SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2024
Commission File Number 1-14926
KT Corporation
(Translation of registrant’s name into English)
90, Buljeong-ro,
Bundang-gu, Seongnam-si,
Gyeonggi-do,
Korea
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: March 19, 2024 | ||
| KT Corporation | ||
| By: | /s/ Youngkyoon Yun | |
Name: | Youngkyoon Yun | |
| Title: | Vice President |
| By: | /s/ Sanghyun Cho | |
| Name: | Sanghyun Cho | |
| Title: | Director |
KT Corporation and Subsidiaries
Consolidated Financial Statements
December 31, 2023 and 2022
KT Corporation
Index
December 31, 2023 and 2022
| Page(s) | ||||
| 1– 4 | ||||
Consolidated Financial Statements | ||||
| 5 – 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 – 10 | ||||
| 11 – 12 | ||||
| 13 – 133 | ||||
Independent Auditor’s Report on Internal Control over Financial Reporting | 134 – 135 | |||
Report on the Effectiveness of Internal Control over Financial Reporting | 136 | |||
 | Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro, Youngdeungpo-gu, Seoul 07326, Korea
Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr |
English Translation of Independent Auditor’s Report Originally Issued in Korean on March 18, 2024
To the Shareholders and the Board of Directors of KT Corporation:
Audit Opinion
We have audited the consolidated financial statements of KT Corporation and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as of December 31, 2023, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows, for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2023, and its financial performance and its cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).
We have also audited, in accordance with the Korean Standards on Auditing (“KSAs”), the consolidated internal control over financial reporting of the Group as of December 31, 2023, based on the Conceptual Framework for Design and Operation of Internal Control over Financial Reporting, and our report dated March 18, 2024 expressed an unqualified opinion.
Basis for Audit Opinion
We conducted our audits in accordance with the KSAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.
Deloitte Touche Tohmatsu Limited is a private company limited by guarantee incorporated in England & Wales under company number 07271800, and its registered office is Hill House, 1 Little New Street, London, EC4a, 3TR, United Kingdom.
1
Key Audit Matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
- Occurrence and accuracy of Mobile service revenue and revenue related to sale of handset for mobile service (“Mobile revenue”)
(1) Reasons for Determining the matter as a Key Audit Matter
As described in Note 2.26 to the consolidated financial statements, the Group recognizes revenue at the point in time when it fulfills its performance obligations identified from contracts with customers. The Group provides various services and rate plans related to mobile revenue, and due to the large volume of transactions with customers, needs complex and elaborate information technology systems to accurately record occurrence of mobile revenue.
Given the magnitude and complexity of mobile revenue recorded by the billing system of the Group, we determined the occurrence and accuracy of mobile revenue recognized through the billing system as a key audit matter.
(2) How the matter has been addressed in the audit
Key audit procedures performed regarding the occurrence and accuracy of mobile revenue computed through the billing system include the following:
| • | During the audit planning phase, we obtained an understanding of the Group’s accounting policies and processes related to Mobile revenue recognition. |
| • | We performed an assessment on the environment of the general information technology systems used for collecting usage of voice, text, and data, as well as handling billing and invoicing throughout the process of recording revenue, and tested manual controls and general information technology controls. |
| • | We reconciled the mobile revenue in the billing system with the revenue in the ledger. |
| • | We performed substantive analytical procedures using historical data on mobile service revenue by rate plan and subscriber information. |
| • | To verify the accuracy and completeness of the subscriber information used in our audit procedures, we selected subscriber information from the billing system, reconciled the selections with contractual terms between the Group and customers, and corroborated if the subscribers were valid for the respective month. |
| • | To verify the occurrence and accuracy of revenue recognition related to sale of handset for mobile service, we selected transactions from the sub-ledger, reconciled the selection with contractual terms between the Group and customers of the Group, and compared the billed amounts to receipts. |
2
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation of the accompanying consolidated financial statements in accordance with K-IFRS, and for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management of the Group is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
3
| • | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| • | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We are solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other matters
The consolidated financial statements for the reporting period ending December 31, 2022, were audited by other external auditor, and their audit report dated March 8, 2023, expressed an unqualified opinion.
The engagement partner on the audit resulting in this independent auditor’s report is Lee, Dong Hyun.
March 18, 2024
Notice to Readers
This report is effective as of March 18, 2024, the auditor’s report date. Certain subsequent events or circumstances may have occurred between the auditor’s report date and the time the auditor’s report is read. Such events or circumstances could significantly affect the consolidated financial statements and may result in modifications to the auditor’s report.
4
KT Corporation and Subsidiaries
Consolidated Statements of Financial Position
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | December 31, 2023 | December 31, 2022 | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 4,5,37 | |||||||||||
Trade and other receivables, net | 4,6,37 | 7,170,289 | 6,098,072 | |||||||||
Other financial assets | 4,7,37 | 1,440,200 | 1,322,452 | |||||||||
Current income tax assets | 3,299 | 1,543 | ||||||||||
Inventories, net | 8 | 912,262 | 709,191 | |||||||||
Other current assets | 9 | 2,112,553 | 2,101,212 | |||||||||
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Total current assets | 14,518,157 | 12,681,532 | ||||||||||
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Non-current assets | ||||||||||||
Trade and other receivables, net | 4,6,37 | 1,404,168 | 1,491,046 | |||||||||
Other financial assets | 4,7,37 | 2,724,761 | 2,501,484 | |||||||||
Property and equipment, net | 10 | 14,872,079 | 14,772,179 | |||||||||
Right-of-use assets | 20 | 1,304,963 | 1,280,334 | |||||||||
Investment properties, net | 11,37 | 2,198,135 | 1,933,358 | |||||||||
Intangible assets, net | 12 | 2,533,861 | 3,129,833 | |||||||||
Investments in associates and joint ventures | 13 | 1,556,889 | 1,480,722 | |||||||||
Deferred income tax assets | 29 | 608,924 | 578,443 | |||||||||
Net defined benefit assets | 17 | 160,748 | 311,142 | |||||||||
Other non-current assets | 9 | 827,297 | 820,608 | |||||||||
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Total non-current assets | 28,191,825 | 28,299,149 | ||||||||||
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Total assets | ||||||||||||
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5
KT Corporation and Subsidiaries
Consolidated Statements of Financial Position
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | December 31, 2023 | December 31, 2022 | |||||||||
Liabilities | ||||||||||||
Current liabilities | ||||||||||||
Trade and other payables | 4,14,37 | |||||||||||
Borrowings | 4,15,37 | 3,058,564 | 1,827,042 | |||||||||
Other financial liabilities | 4,7,37 | 322,099 | 8,791 | |||||||||
Current income tax liabilities | 236,463 | 232,382 | ||||||||||
Other provisions | 16 | 115,209 | 109,133 | |||||||||
Deferred income | 25 | 51,537 | 55,737 | |||||||||
Other current liabilities | 9 | 1,308,615 | 1,133,018 | |||||||||
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Total current liabilities | 13,147,409 | 10,699,268 | ||||||||||
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Non-current liabilities | ||||||||||||
Trade and other payables | 4,14,37 | 819,558 | 1,064,099 | |||||||||
Borrowings | 4,15,37 | 7,159,601 | 8,179,643 | |||||||||
Other financial liabilities | 4,7,37 | 753,739 | 412,650 | |||||||||
Net defined benefit liabilities | 17 | 63,616 | 51,654 | |||||||||
Other provisions | 16 | 107,014 | 91,233 | |||||||||
Deferred income | 25 | 153,563 | 165,186 | |||||||||
Deferred income tax liabilities | 29 | 994,330 | 967,650 | |||||||||
Other non-current liabilities | 9 | 950,015 | 934,575 | |||||||||
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Total non-current liabilities | 11,001,436 | 11,866,690 | ||||||||||
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Total liabilities | 24,148,845 | 22,565,958 | ||||||||||
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Equity attribute to owners of the Controlling Company | ||||||||||||
Share capital | 21 | 1,564,499 | 1,564,499 | |||||||||
Share premium | 1,440,258 | 1,440,258 | ||||||||||
Retained earnings | 22 | 14,494,430 | 14,257,343 | |||||||||
Accumulated other comprehensive income | 23 | 52,407 | (77,776 | ) | ||||||||
Other components of equity | 23 | (802,418 | ) | (572,152 | ) | |||||||
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| 16,749,176 | 16,612,172 | |||||||||||
Non-controlling interest | 1,811,961 | 1,802,551 | ||||||||||
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Total equity | 18,561,137 | 18,414,723 | ||||||||||
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Total liabilities and equity | ||||||||||||
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The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
6
KT Corporation and Subsidiaries
Consolidated Statements of Profit or Loss
Years Ended December 31, 2023 and 2022
| (in millions of Korean won, except per share amounts) | Notes | 2023 | 2022 | |||||||||
Operating revenue | 25 | |||||||||||
Operating expenses | 26 | 24,726,499 | 23,959,923 | |||||||||
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Operating profit | 1,649,774 | 1,690,088 | ||||||||||
Other income | 27 | 308,044 | 595,351 | |||||||||
Other expenses | 27 | 507,904 | 314,607 | |||||||||
Finance income | 28 | 486,277 | 690,428 | |||||||||
Finance costs | 28 | 568,682 | 749,908 | |||||||||
Share of net losses of associates and joint ventures | 13 | (43,424 | ) | (17,285 | ) | |||||||
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Profit before income tax expense | 1,324,085 | 1,894,067 | ||||||||||
Income tax expense | 29 | 335,367 | 506,404 | |||||||||
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Profit for the year | ||||||||||||
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Profit for the year attributable to: | ||||||||||||
Owners of the Controlling Company: | ||||||||||||
Non-controlling interest: | (21,143 | ) | 125,165 | |||||||||
Earnings per share attributable to the equity holders of the Controlling Company during the year (in Korean won): | 30 | |||||||||||
Basic earnings per share | ||||||||||||
Diluted earnings per share | 4,038 | 5,205 | ||||||||||
The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.
7
KT Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | 2023 | 2022 | |||||||
Profit for the year | ||||||||||
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Other comprehensive income | ||||||||||
Items that will not be reclassified to profit or loss: | ||||||||||
Remeasurements of net defined benefit liabilities | 17 | (137,465 | ) | 181,429 | ||||||
Share of remeasurement loss of associates and joint ventures | (105 | ) | (332 | ) | ||||||
Gain (loss) on valuation of equity instruments at fair value through other comprehensive income | 4 | 121,271 | (141,944 | ) | ||||||
Items that may be subsequently reclassified to profit or loss: | ||||||||||
Gain (Loss) on valuation of debt instruments at fair value through other comprehensive income | 4 | 534 | (16,630 | ) | ||||||
Valuation gain on cash flow hedge | 4,7 | 15,329 | 64,091 | |||||||
Other comprehensive loss from cash flow hedges reclassified to profit or loss | 4 | (37,942 | ) | (95,421 | ) | |||||
Share of other comprehensive loss from associates and joint ventures | 21,595 | (10,851 | ) | |||||||
Exchange differences on translation of foreign operations | 24,230 | 17,464 | ||||||||
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Total comprehensive income for the year | ||||||||||
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Total comprehensive income for the year attributable to: | ||||||||||
Owners of the Controlling Company | ||||||||||
Non-controlling interest | (17,370 | ) | 148,790 | |||||||
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
8
KT Corporation and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2023 and 2022
| Attributable to owners of the Controlling Company | ||||||||||||||||||||||||||||||||||
| (in millions of Korean won) | Notes | Share capital | Share premium | Retained earnings | Accumulated other comprehensive income | Other components of equity | Total | Non-controlling interest | Total equity | |||||||||||||||||||||||||
Balance as at January 1, 2022 | ||||||||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||
Profit for the year | — | — | 1,262,498 | — | — | 1,262,498 | 125,165 | 1,387,663 | ||||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | 17, 29 | — | — | 165,524 | — | — | 165,524 | 15,905 | 181,429 | |||||||||||||||||||||||||
Share of gain on remeasurements of associates and joint ventures | — | — | (189 | ) | — | — | (189 | ) | (143 | ) | (332 | ) | ||||||||||||||||||||||
Share of other comprehensive loss of associates and joint ventures | — | — | — | (8,291 | ) | — | (8,291 | ) | (2,560 | ) | (10,851 | ) | ||||||||||||||||||||||
Valuation gain on cash flow hedge | 4,29 | — | — | — | (32,140 | ) | — | (32,140 | ) | 810 | (31,330 | ) | ||||||||||||||||||||||
Gain on valuation of financial instruments at fair value through other comprehensive income | 4,29 | — | — | 4,091 | (160,785 | ) | — | (156,694 | ) | (1,880 | ) | (158,574 | ) | |||||||||||||||||||||
Exchange differences on translation of foreign operations | — | — | — | 5,971 | — | 5,971 | 11,493 | 17,464 | ||||||||||||||||||||||||||
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Total comprehensive income for the year | — | — | 1,431,924 | (195,245 | ) | — | 1,236,679 | 148,790 | 1,385,469 | |||||||||||||||||||||||||
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Transactions with owners | ||||||||||||||||||||||||||||||||||
Dividends paid by the Controlling Company | 31 | — | — | (450,394 | ) | — | — | (450,394 | ) | — | (450,394 | ) | ||||||||||||||||||||||
Dividends paid to non-controlling interest of subsidiaries | — | �� | — | — | — | — | (26,407 | ) | (26,407 | ) | ||||||||||||||||||||||||
Effect of change in connection range | — | — | — | — | — | — | 3,152 | 3,152 | ||||||||||||||||||||||||||
Change in ownership interest in subsidiaries | — | — | — | — | 88,924 | 88,924 | 32,695 | 121,619 | ||||||||||||||||||||||||||
Appropriations of loss on disposal of treasury stock | — | — | (11,577 | ) | — | 11,577 | — | — | — | |||||||||||||||||||||||||
Acquisition of treasury stock | — | — | — | — | 763,081 | 763,081 | — | 763,081 | ||||||||||||||||||||||||||
Conversion of redeemable convertible preferred shares of subsidiaries to common shares | — | — | — | — | — | — | 51,476 | 51,476 | ||||||||||||||||||||||||||
Others | — | — | — | — | (2,654 | ) | (2,654 | ) | 2,220 | (434 | ) | |||||||||||||||||||||||
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Subtotal | — | — | (461,971 | ) | — | 860,928 | 398,957 | 63,136 | 462,093 | |||||||||||||||||||||||||
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Balance as at December 31, 2022 | ||||||||||||||||||||||||||||||||||
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9
KT Corporation and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended December 31, 2023 and 2022
| Attributable to owners of the Controlling Company | ||||||||||||||||||||||||||||||||||
| (in millions of Korean won) | Notes | Share capital | Share premium | Retained earnings | Accumulated other comprehensive income | Other components of equity | Total | Non-controlling interest | Total equity | |||||||||||||||||||||||||
Balance as at January 1, 2023 | ||||||||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||
Profit for the year | — | �� | — | 1,009,861 | — | — | 1,009,861 | (21,143 | ) | 988,718 | ||||||||||||||||||||||||
Remeasurements of net defined benefit liabilities | 17, 29 | — | — | (126,613 | ) | — | — | (126,613 | ) | (10,852 | ) | (137,465 | ) | |||||||||||||||||||||
Share of gain on remeasurements of associates and joint ventures | — | — | (118 | ) | — | — | (118 | ) | 13 | (105 | ) | |||||||||||||||||||||||
Share of other comprehensive loss of associates and joint ventures | — | — | — | 15,775 | — | 15,775 | 5,820 | 21,595 | ||||||||||||||||||||||||||
Valuation loss on cash flow hedge | 4, 29 | — | — | — | (22,252 | ) | — | (22,252 | ) | (361 | ) | (22,613 | ) | |||||||||||||||||||||
Gain (Loss) on valuation of financial instruments at fair value through other comprehensive income | 4, 29 | — | — | 222 | 126,028 | — | 126,250 | (4,445 | ) | 121,805 | ||||||||||||||||||||||||
Exchange differences on translation of foreign operations | — | — | — | 10,632 | — | 10,632 | 13,598 | 24,230 | ||||||||||||||||||||||||||
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Total comprehensive income for the year | — | — | 883,352 | 130,183 | — | 1,013,535 | (17,370 | ) | 996,165 | |||||||||||||||||||||||||
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Transactions with owners | ||||||||||||||||||||||||||||||||||
Dividends paid by the Controlling Company | 31 | — | — | (501,844 | ) | — | — | (501,844 | ) | — | (501,844 | ) | ||||||||||||||||||||||
Dividends paid to non-controlling interest of subsidiaries | — | — | — | — | — | — | (24,964 | ) | (24,964 | ) | ||||||||||||||||||||||||
Effect of change in connection range | — | — | — | — | — | — | (79,134 | ) | (79,134 | ) | ||||||||||||||||||||||||
Change in ownership interest in subsidiaries | — | — | — | — | 216,841 | 216,841 | 128,526 | 345,367 | ||||||||||||||||||||||||||
Appropriations of loss on disposal of treasury stock | — | — | (44,421 | ) | — | 44,421 | — | — | — | |||||||||||||||||||||||||
Acquisition of treasury stock | — | — | — | — | (300,243 | ) | (300,243 | ) | — | (300,243 | ) | |||||||||||||||||||||||
Disposal of treasury stock | — | — | — | — | 4,463 | 4,463 | — | 4,463 | ||||||||||||||||||||||||||
Retirement of treasury stock | — | — | (100,000 | ) | — | 100,000 | — | — | — | |||||||||||||||||||||||||
Accounting for Acquisitions of Interests in Joint Operations | — | — | — | — | (298,196 | ) | (298,196 | ) | — | (298,196 | ) | |||||||||||||||||||||||
Others | 2,448 | 2,448 | 2,352 | 4,800 | ||||||||||||||||||||||||||||||
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Subtotal | — | — | (646,265 | ) | — | (230,266 | ) | (876,531 | ) | 26,780 | (849,751 | ) | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance as at December 31, 2023 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
10
KT Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | 2023 | 2022 | |||||||
Cash flows from operating activities | ||||||||||
Cash generated from operations | 32 | |||||||||
Interest paid | (361,741 | ) | (263,520 | ) | ||||||
Interest received | 360,614 | 307,091 | ||||||||
Dividends received | 60,987 | 68,827 | ||||||||
Income tax paid | (303,766 | ) | (351,212 | ) | ||||||
|
|
|
| |||||||
Net cash inflow from operating activities | 5,503,289 | 3,597,065 | ||||||||
|
|
|
| |||||||
Cash flows from investing activities | ||||||||||
Collection of loans | 53,885 | 44,287 | ||||||||
Disposal of financial assets at fair value through profit or loss | 90,487 | 1,298,621 | ||||||||
Disposal of financial assets at amortized cost | 1,543,663 | 1,046,115 | ||||||||
Disposal of financial assets at fair value through other comprehensive income | 306 | 97,932 | ||||||||
Disposal of investments in associates and joint ventures | 6,890 | 34,828 | ||||||||
Disposal of assets held-for-sale | — | 4,600 | ||||||||
Disposal of property and equipment and investment properties | 100,348 | 178,063 | ||||||||
Disposal of intangible assets | 7,078 | 20,088 | ||||||||
Disposal of right-of-use assets | 529 | 97 | ||||||||
Settlement of derivative assets and liabilities | 4,888 | — | ||||||||
Increase in cash due to changes in scope of consolidation and others | 46,642 | 6,754 | ||||||||
Loans granted | (37,771 | ) | (43,694 | ) | ||||||
Acquisition of financial assets at fair value through profit or loss | (220,989 | ) | (1,317,175 | ) | ||||||
Acquisition of financial assets at amortized cost | (1,875,525 | ) | (1,450,442 | ) | ||||||
Acquisition of financial assets at fair value through other comprehensive income | (10,267 | ) | (449,504 | ) | ||||||
Acquisition of investments in associates and joint ventures | (106,389 | ) | (280,988 | ) | ||||||
Acquisition of property and equipment and investment properties | (3,692,972 | ) | (3,439,857 | ) | ||||||
Acquisition of intangible assets | (478,685 | ) | (545,190 | ) | ||||||
Acquisition of right-of-use assets | (1,065 | ) | (2,090 | ) | ||||||
Decrease in cash due to changes in scope of consolidation and others | (51,561 | ) | (41,088 | ) | ||||||
|
|
|
| |||||||
Net cash outflow from investing activities | (4,620,508 | ) | (4,838,643 | ) | ||||||
|
|
|
| |||||||
11
KT Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | 2023 | 2022 | |||||||
Cash flows from financing activities | 33 | |||||||||
Proceeds from borrowings | 5,381,231 | 4,234,570 | ||||||||
Cash inflows under derivatives contracts | 48,183 | 76,280 | ||||||||
Cash intflow from consolidated equity transaction | 632,776 | 125,066 | ||||||||
Cash inflow from other financing activities | 2,082 | 2,193 | ||||||||
Repayments of borrowings | (5,275,113 | ) | (2,843,249 | ) | ||||||
Dividends paid | (526,826 | ) | (476,800 | ) | ||||||
Decrease in lease liabilities | (407,051 | ) | (378,684 | ) | ||||||
Cash outflow under derivatives contracts | — | (41,197 | ) | |||||||
Acquisition of treasury stock | (300,086 | ) | — | |||||||
Cash outflow from consolidated equity transaction | (7,988 | ) | (28,848 | ) | ||||||
Cash outflow from other financing activities | — | — | ||||||||
|
|
|
| |||||||
Net cash inflow (outflow) from financing activities | (452,792 | ) | 669,331 | |||||||
|
|
|
| |||||||
Effect of exchange rate change on cash and cash equivalents | 503 | 1,717 | ||||||||
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents | 430,492 | (570,530 | ) | |||||||
Cash and cash equivalents | ||||||||||
Beginning of the year | 5 | 2,449,062 | 3,019,592 | |||||||
|
|
|
| |||||||
End of the year | 5 | |||||||||
|
|
|
| |||||||
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
12
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 1. | General Information |
The consolidated financial statements have been prepared by KT Corporation, the “Controlling company” as defined under Korean IFRS 1110 Consolidated Financial Statements, by consolidating 84 subsidiaries (collectively referred to as the “Group”) including BC Card Co., Ltd., etc. as described in Note 1.2
| 1.1 | The Controlling Company |
KT Corporation (the “Controlling Company”) commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telecommunication services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The headquarters are located in Seongnam City, Gyeonggi Province, Republic of Korea, and the address of its registered head office is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province.
On October 1, 1997, upon the announcement of the Government-Investment Enterprises Management Basic Act and the Privatization Law, the Controlling Company became a government-funded institution under the Commercial Code of Korea.
On December 23, 1998, the Controlling Company’s shares were listed on the Korea Exchange.
On May 29, 1999, the Controlling Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), which represents new shares and 20,813,311 government-owned shares, on the New York Stock Exchange. On July 2, 2001, additional ADS representing 55,502,161 government-owned shares were issued on 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 December 31, 2023, the Korean government does not own any shares in the Controlling Company.
13
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 1.2 | Consolidated Subsidiaries |
(1) The consolidated subsidiaries as of December 31, 2023 and 2022, are as follows:
| Controlling Interest 1 (%) | ||||||||||||||
| Subsidiary | Type of business | Location | December 31, 2023 | December 31, 2022 | Closing month | |||||||||
KT Linkus Co., Ltd. | Public telephone maintenance | Korea | 92.4 | % | 92.4 | % | December | |||||||
KT Telecop Co., Ltd. | Security service | Korea | 86.8 | % | 86.8 | % | December | |||||||
KT Alpha Co., Ltd. 5 | Data communication | Korea | 73.0 | % | 73.0 | % | 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 Strategic Investment Fund No.3 | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Strategic Investment Fund No.4 | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Strategic Investment Fund No.5 | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
BC-VP Strategic Investment Fund No.1 | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
BC Card Co., Ltd. | Credit card business | Korea | 69.5 | % | 69.5 | % | December | |||||||
VP Inc. 5 | Payment security service for credit card, others | Korea | 72.2 | % | 69.7 | % | December | |||||||
H&C Network | Call center 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. 5 | Internet banking ASP and security solutions | Korea | 63.9 | % | 61.3 | % | December | |||||||
Smartro Co., Ltd. | VAN (Value Added Network) business | Korea | 64.5 | % | 64.5 | % | December | |||||||
KTDS Co., Ltd. 5 | System integration and maintenance | Korea | 91.6 | % | 95.6 | % | December | |||||||
KT M&S Co., Ltd. | PCS distribution | Korea | 100.0 | % | 100.0 | % | December | |||||||
GENIE Music Corporation 2 | Online music production and distribution | Korea | 36.0 | % | 36.0 | % | December | |||||||
KT MOS Bukbu Co., Ltd. 5 | Telecommunication facility maintenance | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT MOS Nambu Co., Ltd. 5 | Telecommunication facility maintenance | Korea | 98.4 | % | 98.4 | % | December | |||||||
KT Skylife 5 | Satellite TV | Korea | 50.6 | % | 50.2 | % | December | |||||||
Skylife TV Co., Ltd. | TV contents provider | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Estate Inc. | Residential building development and supply | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Investment Management Inc. | Asset management, real estate and consulting services | Korea | 100.0 | % | 100.0 | % | December | |||||||
NEXR Co., Ltd. | Cloud system implementation | Korea | 100.0 | % | 100.0 | % | December | |||||||
KTGDH Co., Ltd. | Data center development and related service | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Sat Co., Ltd. | Satellite communication business | Korea | 100.0 | % | 100.0 | % | December | |||||||
Nasmedia, Co., Ltd. 2,5 | Solution provider and IPTV advertisement sales business | Korea | 44.1 | % | 44.0 | % | December | |||||||
KT Sports Co., Ltd. | Management of sports teams | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Music Contents Fund No.2 | Music and contents investment business | Korea | 100.0 | % | 100.0 | % | December | |||||||
KTCS Corporation 2,5 | Database and online information provider | Korea | 34.1 | % | 34.1 | % | December | |||||||
14
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| Controlling Interest 1 (%) | ||||||||||||||
| Subsidiary | Type of business | Location | December 31, 2023 | December 31, 2022 | Closing month | |||||||||
KTIS Corporation 2,5 | Database and online information provider | Korea | 33.3 | % | 33.3 | % | December | |||||||
KT M Mobile Co., Ltd. | Special category telecommunications operator and sales of communication device | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Investment Co., Ltd. | Financing business for new technology | Korea | 100.0 | % | 100.0 | % | December | |||||||
PlayD Co., Ltd. | Advertising agency | Korea | 70.4 | % | 70.4 | % | December | |||||||
Next Connect PFV | Residential building development and supply | 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 Japan Co., Ltd. | Foreign investment business and local counter work | Japan | 100.0 | % | 100.0 | % | December | |||||||
East Telecom LLC | Wireless/fixed line internet business | Uzbekistan | 91.6 | % | 91.6 | % | December | |||||||
KT America, Inc. | Foreign investment business and local counter work | USA | 100.0 | % | 100.0 | % | December | |||||||
PT. BC Card Asia Pacific | Software development and supply | Indonesia | 99.9 | % | 99.9 | % | December | |||||||
KT Hongkong Telecommunications Co., Ltd. | Fixed line telecommunication business | Hong Kong | 100.0 | % | 100.0 | % | December | |||||||
Korea Telecom Singapore Pte. Ltd. | Foreign investment business and local counter work | Singapore | 100.0 | % | 100.0 | % | December | |||||||
Texnoprosistem LLC | Fixed line internet business | Uzbekistan | 100.0 | % | 100.0 | % | December | |||||||
Nasmedia Thailand Co., Ltd. | Internet advertising solution | Thailand | 99.9 | % | 99.9 | % | December | |||||||
KT Huimangjieum | Manufacturing | Korea | 100.0 | % | 100.0 | % | December | |||||||
K-REALTY RENTAL HOUSING | Residential building | Korea | 88.6 | % | 88.6 | % | December | |||||||
Storywiz Co., Ltd. | Contents and software development and supply | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Engineering Co., Ltd. | Telecommunication facility construction and | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Studio Genie Co., Ltd. | Data communication service and data | Korea | 90.9 | % | 90.9 | % | December | |||||||
KHS Corporation | Operation and maintenance of facilities | Korea | 100.0 | % | 100.0 | % | December | |||||||
Lolab Co., Ltd. | Truck transportation and trucking | Korea | 79.8 | % | 79.8 | % | December | |||||||
HCN Co., Ltd. | Cable television service | Korea | 100.0 | % | 100.0 | % | December | |||||||
Millie Seojae 2 | Book contents service | Korea | 30.2 | % | 38.6 | % | December | |||||||
KT ES Pte. Ltd. | Foreign investment business | Singapore | 57.6 | % | 57.6 | % | December | |||||||
Epsilon Global Communications PTE. Ltd. | Network service industry | Singapore | 100.0 | % | 100.0 | % | December | |||||||
Epsilon Telecommunications (SP) PTE. Ltd. | Fixed line telecommunication business | Singapore | 100.0 | % | 100.0 | % | December | |||||||
Epsilon Telecommunications (US) PTE. Ltd. | Fixed line telecommunication business | Singapore | 100.0 | % | 100.0 | % | December | |||||||
Epsilon Telecommunications Limited | Fixed line telecommunication business | UK | 100.0 | % | 100.0 | % | December | |||||||
Epsilon Telecommunications (HK) Limited | Fixed line telecommunication business | Hong Kong | 100.0 | % | 100.0 | % | December | |||||||
Epsilon US Inc. | Fixed line telecommunication business | USA | 100.0 | % | 100.0 | % | December | |||||||
15
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| Controlling Interest 1 (%) | ||||||||||||||
| Subsidiary | Type of business | Location | December 31, 2023 | December 31, 2022 | Closing month | |||||||||
Epsilon Telecommunications (BG) EOOD | Employee support service | Bulgaria | 100.0 | % | 100.0 | % | December | |||||||
Nasmedia-KT Alpha Future Growth Strategic Investment Fund | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
KT Strategic Investment Fund 6 | Investment fund | Korea | 100.0 | % | 100.0 | % | December | |||||||
Altimedia Corporation | Software development and delivery | Korea | 100.0 | % | 100.0 | % | December | |||||||
Altimidia B.V. (formerly Alticast B.V.) | Software development and delivery | Netherlands | 100.0 | % | 100.0 | % | December | |||||||
Altimidia Vietnam (formerly Alticast Company Limited) | Software development and delivery | Vietnam | 100.0 | % | 100.0 | % | December | |||||||
BCCARD VIETNAM LTD. | Software sales business | Vietnam | 100.0 | % | 100.0 | % | December | |||||||
KTP SERVICES INC. | Fixed line telecommunication business | Philippines | 100.0 | % | 100.0 | % | December | |||||||
KT RUS LLC | Foreign investment business | Russia | 100.0 | % | 100.0 | % | December | |||||||
Hangang Real Estate Investment Trust No. 24 | Investment fund | Korea | 75.0 | % | 75.0 | % | December | |||||||
KT DX Vietnam Company Limited | Software development | Vietnam | 100.0 | % | 100.0 | % | December | |||||||
KT Cloud Co., Ltd. | Information and communications development | Korea | 92.7 | % | 100.0 | % | December | |||||||
Pocheon Jeonggyori Development Co., Ltd. | Residential building development | Korea | 80.9 | % | 80.9 | % | December | |||||||
PT CRANIUM ROYAL ADITAMA | Software development | Indonesia | 67.0 | % | 67.0 | % | December | |||||||
Juice Inc. 3,5 | Online information provider/Software development and delivery | Korea | 42.6 | % | 41.2 | % | December | |||||||
open cloud lab Co., Ltd (formerly SPARK AND ASSOCIATES INC.) | IT consulting service and Telecommunication equipment sales | Korea | 100.0 | % | 100.0 | % | December | |||||||
KD Living, Inc. | Residential building management | Korea | 100.0 | % | — | December | ||||||||
KT HEALTHCARE VINA COMPANY LIMITED | Medical service | Vietnam | 100.0 | % | — | December | ||||||||
K-Realty Qualified Private Real Estate Investment Trust No. 1 4 | Real estate management | Korea | 6.5 | % | — | December | ||||||||
AQUA RETAIL VIETNAM COMPANY LIMITED | E-voucher issuance and trading business | Vietnam | 100.0 | % | — | December | ||||||||
K-Realty Qualified Private Real Estate Investment Trust No. 4 | Real estate management | Korea | 93.9 | % | — | December | ||||||||
| 1 | Sum of the interests owned by the Controlling Company and subsidiaries. |
| 2 | Although the Controlling Company owns less than 50% interest in Nasmedia, Co., Ltd., KTCS Corporation and KTIS Corporation, Millie Seojae, and GENIE Music Corporation these entities are consolidated as the Controlling Company can exercise the majority of the voting rights in its decision-making process at all times considering voting patterns at previous shareholders’ meetings. |
| 3 | Although the Controlling Company owns less than 50% interest in, Juice Inc., this entity is consolidated as the Controlling Company holds the majority of the voting right based on an agreement with other investors. |
| 4 | Although the Controlling Company owns less than 50% interest in K-Realty Qualified Private Real Estate Investment Trust No. 1, these entities are consolidated by comprehensively considering the criteria for determining control, such as ‘power’, ‘variable profit’, and ‘relationship between power and variable profit’, rather than simply judging by the interests owned by the company. |
| 5 | The number of treasury stocks held by subsidiaries are deducted from the total number of shares when calculating the controlling percentage interest. |
16
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(2) Changes in Scope of Consolidation
Subsidiaries newly included and excluded in the consolidation during the year ended December 31, 2023:
| Changes | Location | Name of subsidiary | Reason | |||
| Included | Korea | KD Living, Inc. | Transferred | |||
| Included | Vietnam | KT HEALTHCARE VINA COMPANY LIMITED | Newly established | |||
| Included | Korea | K-Realty Qualified Private Real Estate Investment Trust No. 1 | Transferred | |||
| Included | Vietnam | AQUA RETAIL VIETNAM COMPANY LIMITED | Newly established | |||
| Included | Korea | K-Realty Qualified Private Real Estate Investment Trust No. 4 | Newly established | |||
| Excluded | United Arab Emirates | Epsilon M E A General Trading LLC | Liquidated | |||
| Excluded | Korea | Alpha DX Solution Co., Ltd. | Merged | |||
| Excluded | Korea | KT Strategic Investment Fund No.2 | Liquidated | |||
| Excluded | Korea | LS Marine Solution Co., Ltd. (formerly KT Submarine Co., Ltd.) | Excluded | |||
| Excluded | Korea | KT-Michigan Global Contents Fund | Liquidated | |||
| Excluded | Russia | KT Primorye IDC LLC | Liquidated |
17
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(3) Summarized information for consolidated subsidiaries as at and for the years ended December 31, 2023 and 2022, is as follows:
| (in millions of Korean won) | December 31, 20233 | |||||||||||||||
| Total assets | Total liabilities | Operating revenues | Profit (loss) for the period | |||||||||||||
KT Linkus Co., Ltd. | ||||||||||||||||
KT Telecop Co., Ltd. | 375,596 | 235,947 | 525,946 | 5,728 | ||||||||||||
KT Alpha Co., Ltd. | 443,639 | 191,254 | 434,839 | 19,352 | ||||||||||||
KT Service Bukbu Co., Ltd. | 63,760 | 55,360 | 241,792 | 1,212 | ||||||||||||
KT Service Nambu Co., Ltd. | 71,576 | 58,745 | 290,985 | 1,354 | ||||||||||||
BC Card Co., Ltd. 1 | 6,352,878 | 4,722,432 | 4,025,023 | 76,545 | ||||||||||||
H&C Network | 81,107 | 4,863 | 27,204 | 1,814 | ||||||||||||
Nasmedia Co., Ltd. 1 | 513,311 | 262,336 | 146,769 | 17,703 | ||||||||||||
KTDS Co., Ltd. 1 | 393,667 | 202,067 | 727,261 | 33,971 | ||||||||||||
KT M&S Co., Ltd. | 258,477 | 209,075 | 695,134 | 3,783 | ||||||||||||
KT MOS Bukbu Co., Ltd. | 50,750 | 28,431 | 101,237 | 8,457 | ||||||||||||
KT MOS Nambu Co., Ltd. | 46,839 | 26,012 | 101,071 | 5,749 | ||||||||||||
KT Skylife Co., Ltd. 1 | 1,220,842 | 479,369 | 1,027,986 | (109,407 | ) | |||||||||||
KT Estate Inc. 1 | 2,664,880 | 1,021,741 | 594,526 | 17,407 | ||||||||||||
KT GDH Co., Ltd. | 7,760 | 1,501 | 4,346 | 648 | ||||||||||||
KT Sat Co., Ltd. | 699,607 | 88,524 | 182,149 | 30,502 | ||||||||||||
KT Sports Co., Ltd. | 26,615 | 11,299 | 66,251 | (12,386 | ) | |||||||||||
KT Music Contents Fund No.2 | 5,558 | 1,772 | 534 | (992 | ) | |||||||||||
KT M Mobile Co., Ltd. | 176,838 | 69,317 | 300,523 | 5,605 | ||||||||||||
KT Investment Co., Ltd. 1 | 83,638 | 57,420 | 24,976 | 2,180 | ||||||||||||
KTCS Corporation 1 | 434,900 | 234,850 | 1,035,366 | 15,804 | ||||||||||||
KTIS Corporation | 447,609 | 243,519 | 592,960 | 13,922 | ||||||||||||
Next Connect PFV | 946,687 | 629,809 | — | (29,889 | ) | |||||||||||
KT Japan Co., Ltd. 1 | 2,015 | 3,341 | 2,770 | (110 | ) | |||||||||||
KT America, Inc. | 6,013 | 701 | 8,928 | 133 | ||||||||||||
KT Rwanda Networks Ltd. 2 | 134,847 | 313,787 | 26,750 | (57,628 | ) | |||||||||||
AOS Ltd. 2 | 10,763 | 1,983 | 8,252 | 128 | ||||||||||||
KT Hong Kong Telecommunications Co., Ltd. | 11,142 | 5,121 | 19,279 | 143 | ||||||||||||
KT Huimangjieum 1 | 8,073 | 2,715 | 16,280 | 1,012 | ||||||||||||
KT Engineering Co., Ltd. | 160,243 | 104,005 | 250,483 | 5,327 | ||||||||||||
KT Studio Genie Co., Ltd. 1 | 989,187 | 259,413 | 540,256 | 13,507 | ||||||||||||
Lolab Co., Ltd. | 42,744 | 37,838 | 172,543 | (12,938 | ) | |||||||||||
East Telecom LLC 1 | 48,483 | 22,632 | 30,212 | 7,723 | ||||||||||||
KT ES Pte. Ltd. 1 | 117,009 | 90,392 | 87,837 | (124,850 | ) | |||||||||||
KTP SERVICES INC. | 2,967 | 919 | 671 | 235 | ||||||||||||
Altimedia Corporation 1 | 48,381 | 12,374 | 45,013 | 7,352 | ||||||||||||
KT RUS LLC | 501 | 10 | — | (378 | ) | |||||||||||
18
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 20233 | |||||||||||||||
| Total assets | Total liabilities | Operating revenues | Profit (loss) for the period | |||||||||||||
KT DX Vietnam Company Limited | 1,694 | 102 | 82 | (207 | ) | |||||||||||
KT Cloud Co., Ltd. 1 | 1,983,972 | 503,241 | 678,313 | 63,956 | ||||||||||||
KT Healthcare Vina Co., Ltd. | 12,730 | 439 | — | (721 | ) | |||||||||||
K-Realty Qualified Private Real Estate Investment Trust No. 1 | 80,266 | 50,693 | 4,682 | (1,037 | ) | |||||||||||
AQUA RETAIL VIETNAM COMPANY LIMITED | 1,202 | 62 | 14 | (248 | ) | |||||||||||
| 1 | As intermediate controlling companies, financial information from their consolidated financial statements is presented. |
| 2 | Convertible preferred stock issued by subsidiaries as of the end of the reporting period is included in liabilities. |
| 3 | Profit or loss from the date of acquisition of control to the end of the reporting period is included |
19
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| December 31, 20223 | ||||||||||||||||
| (in millions of Korean won) | Total assets | Total liabilities | Operating revenues | Profit (loss) for the period | ||||||||||||
KT Linkus Co., Ltd. | ||||||||||||||||
KT Submarine Co., Ltd. (formerly KT Submarine Co., Ltd.) | 120,255 | 7,884 | 42,787 | (12,126 | ) | |||||||||||
KT Telecop Co., Ltd. | 370,004 | 230,965 | 516,434 | 4,267 | ||||||||||||
KT Alpha Co., Ltd. 1 | 406,236 | 172,211 | 515,372 | 13,115 | ||||||||||||
KT Service Bukbu Co., Ltd. | 74,673 | 65,820 | 251,852 | 3,227 | ||||||||||||
KT Service Nambu Co., Ltd. | 80,450 | 66,479 | 301,431 | 3,067 | ||||||||||||
BC Card Co., Ltd. 1 | 5,666,075 | 4,109,200 | 3,895,764 | 148,341 | ||||||||||||
H&C Network | 82,737 | 6,640 | 27,392 | 992 | ||||||||||||
Nasmedia Co., Ltd. 1 | 516,945 | 275,730 | 152,394 | 27,691 | ||||||||||||
KTDS Co., Ltd. 1 | 401,932 | 228,474 | 715,527 | 30,941 | ||||||||||||
KT M&S Co., Ltd. | 255,310 | 204,336 | 728,531 | 8,105 | ||||||||||||
KT MOS Bukbu Co., Ltd. | 38,684 | 22,553 | 82,984 | 4,607 | ||||||||||||
KT MOS Nambu Co., Ltd. | 42,011 | 25,416 | 83,034 | 5,035 | ||||||||||||
KT Skylife Co., Ltd. 1 | 1,359,166 | 503,679 | 1,034,236 | 20,941 | ||||||||||||
KT Estate Inc. 1 | 2,480,489 | 836,672 | 488,290 | 61,454 | ||||||||||||
KT GDH Co., Ltd. | 12,059 | 1,596 | 4,318 | 451 | ||||||||||||
KT Sat Co., Ltd. | 677,980 | 89,644 | 180,075 | 28,073 | ||||||||||||
KT Sports Co., Ltd. | 28,220 | 15,461 | 65,283 | (7,302 | ) | |||||||||||
KT Music Contents Fund No.2 | 15,718 | 277 | 1,040 | 735 | ||||||||||||
KT-Michigan Global Content Fund | 2,371 | 27 | 33 | (1,095 | ) | |||||||||||
KT M Mobile Co., Ltd. | 152,114 | 49,816 | 262,407 | 4,731 | ||||||||||||
KT Investment Co., Ltd. 1 | 103,354 | 79,182 | 15,136 | 2,840 | ||||||||||||
KTCS Corporation 1 | 419,726 | 228,618 | 1,030,158 | 17,634 | ||||||||||||
KTIS Corporation | 396,208 | 199,204 | 535,783 | 15,917 | ||||||||||||
Next Connect PFV | 624,734 | 277,967 | — | (3,712 | ) | |||||||||||
KT Japan Co., Ltd. 1 | 1,888 | 3,141 | 1,734 | 226 | ||||||||||||
KT America, Inc. | 5,945 | 843 | 8,070 | 37 | ||||||||||||
KT Rwanda Networks Ltd. 2 | 126,721 | 267,369 | 30,823 | (27,467 | ) | |||||||||||
AOS Ltd. 2 | 10,972 | 905 | 7,966 | 1,274 | ||||||||||||
KT Hong Kong Telecommunications Co., Ltd. | 10,505 | 4,768 | 20,384 | 51 | ||||||||||||
KT Huimangjieum 1 | 6,984 | 2,582 | 21,644 | 494 | ||||||||||||
KT Engineering Co., Ltd. | 141,463 | 89,853 | 258,103 | 10,302 | ||||||||||||
KT Studio Genie Co., Ltd. 1 | 987,270 | 268,911 | 497,998 | 189,498 | ||||||||||||
Lolab Co., Ltd. | 35,091 | 17,247 | 74,176 | (7,985 | ) | |||||||||||
East Telecom LLC 1 | 42,691 | 21,645 | 26,910 | 6,419 | ||||||||||||
KT ES Pte. Ltd. 1 | 240,721 | 88,640 | 78,815 | (23,957 | ) | |||||||||||
20
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| December 31, 20223 | ||||||||||||||||
| (in millions of Korean won) | Total assets | Total liabilities | Operating revenues | Profit (loss) for the period | ||||||||||||
KTP SERVICES INC. | 3,832 | 2,044 | 776 | (255 | ) | |||||||||||
Altimedia Corporation 1 | 44,861 | 15,777 | 47,062 | 6,035 | ||||||||||||
KT RUS LLC 1 | 967 | 16 | — | (871 | ) | |||||||||||
KT DX Vietnam Company Limited | 1,815 | 6 | — | 26 | ||||||||||||
kt cloud Co., Ltd.1 | 1,348,684 | 245,872 | 432,074 | 14,712 | ||||||||||||
| 1 | These companies are the intermediate controlling companies of other subsidiaries and the above financial information is from their consolidated financial statements. |
| 2 | Convertible preferred stock issued by subsidiaries as of the end of the reporting period is included in liabilities. |
| 3 | Profit or loss is included from the date of acquisition of control to the end of the reporting period. |
| 2 | Material Accounting Policies |
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
| 2.1 | Basis of Preparation |
The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The financial statements have been prepared on a historical cost basis, except for the following:
| • | Certain financial assets and liabilities (including derivative instruments) |
| • | Defined benefit pension plans – plan assets measured at fair value |
The preparation of the consolidated financial statements requires the use of critical accounting estimates. Management also needs to exercise judgement in applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.
