalents 26 ₩ 179,236,798,894 ₩ 216,912,848,618
Short-term financial instruments 3,26 198,019,417,471 199,181,899,798
Trade and other receivables 4,26,29 600,003,671,227 624,929,706,505
Other financial assets 5,26 4,550,915,931 3,968,439,606
Current tax assets 2,225,165,919 2,658,916,503
Other current assets 6 37,698,159,083 33,057,804,945
Total current assets 1,021,734,128,525 1,080,709,615,975
Non-current assets:
Long-term financial instruments 3,26 334,242,767 355,006,374
Available-for-sale (“AFS”) financial assets 7,26 2,448,679,828 2,404,703,787
Other financial assets 5,26 4,930,388,886 4,792,854,044
Investments in joint venture and associates 8 15,615,772,879 14,211,520,465
Property, plant and equipment 9,32 9,988,796,555 11,199,776,954
Intangible assets 10,32 57,371,841,322 56,165,565,401
Deferred tax assets 4,496,194,848 4,299,813,938
Other non-current assets 6 59,175,110 60,620,380
Total non-current assets 95,245,092,195 93,489,861,343
Total assets ₩ 1,116,979,220,720 ₩ 1,174,199,477,318
(Continued)
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 (CONTINUED)
LIABILITIES AND EQUITY Notes March 31, 2015 December 31, 2014
(In Korean won)
Current liabilities:
Trade and other payables 11,26,29 ₩ 625,852,382,299 ₩ 682,401,196,484
Other financial liabilities 12,26 12,643,148,681 20,437,847
Current provisions 15 813,552,871 1,041,841,546
Income tax payable 3,302,503,664 10,549,120,189
Other current liabilities 13 23,882,641,241 31,396,539,734
Total current liabilities 666,494,228,756 725,409,135,800
Non-current liabilities:
Other payables 11 40,187,656 48,278,022
Retirement benefit liabilities 14 5,197,035,622 3,158,850,516
Deferred tax liabilities 13,776,197,311 13,085,677,027
Non-current provisions 15 3,847,971,905 4,979,271,689
Other non current liabilities 13 150,640,479 178,928,743
Total non-current liabilities 23,012,032,973 21,451,005,997
Total liabilities ₩ 689,506,261,729 ₩ 746,860,141,797
Equity:
Capital stock 16 9,000,000,000 9,000,000,000
Other components of equity 17 (12,890,706,215) (9,984,797,193)
Retained earnings 18 417,377,077,906 416,280,069,980
Equity attributable to the owners of the
Company
413,486,371,691 415,295,272,787
Non-controlling interests 13,986,587,300 12,044,062,734
Total equity 427,472,958,991 427,339,335,521
Total liabilities and equity ₩ 1,116,979,220,720 ₩ 1,174,199,477,318
(Concluded)
See accompanying notes.
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
2015 2014
Notes
Three months
ended March 31,
Three months
ended March 31
(In Korean won)
Sales 19,29,32 ₩ 227,079,849,778 ₩ 151,808,961,492
Cost of sales 23,29 157,403,425,630 101,830,789,440
Gross profit 69,676,424,148 49,978,172,052
Selling and administrative expenses 20,23,29 51,743,122,284 36,492,692,768
Operating income 32 17,933,301,864 13,485,479,284
Gain on investments in joint venture and
associates, net
8 1,352,488,385 2,916,636,878
Finance income 21,27 5,122,125,070 3,338,852,220
Finance expenses 21,27 4,050,688,069 995,453,593
Other income 22 1,258,783,202 184,921,246
Other expenses 22 201,426,038 86,473,688
Income before income tax 21,414,584,414 18,843,962,347
Income tax expense 24 5,878,467,241 5,674,011,710
Profit for the period 15,536,117,173 13,169,950,637
Other comprehensive income (expenses):
Items that will not be reclassified subsequently
to profit or loss:
Remeasurements of defined benefit plans 18 31,804,012 (18,600,103)
31,804,012 (18,600,103)
Items that may be reclassified subsequently to
profit or loss:
Loss on foreign operations translation, net 17 (2,904,737,079) (792,639,923)
Changes in share of earnings of equity-
accounted investees, net
8,17 51,764,029 8,676,783
Gain on AFS financial assets, net 17 18,675,335 62,495,259
(2,834,297,715) (721,467,881)
Total other comprehensive income (expenses) (2,802,493,703) (740,067,984)
Total comprehensive income 12,733,623,470 12,429,882,653
Profit attributable to:
Owners of the Company 13,665,203,914 13,169,950,637
Non-controlling interests 1,870,913,259 -
15,536,117,173 13,169,950,637
Comprehensive income attributable to:
Owners of the Company 10,791,098,904 12,429,882,653
Non-controlling interests 1,942,524,566 -
12,733,623,470 12,429,882,653
Earnings per share attributable to the owners
of the Company:
Basic and diluted earnings per common share 25 ₩ 759 ₩ 732
See accompanying notes.
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
Capital
stock
Other components
of equity
Retained
earnings
Total equity
attributable to the
owners of the
Company
Non-
controlling
interests
Total
equity
(In Korean won)
Balance at
January 1, 2014
₩ 9,000,000,000 ₩ (3,949,468,201) ₩ 342,591,997,543 ₩ 347,642,529,342 ₩ - ₩ 347,642,529,342
Payment of cash
dividends - - (7,200,000,000) (7,200,000,000) - (7,200,000,000)
Profit for the period - - 13,169,950,637 13,169,950,637 - 13,169,950,637
Gain on AFS financial
assets, net - 62,495,259 - 62,495,259 - 62,495,259
Remeasurements of
defined benefit plans
- - (18,600,103) (18,600,103) - (18,600,103)
Loss on foreign
operations
translation, net
- (792,639,923) - (792,639,923) - (792,639,923)
Changes in valuation
of equity-accounted
investees, net
- 8,676,783 - 8,676,783 - 8,676,783
Balance at
March 31, 2014
9,000,000,000 (4,670,936,082) 348,543,348,077 352,872,411,995 - 352,872,411,995
Balance at
January 1, 2015 9,000,000,000 (9,984,797,193) 416,280,069,980 415,295,272,787 12,044,062,734 427,339,335,521
Payment of cash
dividends
- - (12,600,000,000) (12,600,000,000) - (12,600,000,000)
Profit for the period - - 13,665,203,914 13,665,203,914 1,870,913,259 15,536,117,173
Gain on AFS financial
assets, net
- 18,675,335 - 18,675,335 - 18,675,335
Remeasurements of
defined benefit plans
- - 31,804,012 31,804,012 - 31,804,012
Loss on foreign
operations
translation, net - (2,976,348,386) - (2,976,348,386) 71,611,307 (2,904,737,079)
Changes in valuation
of equity-accounted
investees, net - 51,764,029 - 51,764,029 - 51,764,029
Balance at
March 31, 2015 ₩ 9,000,000,000 ₩ (12,890,706,215) ₩ 417,377,077,906 ₩ 413,486,371,691 ₩ 13,986,587,300 ₩ 427,472,958,991
See accompanying notes.
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
2015 2014
Notes
Three months
ended March 31,
Three months
ended March 31
(In Korean Won)
Cash flows from operating activities:
Cash generated from operations:
Profit for the period 30 ₩ 15,536,117,173 ₩ 13,169,950,637
Adjustments 4,840,675,779 2,164,408,510
Changes in operating assets and liabilities (42,501,460,525) (11,545,866,695)
22,124,667,573 3,788,492,452
Interest received 1,509,617,557 2,970,694,573
Dividend received 100,000,000 100,000,000
Income tax paid (12,211,894,413) (8,762,658,313)
Net cash used by operating activities (32,726,944,429) (1,903,471,288)
Cash flows from investing activities:
Proceeds from withdrawal(purchases) of short-
term financial instruments, net 1,264,098,511 (1,774,206,235)
Proceeds from disposals of other financial assets 8,100,000 -
Proceeds from disposals of property, plant and
equipment 1,804,200 369,131
Acquisitions of other financial assets (1,135,391) (268,648,000)
Acquisitions of property, plant and equipment 9 (413,965,366) (633,329,474)
Acquisitions of intangible assets 10 (1,395,118,449) (8,576,724)
Net cash used by investing activities (536,216,495) (2,684,391,302)
Cash flows from financing activities: - -
Net decrease in cash and cash equivalents (33,263,160,924) (4,587,862,590)
Cash and cash equivalents, beginning of the period 216,912,848,618 91,370,483,561
Effect of exchange rate changes on cash and
cash equivalents (4,412,888,800) (84,934,277)
Cash and cash equivalents, end of the period ₩ 179,236,798,894 ₩ 86,697,686,694
See accompanying notes.
