General Information | 1. General Information The consolidated financial statements include the accounts of KT Corporation, which is the controlling company as defined under IFRS 10, Consolidated Financial Statements, and its 59 controlled subsidiaries as described in Note 1.2 (collectively referred to as the “Group”). The Controlling Company KT Corporation (the “Controlling Company”) commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telephone services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The headquarters are located in Seongnam City, Gyeonggi Province, Republic of Korea, and the address of its registered head office is 90, Buljeong-ro, Bundang-gu, On October 1, 1997, upon the announcement of the Government-Investment Enterprises Management Basic Act and the Privatization Law, the Controlling Company became a government-funded institution under the Commercial Code of Korea. On December 23, 1998, the Controlling Company’s shares were listed on the Korea Exchange. On May 29, 1999, the Controlling Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), representing new shares and 20,813,311 government-owned shares, at the New York Stock Exchange. On July 2, 2001, the additional ADS representing 55,502,161 government-owned shares were issued at the New York Stock Exchange. In 2002, the Controlling Company acquired the entire government-owned shares in accordance with the Korean government’s privatization plan. As of the end of the reporting period, the Korean government does not own any share in the Controlling Company. Consolidated Subsidiaries The consolidated subsidiaries as of December 31, 2016 and 2017, are as follows: Controlling percentage 1 Subsidiary Type of Business Location December 31, December 31, Closing KT Powertel Co., Ltd. 2 Trunk radio system business Korea 44.8% 44.8% December KT Linkus Co., Ltd. Public telephone maintenance Korea 91.4% 91.4% December KT Submarine Co., Ltd. 2,3 Submarine cable construction and maintenance Korea 39.3% 39.3% December KT Telecop Co., Ltd. Security service Korea 86.8% 86.8% December KT Hitel Co., Ltd. Data communication Korea 67.1% 67.1% December KT Service Bukbu Co., Ltd. Opening services of fixed line Korea 67.3% 67.3% December KT Service Nambu Co., Ltd. Opening services of fixed line Korea 77.3% 77.3% December KT Commerce Inc. B2C, B2B service Korea 100.0% 100.0% December KT New Business Fund No.1 Investment fund Korea 100.0% 100.0% December KT Strategic Investment Fund No.1 Investment fund Korea 100.0% 100.0% December KT Strategic Investment Fund No.2 Investment fund Korea 100.0% 100.0% December KT Strategic Investment Fund No.3 Investment fund Korea 100.0% 100.0% December KT Strategic Investment Fund No.4 Investment fund Korea — 100.0% December BC Card Co., Ltd. Credit card business Korea 69.5% 69.5% December VP Inc. Payment security service for credit card, others Korea 50.9% 50.9% December H&C Network Call centre for financial sectors Korea 100.0% 100.0% December BC Card China Co., Ltd. Software development and data processing China 100.0% 100.0% December INITECH Co., Ltd. 4 Internet banking ASP and security solutions Korea 58.2% 58.2% December Smartro Co., Ltd. VAN (Value Added Network) business Korea 81.1% 81.1% December KTDS Co., Ltd. 4 System integration and maintenance Korea 95.5% 95.5% December KT M Hows Co., Ltd. Mobile marketing Korea 90.0% 90.0% December KT M&S Co., Ltd. PCS distribution Korea 100.0% 100.0% December GENIE Music Corporation(KT Music Corporation) 2 Online