21
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.2 | Changes in Accounting Policy and Disclosures |
(1) New and amended standards and interpretations adopted by the Group
The Group has applied a number of new and amended standards and new interpretations issued that are effective accounting periods beginning on January 1, 2023.
| • | K-IFRS 1117 Insurance Contract |
K-IFRS 1117, which supersedes K-IFRS 1104 Insurance Contracts, establishes principles for recognition, measurement, and disclosure of insurance contracts and its main features include the measurement of insurance liabilities at present value of the fulfilment cash flows, recognition of insurance revenue based on accruals-based accounting, and separate presentation of insurance revenue, insurance service expenses, and insurance finance income or expenses.
The Group does not have any contracts that meet the definition of an insurance contract under K-IFRS 1117.
| • | K-IFRS 1001 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements (Amendment) - Disclosure of Accounting Policies |
The amendments change the requirements in K-IFRS 1001 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
The supporting paragraphs in K-IFRS 1001 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.
The IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment) - Disclosure of financial liabilities with condition to adjust exercise price |
The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS 1032.
22
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| • | K-IFRS 1008 Accounting Polices, Changes in Accounting Estimates and Errors (Amendment) - Definition of Accounting Estimates |
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The definition of a change in accounting estimates was deleted.
| • | K-IFRS 1012 Income Taxes (Amendment) - Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.
Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit.
Following the amendments to K-IFRS 1012, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in K-IFRS 1012.
| • | K-IFRS 1012 Income Taxes (Amendment) - International Tax Reform: Pillar Two Model Rules |
The IASB amends the scope of IAS 12 to clarify that the Standard applies to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the OECD, including tax law that implements qualified domestic minimum top-up taxes described in those rules.
The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.
Following the amendments, the Company is required to disclose that it has applied the exception and to disclose separately its current tax expense (income) related to Pillar Two income taxes.
There is no significant impact of the amendments listed above on consolidated financial statements.
(2) New and revised standards and interpretations in issue but not yet effective or adopted by the Group
At the date of authorization of these financial statements, the Company has not applied the following new and amended K-IFRS standards that have been issued but are not yet effective:
23
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2020) - Classification of Liabilities as Current or Non-current |
The amendments clarify that the classification of liabilities as current and non-current is based on rights that are existing at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2023) - Non-current Liabilities with Covenants |
The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date. Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.
The amendments also specifies that the right to defer settlement of a liability for at least twelve months after the reporting date is not affected if an entity only has to comply with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them), the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying with the covenants.
The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted. If an entity applies the amendments for an earlier period, it is also required to apply the 2020 amendments early.
| • | K-IFRS 1007 Cash Flow Statement and K-IFRS 1107 Financial Instruments Disclosure (Amendment) - Supplier finance agreements |
The amendments add a disclosure objective in K-IFRS 1007 Cash Flow Statement stating that an entity is required to disclose information about supplier finance agreements that enables users of financial statements to assess the effect of those arrangements on the Group’s liabilities and cash flows. In addition, K-IFRS 1117 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity’s exposure to concentration of liquidity risk.
24
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The term ‘supplier finance agreements’ is not defined; instead, the amendment describe the characteristics of an arrangement for which an entity would be required to provide the information. To meet the disclosure objective, an entity will be required to disclose in aggregate for its supplier finance arrangements:
| • | The terms and conditions of an agreement |
| • | The carrying amount, and associated line items for which the suppliers have already received payment from the finance providers |
| • | The carrying amount, and associated line items for which the suppliers have already received payment from the finance providers |
| • | Ranges of payment due dates for both those financial liabilities that are part of a supplier finance arrangement and comparable trade payables that are not part of a supplier finance arrangement |
| • | Types of non-cash changes in the carrying amount of financial liabilities corresponding to supplier finance agreements and their impact |
| • | Liquidity risk information |
The above amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
| • | K-IFRS 1116 Lease (Amendment) - Lease Liabilities in a Sale and Leaseback |
The amendments add a subsequent measurement requirements for sale and leaseback transactions that satisfy the requirements in K-IFRS 1115 Revenue from contracts with customers. The amendments require the seller-lessee to determine ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee does not recognize a gain or loss that relates to the right of use asset retained by the seller-lessee after the lease commencement date.
The above amendments are applicable for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2023) - Disclosure of Virtual Assets |
The amendments, in addition to additional disclosure requirements required by other Standards for transactions related to virtual assets, setting out the disclosure requirements in each case of 1) holding virtual assets; 2) holding virtual assets on behalf of customers; and 3) issuing virtual assets.
When holding a virtual asset, disclosure on the general information of the virtual asset, the applied accounting policy, and the acquisition method, acquisition cost, and the fair value of each virtual asset at the end of the reporting period should be disclosed. In addition, when issuing a virtual asset the entity’s obligations and the status of fulfilment of the obligation related to the issued virtual asset, the timing and amount of the recognized revenue of the sold virtual asset, the quantity of virtual assets held after issuance, and important contract details should be disclosed.
25
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The above amendments are applicable applied retrospectively for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
The Group is reviewing the impact of the above-listed amendments on the consolidated financial statements.
| 2.3 | Consolidation |
The Group has prepared the consolidated financial statements in accordance with Korean IFRS 1110 Consolidated Financial Statements.
| (a) | Subsidiaries |
Subsidiaries are all entities (including special purpose entities (“SPEs”)) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. All other non-controlling interests are measured at fair values, unless otherwise required by other standards. Acquisition-related costs are expensed as incurred.
The excess of consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recoded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in the profit or loss as a bargain purchase.
Intercompany transactions, balances and unrealized gains on transactions among group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
| (b) | Changes in ownership interests in subsidiaries without loss of control |
Any differences between the amount of the adjustment to non-controlling interest that do not result in loss of control and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Controlling Company.
26
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (c) | Disposal of subsidiaries |
When the Group ceases to have control over a subsidiary, any retained interest in the subsidiary is remeasured to its fair value with the change in carrying amount recognized in profit or loss.
| (d) | Associates |
Associates are entities over which the Group has significant influence but does not possess control or joint control. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. If the Group’s share of losses of an associate equals or exceeds its interest in the associate (including long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If there is an objective evidence of impairment for the investment in the associate, the Group recognizes the difference between the recoverable amount of the associate and its book amount as impairment loss. If an associate uses accounting policies other than those of the Group for transactions and events in similar circumstances, if necessary, adjustments shall be made to make the associate’s accounting policies conform to those of the Group when the associate’s financial statements are used by the Group in applying the equity method.
| (e) | Joint arrangements |
A joint arrangement, wherein two or more parties have joint control, is classified as either a joint operation or a joint venture. A joint operator recognizes its direct right to the assets, liabilities, revenues, and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues, and expenses. A joint venture has rights to the net assets relating to the joint venture and accounts for that investment using the equity method.
| 2.4 | Segment Reporting |
Information of each operating segment is reported in a manner consistent with the business segment reporting provided to the chief operating decision-maker (Note 34). The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.
| 2.5 | Foreign Currency Translation |
| (a) | Functional and presentation currency |
Items included in the financial statements of each entities in the Group are measured using the currency of the primary economic environment in which each entity operates (its functional currency). The consolidated financial statements are presented in Korean won, which is the presentation currency for the consolidated financial statements.
27
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (b) | Transactions and balances |
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of net investment hedges or are attributable to monetary part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to financial instruments are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss within ‘other income’ or ‘other expense’.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities, such as equities held at fair value through profit or loss, are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets, such as equities classified as available-for-sale financial assets, are recognized in other comprehensive income.
| 2.6 | Financial Assets |
| (a) | Classification |
The Group classifies its financial assets in the following measurement categories:
| • | those to be measured at fair value through profit or loss |
| • | those to be measured at fair value through other comprehensive income |
| • | those to be measured at amortized cost |
The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.
For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. The Group reclassifies debt investments when, and only when, its business model for managing those assets changes.
28
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Changes in fair value of the investments in equity instruments that are not accounted for as other comprehensive income are recognized in profit or loss.
| (b) | Measurement |
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
| A. | Debt instruments |
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its debt instruments into one of the following three measurement categories:
| • | Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in ‘finance income’ using the effective interest rate method. |
| • | Fair value through other comprehensive income: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment loss (and reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘finance income’ using the effective interest rate method. Foreign exchange gains and losses are presented in ‘finance income’ or ‘finance costs’ and impairment loss in ‘finance costs’ or ‘operating expenses’. |
| • | Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit or loss within ‘finance income’ or ‘finance costs’ in the period in which it arises. |
29
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| B. | Equity instruments |
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividend income from such investments continue to be recognized in profit or loss as ‘finance income’ when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘finance income’ or ‘finance costs’ in the statement of profit or loss as applicable. Impairment loss (reversal of impairment loss) on equity investments, measured at fair value through other comprehensive income, are not reported separately from other changes in fair value.
| (c) | Impairment |
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables and lease receivables, the Group applies the simplified approach, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.
| (d) | Recognition and derecognition |
Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
If a transfer does not result in derecognition because the Group has retained substantially all the risks and rewards of ownership of the transferred asset, the Group continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received.
| (e) | Offsetting of financial instruments |
Financial assets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.
30
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.7 | Derivative Instruments |
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting treatment for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group has hedge relationships and designates certain derivatives as:
| • | hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash flow hedges) |
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.
The fair values of derivative financial instruments designated in hedge relationships are disclosed in Note 37.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. A non-derivative financial asset and a non-derivative financial liability is classified as a current or non-current based on its expected maturity and its settlement, respectively.
The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity to the limit of the cumulative change in fair value (present value) of the hedge item (the present value of the cumulative change in the future expected cash flows of the hedged item) from the inception of the hedge. The ineffective portion is recognized in ‘finance income (costs)’.
Amounts of changes in fair value of effective hedging instruments accumulated in equity are recognized as ‘finance income (costs)’ for the periods when the corresponding transactions affect profit or loss.
When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge no longer meets the criteria for hedge accounting, any accumulated cash flow hedge reserve at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cash flow hedge reserve and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.
31
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.8 | Trade Receivables |
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. Trade receivables are subsequently measured at amortized cost using the effective interest method, less loss allowance. See Note 6 for further information about the Group’s accounting treatment for trade receivables and Note 2.6 (c) for a description of the Group’s accounting policy on impairment.
| 2.9 | Inventories |
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method, except for inventories in-transit(specific identification method).
| 2.10 | Non-Current Assets Held-for-Sale |
Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount will be recovered principally through a sale transaction rather than through continued use and when a sale is considered highly probable. The assets are measured at the lower amount between their carrying amount and the fair value less selling costs.
| 2.11 | Property and Equipment |
Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items.
Depreciation of all property and equipment, except for land, is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:
| Useful Life | ||||
Buildings | 5 – 40 years | |||
Structures | 5 – 40 years | |||
Machinery and equipment (Telecommunications equipment and others) | 2 – 40 years | |||
Vehicles | 4 – 10 years | |||
Tools | �� | 2 – 6 years | ||
Office equipment | 2 – 8 years | |||
The depreciation method, residual values, and useful lives of property and equipment are reviewed at the end of each reporting period and, if appropriate, accounted for as changes in accounting estimates.
32
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.12 | Investment Property |
Real estate held for rental income or investment gains is classified as investment property and right-of-use asset. An investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives from 5 to 40 years.
| 2.13 | Intangible Assets |
| (a) | Goodwill |
Goodwill is measured as explained in Note 2.3 (a) and goodwill arising from acquisition of subsidiaries and businesses is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of subsidiaries and business include the carrying amount of goodwill relating to the subsidiaries and businesses sold.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.
| (b) | Intangible assets excluding goodwill |
Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at cost less accumulated amortization and accumulated impairment losses. Membership rights (condominium membership and golf membership), subscription rights, broadcast license, facility-use rights, and transportation rights that have indefinite useful life are not subject to amortization because there is no foreseeable limit to the period over which the assets are expected to be utilized. The Group amortizes intangible assets with a limited useful life using the straight-line method over the following periods:
| Useful Life | ||
| Development costs | 3 – 10 years | |
| Software | 3 –10 years | |
| Frequency usage rights | 5 – 10 years | |
| Others1 | 1 – 50 years |
| 1 | Membership rights (condominium membership and golf membership), subscription rights, broadcast license, facility usage rights and transportation license included in others are classified as intangible assets with indefinite useful life. |
| 2.14 | Borrowing Costs |
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Investment income earned on the temporary investment of specific borrowings on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.
33
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.15 | Government Grants |
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants related to assets are presented in the statement of financial position by setting up the grant as deferred income that is recognized in profit or loss on a systematic basis over the useful life of the asset. Grants related to income are deferred and are presented as a credit in the statement of profit or loss within ‘other income’.
| 2.16 | Impairment of Non-Financial Assets |
Goodwill and intangible assets with indefinite useful life are tested annually for impairment at the end of each reporting period. If certain assets are deemed to be impaired, their recoverable amount is estimated in order to determine the impairment loss. The Group estimates the recoverable amount for each asset, and, in cases when the recoverable amount cannot be estimated for an asset, the recoverable amount of the cash generating unit to which the asset belongs is estimated. Corporate assets are allocated to individual cash generating units on a reasonable and consistent basis and if they cannot be allocated to individual cash generating units, they are allocated to the smallest group of cash generating units on a reasonable and consistent basis. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount (higher of its fair value less costs of disposal and value in use). Impairment loss on non-financial assets other than goodwill are evaluated for reversal at the end of each reporting period.
| 2.17 | Trade and Other Payables |
These amounts represent liabilities for goods and services provided to the Group prior to the end of reporting period which are unpaid. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
| 2.18 | Financial Liabilities |
| (a) | Classification and measurement |
The Group’s financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. Derivatives that are not designated as hedging instruments or derivatives separated from financial instruments containing embedded derivatives are also categorized as held for trading.
The Group classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortized cost and present as ‘trade payables and other payables’, ‘borrowings’ and ‘other financial liabilities’ in the statement of financial position.
34
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Borrowings are initially recognized as the amount obtained by subtracting the transaction cost incurred from the fair value and is then measured as amortized cost. The difference between the consideration received (net of transaction cost) and the redemption amount is recognized as profit or loss over the period using the effective interest rate method. Fees paid to receive the borrowing limit are recognized as transaction costs for loans to the extent that they are likely to be borrowed as part or all of the borrowing limit. In this case, the fee will be deferred until the draw-down occurs. There is a high possibility that borrowings will be executed as part or all of the borrowing limit agreement (relevant fees to the extent that there is no evidence) are recognized as assets as advance payments for liquidity services and amortized over the relevant borrowing limit period.
Preferred shares that require mandatory redemption at a particular date are classified as liabilities. Interest expenses on these preferred shares using the effective interest method are recognized in the statement of profit or loss as ‘finance costs’, together with interest expenses recognized from other financial liabilities.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
| (b) | Derecognition |
Financial liabilities are removed from the statement of financial position when it is extinguished; for example, when the obligation specified in the contract is discharged or cancelled or expired or when the terms of an existing financial liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
The Group’s financial liabilities at fair value through profit or loss are financial instruments held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designed as at fair value through profit or loss are structured financial liabilities containing embedded derivatives issued by the Group.
| 2.19 | Financial Guarantee Contracts |
Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value, subsequently at the higher of the following amount, and the related liability is recognized as ‘other financial liabilities’ in the consolidated statement of financial position:
| • | the amount determined in accordance with the expected credit loss model under Korean IFRS 1109 Financial Instruments |
| • | the amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with Korean IFRS 1115 Revenue from Contracts with Customers |
35
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2.20 | Compound Financial Instruments |
Compound financial instruments are convertible notes that can be converted into equity instruments at the option of the holder.
The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option, and subsequently measured at amortized cost until extinguished on conversion or maturity of the bonds. The equity component is recognized initially on the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
| 2.21 | Employee Benefits |
| (a) | Post-employment benefits |
The Group operates both defined contribution and defined benefit pension plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service.
A defined benefit plan is a pension plan that is not a defined contribution plan. Generally, post-employment benefits are payable after the completion of employment, and the benefit amount depended on the employee’s age, periods of service or salary levels. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.
| (b) | Termination benefits |
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits at the earlier of the following dates: when the entity can no longer withdraw the offer of those benefits or when the entity recognizes costs for a restructuring.
36
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (c) | Long-term employee benefits |
Certain entities within the Group provide long-term employee benefits that are entitled to employees with service period for ten years and above. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. The Group recognizes service cost, net interest on other long-term employee benefits and remeasurements as profit or loss for the year. These liabilities are valued annually by an independent qualified actuary.
| 2.22 | Share-Based Payments |
Equity-settled share-based payment is recognized at fair value of equity instruments granted, and employee benefit expense is recognized over the vesting period. At the end of each period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The acquiree may have outstanding share-based payment transactions that the acquirer does not exchange for its share-based payment transactions. If vested, those acquiree share-based payment transactions are part of the non-controlling interest in the acquiree and are measured at their market-based measure. If unvested, the market-based measure of unvested share-based payment transactions is allocated to the non-controlling interest on the basis of the ratio of the portion of the vesting period completed to the greater of the total vesting period and the original vesting period of the share-based payment transaction. The balance is allocated to post-combination service.
| 2.23 | Provisions |
Provisions for service warranties, recoveries, litigations and claims, and others are recognized when the Group presently hold legal or constructive obligation as a result of past events, and when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period, and the increase in the provision due to the passage of time is recognized as interest expense.
| 2.24 | Leases |
| (a) | Lessee |
The Group leases various repeater server racks, offices, communication line facilities, machinery, cars, and others.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
37
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
| • | Fixed payments (including in-substance fixed payments), less any lease incentives receivable |
| • | Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date |
| • | Amounts expected to be payable by the Group (the lessee) under residual value guarantees |
| • | The exercise price of a purchase option if the Group (the lessee) is reasonably certain to exercise that option, and |
| • | Payments of penalties for terminating the lease, if the lease term reflects the Group (the lessee) exercising that option |
Measurement of lease liability also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease.
The Group determines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. When the lessee and the lessor each has the right to terminate the lease without permission from the other party, the Group should consider a termination penalty in determining the period for which the contract is enforceable.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
| • | the amount of the initial measurement of lease liability |
| • | any lease payments made at or before the commencement date less any lease incentives received |
| • | any initial direct costs (leasehold deposits) |
| • | restoration costs |
The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
38
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, such as vehicles, machinery, and others. Low-value assets are comprised of tools, office equipment, and others.
| (b) | Lessor |
Lease income from operating leases where the Group is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.
| (c) | Extension and termination option |
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Information on critical accounting estimates and assumptions related to the determination of the lease term is presented in Note 3.
| 2.25 | Share Capital |
The Controlling Company classifies ordinary shares as equity.
Where the Controlling Company purchases its own shares, the consideration paid, including any directly attributable incremental costs, is deducted from equity until the share are cancelled or reissued. When these treasury shares are reissued, any consideration received is included in equity attributable to the equity holders of the Controlling Company.
| 2.26 | Revenue Recognition |
| (a) | Identifying performance obligations |
The Group mainly provides telecommunication services and sells handsets. The Group identifies performance obligations with a customer such as providing telecommunication services, selling handsets, and others. Revenue from handsets is recognized when a performance obligation is satisfied by transferring promised goods to customers, and the revenue from telecommunication services is recognized over the estimated contract periods of each service by transferring promised services to customers.
39
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (b) | Allocation the transaction price and revenue recognition |
The Group allocates the transaction price to each performance obligation identified in the contract based on a relative stand-alone selling prices of the goods or services being provided to the customer. To allocate the transaction price to each performance obligation on a relative stand-alone price basis, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price on a relative stand-alone selling price basis. The stand-alone selling price is the price at which the Group would sell a promised good or service separately to the customer. The best evidence of a stand-alone selling price is the observable price of a good or service when the Group sells that good or service separately in similar circumstances and to similar customers. The Group recognizes the allocated amount as contract assets or contract liabilities, and amortizes it through the remaining period which is adjusted in operating income.
| (c) | Incremental contract acquisition costs |
The Group pays commission fees when new customers subscribe to telecommunication services. The incremental contract acquisition costs are those commission fees that the Group incurs to acquire a contract with a customer that would not have been incurred if the contract had not been acquired. The Group recognizes the incremental contract acquisition costs as an asset and amortizes it over the expected period of benefit. However, as a practical expedient, the Group may recognize the incremental contract acquisition costs as an expense when it is incurred if the amortization period of the asset is one year or less.
| (d) | Commission fees |
Commission fees are recognized when it is probable that future economic benefits will flow to the entity and these benefits can be reliably measured. Revenues are measured at the fair value of the consideration received.
| 2.27 | Current and Deferred Income Tax |
The tax expense for the period consists of current and deferred tax. Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax expense is measured at the amount expected to be paid to taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
40
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized only if it is probable that future taxable amount will be available to utilize those temporary differences and losses.
The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, except to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, the Group recognizes a deferred tax asset for all deductible temporary differences arising from such investments to the extent that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when the Group has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
| 2.28 | Dividend |
Dividend distribution to the Group’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Group’s shareholders.
| 2.29 | Approval on Issuance of the Consolidated Financial Statements |
The consolidated financial statements of 2023 were approved for issuance by the Board of Directors on February 7, 2024 and are subject to change with the approval of shareholders at their Annual General Meeting.
41
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 3 | Critical Accounting Estimates and Assumptions |
The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Group’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the actual results, it poses significant risk of resulting in a material adjustment.
Estimates and assumptions that have significant risks of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Additional information of significant judgement and assumptions of certain items are included in relevant notes.
| 3.1 | Impairment of Non-Financial Assets (including Goodwill) |
The Group determines the recoverable amount of a cash generating unit (CGU) based on fair value or value-in-use calculations to assess non-financial assets (including goodwill) for impairment (Note 12, 13).
| 3.2 | Income Taxes |
The Group’s taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain (Note 30).
If a certain portion of the taxable income is not used for investments or increase in wages or dividends in accordance with the Tax System for Recirculation of Corporate Income, the Group is liable to pay additional income tax calculated based on the tax laws. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new tax system. As the Group’s income tax is dependent on the investments as well as wage increase, there is uncertainty in measuring the final tax effects(Note 29).
| 3.3 | Fair Value of Financial Instruments |
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period (Note 37).
| 3.4 | Net Defined Benefit Liability |
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions including the discount rate (Note 17).
42
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 3.5 | Amortization of Contract Assets, Contract Liabilities and Contract Cost Assets |
Contract assets, contract liabilities and contract cost assets recognized under the application of K-IFRS 1115 are amortized over the expected periods of customer relationships. The estimate of the expected terms of customer relationship is based on the historical data. If management’s estimate changes, it may cause significant differences in the timing of revenue recognition and amounts recognized.
| 3.6 | Critical Judgments in Determining the Lease Term |
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
For leases of property, machinery, and communication line facilities, the following factors are normally the most relevant:
| • | If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate). |
| • | If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or not terminate). |
| • | Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset. |
Most extension options in offices, retail stores and vehicles leases have not been included in the lease liability, because the Group can replace the assets without significant cost or business disruption.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.
43
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 4 | Financial Instruments by Category |
(1) Financial instruments by category as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||
| Financial assets | Financial assets at amortized cost | Financial value through profit or loss | Financial assets at fair value through other comprehensive income | Derivatives used for hedging | Total | |||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Trade and other receivables | 8,458,259 | — | 116,198 | — | 8,574,457 | |||||||||||||||
Other financial assets | 1,385,921 | 939,661 | 1,680,168 | 159,211 | 4,164,961 | |||||||||||||||
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||
| Financial liabilities | Financial liabilities at amortized cost | Financial liabilities at fair value through profit and loss | Derivatives used for hedging | Others | Total | |||||||||||||||
Trade and other payables | ||||||||||||||||||||
Borrowings | 10,218,165 | — | — | — | 10,218,165 | |||||||||||||||
Other financial liabilities | 915,185 | 136,106 | 24,547 | — | 1,075,838 | |||||||||||||||
Lease liabilities | — | — | — | 1,179,909 | 1,179,909 | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||
| Financial assets | Financial assets at amortized cost | Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivatives used for hedging | Total | |||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Trade and other receivables | 7,459,994 | — | 129,124 | — | 7,589,118 | |||||||||||||||
Other financial assets | 1,060,058 | 1,064,856 | 1,508,192 | 190,830 | 3,823,936 | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||
| Financial liabilities | Financial liabilities at amortized cost | Financial value through profit and loss | Derivatives used for hedging | Others | Total | |||||||||||||||
Trade and other payables1 | ||||||||||||||||||||
Borrowings | 10,006,685 | — | — | — | 10,006,685 | |||||||||||||||
Other financial liabilities | 246,606 | 141,280 | 33,555 | — | 421,441 | |||||||||||||||
Lease liabilities | — | — | — | 1,172,038 | 1,172,038 | |||||||||||||||
| 1 | Amounts related to employee benefit plans are included in Trade and other payables. |
44
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Gains or losses arising from financial instruments by category for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Financial assets at amortized cost | ||||||||
Interest income 1 | ||||||||
Gain on foreign currency transactions 4 | 22,782 | 23,824 | ||||||
Gain (loss) on foreign currency translation | 5,741 | (2,151 | ) | |||||
Loss on disposal | (3,409 | ) | (81 | ) | ||||
Loss on valuation | (172,966 | ) | (132,102 | ) | ||||
Financial assets at fair value through profit or loss | ||||||||
Interest income 1 | 13,480 | 6,008 | ||||||
Dividend income 5 | 6,918 | 4,600 | ||||||
Loss on valuation 6 | (31,965 | ) | (29,282 | ) | ||||
Gain on disposal | 14,237 | 2,347 | ||||||
Gain on foreign currency transactions 4 | — | 1,100 | ||||||
Gain on foreign currency translation | 3,396 | 13,711 | ||||||
Financial assets at fair value through other comprehensive income | ||||||||
Interest income 1 | 18,966 | 190,281 | ||||||
Dividend income 5 | 52,813 | 9,522 | ||||||
Loss on valuation | — | (61 | ) | |||||
Loss on disposal | (11,193 | ) | (62,183 | ) | ||||
Other comprehensive income (loss) for the year 2 | 121,805 | (158,574 | ) | |||||
Derivative used for hedging | ||||||||
Gain on transactions | 10,192 | 27,628 | ||||||
Gain on valuation 7 | 34,092 | 150,699 | ||||||
Other comprehensive income for the year 2 | 7,772 | 88,048 | ||||||
Reclassified to profit or loss from other comprehensive income for the year 2,3 | (29,178 | ) | (110,616 | ) | ||||
Financial liabilities at fair value through profit or loss | ||||||||
Gain (loss) on valuation | (7,394 | ) | 30,031 | |||||
Gain on disposal | 4,788 | — | ||||||
Interest expense 1 | (44 | ) | (4,046 | ) | ||||
Gain (loss) on foreign currency transactions 4 | (5 | ) | 24 | |||||
Derivatives used for hedging | ||||||||
Loss on transactions | — | (1,291 | ) | |||||
Gain (loss) on valuation | 11,503 | (17,237 | ) | |||||
Other comprehensive income (loss) for the year 2 | 7,557 | (23,957 | ) | |||||
Reclassified to profit or loss from other comprehensive income for the year 2,3 | (8,764 | ) | 15,195 | |||||
Financial liabilities at amortized cost | ||||||||
Interest expense 1 | (358,486 | ) | (275,302 | ) | ||||
Gain on valuation 8 | 3,411 | — | ||||||
Loss on foreign currency transactions 4 | (24,054 | ) | (34,574 | ) | ||||
Loss on foreign currency translation | (93,004 | ) | (168,577 | ) | ||||
Lease liabilities | ||||||||
Interest expense 1 | (52,035 | ) | (41,469 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
45
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 1 | BC Card Co., Ltd., etc., subsidiaries of the Group, recognized interest income and expenses as operating revenue and expenses, respectively. Related interest income recognized as operating revenue is |
| 2 | The amounts directly reflected in equity after adjustments of deferred income tax. |
| 3 | During the years ended December 31, 2023 and 2022, certain derivatives of the Group were settled and the related gain or loss on valuation of cash flow hedge in other comprehensive income was reclassified to profit or loss for the year. |
| 4 | BC Card Co., Ltd., a subsidiary of the Group, recognized foreign currency transaction gain and loss and as operating revenue and expense. In relation to this, foreign currency transaction gain and loss recognized as operating revenue and expense amount to foreign exchange gain |
| 5 | BC Card Co., Ltd., a subsidiary of the Group, recognized dividend income as operating revenue. Related dividend income recognized as operating revenue is |
| 6 | KT Investment Co., Ltd., etc., subsidiaries of the Group, recognized gain and loss on valuation of financial instruments measured at fair value through profit or loss as operating income and expenses. In relation to this, valuation gain and loss recognized as operating revenue and expense amount to valuation loss |
| 7 | BC Card Co., Ltd., a subsidiary of the Group, recognized gain and loss on valuation of derivatives as operating income and expenses. Related valuation gain recognized as operating revenue and expense is |
| 8 | KT Cloud Co., Ltd., a subsidiary of the Group, recognized gain on valuation as convertible preferred stock of |
46
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 5 | Cash and Cash Equivalents |
Restricted cash and cash equivalents as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | Description | |||||||
Bank deposits | Deposit restricted for government project and others | |||||||||
Cash and cash equivalents in the consolidated statement of financial position equal to cash and cash equivalents in the consolidated statement of cash flows.
| 6 | Trade and Other Receivables |
| (1) | Trade and other receivables as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
| Total amounts | Provision for impairment | Present value discount | Carrying amount | |||||||||||||
Current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 3,990,900 | (76,089 | ) | (2,254 | ) | 3,912,557 | ||||||||||
|
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|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 1,227,929 | (107,547 | ) | (13,879 | ) | 1,106,503 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Total amounts | Provision for impairment | Present value discount | Carrying amount | |||||||||||||
Current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 3,092,261 | (82,243 | ) | (2,023 | ) | 3,007,995 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 1,249,096 | (136,300 | ) | (17,109 | ) | 1,095,687 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
47
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | The fair values of trade and other receivables with original maturities less than one year are equal to their carrying amounts because the discounting effect is immaterial. The fair value of trade and other receivables with original maturities longer than one year, which are mainly from sales of goods, is determined by discounting the expected future cash flow at the weighted average interest rate. |
| (3) | Details of changes in provisions for impairment the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||||||||||
| Trade receivables | Other receivables | Trade receivables | Other receivables | |||||||||||||
Beginning balance | ||||||||||||||||
Provision | 69,972 | 114,501 | 64,522 | 65,941 | ||||||||||||
Reversal | — | (14,941 | ) | — | (850 | ) | ||||||||||
Write-off/transfer | (69,246 | ) | (129,108 | ) | (69,430 | ) | (49,904 | ) | ||||||||
Changes in consolidation scope | (310 | ) | (17 | ) | (43 | ) | — | |||||||||
Others | (12,864 | ) | (5,342 | ) | (1,036 | ) | 1,969 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
| �� |
| |||||||||
Provisions for impairment on trade and other receivables are recognized as operating expenses, other expenses and finance costs.
| (4) | Details of other receivables as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Loans | ||||||||
Receivables 1 | 3,539,742 | 2,668,545 | ||||||
Accrued income | 43,920 | 32,218 | ||||||
Refundable deposits | 299,935 | 339,450 | ||||||
Loans receivable | 1,067,005 | 1,013,428 | ||||||
Finance lease receivables | 141,883 | 105,690 | ||||||
Others | 58,357 | 63,941 | ||||||
Less: Provision for impairment | (183,636 | ) | (218,543 | ) | ||||
|
|
|
| |||||
|
|
|
| |||||
| 1 | As of December 31, 2023, credit sales asset of |
48
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (5) | The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of receivables mentioned above as of December 31, 2023. |
| (6) | The Group classifies a certain portion of trade receivables as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract. |
| 7 | Other Financial Assets and Liabilities |
| (1) | Details of other financial assets and liabilities as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Other financial assets | ||||||||
Financial assets at amortized cost 1 | ||||||||
Financial assets at fair value through profit or loss 1,2 | 939,661 | 1,064,856 | ||||||
Financial assets at fair value through other comprehensive income 1 | 1,680,168 | 1,508,192 | ||||||
Derivatives used for hedging | 159,211 | 190,830 | ||||||
Less: Non-current | (2,724,761 | ) | (2,501,484 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
Other financial liabilities | ||||||||
Financial liabilities at amortized cost 3 | ||||||||
Financial liabilities at fair value through profit or loss | 136,106 | 141,280 | ||||||
Derivatives used for hedging | 24,547 | 33,555 | ||||||
Less: Non-current | (753,739 | ) | (412,650 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 1 | As of December 31, 2023, the Group’s other financial assets amounting to |
| 2 | As of December 31, 2023, the Group provided investments in Korea Software Financial Cooperative amounting to |
| 3 | The amount includes liabilities related to the obligation to acquire additional shares in Epsilon Global Communications Pte. Ltd. and MILLIE Co., Ltd. and KT Cloud Co., Ltd. (Note 19). |
| (2) | Financial Assets at fair value through profit or loss |
| 1) | Details of financial assets at fair value through profit or loss as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Equity instruments (Listed) | ||||||||
Equity instruments (Unlisted) | 42,185 | 72,517 | ||||||
Debt securities | 880,549 | 942,274 | ||||||
Derivatives held for trading 1 | 3,016 | 23,418 | ||||||
|
|
|
| |||||
Total | 939,661 | 1,064,856 | ||||||
Less: Non-current | (782,143 | ) | (609,887 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
49
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 1 | According to a derivative arrangement with LS Marine Solution Co., Ltd.(formerly KT Submarine Co., Ltd.), derivative assets amounting to |
| 2) | The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to credit risk is the carrying amount as of December 31, 2023. |
| (3) | Financial Assets at fair value through other comprehensive income |
| 1) | Details of financial assets at fair value through other comprehensive income as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Equity instruments (Listed) 1 | ||||||||
Equity instruments (Unlisted) | 443,067 | 496,284 | ||||||
Debt securities | 5,913 | 5,432 | ||||||
|
|
|
| |||||
Total | 1,680,168 | 1,508,192 | ||||||
Less: Non-current | (1,680,168 | ) | (1,508,192 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 2) | Upon disposal of these equity investments, any balance within the accumulated other comprehensive income is not reclassified to profit or loss, but to retained earnings. Upon disposal of these debt investments, the remaining balance of the accumulated other comprehensive income is reclassified to profit or loss. |
50
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (4) | Derivatives used for hedging |
| 1) | Details of valuation of derivatives used for hedging as of December 31, 2023 and 2022, are as follows: |
(in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||
Interest rate swap | ||||||||||||||||
Currency swap 1 | 157,681 | 24,356 | 186,594 | 33,555 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 159,211 | 24,547 | 190,830 | 33,555 | ||||||||||||
Less: Non-current | (107,802 | ) | (23,696 | ) | (147,141 | ) | (33,555 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Current | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The currency swap contract is to hedge the risk of variability in cash flow from the borrowings due to changes in interest rate and foreign exchange rate and the expected maximum period for the Group to be exposed to risks of cash flow fluctuation by hedged items is until September 7, 2034. |
The entire fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.
| 2) | The valuation gains and losses on the derivative contracts for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| Type of transaction | Valuation gain | Valuation loss | Other comprehensive | Valuation gain | Valuation loss | Other comprehensive | ||||||||||||||||||
Interest rate swap | ||||||||||||||||||||||||
Currency swap | 45,709 | 162 | (27,273 | ) | 154,611 | 20,723 | 79,781 | |||||||||||||||||
Currency forwards | — | — | — | — | — | 754 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | The amounts directly reflected in equity are before adjustments of deferred income tax and allocation to the non-controlling interest. |
| 3) | The ineffective portion recognized in profit or loss on the cash flow hedges are valuation loss of |
51
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 4) | The unsettled amount of derivative instruments for the years ended December 31, 2023 and 2022, are as follows: |
| (i) | Hedging instruments |
| (in millions of Korean won and thousands of foreign currencies) | 2023 | |||||||||||||||||||
| Book value of hedging instruments | Changes in fair value to calculate the ineffective portion of hedges | |||||||||||||||||||
Currency | Foreign currency | Contract amount | Assets | Liabilities | ||||||||||||||||
USD | 2,111,509 | |||||||||||||||||||
JPY | 400,000 | 4,357 | — | 660 | (162 | ) | ||||||||||||||
EUR | 7,700 | 10,283 | — | 231 | 381 | |||||||||||||||
KRW | — | 240,000 | 1,530 | 191 | 707 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won and thousands of foreign currencies) | 2022 | |||||||||||||||||||
| Book value of hedging instruments | Changes in fair value to calculate the ineffective portion of hedges | |||||||||||||||||||
Currency | Foreign currency | Contract amount | Assets | Liabilities | ||||||||||||||||
USD | 2,111,509 | |||||||||||||||||||
JPY | 400,000 | 4,357 | — | 409 | (308 | ) | ||||||||||||||
SGD | 284,000 | 245,208 | 26,351 | — | 20,511 | |||||||||||||||
EUR | 7,700 | 10,283 | — | 210 | 129 | |||||||||||||||
KRW | — | 170,000 | 4,236 | — | 4,717 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(ii) Hedged item
| (in millions of Korean won) | 2023 | 2022 | ||||||||||||||||||||||
Currency | Book value of hedged items | Changes in fair value to calculate the ineffective portion of hedges | Cash flow hedge reserves1 | Book value of hedged items | Changes in fair value to calculate the ineffective portion of hedges | Cash flow hedge reserves1 | ||||||||||||||||||
USD | ||||||||||||||||||||||||
JPY | 3,651 | 162 | 49 | 3,813 | 308 | 116 | ||||||||||||||||||
EUR | 10,985 | (581 | ) | 158 | 10,404 | (121 | ) | 582 | ||||||||||||||||
SGD | — | — | — | 267,843 | (18,720 | ) | 3,406 | |||||||||||||||||
KRW | 239,944 | (596 | ) | 1,315 | 101,035 | (4,655 | ) | 4,385 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | The amount is after the deferred tax directly added or subtracted to the capital is reflected. |
52
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (5) | Financial Liabilities at fair value through profit or loss |
| 1) | Details of financial liabilities at fair value through profit or loss as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Derivatives held for trading 1,2 | ||||||||
| 1 | The Group signed a shareholder-to-share agreement with financial investors participating in the paid-in capital increase of K Bank Inc. for the year ended December 31, 2023. According to the Drag-Along Right, if K Back inc. fails to be listed on the terms agreed upon for the date of completion of the acquisition, financial investors may exercise the Drag-Along right to the Group, and the Group may comply or exercise the right to claim for sale. If financial investors exercise the Drag-Along Right, the Group must exercise the right to claim for sale or guarantee the return on the terms agreed upon by financial investors. |
| 2 | The amount includes derivatives separated from convertible bonds issued by the Group (Note 15). |
| 2) | The valuation gain and loss on financial liabilities at fair value through profit or loss for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||||||||||
Valuation gain | Valuation loss | Valuation gain | Valuation loss | |||||||||||||
Derivatives liabilities held for trading | ||||||||||||||||
| 8 | Inventories |
Inventories as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | ||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Acquisition cost | Valuation allowance | Carrying amount | Acquisition cost | Valuation allowance | Carrying amount | |||||||||||||||||||
Merchandise | ||||||||||||||||||||||||
Others | 33,350 | — | 33,350 | 36,453 | — | 36,453 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Cost of inventories recognized as expenses for the year ended December 31, 2023 amounts toW 3,386,069 million (December 31, 2022:W 3,485,288 million) and reversal valuation loss on inventory amounts toW 6,205 million for the year ended December 31, 2023 (December 31, 2022:W 24,294 million).