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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
AND FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
1. GENERAL:
(1) Innocean Worldwide Inc. (the “Company” or “Parent Company”) was incorporated on May 17, 2005 under
the laws of the Republic of Korea. The Company and its susbsidiaries (the “Group”) conduct their business
as an advertising agency, and are engaged in the production of commercial advertising and promotional
materials, and other related business activities. The Company’s head office is located at 308, Gangnam-
daero, Gangnam-gu, Seoul, Korea. As of March 31, 2015, the Company’s capital stock amounts to
₩9,000,000 thousand and the stockholders of the Company are as follows:
Name Number of shares Equity interest (%)
Seong-Yi Chung 7,200,000 40.00
MSPE Highlight Holdings AB 3,600,000 20.00
Ui-Seon Chung 1,800,000 10.00
Hyundai Chung Mong-Koo Foundation 1,800,000 10.00
Others 3,600,000 20.00
Total 18,000,000 100.00
(2) The Company’s consolidated subsidiaries as of March 31, 2015 and December 31, 2014 are as follows:
Ownership percentage
Subsidiaries
Nature of
the business Location
Closing
Date
March 31,
2015
December 31,
2014
Innocean Worldwide Communication
Private Ltd. (IWI)
Ad-agency India 3.31 100.00 100.00
Innocean Worldwide UK Ltd. (IWUK) Ad-agency UK 12.31 100.00 100.00
Innocean Worldwide Europe GmbH (IWE) Ad-agency Germany 12.31 100.00 100.00
Innocean Worldwide Italy Srl (IWIt) Ad-agency Italy 12.31 100.00 100.00
Innocean Worldwide China Shanghai (IWC
Shanghai)
Ad-agency China 12.31 100.00 100.00
Innocean Worldwide China Beijing (IWC
Beijing)
Ad-agency China 12.31 100.00 100.00
Innocean Worldwide Holdings, Inc.(IWH) Holdings US 12.31 100.00 100.00
Innocean Worldwide Americas, LLC (IWA) Ad-agency US 12.31 60.00 60.00
Innocean Worldwide Australia Pty Ltd.
(IWAu)
Ad-agency Australia 12.31 100.00 100.00
Innocean Worldwide Rus LLC. (IWR) Ad-agency Russia 12.31 100.00 100.00
Innocean Worldwide Canada Inc. (IWC) Ad-agency Canada 12.31 100.00 100.00
Innocean Worldwide Spain S.L. (IWS) Ad-agency Spain 12.31 100.00 100.00
Innocean Worldwide France (IWF) Ad-agency France 12.31 100.00 100.00
Innocean Worldwide Turkey (IWTr) Ad-agency Turkey 12.31 100.00 100.00
Innocean Worldwide Brazil (IWB) Ad-agency Brazil 12.31 100.00 100.00
Innocean Worldwide Mexico (IWM) Ad-agency Mexico 12.31 100.00 100.00
In addition, two Money Market Trusts, over which the Company has the control, are included as consolidated
subsidiaries.
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(3) Condensed financial positions and results of operations of the Company’s consolidated subsidiaries as of
and for the three months ended March 31, 2015, are as follows:
Name of subsidiaries Assets Liabilities Sales
Profit
for the period
(In thousands of Korean Won)
IWI ₩ 15,024,355 ₩ 5,667,343 ₩ 7,465,998 ₩ 696,586
IWUK 15,754,541 12,636,006 2,906,377 619,579
IWE 53,232,197 38,416,549 28,058,622 2,382,456
IWIt 11,385,647 8,691,903 2,740,931 260,428
IWC Shanghai 94,910,931 69,651,579 8,285,010 1,197,478
IWC Beijing 6,957,617 5,085,402 1,740,310 164,960
IWH(*) 29,270,247 1,461,865 - (1,028)
IWA 244,417,652 209,451,183 70,435,246 4,677,283
IWAu 22,357,387 17,591,878 5,438,685 446,796
IWR 17,000,823 7,362,687 1,161,684 (53,062)
IWC 26,699,572 21,301,501 9,410,107 574,628
IWS 9,752,905 8,900,515 2,605,963 5,166
IWF 5,268,244 4,033,470 2,958,517 377,938
IWTr 2,937,837 2,281,106 917,097 (88,967)
IWB 1,829,528 169,158 897,371 371,631
IWM 1,219,963 1,056,602 975,217 (40,479)
(*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost.
(**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial statements,
are prepared for the same reporting periods as that of the Company’s.
(***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after
adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and
subsidiaries and before elimination of intercompany transactions and balances.
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Condensed financial positions and results of operations of the Company’s consolidated subsidiaries as of and for
the three months ended March 31, 2014, are as follows:
Name of subsidiaries Assets Liabilities Sales
Profit
for the period
(In thousands of Korean Won)
IWI ₩ 16,158,221 ₩ 7,521,077 ₩ 8,863,654 ₩ 588,980
IWUK 9,160,694 7,174,381 3,979,639 318,442
IWE 62,052,462 46,901,629 32,821,523 2,434,647
IWIt 15,763,947 12,960,669 2,914,592 252,371
IWC Shanghai 51,927,232 33,793,302 5,139,170 1,006,020
IWC Beijing 5,719,206 3,499,927 1,853,972 193,901
IWH(*) 20,171,073 702,843 - 1,107
IWAu 23,923,344 19,049,883 7,414,147 523,564
IWR 56,720,191 38,558,017 3,202,457 499,781
IWC 6,742,058 1,776,029 6,791,256 468,619
IWS 9,217,686 8,600,824 2,483,106 (281,961)
IWF 4,613,442 3,392,912 2,663,853 163,518
IWTr 3,081,686 2,556,515 1,045,918 (43,878)
IWB ₩ 2,090,901 ₩ 243,545 ₩ 1,001,874 ₩ 620,719 (*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost.
(**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial
statements, are prepared for the same reporting periods as the Company’s. (***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after
adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and
subsidiaries and before elimination of intercompany transactions and balances.
(4) Summarized cash flows of non-wholly owned subsidiary that have material non-controlling interests to the
Group as of March 31, 2015, are as follows:
Description IWA
(In thousands of Korean Won)
Cash flows from operating activities ₩ (47,895,811)
Cash flows from investing activities (22,557)
Cash flows from financing activities -
Effect of exchange rate changes on cash and cash equivalents 235,281
Net decrease in cash and cash equivalents ₩ (47,683,087)
(5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of
March 31, 2015, are as follows:
Description IWA
(In thousands of Korean Won)
Ownership percentage of non-controlling interests 40.00%
Non-controlling interests ₩ 13,986,587
Profit attributable to non-controlling interests ₩ 1,870,913
Comprehensive income attributable to non-controlling interests ₩ 1,942,524
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company maintains its official accounting records in Korean Won and prepares its consolidated financial
statements in conformity with Korean International Financial Reporting Standards (“K-IFRS”), in Korean
language (Hangul). Accordingly, these consolidated financial statements are intended for use by those who are
informed about K-IFRS and Korean practices. The accompanying consolidated financial statements have been
condensed, restructured and translated into English with certain expanded descriptions from Korean language
consolidated financial statements. Certain information included in Korean language consolidated financial
statements, but not required for a fair presentation of the Group’s consolidated statements of financial position,
comprehensive income, changes in equity or cash flows, is not presented in the accompanying consolidated
financial statements.
(1) Basis of consolidated financial statements preparation
The Group’s condensed consolidated financial statements for the three months ended March 31, 2015 and 2014,
respectively, are prepared in accordance with K-IFRS 1034, Interim Financial Reporting. The condensed
consolidated financial statements should be read in conjunction with the annual consolidated financial statements
for the year ended December 31, 2014, which have been prepared in accordance with K-IFRS.
The significant accounting policies used for the preparation of the interim condensed consolidated financial
statements are consistent with those applied to the annual consolidated financial statements for the year ended
December 31, 2014, except for the adoption effect of the new and revised accounting standards and
interpretations described below.
1) New and revised standards that have been applied from the year beginning on January 1, 2015, are as follows:
- K-IFRS 1019 (Amendments): ‘Employee Benefits’
The amendments to K-IFRS 1019 permit to recognize amount of contributions as a reduction in the service cost
in which the related service is rendered if the amount of the contributions are independent of the number of years
of service. The effect of the above mentioned enactments and amendments are not significant on the Group’s
interim condensed consolidated financial statements.
- Annual Improvements to K-IFRS 2010-2012 Cycle
The amendments to K-IFRS 1102 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii)
add definition for ‘performance condition’ and ‘service condition’ which were previously included within the
definition of ‘vesting condition’. The amendments to K-IFRS 1103 clarify the classification and measurement of
the contingent consideration in business combination. The amendments to K-IFRS 1108 clarify that a
reconciliation of the total of the reportable segments’ assets should only be provided if the segment assets are
regularly provided to the chief operating decision maker. The effect of the above mentioned enactments and
amendments are not significant on the Group’s interim condensed consolidated financial statements.
- Annual Improvements to K-IFRS 2011-2013 Cycle
The amendments to K-IFRS 1103 clarify the scope of the portfolio exception for measuring the fair values of the
group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope the
standard does not apply to the accounting for the formation of all types of joint arrangement in the financial
statements of the joint arrangement itself. The amendments to K-IFRS 1113 ‘Fair Value Measurement’ and K-
IFRS 1040 ‘Investment Property’ exist. The effect of the above mentioned enactments and amendments are not
significant on the Group’s interim condensed consolidated financial statements.
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2) New and revised standards that have been issued but are not yet effective as of the authorization date for issue
of financial statements, and that have not been applied earlier by the Group are as follows:
- K-IFRS 1016 (Amendments): ‘Property, Plant and Equipment’
The amendments to K-IFRS 1016 prohibit from using a revenue-based depreciation method for items of property,
plant and equipments. The amendments are effective for the annual periods beginning on or after January 1, 2016.