music production and distribution Korea 49.9% 42.5% December KT Skylife Co., Ltd. 4 Satellite broadcasting business Korea 50.3% 50.3% December Skylife TV Co., Ltd. TV contents provider Korea 92.6% 92.6% December KT Estate Inc. Residential building development and supply Korea 100.0% 100.0% December KT AMC Co., Ltd. Asset management and consulting services Korea 100.0% 100.0% December NEXR Co., Ltd. Cloud system implementation Korea 100.0% 100.0% December KTSB Data service Data centre development and related service Korea 51.0% 51.0% December KT Sat Co., Ltd. Satellite communication business Korea 100.0% 100.0% December KT Innoedu Co E-learning business Korea 96.8% — December Nasmedia, Inc. 3 Online advertisement Korea 42.8% 42.8% December KT Sports Management of sports group Korea 100.0% 100.0% December KT Music Contents Fund No.1 Music contents investment business Korea 80.0% 80.0% December KT Music Contents Fund No.2 Music contents investment business Korea — 100.0% December KT-Michigan Content investment business Korea 88.6% 88.6% December Autopion Co., Ltd. Service for information and communication Korea 100.0% 100.0% December KTCS Corporation 2,4 Database and online information provider Korea 30.9% 30.9% December KTIS Corporation 2,4 Database and online information provider Korea 30.1% 30.1% December KT M mobile Special category telecommunications operator and sales of communication device Korea 100.0% 100.0% December KT Investment Co., Ltd. Technology business finance Korea 100.0% 100.0% December NgenBio Medicine and Pharmacy development business Belgium 49.8% — December Whowho&Company Co., Ltd. Software development and supply Korea 100.0% 100.0% December PlayD Co., Ltd. (N Search Marketing Co., Ltd.) Advertising agency business Korea 100.0% 100.0% December KT Rwanda Networks Ltd. Network installation and management Rwanda 51.0% 51.0% December AOS Ltd. System integration and maintenance Rwanda 51.0% 51.0% December KT Belgium Foreign investment business Belgium 100.0% 100.0% December KT ORS Belgium Foreign investment business Belgium 100.0% 100.0% December Korea Telecom Japan Co., Ltd. Foreign telecommunication business Japan 100.0% 100.0% December KBTO sp.zo.o. Electronic communication business Poland 75.0% 94.0% December Korea Telecom China Co., Ltd. Foreign telecommunication business China 100.0% 100.0% December KT Dutch B.V Super iMax and East Telecom management Netherlands 100.0% 100.0% December Super iMax LLC Wireless high speed internet business Uzbekistan 100.0% 100.0% December East Telecom LLC Fixed line telecommunication business Uzbekistan 91.0% 91.0% December Korea Telecom America, Inc. Foreign telecommunication business USA 100.0% 100.0% December PT. KT Indonesia Foreign telecommunication business Indonesia 99.0% 99.0% December PT. BC Card Asia Pacific Software development and supply Indonesia 99.9% 99.9% December KT Hongkong Telecommunications Co., Ltd. Fixed line communication business Hong Kong 100.0% 100.0% December KT Hong kong Limited Foreign investment business Hong Kong 100.0% 100.0% December Korea Telecom Singapore Pte.Ltd. Foreign investment business Singapore 100.0% 100.0% December Texnoprosistem LLP. Fixed line internet business Uzbekistan 100.0% 100.0% December 1 Sum of the ownership interests owned by the Controlling Company and subsidiaries. 2 Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company can exercise the majority voting rights in its decision-making process at all times considering the historical voting pattern at the shareholders’ meetings. 