53
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 9 | Other Assets and Liabilities |
Other assets and liabilities as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Other assets | ||||||||
Advance payments | ||||||||
Prepaid expenses | 146,628 | 107,775 | ||||||
Contract cost | 1,727,468 | 1,817,678 | ||||||
Contract assets | 832,520 | 802,253 | ||||||
Others | 15,237 | 12,964 | ||||||
Less: Non-current | (827,297 | ) | (820,608 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
Other liabilities | ||||||||
Advances received 1 | ||||||||
Withholdings | 159,080 | 155,017 | ||||||
Unearned revenue 1 | 27,392 | 46,493 | ||||||
Lease liabilities | 1,179,909 | 1,172,038 | ||||||
Contract liabilities | 278,749 | 284,107 | ||||||
Others | 30,848 | 33,108 | ||||||
Less: Non-current | (950,015 | ) | (934,575 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 1 | The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue from Contracts with Customers (Note 25). |
54
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 10 | Property and Equipment |
| (1) | Changes in property and equipment for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||||||||||
| (in millions of Korean won) | Land | Buildings and structures | Machinery and equipment | Others | Construction- in-progress | Total | ||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | (132 | ) | (2,276,292 | ) | (32,477,744 | ) | (1,053,343 | ) | (498 | ) | (35,808,009 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | 1,272,808 | 2,554,561 | 9,613,829 | 223,436 | 1,107,545 | 14,772,179 | ||||||||||||||||||
Acquisition and capital expenditure | 844 | 5,072 | 75,412 | 78,400 | 3,029,380 | 3,189,108 | ||||||||||||||||||
Disposal and termination | (3,651 | ) | (5,012 | ) | (70,418 | ) | (1,711 | ) | (327 | ) | (81,119 | ) | ||||||||||||
Depreciation | — | (148,981 | ) | (2,495,402 | ) | (75,900 | ) | — | (2,720,283 | ) | ||||||||||||||
Impairment (recovery of impairment) | — | — | (6,577 | ) | (1 | ) | (1,294 | ) | (7,872 | ) | ||||||||||||||
Transfer in (out) | 58,790 | 151,157 | 2,706,444 | 16,407 | (3,092,670 | ) | (159,872 | ) | ||||||||||||||||
Transfer from (to) investment properties | (37,725 | ) | (88,336 | ) | — | — | (189 | ) | (126,250 | ) | ||||||||||||||
Acquisitions and dispositions of subsidiaries | 18,761 | 49,532 | (14,981 | ) | (44,543 | ) | (3,205 | ) | 5,564 | |||||||||||||||
Others | 14,549 | 137 | (1,628 | ) | (7,742 | ) | (4,692 | ) | 624 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | (132 | ) | (2,384,943 | ) | (33,804,601 | ) | (993,798 | ) | (650 | ) | (37,184,124 | ) | ||||||||||||
55
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2022 | ||||||||||||||||||||||||
| (in millions of Korean won) | Land | Buildings and structures | Machinery and equipment | Others | Construction- in-progress | Total | ||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | (132 | ) | (2,189,828 | ) | (30,953,434 | ) | (1,386,615 | ) | (621 | ) | (34,530,630 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | 1,315,797 | 2,517,422 | 9,316,571 | 221,238 | 1,093,858 | 14,464,886 | ||||||||||||||||||
Acquisition and capital expenditure | 11,392 | 32,030 | 129,754 | 67,921 | 3,105,283 | 3,346,380 | ||||||||||||||||||
Disposal and termination | (2,556 | ) | (4,338 | ) | (76,608 | ) | (4,695 | ) | (3,926 | ) | (92,123 | ) | ||||||||||||
Depreciation | — | (147,620 | ) | (2,413,191 | ) | (79,376 | ) | — | (2,640,187 | ) | ||||||||||||||
Impairment (recovery of impairment) | — | — | (6,084 | ) | (7,825 | ) | (2,247 | ) | (16,156 | ) | ||||||||||||||
Transfer in (out) | 24,647 | 230,955 | 2,660,753 | 31,036 | (3,010,193 | ) | (62,802 | ) | ||||||||||||||||
Transfer from (to) investment properties | (63,278 | ) | (140,229 | ) | — | — | (2,676 | ) | (206,183 | ) | ||||||||||||||
Acquisitions and dispositions of subsidiaries | — | — | (4,386 | ) | (481 | ) | (3,720 | ) | (8,587 | ) | ||||||||||||||
Others | (13,194 | ) | 66,341 | 7,020 | (4,382 | ) | (68,834 | ) | (13,049 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | (132 | ) | (2,276,292 | ) | (32,477,744 | ) | (1,053,343 | ) | (498 | ) | (35,808,009 | ) | ||||||||||||
| (2) | Details of property and equipment provided as collateral as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||
| Carrying amount | Secured amount | Related line item | Related amount | Secured party | ||||||||||||||
Land and Buildings | Borrowings | Industrial Bank of Korea, etc. | ||||||||||||||||
Land and Buildings | 555,921 | 64,877 | Deposits | 55,965 | Lessee | |||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||
| Carrying amount | Secured amount | Related line item | Related amount | Secured party | ||||||||||||||
Land and Buildings | Borrowings | Industrial Bank of Korea, etc. | ||||||||||||||||
Land and Buildings | 460,166 | 61,733 | Deposits | 52,662 | Lessee | |||||||||||||
| (3) | The borrowing costs capitalized for qualifying assets amount to |
56
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 11 | Investment Properties |
| (1) | Changes in investment properties for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||
| (in millions of Korean won) | Land | Buildings | Construction- in-progress | Total | ||||||||||||
Acquisition cost | ||||||||||||||||
Less: Accumulated depreciation | (1,568 | ) | (661,278 | ) | — | (662,846 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Beginning, net | 879,792 | 916,458 | 137,108 | 1,933,358 | ||||||||||||
Acquisition | — | 57,529 | 153,279 | 210,808 | ||||||||||||
Disposal | (8,167 | ) | (9,323 | ) | — | (17,490 | ) | |||||||||
Depreciation | — | (52,869 | ) | — | (52,869 | ) | ||||||||||
Transfer from property and equipment | 37,725 | 88,336 | 189 | 126,250 | ||||||||||||
Transfer and others | 1 | 27,544 | (29,467 | ) | (1,922 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending, net | ||||||||||||||||
Acquisition cost | ||||||||||||||||
Less: Accumulated depreciation | (1,568 | ) | (723,002 | ) | — | (724,570 | ) | |||||||||
| 2022 | ||||||||||||||||
| (in millions of Korean won) | Land | Buildings | Construction- in-progress | Total | ||||||||||||
Acquisition cost | ||||||||||||||||
Less: Accumulated depreciation | (1,568 | ) | (583,976 | ) | — | (585,544 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Beginning, net | 813,763 | 840,090 | 66,801 | 1,720,654 | ||||||||||||
Acquisition | 14,569 | 17,351 | 55,478 | 87,398 | ||||||||||||
Disposal | (14,725 | ) | (5,858 | ) | (17 | ) | (20,600 | ) | ||||||||
Depreciation | — | (47,004 | ) | — | (47,004 | ) | ||||||||||
Transfer from property and equipment | 63,278 | 140,229 | 2,676 | 206,183 | ||||||||||||
Transfer and others | 2,907 | (28,350 | ) | 12,170 | (13,273 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending, net | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Acquisition cost | ||||||||||||||||
Less: Accumulated depreciation | (1,568 | ) | (661,278 | ) | — | (662,846 | ) | |||||||||
| (2) | The fair value of the Group’s investment properties is |
| (3) | Rental income from investment properties is |
57
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (4) | As of December 31, 2023, the Group (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease fee under this contract is |
| 12 | Intangible Assets |
| (1) | Changes in intangible assets for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||||||||||
| (in millions of Korean won) | Goodwill | Development costs | Software | Frequency usage rights | Others | Total | ||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated amortization (including accumulated impairment loss and others) | (329,664 | ) | (1,631,831 | ) | (1,001,875 | ) | (1,129,451 | ) | (925,639 | ) | (5,018,460 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | 708,223 | 171,856 | 155,076 | 1,488,256 | 606,422 | 3,129,833 | ||||||||||||||||||
Acquisition and capital expenditure1 | — | 33,078 | 38,603 | 37 | 238,019 | 309,737 | ||||||||||||||||||
Disposal and termination | — | (4,812 | ) | (397 | ) | — | (6,431 | ) | (11,640 | ) | ||||||||||||||
Amortization2, 3 | — | (63,052 | ) | (52,265 | ) | (350,276 | ) | (226,316 | ) | (691,909 | ) | |||||||||||||
Impairment | (230,352 | ) | (128 | ) | (16 | ) | — | (5,711 | ) | (236,207 | ) | |||||||||||||
Changes in consolidation scope | 6,207 | — | (108 | ) | — | (69 | ) | 6,030 | ||||||||||||||||
Others | 4,349 | 1,658 | 11,769 | 175 | 10,066 | 28,017 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated amortization (including accumulated impairment loss and others) | (547,927 | ) | (1,651,846 | ) | (1,043,667 | ) | (1,277,051 | ) | (1,109,107 | ) | (5,629,598 | ) | ||||||||||||
| 1 | The amounts include the transferred amount from Property and Equipment account. |
| 2 | The amounts include the transferred amount to Servicing costs. |
| 3 | Amounts include |
| 2022 | ||||||||||||||||||||||||
| (in millions of Korean won) | Goodwill | Development costs | Software | Frequency usage rights | Others | Total | ||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated amortization (including accumulated impairment loss and others) | (305,658 | ) | (1,584,004 | ) | (944,001 | ) | (778,516 | ) | (883,044 | ) | (4,495,223 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | 696,872 | 228,373 | 139,425 | 1,839,131 | 543,532 | 3,447,333 | ||||||||||||||||||
Acquisition and capital expenditure | 19,455 | 45,997 | 55,651 | — | 225,886 | 346,989 | ||||||||||||||||||
Disposal and termination | — | (5,503 | ) | (48 | ) | — | (20,117 | ) | (25,668 | ) | ||||||||||||||
Amortization1 | — | (93,374 | ) | (54,748 | ) | (350,265 | ) | (128,874 | ) | (627,261 | ) | |||||||||||||
Impairment | (24,006 | ) | (744 | ) | (508 | ) | — | (5,416 | ) | (30,674 | ) | |||||||||||||
Changes in consolidation scope | — | (2,320 | ) | (802 | ) | — | (7,144 | ) | (10,266 | ) | ||||||||||||||
Others | 15,902 | (573 | ) | 16,106 | (610 | ) | (1,445 | ) | 29,380 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated amortization (including accumulated impairment loss and others) | (329,664 | ) | (1,631,831 | ) | (1,001,875 | ) | (1,129,451 | ) | (925,639 | ) | (5,018,460 | ) | ||||||||||||
| 1 | The amounts include the transferred amount to Servicing costs. |
58
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | The carrying amount of membership rights with an indefinite useful life not subject to amortization, except for goodwill, is |
| (3) | Goodwill is allocated to the Group’s cash-generating unit, which is identified by operating segments. As of December 31, 2023, goodwill allocated to each cash-generation unit is as follows: |
| (In millions of Korean won) | ||||
| Cash-Generating Unit | Amount | |||
Mobile services | ||||
BC Card Co., Ltd. | 41,234 | |||
HCN Co., Ltd. | 130,242 | |||
GENIE Music Corporation | 50,214 | |||
MILLIE Co., Ltd. | 54,725 | |||
PlayD Co., Ltd. | 40,068 | |||
KT Telecop Co., Ltd. | 15,418 | |||
Epsilon Global Communications Pte. Ltd. | 45,670 | |||
KT MOS Bukbu Co., Ltd. and others | 45,799 | |||
|
| |||
|
| |||
The recoverable amount of goodwill has been determined based on the fair value obtained by calculating the value in use or deducting the cost of disposal. The pre-tax cash flow estimate was used to calculate the value of use based on the financial budget, such as the budget for the next five years. Cash flows after the estimated period were estimated using the expected growth rate, and the growth rate does not exceed the long-term average growth rate of the industry to which the cash-generating unit belongs. The Group determines the growth margin rate based on past performance and expectations of future market changes. The Group has determined pre-tax cash flow estimates based on past earnings and market growth forecasts, and the discount rate used reflects the specific risks of related operations.
The pre-tax discount rates applied to the calculation of the value in use of major goodwill related to HCN Co., Ltd., Epsilon Global Communications Pte. Ltd., ICT, etc. are 11.37%, 8.84%, 6.68%, etc., and the terminal growth rates are 0%, 1%, 0%, etc., respectively.
59
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
As a result of the impairment test of goodwill, the impairment loss of HCN Co., Ltd. Epsilon Global Communications PTE. Ltd., etc. areW 230,352 million, allocated in full to goodwill and recognized as other expenses.
| 13 | Investments in Associates and Joint Ventures |
| (1) | Details of associates as of December 31, 2023 and 2022, are as follows: |
| Percentage of ownership (%) | Location | Closing month | ||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||
KIF Investment Fund | 33.3 | % | 33.3 | % | Korea | December | ||||||||||
K Bank Inc. | 33.7 | % | 33.7 | % | Korea | December | ||||||||||
Hyundai Robotics Co., Ltd. 1 | 10.0 | % | 10.0 | % | Korea | December | ||||||||||
Megazone Cloud Corporation 1 | 6.8 | % | 6.8 | % | Korea | December | ||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 44.6 | % | 44.6 | % | Korea | December | ||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 28.6 | % | 28.6 | % | Korea | December | ||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate Investment LLC | 35.3 | % | 35.3 | % | Korea | December | ||||||||||
LS Marine Solution Co., Ltd. 1, 2 | 7.3 | % | 32.9 | % | Korea | December | ||||||||||
| 1 | As of December 31, 2023, although the Group has less than 20% ownership in ordinary share, this entity is included in investments in associates as the Group has significant influence in determining the operational and financial policies. |
| 2 | As of December 31, 2023, due to the loss of control of an entity, it is now accounted as an associate. |
| (2) | Changes in investments in associates and joint ventures for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||||||
| (in millions of Korean won) | Beginning | Acquisition (Disposal) | Share of net profit ventures 1 | Others | Ending | |||||||||||||||
KIF Investment Fund | ||||||||||||||||||||
K Bank Inc. | 852,756 | — | 1,089 | 19,036 | 872,881 | |||||||||||||||
HD Hyundai Robotics Co., Ltd. | 49,372 | — | (1,637) | (1) | 47,734 | |||||||||||||||
Megazone Cloud Corporation | 136,199 | — | (4,583) | 78 | 131,694 | |||||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 23,589 | — | (105) | — | 23,484 | |||||||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 22,123 | (500) | 3,494 | — | 25,117 | |||||||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate | 16,620 | — | (4,678) | — | 11,942 | |||||||||||||||
LS Marine Solution Co., Ltd. | — | — | 255 | 23,237 | 23,492 | |||||||||||||||
Others 1 | 209,084 | 101,887 | (34,912) | (32,568) | 243,491 | |||||||||||||||
|
|
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|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1 | KT Investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit from associates and joint ventures as operating revenue and expense. Net gain from associates and joint ventures of |
60
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2022 | ||||||||||||||||||||
| (in millions of Korean won) | Beginning | Acquisition (Disposal) | Share of net profit (loss) from associates and joint ventures 1 | Others | Ending | |||||||||||||||
KIF Investment Fund | ||||||||||||||||||||
K Bank Inc. | 831,737 | — | 29,010 | (7,991 | ) | 852,756 | ||||||||||||||
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 48,725 | — | 798 | (151 | ) | 49,372 | ||||||||||||||
Megazone Cloud Corporation | — | 130,001 | (22,555 | ) | 28,753 | 136,199 | ||||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | — | 25,000 | (1,411 | ) | — | 23,589 | ||||||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 22,138 | — | (13 | ) | (2 | ) | 22,123 | |||||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate Investment LLC | 17,084 | — | (464 | ) | — | 16,620 | ||||||||||||||
Others 1 | 189,810 | 100,040 | (24,688 | ) | (56,078 | ) | 209,084 | |||||||||||||
|
|
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|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1 | KT Investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit from associates and joint ventures as operating revenue and expense. Net gain from associates and joint ventures of |
| (3) | Summarized financial information of associates and joint ventures as at and for the years ended December 31, 2023 and 2022, is as follows: |
| December 31, 2023 | ||||||||||||||||
| (in millions of Korean won) | Current assets | Non-current assets | Current liabilities | Non-current liabilities | ||||||||||||
KIF Investment Fund | ||||||||||||||||
K Bank Inc. | 21,320,790 | 89,812 | 19,541,076 | 4,516 | ||||||||||||
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 251,868 | 134,424 | 106,557 | 9,775 | ||||||||||||
Megazone Cloud Corporation | 874,778 | 267,605 | 341,679 | 205,087 | ||||||||||||
IGIS No. 468-1 General Private Real Estate | 2,985 | 49,631 | 11 | — | ||||||||||||
KT-DSC Creative Economy Youth Start-up | 482 | 87,528 | 101 | — | ||||||||||||
IGIS No. 395 Professional Investors Private | 5,690 | 145,769 | 107,553 | — | ||||||||||||
LS Marine Solution Co., Ltd (formerly KT Submarine Co., Ltd.) | 66,767 | 80,307 | 23,906 | 207 | ||||||||||||
61
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Current assets | Non-current assets | Current liabilities | Non-current liabilities | |||||||||||||
KIF Investment Fund | ||||||||||||||||
K Bank Inc. | 16,562,742 | 71,265 | 14,830,983 | 2,168 | ||||||||||||
Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 278,413 | 135,380 | 63,009 | 64,335 | ||||||||||||
Megazone Cloud Corporation | 857,089 | 202,767 | 330,619 | 94,202 | ||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 52,851 | — | 12 | — | ||||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 908 | 76,884 | 362 | — | ||||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate Investment LLC | 9,344 | 127,321 | 90,545 | — | ||||||||||||
| 2023 | ||||||||||||||||||||
| (In millions of Korean won) | Operating revenue | Profit (loss) for the year | Other comprehensive income (loss) | Total comprehensive income (loss) | Dividends received from associates | |||||||||||||||
KIF Investment Fund | ||||||||||||||||||||
K Bank Inc. | 946,559 | 10,560 | 56,609 | 67,169 | — | |||||||||||||||
Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 167,949 | (17,513 | ) | (1,093 | ) | (18,606 | ) | — | ||||||||||||
Megazone Cloud Corporation | 1,410,078 | (34,760 | ) | (3,021 | ) | (37,781 | ) | — | ||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 6 | (234 | ) | — | (234 | ) | — | |||||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 19,849 | 12,227 | — | 12,227 | — | |||||||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate Investment LLC | — | (406 | ) | — | (406 | ) | — | |||||||||||||
LS Marine Solution Co., Ltd (formerly KT Submarine Co., Ltd.) | 70,779 | 11,618 | (289 | ) | 11,329 | — | ||||||||||||||
62
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2022 | ||||||||||||||||||||
| (In millions of Korean won) | Operating revenue | Profit (loss) for the year | Other comprehensive income (loss) | Total comprehensive income (loss) | Dividends received from associates | |||||||||||||||
KIF Investment Fund | ||||||||||||||||||||
K Bank Inc. | 558,656 | 86,498 | (24,888 | ) | 61,610 | — | ||||||||||||||
Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 180,724 | 9,332 | (49 | ) | 9,283 | — | ||||||||||||||
Megazone Cloud Corporation | 1,256,208 | (293,186 | ) | (6,609 | ) | (299,795 | ) | — | ||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 9 | (3,161 | ) | — | (3,161 | ) | — | |||||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund | 19,931 | (53 | ) | — | (53 | ) | — | |||||||||||||
IGIS No. 395 Professional Investors Private Investment Real Estate Investment LLC | — | (474 | ) | — | (474 | ) | — | |||||||||||||
| (4) | Details of a reconciliation of the summarized financial information to the carrying amount of interests in the associates and joint ventures as at and for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||||||
| (in millions of Korean won) | Net assets (a) | Percentage of (b) | Share in net (c)=(a)x(b) | Intercompany (d) | Book amount (c)+(d) | |||||||||||||||
KIF Investment Fund | 33.33 | % | ||||||||||||||||||
K Bank Inc. | 1,865,010 | 33.72 | % | 628,910 | 243,971 | 872,881 | ||||||||||||||
Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 269,960 | 10.00 | % | 26,996 | 20,738 | 47,734 | ||||||||||||||
Megazone Cloud Corporation | 547,786 | 6.83 | % | 37,404 | 94,290 | 131,694 | ||||||||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | 52,605 | 44.64 | % | 23,484 | — | 23,484 | ||||||||||||||
KT-DSC Creative Economy Youth Start-up | 87,908 | 28.57 | % | 25,117 | — | 25,117 | ||||||||||||||
IGIS No. 395 Professional Investors Private | 43,905 | 35.29 | % | 15,496 | (3,554 | ) | 11,942 | |||||||||||||
LS Marine Solution Co., Ltd (formerly KT Submarine Co., Ltd.) | 122,961 | 7.30 | % | 8,972 | 14,520 | 23,492 | ||||||||||||||
63
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2022 | ||||||||||||||||||||
| (in millions of Korean won) | Net assets (a) | Percentage of (b) | Share in net (c)=(a)x(b) | Intercompany (d) | Book amount (c)+(d) | |||||||||||||||
KIF Investment Fund | 33.33 | % | ||||||||||||||||||
K Bank Inc. | 1,800,856 | 33.72 | % | 607,276 | 245,480 | 852,756 | ||||||||||||||
Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 286,449 | 10.00 | % | 28,645 | 20,727 | 49,372 | ||||||||||||||
Megazone Cloud Corporation | 635,035 | 6.83 | % | 43,360 | 92,839 | 136,199 | ||||||||||||||
IGIS No. 468-1 General Private Real Estate | 52,839 | 44.64 | % | 23,589 | — | 23,589 | ||||||||||||||
KT-DSC Creative Economy Youth Start-up | 77,430 | 28.57 | % | 22,123 | — | 22,123 | ||||||||||||||
IGIS No. 395 Professional Investors Private | 46,120 | 35.29 | % | 16,278 | 342 | 16,620 | ||||||||||||||
| (5) | Due to discontinuance of equity method of accounting, the Group has not recognized loss from associates and joint ventures of |
64
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 14 | Trade and Other Payables |
| (1) | Details of trade and other payables as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Current liabilities | ||||||||
Trade payables | ||||||||
Other payables | 6,757,170 | 6,182,650 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Non-current liabilities | ||||||||
Trade payables | ||||||||
Other payables | ||||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Details of other payables as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Non-trade payables 1 | ||||||||
Accrued expenses | 1,267,700 | 1,234,023 | ||||||
Operating deposits | 880,810 | 818,603 | ||||||
Others | 217,851 | 212,823 | ||||||
Less: non-current | (816,356 | ) | (1,064,099 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
1 As of December 31, 2023, credit sale liabilities amounting toW 2,314,077 million (December 31, 2022:W 1,754,075 million) held by BC Card Co., Ltd. (a subsidiary of the Group) are included.
65
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 15 | Borrowings |
| (1) | Details of borrowings as of December 31, 2023 and 2022, are as follows: |
| 1) | Debentures |
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
MTNP notes 1 | Sep. 7, 2034 | 6.500% | USD 100,000 | USD 100,000 | ||||||||||||||||||
MTNP notes | Jul. 18, 2026 | 2.500% | USD 400,000 | 515,760 | USD 400,000 | 506,920 | ||||||||||||||||
MTNP notes | Aug. 23, 2023 | — | — | — | USD 100,000 | 126,730 | ||||||||||||||||
MTNP notes | Jul. 19, 2024 | 0.330% | JPY 400,000 | 3,651 | JPY 400,000 | 3,813 | ||||||||||||||||
MTNP notes | Sep. 1. 2025 | 1.000% | USD 400,000 | 515,760 | USD 400,000 | 506,920 | ||||||||||||||||
FR notes 2 | Nov. 1, 2024 | Compounded SOFR+1.210% | USD 350,000 | 451,290 | USD 350,000 | 443,555 | ||||||||||||||||
FR notes | Jun. 19, 2023 | — | — | — | SGD 284,000 | 267,843 | ||||||||||||||||
MTNP notes | Jan. 21, 2027 | 1.375% | USD 300,000 | 386,820 | USD 300,000 | 380,190 | ||||||||||||||||
MTNP notes | Aug. 08, 2025 | 4.000% | USD 500,000 | 644,700 | USD 500,000 | 633,650 | ||||||||||||||||
The 183-3rd Public bond | Dec. 22, 2031 | 4.270% | — | 160,000 | — | 160,000 | ||||||||||||||||
The 184-2nd Public bond | Apr. 10, 2023 | — | — | — | — | 190,000 | ||||||||||||||||
The 184-3rd Public bond | Apr. 10, 2033 | 3.170% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 186-3rd Public bond | Jun. 26, 2024 | 3.418% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 186-4th Public bond | Jun. 26, 2034 | 3.695% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 187-3rd Public bond | Sep. 2, 2024 | 3.314% | — | 170,000 | — | 170,000 | ||||||||||||||||
The 187-4th Public bond | Sep. 2, 2034 | 3.546% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 188-2nd Public bond | Jan. 29, 2025 | 2.454% | — | 240,000 | — | 240,000 | ||||||||||||||||
The 188-3rd Public bond | Jan. 29, 2035 | 2.706% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 189-3rd Public bond | Jan. 28, 2026 | 2.203% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 189-4th Public bond | Jan. 28, 2036 | 2.351% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 190-2nd Public bond | Jan. 30, 2023 | — | — | — | — | 150,000 | ||||||||||||||||
The 190-3rd Public bond | Jan. 30, 2028 | 2.947% | — | 170,000 | — | 170,000 | ||||||||||||||||
The 190-4th Public bond | Jan. 30, 2038 | 2.931% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 191-2nd Public bond | Jan. 15, 2024 | 2.088% | — | 80,000 | — | 80,000 | ||||||||||||||||
The 191-3rd Public bond | Jan. 15, 2029 | 2.160% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 191-4th Public bond | Jan. 14, 2039 | 2.213% | — | 90,000 | — | 90,000 | ||||||||||||||||
The 192-2nd Public bond | Oct. 11, 2024 | 1.578% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 192-3rd Public bond | Oct. 11, 2029 | 1.622% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 192-4th Public bond | Oct. 11, 2039 | 1.674% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 193-1st Public bond | Jun. 16, 2023 | — | — | — | — | 150,000 | ||||||||||||||||
The 193-2nd Public bond | Jun. 17, 2025 | 1.434% | — | �� | 70,000 | — | 70,000 | |||||||||||||||
The 193-3rd Public bond | Jun. 17, 2030 | 1.608% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 193-4th Public bond | Jun. 15, 2040 | 1.713% | — | 60,000 | — | 60,000 | ||||||||||||||||
The 194-1st Public bond | Jan. 26, 2024 | 1.127% | — | 130,000 | — | 130,000 | ||||||||||||||||
The 194-2nd Public bond | Jan. 27, 2026 | 1.452% | — | 140,000 | — | 140,000 | ||||||||||||||||
66
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
The 194-3rd Public bond | Jan. 27, 2031 | 1.849% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 194-4th Public bond | Jan. 25, 2041 | 1.976% | — | 80,000 | — | 80,000 | ||||||||||||||||
The 195-1st Public bond | Jun. 10, 2024 | 1.387% | — | 180,000 | — | 180,000 | ||||||||||||||||
The 195-2nd Public bond | Jun. 10, 2026 | 1.806% | — | 80,000 | — | 80,000 | ||||||||||||||||
The 195-3rd Public bond | Jun. 10, 2031 | 2.168% | — | 40,000 | — | 40,000 | ||||||||||||||||
The 196-1st Public bond | Jan. 27, 2025 | 2.596% | — | 270,000 | — | 270,000 | ||||||||||||||||
The 196-2nd Public bond | Jan. 27, 2027 | 2.637% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 196-3rd Public bond | Jan. 27, 2032 | 2.741% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 197-1st Public bond | Jun. 27, 2025 | 4.191% | — | 280,000 | — | 280,000 | ||||||||||||||||
The 197-2nd Public bond | Jun. 29, 2027 | 4.188% | — | 120,000 | — | 120,000 | ||||||||||||||||
The 198-1st Public bond | Jan. 10, 2025 | 3.847% | — | 70,000 | — | — | ||||||||||||||||
The 198-2nd Public bond | Jan. 12, 2026 | 3.869% | — | 150,000 | — | — | ||||||||||||||||
The 198-3rd Public bond | Jan. 12, 2028 | 3.971% | — | 80,000 | — | — | ||||||||||||||||
The 199-1st Public bond | Jul. 11, 2025 | 4.028% | — | 85,000 | — | — | ||||||||||||||||
The 199-2nd Public bond | Jul. 10, 2026 | 4.146% | — | 160,000 | — | — | ||||||||||||||||
The 199-3rd Public bond | Jul. 12, 2028 | 4.221% | — | 155,000 | — | — | ||||||||||||||||
The 18-1st unsecured bond | Jul. 2, 2024 | 1.844% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 18-2nd unsecured bond | Jul. 2, 2026 | 2.224% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 148th Won-denominated unsecured bond | Jun. 23, 2023 | — | — | — | — | 100,000 | ||||||||||||||||
The 149-1st Won-denominated unsecured bond | Mar. 8, 2024 | 1.440% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 149-2nd Won-denominated unsecured bond | Mar. 10, 2026 | 1.756% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 150-1st Won-denominated unsecured bond | Apr. 7, 2023 | — | — | — | — | 20,000 | ||||||||||||||||
The 150-2nd Won-denominated unsecured bond | Apr. 8, 2024 | 1.462% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 151-1st Won-denominated unsecured bond | May 12, 2023 | — | — | — | — | 10,000 | ||||||||||||||||
The 151-2nd Won-denominated unsecured bond | May 14, 2024 | 1.432% | — | 40,000 | — | 40,000 | ||||||||||||||||
The 152-1st Won-denominated unsecured bond | Aug. 30, 2024 | 1.813% | — | 80,000 | — | 80,000 | ||||||||||||||||
The 152-2nd Won-denominated unsecured bond | Aug. 28, 2026 | 1.982% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 153-1st Won denominated unsecured bond | Nov. 10, 2023 | — | — | — | — | 30,000 | ||||||||||||||||
The 153-2nd Won-denominated unsecured bond | Nov. 11, 2024 | 2.425% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 154th Won-denominated unsecured bond | Jan. 23, 2025 | 2.511% | — | 40,000 | — | 40,000 | ||||||||||||||||
The 155-1st Won-denominated unsecured bond | Feb. 29, 2024 | 2.615% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 155-2nd Won-denominated unsecured bond | Sep. 2, 2024 | 2.745% | — | 20,000 | — | 20,000 | ||||||||||||||||
67
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
The 155-3rd Won-denominated unsecured bond | Feb. 28, 2025 | 2.880% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 156-1st Won-denominated unsecured bond 3 | Mar. 25, 2025 | 5Y CMS+0.404% | — | 60,000 | — | 60,000 | ||||||||||||||||
The 156-2nd Won-denominated unsecured bond 3 | Mar. 25, 2032 | 10Y CMS+0.965% | — | 40,000 | — | 40,000 | ||||||||||||||||
The 157-1st Won-denominated unsecured bond | Apr. 28, 2023 | — | — | — | — | 30,000 | ||||||||||||||||
The 157-2nd Won-denominated unsecured bond | Oct. 27, 2023 | — | — | — | — | 30,000 | ||||||||||||||||
The 158th Won-denominated unsecured bond | Jan. 27, 2025 | 4.421% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 159-1st Won-denominated unsecured bond | Aug. 09, 2024 | 4.267% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 159-2nd Won-denominated unsecured bond | Aug. 11, 2027 | 4.505% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 160-1st Won-denominated unsecured bond | Jun. 14, 2024 | 5.615% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 160-2nd Won-denominated unsecured bond | Dec. 13, 2024 | 5.667% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 160-3rd Won-denominated unsecured bond | Dec. 12, 2025 | 5.769% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 161-1st Won-denominated unsecured bond | Jun. 21, 2024 | 5.527% | — | 10,000 | — | 10,000 | ||||||||||||||||
The 161-2nd Won-denominated unsecured bond | Dec. 20, 2024 | 5.557% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 161-3rd Won-denominated unsecured bond | Jun. 20, 2025 | 5.594% | — | 30,000 | — | 30,000 | ||||||||||||||||
The 161-4th Won-denominated unsecured bond | Dec. 22, 2025 | 5.615% | — | 10,000 | — | 10,000 | ||||||||||||||||
The 162-1st Won-denominated unsecured bond | Dec. 27, 2023 | — | — | — | — | 50,000 | ||||||||||||||||
The 162-2nd Won-denominated unsecured bond | Jan. 26, 2024 | 5.069% | — | 40,000 | — | 40,000 | ||||||||||||||||
The 162-3rd Won-denominated unsecured bond | Apr. 26, 2024 | 5.080% | — | 10,000 | — | 10,000 | ||||||||||||||||
The 163-1st Won-denominated unsecured bond | Feb. 20, 2026 | 4.059% | — | 20,000 | — | — | ||||||||||||||||
The 163-2nd Won-denominated unsecured bond | Feb. 22, 2028 | 4.311% | — | 80,000 | — | — | ||||||||||||||||
The 164-1st Won-denominated unsecured bond | Apr. 12, 2024 | 3.778% | — | 10,000 | — | — | ||||||||||||||||
The 164-2nd Won-denominated unsecured bond | Oct. 24, 2024 | 3.821% | — | 30,000 | — | — | ||||||||||||||||
The 164-3rd Won-denominated unsecured bond | Apr. 14, 2028 | 4.220% | — | 30,000 | — | — | ||||||||||||||||
The 165-1st Won-denominated unsecured bond | May. 09, 2025 | 3.870% | — | 30,000 | — | — | ||||||||||||||||
The 165-2nd Won-denominated unsecured bond | Nov. 09, 2026 | 3.932% | — | 10,000 | — | — | ||||||||||||||||
68
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
The 165-3rd Won-denominated unsecured bond | May. 07, 2027 | 3.972% | — | 30,000 | — | — | ||||||||||||||||
The 166-1st Won-denominated unsecured bond | Nov. 22. 2024 | 4.205% | — | 20,000 | — | — | ||||||||||||||||
The 166-2nd Won-denominated unsecured bond | Apr. 22. 2025 | 4.310% | — | 40,000 | — | — | ||||||||||||||||
The 166-3rd Won-denominated unsecured bond | May. 21. 2025 | 4.332% | — | 10,000 | — | — | ||||||||||||||||
The 166-4th Won-denominated unsecured bond | May. 22. 2025 | 4.332% | — | 40,000 | — | — | ||||||||||||||||
The 167-1st Won-denominated unsecured bond | Dec. 20. 2024 | 3.865% | — | 30,000 | — | — | ||||||||||||||||
The 167-2nd Won-denominated unsecured bond | Jan. 22. 2025 | 3.864% | — | 50,000 | — | — | ||||||||||||||||
The 167-3rd Won-denominated unsecured bond | Feb. 21. 2025 | 3.864% | — | 10,000 | — | — | ||||||||||||||||
The 167-4th Won-denominated unsecured bond | Dec. 22. 2025 | 3.858% | — | 10,000 | — | — | ||||||||||||||||
|
|
|
| |||||||||||||||||||
Subtotal | 8,446,921 | 8,406,351 | ||||||||||||||||||||
Less: Current portion | (1,924,523 | ) | (1,154,101 | ) | ||||||||||||||||||
Discount on bonds | (19,248 | ) | (23,728 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||
| 1 | As of December 31, 2023, the Controlling Company has outstanding notes in the amount of USD 100 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 2,000 million. However, the MTNP has been terminated since 2007. |
| 2 | The Daily SOFR is approximately 5.380% as of December 31, 2023. Due to the recent suspension of LIBOR calculation, the Group changed the alternative indicator interest rate to Compounded SOFR+1.210%. |
| 2 | The CMS (5Y) and CMS (10Y) is approximately 2.993% and 2.990%, respectively as of December 31, 2023. |
69
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2) | Convertible bonds |
| (in millions of Korean won) | ||||||||||||||||||||
| Type | Issuance Date | Maturity | Annual interest Rate | December 31, 2023 | December 31, 2022 | |||||||||||||||
The 1st CB (Private) 1 | Jun. 5, 2020 | Jun. 5, 2025 | 2 | |||||||||||||||||
The 1st unsecured CB 3 | Jul. 25, 2022 | Jan. 25, 2025 | — | — | 30,000 | |||||||||||||||
Redemption premium | 2,267 | 4,565 | ||||||||||||||||||
Bond discount issuance | (1,811 | ) | (7,206 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
| Subtotal | 8,456 | 35,359 | ||||||||||||||||||
Current portion | (8,456 | ) | — | |||||||||||||||||
|
|
|
| |||||||||||||||||
| Total | ||||||||||||||||||||
|
|
|
| |||||||||||||||||
| 1 | Common shares of Storywiz are subject to conversion (appraisal period: June 5, 2021~May 4, 2025). |
| 2 | Nominal interest rate and maturity yield is approximately 0% and 5%, respectively, and will be settled on maturity. |
| 3 | During the current period, bonds of kt cloud are converted to 73,800 of Common shares and 73,800 of preference shares. |
70
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 3) | Borrowings |
| a. | Short-term borrowings |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Financial institution | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
Operational | Shinhan Bank | 3.840%~6.440% | — | — | ||||||||||||||||||
| — | — | — | — | 30,000 | ||||||||||||||||||
| — | — | — | — | 50,000 | ||||||||||||||||||
| Woori Bank 1, | 4.400% | — | 70,000 | — | — | |||||||||||||||||
| CD(91D)+1.960% | — | 20,000 | — | — | ||||||||||||||||||
| Korea Development Bank | 3.230%~4.950% | — | 34,900 | — | 27,201 | |||||||||||||||||
| Industrial Bank of Korea | 4.862% | — | 6,000 | — | 6,000 | |||||||||||||||||
| Hana Bank 1 | CD(91D)+0.126% | — | 4,800 | — | 5,000 | |||||||||||||||||
| KB SECURITIES | 4.110%~4.910% | — | 69,635 | — | 94,822 | |||||||||||||||||
| NH INVESTMENT & SECURITIES | — | — | — | — | 20,000 | |||||||||||||||||
| HSBC 2 | | Compounded SOFR +2.100% | USD 23,600 | 30,450 | USD 18,500 | 23,451 | ||||||||||||||||
| NongHyup Bank | 4.880% | — | 8,500 | — | 9,000 | |||||||||||||||||
| — | — | — | — | 15,000 | ||||||||||||||||||
| IBK Securities | — | — | — | — | 20,000 | |||||||||||||||||
| Hi Investment & Securities and others | — | — | — | — | 99,524 | |||||||||||||||||
| Korea Investment | 4.910% | — | 30,000 | — | — | |||||||||||||||||
|
|
|
| |||||||||||||||||||
| Total | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||
| 1 | CD (91D) is approximately 3.820% as of December 31, 2023. |
| 2 | The Daily SOFR is approximately 5.380% as of December 31, 2023. |
71
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| b. | Long-term borrowings |
| (in millions of Korean won and thousands of foreign currencies) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Financial institution | Type | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
Export-Import | | Inter-Korean Cooperation Fund 1 | 1.00% | — | — | |||||||||||||||||
CA-CIB | General loans | 3.380%~4.150% | — | 200,000 | — | 200,000 | ||||||||||||||||
JPM | General loans | 2.700%~4.480% | — | 200,000 | — | 100,000 | ||||||||||||||||
DBS | General loans | 4.079% | — | 100,000 | — | 100,000 | ||||||||||||||||
Shinhan Bank | General loans2 | Term SOFR(3M)+1.100% | USD 8,910 | 11,489 | USD 8,910 | 11,292 | ||||||||||||||||
| General loans | — | — | — | USD 38,000 | 48,158 | |||||||||||||||||
| General loans | 1.900%~3.200% | USD 31,472 | 40,655 | USD 31,472 | 39,855 | |||||||||||||||||
| General loans 3 | 4.490% | — | 62,398 | — | 62,398 | |||||||||||||||||
| General loans 2 | Term SOFR(3M)+1.300% | USD 21,127 | 27,241 | USD 21,127 | 26,774 | |||||||||||||||||
| General loans 2 | Term SOFR(3M)+1.940% | USD 35,000 | 45,129 | — | — | |||||||||||||||||
| General loans 2 | CD(91D)+1.800% | — | 16,900 | — | — | |||||||||||||||||
Woori Bank | General loans 2 | EURIBOR(3M)+0.900% | EUR 7,700 | 10,985 | EUR 7,700 | 10,404 | ||||||||||||||||
| General loans | 3.320%~5.800% | — | 41,526 | — | 15,000 | |||||||||||||||||
| PF loans | — | — | — | — | 40,682 | |||||||||||||||||
Hi Investment & Securities | CP | 2.302% | — | 92,994 | — | 90,724 | ||||||||||||||||
Bookook Investment | CP | 3.490%~3.603% | — | 19,525 | — | 18,806 | ||||||||||||||||
Korea Investment | CP | 3.622% | — | 75,928 | — | 73,039 | ||||||||||||||||
Korea Development Bank | General loans | 3.000%~4.870% | — | 137,000 | — | 38,000 | ||||||||||||||||
NH Jayang | PF loans 2 | CD(91D)+1.150% | — | 53,033 | — | 59,066 | ||||||||||||||||
Kyobo Life Insurance | PF loans 2 | CD(91D)+1.150%~CD(91D)+3.450% | — | 84,586 | — | 66,390 | ||||||||||||||||
Standard Chartered Bank Korea | PF loans 2 | CD(91D)+1.150%~CD(91D)+3.450% | — | 56,390 | — | 44,260 | ||||||||||||||||
| General loans 2 | CD(91D)+0.750% | — | 32,000 | — | — | |||||||||||||||||
Samsung Life Insurance | PF loans | 1.860%~4.160% | — | 46,992 | — | 36,883 | ||||||||||||||||
|
|
|
| |||||||||||||||||||
Subtotal | 1,356,251 | 1,083,705 | ||||||||||||||||||||
Less: Current portion | (699,800 | ) | (167,943 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
|
|
|
| |||||||||||||||||||
| 1 | The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a seven-year grace period. |
| 2 | EURIBOR (3M), Term SOFR (3M) and CD (91D) are approximately 3.909%, 5.331%, 3.820% respectively, as of December 31, 2023. |
| 3 | The general loans are repayable in installments over 4 years after a three-year grace period. |
| (2) | Repayment schedule of the Group’s debentures and borrowings including the portion of current liabilities as of December 31, 2023, is as follows: |
| (in millions of Korean won) | ||||||||||||||||||||||||||||
| Bonds | Borrowings | Total | ||||||||||||||||||||||||||
| In local currency | In foreign currency | Sub- total | In local currency | In foreign currency | Sub- total | |||||||||||||||||||||||
Jan. 1, 2024~Dec. 31, 2024 | ||||||||||||||||||||||||||||
Jan. 1, 2025~Dec. 31, 2025 | 1,445,000 | 1,160,460 | 2,605,460 | 421,322 | 56,618 | 477,940 | 3,083,400 | |||||||||||||||||||||
Jan. 1, 2026~Dec. 31, 2026 | 760,000 | 515,760 | 1,275,760 | 109,087 | — | 109,087 | 1,384,847 | |||||||||||||||||||||
Jan. 1, 2027~Dec. 31, 2027 | 280,000 | 386,820 | 666,820 | 15,600 | — | 15,600 | 682,420 | |||||||||||||||||||||
After Jan. 1, 2028 | 1,845,000 | 128,940 | 1,973,940 | 53,825 | — | 53,825 | 2,027,765 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
72
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 16. | Provisions |
Changes in provisions for the years ended December 31, 2023 and 2022, are as follows:
| 2023 | ||||||||||||||||
| (in millions of Korean won) | Litigation | Restoration cost | Others | Total | ||||||||||||
Beginning balance | ||||||||||||||||
Increase (transfer) | 592 | 26,381 | 10,656 | 37,629 | ||||||||||||
Usage | (7,179 | ) | (1,138 | ) | (6,391 | ) | (14,708 | ) | ||||||||
Reversal | (35 | ) | (653 | ) | (2,096 | ) | (2,784 | ) | ||||||||
Scope change | — | — | (177 | ) | (177 | ) | ||||||||||
Others | — | (393 | ) | 2,290 | 1,897 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Current | ||||||||||||||||
Non-current | 577 | 106,214 | 223 | 107,014 | ||||||||||||
| 2022 | ||||||||||||||||
| (in millions of Korean won) | Litigation | Restoration cost | Others | Total | ||||||||||||
Beginning balance | ||||||||||||||||
Increase (transfer) | 6,005 | 13,027 | 5,847 | 24,879 | ||||||||||||
Usage | (6,155 | ) | (8,143 | ) | (15,783 | ) | (30,081 | ) | ||||||||
Reversal | (43,686 | ) | (3,685 | ) | (4,418 | ) | (51,789 | ) | ||||||||
Others | — | 405 | (445 | ) | (40 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Current | 34,730 | 19,918 | 54,485 | 109,133 | ||||||||||||
1Non-current | ||||||||||||||||
73
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 17. | Net Defined Benefit Liabilities (Assets) |
| (1) | The amounts recognized in the statements of financial position as of December 31, 2023 and 2022, are determined as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Present value of defined benefit obligations | ||||||||
Fair value of plan assets | (2,462,925 | ) | (2,478,143 | ) | ||||
|
|
|
| |||||
Liabilities | ||||||||
|
|
|
| |||||
Assets | ||||||||
|
|
|
| |||||
| (2) | Changes in the defined benefit obligations for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning | ||||||||
Current service cost | 213,489 | 238,068 | ||||||
Interest expense | 103,874 | 59,041 | ||||||
Benefit paid | (358,298 | ) | (316,047 | ) | ||||
Changes due to settlements of plan | 1 | (701 | ) | |||||
Remeasurements: | ||||||||
Actuarial gains and losses arising from changes in demographic assumptions | 1,903 | (13,048 | ) | |||||
Actuarial gains and losses arising from changes in financial assumptions | 138,462 | (323,501 | ) | |||||
Actuarial gains and losses arising from experience adjustments | 48,174 | 80,845 | ||||||
Changes in scope of consolidation, etc. | (467 | ) | (932 | ) | ||||
|
|
|
| |||||
Ending | ||||||||
|
|
|
| |||||
| (3) | Changes in the fair value of plan assets for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning | ||||||||
Interest income | 121,336 | 55,902 | ||||||
Remeasurements: | ||||||||
Return on plan assets (excluding amounts included in interest income) | 9,410 | (8,542 | ) | |||||
Benefits paid | (307,762 | ) | (287,419 | ) | ||||
Employer contributions | 165,128 | 401,358 | ||||||
Changes in scope of consolidation, etc. | (3,330 | ) | 2,212 | |||||
|
|
|
| |||||
Ending | ||||||||
|
|
|
| |||||
|
|
|
| |||||
74
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (4) | Amounts recognized in the consolidated statement of profit or loss for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Current service cost | ||||||||
Net interest cost | (17,462 | ) | 3,139 | |||||
Changes due to settlements of plan | 1 | (701 | ) | |||||
Transfer out | (13,435 | ) | (15,102 | ) | ||||
|
|
|
| |||||
Total expenses | ||||||||
|
|
|
| |||||
| (5) | Principal actuarial assumptions used are as follows: |
| December 31, 2023 | December 31, 2022 | |||
Discount rate | 3.67%~5.51% | 2.4%~6.29% | ||
Salary growth rate | 1.7%~8.96% | 1.82%~8.9% |
| (6) | The sensitivity of the defined benefit obligations as of December 31, 2023, to changes in the principal assumptions is: |
| (in percentage, in millions of Korean won) | Effect on defined benefit obligation | |||||||||||
| Changes in assumption | Increase in assumption | Decrease in assumption | ||||||||||
Discount rate | 0.5% point | |||||||||||
Salary growth rate | 0.5% point | 145,687 | (135,431 | ) | ||||||||
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
The above sensitivity analysis is based on changes in assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.