- K-IFRS 1038 (Amendments): ‘Intangible Assets’
The amendments to K-IFRS 1038 rebut presumption that revenue is not an appropriate basis for the amortization
of intangible assets, which presumption can only be rebutted when the intangible asset is expressed as a measure
of revenue or when it can be demonstrated that revenue and consumption of the economic benefits of the
intangible asset are highly correlated. The amendments to K-IFRS 1038 are effective for annual periods
beginning on or after January 1, 2016.
- K-IFRS 1111(Amendments): ‘Joint Arrangements’
The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of a joint operation that
constitues a business as defined in K-IFRS 1103 ‘Business Combinations’. A joint operator is also required to
disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The
amendments to K-IFRS 1111 are effective for the annual periods beginning on or after January 1, 2016.
The Group does not anticipate that the above mentioned enactments and amendments will have any significant
effect on the Group’s consolidated financial statements.
(2) Significant accounting judgments and key sources of estimation uncertainties
In the preparation of the Group’s interim consolidated financial statements, management is required to apply
accounting policies and make judgments, estimation and assumptions affecting the carrying amounts of assets
and liabilities, income and expenses. Actual results may be different from those estimations.
The management’s significant judgments about the application of the Group’s accounting policies and the main
resources of the uncertainty are consistent with those of the annual consolidated financial statements for the year
ended December 31, 2014.
- 14 -
3. FINANCIAL INSTRUMENTS:
Financial instruments as of March 31, 2015 and December 31, 2014, consist of the following:
Accounts Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Short-term financial
instruments Time deposits ₩ 103,862,507 ₩ 104,597,960
Financial assets at fair value
through profit or loss
(“FVTPL”)(*)
94,156,910 94,583,940
₩ 198,019,417 ₩ 199,181,900
Long-term financial
instruments
Guarantee deposit for checking
accounts
₩ 6,000 ₩ 6,000
Long-term financial institution
deposits
328,243 349,006
₩ 334,243 ₩ 355,006
(*) It consist of MMT(Money Market Trust) designated as FVTPL and the Company has power of control as of
March 31, 2015 and December 31, 2014.
4. TRADE AND OTHER RECEIVABLES:
(1) Trade and other receivables as of March 31, 2015 and December 31, 2014, consist of the following:
Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Trade receivables ₩ 604,505,957 ₩ 627,820,267
Less: Allowance for doubtful accounts (7,106,482) (7,181,210)
Other receivables 2,608,780 4,313,002
Less: Allowance for doubtful accounts (4,584) (22,353)
₩ 600,003,671 ₩ 624,929,706
(2) The changes in allowance for doubtful accounts for the three months ended March 31, 2015, are as follows:
Description Trade receivables Other receivables
(In thousands of Korean won)
Beginning balance ₩ 7,181,210 ₩ 22,353
Reversal for allowance for doubtful
accounts, net (68,789) (17,769)
Foreign exchange differences (5,939) -
Ending balance ₩ 7,106,482 ₩ 4,584
The changes in allowance for doubtful accounts for the three months ended March 31, 2014, are as follows:
Description Trade receivables Other receivables
(In thousands of Korean won)
Beginning balance ₩ 2,712,110 ₩ 37,675
Reversal for allowance for doubtful
accounts, net (758,803) (1,876)
Foreign exchange differences 506 -
Ending balance ₩ 1,953,813 ₩ 35,799
- 15 -
(3) The aging analysis of trade and other receivables that is delinquent but not impaired as of March 31, 2015 a
nd December 31, 2014, is as follows:
March 31,2015
Accounts
Less than
3 months
Over 3 months,
less than 6
months
Over
6 months
Total
(In thousands of Korean won)
Trade receivables
₩ 59,020,155 ₩ 8,766,764 ₩ 3,714,710 ₩ 71,501,629
Other receivables 51,358 - 31,574 82,932
December 31, 2014
Accounts
Less than
3 months
Over 3 months,
less than 6
months
Over
6 months Total
(In thousands of Korean won)
Trade receivables
₩ 57,167,347 ₩ 5,868,381 ₩ 6,915,333 ₩ 69,951,062
Other receivables 573,665 677,680 100,407 1,351,752
(4) Aging analysis of impaired trade and other receivables as of March 31, 2015 and December 31, 2014, is as
follows:
March 31, 2015
Accounts
Less than
3 months
Over 3 months,
less than 6
months
Over
6 months Total
(In thousands of Korean won)
Trade receivables
₩ - ₩ 3,021,714 ₩ 3,985,962 ₩ 7,007,676
Less: Allowance for doubtful
accounts - (2,872,744) (3,789,454) (6,662,198)
₩ - ₩ 148,970 ₩ 196,508 ₩ 345,478
December 31, 2014
Accounts
Less than
3 months
Over 3 months,
less than 6
months
Over
6 months Total
(In thousands of Korean won)
Trade receivables
₩ 3,021,714 ₩ 3,985,962 ₩ - ₩ 7,007,676
Less: Allowance for doubtful
accounts (2,872,744) (3,789,454) - (6,662,198)
₩ 148,970 ₩ 196,508 ₩ - ₩ 345,478
Besides the allowances for doubtful accounts on above impaired trade and other receivables, the Group
accounted for allowance for doubtful accounts amounting to ₩448,868 thousand and ₩541,365 thousand as of
March 31, 2015 and December 31, 2014 respectively, by the collective impairment test.
- 16 -
5. OTHER FINANCIAL ASSETS:
Other financial assets as of March 31, 2015 and December 31, 2014, consist of the following:
Accounts
March 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Currency foward ₩ 125,177 ₩ - ₩ - ₩ -
Stock warrants 182,881 - 182,881 -
Accrued income 3,099,379 - 2,536,664 -
Leasehold deposits 18,454 4,930,389 130,909 4,792,854
Short-term loans 1,125,025 - 1,117,986 -
₩ 4,550,916 ₩ 4,930,389 ₩ 3,968,440 ₩ 4,792,854
6. OTHER ASSETS:
Other assets as of March 31, 2015 and December 31, 2014, consist of the following:
Accounts
March 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Due from customers for
contract work
₩ 28,209,727 ₩ - ₩ 15,095,843 ₩ -
Advanced payments 2,841,858 - 8,027,254 -
Prepaid expenses 1,275,438 59,175 1,103,935 60,620
Prepaid value added tax 1,502,560 - 3,094,879 -
Others 3,868,576 - 5,735,894 -
₩ 37,698,159 ₩ 59,175 ₩ 33,057,805 ₩ 60,620
7. AFS FINANCIAL ASSETS:
Available-for-sale (AFS) financial assets as of March 31, 2015 and December 31, 2014, consist of the following:
March 31, 2015
December 31,
2014
Description
Ownership
percentage Amortized cost
Valuation
difference Book value Book value
(In thousands of Korean won)
Non-marketable securities:
ISU-S&M Contents
Investment Fund
5% ₩ 500,000
₩ -
₩ 500,000
₩ 500,000
Debt securities:
The Education Co., Ltd. - 1,924,042 24,638 1,948,680 1,904,704
₩ 2,424,042 ₩ 24,638 ₩ 2,448,680 ₩ 2,404,704
- 17 -
8. INVESTMENTS IN JOINT VENTURE AND ASSOCIATES:
(1) Investments in joint venture and associates as of March 31, 2015 and December 31, 2014, are as follows:
March 31, 2015
December 31,
2014
Description
Nature of
business Location
Ownership
percentage Book value Book value
(%) (In thousands of Korean won)
Joint venture:
Beijing Innocean-CBAC
Advertising Co., Ltd.
(ICBAC)(*)
Ad-agency China 51.00 ₩ 7,260,015 ₩ 5,945,479
Associates :
Mate Communications
Co., Ltd.
Ad-agency Korea 28.31 5,107,035 5,048,632
Inspirecorp. Co., Ltd. Education Korea 29.08 226,891 232,322
UNION Contents Value-
Up Investment Fund
Investment Korea 27.27 3,021,832 2,985,087
IWA (**) Ad-agency U.S.A - - -
₩ 15,615,773 ₩ 14,211,520
(*) ICBAC is categorized as a joint venture although the Group owns the majority of shares, because the Group have joint
control over the entity by virtue of an agreement with the other investors.
(**) The subsidiary is newly included in the consolidation scope because the Group obtained additional shares for the year
ended December 31, 2014.