3 Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company holds the majority of voting right based on an agreement with other investors. 4 The number of subsidiaries’ treasury stock is deducted from the total number of shares when calculating the controlling percentage ownership. Changes in scope of consolidation in 2017 are as follows: Changes Location Subsidiary Reason Included Korea KT Strategic Investment Fund No.4 Newly established KT Music Contents Investment Fund No.2 Newly established Excluded Korea KT Innoedu Co., Ltd. Shares disposed NgeneBio Percentage of ownership decreased Summarized information for consolidated subsidiaries as of and for the years ended December 31, 2015, 2016 and 2017, follows: (in millions of Korean won) 2015 Total assets Total Operating Profit (loss) For the year KT Powertel Co., Ltd. ₩ 113,515 ₩ 21,182 ₩ 104,527 ₩ (32,417 ) KT Linkus Co., Ltd. 77,141 65,745 116,095 3,449 KT Submarine Co., Ltd. 160,314 63,518 67,268 4,145 KT Telecop Co., Ltd. 269,191 134,966 302,844 (7,593 ) KT Hitel Co.,Ltd. 235,757 33,938 162,155 7,258 KT Service Bukbu Co., Ltd 2 31,879 22,627 89,498 (4,630 ) KT Service Nambu Co., Ltd 2 20,729 10,567 110,129 (5,055 ) BC Card Co., Ltd. 1 2,963,952 1,945,634 3,504,946 218,969 H&C Network 1 248,189 70,635 241,008 19,513 Nasmedia, Inc. 141,733 72,202 45,630 9,916 KTDS Co., Ltd. 1 162,518 116,654 423,015 12,836 KT M Hows Co., Ltd. 25,093 17,980 19,352 1,728 KT M&S Co., Ltd. 256,246 217,892 853,011 (18,776 ) GENIE Music Corporation(KT Music Corporation) 90,518 30,704 90,005 3,446 KT Skylife Co., Ltd. 1 711,294 217,850 668,521 72,987 KT Estate Inc. 1 1,603,438 260,292 254,776 27,487 KTSB Data service 23,063 1,730 4,390 (2,444 ) KT Innoedu Co., Ltd. 5,858 7,585 18,156 (4,288 ) KT Sat Co., Ltd. 679,959 210,110 133,326 27,174 KT Sports 15,341 11,643 51,801 (3,836 ) KT Music Contents Fund No.1 10,206 47 468 (111 ) KT-Michigan 5,401 — 861 (209 ) Autopion Co., Ltd. 7,102 3,317 10,585 1,123 KT M mobile 64,756 13,121 42,478 (36,725 ) KT Investment Co., Ltd 49,485 30,827 4,704 (219 ) NgeneBio 7,894 4,683 — (434 ) KTCS Corporation 1 346,949 194,367 1,066,556 13,685 KTIS Corporation 211,164 55,370 473,892 15,041 Korea Telecom Japan Co., Ltd. 13,889 14,393 25,652 (248 ) Korea Telecom China Co., Ltd. 909 198 1,748 (95 ) KT Dutch B.V. 1 29,402 27 161 118 Super iMax LLC 14,962 8,186 8,291 (2,220 ) East Telecom LLC 30,833 17,066 24,066 664 Korea Telecom America, Inc. 6,016 1,378 6,391 156 PT. KT Indonesia 22 — — (9 ) Olleh Rwanda Networks Ltd. 188,951 147,653 7,299 (28,721 ) KT Belgium 77,058 4 — (127 ) KT ORS Belgium 1,996 20 — (75 ) KBTO sp.zo.o. 1,471 1,817 — (328 ) Africa Olleh Services Ltd. 11,928 12,187 8,712 (923 ) (In millions of Korean won) 2016 Total assets Total liabilities Operating Profit (loss) For the year KT Powertel Co., Ltd. ₩ 113,725 ₩ 19,899 ₩ 81,390 ₩ 202 KT Linkus Co., Ltd. 64,318 56,953 117,587 (3,830 ) KT Submarine Co., Ltd. 156,993 55,573 84,137 5,146 KT Telecop Co., Ltd. 265,553 132,344 315,948 143 KT Hitel Co., Ltd. 249,202 46,941 198,994 4,298 KT Service Bukbu Co., Ltd. 32,863 24,580 182,952 694 KT Service Nambu Co., Ltd. 32,621 24,282 218,602 772 BC Card Co., Ltd. 1 3,651,065 2,602,404 3,567,512 163,131 H&C Network 1 272,110 80,983 266,613 14,749 Nasmedia, Inc. 1 263,925 159,502 70,037 11,972 KTDS Co., Ltd. 1 197,970 151,644 476,379 10,838 KT M Hows Co., Ltd. 28,539 18,466 19,922 2,865 KT M&S Co., Ltd. 247,854 227,507 724,144 (12,955 ) GENIE Music