The Group actively monitors how the duration and the expected yield of the investments match the expected cash outflows arising from the pension obligations. Expected contributions to post-employment benefit plans, for the year ending December 31, 2023, areW 273,503 million.
75
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (7) | The expected maturity analysis of undiscounted pension benefits as of December 31, 2023, is as follows: |
| (in millions of Korean won) | Less than 1 year | Between 1-2 years | Between 2-5 years | Over 5 years | Total | |||||||||||||||
Pension benefits | ||||||||||||||||||||
| (8) | The weighted average duration of the defined benefit obligations is 6.2 years. |
| 18. | Defined Contribution Plan |
Recognized expense related to the defined contribution plan for the year ended December 31, 2023, isW 85,174 million (2022:W 72,576 million).
76
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 19. | Commitments and Contingencies |
| (1) | As of December 31, 2023, major commitments with local financial institutions are as follows: |
| (in millions of Korean won and foreign currencies in thousands) | Financial institution | Limit | Used amount | |||||||||||||||
Bank overdraft | Kookmin Bank and others | 374,000 | — | |||||||||||||||
Inter-Korean Cooperation Fund | Export-Import Bank of Korea | 37,700 | 1,480 | |||||||||||||||
Economic Cooperation Business Insurance | Export-Import Bank of Korea | 3,240 | 1,732 | |||||||||||||||
Collateralized loan on electronic accounts receivable-trade | Kookmin Bank and others | 545,350 | 42,822 | |||||||||||||||
Plus electronic notes payable | Industrial Bank of Korea | 50,000 | 885 | |||||||||||||||
Working capital loan | Korea Development Bank and others | 1,562,800 | 142,700 | |||||||||||||||
| Shinhan Bank | USD | 76,509 | USD | 76,509 | ||||||||||||||
| Woori Bank | EUR | 7,700 | EUR | 7,700 | ||||||||||||||
Facility loans | Shinhan Bank and others | 924,000 | 429,924 | |||||||||||||||
Derivatives transaction limit | Korea Development Bank and others | USD | 1,970,000 | USD | 1,970,000 | |||||||||||||
| Citi Bank | JPY | 400,000 | JPY | 400,000 | ||||||||||||||
Total | KRW | 3,497,090 | 619,543 | |||||||||||||||
| USD | 2,046,509 | 2,046,509 | ||||||||||||||||
| EUR | 7,700 | 7,700 | ||||||||||||||||
| JPY | 400,000 | 400,000 | ||||||||||||||||
| (2) | As of December 31, 2023, guarantees received from financial institutions are as follows: |
(in millions of Korean won and foreign currencies in thousands) | Financial institution | Limit | ||||||
Hana Bank | Guarantee for payment in Korean currency | 4,000 | ||||||
| Comprehensive credit line and others | 3,100 | |||||||
| Guarantee for payment in foreign currency | USD | 59 | ||||||
| Comprehensive credit line and others | USD | 10,300 | ||||||
Kookmin Bank | Guarantee for payment in foreign currency | USD | 3,186 | |||||
Shinhan Bank | Guarantee for payment in Korean currency and others | USD | 94,517 | |||||
Guarantee for payment in foreign currency and others | VND | 211,262 | ||||||
Woori Bank | Guarantee for payment in Korean currency | 5,200 | ||||||
| Guarantee for payment in foreign currency | USD | 7,000 | ||||||
Korea Development Bank | Refund guarantee for advances received | USD | 6,811 | |||||
HSBC | Guarantees for depositions | USD | 816 | |||||
Seoul Guarantee Insurance Company | Performance guarantee and others | 366,395 | ||||||
Korea Software Financial Cooperative | Performance guarantee and others | 1,556,979 | ||||||
Korea Specialty Contractor Financial Cooperative | Performance guarantee and others | 135 | ||||||
Korea Housing Finance Corporation | Performance guarantee and others | 44,000 | ||||||
Korea Housing & Urban Guarantee Corporation1 | Performance guarantee and others | 691,530 | ||||||
Information & Communication Financial Cooperative | Performance guarantee and others | 78,183 | ||||||
|
|
| ||||||
Total | KRW | 2,749,522 | ||||||
| USD | 122,689 | |||||||
| VND | 211,262 | |||||||
|
|
| ||||||
| 1 | Inventory assets ( |
77
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | As of December 31, 2023, guarantees provided by the Group to third parties are as follows: |
| (in millions of Korean won) | ||||||||||||||||
| Subject to payment guarantees | Creditor | Limit | Used amount | Period | ||||||||||||
KT Estate Inc | Wonju Bando U-bora Mark Bridge Buyer | Hana Bank | 103,000 | 55,314 | | Aug. 5, 2022 ~ Feb. 28, 2025 |
| |||||||||
KT Engineering Co., Ltd.1 | Gasan Solar Power Plant Inc. | Shinhan Bank | 4,700 | 364 | | Jan. 7, 2010 ~ Jan. 8, 2025 |
| |||||||||
KT Engineering Co., Ltd.1 | Korea Cell Inc. | Suhyup Bank | 3,250 | 50 | | Feb. 17, 2014 ~ Feb. 16, 2024 |
| |||||||||
KT Engineering Co., Ltd.1 | San-Ya Agricultural Association Corporation | Suhyup Bank | 3,250 | 51 | | Feb. 17, 2014 ~ Feb. 16, 2024 |
| |||||||||
KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) | Cash payers | T-commerce cash payers | 821 | — | | Apr. 14, 2023 ~ Apr. 12, 2024 |
| |||||||||
Nasmedia Co., Ltd. | Stockholders Association Members | Korea Securities Finance Corp | 1,104 | 610 | — | |||||||||||
| 1 | KT Engineering Co., Ltd., a subsidiary of the Group, is subject to payment, depending on the reimbursement of principal debtor. |
| (4) | The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd., a subsidiary, to pay KT Sat Co., Ltd.’s liabilities incurred prior to spin-off. As of December 31, 2023, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of |
| (5) | For the year ended December 31, 2023, the Group entered into agreements with the Securitization Specialty Companies (2023: First 5G 67th to 72th Securitization Specialty Co., Ltd., 2022: First 5G 61st to 66th Securitization Specialty Co., Ltd.) and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreement, the Group will receive asset management fees upon liquidation of the securitization specialty company |
78
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (6) | As of December 31, 2023, the Group is a defendant in 177 lawsuits with the total claimed amount of |
| (7) | Under the agreement of bond issuance and borrowings, the Group is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restriction on provision of additional collateral and disposal of certain assets. |
| (8) | As of December 31, 2023, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants. |
| (9) | As of December 31, 2023, contract amount of property and equipment acquisition agreement made but not yet recognized amounts to |
| (10) | As of December 31, 2023, there are derivatives generated by the Group granting Drag-Along Right to financial investors participating in paid-in capital increase of K Bank Inc. (Note 7). |
| (11) | The Group has an agreement with a transferor participated in share transfer agreement of MILLE Co., Ltd. As per the conditions of the agreement, the transferor may exercise Put Option for the ordinary shares it owns (Note 7). |
| (12) | The Group entered into an agreement with financial investors of Epsilon Global Communications Pte. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, financial investors may exercise Tag-Along Right, Drag-Along Right and the right to sell shares for the convertible preferred shares it owns (Note 7). |
| (13) | The Group has an obligation for additional contributions as per agreement to Future Innovation Private Equity Fund No.3 and others. As of December 31, 2023, remaining amount of |
| (14) | The Group has the amount of |
| (15) | During the prior period, the Group entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY. If a certain period of time has elapsed from the date of the contract and the acquired stocks are to be disposed to a third party, HYUNDAI MOBIS and HYUND AI MOTOR COMPANY may exercise a preferential purchase right to designate a buyer with priority. |
79
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (16) | During the prior period, the Group entered into an agreement with LS Cable & System Ltd., which participated in the stock acquisition contract of KT Submarine Co., Ltd (formerly KT Submarine Co., Ltd.). As per the agreement, the Group may exercise a put-option to LS Cable & System Ltd in the future (Note 7). |
| (17) | During the period, the Group entered into an agreement with equity investors which participated in the stock acquisition contract of kt cloud Co., Ltd., Under the agreement, in specific occasion, equity investors may exercise a Tag-along or put-option to the Group in the future. |
| (18) | The Group has the obligation of paying Minimum Guarantee as utilizing product bundling of Tving Co.,Ltd. and the right to be paid certain proportion of the excess as per agreement. |
| 20. | Leases |
Information of leases in which the Group is a lessee is as follows. Information when the Group is a lessor is described in Note 11.
| (1) | Amounts recognized in the consolidated statement of financial position |
The consolidated statements of financial position shows the following amounts relating to leases:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Right-of-use assets | ||||||||
Property and building | ||||||||
Machinery and communication line facilities | 89,150 | 50,794 | ||||||
Others | 196,276 | 148,473 | ||||||
|
|
|
| |||||
|
|
|
| |||||
Investment property (buildings) | ||||||||
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Lease liabilities1 | ||||||||
Current | ||||||||
Non-current | 872,042 | 856,146 | ||||||
|
|
|
| |||||
|
|
|
| |||||
| 1 | Included in the line item ‘other current liabilities and other non-current liabilities’ in the consolidated statements of financial position (Note 9). |
For the years ended December 31, 2023 and 2022, Right-of-use assets related to leases increased byW 440,552 million andW 405,453 million, respectively.
80
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Amounts recognized in the consolidated statement of profit or loss |
The consolidated statement of profit or loss relating to leases for the year ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Depreciation of right-of-use assets | ||||||||
Property and building | ||||||||
Machinery and communication line facilities | 32,794 | 31,140 | ||||||
Others | 72,372 | 59,954 | ||||||
|
|
|
| |||||
|
|
|
| |||||
Depreciation of investment properties | ||||||||
Interest expense relating to lease liabilities | 52,035 | 41,469 | ||||||
Expense relating to short-term leases | 8,804 | 12,876 | ||||||
Expense relating to leases of low-value assets that are not short-term leases | 26,290 | 26,813 | ||||||
Expense relating to variable lease payments not included in lease liabilities | 9,288 | 4,827 | ||||||
The total cash outflow for leases for the year ended December 31, 2023 isW 500,392 million (2022:W 464,337 million).
| 21. | Share Capital |
As of December 31, 2023 and 2022, the Group has 1,000,000,000 shares authorized to issue and details are as follows:
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
Number of issued shares | Par value per share (Korean won) | Ordinary Shares (in millions of Korean won) | Number of issued shares | Par value per share (Korean won) | Ordinary shares (in millions of Korean won) | |||||||||||||||||||
Ordinary shares 1 | 257,860,760 | 261,111,808 | ||||||||||||||||||||||
| 1 | The Group retired 55,039,007 treasury shares against retained earnings. Therefore, the ordinary shares amount differs from the amount resulting from multiplying the number of shares issued. |
81
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 22. | Retained Earnings |
Details of retained earnings as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Legal reserve 1 | ||||||||
Voluntary reserves 2 | 4,651,362 | 4,651,362 | ||||||
Unappropriated retained earnings | 9,060,819 | 8,823,732 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1 | The Commercial Code of the Republic of Korea requires the Controlling Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends but may be transferred to share capital with the approval of the Controlling Company’s Board of Directors or used to reduce accumulated deficit, if any, with the ratification of the Controlling Company’s majority shareholders. |
| 2 | The reserves of research and development of human resources in other surplus reserves are separately accumulated on disposal of retained earnings on tax filing adjustments when calculating income taxes in accordance with regulations of Tax Reduction and Exemption Control Act of Korea. Reversal of the reserves according to the relevant tax law can be paid out as dividends |
| 23. | Accumulated Other Comprehensive Income and Other Components of Equity |
| (1) | As of December 31, 2023 and 2022, the details of the Controlling Company’s accumulated other comprehensive income, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Changes in investments in associates and joint ventures | ||||||||
Loss on derivatives valuation | (29,361 | ) | (7,109 | ) | ||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | 73,928 | (52,100 | ) | |||||
Exchange differences on translation for foreign operations | 3,817 | (6,815 | ) | |||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
82
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Changes in accumulated other comprehensive income for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||
| Beginning | Increase (decrease) | Reclassification gain or loss | Ending | |||||||||||||
Changes in investments in associates and joint ventures | ||||||||||||||||
Gain (loss) on derivatives valuation | (7,109 | ) | 15,690 | (37,942 | ) | (29,361 | ) | |||||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | (52,100 | ) | 126,028 | — | 73,928 | |||||||||||
Exchange differences on translation for foreign operations | (6,815 | ) | 10,632 | — | 3,817 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||
| Beginning | Increase (decrease) | Reclassification gain or loss | Ending | |||||||||||||
Changes in investments in associates and joint ventures | ||||||||||||||||
Gain (loss) on derivatives valuation | 25,031 | 63,281 | (95,421 | ) | (7,109 | ) | ||||||||||
Gain on valuation of financial assets at fair value through other comprehensive income | 108,685 | (160,785 | ) | — | (52,100 | ) | ||||||||||
Exchange differences on translation for foreign operations | (12,786 | ) | 5,971 | — | (6,815 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (3) | The Group’s other components of equity, as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Treasury stock | ||||||||
Gain or loss on disposal of treasury stock 1 | 3,220 | (41,503 | ) | |||||
Share-based compensation | 8,773 | 6,222 | ||||||
Equity transactions within consolidated entities 2 | (416,336 | ) | (334,576 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1 | The amount directly reflected in equity is |
| 2 | Profit or loss incurred from transactions with non-controlling interest and investment difference incurred from change in proportion of subsidiaries are included. |
83
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (4) | As of December 31, 2023 and 2022, the details of treasury stock, are as follows: |
| December 31, 2023 | December 31, 2022 | |||||||
Number of shares (in shares) | 11,447,338 | 5,069,130 | ||||||
Amount (in millions of Korean won) | ||||||||
Treasury stocks held as of December 31, 2023, are expected to be used for stock compensation for the Group’s directors, employees, and other purposes.
| 24. | Share-Based Compensation |
| (1) | Details of share-based compensation granted by the Controlling to executives and employees, including the CEO, by the resolution of the Board of Directors for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||
| (in share) | 17th grant | |
| Grant date | June 15, 2023, Oct 17, 2023 | |
| Grantee | CEO, internal directors, external directors, executives | |
| Vesting conditions | Service condition: 1 year Non-market performance condition: achievement of performance | |
| Fair value per option (in Korean won) | ||
| Total compensation costs (in Korean won) | ||
| Estimated exercise date (exercise date) | During 2024 | |
| Valuation method | Fair value method | |
| 2022 | ||
(in share) | 16th grant | |
| Grant date | June 9, 2022 | |
| Grantee | CEO, internal directors, external directors, executives | |
| Vesting conditions | Service condition: 1 year Non-market performance condition: achievement of performance | |
| Fair value per option (in Korean won) | ||
Total compensation costs (in Korean won) | ||
| Estimated exercise date | During 2023 | |
| Valuation method | Fair value method | |
84
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Changes in the number of stock options for the years ended December 31, 2023 and 2022, are as follows: |
| (in share) | 2023 | |||||||||||||||||||||||
| Beginning | Granted | Expired | Exercised1 | Ending | Number of shares exercisable | |||||||||||||||||||
16th grant | 258,509 | — | (105,859 | ) | (131,690 | ) | 20,960 | — | ||||||||||||||||
17th grant | — | 307,182 | — | — | 307,182 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 258,509 | 307,182 | (105,859 | ) | (131,690 | ) | 328,142 | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in share) | 2022 | |||||||||||||||||||||||
| Beginning | Granted | Expired | Exercised1 | Ending | Number of shares exercisable | |||||||||||||||||||
15th grant | 284,209 | — | (155,286 | ) | (128,923 | ) | — | — | ||||||||||||||||
16th grant | — | 258,509 | — | — | 258,509 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 284,209 | 258,509 | (155,286 | ) | (128,923 | ) | 258,509 | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | The weighted average price of ordinary shares at the time of exercise, during the year ended December 31, 2023, is |
| 25. | Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities |
| (1) | The Group has recognized the following amounts relating to revenue in the statement of profit or loss: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Revenue from contracts with customers | ||||||||
Revenue from other sources | 224,016 | 206,128 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Operating revenues for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Services | ||||||||
Sales of goods | 3,381,586 | 3,404,802 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Revenue from providing services are recognized over time, and sales of goods are recognized at a point in time. Revenues from construction commitments included in sales of goods are recognized using the percentage of completion method.
85
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | Contract assets and liabilities recognized in relation to the revenues from contracts with customers, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Contract assets 1 | ||||||||
Contract liabilities 1 | 311,023 | 344,869 | ||||||
Deferred revenue 2 | 81,067 | 81,653 | ||||||
| 1 | The Group recognized contract assets of |
| 2 | Deferred revenue recognized relating to government grant is excluded. |
| (4) | The contract costs recognized as assets are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Incremental costs of obtaining a contract | ||||||||
Cost of contract performance | 70,757 | 73,582 | ||||||
As of December 31, 2023, the Group recognized contract assets in the amount ofW 1,759,586 million as operating expenses (2022:W 1,793,013 million).
| (5) | For the years ended December 31, 2023 and 2022, revenue recognized from carried-forward contract liabilities and deferred revenue from prior year, is as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Revenue recognized that was included in the contract liabilities balance at the beginning of the year | ||||||||
Allocation of the transaction price | ||||||||
Deferred revenue of joining/installment fee | 41,824 | 44,204 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
86
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 26. | Operating Expenses |
| (1) | Operating expenses for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Employee Benefit Cost | ||||||||
Depreciation | 2,723,610 | 2,637,463 | ||||||
Depreciation of right-of-use assets | 402,737 | 396,214 | ||||||
Amortization of intangible assets | 683,784 | 622,202 | ||||||
Commissions | 1,264,729 | 1,295,434 | ||||||
Interconnection charges | 436,598 | 479,500 | ||||||
International interconnection fees | 140,433 | 186,253 | ||||||
Purchase of inventories | 3,595,345 | 3,656,040 | ||||||
Changes of inventories | (203,071 | ) | (195,046 | ) | ||||
Sales promotion and sales commission | 2,353,318 | 2,353,909 | ||||||
Service costs | 2,237,132 | 2,334,386 | ||||||
Utilities | 544,675 | 368,348 | ||||||
Taxes and dues | 250,651 | 276,962 | ||||||
Rent | 167,576 | 160,848 | ||||||
Insurance premiums | 66,737 | 68,245 | ||||||
Installation fees | 174,238 | 150,140 | ||||||
Advertising expenses | 153,750 | 195,519 | ||||||
Bad debt expenses | 150,549 | 115,358 | ||||||
Card service costs | 3,189,376 | 3,127,673 | ||||||
Others | 1,844,923 | 1,234,590 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Details of employee benefits for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Short-term employee benefits | ||||||||
Post-employment benefits (defined benefits) | 182,593 | 225,404 | ||||||
Post-employment benefits (defined contributions) | 85,174 | 72,576 | ||||||
Share-based compensation | 15,450 | 16,799 | ||||||
Others | 40,733 | 19,232 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
87
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 27. | Other Income and Other Expenses |
| (1) | Other income for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Gain on disposal of property and equipment and investment properties | ||||||||
Gain on disposal of intangible assets | 1,727 | 622 | ||||||
Gain on disposal of right-of-use assets | 3,580 | 3,326 | ||||||
Compensation on property and equipment | 152,712 | 159,849 | ||||||
Gain on government subsidies | 40,725 | 44,473 | ||||||
Gain on disposal of investments in associates | 6,982 | 38,319 | ||||||
Gain on disposal of investments in subsidiaries | 28,825 | 216,591 | ||||||
Others | 51,046 | 79,568 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Other expenses for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Loss on disposal of property and equipment | ||||||||
Loss on disposal of intangible assets | 5,328 | 7,015 | ||||||
Loss on disposal of right-of-use assets | 2,115 | 2,348 | ||||||
Loss on disposal of investments in associates | — | 295 | ||||||
Impairment loss on property and equipment | 7,871 | 16,094 | ||||||
Impairment loss on intangible assets | 236,206 | 30,965 | ||||||
Donations | 24,664 | 15,642 | ||||||
Other allowance for bad debts | 34,112 | 17,551 | ||||||
Others | 124,898 | 143,282 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
88
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 28. | Finance Income and Costs |
| (1) | Details of finance income for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Interest income | ||||||||
Gain on foreign currency transactions | 27,407 | 67,976 | ||||||
Gain on foreign currency translation | 11,944 | 43,092 | ||||||
Gain on derivative transactions | 12,304 | 50,668 | ||||||
Gain on valuation of derivatives | 49,881 | 182,998 | ||||||
Gain on disposal of trade receivables | 3,441 | — | ||||||
Gain on valuation of financial instruments | 32,477 | 31,032 | ||||||
Others | 69,216 | 42,737 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Details of finance costs for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Interest expenses | ||||||||
Loss on foreign currency transactions | 34,281 | 81,171 | ||||||
Loss on foreign currency translation | 95,730 | 200,109 | ||||||
Loss on derivative transactions | 417 | 24,331 | ||||||
Loss on valuation of derivatives | 6,598 | 21,601 | ||||||
Loss on disposal of trade receivables | 17,980 | 62,697 | ||||||
Loss on valuation of financial instruments | 55,049 | 65,660 | ||||||
Others | 2,282 | 485 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
89
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 29. | Deferred Income Tax and Income Tax Expense |
| (1) | Deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Deferred tax assets | ||||||||
Deferred tax assets to be recovered within 12 months | ||||||||
Deferred tax assets to be recovered after more than 12 months | 1,818,523 | 1,907,043 | ||||||
|
|
|
| |||||
Deferred tax assets before offsetting | 2,222,757 | 2,305,753 | ||||||
|
|
|
| |||||
Deferred tax liabilities | ||||||||
Deferred tax liabilities to be recovered within 12 months | ||||||||
Deferred tax liabilities to be recovered after more than 12 months | (2,116,346 | ) | (2,108,438 | ) | ||||
|
|
|
| |||||
Deferred tax liabilities before offsetting | (2,608,163 | ) | (2,694,960 | ) | ||||
|
|
|
| |||||
Deferred tax assets after offsetting | ||||||||
|
|
|
| |||||
Deferred tax liabilities after offsetting | ||||||||
|
|
|
| |||||
| (2) | The movement in deferred income tax assets and liabilities as of December 31, 2023 and 2022, before taking into consideration the offsetting of balances, is as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax liabilities | ||||||||||||||||
Investments in subsidiaries, associates and joint ventures | (255,184 | ) | (7,821 | ) | (7,225 | ) | (270,230 | ) | ||||||||
Depreciation and impairment loss | (151,433 | ) | 39,309 | — | (112,124 | ) | ||||||||||
Plan assets | (542,900 | ) | 8,367 | 826 | (533,707 | ) | ||||||||||
Advanced depreciation provision | (521,939 | ) | 3,859 | — | (518,080 | ) | ||||||||||
Contract assets | (424,302 | ) | 2,478 | — | (421,824 | ) | ||||||||||
Financial assets at fair value through profit or loss | (420 | ) | 461 | 43 | 84 | |||||||||||
Financial assets at fair value through other comprehensive income | (60,629 | ) | (53 | ) | (41,945 | ) | (102,627 | ) | ||||||||
Others | (738,153 | ) | 90,876 | (2,378 | ) | (649,655 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Deferred tax assets | ||||||||||||||||
Depreciation and impairment loss | 188,832 | (71,689 | ) | (397 | ) | 116,746 | ||||||||||
Contract liabilities | 121,289 | (9,311 | ) | — | 111,978 | |||||||||||
Defined benefit liabilities | 481,858 | (6,705 | ) | 40,838 | 515,991 | |||||||||||
Provisions | 151,955 | (5,784 | ) | — | 146,171 | |||||||||||
Others | 1,258,848 | (58,388 | ) | 2,141 | 1,202,601 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Temporary difference, net | (492,178 | ) | (14,401 | ) | (8,097 | ) | (514,676 | ) | ||||||||
Tax credit carryforwards | 102,971 | 26,299 | — | 129,270 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
90
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax liabilities | ||||||||||||||||
Investments in associates and joint ventures | (240,633 | ) | (18,299 | ) | 3,748 | (255,184 | ) | |||||||||
Depreciation and impairment loss | (88,588 | ) | (62,845 | ) | — | (151,433 | ) | |||||||||
Plan assets | (538,928 | ) | (5,294 | ) | 1,322 | (542,900 | ) | |||||||||
Advanced depreciation provision | (339,005 | ) | (182,934 | ) | — | (521,939 | ) | |||||||||
Contract assets | (493,917 | ) | 69,615 | — | (424,302 | ) | ||||||||||
Financial assets at fair value through profit or loss | (336 | ) | (73 | ) | (11 | ) | (420 | ) | ||||||||
Financial assets at fair value through other comprehensive income | (47,521 | ) | (71,396 | ) | 58,288 | (60,629 | ) | |||||||||
Others | (623,744 | ) | (111,135 | ) | (3,274 | ) | (738,153 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Deferred tax assets | ||||||||||||||||
Depreciation and impairment loss | 225,821 | (36,989 | ) | — | 188,832 | |||||||||||
Contract liabilities | 148,454 | (27,165 | ) | — | 121,289 | |||||||||||
Defined benefit liabilities | 571,336 | (22,423 | ) | (67,055 | ) | 481,858 | ||||||||||
Provisions | 172,871 | (20,894 | ) | (22 | ) | 151,955 | ||||||||||
Others | 899,543 | 350,670 | 8,635 | 1,258,848 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Temporary difference, net | (354,647 | ) | (139,162 | ) | 1,631 | (492,178 | ) | |||||||||
Tax credit carryforwards | 134,417 | (31,446 | ) | — | 102,971 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
91
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | The tax impacts recognized directly to equity as of December 31, 2023 and 2022, are as follows: |
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| (in millions of Korean won) | Before recognition | Tax effect | After recognition | Before recognition | Tax effect | After recognition | ||||||||||||||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | ||||||||||||||||||||||||
Gain (loss) on valuation of hedge instruments | (30,168 | ) | 7,555 | (22,613 | ) | (42,510 | ) | 11,180 | (31,330 | ) | ||||||||||||||
Remeasurements of net defined benefit liabilities | (179,129 | ) | 41,664 | (137,465 | ) | 247,162 | (65,733 | ) | 181,429 | |||||||||||||||
Share of gain of associates and joint ventures, and others | 28,715 | (7,225 | ) | 21,490 | (14,931 | ) | 3,748 | (11,183 | ) | |||||||||||||||
Exchange differences on translation for foreign operations | 32,376 | (8,146 | ) | 24,230 | 23,316 | (5,852 | ) | 17,464 | ||||||||||||||||
Gain or loss on disposal of treasury stock | 402 | (101 | ) | 301 | (59,308 | ) | 14,886 | (44,422 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (4) | Details of income tax expense for the years ended December 31, 2023 and 2022, are calculated as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Current income tax expenses | ||||||||
Impact of change in temporary difference | (11,898 | ) | 170,608 | |||||
|
|
|
| |||||
Income tax expense | ||||||||
|
|
|
| |||||
92
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (5) | The relationship between the Group’s profit before tax and income tax expense for the years ended December 31, 2023 and 2022, is as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Profit before income tax | ||||||||
|
|
|
| |||||
Expected tax expense at statutory tax rate | ||||||||
Tax effect: | ||||||||
Income not taxable for tax purposes | (30,106 | ) | (47,550 | ) | ||||
Expenses not deductible for tax purposes | 26,723 | 53,398 | ||||||
Tax credit and deductions | (78,459 | ) | (54,895 | ) | ||||
Others | 78,013 | 44,945 | ||||||
|
|
|
| |||||
Income tax expense | ||||||||
|
|
|
| |||||
| (6) | Details of deferred tax assets and liabilities that are not recognized as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Deductible temporary differences | ||||||||
Investment in subsidiaries, associates, and joint ventures | ||||||||
Unused tax loss | 203,200 | 103,326 | ||||||
Unused Tax credit | 2,338 | 1,988 | ||||||
Others | 437,238 | 387,084 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Taxable temporary differences | ||||||||
Investment in subsidiaries, associates, and joint ventures | ||||||||
Others | 211,201 | 216,660 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (7) | The expected period of expiry for unused tax losses not recognized in deferred tax assets as of December 31, 2023 and 2022, is as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Less than 1 year | 4,484 | 72,512 | ||||||
1~5 years | 11,936 | 13,358 | ||||||
5~10 years | 8,745 | 12,021 | ||||||
More than 10 years | 178,035 | 5,435 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
93
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 30. | Earnings per Share |
| (1) | Basic Earnings per Share |
Basic earnings per share is calculated by dividing the profit from operations attributable to the ordinary shares by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares held by the Group as treasury stock.
Basic earnings per share from operations for the years ended December 31, 2023 and 2022, is calculated as follows:
| 2023 | 2022 | |||||||
Profit attributable to ordinary shares of owners of the Controlling Company (in millions of Korean won) | ||||||||
Weighted average number of ordinary shares outstanding (in number of shares) | 249,470,072 | 242,235,332 | ||||||
Basic earnings per share (in Korean won) | ||||||||
Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares from convertible bond and other share-based compensation.
| (2) | Diluted Earnings per Share |
Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding assuming that all dilutive potential ordinary shares are converted into ordinary shares. The Group has dilutive potential ordinary shares from convertible bonds, convertible preferred stock and other share-based payments:
| 2023 | 2022 | |||||||
Profit attributable to ordinary shares (in millions of Korean won) | ||||||||
|
|
|
| |||||
Diluted profit attributable to ordinary shares (in millions of Korean won) | ||||||||
|
|
|
| |||||
Number of dilutive potential ordinary shares outstanding (in number of shares) | 119,263 | 91,931 | ||||||
Weighted average number of ordinary shares outstanding (in number of shares) | 249,589,335 | 242,327,263 | ||||||
Diluted earnings per share (in Korean won) | ||||||||
94
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the year by the sum of the number of ordinary shares and dilutive potential ordinary shares. Convertible bonds and convertible preferred stocks without dilutive effects are excluded from the calculation.
| 31. | Dividend |
The dividends paid by the Group in 2023 wereW 501,844 million (W 1,960 per share). The dividends paid by the Group in 2022 wereW 450,394 million (W 1,910 per share). A dividend in respect of the year ended December 31, 2023, ofW 1,960 per share, amounting to a total dividend ofW 482,970 million, is to be proposed at the shareholders’ meeting on March 28, 2024.