(2) The changes in investments in joint venture and associates for the three months ended March 31, 2015, are
as follows:
Description
Beginning of the
period
Share of profits
for the period
Others
End of
the period
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 5,945,479 ₩ 1,262,771 ₩ 51,765 ₩ 7,260,015
Associates :
Mate Communications
Co., Ltd. 5,048,632 58,403 - 5,107,035
Inspirecorp. Co., Ltd. 232,322 (5,431) - 226,891
UNION Contents
Value-Up Investment
Fund 2,985,087 36,745 - 3,021,832
₩ 14,211,520 ₩ 1,352,488 ₩ 51,765 ₩ 15,615,773
- 18 -
The changes in investments in joint venture and associates for the three months ended March 31, 2014, are as
follows:
Description
Beginning of the
period
Share of profits
for the period
Others
End of
the period
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 5,139,332 ₩ 1,257,891 ₩ (74,652) ₩ 6,322,571
Associates :
Mate Communications
Co., Ltd. 4,772,135 (127,101) - 4,645,034
Inspirecorp. Co., Ltd. 300,120 (17,786) - 282,334
IWA 13,424,412 1,803,633 83,329 15,311,374
₩ 23,635,999 ₩ 2,916,637 ₩ 8,677 ₩ 26,561,313
(3) Condensed financial information of the Group’s joint venture and associates as of and for the three months ended
March 31, 2015, is as follows:
Description
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 54,606,145 ₩ 67,140 ₩ 40,437,963 ₩ -
Associates :
Mate Communications Co., Ltd. 15,919,680 2,135,588 4,477,939 87,428
Inspirecorp. Co., Ltd. 26,117 97,210 37,607 -
UNION Contents
Value-Up Investment Fund ₩ 6,645,603 ₩ 4,436,867 ₩ 2,420 ₩ -
Description Sales
Profit for the
period
Other
comprehensive
income
Total
comprehensive
income
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 8,054,077 ₩ 2,476,021 ₩ - ₩ 2,476,021
Associates :
Mate Communications Co., Ltd. 5,073,730 206,290 - 206,290
Inspirecorp. Co., Ltd. 59,495 (18,658) - (18,658)
UNION Contents
Value-Up Investment Fund ₩ 82,722 ₩ 8,644 ₩ - ₩ 8,644
- 19 -
Condensed financial information of the Group’s joint venture and associates as of and for the three months ended
March 31, 2014, is as follows:
Description
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 31,034,763 ₩ 229,272 ₩ 18,866,836 ₩ -
Associates :
Mate Communications Co., Ltd. 14,658,974 1,976,081 4,675,259 101,760
Inspirecorp. Co., Ltd. 194,173 85,210 2,995 -
IWA 178,563,045 4,928,972 162,420,805 -
Description Sales
Profit for the
period
Other
comprehensive
income
Total
comprehensive
income
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 5,455,022 ₩ 2,466,453 ₩ - ₩ 2,466,453
Associates :
Mate Communications Co., Ltd. 2,896,574 (448,941) - (448,941)
Inspirecorp. Co., Ltd. 7,236 (61,168) - (61,168)
IWA 64,592,468 4,509,083 - 4,509,083
(4) Condensed additional financial information of the Group’s joint venture as of and for the three months ended
March 31, 2015, is as follows:
Name of
the
company
Cash and
cash equivalents
Current
financial
liabilities
Non-current
financial
liabilities
Depreciation
and
amortization
Interest
income
Interest
expenses
Income tax
expense
(In thousands of Korean won)
ICBAC ₩ 24,921,701 ₩ 40,437,963 ₩ - ₩ 38,158 ₩ 74,441 ₩ - ₩ 825,340
Condensed additional financial information of the Group’s joint venture as of and for the three months ended
March 31, 2014, is as follows:
Name of
the
company
Cash and
cash equivalents
Current
financial
liabilities
Non-current
financial
liabilities
Depreciation
and
amortization
Interest
Income
Interest
Expenses
Income tax
Expense
(In thousands of Korean won)
ICBAC ₩ 12,227,972 ₩ 18,866,836 ₩ - ₩ 44,336 ₩ 38,180 ₩ - ₩ 822,151
- 20 -
(5) Reconciliations of the Group’s share of net assets of the Group’s joint venture and associates to their carrying
amounts as of March 31, 2015, are as follows:
Description
Net asset
Ownership
percentage
Group’s share of
net asset
Goodwill Book value
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 14,235,324 51.00% ₩ 7,260,015 ₩ - ₩ 7,260,015
Associates :
Mate Communications
Co., Ltd.
13,489,929 28.31% 3,818,999 1,288,036 5,107,035
Inspirecorp. Co., Ltd. 85,736 29.08% 24,932 201,959 226,891
UNION Contents
Value-Up Investment Fund ₩ 11,080,062 27.27% ₩ 3,021,832 ₩ - ₩ 3,021,832
Reconciliations of the Group’s share of net assets of the Group’s joint venture and associates to their carrying
amounts as of December 31, 2014, are as follows:
Description
Net asset
Ownership
percentage
Group’s share of
net asset
Goodwill Book value
(In thousands of Korean won)
Joint venture:
ICBAC ₩ 11,657,804 51.00% ₩ 5,945,479 ₩ - ₩ 5,945,479
Associates :
Mate Communications
Co., Ltd.
13,283,609 28.31% 3,760,596 1,288,036 5,048,632
Inspirecorp. Co., Ltd. 104,396 29.08% 30,363 201,959 232,322
UNION Contents
Value-Up Investment Fund ₩ 10,945,320 27.27% ₩ 2,985,087 ₩ - ₩ 2,985,087
- 21 -
9. PROPERTY, PLANT AND EQUIPMENT:
The changes in property, plant and equipment (“PP&E”) for the three months ended March 31, 2015, are as
follows:
Description
Beginning of
the period
Acquisitions
Disposals
Depreciation
Others
End of
the period
(In thousands of Korean won)
Structures ₩ 69,510 ₩ - ₩ - ₩ (16,044) ₩ - ₩ 53,466 Equipments 6,010,777 356,341 (672) (676,633) (159,881) 5,529,932 Leasehold
improvements
4,737,250 15,628 - (485,185) (218,571) 4,049,122 Others 382,240 41,996 - (44,699) (23,260) 356,277
₩ 11,199,777 ₩ 413,965 ₩ (672) ₩ (1,222,561) ₩ (401,712) ₩ 9,988,797
The changes in PP&E the three months ended March 31, 2014, are as follows:
Description
Beginning of
the period
Acquisitions
Disposals
Depreciation
Others
End of
the period
(In thousands of Korean won)
Structures ₩ 133,680 ₩ - ₩ - ₩ (16,040) ₩ - ₩ 117,640 Equipments 4,479,564 215,654 - (388,851) (131,491) 4,174,876 Leasehold
improvements
3,917,191 412,132 (1,360) (410,349) 199,611 4,117,225 Others 369,955 5,543 (82) (45,055) 9,567 339,928
₩ 8,900,390 ₩ 633,329 ₩ (1,442) ₩ (860,295) ₩ 77,687 ₩ 8,749,669
- 22 -
10. INTANGIBLE ASSETS:
(1) The changes in intangible assets for the three months ended March 31, 2015, are as follows:
Description
Beginning
of the period Acquisition Amortization Impairment loss Others
End of the
period
(In thousands of Korean Won)
Goodwill ₩ 25,358,287 ₩ - ₩ - ₩ - ₩ 138,726 ₩ 25,497,013
Software 657,358 19,618 (56,063) - (59,717) 561,196
Membership 10,013,644 1,375,500 - (120,000) - 11,269,144 Customer
Relationships 14,642,752 - (128,364) - 698,700 15,213,088
Others 5,493,524 - (43,400) - (618,724) 4,831,400
₩ 56,165,565 ₩ 1,395,118 ₩ (227,827) ₩ (120,000) ₩ 158,985 ₩ 57,371,841
The changes in intangible assets for the three months ended March 31, 2014, are as follows:
Description
Beginning
of the period Acquisition Amortization Others End of the period
(In thousands of Korean Won)
Goodwill ₩ 3,773,588 ₩ - ₩ - ₩ (38,800) ₩ 3,734,788
Software 822,731 8,577 (51,199) 4,522 784,631
Membership 10,003,644 - - - 10,003,644
Others 5,048,380 - (43,410) - 5,004,970
₩ 19,648,343 ₩ 8,577 ₩ (94,609) ₩ (34,278) ₩ 19,528,033
(2) Goodwill of the Group as of March 31, 2015 and December 31, 2014, consist of the following :
Description March 31, 2015 December 31, 2014
(In thousands of Korean Won)
IWA(*) ₩ 21,639,322 ₩ 21,525,740
IWC Beijing (*)
3,857,691
3,832,547
₩ 25,497,013 ₩ 25,358,287
(*) Changes of book value are due to the effect of foreign currency exchange differences.