Corporation(KT Music Corporation) 110,080 41,953 111,450 8,235 KT Skylife Co., Ltd. 1 777,948 231,452 668,945 68,863 KT Estate Inc. 1 1,734,729 375,341 405,417 46,815 KTSB Data service 20,075 759 5,136 (1,983 ) KT Innoedu Co., Ltd. 6,477 7,259 15,599 103 KT Sat Co., Ltd. 744,653 253,041 144,594 36,266 KT Sports 16,925 13,573 48,476 (198 ) KT Music Contents Fund No.1 10,592 331 349 103 KT-Michigan 16,250 163 133 (514 ) Autopion Co., Ltd. 6,163 2,794 7,772 (409 ) KT M mobile 131,446 20,369 112,532 (40,041 ) KT Investment Co., Ltd. 1 39,506 23,123 10,130 (1,832 ) NgeneBio 6,361 4,733 244 (1,833 ) KTCS Corporation 1 322,768 166,642 955,050 7,892 KTIS Corporation 221,176 63,871 436,914 9,991 Korea Telecom Japan Co., Ltd. 3,592 5,374 5,122 (1,391 ) Korea Telecom China Co., Ltd. 532 188 930 60 KT Dutch B.V 34,197 73 166 85 Super iMax LLC 10,308 6,734 10,759 (1,802 ) East Telecom LLC 31,885 16,554 27,492 3,257 Korea Telecom America, Inc. 4,464 1,306 7,113 181 PT. KT Indonesia 16 — — (7 ) KT Rwanda Networks Ltd. 167,112 138,651 13,435 (31,455 ) KT Belguium 79,391 7 — (67 ) KT ORS Belgium 2,013 23 — (46 ) KBTO sp.zo.o. 1,166 2,378 21 (2,587 ) AOS Ltd. 10,025 3,179 14,481 (1,123 ) KT Hongkong Telecommunications Co., Ltd. 1,571 956 1,568 120 (In millions of Korean won) 2017 Total assets Total liabilities Operating Profit (loss) for the year KT Powertel Co., Ltd. 115,125 18,937 69,234 2,112 KT Linkus Co., Ltd. 59,344 51,516 112,043 725 KT Submarine Co., Ltd. 142,797 34,056 73,985 8,243 KT Telecop Co., Ltd. 264,353 131,633 317,591 2,885 KT Hitel Co., Ltd. 258,240 52,943 227,884 3,225 KT Service Bukbu Co., Ltd. 29,281 22,096 194,837 688 KT Service Nambu Co., Ltd. 36,076 26,412 232,996 875 BC Card Co., Ltd. 1 4,048,263 2,955,038 3,628,995 156,109 H&C Network 1 273,856 65,446 277,622 16,104 Nasmedia, Inc. 1 315,967 188,197 120,667 26,676 KTDS Co., Ltd. 1 144,922 93,343 459,266 11,584 KT M Hows Co., Ltd. 42,738 28,489 24,610 4,097 KT M&S Co., Ltd. 242,388 231,151 734,420 (9,707 ) GENIE Music Corporation(KT Music Corporation) 139,686 48,512 156,163 (3,401 ) KT Skylife Co., Ltd. 1 792,893 210,550 687,752 57,314 KT Estate Inc. 1 1,869,194 502,915 428,446 52,416 KTSB Data service 18,306 605 4,950 (1,651 ) KT Sat Co., Ltd. 742,391 220,804 147,649 29,601 KT Sports 11,131 7,805 53,357 (199 ) KT Music Contents Fund No.1 13,804 1,041 370 (499 ) KT Music Contents Fund No.2 7,500 11 — (11 ) KT-Michigan 14,575 147 159 (426 ) Autopion Co., Ltd. 6,306 3,530 6,679 (618 ) KT M mobile 93,601 21,453 159,684 (38,883 ) KT Investment Co., Ltd. 1 54,673 38,313 8,794 (619 ) KTCS Corporation 1 348,334 188,764 968,186 7,385 KTIS Corporation 223,818 62,569 438,597 8,337 Korea Telecom Japan Co., Ltd. 1 1,554 2,788 2,772 536 Korea Telecom China Co., Ltd. 665 32 1,030 348 KT Dutch B.V 30,312 50 206 169 Super iMax LLC 3,449 4,886 7,314 (4,584 ) East Telecom LLC 1 11,672 11,748 19,663 (9,118 ) Korea Telecom America, Inc. 3,694 791 6,783 109 PT. KT Indonesia 8 — — (6 ) KT Rwanda Networks Ltd. 2 151,359 139,561 15,931 (22,762 ) KT Belguium 86,455 8 49 (2 ) KT ORS Belgium 1,769 14 10 (10 ) KBTO sp.zo.o. 3,311 2,268 67 (3,456 ) AOS Ltd. 2 9,437 4,519 8,952 (682 ) KT Hongkong Telecommunications Co., Ltd. 2,578 1,497 7,304 494 1 These companies are the intermediate controlling companies of other subsidiaries and the above financial information is from their consolidated financial statements. 2 At the end of the reporting period, convertible preferred stock issued by subsidiaries included in liabilities. |