95
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 32. | Cash Generated from Operations |
| (1) | Cash flows from operating activities for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
1. Profit for the year | ||||||||
2. Adjustments for: | ||||||||
Income tax expense | 335,367 | 506,404 | ||||||
Interest income 1 | (392,580 | ) | (340,794 | ) | ||||
Interest expense 1 | 410,566 | 320,914 | ||||||
Dividends income 2 | (59,758 | ) | (14,121 | ) | ||||
Depreciation | 2,773,152 | 2,687,191 | ||||||
Amortization of intangible assets | 691,909 | 627,261 | ||||||
Depreciation of right-of-use assets | 402,737 | 396,214 | ||||||
Provisions for post-employment benefits (defined benefits) | 196,027 | 240,506 | ||||||
Allowance for bad debts | 175,244 | 132,102 | ||||||
Share of net profit or loss of associates and joint Ventures | 44,323 | 16,821 | ||||||
Gain and loss on disposal of associates and joint ventures | (6,982 | ) | (38,024 | ) | ||||
Profits and loss on the disposal of subsidiaries | (28,825 | ) | (216,591 | ) | ||||
Loss (gain) on disposal of property and equipment, and investment in properties 3 | 511 | (66,317 | ) | |||||
Impairment loss on property and equipment, and investment in properties | 7,871 | 16,094 | ||||||
Gain on disposal of right-of-use assets | (1,465 | ) | (978 | ) | ||||
Loss on disposal of intangible assets | 3,601 | 6,393 | ||||||
Impairment loss on intangible assets | 236,106 | 30,674 | ||||||
Loss on foreign currency translation | 83,899 | 157,017 | ||||||
Gain on valuation of derivatives, net | (37,249 | ) | (205,381 | ) | ||||
Loss (gain) on disposal of financial assets at amortized cost | 1 | 3 | ||||||
Gain on disposal of financial assets at fair value through profit or loss | (2,225 | ) | (2,347 | ) | ||||
Loss on valuation of financial assets at fair value through profit or loss 4 | 13,920 | 44,833 | ||||||
Others | 158,820 | (49,891 | ) | |||||
3. Changes in operating assets and liabilities | ||||||||
Increase in trade receivables | (124,023 | ) | (43,787 | ) | ||||
96
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Increase in other receivables | (1,085,527 | ) | (1,598,216 | ) | ||||
Increase in other current assets | 250,569 | (101,947 | ) | |||||
Increase in other non-current Assets | (81,101 | ) | (120,055 | ) | ||||
Increase in inventories | (249,923 | ) | (170,773 | ) | ||||
Increase (decrease) in trade payables | 121,515 | (368,355 | ) | |||||
Increase in other payables | 829,220 | 1,103,113 | ||||||
Increase (decrease) in other current liabilities | 314,208 | (30,375 | ) | |||||
Decrease in other non-current liabilities | (3,117 | ) | (12,171 | ) | ||||
Decrease in provisions | (5,083 | ) | (22,115 | ) | ||||
Increase (decrease) in deferred revenue | 905 | (384 | ) | |||||
Increase in plan assets | 115,725 | (90,771 | ) | |||||
Payment of post-employment benefits (defined benefits) | (329,861 | ) | (343,931 | ) | ||||
|
|
|
| |||||
4. Cash generated from operations (1+2+3) | ||||||||
|
|
|
|
| 1 | Subsidiaries such as BC Card Co., Ltd. recognize interest income and expense as operating revenue and expense, respectively. Interest income of |
| 2 | BC Card Co., Ltd. recognized dividend income as operating revenue. Dividend income of |
| 3 | Gain and loss on disposal of investment properties of KT Estate Inc. are presented as operating revenue and operating expense, respectively. Gain on disposal of investment properties amounting to |
| 4 | Subsidiaries such as KT Investment Co., Ltd. recognized gain and loss on valuation of financial assets at fair value through profit or loss as operating revenue and expense, respectively. Loss on valuation of financial assets at fair value through profit or loss of |
97
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Significant transactions not affecting cash flows for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Reclassification of current portion of borrowings | ||||||||
Reclassification of construction-in-progress to property and equipment | 3,123,611 | 3,167,965 | ||||||
Reclassification of non-trade payable from property and equipment | (293,448 | ) | (7,055 | ) | ||||
Reclassification of non-trade payable from intangible assets | (276,491 | ) | (197,389 | ) | ||||
Reclassification of non-trade payables from defined benefit liabilities | 26,246 | (32,417 | ) | |||||
Reclassification of non-trade payable from plan assets | (24,821 | ) | 28,532 | |||||
Disposal of treasury stock related to acquisition of financial assets | — | 747,161 | ||||||
Acquisition of financial assets related to disposal of a subsidiary | — | 250,000 | ||||||
98
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 33. | Changes in Liabilities Arising from Financing Activities |
Details of changes in liabilities arising from financing activities, liabilities related to cashflow to be classified as future financing activities, for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||||||||||||||
| Beginning | Cash flows | Others | ||||||||||||||||||||||||||
| Newly acquired | Changes in FX rate | Fair value changes | Others | Ending | ||||||||||||||||||||||||
Borrowing | ||||||||||||||||||||||||||||
Lease liabilities | 1,172,038 | (407,051 | ) | 460,617 | — | 24 | (45,719 | ) | 1,179,909 | |||||||||||||||||||
Derivative liabilities | 33,555 | — | — | 10,888 | 9,643 | (29,539 | ) | 24,547 | ||||||||||||||||||||
Derivative assets | (190,830 | ) | 48,183 | — | 32,487 | 1,788 | (50,839 | ) | (159,211 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||||||||||||||||||
| Beginning | Cash flows | Others | ||||||||||||||||||||||||||||||
| Newly acquired | Changes in FX rate | Fair value change | Changes in consolidation scope | Others | Ending | |||||||||||||||||||||||||||
Borrowing | ||||||||||||||||||||||||||||||||
Lease liabilities | 1,159,369 | (378,684 | ) | 427,398 | — | — | — | (36,045 | ) | 1,172,038 | ||||||||||||||||||||||
Derivative liabilities | 75,176 | (41,197 | ) | — | 19,858 | 12,941 | — | (33,223 | ) | 33,555 | ||||||||||||||||||||||
Derivative assets | (99,453 | ) | 76,280 | (754 | ) | (147,161 | ) | 30,341 | — | (50,083 | ) | (190,830 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
99
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 34. | Segment Information |
| (1) | The management of the Group determines the operating segments based on the reported information when establishing the business strategy. |
| Details | Business service | |
ICT | Mobile/fixed line telecommunication service and convergence business, B2B business and others | |
Finance | Credit card business | |
Satellite TV | Satellite TV business | |
Real estate | Residential building development and supply | |
Others | IT, facility security, global business, and others | |
| (2) | Details of each segment for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||
Operating revenues | Operating income | Depreciation and | ||||||||||
ICT | ||||||||||||
Finance | 3,720,859 | 92,199 | 37,150 | |||||||||
Satellite TV | 708,217 | 44,482 | 52,871 | |||||||||
Real estate | 583,504 | 89,959 | 70,653 | |||||||||
Others | 8,118,542 | 240,049 | 584,738 | |||||||||
|
|
|
|
|
| |||||||
| 31,502,559 | 1,652,081 | 3,928,820 | ||||||||||
Elimination | (5,126,286 | ) | (2,307 | ) | (118,689 | ) | ||||||
|
|
|
|
|
| |||||||
Consolidated amount | ||||||||||||
|
|
|
|
|
| |||||||
| (in millions of Korean won) | 2022 | |||||||||||
Operating revenues | Operating income | Depreciation and | ||||||||||
ICT | ||||||||||||
Finance | 3,613,981 | 121,461 | 47,638 | |||||||||
Satellite TV | 704,928 | 50,600 | 58,413 | |||||||||
Real estate | 485,056 | 118,953 | 65,457 | |||||||||
Others | 7,708,737 | 259,082 | 575,035 | |||||||||
|
|
|
|
|
| |||||||
| 30,801,945 | 1,718,199 | 3,852,350 | ||||||||||
Elimination | (5,151,934 | ) | (28,111 | ) | (196,471 | ) | ||||||
|
|
|
|
|
| |||||||
Consolidated amount | ||||||||||||
|
|
|
|
|
| |||||||
| 1 | Sum of the amortization of property and equipment, intangible assets, investment properties and right-of-use assets. |
100
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | Operating revenues for the years ended December 31, 2023 and 2022, and non-current assets as of December 31, 2023 and 2022, by geographical regions, are as follows: |
| (in millions of Korean won) | Operating revenues | Non-current assets 1 | ||||||||||||||
| Location | December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||
Domestic | ||||||||||||||||
Overseas | 169,510 | 159,857 | 183,344 | 270,490 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | Sum of property and equipment, intangible assets, investment properties and right-of-use assets. |
| 35. | Related Party Transactions |
| (1) | The list of related party of the Group as of December 31, 2023, is as follows: |
| Relationship | Name of Entity | |
Associates and joint ventures | 54 entities such as K Bank Inc., KIF Investment Fund, and Megazone Cloud Corporation | |
Others 1 | Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd., Mastern No.127 Logispoint Daegu Co., Ltd., KORAMKO No. 143 General Private Real Estate Investment Company |
| 1 | Despite the significant influence, treated as investment changes in FV under IFRS 9 instead of using equity method. |
| (2) | Outstanding balances of receivables and payables in relations to transactions with related parties as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||||
| Receivables | Payables | |||||||||||||||||||||||||
| Trade receivables | Other receivables | Lease receivables | Trade payables | Other payables | Lease liabilities | |||||||||||||||||||||
Associates and joint ventures | K Bank, Inc. | |||||||||||||||||||||||||
| Little Big Pictures | 232 | 3,473 | — | 9 | 6 | — | ||||||||||||||||||||
| K-Realty 11th Real Estate Investment Trust Company | 110 | 1,283 | — | — | — | 6,732 | ||||||||||||||||||||
| K-Realty No.3 Real Estate General Private Placement Investment Company | 4,576 | — | — | — | — | — | ||||||||||||||||||||
| Others | 2,044 | 162 | — | 2,900 | 3,029 | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
101
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||
| Receivables | Payables | |||||||||||||||||||||
| Trade receivables | Other receivables | Trade payables | Other payables | Lease liabilities | ||||||||||||||||||
Associates and joint ventures | K Bank, Inc. | |||||||||||||||||||||
| Little Big Pictures | 1,454 | 7,645 | — | 9 | — | |||||||||||||||||
| K-Realty 11th Real Estate Investment Trust Company | 151 | 1,283 | — | — | 8,824 | |||||||||||||||||
| Others | 2,285 | 2 | 3,235 | 2,932 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (3) | Significant transactions with related parties for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||||||||
| Sales | Purchases | Acquisition of right-of-use assets | ||||||||||||||||||||
| Relationship | Name of Entity | Operating revenue | Other income | Operating expenses | Others1 | |||||||||||||||||
Associates and joint ventures | K Bank, Inc. | |||||||||||||||||||||
| HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) | 78 | — | 182 | — | 7 | |||||||||||||||||
| K-Realty 11th Real Estate Investment Trust Company | 146 | 200 | 2,559 | — | — | |||||||||||||||||
| K-Realty No.3 Real Estate General Private Placement Investment Company | 6,084 | 132 | — | — | ||||||||||||||||||
| Others 2 3 | 20,515 | 793 | 42,032 | 137 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Others | Digital Pharm Co., Ltd. | 1 | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | Amounts include acquisition of property and equipment, and others. |
| 2 | Includes transactions of the entity before it was excluded as an associate and joint venture of the Group. |
| 3 | Includes transactions of FUNDA Co., Ltd, Maruee Limited Company Specializing in the Cultural Industry, Mastern No.127 Logispoint Daegu Co., Ltd. before it was excluded as associates and joint ventures of the Group. |
102
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||||||||
| Sales | Purchases | Acquisition of right-of- use assets | ||||||||||||||||||||
| Relationship | Name of Entity | Operating revenue | Other income | Operating expenses | Others1 | |||||||||||||||||
Associates and joint ventures | K- Realty CR-REITs No.1 2 | |||||||||||||||||||||
| K Bank, Inc. | 29,536 | — | 11,007 | — | — | |||||||||||||||||
| Hyundai Robotics Co., Ltd. 1 | 94 | — | 629 | 3,170 | — | |||||||||||||||||
| K-Realty 11th Real Estate Investment Trust Company | 141 | 189 | 1,674 | — | 1,966 | |||||||||||||||||
| Others 3 | 10,226 | 1,738 | 35,435 | 2,307 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Others | Digital Pharm Co., Ltd. | 1 | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | Amounts include acquisition of property and equipment, and others. |
| 2 | Includes transactions of the entity before it was excluded as an associate and joint venture of the Group. |
| 3 | Includes transactions of StorySoop Inc. before it was excluded as associates and joint ventures of the Group. |
| (in millions of Korean won) | 2023 | 2022 | ||||||||||||||||||||||||
| Finance income | Finance costs | Dividend Income | Finance income | Finance costs | Dividend income | |||||||||||||||||||||
Associates and joint ventures | K Bank, Inc. | |||||||||||||||||||||||||
| K- Realty CR-REITs No.1 | — | — | — | — | — | 45,549 | ||||||||||||||||||||
| K-Realty 11th Real Estate Investment Trust Company | — | 261 | 507 | — | 260 | 162 | ||||||||||||||||||||
| Others 1, 2 | — | — | 1,279 | — | — | 9,158 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| 1 | Includes transactions of the entity before it was excluded as an associate and joint venture of the Group. |
| 2 | Includes transactions of FUNDA Co., Ltd, Maruee Limited Company Specializing in the Cultural Industry, Mastern No.127 Logispoint Daegu Co., Ltd. before they were excluded as associates and joint ventures of the Group. |
| (4) | Key management compensation for the years ended December 31, 2023 and 2022, consists of: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Salaries and other short-term benefits | ||||||||
Post-employment benefits | 153 | 294 | ||||||
Share-based compensation | 569 | 976 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
103
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (5) | Fund transactions with related parties for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||
| Borrowing transactions1 | Equity contributions in cash | |||||||||||
| Borrowings | Repayments | |||||||||||
Associates and joint ventures | ||||||||||||
K-Realty 11th Real Estate Investment Trust Company | ||||||||||||
STIC Place General Private Placement Real Estate Investment Trust No.2 | — | — | 20,000 | |||||||||
Telco Credit Bureau Co.,Ltd. | — | — | 6,500 | |||||||||
Pacific geumto no.75 private hybrid asset fund | — | — | 19,000 | |||||||||
Kiamco Data Center Blind Fund | — | — | 15,000 | |||||||||
STIC Mixed Asset Investment Trust No. 1 | — | — | 10,930 | |||||||||
Others 2 | — | — | 31,107 | |||||||||
Others | ||||||||||||
Rebellions Co.,Ltd. | — | — | 19,998 | |||||||||
|
|
|
|
|
| |||||||
Total | ||||||||||||
|
|
|
|
|
| |||||||
| 1 | Lease transactions are included in borrowing transactions. |
| 2 | Transactions with Daemuga Culture Industry Specialist Limited Company and Maruee Culture Industry Specialist Limited Company until the date that they were excluded from associates are included. |
| (in millions of Korean won) | 2022 | |||||||||||
| Borrowing transactions1 | Equity contributions in cash | |||||||||||
| Borrowings | Repayments | |||||||||||
Associates and joint ventures | ||||||||||||
Megazone Cloud Corporation | ||||||||||||
IBK-KT Emerging Digital Industry Investment Fund | — | — | 10,800 | |||||||||
Mastern KT Multi-Family Real Estate Private Equity Investment Fund I | — | — | 18,859 | |||||||||
IGIS No. 468-1 General Private Real Estate Investment Company | — | — | 25,000 | |||||||||
K-Realty 11th Real Estate Investment Trust Company | 1,916 | 771 | — | |||||||||
Others | — | — | 93,478 | |||||||||
|
|
|
|
|
| |||||||
Total | ||||||||||||
|
|
|
|
|
| |||||||
| 1 | Lease transactions are included in borrowing transactions. |
| (6) | Provision of collateral and investment agreement and others |
The Group has an obligation according to invest agreements with related parties such as Kiamco Data Center Blind Fund. As of December 31, 2023 the Group has a plan to make an additional investment ofW 107,774 million.
104
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (7) | As of December 31, 2023, the limit of the credit card contract provided by the Group to K Bank, Inc. is |
| 36. | Financial Risk Management |
| (1) | Financial Risk Factors |
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures such as cash flow risk.
The Group’s financial policy is set up in the long-term perspective and annually reported to the Board of Directors. The financial risk management is carried out by the Value Management Office, which identifies, evaluates and hedges financial risks. The treasury department in the Value Management Office considers various finance market conditions to estimate the effect from the market changes.
| 1) | Market risk |
The Group’s market risk management focuses on controlling the extent of exposure to the risk in order to minimize revenue volatility. Market risk is a risk that decreases value or profit of the Group’s portfolio due to changes in market interest rate, foreign exchange rate and other factors.
| (i) | Sensitivity analysis |
Sensitivity analysis is performed for each type of market risk to which the Group is exposed. Reasonably possible changes in the relevant risk variable such as prevailing market interest rates, currency rates, equity prices or commodity prices are estimated and if the rate of change in the underlying risk variable is stable, the Group does not alter the chosen reasonably possible change in the risk variable. The reasonably possible change does not include remote or ‘worst case’ scenarios or ‘stress tests’.
| (ii) | Foreign exchange risk |
The Group is exposed to foreign exchange risk arising from operating, investing and financing activities. Foreign exchange risk is managed within the range of the possible effect on the Group’s cash flows. Foreign exchange risk (i.e. foreign currency translation of overseas operating assets and liabilities) unaffecting the Group’s cash flows is not hedged but can be hedged at a particular situation.
105
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
As of December 31, 2023 and 2022, if the foreign exchange rate had strengthened or weakened by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:
| (in millions of Korean won) | Fluctuation of foreign exchange rate | Impact on profit before income tax1 | Impact on equity | |||||||||
2023.12.31 | + 10 | % | ||||||||||
| - 10 | % | 10,313 | 18,460 | |||||||||
2022.12.31 | + 10 | % | ||||||||||
| - 10 | % | 5,841 | 15,836 | |||||||||
| 1 | Computed with consideration of derivatives hedging effect applied by the Group to hedge foreign exchange risk of liabilities in foreign currencies |
The analysis above is a simple sensitivity analysis, which assumes that all the variables other than foreign exchange rates are held constant. Therefore, the analysis does not reflect any correlation between foreign exchange rates and other variables, nor management’s decision to decrease the risk.
Details of significant financial assets and liabilities in foreign currencies as of December 31, 2023 and 2022, are as follows:
| (in thousands of foreign currencies) | December 31, 2023 | December 31, 2022 | ||||||||||||||
Financial assets | Financial liabilities | Financial assets | Financial liabilities | |||||||||||||
USD | 139,807 | 2,271,673 | 106,426 | 2,336,607 | ||||||||||||
SDR | 254 | 722 | 255 | 722 | ||||||||||||
JPY | 17,496 | 400,002 | 32,801 | 400,002 | ||||||||||||
GBP | — | — | 30 | 83 | ||||||||||||
EUR | 304 | 7,810 | 185 | 7,832 | ||||||||||||
RWF | 402 | — | 15,521 | 13,025 | ||||||||||||
THB | 244 | — | 265 | — | ||||||||||||
TZS | 21,958 | — | 1,464 | — | ||||||||||||
BWP | 680 | — | 183 | — | ||||||||||||
HKD | — | — | 37 | — | ||||||||||||
VND | 380,629 | — | 280,226 | — | ||||||||||||
SGD | 1,375 | — | 448 | 284,000 | ||||||||||||
TWD | 1,685 | — | — | — | ||||||||||||
MYR | — | — | 1 | — | ||||||||||||
CHF | — | 25 | — | — | ||||||||||||
BGN | — | — | 62 | — | ||||||||||||
PKR | 114,025 | — | — | — | ||||||||||||
106
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (iii) | Price risk |
As of December 31, 2023 and 2022, the Group is exposed to equity securities price risk because the securities held by the Group are traded in active markets. If the stock index increased or decreased by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:
| (in millions of Korean won) | Fluctuation of stock index | Impact on profit before income tax | Impact on equity | |||||||||
2023.12.31 | + 10% | |||||||||||
| - 10% | (1,473 | ) | (121,423 | ) | ||||||||
2022.12.31 | + 10% | |||||||||||
| - 10% | (111,288 | ) | (113,948 | ) | ||||||||
The analysis above is based on the assumption that the equity index increased or decreased by 10% with all other variables held constant and all the Group’s marketable equity instruments moved according to the historical correlation with the index. Equity would increase or decrease as a result of gain or loss on equity securities classified as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.
| (iv) | Cash flow and fair value interest rate risk |
The Group’s interest rate risk arises from liabilities in foreign currency such as foreign currency debentures. Debentures in foreign currency issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by swap transactions. Debentures and borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group sets the policy and operates to minimize the uncertainty of changes in interest rates and financial costs.
As of December 31, 2023 and 2022, if the market interest rate had increased or decreased by 100bp with other variables held constant, the effects on profit before income tax and equity would be as follows:
| (in millions of Korean won) | Fluctuation of interest rate | Impact on profit before income tax | Impact on equity | |||||||||
2023.12.31 | + 100 bp | |||||||||||
| - 100 bp | 2,696 | 5,037 | ||||||||||
2022.12.31 | + 100 bp | |||||||||||
| - 100 bp | (669 | ) | 2,100 | |||||||||
The analysis above is a simple sensitivity analysis which assumes that all the variables other than market interest rates are held constant. Therefore, the analysis does not reflect any correlation between market interest rates and other variables, nor management’s decision to decrease the risk.
107
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2) | Credit risk |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s trade receivables from customers, debt securities and others.
| • | Risk management |
Credit risk is managed on the Group basis with the purpose of minimizing financial loss. Credit risk arises from the normal transactions and investing activities, where clients or other party fails to discharge an obligation on contract conditions. To manage credit risk, the Group considers the counterparty’s credit based on the counterparty’s financial conditions, default history and other important factors.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as outstanding receivables. To minimize such risk, only financial institutions with strong credit ratings are accepted.
The Group’s investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
| • | Security |
For some trade receivables, the Group may obtain security in the form of guarantees or letters of credit, etc. which can be called upon if the counterparty defaults under the terms of the agreement.
| • | Impairment of financial assets |
The Group has four types of financial assets that are subject to the expected credit loss model:
| • | trade receivables for sales of goods and provision of services, |
| • | contract assets relating to provision of services, |
| • | debt investments carried at fair value through other comprehensive income, and |
| • | other financial assets carried at amortized cost. |
While cash equivalents are also subject to the impairment requirement, the identified expected credit loss is immaterial.
108
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The maximum exposure to credit risk of the Group’s financial instruments without considering the value of collaterals as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Cash and cash equivalents (except for cash on hand) | ||||||||
Trade and other receivables | ||||||||
Financial assets at amortized costs | 8,458,259 | 7,459,994 | ||||||
Financial assets at fair value through other comprehensive income | 116,198 | 129,124 | ||||||
Contract assets | 832,520 | 802,253 | ||||||
Other financial assets | ||||||||
Derivatives financial assets for hedging | 159,211 | 190,830 | ||||||
Financial assets at fair value through profit or loss | 880,549 | 942,274 | ||||||
Financial assets at fair value through other comprehensive income | 5,913 | 5,432 | ||||||
Financial assets at amortized costs | 1,385,921 | 1,060,058 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
The Group is exposed to credit risk for financial guarantee contracts. As of December 31, 2023, the Group’s maximum exposure amount isW 116,719 million (2022:W 26,206 million).
| (i) | Trade receivables at amortized costs |
The Group applies a simplified method of recognizing the expected credit loss allowance, which uses lifetime expected credit loss for all trade receivables and contact assets.
The Group measures the expected credit loss by considering the future unrecoverable rate of the remaining balance of trade receivables and other receivables at the end of the reporting period. Each trade receivables and other receivables are classified considering the credit risk characteristics and overdue periods in order to measure expected credit loss. The expected credit loss rate calculation is based on historical payment and credit loss information in relation to revenue for 36 months period up to December 31, 2023. Meanwhile, the credit sales assets of BC Card Co., Ltd., a subsidiary, were judged to have low credit risk, so the expected 12-month credit loss was applied.
109
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The expected credit losses reflect forward-looking information. Provision for impairment as of December 31, 2023 and 2022, are as follows:
| December 31, 2023 | ||||||||||||||||
| (in millions of Korean won) | Less than 6 months | 7-12 months | More than 1 years | Total | ||||||||||||
Expected credit loss rate | 5.43 | % | 21.72 | % | 54.55 | % | — | |||||||||
Total carrying amounts | ||||||||||||||||
Provision for impairment | ||||||||||||||||
| December 31, 2022 | ||||||||||||||||
| (in millions of Korean won) | Less than 6 months | 7-12 months | More than 1 years | Total | ||||||||||||
Expected credit loss rate | 5.57 | % | 25.84 | % | 67.16 | % | — | |||||||||
Total carrying amounts | ||||||||||||||||
Provision for impairment | ||||||||||||||||
Details of changes in provisions for impairment of trade receivables the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning balance | ||||||||
Provision | 69,972 | 64,522 | ||||||
Written-off | (80,126 | ) | (68,298 | ) | ||||
Others | (2,294 | ) | (2,211 | ) | ||||
|
|
|
| |||||
Ending balance | ||||||||
|
|
|
| |||||
As of December 31, 2023, the maximum exposure of the trade receivables carrying amount to credit risk isW 3,439,199 million (2022:W 3,356,312 million).
Impairment of trade receivable for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Impairment loss | ||||||||
Bad debt expenses | ||||||||
110
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (ii) | Cash equivalents (except for cash on hand) |
The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as of December 31, 2023, is the carrying amount of these investments.
| (iii) | Other financial assets at amortized costs |
Other financial assets at amortized cost include time deposits, other long-term financial instruments, and others. All of the financial assets at amortized costs are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Management considers ‘low credit risk’ for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
Details of changes in provisions for impairment of other financial assets at amortized costs for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning balance | ||||||||
Provision | 114,501 | 65,941 | ||||||
Written-off | (150,014 | ) | (51,383 | ) | ||||
Reversal | (14,941 | ) | (850 | ) | ||||
Others | 15,547 | 3,448 | ||||||
|
|
|
| |||||
Ending balance | ||||||||
|
|
|
| |||||
| (iv) | Financial assets at fair value through other comprehensive income |
Financial assets at fair value through other comprehensive income include available-for-sale recognized in the prior financial year.
All of the debt investments at fair value through other comprehensive income are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Managements consider ‘low credit risk’ for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through other comprehensive income. The maximum exposure at the end of the reporting period is the carrying amount of these investments.
111
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (v) | Financial assets at fair value through profit or loss |
The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as of December 31, 2023, is the carrying amount of these investments.
| 3) | Liquidity risk |
The Group manages its liquidity risk by liquidity strategy and plans. The Group considers the maturity of financial assets and financial liabilities and the estimated cash flows from operations.
The table below analyzes the Group’s liabilities (including interest expenses) into relevant maturity groups based on the remaining period at the date of the end of each reporting period to the contractual maturity date. These amounts are contractual undiscounted cash flows and can differ from the amount in the consolidated financial statements.
| December 31, 2023 | ||||||||||||||||
| (in millions of Korean won) | Less than 1 year | 1-5 years | More than 5 years | Total | ||||||||||||
Trade and other payables | ||||||||||||||||
Borrowings (including debentures) | 2,922,557 | 6,027,323 | 1,743,842 | 10,693,722 | ||||||||||||
Lease liabilities | 313,431 | 617,561 | 409,174 | 1,340,166 | ||||||||||||
Other non-derivative financial liabilities | 372,743 | 747,221 | 10,073 | 1,130,037 | ||||||||||||
Financial guarantee contracts 1 | 13,719 | 103,000 | — | 116,719 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
112
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| December 31, 2022 | ||||||||||||||||
| (in millions of Korean won) | Less than 1 year | 1-5 years | More than 5 years | Total | ||||||||||||
Trade and other payables | ||||||||||||||||
Borrowings (including debentures) | 2,028,207 | 6,972,077 | 2,016,472 | 11,016,756 | ||||||||||||
Lease liabilities | 313,162 | 615,766 | 407,833 | 1,336,761 | ||||||||||||
Other non-derivative financial liabilities | 33,279 | 209,155 | 93,744 | 336,178 | ||||||||||||
Financial guarantee contracts 1 | 21,618 | — | 4,588 | 26,206 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | Total amount guaranteed by the Group according to guarantee contracts. Cash flow from financial guarantee contracts is classified as the maturity group in the earliest period when the financial guarantee contracts can be executed. |
As of December 31, 2023, the cash outflows and inflows by maturity of the Group’s derivatives held for trading and gross-settled derivatives, are as follows:
| December 31, 2023 | ||||||||||||||||
| (in millions of Korean won) | Less than 1 year | 1-5 years | More than 5 years | Total | ||||||||||||
Derivatives held for trading 1 | ||||||||||||||||
Outflows | ||||||||||||||||
Inflows | — | — | 1,015 | 1,015 | ||||||||||||
Derivatives settled gross 2 | ||||||||||||||||
Outflows | ||||||||||||||||
Inflows | 614,066 | 2,198,958 | 36,344 | 2,849,368 | ||||||||||||
| 1 | During the year ended December 31, 2023, derivative liabilities held-for-trading are classified under the ‘more than one year to less than five years’ category as they are relevant to the fair value of derivatives liabilities related to shareholder-to-share contracts (Note 19). |
As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taking into consideration to understand the timing of cash flows.
| 2 | Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the consolidated statement of financial position. |
113
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| December 31, 2022 | ||||||||||||||||
| (in millions of Korean won) | Less than 1 year | 1-5 years | More than 5 years | Total | ||||||||||||
Derivatives held for trading 1 | ||||||||||||||||
Outflows | ||||||||||||||||
Derivatives settled gross 2 | ||||||||||||||||
Outflows | ||||||||||||||||
Inflows | 550,478 | 2,670,002 | 37,873 | 3,258,353 | ||||||||||||
| 1 | During the year ended December 31, 2023, derivative liabilities held-for-trading are classified under the ‘more than one year to more than five years’ category as they are relevant to the fair value of derivatives liabilities related to shareholder-to-share contracts (Note 19). |
As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taken into consideration to understand the timing of cash flows.
| 2 | Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the consolidated statement of financial position. |
Meanwhile, as of December 31, 2023, the Group is obligated to investW 107,774 million in Kiamco Data Center Blind Fund, a related party, and others, andW 4,132 million and USD 30,350 thousand to make payment using the future Capital Call method to Future Innovation Private Equity Fund No.3 (Notes 19 and 35).
114
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Capital Risk Management |
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other shareholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group’s capital structure consists of liabilities including borrowings, cash and cash equivalents, and shareholders’ equity. The treasury department monitors the Group’s capital structure and considers cost of capital and risks related each to capital component.
The debt-to-equity ratios as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Total liabilities | ||||||||
Total equity | 18,561,137 | 18,414,723 | ||||||
Debt-to-equity ratio | 130 | % | 123 | % | ||||
The Group manages capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ in the consolidated statement of financial position plus net debt.
The gearing ratios as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Total borrowings | ||||||||
Less: cash and cash equivalents | (2,879,554 | ) | (2,449,062 | ) | ||||
|
|
|
| |||||
Net debt | 7,338,611 | 7,557,623 | ||||||
Total equity | 18,561,137 | 18,414,723 | ||||||
Total capital | 25,899,748 | 25,972,346 | ||||||
Gearing ratio | 28 | % | 29 | % | ||||
115
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | Offsetting Financial Assets and Financial Liabilities |
| 1) | Details of the Group’s financial assets recognized, subject to enforceable master netting arrangements or similar agreements, as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||
Gross assets | Gross liabilities offset | Net amounts presented in the statement of financial position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade receivables | ||||||||||||||||||||||||
Other financial assets | 759 | (757 | ) | 2 | (2 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||||
Gross assets | Gross liabilities offset | Net amounts presented in the statement of financial position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade receivables | ||||||||||||||||||||||||
Other financial assets | 764 | (764 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
The amount in the above table includes the amounts subject to offsetting arrangements under the agreement on facility interconnection and data sharing between telecommunication companies.
116
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 2) | Details of the Group’s financial liabilities recognized, subject to enforceable master netting arrangements or similar agreements, as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||
| Gross liabilities | Gross assets offset | Net amounts position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade payables | ||||||||||||||||||||||||
Other payables | 4,362 | (1,407 | ) | 2,955 | (2,955 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||||
| Gross liabilities | Gross assets offset | Net amounts position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade payables | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.
117
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 37. | Fair Value |
| (1) | Fair Value of Financial Instruments by Category |
Carrying amount and fair value of financial instruments by category as of December 31, 2023 and 2022, are as follows:
| December 31, 2023 | December 31, 2022 | |||||||||||||||
| (in millions of Korean won) | Carrying amount | Fair value | Carrying amount | Fair value | ||||||||||||
Financial assets | ||||||||||||||||
Cash and cash equivalents | 1 | 1 | ||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets measured at amortized cost 2 | 8,326,229 | 1 | 7,364,516 | 1 | ||||||||||||
Financial assets at fair value through other comprehensive income | 116,198 | 116,198 | 129,124 | 129,124 | ||||||||||||
Other financial assets | ||||||||||||||||
Financial assets measured at amortized cost | 1,385,921 | 1 | 1,060,058 | 1 | ||||||||||||
Financial assets at fair value through profit or loss | 939,661 | 939,661 | 1,064,856 | 1,064,856 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,680,168 | 1,680,168 | 1,508,192 | 1,508,192 | ||||||||||||
Derivative financial assets for hedging | 159,211 | 159,211 | 190,830 | 190,830 | ||||||||||||
|
|
|
| |||||||||||||
Total | ||||||||||||||||
|
|
|
| |||||||||||||
Financial liabilities | ||||||||||||||||
Trade and other payables 3 | 1 | 1 | ||||||||||||||
Borrowings | 10,218,165 | 9,979,545 | 10,006,685 | 9,405,992 | ||||||||||||
Other financial liabilities | ||||||||||||||||
Financial liabilities at amortized cost | 915,185 | 1 | 246,606 | 1 | ||||||||||||
Financial liabilities at fair value through profit or loss | 136,106 | 136,106 | 141,280 | 141,280 | ||||||||||||
Derivative financial liabilities for hedging | 24,547 | 24,547 | 33,555 | 33,555 | ||||||||||||
|
|
|
| |||||||||||||
Total | ||||||||||||||||
|
|
|
| |||||||||||||
| 1 | The Group did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value. |
| 2 | Lease receivables are excluded from fair value disclosure in accordance with Korean IFRS 1107. |
| 3 | Amounts related to employee benefit plans are included in trade and other payables at the end of previous year. |
118
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Fair Value Hierarchy |
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:
| • | Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. |
| • | Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. |
| • | Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. |
119
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value disclosed in fair value as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Other financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 13,911 | 156,918 | 768,832 | 939,661 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,230,936 | 5,206 | 444,026 | 1,680,168 | ||||||||||||
Derivative financial assets for hedging | — | 159,211 | — | 159,211 | ||||||||||||
Investment properties | — | — | 5,276,169 | 5,276,169 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Borrowings | ||||||||||||||||
Other financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | — | 1,545 | 134,561 | 136,106 | ||||||||||||
Derivative financial liabilities for hedging | — | 24,547 | — | 24,547 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
120
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Other financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 26,647 | 426,140 | 612,069 | 1,064,856 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,005,900 | 5,163 | 497,129 | 1,508,192 | ||||||||||||
Derivative financial assets for hedging | — | 189,717 | 1,113 | 190,830 | ||||||||||||
Investment properties | — | — | 5,370,047 | 5,370,047 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Borrowings | ||||||||||||||||
Other financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | — | — | 141,280 | 141,280 | ||||||||||||
Derivative financial liabilities for hedging | — | 33,555 | — | 33,555 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
121
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (3) | Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements |
| 1) | Details of transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements |
There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements.
| 2) | Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements. |
Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||
| Financial assets | Financial liabilities | |||||||||||||||
Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivative financial assets for hedging | Financial liabilities at fair value through profit or loss | |||||||||||||
Beginning balance | ||||||||||||||||
Acquisition | 216,838 | 10,267 | — | — | ||||||||||||
Reclassification | 26,471 | (5,532 | ) | (1,113 | ) | (7,363 | ) | |||||||||
Changes in consolidation scope | 252 | — | — | — | ||||||||||||
Disposal | (44,323 | ) | (6 | ) | — | (5,205 | ) | |||||||||
Amount recognized in profit or loss 1, | (42,475 | ) | (61 | ) | — | 5,849 | ||||||||||
Amount recognized in other comprehensive income | — | (57,771 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The recognition of gains and losses on financial liabilities measured at fair value through profit or loss consists of derivative valuation gains and losses. |
122
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||
| Financial assets | Financial liabilities | |||||||||||||||
| Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivative financial assets (liabilities) for hedging | Financial liabilities at fair value through profit or loss | |||||||||||||
Beginning balance | ||||||||||||||||
Acquisition | 226,310 | 262,408 | — | 3,046 | ||||||||||||
Reclassification | (8,962 | ) | 8,122 | — | (54,921 | ) | ||||||||||
Changes in consolidation scope | — | (40 | ) | — | — | |||||||||||
Disposal | (179,740 | ) | (97,426 | ) | (31,565 | ) | — | |||||||||
Amount recognized in profit or loss 1,2 | (2,624 | ) | 18 | — | (22,177 | ) | ||||||||||
Amount recognized in other comprehensive income 1 | — | 674 | 1,113 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The recognition of gains and losses on derivatives financial liabilities (assets) for hedging purposes consists entirely of derivatives valuation losses. |
| 2 | The recognition of gains and losses on financial liabilities measured at fair value through profit or loss consists of derivative valuation losses. |
123
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (4) | Valuation Technique and the Inputs |
Valuation techniques and inputs used in the recurring, non-recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||
| Fair value | Level | Valuation techniques | Inputs | |||||||||
Assets | ||||||||||||
Trade and other receivables | ||||||||||||
Financial assets at fair value through other comprehensive income | 2 | DCF Model | Guaranteed bond interest rate | |||||||||
Other financial assets | ||||||||||||
Financial assets at fair value through profit or loss | 925,750 | 2,3 | DCF Model, Adjusted Net Asset Model, Monte-Carlo Simulation | Market Interest rate, Underlying asset price | ||||||||
Financial assets at fair value through other comprehensive income | 449,232 | 2,3 | DCF Model, Market Approach Model | Discount rate | ||||||||
Derivative financial assets for hedging | 159,211 | 2 | DCF Model | Market observation discount rate, Swap interest rate | ||||||||
Investment properties | 5,276,169 | 3 | DCF Model | |||||||||
Liabilities | ||||||||||||
Borrowings | 2 | DCF Model | Bond interest rate | |||||||||
Other financial liabilities | ||||||||||||
Financial liabilities at fair value through profit or loss | 136,106 | 2,3 | DCF Model, Binomial Option Pricing | Forward exchange rate Forward interest rate | ||||||||
Derivative financial liabilities for hedging | 24,547 | 2 | DCF Model | Market observation discount rate | ||||||||
124
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Fair value | Level | Valuation techniques | Inputs | |||||||||||||
| Assets | ||||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets at fair value through other comprehensive income | 2 | DCF Model | | Guaranteed bond interest rate | | |||||||||||
Other financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | 1,038,209 | 2,3 | | DCF Model, Adjusted Net Asset Monte-Carlo Simulation |
| | Market Interest rate, Underlying asset | | ||||||||
Financial assets at fair value through other comprehensive income | 502,292 | 2,3 | | DCF Model, Market Approach Model |
| Discount rate | ||||||||||
Derivative financial assets for hedging | 190,830 | 2,3 | DCF Model | | Market observation discount rate, Swap interest rate |
| ||||||||||
Investment properties | 5,370,047 | 3 | DCF Model | |||||||||||||
Liabilities | ||||||||||||||||
Borrowings | 2 | DCF Model | Bond interest rate | |||||||||||||
Other financial liabilities | ||||||||||||||||
Financial liabilities at fair value through profit or loss | 141,280 | 3 | | DCF Model, Binomial Option Pricing Monte-Carlo Simulation |
| |||||||||||
Derivative financial liabilities for hedging | 33,555 | 2 | DCF Model | | Market observation discount rate | |||||||||||
| (5) | Valuation Processes for Fair Value Measurements Categorized Within Level 3 |
The Group uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the chief financial officer (CFO) and discuss the valuation processes and results with the CFO in line with the Group’s closing dates.
125
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (6) | Gains and Losses on Valuation at the Transaction Date |
In the case that the Group values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by the said valuation technique differs from the transaction price, then the fair value of the financial instruments is recognized as the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case that inputs of the valuation techniques become observable in markets, the remaining deferred difference is immediately recognized in full in profit or loss.