- 23 -
11. TRADE AND OTHER PAYABLES :
Trade and other payables as of March 31, 2015 and December 31, 2014, consist of the following:
March 31, 2015 December 31, 2014
Accounts Current Non-current Current Non-current
(In thousands of Korean won)
Trade payables ₩ 603,465,170 ₩ - ₩ 653,290,925 ₩ -
Other payables 12,366,048 - 13,448,016 -
Accrued expenses 10,021,164 40,188 15,662,255 48,278
₩ 625,852,382 ₩ 40,188 ₩ 682,401,196 ₩ 48,278
12. OTHER FINANCIAL LIABILITIES:
Other financial liabilities as of March 31, 2015 and December 31, 2014, consist of the following:
Accounts
March 31, 2015
December 31, 2014
(In thousands of Korean won)
Currency foward
₩ 43,149
₩ 20,438
Dividends payable 12,600,000 -
₩ 12,643,149 ₩ 20,438
13. OTHER LIABILITIES:
Other liabilities as of March 31, 2015 and December 31, 2014, consist of the following:
March 31, 2015 December 31, 2014
Accounts Current Non-current Current Non-current
(In thousands of Korean won)
Advance received ₩ 17,704,116 ₩ - ₩ 21,127,135 ₩ -
Value-added tax
withholding
3,983,432 - 1,424,343 -
Withholdings 1,168,130 - 2,240,970 -
Unearned income 991,241 - 694,777 -
Others 35,722 150,640 5,909,315 178,929
₩ 23,882,641 ₩ 150,640 ₩ 31,396,540 ₩ 178,929
- 24 -
14. RETIREMENT BENEFIT PLAN:
(1) The main actuarial assumptions used by the Company as of March 31, 2015 and December 31, 2014, are as
follows:
Description March 31, 2015 December 31, 2014
Discount rate 2.78% 2.79%
Expected rate of salary increase 6.59% 6.61%
(2) The amounts recognized in the condensed consolidated statements of financial position related to defined
benefit plans as of March 31, 2015 and December 31, 2014, are as follows:
Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Present value of defined benefit obligations ₩ 24,265,577 ₩ 23,559,645
Fair value of plan assets
(19,068,541)
(20,400,794)
Net defined benefit liabilities ₩ 5,197,036 ₩ 3,158,851
(3) The changes in the net defined benefit liability for the three months ended March 31, 2015, are as follows:
Description
Present value of the
defined benefit obligations
Fair value of the
plan assets
Net defined benefit
liabilities
(In thousands of Korean won)
Beginning of the period ₩ 23,559,645 ₩ (20,400,794) ₩ 3,158,851
Current service cost 1,227,171 - 1,227,171
Interest expenses (income) 159,507 (123,926) 35,581
Subtotal 24,946,323 (20,524,720) 4,421,603
Remeasurements:
Actuarial loss arising from
changes in financial
assumptions
(43,595) - (43,595)
Subtotal (43,595) - (43,595)
Benefits paid (595,067) 1,456,179 861,112
Effect of exchange rate
and others
(42,084) - (42,084)
End of the period ₩ 24,265,577 ₩ (19,068,541) ₩ 5,197,036
- 25 -
The changes in the net defined benefit liability for the three months ended March 31, 2014, are as follows:
Description
Present value of the
defined benefit obligations
Fair value of the
plan assets
Net defined benefit
liabilities
(In thousands of Korean won)
Beginning of the period ₩ 19,391,273 ₩ (13,732,654) ₩ 5,658,619
Current service cost 1,202,815 - 1,202,816
Interest expenses (income) 164,221 (111,175) 53,046
Subtotal 20,758,309 (13,843,829) 6,914,481
Remeasurements:
Actuarial loss arising from
changes in financial
assumptions 29,267 - 29,267
Subtotal 29,267 - 29,267
Benefits paid (285,766) 642,523 356,757
Effect of exchange rate
and others 9,594 - 9,593
End of the period ₩ 20,511,404 ₩ (13,201,306) ₩ 7,310,098
(4) The fair value of the plan assets as of March 31, 2015 and December 31, 2014, consists of the following:
Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Insurance instruments ₩ 19,068,541 ₩ 20,400,794
- 26 -
15. PROVISIONS:
The changes in provisions for the three months ended March 31, 2015, are as follows:
Description
Provision for
restoration
liabilities
Other long-
term
employee
benefits
Others
Total
(In thousands of Korean Won)
Beginning of the period ₩ 646,601 ₩ 1,632,614 ₩ 3,741,899 ₩ 6,021,114
Charged (14,537) 49,261 (1,304,060) (1,269,336)
Utilized - - - -
Amortization of present value discounts
and change of discount rate 195 - -
195
Others (2,343) - (88,105) (90,448)
End of the period ₩ 629,916 ₩ 1,681,875 ₩ 2,349,734 ₩ 4,661,525
Classification:
Current ₩ - ₩ - ₩ 813,553 ₩ 813,553
Non current 629,916 1,681,875 1,536,181 3,847,972
The changes in provisions for the three months ended March 31, 2014, are as follows:
Description
Provision for
restoration
liabilities
Other long-term
employee
benefits
Others
Total
(In thousands of Korean Won)
Beginning of the period ₩ 598,732 ₩ 1,188,384 ₩ 2,819,228 ₩ 4,606,344
Charged 21,478 38,351 96,444 156,273
Utilized - - (480,408) (480,408)
Amortization of present value discounts
and change of discount rate 170 - -
170
Others 728 - (2,535) (1,806)
End of the period ₩ 621,109 ₩ 1,226,735 ₩ 2,432,729 ₩ 4,280,573
Classification:
Current ₩ - ₩ - ₩ 1,076,362 ₩ 1,076,362
Non current 621,109 1,226,735 1,356,367 3,204,211
- 27 -
16. CAPITAL STOCK :
Capital stock as of March 31, 2015 and December 31, 2014, consists of the following:
Type of share Authorized Issued Par value March 31, 2015 December 31, 2014
(In thousands of Korean Won)
Common share 24,000,000 shares 18,000,000 shares ₩ 500 ₩ 9,000,0000 ₩ 9,000,000
(*) The Group split face value to ₩ 500 per share from ₩ 5,000 at the General Meeting of Shareholders on
March 23rd, 2015.
17. OTHER COMPONENTS OF EQUITY:
(1) The details of other components of equity as of March 31, 2015 and December 31, 2014, are as follows:
Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Gain on valuation of AFS financial assets, net ₩ 66,214 ₩ 47,539 Gain on share of the other comprehensive income
of equity-accounted investees
416,507
364,743 Loss on foreign operations translation, net
(13,373,427)
(10,397,079)
₩ (12,890,706) ₩ (9,984,797)
(2) Changes in gain on valuation of AFS assets for the three months ended March 31, 2015 and 2014, are as
follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean won)
Beginning of the period ₩ 47,539 ₩ -
Gain on changes in fair value of AFS financial assets
24,638
82,448
Tax effect
(5,963)
(19,953)
End of the period ₩ 66,214 ₩ 62,495
18. RETAINED EARNINGS:
(1) Retained earnings as of March 31, 2015 and December 31, 2014, are as follows:
Description March 31, 2015 December 31, 2014
(In thousands of Korean won)
Legal reserve (*) ₩ 4,500,000 ₩ 4,500,000
Discretionary reserve
Reserve for establishment of research center
for brand
18,000,000 18,000,000
Reserve for development for overseas markets 21,500,000 21,500,000
Unappropriated 373,377,078 372,280,069
₩ 417,377,078 ₩ 416,280,070
(*) The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve,
a minimum of 10% of annual cash dividends declared, until such reserve equals 50% of its capital stock
issued. The Company’s accumulated legal reserve has already reached 50% of its paid-in capital as of March
31, 2015.The legal reserve may not be utilized for cash dividends, but may only be used to offset a deficit, if
any, or be transferred to capital stock.
- 28 -
(2) Changes in retained earnings for the three months ended March 31, 2015 and 2014, are as follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean won)
Beginning of the period ₩ 416,280,070 ₩ 342,591,998
Net income attributable to the owners
of the Company
13,665,204
13,886,688
Payment of dividends (12,600,000) (7,200,000)
Remeasurements of defined benefit plans
43,595
(29,267)
Tax effect (11,791) 10,667
End of the period ₩ 417,377,078 ₩ 349,260,086
- 29 -
19. SALES:
(1) Sales for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Rendering of services ₩ 223,594,707 ₩ 146,692,069
Sales of goods 3,485,143 5,116,892
₩ 227,079,850 ₩ 151,808,961
(2) The sales revenue from the customer who accounts for more than 10% of the Group’s sales revenue are as
follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Hyundai Motor Company ₩ 30,165,036 ₩ 23,258,477
20. SELLING AND ADMINISTRATIVE EXPENSES:
Selling and administrative expenses for the three months ended March 31, 2015 and 2014, consist of the
following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Payroll ₩ 33,370,700 ₩ 22,576,908
Post-employment benefits 1,262,752 1,255,862
Welfare expenses 3,597,688 2,338,696
Travel expenses 939,537 718,119
Entertainment expenses 724,085 561,503
Communication expenses 421,145 336,773
Tax and dues 367,379 365,505
Depreciation 1,194,881 860,295
Amortization 227,827 94,609
Rent 3,565,995 2,752,920
Repairs 193,913 227,560
Vehicles maintenance 286,932 284,128
Employee training cost 131,053 257,292
Publication expenses 264,708 141,927
Office supplies expenses 354,959 98,247
Supplies expenses 80,837 204,771
Service charges 2,808,329 2,329,307
Advertisements 357,871 501,017
Reversal for allowance for doubtful accounts (86,558) (760,679)
Market development expenses 479,961 678,646
Others 1,199,128 669,287
₩ 51,743,122 ₩ 36,492,693
- 30 -
21. FINANCE INCOME AND EXPENSES:
(1) Finance income for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Interest income ₩ 1,854,184 ₩ 1,964,007
Dividend income 100,000 100,000
Gain on foreign exchange transactions 2,883,270 919,225
Gain on foreign currency translation 153,055 315,444
Gain on disposals of other financial assets 6,440 -
Gain on valuation of derivatives 125,176 40,176
₩ 5,122,125 ₩ 3,338,852
(2) Finance expenses for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Loss on foreign exchange transactions ₩ 3,146,168 ₩ 703,144
Loss on foreign currency translation 879,939 231,478
Loss on valuation of derivatives 22,711 59,053
Others 1,870 1,779
₩ 4,050,688 ₩ 995,454
22. OTHER INCOME AND EXPENSES: (1) Other income for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Gain on disposals of PP&E ₩ 1,132 ₩ 287
Miscellaneous revenues 1,256,531 167,446
Others 1,120 17,188
₩ 1,258,783 ₩ 184,921
(2) Other expenses for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Loss on disposals of PP&E ₩ - ₩ 1,360
Impairment loss on intangible assets 120,000 -
Miscellaneous losses 4,996 24,224
Donations 17,898 3,747
Others 58,532 57,143
₩ 201,426 ₩ 86,474
- 31 -
23. EXPENSES BY NATURE:
Expenses by nature for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Outsourced production expenses ₩ 135,769,378 ₩ 90,803,649
Salaries 38,231,140 26,171,465
Depreciation 1,222,561 860,295
Amortization 227,827 94,609
Service charges 16,658,606 4,606,663
Others 17,037,036 15,786,801
₩ 209,146,548 ₩ 138,323,482
24. INCOME TAX EXPENSE:
(1) Income tax expenses for the three months ended March 31, 2015 and 2014, consist of the following:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Income tax currently payable ₩ 5,450,344 ₩ 4,670,726
Adjustments recognized in the current period in
relation to the prior periods (19,723) 612
Changes in deferred income tax due to:
Temporary differences (224,451) 630,778
Items directly charged to equity 5,829 (30,619)
Others 666,468 402,515
Income tax expense ₩ 5,878,467 ₩ 5,674,012
(2) The reconciliations between income before income tax and income tax expense pursuant to Corporate
Income Tax Law of Korea for the three months ended March 31, 2015 and 2014, are as follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Income before income tax ₩ 21,414,584 ₩ 18,843,962
Income tax expense calculated at current applicable
tax rates
5,159,293 4,994,852
Adjustments:
Non-taxable income - -
Non-deductible expenses 179,190 234,296
Tax credits - -
Others 539,984 444,864
719,174 679,160
Income tax expense ₩ 5,878,467 ₩ 5,674,012
Effective tax rate 27.45% 30.11%
- 32 -
25. EARNINGS PER COMMON SHARE:
Basic earnings per common share are computed by dividing profit for the period attributable to owners of the
company by the weighted-average number of common shares outstanding during the period. The Group did not
compute diluted earnings per common share for the three months ended March 31, 2015 and 2014 since there
were no dilutive items during the periods.
Basic earnings per common share for the three months ended March 31, 2015 and 2014, are computed as follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In Korean Won)
Profit attributable to the owners of the Parent Company ₩ 13,665,203,914 ₩ 13,169,950,637
Weighted-average number of common shares outstanding 18,000,000 shares 18,000,000 shares
Basic earnings per common share ₩ 759 ₩ 732
(*) The Group split face value to ₩ 500 per share from ₩ 5,000 at the General Meeting of Shareholders on
March 23rd, 2015.
26. FINANCIAL INSTRUMENTS:
(1) Financial assets by categories as of March 31, 2015, are as follows:
Description
Financial
assets
at FVTPL
Loans
and
receivables
AFS
financial
assets
Book value Fair value
(In thousands of Korean Won)
Cash and
cash equivalents
₩ - ₩ 179,236,799 ₩ - ₩ 179,236,799 ₩ 179,236,799
Short-term and long-
term financial
instruments
94,156,910 104,196,750 - 198,353,660 198,353,660
Trade and other
receivables
- 600,003,671 - 600,003,671 600,003,671
AFS financial assets - - 2,448,680 2,448,680 2,448,680
Other financial assets
308,057
9,173,248
-
9,481,305
9,481,305
₩ 94,464,967 ₩ 892,610,468 ₩ 2,448,680 ₩ 989,524,115 ₩ 989,524,115
Financial assets by categories as of March 31, 2014, are as follows:
Description
Financial
assets
at FVTPL
Loans
and
receivables
AFS
financial
assets
Book value Fair value
(In thousands of Korean Won)
Cash and
cash equivalents
₩ - ₩ 216,912,849 ₩ - ₩ 216,912,849 ₩ 216,912,849
Short-term and long-
term financial
instruments
94,583,940 104,952,966 - 199,536,906 199,536,906
Trade and other
receivables
- 624,929,706 - 624,929,706 624,929,706
AFS financial Assets - - 2,404,704 2,404,704 2,404,704
Other financial assets
182,881
8,578,413
-
8,761,294
8,761,294
₩ 94,766,821 ₩ 955,373,934 ₩ 2,404,704 ₩ 1,052,545,459 ₩ 1,052,545,459
- 33 -
(2) Financial liabilities by categories as of March 31, 2015, are as follows:
Description
Financial liabilities
at FVTPL
Financial liabilities
carried at
amortized cost
Book value Fair value
(In thousands of Korean Won)
Trade notes and
other payable
₩ - ₩ 625,892,570 ₩ 625,892,570 ₩ 625,892,570
Other financial liabilities 43,149 12,600,000 12,643,149 12,643,149
₩ 43,149 ₩ 638,492,570 ₩ 638,535,719 ₩ 638,535,719
Financial liabilities by categories as of March 31, 2014, are as follows:
Description
Financial liabilities
at FVTPL
Financial liabilities
carried at
amortized cost
Book value Fair value
(In thousands of Korean Won)
Trade notes and
other payable
₩ - ₩ 682,449,474 ₩ 682,449,474 ₩ 682,449,474
Other financial liabilities 20,438 - 20,438 20,438
₩ 20,438 ₩ 682,449,474 ₩ 682,469,912 ₩ 682,469,912
(3) Financial assets and liabilities measured at fair value are categorized into the following three-level fair
value hierarchy.
Level 1 : Fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 : Fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3 : Fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
Fair value measurements of financial instruments by fair-value hierarchy levels as of March 31, 2015, are as follows:
March 31, 2015
Description Level 1 Level 2 Level 3 Total
(In thousands of Korean Won)
Financial assets at FVTPL ₩ - ₩ 94,156,910 ₩ - ₩ 94,156,910
AFS financial assets - 1,948,680 - 1,948,680
Derivatives assets - 125,177 - 125,177
Derivatives liabilities - 43,149 - 43,149
Fair value measurements of financial instruments by fair-value hierarchy levels as of December 31, 2014, are as
follows:
December 31, 2014
Description Level 1 Level 2 Level 3 Total
(In thousands of Korean Won)
Financial assets at FVTPL ₩ - ₩ 94,583,940 ₩ - ₩ 94,583,940
AFS financial assets - 1,904,704 - 1,904,704
Derivatives liabilities - 20,438 - 20,438
The Group recognizes transfers between levels of the fair-value hierarchy at the date of the event or change in
circumstances that caused the transfer.
Descriptions of the valuation techniques and the inputs used in the fair value measurements categorized within
Level 2 of the fair-value hierarchy are as follows:
- 34 -
- Debt instruments including corporate bonds
Fair value of debt instruments including corporate bonds is measured by applying the discounted cash flow
method. The rate used to discount cash flows is determined based on yield to maturity, which have the similar
credit rating and period quoted in the current market with those of debt instruments including corporate bonds
that should be measured. The Group classifies fair value measurements of debt instruments including corporate
bonds as Level 2 of the fair-value hierarchy since the rate, which has significant effects on fair value of debt
instruments including corporate bonds, is based on observable market data.
- Currency forwards
Fair value of currency forwards is measured based on forward exchange rate quoted in the current market at the
end of the reporting period, which has the same remaining period of derivatives to be measured. As the inputs
used to measure fair value of currency forwards and options are supported by observable market data, such as
forward exchange rates, the Group classified the estimates of fair value measurements of the currency forwards
and options as Level 2 of the fair-value hierarchy.
There are no changes in valuation techniques used in the fair value measurements of financial instruments categorized
within Level 2.
(4) The description for financial assets and liabilities which should be measured at fair value but have not been
disclosed at fair value due to non-reliable measurement of fair value is as follows:
Categories Description March 31, 2015 December 31, 2014
(In thousands of Korean Won)
Financial assets at FVTPL Stock warrants(*) ₩ 182,881 ₩ 182,881
AFS financial assets Unlisted equity securities(*) 500,000 500,000
(*) It is measured at the acquisition cost because the Group can neither obtain reliable financial imformation for
fair value nor assess the probability for the significant and various estimations about the fair value
measurement.
- 35 -
27. GAIN (LOSS) BY CATEGORIES OF FINANCIAL INSTRUMENTS;
Gain(loss) by categories of financial instruments for the three months ended March 31, 2015, consist of the
following:
Description
Loans and
receivables
Financial
assets
at FVTPL
AFS
financial
assets Derivatives
Total
(In thousands of Korean Won)
Interest income ₩ 833,426 ₩ 941,913 ₩ 78,845 ₩ - ₩ 1,854,184
Gain(loss) on
foreign exchange
transactions, net (485,324) - - 222,426 (262,898)
Gain(loss) on
foreign currency
translation, net (726,884) - - - (726,884)
Dividend income - - 100,000 - 100,000
Gain(loss) on
valuation of
derivatives
- - - 102,466 102,466
Gain on disposals
of other financial
assets 6,440 - - - 6,440
Others
(1,870)
-
-
- (1,870)
₩ (374,212) ₩ 941,913 ₩ 178,845 ₩ 324,892 ₩ 1,071,438
Gain(loss) by categories of financial instruments for the three months ended March 31, 2014, consisted of the
following:
Description
Loans and
receivables
Financial
assets
at FVTPL
AFS
financial
assets Derivatives
Total
(In thousands of Korean Won)
Interest income ₩ 981,944 ₩ 906,642 ₩ 75,421 ₩ - ₩ 1,964,007
Gain(loss) on
foreign exchange
transactions, net 234,417 - - (18,336) 216,081
Gain(loss) on
foreign currency
translation, net 83,966 - - - 83,966
Dividend income - - 100,000 - 100,000
Gain(loss) on
valuation of
derivatives
- - - (18,877) (18,877)
Gain on disposals
of other financial
assets (1,778) - - - (1,778)
₩ 1,298,549 ₩ 906,642 ₩ 75,421 ₩ (37,213) ₩ 2,343,399
- 36 -
28. RISK MANAGEMENT:
(1) Capital risk management
The Group manages its capital to maintain an optimal capital structure for maximizing profit of its shareholders
and for reducing the cost of capital. Debt to equity ratio calculated as total liabilities divided by total equity is
used as an index to manage the Group’s capital. The overall capital risk management policy is consistent with
that of the prior period.