In relation to this, details and changes of the total deferred difference for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
| Derivatives used for hedging | Derivatives used for hedging | |||||||
I. Beginning balance | ||||||||
II. New transactions | — | — | ||||||
III. Recognized at fair value through profit or loss | — | (832 | ) | |||||
|
|
|
| |||||
IV. Ending balance (I+II+III) | ||||||||
|
|
|
| |||||
126
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 38. | Interests in Unconsolidated Structured Entities |
| (1) | Details of information about its interests in unconsolidated structured entities, which the Group does not have control over, including the nature, purpose and activities of the structured entity and how the structured entity is financed, are as follows: |
Classes of | Nature, purpose, activities and others | |
| Real estate finance | A structured entity incorporated for the purpose of real estate development is provided with funds by investors’ investments in equity and borrowings from financial institutions (including long-term and short-term loans and issuance of ABCP due in three months), and based on these, the structured entity implements activities such as real estate acquisition, development and mortgage loans. The structured entity repays loan principals with funds incurred from instalment house sales after the completion of real estate development or with collection of the principal of mortgage loan. The remaining shares are distributed to investors. As of December 31, 2023, this entity is engaged in real estate finance structured entity, and generates revenues by receiving dividends from direct investments in or receiving interests on loans to the structured entity. Financial institutions, including the Entity, are provided with guarantees including joint guarantees or real estate collateral from investors and others. Consequently, the entity is a priority over other parties in the preservation of claim. However, when the credit rating of investors and others decreases or when the value of real estate decreases, the entity may be obliged to cover losses. | |
| PEF and investment funds | Minority investors including managing members contribute to PEF and investment funds incorporated for the purpose of providing funds to the small, medium, or venture entities, and the managing member implements activities such as investments in equity or loans based on the contributions. As of December 31, 2023, the entity is engaged in PEF and investment funds structured entity, and after contributing to PEF and investment funds, the entity receives dividends for operating revenues from these contributions. The entity is provided with underlying assets of PEF and investment funds as collateral. However, when the value of the underlying assets decreases, the entity may be obliged to cover losses. | |
| Asset securitization | The Group transfers accounts receivable for handset sales to its Special Purpose Company (“SPC”) for asset securitization. SPC issues the asset-backed securities with accounts receivable for handset sales as an underlying asset, and makes payment for the underlying asset acquired. | |
127
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Details of scale of unconsolidated structured entities and nature of the risks associated with an entity’s interests in unconsolidated structured entities as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
| Real Estate Finance | PEF and Investment Funds | Asset Securitization | Total | |||||||||||||
Total assets of unconsolidated structured entities | ||||||||||||||||
Assets recognized in statement of financial position | ||||||||||||||||
Other financial assets | ||||||||||||||||
Joint ventures and associates | 144,517 | 282,550 | — | 427,067 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Maximum loss exposure 1 | ||||||||||||||||
Investment assets | ||||||||||||||||
Investment agreement, etc | 44,975 | 106,064 | — | 151,039 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | Includes the investments recognized in the Group’s financial statements and the amounts which are probable to be determined when certain conditions are met by agreements including purchase agreements, credit granting and others. |
128
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Real Estate Finance | PEF and Investment Funds | Asset Securitization | Total | |||||||||||||
Total assets of unconsolidated structured entities | ||||||||||||||||
Assets recognized in statement of financial position | ||||||||||||||||
Other financial assets | ||||||||||||||||
Joint ventures and associates | 123,138 | 268,275 | — | 391,413 | ||||||||||||
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Total | ||||||||||||||||
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| |||||||||
Maximum loss exposure 1 | ||||||||||||||||
Investment assets | ||||||||||||||||
Investment agreement, etc. | 40,914 | 91,224 | — | 132,138 | ||||||||||||
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| |||||||||
Total | ||||||||||||||||
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| 1 | Includes the investments recognized in the Group’s financial statements and the amounts which are probable to be determined when certain conditions are met by agreements including purchase agreements, credit granting and others. |
129
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| 39. | Information About Non-Controlling Interests |
| (1) | Changes in Accumulated Non-Controlling Interests |
Profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are material to the Group for the years ended December 31, 2023 and 2022, is as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||||||||||
| Non-controlling interests’ rate (%) | Accumulated non-controlling interests at the beginning of the year | Profit or loss allocated to non-controlling interests | Dividends paid to non-controlling interests | Others | Accumulated non-controlling interests at the end of the year | |||||||||||||||||||
KT Skylife Co., Ltd. | 49.4 | % | ||||||||||||||||||||||
BC Card Co., Ltd. | 30.5 | % | 524,657 | 25,355 | (4,960 | ) | 3,023 | 548,075 | ||||||||||||||||
KTIS Corporation | 66.7 | % | 141,402 | 5,947 | (2,451 | ) | (1,872 | ) | 143,026 | |||||||||||||||
KTCS Corporation | 78.3 | % | 153,881 | 14,228 | (3,001 | ) | (2,313 | ) | 162,795 | |||||||||||||||
Nasmedia, Co., Ltd. | 55.9 | % | 135,425 | 10,679 | (4,028 | ) | (467 | ) | 141,609 | |||||||||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||||||||||
| Non-controlling interests’ rate (%) | Accumulated non-controlling interests at the beginning of the year | Profit or loss allocated to non-controlling interests | Dividends paid to non-controlling interests | Others | Accumulated non-controlling interests at the end of the year | |||||||||||||||||||
KT Skylife Co., Ltd. | 49.8 | % | ||||||||||||||||||||||
BC Card Co., Ltd. | 30.5 | % | 498,928 | 47,909 | (7,641 | ) | (14,539 | ) | 524,657 | |||||||||||||||
KTIS Corporation | 66.7 | % | 135,240 | 14,965 | (2,226 | ) | (6,577 | ) | 141,402 | |||||||||||||||
KTCS Corporation | 78.3 | % | 145,111 | 18,888 | (2,721 | ) | (7,397 | ) | 153,881 | |||||||||||||||
Nasmedia, Co., Ltd. | 56.0 | % | 124,181 | 15,610 | (4,187 | ) | (179 | ) | 135,425 | |||||||||||||||
130
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (2) | Summarized Financial Information on Subsidiaries |
The summarized financial information for each subsidiary with non-controlling interests that are material to the Group, before inter-group eliminations, is as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Current assets | ||||||||||||||||||||
Non-current assets | 795,182 | 2,613,031 | 336,296 | 130,391 | 101,537 | |||||||||||||||
Current liabilities | 353,839 | 3,661,263 | 116,271 | 187,621 | 251,207 | |||||||||||||||
Non-current liabilities | 125,531 | 1,061,169 | 127,248 | 47,228 | 11,129 | |||||||||||||||
Equity | 741,473 | 1,630,446 | 204,090 | 200,050 | 250,975 | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Current assets | ||||||||||||||||||||
Non-current assets | 938,465 | 2,513,453 | 294,087 | 123,517 | 81,586 | |||||||||||||||
Current liabilities | 274,637 | 2,879,551 | 103,698 | 188,379 | 261,381 | |||||||||||||||
Non-current liabilities | 229,042 | 1,229,649 | 95,506 | 40,240 | 14,349 | |||||||||||||||
Equity | 855,487 | 1,556,875 | 197,004 | 191,107 | 241,215 | |||||||||||||||
Summarized consolidated statements of comprehensive income for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Sales | ||||||||||||||||||||
Profit for the year | (109,407 | ) | 76,545 | 13,922 | 15,804 | 17,703 | ||||||||||||||
Other comprehensive income (loss) | (6,625 | ) | 13,832 | (3,162 | ) | (2,550 | ) | (1,890 | ) | |||||||||||
Total comprehensive income | (116,032 | ) | 90,377 | 10,760 | 13,254 | 15,813 | ||||||||||||||
131
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Sales | ||||||||||||||||||||
Profit for the year | 20,941 | 148,341 | 15,917 | 17,634 | 27,691 | |||||||||||||||
Other comprehensive income (loss) | 13,544 | (5,286 | ) | (2,415 | ) | (134 | ) | (695 | ) | |||||||||||
Total comprehensive income | 34,485 | 143,055 | 13,502 | 17,500 | 26,996 | |||||||||||||||
Summarized consolidated statements of cash flows for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Cash flows from investing activities | (125,343 | ) | (74,430 | ) | (17,636 | ) | (5,901 | ) | (30,910 | ) | ||||||||||
Cash flows from financing activities | (50,811 | ) | (67,609 | ) | (32,872 | ) | (26,948 | ) | (11,077 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 31,053 | (59,156 | ) | 384 | 22,297 | (33,871 | ) | |||||||||||||
Cash and cash equivalents at beginning of year | 98,695 | 435,047 | 24,944 | 61,814 | 86,133 | |||||||||||||||
Exchange differences | — | (95 | ) | — | — | 15 | ||||||||||||||
Cash and cash equivalents at end of the year | 129,748 | 375,796 | 25,328 | 84,111 | 52,277 | |||||||||||||||
132
KT Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||||||
| KT Skylife Co., Ltd. | BC Card Co., Ltd. | KTIS Corporation | KTCS Corporation | Nasmedia, Co., Ltd. | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Cash flows from investing activities | (78,928 | ) | (7,733 | ) | 9,813 | 13,245 | 3,845 | |||||||||||||
Cash flows from financing activities | (79,455 | ) | 914,441 | (29,199 | ) | (35,578 | ) | (11,136 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | 18,024 | 108,665 | (5,577 | ) | (2,910 | ) | 14,724 | |||||||||||||
Cash and cash equivalents at beginning of year | 80,672 | 326,482 | 30,521 | 63,884 | 71,396 | |||||||||||||||
Exchange differences | (1 | ) | (100 | ) | — | 840 | 13 | |||||||||||||
Cash and cash equivalents at end of the year | 98,695 | 435,047 | 24,944 | 61,814 | 86,133 | |||||||||||||||
| (3) | Transactions with Non-Controlling Interests |
The effect of changes in the ownership interest on the equity attributable to owners of the Group for the years ended December 31, 2023 and 2022 is summarized as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Carrying amount of non-controlling interests acquired | ||||||||
Consideration paid to non-controlling interests | 213,819 | 69,652 | ||||||
|
|
|
| |||||
Effect of changes in equity (net amount) | ||||||||
|
|
|
| |||||
| 40. | Events After the Reporting Period |
| (1) | The Company has decided to acquire treasury stocks ( |
| (2) | The company issued the following bonds after the end of the reporting period (unit: |
Type | Issued Date | Annual interest rates | Maturity | Korean won | ||||||||
The 200-1st Public bond | Feb. 27, 2024 | 3.552 | % | Feb. 27, 2026- | 120,000 | |||||||
The 200-2nd Public bond | Feb. 27, 2024 | 3.608 | % | Feb. 26, 2027- | 200,000 | |||||||
The 200-3rd Public bond | Feb. 27, 2024 | 3.548 | % | Feb. 27, 2029- | 80,000 | |||||||
133
| Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro, Youngdeungpo-gu, Seoul 07326, Korea
Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr |
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
English Translation of Independent Auditor’s Report on Internal Control over Financial Reporting Originally Issued in Korean on March 18, 2024
To the shareholders and the Board of Directors of KT Corporation
Audit Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of KT Corporation and its subsidiaries (the “Group”) as of December 31, 2023, based on ‘Conceptual Framework for Design and Operation of Internal Control over Financial Reporting’.
In our opinion, the Group’s internal control over financial reporting is designed and operated effectively as of December 31, 2023, in all material respects, in accordance with the ‘Conceptual Framework for Design and Operation of Internal Control over Financial Reporting’.
We have also audited, in accordance with the Korean Standards on Auditing (“KSAs”), the consolidated financial statements of the Group, which comprise the consolidated statement of financial position as of December 31, 2023, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows, for the year then ended, and notes to the consolidated financial statements, including material accounting policy information, and our report dated March 18, 2024, expressed an unqualified opinion.
Basis for Audit Opinion
We conducted our audits in accordance with the KSAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Internal Control over Financial Reporting section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audits of the internal control over financial reporting in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Internal Control over Financial Reporting
Management is responsible for designing, operating and maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report on the Effectiveness of the Internal Control over Financial Reporting by CEO.
Those Charged with Governance is responsible for the oversight of internal control over financial reporting of the Group.
Auditor’s Responsibilities for the Audit of the Internal Control over Financial Reporting
Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the KSAs. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.
Deloitte Touche Tohmatsu Limited is a private company limited by guarantee incorporated in England & Wales under company number 07271800, and its registered office is Hill House, 1 Little New Street, London, EC4a, 3TR, United Kingdom.
134
The audit of internal control over financial reporting involves performing procedures to obtain audit evidence about whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of that a material weakness exists. The audit includes obtaining an understanding of internal control over financial reporting and testing and evaluating the design and operating effectiveness of iternal control over financial reporting based on the assessed risks.
Definition and Limitations of Internal Control over Financial Reporting
A group’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with Korean International Financial Reporting Standards (“K-IFRS”). A group’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the group; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with K-IFRS, and that receipts and expenditures of the group are being made only in accordance with authorizations of management and directors of the group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the group’s assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The engagement partner on the audit resulting in this independent auditor’s report is Lee, Dong Hyun.
March 18, 2024
Notice to Readers
This report is effective as of March 18, 2024, the auditor’s report date. Certain subsequent events or circumstances may have occurred between the auditor’s report date and the time the auditor’s report is read. Such events or circumstances could significantly affect the Group’s internal control over financial reporting and may result in modifications to the auditor’s report. |
135
Report on the Effectiveness of
the Internal Control over Financial Reporting
To the Shareholders, Audit Committee and Board of Directors of
KT Corporation
We, as the Chief Executive Officer (“CEO”) and the Internal Control over Financial Reporting (“ICFR”) Officer of KT Corporation (“the Company”), assessed the effectiveness of the design and operation of the Company’s Internal Control over Financial Reporting for consolidation purposes for the year ended December 31, 2023.
The Company’s management, including ourselves, is responsible for designing and operating ICFR for consolidation purposes.
We assessed the design and operating effectiveness of the ICFR for consolidation purposes in the prevention and detection of an error or fraud which may cause material misstatements in the preparation and disclosure of reliable Consolidated financial statements.
We designed and operated ICFR for consolidation purposes in accordance with Conceptual Framework for Designing and Operating internal Control over Financial Reporting established by the Operating Committee of Internal Control over Financial Reporting in Korea (“the ICFR Committee”), And, we conducted an evaluation of ICFR for consolidation purposes based on Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting established by the ICFR Committee.
Based on the assessment results, we believe that the Company’s ICFR for consolidation purposes, as at December 31, 2023, is designed and operating effectively, in all material respects, in conformity with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting
We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statement which cause material misunderstandings, and we have reviewed and verified this report with sufficient due care.
February 20, 2024
| Chief Executive Officer |  | |||
Internal Control over Financial Reporting Officer |
136
KT Corporation
Separate Financial Statements
December 31, 2023 and 2022
KT Corporation
Index
December 31, 2023 and 2022
| Page(s) | ||||
| 1 – 4 | ||||
Separate Financial Statements | ||||
| 5 – 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 | ||||
| 10 | ||||
| 11 – 112 | ||||
Independent Auditor’s Report on Internal Control over Financial Reporting | 113 – 114 | |||
Report on the Effectiveness of Internal Control over Financial Reporting | 115 | |||
| Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro, Youngdeungpo-gu, Seoul 07326, Korea
Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr |
English Translation of Independent Auditor’s Report Originally Issued in Korean on March 18, 2024
To the Shareholders and the Board of Directors of KT Corporation:
Audit Opinion
We have audited the financial statements of KT Corporation (the “Company”), which comprise the statement of financial position as of December 31, 2023, and the statement of profit or loss, the statement of comprehensive income, statement of changes in shareholders’ equity and statement of cash flows, for the year then ended, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and its financial performance and its cash flows for the year then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).
We have also audited, in accordance with the Korean Standards on Auditing (“KSAs”), the internal control over financial reporting of the Company as of December 31, 2023, based on the Conceptual Framework for Design and Operation of Internal Control over Financial Reporting, and our report dated March 18, 2024 expressed an unqualified opinion.
Basis for Audit Opinion
We conducted our audit in accordance with the KSAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.
Deloitte Touche Tohmatsu Limited is a private company limited by guarantee incorporated in England & Wales under company number 07271800, and its registered office is Hill House, 1 Little New Street, London, EC4a, 3TR, United Kingdom.
1
Key Audit Matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
- Occurrence and accuracy of Mobile service revenue and revenue related to sale of handset for mobile service (“Mobile revenue”)
(1) Reasons for Determining the matter as a Key Audit Matter
As described in Note 2.22 to the financial statements, the Company recognizes revenue at the point in time when it fulfills its performance obligations identified from contracts with customers. The Company provides various services and rate plans related to mobile revenue, and due to the large volume of transactions with customers, needs complex and elaborate information technology systems to accurately record occurrence of mobile revenue.
Given the magnitude and complexity of mobile revenue recorded by the billing system of the Company, we determined the occurrence and accuracy of mobile revenue recognized through the billing system as a key audit matter.
(2) How the matter has been addressed in the audit
Key audit procedures performed regarding the occurrence and accuracy of mobile revenue computed through the billing system include the following:
| • | During the audit planning phase, we obtained an understanding of the Company’s accounting policies and processes related to Mobile revenue recognition. |
| • | We performed an assessment on the environment of the general information technology systems used for collecting usage of voice, text, and data, as well as handling billing and invoicing throughout the process of recording revenue and tested manual controls and general information technology controls. |
| • | We reconciled the mobile revenue in the billing system with the revenue in the ledger. |
| • | We performed substantive analytical procedures using historical data on mobile revenue by rate plan and subscriber information. |
| • | To verify the accuracy and completeness of the subscriber information used in our audit procedures, we selected subscriber information from the billing system, reconciled the selections with contractual terms between the Company and customers, and corroborated if the subscribers were valid for the respective month. |
| • | To verify the occurrence and accuracy of revenue recognition related to sale of handset for mobile service, we selected transactions from the |
2
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the accompanying financial statements in accordance with K-IFRS, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management of the Company is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
3
| • | Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other matters
The financial statements for the reporting period ending December 31, 2022, were audited by another external auditor, and their audit report dated March 8, 2023, expressed an unqualified opinion.
The engagement partner on the audit resulting in this independent auditor’s report is Lee, Dong Hyun.
March 18, 2024
Notice to Readers
This report is effective as of March 18, 2024, the auditor’s report date. Certain subsequent events or circumstances may have occurred between the auditor’s report date and the time the auditor’s report is read. Such events or circumstances could significantly affect the financial statements and may result in modifications to the auditor’s report.
4
December 31, 2023 and 2022
Separate Statements of Financial Position
December 31, 2023 and 2022
| (in millions of Korean won) | Notes | December 31, 2023 | December 31, 2022 | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 4,5,36 | |||||||||||
Trade and other receivables, net | 4,6,36 | 3,190,269 | 3,055,649 | |||||||||
Other financial assets | 4,7,36 | 279,451 | 232,837 | |||||||||
Inventories, net | 8 | 368,117 | 349,870 | |||||||||
Other current assets | 9 | 2,008,723 | 1,998,825 | |||||||||
|
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|
| |||||||||
Total current assets | 7,088,565 | 6,603,488 | ||||||||||
|
|
|
| |||||||||
Non-current assets | ||||||||||||
Trade and other receivables, net | 4,6,36 | 370,717 | 526,988 | |||||||||
Other financial assets | 4,7,36 | 2,134,324 | 1,993,893 | |||||||||
Property and equipment, net | 10 | 11,492,776 | 11,540,162 | |||||||||
Right-of-use assets | 20 | 976,625 | 983,049 | |||||||||
Investment properties, net | 11,36 | 1,191,592 | 1,137,489 | |||||||||
Intangible assets, net | 12 | 1,487,848 | 1,855,679 | |||||||||
Investments in subsidiaries, associates and joint ventures | 13 | 4,796,606 | 4,879,219 | |||||||||
Net defined benefit assets | 17 | 60,590 | 180,689 | |||||||||
Other non-current assets | 9 | 709,276 | 717,118 | |||||||||
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|
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| |||||||||
Total non-current assets | 23,220,354 | 23,814,286 | ||||||||||
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Total assets | ||||||||||||
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5
KT Corporation
Separate Statements of Financial Position
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||||||
Liabilities | ||||||||||||
Current liabilities | ||||||||||||
Trade and other payables | 4,14,36 | |||||||||||
Borrowings | 4,15,36 | 1,725,234 | 984,720 | |||||||||
Other financial liabilities | 4,7,36 | 660 | — | |||||||||
Current income tax liabilities | 29 | 148,136 | 127,944 | |||||||||
Provisions | 16 | 91,861 | 87,720 | |||||||||
Deferred income | 25 | 39,618 | 44,042 | |||||||||
Other current liabilities | 9 | 719,605 | 665,968 | |||||||||
|
|
|
| |||||||||
Total current liabilities | 6,957,491 | 6,321,450 | ||||||||||
|
|
|
| |||||||||
Non-current liabilities | ||||||||||||
Trade and other payables | 4,14,36 | 739,766 | 979,050 | |||||||||
Borrowings | 4,15,36 | 5,834,699 | 6,510,841 | |||||||||
Other financial liabilities | 4,7,36 | 23,819 | 37,566 | |||||||||
Net defined benefit liabilities | 17 | 0 | — | |||||||||
Provisions | 16 | 90,493 | 79,374 | |||||||||
Deferred income | 25 | 145,334 | 158,161 | |||||||||
Deferred income tax liabilities | 29 | 796,087 | 763,113 | |||||||||
Other non-current liabilities | 9 | 677,691 | 710,139 | |||||||||
|
|
|
| |||||||||
Total non-current liabilities | 8,307,889 | 9,238,244 | ||||||||||
|
|
|
| |||||||||
Total liabilities | 15,265,380 | 15,559,694 | ||||||||||
|
|
|
| |||||||||
Equity | ||||||||||||
Share capital | 21 | 1,564,499 | 1,564,499 | |||||||||
Share premium | 1,440,258 | 1,440,258 | ||||||||||
Retained earnings | 22 | 12,544,425 | 12,347,403 | |||||||||
Accumulated other comprehensive income | 23 | 64,229 | (72,672 | ) | ||||||||
Other components of equity | 23 | (569,872 | ) | (421,408 | ) | |||||||
|
|
|
| |||||||||
Total equity | 15,043,539 | 14,858,080 | ||||||||||
|
|
|
| |||||||||
Total liabilities and equity | ||||||||||||
|
|
|
| |||||||||
The above separate statements of financial position should be read in conjunction with the accompanying notes.
6
KT Corporation
Separate Statements of Profit or Loss
Years Ended December 31, 2023 and 2022
| (in millions of Korean won, except per share amounts) | Notes | 2023 | 2022 | |||||||
Operating revenue | 25 | |||||||||
Operating expenses | 26 | 17,186,045 | 17,121,140 | |||||||
|
|
|
| |||||||
Operating profit | 1,185,392 | 1,168,103 | ||||||||
Other income | 27 | 327,527 | 408,025 | |||||||
Other expenses | 27 | 319,586 | 228,723 | |||||||
Finance income | 28 | 381,151 | 577,334 | |||||||
Finance costs | 28 | 419,210 | 653,996 | |||||||
|
|
|
| |||||||
Profit before income tax | 1,155,274 | 1,270,743 | ||||||||
Income tax expense | 29 | 221,937 | 506,993 | |||||||
|
|
|
| |||||||
Profit for the year | ||||||||||
|
|
|
| |||||||
Earnings per share | ||||||||||
Basic earnings per share | 30 | |||||||||
Diluted earnings per share | 30 | 3,739 | 3,152 | |||||||
The above separate statements of profit or loss should be read in conjunction with the accompanying notes.
7
KT Corporation
Separate Statements of Comprehensive Income
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | 2023 | 2022 | |||||||||
Profit for the year | ||||||||||||
|
|
|
| |||||||||
Other comprehensive income (loss) | ||||||||||||
Items that will not be reclassified to profit or loss: | ||||||||||||
Remeasurements of net defined benefit liabilities | 17 | (90,272 | ) | 114,154 | ||||||||
Gain (loss) on valuation of equity instruments at fair value through other comprehensive income | 158,245 | (149,638 | ) | |||||||||
Items that may be subsequently reclassified to profit or loss: | ||||||||||||
Loss on valuation of debt instruments at fair value through other comprehensive income | 4 | (26 | ) | (13,902 | ) | |||||||
Valuation gain on cash flow hedges | 4,7 | 16,030 | 56,259 | |||||||||
Other comprehensive loss from cash flow hedges reclassified to profit or loss | 4 | (37,126 | ) | (91,012 | ) | |||||||
|
|
|
| |||||||||
Total other comprehensive income (loss) | ||||||||||||
|
|
|
| |||||||||
Total comprehensive income for the year | ||||||||||||
|
|
|
| |||||||||
The above separate statements of comprehensive income should be read in conjunction with the accompanying notes.
8
KT Corporation
Separate Statements of Changes in Equity
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | Share capital | Share premium | Retained earnings | Accumulated other comprehensive income | Other of equity | Total | |||||||||||||||||||||
Balance at January 1, 2022 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||
Profit for the year | — | — | 763,750 | — | — | 763,750 | ||||||||||||||||||||||
Gain on valuation of financial assets at fair value through other comprehensive income | 4,29 | — | — | (11 | ) | (163,529 | ) | — | (163,540 | ) | ||||||||||||||||||
Remeasurements of net defined benefit liabilities | 17,29 | — | — | 114,154 | — | — | 114,154 | |||||||||||||||||||||
Valuation gain on cash flow hedge | 4,29 | — | — | — | (34,753 | ) | — | (34,753 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total comprehensive income for the year | — | — | 877,893 | (198,282 | ) | — | 679,611 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Transactions with equity holders | — | — | ||||||||||||||||||||||||||
Dividends paid | 31 | — | — | (450,394 | ) | — | — | (450,394 | ) | |||||||||||||||||||
Appropriation of retained earnings related to loss on disposal of treasury stock | 22 | — | — | (11,577 | ) | — | 11,577 | — | ||||||||||||||||||||
Disposal of treasury stock | — | — | — | 763,081 | 763,081 | |||||||||||||||||||||||
Others | — | — | — | — | 888 | 888 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2022 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at January 1, 2023 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||
Profit for the year | — | — | 933,337 | — | — | 933,337 | ||||||||||||||||||||||
Loss on valuation of financial assets at fair value through other comprehensive income | 4,29 | — | — | 222 | 157,997 | — | 158,219 | |||||||||||||||||||||
Remeasurements of net defined benefit liabilities | 17,29 | — | — | (90,272 | ) | — | — | (90,272 | ) | |||||||||||||||||||
Valuation loss on cash flow hedge | 4,29 | — | — | — | (21,096 | ) | — | (21,096 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total comprehensive income for the year | — | — | 843,287 | 136,901 | — | 980,188 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Transactions with equity holders | — | |||||||||||||||||||||||||||
Dividends paid | 31 | — | — | (501,844 | ) | — | — | (501,844 | ) | |||||||||||||||||||
Appropriation of retained earnings related to loss on | 22 | — | — | (44,421 | ) | — | 44,421 | — | ||||||||||||||||||||
Acquisition of treasury stock | — | — | — | — | (300,243 | ) | (300,243 | ) | ||||||||||||||||||||
Disposal of treasury stock | — | — | — | — | 4,463 | 4,463 | ||||||||||||||||||||||
Retirement of treasury stock | 22 | — | — | (100,000 | ) | — | 100,000 | — | ||||||||||||||||||||
Others | — | — | — | — | 2,895 | 2,895 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2023 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
The above separate statements of changes in equity should be read in conjunction with the accompanying notes.
9
KT Corporation
Separate Statements of Cash Flows
Years Ended December 31, 2023 and 2022
| (in millions of Korean won) | Notes | 2023 | 2022 | |||||||||
Cash flows from operating activities | ||||||||||||
Cash generated from operations | 32 | |||||||||||
Interest paid | (246,516 | ) | (202,579 | ) | ||||||||
Interest received | 191,289 | 211,170 | ||||||||||
Dividends received | 115,324 | 98,874 | ||||||||||
Income tax paid | (165,648 | ) | (173,297 | ) | ||||||||
|
|
|
| |||||||||
Net cash inflow from operating activities | 4,552,254 | 4,062,353 | ||||||||||
|
|
|
| |||||||||
Cash flows from investing activities | ||||||||||||
Collection of loans | 36,724 | 133,864 | ||||||||||
Disposal of current financial instruments at amortized cost | 343,231 | 900 | ||||||||||
Disposal of financial assets at fair value through profit or loss | 4,155 | 1,695 | ||||||||||
Disposal of financial assets at fair value through other comprehensive income | 306 | — | ||||||||||
Disposal of investments in subsidiaries, associates and joint ventures | 73,556 | 36,028 | ||||||||||
Disposal of property and equipment | 30,010 | 60,619 | ||||||||||
Disposal of intangible assets | 2,860 | 17,047 | ||||||||||
Disposal of right-of-use assets | 458 | 96 | ||||||||||
Loans granted | (30,107 | ) | (125,146 | ) | ||||||||
Acquisition of financial instruments at amortized cost | (304,450 | ) | (343,794 | ) | ||||||||
Acquisition of financial assets at fair value through profit or loss | (46,437 | ) | (115,415 | ) | ||||||||
Acquisition of financial assets at fair value through other comprehensive income | (10,267 | ) | (442,176 | ) | ||||||||
Acquisition of investments in subsidiaries, associates and joint ventures | (49,032 | ) | (348,607 | ) | ||||||||
Acquisition of property and equipment | (2,928,008 | ) | (2,980,008 | ) | ||||||||
Acquisition of intangible assets | (311,317 | ) | (307,689 | ) | ||||||||
Acquisition of right-of-use assets | (926 | ) | (1,984 | ) | ||||||||
|
|
|
| |||||||||
Net cash outflow from in investing activities | (3,189,244 | ) | (4,414,570 | ) | ||||||||
|
|
|
| |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from borrowings and bonds | 2,207,827 | 1,741,962 | ||||||||||
Settlement of derivative instruments (inflow) | 46,526 | 76,280 | ||||||||||
Dividend paid | (501,844 | ) | (450,394 | ) | ||||||||
Repayments of borrowings and debentures | (2,206,730 | ) | (1,359,117 | ) | ||||||||
Settlement of derivative instruments (outflow) | — | (41,197 | ) | |||||||||
Acquisition of treasury stock | (300,086 | ) | — | |||||||||
Decrease in lease liabilities | (333,042 | ) | (357,337 | ) | ||||||||
|
|
|
| |||||||||
Net cash outflow from financing activities | 33 | (1,087,349 | ) | (389,803 | ) | |||||||
|
|
|
| |||||||||
Effect of exchange rate change on cash and cash equivalents | 37 | (387 | ) | |||||||||
|
|
|
| |||||||||
Net increase (decrease) in cash and cash equivalents | 275,698 | (742,407 | ) | |||||||||
Cash and cash equivalents | ||||||||||||
Beginning of the year | 5 | 966,307 | 1,708,714 | |||||||||
|
|
|
| |||||||||
End of the year | 5 | |||||||||||
|
|
|
| |||||||||
The above separate statements of cash flows should be read in conjunction with the accompanying notes.
10
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 1. | General Information |
KT Corporation (the “Company”) commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telecommunication services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The address of the Company’s registered office is 90, Buljeonga-ro, Bundang-gu, Seongnam City, Gyeonggi Province, Korea.
On October 1, 1997, upon the announcement of the Act on the Management of Government-Invested Institutions and the Privatization Law, the Company became a government-funded institution under the Commercial Code of Korea.
On December 23, 1998, the Company’s shares were listed on the Korea Exchange.
On May 29, 1999, the Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), which represents new shares and 20,813,311 government-owned shares, on the New York Stock Exchange. On July 2, 2001, additional ADS, representing 55,502,161 government-shares, were issued on the New York Stock Exchange.
In 2002, the Company acquired the entire government-owned shares in accordance with the Korean government’s privatization plan. As of December 31, 2023, the Korean government does not own any shares in the Company.
11
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2. | Significant Accounting Policies |
The principal accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
| 2.1 | Basis of Preparation |
The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.
The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.
The financial statements have been prepared on a historical cost basis, except for the following:
| • | Certain financial assets and liabilities (including derivative instruments) |
| • | Defined benefit pension plans – plan assets measured at fair value |
The preparation of the separate financial statement requires the use of critical accounting estimates. Management also needs to exercise judgement in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 3.
| 2.2 | Changes in Accounting Policies and Disclosures |
(1) New and amended standards and interpretations adopted by the Company
The Company has applied a number of new and amended standards and new interpretations issued that are effective accounting periods beginning on January 1, 2023.
| • | K-IFRS 1117 Insurance Contract |
K-IFRS 1117, which supersedes K-IFRS 1104 Insurance Contracts, establishes principles for recognition, measurement, and disclosure of insurance contracts and its main features include the measurement of insurance liabilities at present value of the fulfilment cash flows, recognition of insurance revenue based on accruals-based accounting, and separate presentation of insurance revenue, insurance service expenses, and insurance finance income or expenses.
The Company does not have any contracts that meet the definition of an insurance contract under K-IFRS 1117.
12
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | K-IFRS 1001 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements (Amendment)—Disclosure of Accounting Policies |
The amendments change the requirements in K-IFRS 1001 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
The supporting paragraphs in K-IFRS 1001 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.
The IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment)—Disclosure of financial liabilities with condition to adjust exercise price |
The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS 1032.
| • | K-IFRS 1008 Accounting Polices, Changes in Accounting Estimates and Errors (Amendment)—Definition of Accounting Estimates |
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The definition of a change in accounting estimates was deleted.
13
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | K-IFRS 1012 Income Taxes (Amendment)—Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.
Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit.
Following the amendments to K-IFRS 1012, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in K-IFRS 1012.
| • | K-IFRS 1012 Income Taxes (Amendment) - International Tax Reform: Pillar Two Model Rules |
The amendments clarify that the Standard applies to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the OECD, including tax law that implements qualified domestic minimum top-up taxes described in those rules.
The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.
Following the amendments, the Company is required to disclose that it has applied the exception and to disclose separately its current tax expense (income) related to Pillar Two income taxes.
There is no significant impact of the amendments listed above on consolidated financial statements.
14
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
(2) New and revised standards and interpretations in issue but not yet effective or adopted by the Company
At the date of authorization of these financial statements, the Company has not applied the following new and amended K-IFRS standards that have been issued but are not yet effective:
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2020) – Classification of Liabilities as Current or Non-current |
The amendments clarify that the classification of liabilities as current and non-current is based on rights that are existing at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2023)—Non-current Liabilities with Covenants |
The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date. Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.
The amendments also specifies that the right to defer settlement of a liability for at least twelve months after the reporting date is not affected if an entity only has to comply with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them), the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying with the covenants.
The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted. If an entity applies the amendments for an earlier period, it is also required to apply the 2020 amendments early.
15
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | K-IFRS 1007 Cash Flow Statemen and K-IFRS 1107 Financial Instruments Disclosure (Amendment) - Supplier Finance Agreements |
The amendments add a disclosure objective in K-IFRS 1007 Cash Flow Statement stating that an entity is required to disclose information about supplier finance agreements that enables users of financial statements to assess the effects of those arrangements on the Company’s liabilities and cash flows. In addition, K-IFRS 1117 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity’s exposure to concentration of liquidity risk.
The term ‘supplier finance agreements’ is not defined; instead, the amendment describe the characteristics of an arrangement for which an entity would be required to provide the information.
To meet the disclosure objective, an entity will be required to disclose in aggregate for its supplier finance arrangements:
| • | The terms and conditions of an agreement |
| • | The carrying amount, and associated line items presented in the entity’s statement of financial position, of the liabilities that are part of the arrangements |
16
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | The carrying amount, and associated line items for which the suppliers have already received payment from the finance providers |
| • | Ranges of payment due dates for both those financial liabilities that are part of a supplier finance arrangement and comparable trade payables that are not part of a supplier finance arrangement |
| • | Types of non-cash changes in the carrying amount of financial liabilities corresponding to supplier finance agreements and their impact |
| • | Liquidity risk information |
The above amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
| • | K-IFRS 1116 Leases (Amendment)—Lease Liability in a Sale and Leaseback |
The amendments add a subsequent measurement requirements for sale and leaseback transactions that satisfy the requirements in K-IFRS 1115 Revenue from contracts with customers. The amendments require the seller-lessee to determine ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee does not recognise a gain or loss that relates to the right of use asset retained by the seller-lessee, after the lease commencement date.
The above amendments are applicable for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
| • | K-IFRS 1001 Presentation of Financial Statements (Amendment in 2023)—Disclosure of Virtual Assets |
The amendments, in addition to additional disclosure requirements required by other Standards for transactions related to virtual assets, setting out the disclosure requirements in each case of 1) holding virtual assets; 2) holding virtual assets on behalf of customers; and 3) issuing virtual assets.
When holding a virtual asset, disclosure on the general information of the virtual asset, the applied accounting policy, and the acquisition method, acquisition cost, and the fair value of each virtual asset at the end of the reporting period should be disclosed. In addition, when issuing a virtual asset, the entity’s obligations and the status of fulfilment of the obligation related to the issued virtual asset, the timing and amount of the recognized revenue of the sold virtual asset, the quantity of virtual assets held after issuance, and important contract details should be disclosed.
17
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
The above amendments are applicable for annual reporting periods beginning on or after 1 January 2024, with early application permitted.
The Company is reviewing the impact of the above-listed amendments on the financial statements.
| 2.3 | Subsidiaries, Associates and Joint Ventures |
The financial statements of the Company are the separate financial statements prepared in accordance with Korean IFRS 1027 Separate Financial Statements. Investments in subsidiaries, joint ventures and associates are recognized at cost under the direct equity method. Management applied the carrying amounts under the previous K-GAAP at the time of transition to Korean IFRS as deemed cost of investments. The Company recognizes dividend income from subsidiaries, joint ventures and associates in profit or loss when its right to receive the dividend is established.
18
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2.4 | Foreign Currency Translation |
| (a) | Functional and presentation currency |
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (its functional currency). The financial statements are presented in Korean won, which is the functional currency of the Company and the presentation currency for the financial statements.
| (b) | Transactions and balances |
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of net investment hedges or are attributable to monetary part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to financial instruments are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss within ‘other income’ or ‘other expense’.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities, such as equities held at fair value through profit or loss, are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets, such as equities classified as available-for-sale financial assets, are recognized in other comprehensive income.
19
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2.5 | Financial Assets |
| (a) | Classification |
The Company classifies its financial assets in the following measurement categories:
| • | those to be measured at fair value through profit or loss |
| • | those to be measured at fair value through other comprehensive income, and |
| • | those to be measured at amortized cost. |
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. The Company reclassifies debt investments when, and only when, its business model for managing those assets changes.
For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Changes in fair value of the investments in equity instruments that are not accounted for as other comprehensive income are recognized in profit or loss.
| (b) | Measurement |
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset or the issuance of the financial liabilities. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
| A. | Debt instruments |
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into one of the following three measurement categories:
| • | Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in ‘finance income’ using the effective interest rate method. |
20
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | Fair value through other comprehensive income: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment loss (and reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘finance income’ using the effective interest rate method. Foreign exchange gains and losses are presented in ‘finance income’ or ‘finance costs’ and impairment loss in ‘finance costs’ or ‘operating expenses’. |
| • | Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit or loss within ‘finance income or finance costs’ in the period in which it arises. |
| B. | Equity instrument |
The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividend income from such investments continue to be recognized in profit or loss as ‘finance income’ when the Company’s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘finance income’ or ‘finance costs’ in the statement of profit or loss as applicable. Impairment loss (reversal of impairment loss) on equity investments, measured at fair value through other comprehensive income, are not reported separately from other changes in fair value.
| (c) | Impairment |
The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables and lease receivables, the Company applies the simplified approach, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.
| (d) | Recognition and derecognition |
Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Company commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
21
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
If a transfer does not result in derecognition because the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received.
| (e) | Offsetting of financial instruments |
Financial assets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
| 2.6 | Derivative Instruments |
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting treatment for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company has hedge relationships and designates certain derivatives as:
| • | hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash flow hedges) |
At inception of the hedge relationship, the Company documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.
The fair values of derivative financial instruments designated in hedge relationships are disclosed in Note 36.
The full fair value of a hedging derivative is classified as a non-current asset or non-current liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. A non-derivative financial asset and a non-derivative financial liability is classified as a current or non-current based on its expected maturity and its settlement, respectively.
The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity, and the ineffective portion is recognized in ‘finance income (costs)’.
Amounts of changes in fair value of effective hedging instruments accumulated in equity are recognized as ‘finance income (costs)’ for the periods when the corresponding transactions affect profit or loss.
22
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge no longer meets the criteria for hedge accounting, any accumulated cash flow hedge reserve at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cash flow hedge reserve and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.
| 2.7 | Trade Receivables |
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less loss allowance. See Note 6 for further information about the Company’s accounting treatment for trade receivables and Note 2.5 (c) for a description of the Company’s accounting policy on impairment.
| 2.8 | Inventories |
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method, except for inventories in-transit(specific identification method).
| 2.9 | Property and Equipment |
Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items.
Depreciation of all property and equipment, except for land, is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:
| Useful Life | ||||
Buildings | 10 – 40 years | |||
Structures | 10 – 40 years | |||
Telecommunications equipment | 2 – 40 years | |||
Vehicles | 4 years | |||
Tools | 4 years | |||
Office equipment | 2 – 4 years | |||
The depreciation method, residual values, and useful lives of property and equipment are reviewed at the end of each reporting period and, if appropriate, accounted for as changes in accounting estimates.
23
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2.10 | Investment Property |
Real estate held for rental income or investment gains is classified as investment property and right—of-use asset. An investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives from 10 to 40 years.
| 2.11 | Intangible Assets |
| (a) | Goodwill |
Goodwill represents the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition date fair value of the Company’s previously held equity interest in the acquiree over the net acquired identifiable assets at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.
| (b) | Intangible assets, except for goodwill |
Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at cost less accumulated amortization and accumulated impairment losses. Membership rights (condominium membership and golf membership) and broadcast rights that have indefinite useful life are not subject to amortization because there is no foreseeable limit to the period over which the assets are expected to be utilized. The Company amortizes intangible assets with a limited useful life using the straight-line method over the following periods:
| Useful Life | ||||
| Development costs | 6 years | |||
| Software | �� | 6 years | ||
| Industrial property rights | 5 – 50 years | |||
| Frequency usage rights | 5 – 10 years | |||
| Others 1 | 2 – 50 years | |||
| 1 | Membership rights (condominium membership and golf membership) included in others are classified as intangible assets with indefinite useful life. |
24
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2.12 | Borrowing Costs |
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.
| 2.13 | Government Grants |
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants related to assets are presented in the statement of financial position by setting up the grant as deferred income that is recognized in profit or loss on a systematic basis over the useful life of the asset. Grants related to income are deferred and presented as a credit in the statement of profit or loss within ‘other income’.
| 2.14 | Impairment of Non-Financial Assets |
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The Company estimates the recoverable amount for each asset, and, in cases when the recoverable amount cannot be estimated for an individual asset, the recoverable amount of the cash generating unit to which the asset belongs is estimated. Corporate assets are allocated to individual cash generating units on a reasonable and consistent basis and if they cannot be allocated to individual cash generating units, they are allocated to the smallest group of cash generating units on a reasonable and consistent basis. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount (higher of its fair value less costs of disposal and value in use). Impairment loss on non-financial assets other than goodwill are evaluated for reversal at the end of each reporting period.
| 2.15 | Trade and Other Payables |
These amounts represent liabilities for goods and services provided to the Company prior to the end of reporting period which are unpaid. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
25
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2.16 | Financial Liabilities |
| (a) | Classification and measurement |
Financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. Derivatives that are not designated as hedging instruments or derivatives separated from financial instruments containing embedded derivatives are also categorized as held for trading.
The Company classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortized cost and present as ‘trade payables and other payables’, ‘borrowings’, and ‘other financial liabilities’ in the statement of financial position.
Borrowings are initially recognized as the amount obtained by subtracting the transaction cost incurred from the fair value and is then measured as amortized cost. The difference between the consideration received (net of transaction cost) and the redemption amount is recognized as profit or loss over the period using the effective interest rate method. Fees paid to receive the borrowing limit are recognized as transaction costs for loans to the extent that they are likely to be borrowed as part or all of the borrowing limit. In this case, the fee will be deferred until draw-down occurs. There is a high possibility that borrowings will be executed as part or all of the borrowing limit agreement (relevant fees to the extent that there is no evidence) are recognized as assets as advance payments for liquidity services and amortized over the relevant borrowing limit period.
Preferred shares that require mandatory redemption at a particular date are classified as liabilities. Interest expenses on these preferred shares using the effective interest method are recognized in the statement of profit or loss as ‘finance costs’, together with interest expenses recognized from other financial liabilities.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
| (b) | Derecognition |
Financial liabilities are removed from the statement of financial position when it is extinguished; for example, when the obligation specified in the contract is discharged or cancelled or expired or when the terms of an existing financial liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
26
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
The Company’s financial liabilities at fair value through profit or loss are financial instruments held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designed as at fair value through profit or loss are structured financial liabilities containing embedded derivatives issued by the Company.
| 2.17 | Employee Benefits |
| (a) | Post-employment benefits |
The Company operates both defined contribution and defined benefit pension plans.
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service.
A defined benefit plan is a pension plan that is not a defined contribution plan. Generally, post-employment benefits are payable after the completion of employment, and the benefit amount depended on the employee’s age, periods of service or salary levels. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.
| (b) | Termination benefits |
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: when the entity can no longer withdraw the offer of those benefits or when the entity recognizes costs for a restructuring.
27
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (c) | Long-term employee benefits |
Certain entities within the Company provide long-term employee benefits that are entitled to employees with service period at least five years and above. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. The Company recognizes service cost, net interest on other long-term employee benefits and remeasurements as profit or loss for the year. These liabilities are valued annually by an independent qualified actuary.
| 2.18 | Share-Based Payments |
Equity-settled share-based payment is recognized at fair value of equity instruments granted, and employee benefit expense is recognized over the vesting period. At the end of each period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
| 2.19 | Provisions |
Provisions for service warranties, make good obligation, and legal claims are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period, and the increase in the provision due to the passage of time is recognized as interest expense.
| 2.20 | Leases |
| (a) | Lessee |
The Company leases various repeater server racks, offices, communication line facilities, machinery, and cars.
Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
| • | Fixed payments (including in-substance fixed payments), less any lease incentives receivable |
| • | Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date |
| • | Amounts expected to be payable by the Company (the lessee) under residual value guarantees |
28
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | The exercise price of a purchase option if the Company (the lessee) is reasonably certain to exercise that option, and |
| • | Payments of penalties for terminating the lease, if the lease term reflects the Company (the lessee) exercising that option |
Measurement of lease liability also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease.
The Company determines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. When the lessee and the lessor each has the right to terminate the lease without permission from the other party, the Company should consider a termination penalty in determining the period for which the contract is enforceable.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
| • | the amount of the initial measurement of lease liability |
| • | any lease payments made at or before the commencement date less any lease incentives received |
| • | any initial direct costs |
| • | restoration costs |
The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, such as vehicles, machinery, and others. Low-value assets are comprised of tools, office equipment, and others.
29
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (b) | Lessor |
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.
| (c) | Extension and termination options |
Extension and termination options are included in a number of property and equipment leases across the Company. These terms are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor. Information on critical accounting estimates and assumptions related to the determination of the lease term is presented in Note 3.
| 2.21 | Share Capital |
The Company classifies ordinary shares as equity.
Where the Company purchases its own shares, the consideration paid including any directly attributable incremental costs is deducted from equity attributable to the equity holders of the Company until the share are cancelled or reissued. When these treasury shares are reissued, any consideration received is included in equity attributable to the equity holders of the Company.
| 2.22 | Revenue Recognition |
| (a) | Identifying performance obligations |
The Company mainly provides telecommunication services and sells handsets. The Company identifies performance obligations with a customer such as providing telecommunication services, selling handsets, and others. Revenue from handsets is recognized when a performance obligation is satisfied by transferring promised goods to customers, and the revenue from telecommunication services is recognized over the estimated contract periods of each service by transferring promised services to customers.
| (b) | Allocation the transaction price and revenue recognition |
The Company allocates the transaction price to each performance obligation identified in the contract based on a relative stand-alone selling price of the goods or services being provided to the customer. To allocate the transaction price to each performance obligation on a relative stand-alone price basis, the Company determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price on a relative stand-alone selling price basis. The stand-alone selling price is the price at which the Company would sell a promised good or service separately to the customer. The best evidence of a stand-alone selling price is the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar customers. The Company recognizes the allocated amount as contract assets or contract liabilities, and amortizes it through the remaining period which is adjusted in operating income.
30
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (c) | Incremental contract acquisition costs |
The Company pays commission fees when new customers subscribe to telecommunication services. The incremental contract acquisition costs are those commission fees that the Company incurs to acquire a contract with a customer that would not have been incurred if the contract had not been acquired. The Company recognizes the incremental contract acquisition costs as an asset and amortizes it over the expected period of benefit. However, as a practical expedient, the Company may recognize the incremental contract acquisition cost as an expense when it is incurred if the amortization period of the asset is one year or less.
| 2.23 | Current and Deferred Tax |
The tax expense for the period consists of current and deferred tax. Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax expense is measured at the amount expected to be paid to taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the separate financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
The Company recognizes a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, the Company recognizes a deferred tax asset for all deductible temporary differences arising from such investments to the extent that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
31
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
Current tax assets and liabilities are offset when the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
| 2.24 | Dividend |
Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company’s shareholders.
| 2.25 | Approval on Issuance of the Separate Financial Statements |
The separate financial statements of 2023 were approved for issuance by the Board of Directors on February 7, 2024 and are subject to change with the approval of shareholders at their Annual General Meeting.
| 3. | Critical Accounting Estimates and Assumptions |
The preparation of financial statements requires the Company to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Company’s accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the actual results, it poses significant risk of resulting in a material adjustment.
Estimates and assumptions that have significant risks of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Additional information of significant judgement and assumptions of certain items are included in relevant notes.
| 3.1 | Impairment of Non-Financial Assets (including Goodwill) |
The Company determines the recoverable amount of a cash generating unit (CGU) based on fair value or value-in-use calculations to assess non-financial assets (including goodwill) for impairment (Notes 12 and 13).
| 3.2 | Income Taxes |
The Company’s taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain (Note 29).
If a certain portion of the taxable income is not used for investments or increase in wages or dividends in accordance with the Tax System for Recirculation of Corporate Income, the Company is liable to pay additional income tax calculated based on the tax laws. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Company’s income tax is dependent on the investments as well as wage increase, there is uncertainty in measuring the final tax effects.
32
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 3.3 | Fair Value of Financial Instruments |
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its judgment to select a variety of methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period (Note 36).
| 3.4 | Net Defined Benefit Liability |
The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions including the discount rate (Note 17).
| 3.5 | Amortization of Contract Assets, Contract Liabilities and Contract Cost Assets |
Contract assets, contract liabilities and contract cost assets recognized under the application of K-IFRS 1115 are amortized over the expected periods of customer relationships. The estimate of the expected terms of customer relationship is based on the historical data. If management’s estimate changes, it may cause significant differences in the timing of revenue recognition and amounts recognized.
| 3.6 | Critical Judgements in Determining the Lease Term |
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
For leases of properties, machinery, and communication line facilities, the following factors are normally the most relevant:
| • | If there are significant penalties to terminate (or not extend), the Company is typically reasonably certain to extend (or not terminate). |
| • | If any leasehold improvements are expected to have a significant remaining value, the Company is typically reasonably certain to extend (or not terminate). |
| • | Otherwise, the Company considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset. |
The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.
33
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 4. | Financial Instruments by Category |
Financial instruments by category as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||
| Financial assets | Financial assets at amortized cost | Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivatives used for | Total | |||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Trade and other receivables | 3,444,788 | — | 116,198 | — | 3,560,986 | |||||||||||||||
Other financial assets | 377,996 | 441,321 | 1,437,684 | 156,774 | 2,413,775 | |||||||||||||||
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||
| Financial liabilities | Financial liabilities at amortized cost | Financial liabilities at fair value through profit and loss | Derivatives used for hedging | Others | Total | |||||||||||||||
Trade and other payables | ||||||||||||||||||||
Borrowings | 7,559,933 | — | — | — | 7,559,933 | |||||||||||||||
Other financial liabilities | — | 1,403 | 23,076 | — | 24,479 | |||||||||||||||
Lease liabilities | — | — | — | 851,610 | 851,610 | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||
| Financial assets | Financial assets at amortized cost | Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivatives used for | Total | |||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Trade and other receivables | 3,453,513 | — | 129,124 | — | 3,582,637 | |||||||||||||||
Other financial assets | 416,294 | 410,388 | 1,214,059 | 185,989 | 2,226,730 | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||
| Financial liabilities | Financial liabilities at amortized cost | Financial liabilities at fair value through profit and loss | Derivatives used for hedging | Others | Total | |||||||||||||||
Trade and other payables 1 | ||||||||||||||||||||
Borrowings | 7,495,561 | — | — | — | 7,495,561 | |||||||||||||||
Other financial liabilities | — | 5,164 | 32,402 | — | 37,566 | |||||||||||||||
Lease liabilities | — | — | — | 865,280 | 865,280 | |||||||||||||||
| 1 | Amounts related to employee benefit plans are included in Trade and other payables. |
34
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
Gains and losses arising from financial instruments by category for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Financial assets at amortized cost | ||||||||
Interest income | ||||||||
Impairment loss | (80,757 | ) | (63,593 | ) | ||||
Gain on foreign currency transactions | 11,904 | 16,421 | ||||||
Gain on foreign currency translation | 3,780 | 3,868 | ||||||
Financial assets at fair value through profit or loss | ||||||||
Interest income | 7,083 | 326 | ||||||
Dividend income | 7 | 5 | ||||||
Loss on valuation | (17,003 | ) | (16,353 | ) | ||||
Gain on disposal | 1,809 | 1,555 | ||||||
Gain on foreign currency translation | 3,846 | 15,209 | ||||||
Financial assets at fair value through other comprehensive income | ||||||||
Interest income | 18,699 | 190,021 | ||||||
Dividend income | 52,170 | 8,974 | ||||||
Loss on disposal | (11,132 | ) | (62,630 | ) | ||||
Other comprehensive income (loss) for the year 1 | 158,219 | (163,540 | ) | |||||
Gain on valuation | — | — | ||||||
Derivative assets used for hedging | ||||||||
Gain (loss) on transactions | 10,192 | 27,479 | ||||||
Gain on valuation | 33,754 | 150,570 | ||||||
Other comprehensive income for the year 1 | 9,051 | 80,225 | ||||||
Reclassified to profit or loss from other comprehensive income for the year 1,2 | (28,977 | ) | (106,149 | ) | ||||
Financial liabilities at amortized cost | ||||||||
Interest expense | (246,101 | ) | (226,977 | ) | ||||
Loss on foreign currency transactions | (20,833 | ) | (35,483 | ) | ||||
Loss on foreign currency translation | (47,874 | ) | (141,768 | ) | ||||
Financial liabilities at fair value through profit or loss | ||||||||
Gain on valuation | (1,444 | ) | 166 | |||||
Gain on transactions | 5,205 | — | ||||||
Derivative liabilities used for hedging | ||||||||
Loss on valuation | 10,888 | (20,722 | ) | |||||
Other comprehensive loss for the year 1 | 6,979 | (23,966 | ) | |||||
Reclassified to profit or loss from other comprehensive income for the year 1,2 | (8,149 | ) | 15,137 | |||||
Lease liabilities | ||||||||
Interest expense | (38,946 | ) | (31,625 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1 | The amounts directly reflected in equity are after adjustments of deferred income tax. |
| 2 | During the years ended December, 31, 2023 and 2022, certain derivatives of the Company were settled and the related gain or loss on valuation of cash flow hedges in other comprehensive income was reclassified to profit or loss for the current year. |
35
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 5. | Cash and Cash Equivalents |
Restricted cash and cash equivalents as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | Description | |||||||
Bank deposits | Deposits restricted for government projects and others | |||||||||
Cash and cash equivalents in the separate statement of financial position are equal to cash and cash equivalents in the separate statement of cash flows.
36
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 6. | Trade and Other Receivables |
(1) Trade and other receivables as of December 31, 2023 and 2022, are as follows:
| December 31, 2023 | ||||||||||||||||
| (in millions of Korean won) | Total amounts | Provision for impairment | Present value discount | Carrying amount | ||||||||||||
Current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 447,335 | (29,616 | ) | (2,115 | ) | 415,604 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 121,958 | (431 | ) | (6,923 | ) | 114,604 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
37
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| December 31, 2022 | ||||||||||||||||
| (in millions of Korean won) | Total amounts | Provision for impairment | Present value discount | Carrying amount | ||||||||||||
Current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 443,525 | (30,549 | ) | (1,894 | ) | 411,082 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-current assets | ||||||||||||||||
Trade receivables | ||||||||||||||||
Other receivables | 177,815 | (429 | ) | (8,820 | ) | 168,566 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
(2) The fair values of trade and other receivables with original maturities less than one year are equal to their carrying amount because the discounting effect is immaterial. The fair value of trade and other receivables with original maturities longer than one year, which are mainly from sales of goods, is determined by discounting the expected future cash flow at the weighted average interest rate.
38
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
(3) Details of changes in provisions for impairment for the years ended December 31, 2023 and 2022, are as follows:
| 2023 | 2022 | |||||||||||||||
| (in millions of Korean won) | Trade receivables | Other receivables | Trade receivables | Other receivables | ||||||||||||
Beginning | ||||||||||||||||
Provision | 55,121 | 27,915 | 49,727 | 13,866 | ||||||||||||
Write-off/transfer | (54,482 | ) | (28,846 | ) | (53,383 | ) | (27,262 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ending | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Provision for impairment on trade and other receivables is recognized as operating expenses, other expenses and finance costs.
39
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
(4) Details of other receivables as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Loans | ||||||||
Receivables | 261,692 | 262,557 | ||||||
Accrued income | 5,275 | 6,996 | ||||||
Refundable deposits | 253,219 | 294,575 | ||||||
Others | — | 35 | ||||||
Provision for impairment | (30,047 | ) | (30,978 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
(5) The maximum exposure of trade and other receivables to credit risks is the carrying amount of each class of receivables mentioned above as of December 31, 2023.
(6) The Company classifies a portion of the trade receivables as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.
40
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 7. | Other Financial Assets and Liabilities |
(1) Details of other financial assets and liabilities as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Other financial assets | ||||||||
Financial assets measured at amortized cost 1 | ||||||||
Financial assets at fair value through profit or loss 2 | 441,321 | 410,388 | ||||||
Financial assets at fair value through other comprehensive income | 1,437,684 | 1,214,059 | ||||||
Derivatives used for hedging | 156,774 | 185,989 | ||||||
Less: Non-current | (2,134,324 | ) | (1,993,893 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
Other financial liabilities | ||||||||
Financial liabilities at fair value through profit or loss | ||||||||
Derivatives used for hedging | 23,076 | 32,402 | ||||||
Less: Non-current | (23,819 | ) | (37,566 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 1 | As of December 31, 2023, the Company’s financial instruments amount to |
| 2 | The Company provided investment in Korea Software Financial Cooperative and others amounting to |
(2) Financial Assets at fair value through profit or loss
1) Details of financial assets at fair value through profit or loss as of December 31, 2023 and December 31, 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Debt instruments | 440,257 | 387,594 | ||||||
Derivative liabilities held for trading 1 | 1,064 | 22,794 | ||||||
Less: Non-current | (441,321 | ) | (410,388 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 1 | Derivative assets amounting to |
41
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
2) The maximum exposure of debt instruments of financial assets at fair value through profit or loss to credit risk is the carrying amount as of December 31, 2023.
(3) Financial Assets at fair value through other comprehensive income
1) Details of financial assets at fair value through other comprehensive income as of December 31, 2023 and December 31, 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Equity instruments (Listed) | ||||||||
Equity instruments (Unlisted) | 201,189 | 198,453 | ||||||
Less: Non-current | (1,437,684 | ) | (1,214,059 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
2) Upon disposal of these equity instruments, any balance within the other comprehensive income is not reclassified to profit or loss, but to retained earnings. Upon disposal of these debt instruments, the remaining balance of the accumulated other comprehensive income is reclassified to profit or loss.
(4) Derivatives used for hedging
The company trades derivative financial instruments to avoid interest rate risk and currency risk arising from the company’s debt. The company applies cash flow hedge accounting using currency swaps to avoid the risk of cash flow fluctuations caused by interest rate and exchange rate fluctuations on foreign currency bonds.
1) Details of valuation of derivatives used for hedging as of December 31, 2023 and December 31, 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||
Currency swap 1 | ||||||||||||||||
Less: Non-current | (105,680 | ) | (22,416 | ) | (143,413 | ) | (32,402 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Current | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | The currency swap contract is to hedge the risk of volatility in cash flow from the borrowings due to changes in interest rate and foreign exchange rate and the expected maximum period for the Company to be exposed to risks of cash flow volatility by hedged items is until September 7, 2034. |
The entire fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.
42
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
2) Details of valuation gains and losses from derivatives for risk hedging purposes for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| Type of transaction | Valuation gain | Valuation loss | Other comprehensive loss1 | Valuation gain | Valuation loss | Other comprehensive income1 | ||||||||||||||||||
Currency swap | ||||||||||||||||||||||||
| 1 | The amounts directly reflected in equity are before adjustments of deferred income tax. |
43
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
3) The ineffective portion recognized in profit or loss concerning cash flow hedges are valuation gains ofW 1,267 million for the year ended December 31, 2023 (December 31, 2022: valuation gains ofW 3,408 million).
4) The unsettled amount of derivative instruments for the years ended December 31, 2023 and 2022, are as follows:
(i) Hedging instruments
| (in millions of Korean won) | ||||||||||||||||||||
| 2023 | ||||||||||||||||||||
| Book value of hedging instruments | Changes in fair value to calculate the ineffective portion of hedges | |||||||||||||||||||
Currency | Foreign currency | Contract amount | Assets | Liabilities | ||||||||||||||||
USD | 1,970,000 | |||||||||||||||||||
JPY | 400,000 | 4,357 | — | 660 | (162 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won) | ||||||||||||||||||||
| 2022 | ||||||||||||||||||||
| Book value of hedging instruments | Changes in fair value to calculate the ineffective portion of hedges | |||||||||||||||||||
Currency | Foreign currency | Contract amount | Assets | Liabilities | ||||||||||||||||
USD | 2,070,000 | |||||||||||||||||||
JPY | 400,000 | 4,357 | — | 409 | (308 | ) | ||||||||||||||
SGD | 284,000 | 245,208 | 26,351 | — | 20,511 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
(ii) Hedged item
| (in millions of Korean won) | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
Currency | Book value of hedged items | Changes in fair value to calculate the ineffective portion of hedges | Cash flow hedge reserves1 | Book value of hedged items | Changes in fair value to calculate the ineffective portion of hedges | Cash flow hedge reserves1 | ||||||||||||||||||
USD | ||||||||||||||||||||||||
JPY | 3,651 | 162 | 49 | 3,813 | 306 | 116 | ||||||||||||||||||
SGD | 267,843 | (18,720 | ) | 3,406 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | The amounts directly reflected in equity are after adjustments of deferred income tax. |
44
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
(5) Financial Liabilities at fair value through profit or loss
1) Details of financial liabilities at fair value through profit or loss as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Financial liabilities at fair value through profit or loss | ||||||||
Derivative liabilities held for trading 1 | ||||||||
| 1 | Derivative liabilities recognized in relation to acquisition of Epsilon Global Communications Pte. Ltd. (Note 19). |
| 8. | Inventories |
Inventories as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | ||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Acquisition cost | Valuation allowance | Carrying amount | Acquisition cost | Valuation allowance | Carrying amount | |||||||||||||||||||
Merchandise | ||||||||||||||||||||||||
Cost of inventories recognized as expenses for the year ended December 31, 2023 amounts toW 2,568,849 million (December 31, 2022:W 2,581,671 million), and reversal of inventory valuation loss amounts toW 9,538 million for the year ended December 31, 2022 (December 31, 2022: reversal of loss on valuation inventories ofW 23,564 million).
45
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 9. | Other Assets and Liabilities |
Other assets and liabilities as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Other assets | ||||||||
Advance payments | ||||||||
Prepaid expenses | 79,051 | 54,044 | ||||||
Contract costs | 1,804,448 | 1,883,084 | ||||||
Contract assets | 774,435 | 724,500 | ||||||
Less: Non-current | (709,276 | ) | (717,118 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
Other liabilities | ||||||||
Advances received 1 | ||||||||
Withholdings | 39,214 | 38,561 | ||||||
Unearned revenue | 951 | 1,051 | ||||||
Lease liabilities | 851,610 | 865,280 | ||||||
Contract liabilities | 259,724 | 281,435 | ||||||
Less: Non-current | (677,691 | ) | (710,139 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
| 1 | The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue form Contracts with Customers (Note 25). |
46
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 10. | Property and Equipment |
| (1) | Changes in property and equipment for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||||||||||
| Land | Buildings and structures | Telecommunications equipment | Others | Construction- in-progress | Total | |||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment losses and others) | (132 | ) | (1,607,255 | ) | (30,258,781 | ) | (551,779 | ) | (498 | ) | (32,418,445 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | ||||||||||||||||||||||||
Acquisitions and capital expenditures | — | 1,292 | 19,763 | 12,309 | 2,581,114 | 2,614,478 | ||||||||||||||||||
Disposals and terminations | (3,651 | ) | (4,998 | ) | (64,153 | ) | (1,505 | ) | (302 | ) | (74,609 | ) | ||||||||||||
Depreciation | — | (72,042 | ) | (2,231,189 | ) | (31,858 | ) | — | (2,335,089 | ) | ||||||||||||||
Impairment | — | — | (6,055 | ) | — | (1,294 | ) | (7,349 | ) | |||||||||||||||
Transfers in (out) | 6,405 | 145,566 | 2,406,442 | 12,666 | (2,715,765 | ) | (144,686 | ) | ||||||||||||||||
Others | (20,766 | ) | (80,795 | ) | 1,432 | (2 | ) | — | (100,131 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | 848,709 | 1,027,399 | 8,750,517 | 70,312 | 795,839 | 11,492,776 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | 848,841 | 2,677,013 | 40,276,446 | 621,966 | 796,489 | 45,220,755 | ||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment losses and others) | (132 | ) | (1,649,614 | ) | (31,525,929 | ) | (551,654 | ) | (650 | ) | (33,727,979 | ) | ||||||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||||||||||
| Land | Buildings and structures | Telecommunications equipment | Others | Construction- in-progress | Total | |||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment losses and others) | (132 | ) | (1,761,393 | ) | (29,350,392 | ) | (1,005,623 | ) | (620 | ) | (32,138,160 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Beginning, net | ||||||||||||||||||||||||
Acquisitions and capital expenditures | — | 2,015 | 16,512 | 16,760 | 2,901,085 | 2,936,372 | ||||||||||||||||||
Disposals and terminations | (2,556 | ) | (4,292 | ) | (66,672 | ) | (3,985 | ) | — | (81,044 | ) | |||||||||||||
Depreciation | — | (80,667 | ) | (2,178,314 | ) | (31,493 | ) | — | (2,290,474 | ) | ||||||||||||||
Impairment | — | — | (2,063 | ) | — | (906 | ) | (2,969 | ) | |||||||||||||||
Transfers in (out) | 24,647 | 211,503 | 2,569,792 | 19,590 | (2,936,585 | ) | (111,053 | ) | ||||||||||||||||
Investment in kind | (26,681 | ) | (488,870 | ) | (207,516 | ) | (228 | ) | (25,254 | ) | (748,549 | ) | ||||||||||||
Others | (17,485 | ) | (166,144 | ) | 3,029 | (2,638 | ) | — | (183,238 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment losses and others) | (132 | ) | (1,607,255 | ) | (30,258,781 | ) | (551,779 | ) | (498 | ) | (32,418,445 | ) | ||||||||||||
47
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
The borrowing costs capitalized for qualifying assets amount toW 5,171 million for the year ended December 31, 2023 (December 31, 2022:W 4,697 million). The interest rate applied to calculate the capitalized borrowing costs in 2023 is 2.85%~3.09% (2022: 2.05%~2.71%).
| 11. | Investment Properties |
| (1) | Changes in investment properties for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | 2022 | |||||||||||||||||||||||
| (in millions of Korean won) | Land | Buildings | Total | Land | Buildings | Total | ||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation | — | (632,530 | ) | (632,530 | ) | — | (551,817 | ) | (551,817 | ) | ||||||||||||||
Beginning, net | 209,876 | 927,613 | 1,137,489 | 192,392 | 804,952 | 997,344 | ||||||||||||||||||
Depreciation | — | (47,460 | ) | (47,460 | ) | — | (43,441 | ) | (43,441 | ) | ||||||||||||||
Transfer increase | 20,767 | 80,796 | 101,563 | 17,484 | 166,102 | 183,586 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending, net | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisition cost | ||||||||||||||||||||||||
Less: Accumulated depreciation | — | (692,046 | ) | (692,046 | ) | — | (632,530 | ) | (632,530 | ) | ||||||||||||||
| (2) | The fair value of investment properties is |
| (3) | Rental income from investment properties is |
| (4) | As of December 31, 2023, the Company (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease fee under this contract is |
48
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (5) | Details of investment properties provided as collateral as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
| Collateral | Carrying amount | Secured amount | Related account | Related amount | ||||||||||||
Land and buildings | Deposits received | |||||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Collateral | Carrying amount | Secured amount | Related account | Related amount | ||||||||||||
Land and buildings | Deposits received | |||||||||||||||
| 12. | Intangible Assets |
| (1) | Changes in intangible assets for the years ended December 31, 2023 and 2022, are as follows: |
| 2023 | ||||||||||||||||||||||||||||
| (in millions of Korean won) | Goodwill | Industrial rights | Development costs | Software | Frequency usage rights | Others1 | Total | |||||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | — | (19,712 | ) | (1,631,586 | ) | (672,156 | ) | (1,121,741 | ) | (145,672 | ) | (3,590,867 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Beginning, net | ||||||||||||||||||||||||||||
Acquisition and capital expenditure 1 | — | 4,775 | 75 | 7 | — | 2,335 | 7,192 | |||||||||||||||||||||
Disposals and terminations | — | (377 | ) | (4,812 | ) | (367 | ) | — | (2,937 | ) | (8,493 | ) | ||||||||||||||||
Amortization | — | (3,223 | ) | (55,314 | ) | (15,346 | ) | (350,274 | ) | (87,058 | ) | (511,215 | ) | |||||||||||||||
Investment in kind | — | — | 41,388 | 9,257 | — | 94,040 | 144,685 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Ending, net | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Acquisition cost | ||||||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | — | (20,619 | ) | (1,648,027 | ) | (687,411 | ) | (1,270,555 | ) | (232,731 | ) | (3,859,343 | ) | |||||||||||||||
| 1 | Amounts include |
49
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2022 | ||||||||||||||||||||||||||||
| (in millions of Korean won) | Goodwill | Industrial rights | Development costs | Software | Frequency usage rights | Others | Total | |||||||||||||||||||||
Acquisition cost | ||||||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | — | (17,994 | ) | (1,594,563 | ) | (665,813 | ) | (771,040 | ) | (128,509 | ) | (3,177,919 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Beginning, net | ||||||||||||||||||||||||||||
Acquisition and capital expenditure 1 | — | 5,082 | 55,677 | 17,440 | — | 38,657 | 116,856 | |||||||||||||||||||||
Disposals and terminations | — | (121 | ) | (5,502 | ) | (4 | ) | — | (17,397 | ) | (23,024 | ) | ||||||||||||||||
Amortization | — | (2,935 | ) | (77,351 | ) | (18,818 | ) | (350,701 | ) | (17,247 | ) | (467,052 | ) | |||||||||||||||
Investment in kind | — | — | (3,391 | ) | (3,883 | ) | — | (391 | ) | (7,665 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Ending, net | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Acquisition cost | ||||||||||||||||||||||||||||
Less: Accumulated depreciation (including accumulated impairment loss and others) | — | (19,712 | ) | (1,631,586 | ) | (672,156 | ) | (1,121,741 | ) | (145,672 | ) | (3,590,867 | ) | |||||||||||||||
| 1 | Amounts include transfer from property and equipment. |
| (2) | The carrying amount of membership rights with an indefinite useful life not subject to amortization is |
| (3) | The Company annually performs an assessment of goodwill impairment. The recoverable amount of all CGUs has been determined based on value-in-use. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates of 0%. The growth rate does not exceed the long-term average growth rate included in industry report specific to the industry in which the CGU operates. |
The Company determines the gross margin rate based on past performance and its expectations of market changes. The average growth rates used are estimated based on historical growth rate. In addition, the Company estimated pre-tax cash flow based on past performance and its expectation of market growth. The discount rate applied is pre-tax discount rate of 6.68%, reflecting specific risks related to the relevant CGUs.
As a result of impairment tests, the Company concluded that the carrying amount of CGUs does not exceed the recoverable amount of CGUs. Therefore, the Company did not recognize any impairment loss on goodwill for the years ended December 31, 2023 and 2022.
50
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 13. | Investments in Subsidiaries, Associates and Joint Ventures |
| (1) | Carrying amounts in investments in subsidiaries, associates and joint ventures as of December 31, 2023 and 2022, is as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Subsidiaries | ||||||||
Associates and joint ventures | 415,445 | 386,232 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1) | Investments in subsidiaries as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | Location | Percentage of ownership (%) | Carrying amount | |||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||
KT Estate Inc. | Korea | 100.0 | % | |||||||||||||
KT Sat Co., Ltd. | Korea | 100.0 | % | 390,530 | 390,530 | |||||||||||
KTCS Corporation 1 | Korea | 8.4 | % | 6,427 | 6,427 | |||||||||||
KTIS Corporation 1 | Korea | 33.3 | % | 30,633 | 30,633 | |||||||||||
KT Skylife Co., Ltd. | Korea | 50.6 | % | 311,696 | 311,696 | |||||||||||
BC Card Co., Ltd. | Korea | 69.5 | % | 633,004 | 633,004 | |||||||||||
KT M&S Co., Ltd. | Korea | 100.0 | % | 26,764 | 26,764 | |||||||||||
KT Alpha Co., Ltd. | Korea | 70.5 | % | 130,924 | 130,924 | |||||||||||
KT Telecop Co., Ltd. | Korea | 86.8 | % | 134,308 | 134,308 | |||||||||||
LS Marine Solution Co., Ltd. (formerly KT Submarine Co., Ltd.,) 3 | Korea | 7.3 | % | — | 24,370 | |||||||||||
Nasmedia, Inc. 1 | Korea | 44.1 | % | 23,051 | 23,051 | |||||||||||
KTDS Co., Ltd. | Korea | 91.6 | % | 19,616 | 19,616 | |||||||||||
KTGDH Co., Ltd. | Korea | 100.0 | % | 2,745 | 7,544 | |||||||||||
KT Strategic Investment Fund No.2 | Korea | — | — | 2,381 | ||||||||||||
KT Sports | Korea | 52.6 | % | 27,327 | 19,311 | |||||||||||
KT M Mobile Co., Ltd. | Korea | 100.0 | % | 102,237 | 102,237 | |||||||||||
KT Service Bukbu Co., Ltd. | Korea | 67.3 | % | 3,873 | 3,873 | |||||||||||
KT Service Nambu Co., Ltd. | Korea | 76.4 | % | 10,160 | 10,160 | |||||||||||
KT Strategic Investment Fund No.3 | Korea | 86.7 | % | 2,947 | 2,947 | |||||||||||
KT Strategic Investment Fund No.4 | Korea | 95.0 | % | — | 16,720 | |||||||||||
PlayD Co., Ltd. 2 | Korea | 23.5 | % | 20,000 | 20,000 | |||||||||||
KT MOS Bukbu Co., Ltd. | Korea | 100.0 | % | 6,334 | 6,334 | |||||||||||
KT MOS Nambu Co., Ltd. | Korea | 98.4 | % | 4,267 | 4,267 | |||||||||||
Next Connect PFV | Korea | 100.0 | % | 24,250 | 24,250 | |||||||||||
KT Strategic Investment Fund No.5 | Korea | 95.0 | % | 19,000 | 19,000 | |||||||||||
KT Engineering Co., Ltd. | Korea | 59.8 | % | 28,000 | 28,000 | |||||||||||
KT Studio Genie Co., Ltd. | Korea | 90.9 | % | 283,620 | 283,620 | |||||||||||
Lolab Co., Ltd. | Korea | 79.8 | % | 21,958 | 21,950 | |||||||||||
KT ES Pte. Ltd. | Singapore | 57.6 | % | 13,640 | 96,878 | |||||||||||
Altimedia Corporation | Korea | 100.0 | % | 22,000 | 22,000 | |||||||||||
kt cloud Co., Ltd. | Korea | 92.7 | % | 901,504 | 901,504 | |||||||||||
Others | 95,824 | 84,166 | ||||||||||||||
|
|
|
| |||||||||||||
Total | ||||||||||||||||
|
|
|
| |||||||||||||
51
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 1 | As of December 31, 2023, although sum of percentage of ownership of the Company and its subsidiaries is less than 50% ownership in these entities, these entities are included in investments in subsidiaries due to the dispersion of other shareholders excluding the Company and voting patterns at previous shareholders’ meetings. |
| 2 | As of December 31, 2023, this entity is included in investments in subsidiaries as Nasmedia Co., Ltd. holds ownership of 46.9% and the Company and the subsidiary holds ownership of 70.4%. |
| 3 | As of December 31, 2023, this entity is excluded from subsidiaries as substituted associates. |
| 4 | As of December 31, 2023, this entity is excluded from subsidiaries as liquidated. |
| 2) | Investments in associates and joint ventures as of and for the years ended December 31, 2023 and 2022, are as follows: |
| Carrying amount | ||||||||||||||||
| (in millions of Korean won) | Location | Percentage of ownership (%) | December 31, 2023 | December 31, 2022 | ||||||||||||
KIF Investment Fund | Korea | 33.3 | % | |||||||||||||
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) 1 | Korea | 10.0 | % | 50,000 | 50,000 | |||||||||||
Megazone Cloud Corporation 1 | Korea | 6.7 | % | 130,001 | 130,001 | |||||||||||
KT-DSC Creative Economy Youth Start-up Investment Fund 1 | Korea | 17.1 | % | 2,220 | 2,520 | |||||||||||
LS Marine Solution Co., Ltd. (formerly KT Submarine Co., Ltd.,) 1 | Korea | 7.3 | % | 5,409 | — | |||||||||||
Others | 112,179 | 88,075 | ||||||||||||||
|
|
|
| |||||||||||||
Total | ||||||||||||||||
|
|
|
| |||||||||||||
| 1 | The Company has less than 20% interest in the investees, but the investments are classified as investments in associates as the Company has significant influence in determining the operational and financial policies. |
| (2) | Changes in investments in subsidiaries, associates and joint ventures for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning | ||||||||
Acquisition | 49,031 | 348,608 | ||||||
Disposal | (47,636 | ) | (34,750 | ) | ||||
Impairment | (83,237 | ) | (3,000 | ) | ||||
Others 1 | (771 | ) | 751,446 | |||||
|
|
|
| |||||
Ending | ||||||||
|
|
|
| |||||
52
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 1 | Others include transactions by the Company to increase investment in kind in kt cloud Co., Ltd. during the period ended December 31, 2022. |
| (3) | The impairment test in subsidiaries, associates and joint ventures for the years ended December 31, 2023 and 2022, are as follows: |
| 1) | The cost method is applied to account for investments in subsidiaries, associates and joint ventures and is reviewed for any indicators that an impairment loss may have occurred at the end of each reporting period. If there are such indicators, the recoverable amount of the asset is estimated using the future cash flow discount method, and if the recoverable amount falls short of the carrying amount, the carrying amount of the asset is reduced and the impairment loss is immediately recognized as loss in the current year. |
| 2) | During the year ended December 31, 2023, the difference between recoverable amount and carrying amount of |
53
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 14. | Trade and Other Payables |
| (1) | Details of trade and other payable as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Current liabilities | ||||||||
Trade payables | ||||||||
Other payables | 3,518,544 | 3,842,796 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Non-current liabilities | ||||||||
Trade payables | — | — | ||||||
Other payables | 739,766 | 979,050 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Details of other payables as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Non-trade payable | ||||||||
Accrued expenses | 879,613 | 935,250 | ||||||
Operating deposits | 401,271 | 436,485 | ||||||
Others | 97,041 | 98,554 | ||||||
Less: Non-current | (739,766 | ) | (979,050 | ) | ||||
|
|
|
| |||||
Current | ||||||||
|
|
|
| |||||
54
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 15. | Borrowings |
| (1) | Details of borrowings as of December 31, 2023 and 2022, are as follows: |
| 1) | Debentures |
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||||
MTNP notes 1 | Sep. 7, 2034 | 6.500% | USD 100,000 | USD 100,000 | ||||||||||||||||||
MTNP notes | Jul. 18, 2026 | 2.500% | USD 400,000 | 515,760 | USD 400,000 | 506,920 | ||||||||||||||||
FR notes | Aug. 23, 2023 | — | — | — | USD 100,000 | 126,730 | ||||||||||||||||
MTNP notes | Jul. 19, 2024 | 0.330% | JPY 400,000 | 3,651 | JPY 400,000 | 3,813 | ||||||||||||||||
MTNP notes | Sep. 1, 2025 | 1.000% | USD 400,000 | 515,760 | USD 400,000 | 506,920 | ||||||||||||||||
FR notes 2 | Nov. 1, 2024 | Compounded SOFR +1.210% | USD 350,000 | 451,290 | USD 350,000 | 443,555 | ||||||||||||||||
FR notes | Jun. 19, 2023 | — | — | — | SGD 284,000 | 267,843 | ||||||||||||||||
MTNP notes | Jan. 21, 2027 | 1.375% | USD 300,000 | 386,820 | USD 300,000 | 380,190 | ||||||||||||||||
MTNP notes | Aug. 8, 2025 | 4.000% | USD 500,000 | 644,700 | USD 500,000 | 633,650 | ||||||||||||||||
The 183-3rd Public bond | Dec. 22, 2031 | 4.270% | — | 160,000 | — | 160,000 | ||||||||||||||||
The 184-2nd Public bond | Apr. 10, 2023 | — | — | — | — | 190,000 | ||||||||||||||||
The 184-3rd Public bond | Apr. 10, 2033 | 3.170% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 186-3rd Public bond | Jun. 26, 2024 | 3.418% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 186-4th Public bond | Jun. 26, 2034 | 3.695% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 187-3rd Public bond | Sep. 2, 2024 | 3.314% | — | 170,000 | — | 170,000 | ||||||||||||||||
The 187-4th Public bond | Sep. 2, 2034 | 3.546% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 188-2nd Public bond | Jan. 29, 2025 | 2.454% | — | 240,000 | — | 240,000 | ||||||||||||||||
The 188-3rd Public bond | Jan. 29, 2035 | 2.706% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 189-3rd Public bond | Jan. 28, 2026 | 2.203% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 189-4th Public bond | Jan. 28, 2036 | 2.351% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 190-2nd Public bond | Jan. 30, 2023 | — | — | — | — | 150,000 | ||||||||||||||||
The 190-3rd Public bond | Jan. 30, 2028 | 2.947% | — | 170,000 | — | 170,000 | ||||||||||||||||
The 190-4th Public bond | Jan. 30, 2038 | 2.931% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 191-2nd Public bond | Jan. 15, 2024 | 2.088% | — | 80,000 | — | 80,000 | ||||||||||||||||
The 191-3rd Public bond | Jan. 15, 2029 | 2.160% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 191-4th Public bond | Jan. 14, 2039 | 2.213% | — | 90,000 | — | 90,000 | ||||||||||||||||
The 192-2nd Public bond | Oct. 11, 2024 | 1.578% | — | 100,000 | — | 100,000 | ||||||||||||||||
The 192-3rd Public bond | Oct. 11, 2029 | 1.622% | — | 50,000 | — | 50,000 | ||||||||||||||||
The 192-4th Public bond | Oct. 11, 2039 | 1.674% | — | 110,000 | — | 110,000 | ||||||||||||||||
The 193-1st Public bond | Jun. 16, 2023 | — | — | — | — | 150,000 | ||||||||||||||||
The 193-2nd Public bond | Jun. 17, 2025 | 1.434% | — | 70,000 | — | 70,000 | ||||||||||||||||
The 193-3rd Public bond | Jun. 17, 2030 | 1.608% | — | 20,000 | — | 20,000 | ||||||||||||||||
The 193-4th Public bond | Jun. 15, 2040 | 1.713% | — | 60,000 | — | 60,000 | ||||||||||||||||
The 194-1st Public bond | Jan. 26, 2024 | 1.127% | — | 130,000 | — | 130,000 | ||||||||||||||||
The 194-2nd Public bond | Jan. 27, 2026 | 1.452% | — | 140,000 | — | 140,000 | ||||||||||||||||
55
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won and foreign currencies in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||
| Type | Maturity | Annual interest rates | Foreign currency | Korean won | Foreign currency | Korean won | ||||||||||||||
The 194-3rd Public bond | Jan. 27, 2031 | 1.849% | — | 50,000 | — | 50,000 | ||||||||||||||
The 194-4th Public bond | Jan. 25, 2041 | 1.976% | — | 80,000 | — | 80,000 | ||||||||||||||
The 195-1st Public bond | Jun. 10, 2024 | 1.387% | — | 180,000 | — | 180,000 | ||||||||||||||
The 195-2nd Public bond | Jun. 10, 2026 | 1.806% | — | 80,000 | — | 80,000 | ||||||||||||||
The 195-3rd Public bond | Jun. 10, 2031 | 2.168% | — | 40,000 | — | 40,000 | ||||||||||||||
The 196-1st Public bond | Jan. 27, 2025 | 2.596% | — | 270,000 | — | 270,000 | ||||||||||||||
The 196-2nd Public bond | Jan. 27, 2027 | 2.637% | — | 100,000 | — | 100,000 | ||||||||||||||
The 196-3rd Public bond | Jan. 27, 2032 | 2.741% | — | 30,000 | — | 30,000 | ||||||||||||||
The 197-1st Public bond | Jun. 27, 2025 | 4.191% | — | 280,000 | — | 280,000 | ||||||||||||||
The 197-2nd Public bond | Jun. 29, 2027 | 4.188% | — | 120,000 | — | 120,000 | ||||||||||||||
The 198-1st Public bond | Jan. 10, 2025 | 3.847% | — | 70,000 | — | — | ||||||||||||||
The 198-2nd Public bond | Jan. 12, 2026 | 3.869% | — | 150,000 | — | — | ||||||||||||||
The 198-3rd Public bond | Jan. 12, 2028 | 3.971% | — | 80,000 | — | — | ||||||||||||||
The 199-1st Public bond | Jul. 11, 2025 | 4.028% | — | 85,000 | — | — | ||||||||||||||
The 199-2nd Public bond | Jul. 10, 2026 | 4.146% | — | 160,000 | — | — | ||||||||||||||
The 199-3rd Public bond | Jul. 12, 2028 | 4.221% | — | 155,000 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Subtotal | 6,976,921 | 7,116,351 | ||||||||||||||||||
Less: Current portion | (1,224,741 | ) | (884,227 | ) | ||||||||||||||||
Discount on bonds | (18,468 | ) | (22,764 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
Total | ||||||||||||||||||||
|
|
|
| |||||||||||||||||
| 1 | As of December 31, 2023, the Company has outstanding notes in the amount of USD 100 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 2,000 million. However, the MTN program has been terminated since 2007. |
| 2 | The Daily SOFR is approximately 5.380% as of December 31, 2023. Due to the recent suspension of LIBOR calculation, the Company changed the alternative indicator interest rate to Compound SOFR+1.210%. |
56
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 2) | Long-Term Borrowings |
(in millions of Korean won) Financial institution | Type | Maturity | Annual interest rates | December 31, 2023 | December 31, 2022 | |||||||||||||
Export-Import Bank of Korea | Inter-Korean Cooperation Fund 1 | Jul. 10, 2026 | 1.000 | % | ||||||||||||||
CA-CIB | Long-term loan | May. 15, 2023 | — | — | 100,000 | |||||||||||||
| May. 28, 2024 | 3.380 | % | 100,000 | 100,000 | ||||||||||||||
| Mar. 15, 2024 | 4.150 | % | 100,000 | — | ||||||||||||||
JPM | Long-term commercial papers | Feb. 28, 2025 | 2.700 | % | 100,000 | 100,000 | ||||||||||||
| Mar. 15, 2024 | 4.480 | % | 100,000 | — | ||||||||||||||
DBS | Long-term commercial papers | Jun. 28, 2024 | 4.079 | % | 100,000 | 100,000 | ||||||||||||
KDB | Long-term commercial papers | Mar. 14, 2024 | 4.380 | % | 100,000 | — | ||||||||||||
|
|
|
| |||||||||||||||
| Subtotal | 601,480 | 401,974 | ||||||||||||||||
| Less: Current portion | (500,493 | ) | (100,493 | ) | ||||||||||||||
|
|
|
| |||||||||||||||
| Net | ||||||||||||||||||
|
|
|
| |||||||||||||||
| 1 | The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a 7-year grace period. |
57
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | Repayment schedule of the Company’s debentures and borrowings including the portion of current liabilities as of December 31, 2023, is as follows: |
| (in millions of Korean won) | Bonds | |||||||||||||||||||
| In local currency | In foreign currency | Sub- total | Borrowings | Total | ||||||||||||||||
Jan. 1, 2024~Dec. 31, 2024 | ||||||||||||||||||||
Jan. 1, 2025~Dec. 31, 2025 | 1,015,000 | 1,160,460 | 2,175,460 | 100,493 | 2,275,953 | |||||||||||||||
Jan. 1, 2026~Dec. 31, 2026 | 630,000 | 515,760 | 1,145,760 | 494 | 1,146,254 | |||||||||||||||
Jan. 1, 2027~Dec. 31, 2027 | 220,000 | 386,820 | 606,820 | — | 606,820 | |||||||||||||||
Thereafter | 1,695,000 | 128,940 | 1,823,940 | — | 1,823,940 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
58
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 16. | Provisions |
Changes in provisions for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||
| Litigation | Restoration cost | Others | Total | |||||||||||||
Beginning balance | ||||||||||||||||
Increase (transfer) | 3 | 20,702 | 2,092 | 22,797 | ||||||||||||
Usage | (5,028 | ) | (983 | ) | (249 | ) | (6,260 | ) | ||||||||
Reversal | (34 | ) | (639 | ) | (604 | ) | (1,277 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Current | ||||||||||||||||
Non-current | — | 90,283 | 210 | 90,493 | ||||||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||
| Litigation | Restoration cost | Others | Total | |||||||||||||
Beginning balance | ||||||||||||||||
Increase (transfer) | 1,630 | 7,654 | 1,783 | 11,067 | ||||||||||||
Usage | (5,691 | ) | (7,689 | ) | (15,241 | ) | (28,621 | ) | ||||||||
Reversal | (42,120 | ) | (2,846 | ) | (3,330 | ) | (48,296 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Current | ||||||||||||||||
Non-current | — | 78,915 | 459 | 79,374 | ||||||||||||
59
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 17. | Net Defined Benefit Liabilities (Asset) |
| (1) | The amounts recognized in the statements of in the statements of financial position as of December 31, 2023 and December 31, 2022, are determined as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Present value of defined benefit obligations | ||||||||
Fair value of plan assets | (1,609,178 | ) | (1,674,344 | ) | ||||
|
|
|
| |||||
Liabilities (Assets), net | ||||||||
|
|
|
| |||||
| (2) | Changes in the defined benefit obligations for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning | ||||||||
Current service cost | 109,110 | 128,218 | ||||||
Interest expense | 73,330 | 41,723 | ||||||
Benefits paid | (256,252 | ) | (208,060 | ) | ||||
Others1 | — | (21,078 | ) | |||||
Remeasurements: | ||||||||
Actuarial losses arising from changes in demographic assumptions | 19 | — | ||||||
Actuarial losses arising from changes in financial assumptions | 93,422 | (228,246 | ) | |||||
Actuarial losses arising from experience adjustments | 35,304 | 59,857 | ||||||
|
|
|
| |||||
Ending | ||||||||
|
|
|
| |||||
| 1 | Others Include transactions by the Company to increase investment in kind to kt cloud Co., Ltd. during the period ended December 31, 2022. |
| (3) | Changes in the fair value of plan assets for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning | ||||||||
Interest income | 82,603 | 38,900 | ||||||
Remeasurements | 7,566 | (4,949 | ) | |||||
Employer contributions | 78,501 | 243,900 | ||||||
Benefits paid | (233,836 | ) | (192,028 | ) | ||||
Others1 | — | (16,264 | ) | |||||
|
|
|
| |||||
Ending | ||||||||
|
|
|
| |||||
| 1 | Others Include transactions by the Company to increase investment in kind in kt cloud Co., Ltd. during the period ended December 31, 2022. |
60
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (4) | Amounts recognized in the separate statements of profit or loss for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Current service cost | ||||||||
Net interest expense | (9,273 | ) | 2,823 | |||||
Account transfers | (13,548 | ) | (15,305 | ) | ||||
|
|
|
| |||||
Total expense | ||||||||
|
|
|
| |||||
Principal actuarial assumptions were as follows:
| December 31, 2023 | December 31, 2022 | |||||||
Discount rate | 4.16 | % | 5.13 | % | ||||
Future salary increases | 5.98 | % | 5.76 | % | ||||
The sensitivity analysis of the defined benefit obligations as of December 31, 2023, to changes in the principal assumptions, is as follows:
| (in millions of Korean won) | Effect on defined benefit obligation | |||||||||||
| Changes in assumption | Increase in assumption | Decrease in assumption | ||||||||||
Discount rate | 0.50 | %p | ||||||||||
Future salary growth rate | 0.50 | %p | 39,000 | (37,202 | ) | |||||||
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
The above sensitivity analysis is based on changes in assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.