Debt to equity ratios as of March 31, 2015 and December 31, 2014, are as follows:
Description March 31, 2015 December 31, 2014
(In thousands of Korean Won)
Total liabilities ₩ 689,506,262 ₩ 746,860,142
Total equity 427,472,959 427,339,336
Debt-to-equity ratio 161.30% 174.77%
(2) Financial risk management
The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and
price risk), credit risk and liquidity risk related to its financial instruments. The purpose of risk management of
the Group is to identify potential risks related to financial performance and reduce, eliminate and evade those
risks to an acceptable level of risks to the Group. The overall financial risk management policy is consistent with
that of the prior period.
1) Market risk
The Group is exposed to the risk that fair value of future cash flows of financial instrument will fluctuate due to
changes in market prices. Market risk consists of foreign exchange risk, interest risk and price risk.
a) Foreign exchange risk management
Foreign exchange risk is the risk that fair value of financial instrument will fluctuate due to changes in foreign
currency exchange rates. The Group is mainly exposed to exchange rate risk of foreign currencies such as USD
because of overseas operating activities.
The Group monitors and manages the foreign exchange risks regularly. The Group’s sensitivity to a 5% change in exchange rate of the functional currency against each foreign currency on income before income tax for the three months ended March 31, 2015, would be as follows:
Foreign Exchange Rate Sensitivity
Foreign Currency Increase by 5% Decrease by 5%
(In thousands of Korean Won)
USD ₩ 659,046 ₩ (659,046)
EUR 491,321 (491,321)
GBP 16,872 (16,872)
AUD 11,774 (11,774)
Others ₩ 14,046 ₩ (14,046)
The sensitivity analysis is applied to the Group’s monetary assets and liabilities in foreign currencies other than
functional currency.
- 37 -
b) Interest rate risk management
Interest rate risk is the risk that interest income and expenses will fluctuate following to market interest rate. The
Group is exposed to interest rate risk arising from financial instruments with floating interest rates. The Group
manages interest rate risk to minimize the uncertainty and fluctuation of the profit for the period due to changes
in interest rate.
Effect of the Group’s sensitivity to a 1% change in interest rates for the financial assets and liabilities with
floating interest rates on income before income tax for the three months ended March 31, 2015, would be as
follows:
Interest Rate Sensitivity
Accounts Increase by 1% Decrease by 1%
(In thousands of Korean Won)
Interest income ₩ 1,207,434 ₩ (1,207,434)
c) Equity price risk
Equity price risk is the risk that the fair value or future cash flow of financial instrument will fluctuate due to
changes in market price other than foreign currency risk and interest rate risk. However, the Group does not
have equity securities traded in active market.
2) Credit risk
The Group is exposed to credit risk when a counterparty defaults on its contractual obligation resulting in a
financial loss for the Group. The Group operates a policy to transact with counterparties who only meet a certain
level of credit rating which was evaluated based on the counterparty’s financial conditions, default history, and
other factors. The credit risk in the liquid funds and derivative financial instruments is limited as the Group
transacts only with financial institutions with high credit-ratings assigned by international credit-rating agencies.
The book value of financial assets in the consolidated financial statements represents the maximum amounts of
exposure to credit risk.
The trade receivables (billing basis) of customers, which represent more than 5% of total trade receivables, are as
follows:
Description March 31, 2015 December 31, 2014
(In thousands of Korean Won)
Hyundai Motor Company. ₩ 91,657,875 ₩ 134,330,142
Kia Motors America, Inc. 81,372,867 81,268,356
Dongfeng Yueda
Kia Motor Co., Ltd
72,878,160
61,969,627
Kia Motors Corporation 33,333,189 55,185,336
Hyundai Motor America 87,235,040 39,365,756
3) Liquidity risk
The Group manages liquidity risk by matching the maturity of financial liabilities and financial assets through
reviewing and analysing between actual cashflows and budgetary cashflows based on long-term and short-term
cash management plan.
The maturity analysis of non-derivative liabilities according to their remaining contract expiration as of March 31,
2015 is as follows:
Nominal cash flows
Description Less than one year One - five years Total
(In thousands of Korean Won)
Non-interest-bearing liabilities ₩ 638,452,382 ₩ 40,188 ₩ 638,492,570
The above maturity analysis have been drawn up based on the undiscounted cashflows of financial liabilites
based on earliest date on which the Group can be required to pay.
- 38 -
29. RELATED-PARTY TRANSACTIONS:
(1) For the three months ended March 31, 2015, significant transactions arising from operations between the
Group and related parties or affiliates of Hyundai Motor company Group (“The Affiliates”) by the
Monopoly Regulation And Fair Trade Act of the Republic of Korea (“the Act”) are as follows:
Description
Proceeds Expenses
Sales and others Purchases and others
(In thousands of Korean Won)
Joint venture
and associates Mate Communications Co., Ltd. ₩ - ₩ 1,042,267
Inspirecorp. Co., Ltd. - 36,000
Other related
parties (*)
Hyundai Motor America 44,172,798 -
KIA Motors America, Inc. 12,707,811 -
Affiliates by the
Act
Hyundai Motor Company 30,165,036 59,023
Hyundai Card Co., Ltd. 753,121 341,671
Hyundai Capital Services, Inc. 524,764 97,717
Hyundai Autoever Corp. - 229,724
Kia Motors Corporation 7,880,462 2,421
Dongfeng Yueda
Kia Motor Co., Ltd 6,033,746 -
KIA tigers Co., Ltd 1,835,828 -
Hyundai Motor India Limited 7,170,755 -
Hyundai Motor
Deutschland GmbH 5,504,644 -
Hyundai Motor Group
China, Ltd. 3,545,881 108,643
Hyundai Motors Europe GmbH 3,413,018 -
Hyundai Motor Company
Australia Pty Limited 3,132,189 5,374
Hyundai Auto Canada Corp. 3,119,711 -
KIA Motors France SAS 1,581,182 2,253
KIA Motors Europe GmbH 6,633,648 -
KIA Canada, Inc. 6,258,734 -
KIA Motors Deutschland GmbH 4,453,579 17,251
KIA Motors Company Italy S.r.l 2,541,103 -
KIA Motors Australia Pty Ltd. 2,171,918 15,218
KIA Motors (UK) Ltd. 1,684,765 -
Hyundai Motor France SAS 1,578,120 3,677
Others(**) ₩ 10,933,226 ₩ 207,601
(*) Other related parties have significant influence over IWA which became a subsidiary since October 1, 2014.
(**) Others include subsidiaries of the Affiliates by the Act.
- 39 -
For the three months ended March 31, 2014, significant transactions arising from operations between the Group
and related parties or the Affiliates by Act, are as follows:
Description
Proceeds Expenses
Sales and others Purchases and others
(In thousands of Korean Won)
Joint venture and
associates Mate Communications Co., Ltd
₩ 70,108 ₩ 383,292
Affiliates by the Act Hyundai Motor Company 23,258,477 60,660
Hyundai Card Co., Ltd. 649,442 343,358
Hyundai Capital Services, Inc. 521,049 93,141
Hyundai Autoever Corp. 548,109 222,917
Kia Motors Corporation 6,454,315 649
Dongfeng Yueda Kia
Motor Co., Ltd 4,049,522 -
Hyundai Motor India Limited 8,737,843 -
Hyundai Motor
Deutschland GmbH 5,192,492 16,343
Hyundai Motor Group
China, Ltd. 3,111,081 -
Hyundai Motors Europe GmbH 3,431,392 -
Hyundai Motor Company
Australia Pty Limited 2,774,699 8,570
Hyundai Auto Canada Corp. 3,148,463 -
Hyundai Motor (UK) Ltd. 1,854,722 3,107
KIA Motors Europe GmbH 6,355,119 -
KIA Canada, Inc. 3,642,792 -
KIA Motors Deutschland GmbH 7,576,240 38,825
KIA Motors Company Italy S.r.l 2,721,059 -
KIA Motors Australia Pty Ltd. 4,512,732 12,203
KIA Motors (UK) Ltd. 1,630,304 -
KIA Motors France SAS 1,641,684 125
KIA Motors Russia LLC 1,525,767 -
Others(*) ₩ 10,031,926 ₩ 133,433
(*) Others include subsidiaries of the Affiliates by the Act.
- 40 -
(2) As of March 31, 2015, significant balances related to the transactions between the Group and related parties
or the Affiliates by the Act are as follows:
Description
Receivables Payables
Trade
receivables
Other
receivables
and others
Trade
payables
Other
payables
and others
(In thousands of Korean Won)
Joint venture
and associates Mate Communications Co., Ltd ₩ - ₩ - ₩ - ₩ 805,980
Inspirecorp. Co., Ltd. - - - 13,200
Other related
parties
Hyundai Motor America 87,235,040 - - -
KIA Motors America, Inc. 81,372,867 - - -
Affiliates by the
Act
Hyundai Motor Company 91,657,875 15,386,150 62,607 12,894,007
Hyundai MOBIS Co., Ltd. 11,001,883 - 29,700 93,795
Kia Motors Corporation 33,333,189 2,670,041 28,057 348,622
Dongfeng Yueda
Kia Motor Co., Ltd 72,878,160 - - -
Hyundai Motor India Limited 8,085,853 - - -
Hyundai Motor
Deutschland GmbH 8,333,995 2,200 - 6,536
Hyundai Motor Europe GmbH 7,067,775 - - -
Hyundai Motor Company
Australia Pty Limited 6,770,119 - 647 -
Hyundai Auto Canada Corp. 13,985,841 278,880 - -
Hyundai Motor (UK) Ltd 8,181,579 - - 646
KIA Canada, Inc. 7,528,506 140,814 - -
Others(*) ₩ 64,534,603 ₩ 645,349 ₩ 822,638 ₩ 828,183
(*) Others include subsidiaries of the Affiliates by the Act.
- 41 -
As of December 31, 2014, significant balances related to the transactions between the Group and related parties
or the Affiliates by the Act are as follows:
Description
Receivables Payables
Trade
receivables
Other
receivables
and others
Trade
payables
Other
payables
and others
(In thousands of Korean Won)
Joint venture
and associates Mate Communications Co., Ltd ₩ - ₩ - ₩ 225,675 ₩ 1,195,565
Other related
parties
Hyundai Motor America 39,365,756 - - -
KIA Motors America, Inc. 81,268,356 - - -
Affiliates by the
Act
Hyundai Motor Company 134,330,142 8,771,480 41,032 11,201,539
Hyundai MOBIS Co., Ltd. 17,212,628 1,292 14,850 129,836
Hyundai Steel Co., Ltd. 6,905,851 945 - 151,253
Hyundai Engineering &
Construction Co., Ltd. 6,415,865 2,210 - 77,493
Kia Motors Corporation 55,185,336 775,893 34,343 579,147
Dongfeng Yueda
Kia Motor Co., Ltd 61,969,627 - - -
Hyundai Motor Group China, Ltd. 10,386,430 - - 149,231
Hyundai Motor Europe GmbH - - - 5,308,105
Hyundai Motors
Australia Pty Ltd. 6,426,005 - 5,827 -
Hyundai Assan Otomotiv
Sanayi Ve Ticaret A.S. 5,856,146 - - -
KIA Motors Company Italy S.r.l 12,597,161 - 19,070 35,288
KIA Motors Australia Pty Ltd. 6,790,498 - 14,108 70,727
KIA Motors Iberia 5,932,257 - 6,020 -
Others(*) ₩ 51,252,420 ₩ 757,550 ₩ 515,720 ₩ 1,256,139
(*) Others include subsidiaries of the Affiliates by the Act.
(3) Compensation of key management personnel for the three months ended March 31, 2015 and 2014, are as
follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Short-term employee salaries ₩ 663,826 ₩ 596,261
Post-employment benefits 1,293,210 1,275,754
Other long-term benefits 53,291 38,351
₩ 2,010,327 ₩ 1,910,366
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30. CASH GENERATED FROM OPERATIONS:
Cash generated from operations for the three months ended March 31, 2015 and 2014 is as follows:
Description
Three months ended
March 31, 2015
Three months ended
March 31, 2014
(In thousands of Korean Won)
Profit for the period ₩ 15,536,117 ₩ 13,169,951
Adjustments:
Post-employment benefits 1,262,752 1,255,862
Depreciation 1,222,561 860,295
Amortization of intangible assets 227,827 94,609
Reversal for allowance for doubtful accounts (86,558) (760,679)
Loss on valuation of derivatives 22,711 59,053
Impairment losse on intangible assets 120,000 -
Income tax expense 5,878,467 5,674,012
Loss(gain) on foreign currency translation, net 726,884 (83,966)
Loss(gain) on disposals of PP&E, net (1,132) 1,073
Interest income (1,854,184) (1,964,007)
Gain on valuation of derivatives (125,176) (40,176)
Gain on investments in joint venture and
associates, net (1,352,488)
(2,916,637)
Dividend income (100,000) (100,000)
Others (1,100,988) 84,970
4,840,676 2,164,409
Changes in operating assets and liabilities:
Decrease in trade receivables 15,775,993 67,187,597
Decrease in other receivables 1,366,681 146,718
Decrease(increase) in other financial assets 184,517 (10,761,185)
Decreas in other assets (5,381,341) (3,891,311)
Decrease in trade payables (43,979,028) (66,104,111)
Increase(decrease) in other payables (5,390,096) 2,877,358
Decrease in other liabilities (1,264,646) (897,740)
Payment of severance benefits (595,067) (285,766)
Changes in net defined benefit liabilities 1,456,179 642,523
Decrease in provisions (4,674,653) (459,950)
(42,501,461) (11,545,867)
Cash generated from operations ₩ (22,124,668) ₩ 3,788,493
31. COMMITMENTS AND CONTINGENCIES:
(1) Payment guarantees provided by third parties other than related parties as of March 31, 2015, are as follows:
Description Financial institutions Provided entity Guaranteed limits Guaranteed amount
(In thousands of Korean won)
Performance
guarantee
Kookmin Bank
Seoul Line 9
Operation Co., Ltd
₩ 15,000,000 ₩ 30,600
Kookmin Bank - 12,000,000 -
Woori Bank - 5,000,000 -
Woori Bank - $ 5,000,000 -
₩ 30,600
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(2) The Group has been provided with guarantees amounting to ₩9,946,617 thousand relating to contract
performance by Seoul Guarantee Insurance Company as of March 31, 2015.
(3) The Company has entered into an agency agreement with KOBACO, which also serves as a regulatory
agency for the domestic media and advertising industry. Under the agreement, the Company should submit
all requests for advertisements received from direct advertisers or advertising sponsors to KOBACO, which
is authorized to deal with media companies for the airing of such advertisements, and from which the
Company receives an agent fee ranging from 9% to 13% of the receipts from advertisers.
(4) As of March 31, 2015, the Company maintains the lines for bank overdraft of up to ₩4,000 million and
discount of notes receivable of up to ₩3,000 million with Kookmin Bank and other financial institutions.
The Company does not have discounted the notes receivable as of March 31, 2015
(5) As of March 31, 2015, the Company is involved in lawsuits relating to service charges as a plaintiff
(aggregate claim amount of ₩3,844,318 thousand). After the Company won the case in the first trial, the
second trial has been in process.
32. SEGMENT INFORMATION:
(1) The Group has a single segment, advertising agencies, and consists of a single operating segment.
(2) Operating performance by region where the Group’s entities are located for the years ended March 31, 2015
and 2014, are as follows:
For the three months ended March 31, 2015
Korea Europe
America China Others
Consolidation
adjustments
Total
(In thousands of Korean Won)
Total sales ₩ 81,615,345 ₩ 39,270,410 ₩ 81,717,942 ₩ 10,025,320 ₩ 14,983,464 ₩ (532,631) ₩ 227,079,850
Inter-company sales (6,386) (479,112) (29,519) - (17,614) 532,631 -
Net sales 81,608,958 38,791,298 81,688,423 10,025,320 14,965,851 - 227,079,850
Operating income ₩ 3,745,547 ₩ 5,142,917 ₩ 5,839,163 ₩ 1,749,636 ₩ 1,429,519 ₩ 26,520 ₩ 17,933,302
For the three months ended March 31, 2014
Korea Europe
America China Others
Consolidation
adjustments
Total
(In thousands of Korean Won)
Total sales ₩ 72,474,746 ₩ 44,862,713 ₩ 7,793,130 ₩ 6,993,142 ₩ 20,526,176 ₩ (840,946) ₩ 151,808,961
Inter-company sales (274,873) (557,130) - - (8,943) 840,946 -
Net sales 72,199,873 44,305,583 7,793,130 6,993,142 20,517,233 - 151,808,961
Operating income ₩ 3,835,314 ₩ 4,178,886 ₩ 1,431,904 ₩ 1,471,368 ₩ 2,502,257 ₩ 65,750 ₩ 13,485,479
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(3) Non-current assets by region where the Group’s entities are located for the three months ended March 31, 2015
and 2014, are as follows:
For the three months ended March 31, 2015
Korea Europe
America China Others
Consolidation
adjustments
Total
(In thousands of Korean Won)
Non-current
assets(*) ₩ 18,294,468 ₩ 3,101,076 ₩ 19,336,485 ₩ 313,854 ₩ 817,741 ₩ 25,497,014 ₩ 67,360,638
(*) Non-current assets consist of PP&E and intangible assets.
For the three months ended March 31, 2014
Korea Europe
America China Others
Consolidation
adjustments
Total
(In thousands of Korean Won)
Non-current
assets(*) ₩ 17,093,491 ₩ 3,625,678 ₩ 20,030,964 ₩ 326,799 ₩ 930,123 ₩ 25,358,287 ₩ 67,365,342
(*) Non-current assets consist of PP&E and intangible assets.