The Company reviews the funding level on an annual basis and has a policy of eliminating deficit from the fund. Expected contributions to post-employment benefit plans, for the year ending December 31, 2024, areW 116,640 million.
The expected maturity analysis of undiscounted pension benefits as of December 31, 2023, is as follows:
| (in millions of Korean won) | Less than 1 year | Between 1-2 years | Between 2-5 years | Over 5 years | Total | |||||||||||||||
Pension benefits | ||||||||||||||||||||
The weighted average duration of the defined benefit obligations is 5.7 years.
61
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 18. | Defined Contribution Plan |
For the year ended December 31, 2023, recognized expense related to the defined contribution plan isW 51,316 million (December 31, 2022:W 45,227 million).
| 19. | Commitments and Contingencies |
| (1) | As of December 31, 2023, major commitments with local financial institutions are as follows: |
| (in millions of Korean won and foreign currencies in thousands) | Financial institution | Limit | Used amount | |||||||||||
Bank overdraft | Kookmin Bank and others | 360,000 | — | |||||||||||
Working capital loan | DBS Bank and others | 1,070,000 | — | |||||||||||
Facility loan | DBS Bank | 100,000 | 100,000 | |||||||||||
Inter-Korean Cooperation Fund | Export-Import Bank of Korea | 37,700 | 1,480 | |||||||||||
Economic Cooperation Business Insurance | Export-Import Bank of Korea | 3,240 | 1,732 | |||||||||||
Collateralized loan on electronic | Kookmin Bank and others | 247,000 | 7,321 | |||||||||||
Plus electronic notes payable | Industrial Bank of Korea | 50,000 | 2,558 | |||||||||||
Derivatives transaction limit | DBS Bank and others | USD | 1,970,000 | USD | 1,970,000 | |||||||||
| Citi Bank | JPY | 400,000 | JPY | 400,000 | ||||||||||
|
|
|
|
|
| |||||||||
Total | KRW | 1,867,940 | 113,091 | |||||||||||
| USD | 1,970,000 | 1,970,000 | ||||||||||||
| JPY | 400,000 | 400,000 | ||||||||||||
|
|
|
| |||||||||||
62
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | As of December 31, 2023, guarantees received from financial institutions are as follows: |
| (in millions of Korean won and foreign currencies in thousands) | Warranty details | Limit | ||||||
Hana Bank | Comprehensive credit line | USD | | 3,100 8,700 |
| |||
| Shinhan Bank | Guarantee for payment in foreign currency and others | USD | 39,517 | |||||
Kookmin Bank | Guarantee for payment in foreign currency | USD | 3,186 | |||||
Woori Bank | Guarantee for payment in foreign currency | USD | 5,000 | |||||
Korea Development Bank | Refund guarantee for advances received | USD | 6,811 | |||||
Korea Software Financial Cooperative | Advance payment/other guarantee and others | 1,135,945 | ||||||
Seoul Guarantee Insurance Company | Performance guarantee and others | 19,698 | ||||||
|
| |||||||
Total | KRW | 1,158,743 | ||||||
| USD | 63,214 | |||||||
|
| |||||||
| (3) | The Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities incurred prior to its spin-off. As of December 31, 2023, the Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of |
| (4) | For the year ended December 31, 2023, the Company entered into agreements with the Securitization Specialty Companies (2023: First 5G 67th to 72th Securitization Specialty Co., Ltd., 2022: First 5G 61st to 66th Securitization Specialty Co., Ltd.) and disposed of its trade receivables related to handset sales. The Company also made asset management agreements with each securitization specialty company and in accordance with the agreement, the Company will receive asset management fees upon liquidation of the securitization specialty company. |
| (5) | As of December 31, 2023, the Company is a defendant in 123 lawsuits with the total claimed amount of |
| (6) | According to the financial and other covenants included in certain debentures and borrowings, the Company is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restrictions on provision of additional collateral and disposal of certain assets. |
| (7) | As of December 31, 2023, the Company participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants. |
| (8) | As of December 31, 2023, the contract amount of property and equipment acquisition agreements made but not yet recognized amounts to |
63
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (9) | The Company entered into an agreement with financial investors of Epsilon Global Communications Pte., Ltd. in the acquisition of shares contract. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, the financial investors may exercise the Tag-Along Right, Drag-Along Right, or the right to sell shares for the convertible preferred shares they own(Note 7). |
| (10) | The Company has an obligation for additional contributions as per agreement to Future Innovation Private Equity Fund No.3 and others. As of December 31, 2023, remaining amount of |
| (11) | The Company has the amount of |
| (12) | During the prior period, the Company entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY. If a certain period of time has elapsed from the date of the contract and the acquired stocks are to be disposed to a third party, HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY may exercise a preferential purchase right to designate a buyer with priority. |
| (13) | During the prior period, the Company entered into an agreement with LS Cable & System Ltd., which participated in the stock acquisition contract of LS Marine Solution Co., Ltd. (formerly KT Submarine Co., Ltd.,) Under the agreement, the company may exercise a put-option to LS Cable&System Ltd. in the future. (Note 7). |
| (14) | During for period, the Company entered into an agreement with equity investors which participated in the stock acquisition contract of kt cloud Co., Ltd., Under the agreement, in specific occasion, equity investors may exercise a Tag-along or put-option to the Company in the future. |
| (15) | The Company has the obligation of paying Minimum Guarantee as utilizing product bundling of Tving Co.,Ltd. and the right to be paid certain proportion of the excess as per agreement. |
64
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 20. | Leases |
Set out below is information for leases when the Company is a lessee. Information on leases when the Company is a lessor is provided in Note 11.
(1) The separate statements of financial position shows the following amounts relating to leases:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Right-of-use assets | ||||||||
Property and buildings | ||||||||
Machinery and communication line facilities | 50,242 | 38,112 | ||||||
Others | 72,958 | 55,322 | ||||||
|
|
|
| |||||
|
|
|
| |||||
Investment properties (building) | ||||||||
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Lease liabilities 1 | ||||||||
Current | ||||||||
Non-current | 625,020 | 641,533 | ||||||
|
|
|
| |||||
|
|
|
| |||||
| 1 | Included in the line item ‘other current liabilities and non-current liabilities’ in the separate statements of financial position (Note 9). |
For the years ended December 31, 2023 and 2022, right-of-use assets related to leases increased byW 338,200 million andW 276,784 million, respectively.
65
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | The separate statements of profit or loss shows the following amounts relating to leases: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Depreciation of right-of-use assets | ||||||||
Property and building | ||||||||
Machinery and communication line facilities | 25,845 | 29,842 | ||||||
Others | 27,880 | 24,284 | ||||||
|
|
|
| |||||
|
|
|
| |||||
Depreciation of investment properties | ||||||||
Interest expense relating to lease liabilities | 38,946 | 31,625 | ||||||
Expense relating to Short-term leases | 4,631 | 4,203 | ||||||
Expense relating to leases of low-value assets that are not short-term leases | 11,527 | 12,562 | ||||||
The total cash outflow for leases for the years ended December 31, 2023 and 2022 isW 385,080 million andW 405,444 million, respectively.
| 21. | Share Capital |
As of December 31, 2023 and 2022, the Company has 1,000,000,000 shares authorized to issue, and the details are as follows:
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
Number of issued shares | Par value per share (in Korean won) | Ordinary shares (in millions of Korean won) | Number of issued shares | Par value per share (in Korean | Ordinary shares (in millions of Korean won) | |||||||||||||||||||
Ordinary shares1 | 257,860,760 | 261,111,808 | ||||||||||||||||||||||
| 1 | The Company retired 55,039,007 treasury shares against retained earnings. Therefore, the ordinary shares amount differs from the amount resulting from multiplying the number of shares issued. |
66
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 22. | Retained Earnings |
Details of retained earnings as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Legal reserve 1 | ||||||||
Voluntary reserves 2 | 4,651,362 | 4,651,362 | ||||||
Unappropriated retained earnings | 7,110,814 | 6,913,792 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1 | The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends but may be transferred to share capital with the approval of the Company’s Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the Company’s majority shareholders. |
| 2 | In accordance with the Restrictions on Special Taxation Act, R&D and HR related reserves under the voluntary reserves are separately accumulated when retained earnings from tax reserve funds are disposed, when income tax is recalculated from tax return adjustments. Reversal of these provisions can be paid out as dividends according to the related tax law. |
The appropriation of retained earnings for the year ended December 31, 2023 is expected to be appropriated at the shareholders’ meeting on March 28, 2024. The appropriation date for the year ended December 31, 2022 was March 31, 2023.
The appropriation of retained earnings for the years ended December 31, 2023 and 2022, is as follows:
| (in millions of Korean won) | Note | 2023 | 2022 | |||||||||
Unappropriated retained earnings from prior year | ||||||||||||
Remeasurements of net defined benefit liabilities | 17, 29 | (90,272 | ) | 114,154 | ||||||||
Gain (loss) on disposal of financial assets at fair value through other comprehensive income | 4 | 222 | (11 | ) | ||||||||
Profit for the year | 933,337 | 763,750 | ||||||||||
Retirement of treasury stock | (100,000 | ) | — | |||||||||
|
|
|
| |||||||||
Retained earnings available for appropriation | 7,110,814 | 6,913,792 | ||||||||||
|
|
|
| |||||||||
Appropriation of loss on disposal of treasury stock | 23 | — | (44,421 | ) | ||||||||
Dividends | 31 | |||||||||||
(Cash dividend (%): Ordinary shares: | (482,970 | ) | (501,844 | ) | ||||||||
| ||||||||||||
| ||||||||||||
|
|
|
| |||||||||
Appropriation of retained earnings | (482,970 | ) | (546,265 | ) | ||||||||
|
|
|
| |||||||||
Retained earnings after appropriation | ||||||||||||
|
|
|
| |||||||||
67
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 23. | Accumulated Other Comprehensive Income and Other Components of Equity |
| (1) | As of December 31, 2023 and 2022, the details of the Company’s accumulated other comprehensive income, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | ||||||||
Gain (loss) on derivatives valuation | (30,861 | ) | (9,765 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Changes in accumulated other comprehensive income for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||
| Beginning | Increase (Decrease) | Reclassification to gain or loss | Ending | |||||||||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | ||||||||||||||||
Gain (loss) on derivatives valuation | (9,765 | ) | 16,030 | (37,126 | ) | (30,861 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||
| Beginning | Increase (Decrease) | Reclassification to gain or loss | Ending | |||||||||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | ||||||||||||||||
Gain (loss) on derivatives valuation | 24,988 | 56,259 | (91,012 | ) | (9,765 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
68
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | As of December 31, 2023 and 2022, the Company’s other components of equity, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Treasury stock 1 | ||||||||
Loss on disposal of treasury stock 1 | 301 | (44,422 | ) | |||||
Share-based compensation | 8,773 | 6,222 | ||||||
Other | (180,871 | ) | (180,913 | ) | ||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| 1 | The amount of income tax effect directly reflected in equity is |
| (3) | As of December 31, 2023 and 2022, details of treasury stock, are as follows: |
| December 31, 2023 | December 31, 2022 | |||||||
Number of shares (in shares) | 11,447,338 | 5,069,130 | ||||||
Amount (in millions of Korean won) | ||||||||
Treasury stock is expected to be used for stock compensation for the Company’s directors, employees, and other purposes.
69
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 24. | Share-Based Compensation |
Details of share-based compensation granted by the Company to executives and employees, including the CEO, by the resolution the Board of Directors as of December 31, 2023 and 2022, are as follows:
2023 | ||
| (in share) | 17th grant | |
| Grant date | June 15, 2023, Oct 17, 2023 | |
| Grantee | CEO, internal directors, external directors, executives | |
| Vesting conditions | Service condition: 1 year Non-market performance condition: achievement of performance | |
| Fair value per option (in Korean won) | ||
| Total compensation costs | ||
| Estimated exercise date | During 2024 | |
| Valuation method | Fair value method | |
2022 | ||
| (in share) | 16th grant | |
| Grant date | June 9, 2022 | |
| Grantee | CEO, internal directors, external directors, executives | |
| Vesting conditions | Service condition: 1 year Non-market performance condition: achievement of performance | |
| Fair value per option (in Korean won) | ||
| Total compensation costs | ||
| Estimated exercise date | July 17, 2023 | |
| Valuation method | Fair value method | |
70
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
Changes in the number of share-based compensation for the years ended December 31, 2023 and 2022, are as follows:
| (in shares) | 2023 | |||||||||||||||||||||||
| Beginning | Granted | Expired | Exercised1 | Ending | Number of shares exercisable | |||||||||||||||||||
16th grant | 258,509 | — | (105,859 | ) | (131,690 | ) | 20,960 | — | ||||||||||||||||
17th grant | — | 307,182 | — | — | 307,182 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 258,509 | 307,182 | (105,859 | ) | (131,690 | ) | 328,142 | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in shares) | 2022 | |||||||||||||||||||||||
| Beginning | Granted | Expired | Exercised1 | Ending | Number of shares exercisable | |||||||||||||||||||
15th grant | 284,209 | — | (155,286 | ) | (128,923 | ) | — | — | ||||||||||||||||
16th grant | — | 258,509 | — | — | 258,509 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 284,209 | 258,509 | (155,286 | ) | (128,923 | ) | 258,509 | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | The weighted average price of ordinary shares at the time of exercise, during the year ended December 31, 2023, is |
71
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 25. | Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities |
| (1) | The Company has recognized the following amounts relating to revenue in the separate statement of profit or loss: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Revenue from contracts with customers | ||||||||
Revenue from other sources | 232,945 | 205,386 | ||||||
|
|
|
| |||||
Total revenue | ||||||||
|
|
|
| |||||
| (2) | Operating revenues for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Services provided | ||||||||
Sales of goods | 2,439,016 | 2,523,055 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
Revenue from services provided are recognized over time and revenue from sales of goods are recognized at a point in time.
| (3) | The Contract assets, liabilities and deferred revenue recognized in relation to the revenues from contracts with customers, are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Contract assets1 | ||||||||
Contract liabilities1 | 291,997 | 342,196 | ||||||
Deferred revenue2 | 70,314 | 70,369 | ||||||
| 1 | Company recognized contract assets of |
| 2 | Deferred revenue recognized relating to government grant is excluded. |
| (4) | The contract costs recognized as assets are as follows: |
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Incremental cost of obtaining a contract | ||||||||
Cost of contract performance | 157,292 | 153,517 | ||||||
The Company recognizedW 1,881,164 million (2022:W 1,908,543 million) of operating expenses during the year end December 31, 2023, which relates to contract cost assets.
The Company did not recognize an impairment loss in anticipation of full recovery of costs recognized as assets.
72
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (5) | For the year ended December 31, 2023 and 2022, revenue recognition arising from carried-forward contract liabilities and deferred revenue from prior year, is as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Revenue recognized that was included in the contract liabilities balance at the beginning of the year | ||||||||
Allocation of the transaction price | ||||||||
Deferred revenue of joining/installment fee | 36,708 | 37,984 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
73
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 26. | Operating Expenses |
| (1) | Operating expenses for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Salaries and wages | ||||||||
Depreciation | 2,335,992 | 2,286,741 | ||||||
Depreciation of intangible assets | 508,200 | 464,991 | ||||||
Depreciation of right-of-use assets | 339,216 | 354,076 | ||||||
Commissions | 1,892,485 | 1,815,415 | ||||||
Interconnection charges | 436,906 | 479,644 | ||||||
International interconnection fees | 140,434 | 186,258 | ||||||
Purchase of inventories | 2,577,559 | 2,618,632 | ||||||
Changes of inventories | (18,248 | ) | (60,524 | ) | ||||
Sales promotion expense and sales commission | 2,543,731 | 2,574,457 | ||||||
Service costs | 755,918 | 832,843 | ||||||
Purchase of contents | 658,230 | 653,265 | ||||||
Utilities | 387,006 | 323,821 | ||||||
Taxes and dues | 196,384 | 222,568 | ||||||
Rent | 125,292 | 116,112 | ||||||
Insurance premiums | 54,783 | 57,340 | ||||||
Installation fees | 470,900 | 491,461 | ||||||
Advertising expenses | 110,899 | 148,493 | ||||||
Research and development expenses | 226,771 | 186,212 | ||||||
Bad debt expenses | 55,121 | 49,727 | ||||||
Others | 1,109,931 | 938,936 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
74
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | Details of employee benefits for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Short-term employee benefits | ||||||||
Post-employment benefits (defined benefits) | 86,289 | 115,736 | ||||||
Post-employment benefits (defined contributions) | 51,316 | 45,227 | ||||||
Share-based compensation | 10,481 | 14,192 | ||||||
Others | 37,495 | 18,052 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
75
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 27. | Other Income and Other Expenses |
| (1) | Other income for the years ended December 31, 2023 and 2022, are as follows |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Gain on disposal of property and equipment | ||||||||
Gain on disposal of right-of-use assets | 3,338 | 2,935 | ||||||
Gain on disposal of intangible assets | — | 263 | ||||||
Compensation on property and equipment | 152,712 | 159,849 | ||||||
Gain on disposal of investments in subsidiaries, associates and joint ventures | 25,920 | 1,278 | ||||||
Dividends received | 64,654 | 89,895 | ||||||
Gains on government subsidies | 40,725 | 44,473 | ||||||
Others | 18,318 | 57,157 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Other expenses for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Loss on disposal of property and equipment | ||||||||
Impairment loss on property and equipment | 7,349 | 2,969 | ||||||
Loss on disposal of right-of-use assets | 2,047 | 1,991 | ||||||
Impairment loss on intangible assets | 5,280 | 6,240 | ||||||
Impairment loss on investments in subsidiaries, associates and joint ventures | 83,237 | 3,000 | ||||||
Donations | 21,397 | 10,576 | ||||||
Others | 133,817 | 131,347 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
76
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 28. | Finance Income and Costs |
| (1) | Details of financial income for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Interest income | ||||||||
Gain on foreign currency transactions | 16,196 | 54,875 | ||||||
Gain on foreign currency translation | 9,318 | 40,046 | ||||||
Gain on derivative transactions | �� | 10,192 | 50,518 | |||||
Gain on valuation of derivatives | 44,804 | 150,570 | ||||||
Gain on disposal of trade receivable | 3,441 | |||||||
Gain on valuation of financial instruments | 24,831 | 36,197 | ||||||
Others | 61,471 | 10,533 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (2) | Details of financial costs for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Interest expenses | ||||||||
Loss on foreign currency transactions | 25,124 | 73,937 | ||||||
Loss on foreign currency translation | 49,567 | 162,737 | ||||||
Loss on derivative transactions | — | 23,039 | ||||||
Loss on valuation of derivatives | 162 | 20,722 | ||||||
Loss on disposal of trade receivables | 14,574 | 62,630 | ||||||
Loss on valuation of financial instruments | 43,278 | 52,385 | ||||||
Others | — | 42 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
77
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 29. | Deferred Income Tax and Income Tax Expense |
Deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Deferred tax assets | ||||||||
Deferred tax assets to be recovered within 12 months | ||||||||
Deferred tax assets to be recovered after more than 12 months | 954,493 | 1,042,833 | ||||||
|
|
|
| |||||
| 1,237,989 | 1,350,210 | |||||||
|
|
|
| |||||
Deferred tax liabilities | ||||||||
Deferred tax liabilities to be recovered within 12 months | (523,094 | ) | (529,259 | ) | ||||
Deferred tax liabilities to be recovered after more than 12 months | (1,510,982 | ) | (1,584,064 | ) | ||||
|
|
|
| |||||
| (2,034,076 | ) | (2,113,323 | ) | |||||
|
|
|
| |||||
Deferred tax assets (liabilities), net | ||||||||
|
|
|
| |||||
The movement in deferred income tax assets and liabilities as of December 31, 2023 and 2022, before taking into consideration the offsetting of balances, is as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax liabilities | ||||||||||||||||
Investment in subsidiaries, associates and joint ventures | ||||||||||||||||
Depreciation expense and impairment loss | (148,709 | ) | 39,228 | — | (109,481 | ) | ||||||||||
Plan assets | (420,261 | ) | 15,393 | — | (404,868 | ) | ||||||||||
Deferred tax gain on disposal of fixed assets | (529,868 | ) | 3,859 | — | (526,009 | ) | ||||||||||
Contract assets | (654,551 | ) | 5,642 | — | (648,909 | ) | ||||||||||
Financial assets at fair value through other comprehensive income | (31,198 | ) | 10,195 | (45,301 | ) | (66,304 | ) | |||||||||
Others | (295,836 | ) | 48,786 | 4,350 | (242,700 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
78
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2023 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax assets | ||||||||||||||||
Investments in subsidiaries, associates and joint ventures | 3,533 | 3,732 | 51 | 7,316 | ||||||||||||
Depreciation expense and impairment loss | 88,231 | (62,210 | ) | — | 26,021 | |||||||||||
Contract liabilities | 121,393 | (9,513 | ) | — | 111,880 | |||||||||||
Defined benefit liabilities | 374,907 | (16,191 | ) | 30,907 | 389,623 | |||||||||||
Provisions | 279,811 | (18,881 | ) | — | 260,930 | |||||||||||
Financial assets at fair value through other comprehensive income | 19,548 | (11,801 | ) | (7,747 | ) | — | ||||||||||
Trade receivables | 1,575 | (37 | ) | — | 1,538 | |||||||||||
Others | 358,760 | (49,948 | ) | 2,752 | 311,564 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Temporary difference, net | (865,565 | ) | (44,644 | ) | (14,995 | ) | (925,204 | ) | ||||||||
Tax credit carryforwards | 102,452 | 26,665 | — | 129,117 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax liabilities | ||||||||||||||||
Investment in subsidiaries, associates and joint ventures | ||||||||||||||||
Depreciation expense and impairment loss | (83,769 | ) | (64,940 | ) | — | (148,709 | ) | |||||||||
Plan assets | (418,207 | ) | (2,054 | ) | — | (420,261 | ) | |||||||||
Deferred tax gain on disposal of fixed assets | (346,934 | ) | (182,934 | ) | — | (529,868 | ) | |||||||||
Contract assets | (664,255 | ) | 9,704 | — | (654,551 | ) | ||||||||||
Financial assets at fair value through other comprehensive income | (64,742 | ) | (3,453 | ) | 36,997 | (31,198 | ) | |||||||||
Others | (272,863 | ) | (25,458 | ) | 2,485 | (295,836 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
79
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||
| Beginning | Statement of profit or loss | Other comprehensive income | Ending | |||||||||||||
Deferred tax assets | ||||||||||||||||
Investments in subsidiaries, associates and joint ventures | 5,038 | (1,505 | ) | — | 3,533 | |||||||||||
Depreciation expense and impairment loss | 69,327 | 18,904 | — | 88,231 | ||||||||||||
Contract liabilities | 148,693 | (27,300 | ) | — | 121,393 | |||||||||||
Defined benefit liabilities | 448,555 | (24,362 | ) | (49,286 | ) | 374,907 | ||||||||||
Provisions | 276,508 | 3,304 | — | 279,812 | ||||||||||||
Financial assets at fair value through other comprehensive income | — | — | 19,548 | 19,548 | ||||||||||||
Trade receivables | 1,635 | (60 | ) | — | 1,575 | |||||||||||
Others | 311,212 | 37,953 | 9,594 | 358,759 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Temporary difference, net | (621,106 | ) | (263,797 | ) | 19,338 | (865,565 | ) | |||||||||
Tax credit carryforwards | 133,999 | (31,547 | ) | — | 102,452 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total unrecognized temporary differences as deferred tax liabilities as of December 31, 2023 isW 536,902 million (2022:W 559,164 million), relating to investment in subsidiaries, associates and joint ventures, and the total of unrecognized temporary differences as deferred tax assets as of December 31, 2023 isW 3,382,443 million (2022:W 3,328,478 million), relating to investment in subsidiaries, associates and joint ventures.
The tax impact recognized directly to equity as of December 31, 2023 and 2022, is as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||||||||||||||||||
| Before recognition | Tax effect | After recognition | Before recognition | Tax effect | After recognition | |||||||||||||||||||
Gain (loss) on valuation of financial assets at fair value through other comprehensive income | ||||||||||||||||||||||||
Hedge instruments valuation gain (loss) | (28,199 | ) | 7,103 | (21,096 | ) | (46,832 | ) | 12,079 | (34,753 | ) | ||||||||||||||
Remeasurements of net defined benefit liabilities | (121,180 | ) | 30,907 | (90,273 | ) | 163,440 | (49,286 | ) | 114,154 | |||||||||||||||
Loss on disposal of treasury stock | 402 | (101 | ) | 301 | (59,308 | ) | 14,886 | (44,422 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
80
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
Details of income tax expenses for the years ended December 31, 2023 and 2022, are calculated as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Current income tax expenses | ||||||||
Impact of change in temporary differences | 17,979 | 295,344 | ||||||
|
|
|
| |||||
Total income tax expense | ||||||||
|
|
|
| |||||
The relationship between the Company profit before tax and income tax expense for the years ended December 31, 2023 and 2022, is as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Profit before income tax | ||||||||
|
|
|
| |||||
Expected tax expense at statutory tax rate | ||||||||
Tax effects of | ||||||||
Income not taxable for tax purposes | (11,952 | ) | (3,515 | ) | ||||
Expenses not deductible for tax purposes | 8,157 | 20,089 | ||||||
Tax credit and deferred tax effects due to consolidated tax return | (64,177 | ) | (49,393 | ) | ||||
Temporary difference not recognized as deferred tax | 17,803 | 245,871 | ||||||
Deferred tax due to tax rate changes | — | (39,602 | ) | |||||
Others | (22,524 | ) | (5,549 | ) | ||||
|
|
|
| |||||
Income tax expense | ||||||||
|
|
|
| |||||
81
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 30. | Earnings per Share |
| (1) | Basic Earnings per Share |
Basic earnings per share is calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury stock.
Basic earnings per share for the years ended December 31, 2023 and 2022, is calculated as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Profit attributable to ordinary shares | ||||||||
Weighted average number of ordinary shares outstanding in shares | 249,470,072 | 242,235,332 | ||||||
Basic earnings per share (in Korean won) | 3,741 | 3,153 | ||||||
| (2) | Diluted Earnings per Share |
Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares from other share-based compensation.
Diluted earnings per share for the years ended December 31, 2023 and 2022, is calculated as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Profit attributable to ordinary shares (in millions of Korean won) | ||||||||
Adjusted profit for the year attributable to ordinary shares (in millions of Korean won) | 933,337 | 763,750 | ||||||
Number of dilutive potential ordinary shares outstanding | 119,263 | 91,931 | ||||||
Weighted-average number of ordinary shares outstanding and dilutive ordinary shares | 249,589,335 | 242,327,263 | ||||||
Diluted earnings per share (in Korean won) | 3,739 | 3,152 | ||||||
Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the year by the sum of the number of ordinary shares and dilutive potential ordinary shares.
82
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 31. | Dividends |
The dividends paid by the Company in 2023 wereW 501,844 million (W 1,960 per share). The dividends paid by the Company in 2022 wereW 450,394 million (W 1,910 per share). A dividend in respect of the year ended December 31, 2023, ofW 1,960 per share, amounting to a total dividend ofW 482,970 million, is to be proposed at the shareholders’ meeting on March 28, 2024.
83
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 32. | Cash Generated from Operations |
| (1) | Cash flows from operating activities for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
1. Profit for the year | ||||||||
2. Adjustments for: | ||||||||
Income tax expense | 221,937 | 506,993 | ||||||
Interest income | (210,898 | ) | (234,595 | ) | ||||
Interest expense | 285,048 | 258,504 | ||||||
Dividends income | (116,832 | ) | (98,874 | ) | ||||
Depreciation | 2,382,549 | 2,333,915 | ||||||
Amortization of intangible assets | 511,215 | 467,052 | ||||||
Depreciation of right-of-use assets | 339,216 | 354,076 | ||||||
Provisions for post-employment | 99,837 | 131,041 | ||||||
Allowance for bad debts | 83,036 | 63,593 | ||||||
Loss (gain) on disposal of subsidiaries, associates and joint ventures | (25,920 | ) | (1,278 | ) | ||||
Impairment loss on interests in subsidiaries, associates and joint ventures | 83,237 | 3,000 | ||||||
Loss on disposal of property and equipment | 44,599 | 20,425 | ||||||
Loss on disposal of intangible assets | 5,280 | 5,977 | ||||||
Gain on disposal of right-of-use assets | (1,291 | ) | (944 | ) | ||||
Loss on foreign currency translation | 40,249 | 122,691 | ||||||
Gain on valuation of derivatives, net | (36,865 | ) | (177,600 | ) | ||||
Loss (gain) on valuation of financial assets at fair value | (4,727 | ) | 37,256 | |||||
Gain on disposal of financial assets at fair value | (1,809 | ) | (1,555 | ) | ||||
Others | 5,600 | (122,170 | ) | |||||
3. Changes in operating assets and liabilities | ||||||||
Decrease in trade receivables | (63,926 | ) | 118,814 | |||||
Decrease in other receivables | 10,779 | 67,940 | ||||||
Increase in other current assets | (9,897 | ) | (26,665 | ) | ||||
Decrease (increase) in other non-current assets | 7,842 | (13,886 | ) | |||||
Increase in inventories | (12,924 | ) | (39,879 | ) | ||||
Increase (decrease) in trade payables | 146,065 | (313,744 | ) | |||||
Increase in other payables | 28,147 | 314,512 | ||||||
Increase (decrease) in other current liabilities | 50,794 | (69,292 | ) | |||||
Decrease in other non-current liabilities | (15,935 | ) | (17,018 | ) | ||||
Decrease in provisions | (3,292 | ) | (26,519 | ) | ||||
Decrease in deferred revenue | (17,251 | ) | (34,083 | ) | ||||
Payment of post-employment benefits | (229,675 | ) | (238,219 | ) | ||||
Decrease (increase) in plan assets | 130,280 | (25,033 | ) | |||||
|
|
|
| |||||
4. Cash generated from operations (1+2+3) | ||||||||
|
|
|
| |||||
84
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | Significant transactions not affecting cash flows for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Reclassification of current portion of borrowings | ||||||||
Reclassification of construction-in-progress to property and equipment | 2,715,765 | 2,936,585 | ||||||
Reclassification of accounts payable from property and equipment | (313,921 | ) | (46,638 | ) | ||||
Reclassification of accounts payable from intangible assets | (304,125 | ) | (304,125 | ) | ||||
Reclassification of payable from net defined benefit liabilities | 1,522 | (3,320 | ) | |||||
Disposal of treasury stock related to the acquisition of financial instrument | — | 747,161 | ||||||
Increase of in subsidiary shares due to investment in kind | — | 751,504 | ||||||
85
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 33. | Cash Generated from Financing Activities |
Details of changes in liabilities related to cash flows that have been classified as financing activities, or will be classified as financing activities in the separate statement of cash flows for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | |||||||||||||||||||||||||||
| Beginning | Financing activities cash flows | Others | ||||||||||||||||||||||||||
| Newly acquired | Exchange difference | Fair value change | Other changes | Ending | ||||||||||||||||||||||||
Borrowing | ||||||||||||||||||||||||||||
Lease liabilities | 865,280 | (333,042 | ) | 352,687 | — | — | (33,315 | ) | 851,610 | |||||||||||||||||||
Derivative liabilities | 32,402 | — | — | 10,888 | 9,326 | (29,540 | ) | 23,076 | ||||||||||||||||||||
Derivative assets | (185,989 | ) | 46,525 | — | 32,487 | 5,850 | (55,647 | ) | (156,774 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| (in millions of Korean won) | 2022 | |||||||||||||||||||||||||||
| Beginning | Financing activities cash flows | Others | ||||||||||||||||||||||||||
| Newly acquired | Exchange difference | Fair value change | Other changes | Ending | ||||||||||||||||||||||||
Borrowing | ||||||||||||||||||||||||||||
Lease liabilities | 966,700 | (357,337 | ) | 295,207 | — | — | (39,290 | ) | 865,280 | |||||||||||||||||||
Derivative liabilities | 18,050 | (41,197 | ) | — | 19,858 | 11,788 | 23,903 | 32,402 | ||||||||||||||||||||
Derivative assets | (97,021 | ) | 76,280 | — | (147,161 | ) | 31,636 | (49,723 | ) | (185,989 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
86
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 34. | Related Party Transactions |
| (1) | The list of related parties of the Company as of December 31, 2023, is as follows: |
| Relationship | Name of Entity | |
| Subsidiaries | 84 entities including KT Estate Inc., KT Skylife Co., Ltd., BC Card Co., Ltd. | |
| Associates and joint ventures | 54 entities including K Bank Inc., KIF Investment Fund, Megazone Cloud Corporation | |
| Others1 | Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd., Mastern No.127 Logispoint Daegu Co., Ltd., KORAMKO No. 143 General Private Real Estate Investment Company |
| 1 | Despite the significant influence, treated as investment changes in FV under IFRS 9 instead of using equity method. |
| (2) | The amount of the installment handset sales receivable inherited from KTIS Corporation, KTCS Corporation, KT Commerce Inc., KT Telecop Co., Ltd., KT M&S Co., Ltd. and KT Service Nambu Co., Ltd. for the year ended December 31, 2023 is |
| (3) | The Company has entered into an additional agreement in relation to providing communication service in wholesale with KT M Mobile Co., Ltd. in connection with the agreement, the Company offsets all or partial receivables against payables for joining mobile telecommunication services and usage of network arising from telecommunication operations. |
87
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (4) | Outstanding balances of receivables and payables in relation to transaction with related parties as of December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||
| Receivables | Payables | |||||||||||||||||||||||
| Trade receivables | Loans and others | Other receivables | Trade payables | Other payables | Lease liabilities | |||||||||||||||||||
Subsidiaries |
| |||||||||||||||||||||||
KT Linkus Co., Ltd. | 13 | — | 3 | — | 13,404 | — | ||||||||||||||||||
KT Telecop Co., Ltd. | 426 | — | 644 | 2,534 | 26,002 | — | ||||||||||||||||||
KTCS Corporation | 140 | — | 8,316 | — | 52,542 | 5 | ||||||||||||||||||
KTIS Corporation | 11,258 | — | 25 | — | 47,246 | — | ||||||||||||||||||
KT Service Bukbu Co., Ltd. | 19 | — | 4 | — | 24,375 | — | ||||||||||||||||||
KT Service Nambu Co., Ltd. | — | — | 9 | — | 24,653 | — | ||||||||||||||||||
KT Skylife Co., Ltd. | 37,070 | — | 11,062 | — | 8,457 | — | ||||||||||||||||||
KTDS Co., Ltd. | 1,633 | — | 3,361 | 1,107 | 132,711 | — | ||||||||||||||||||
KT Estate Inc. | 1,202 | — | 42,614 | — | 22,861 | 1,677 | ||||||||||||||||||
Skylife TV Co., Ltd. | 54 | — | — | — | 2,289 | — | ||||||||||||||||||
BC Card Co., Ltd. 1 | 699 | — | 6,443 | — | 1,123 | 3 | ||||||||||||||||||
KT Sat Co., Ltd. | 1,272 | — | 1 | — | 1,908 | — | ||||||||||||||||||
KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) | 4,684 | — | 79 | — | 9,226 | — | ||||||||||||||||||
KT Commerce Inc. | 167 | — | 2 | 8,124 | 19,296 | — | ||||||||||||||||||
KT M&S Co., Ltd. | 240 | 8,400 | 243 | — | 95,671 | — | ||||||||||||||||||
GENIE Music Corporation | 13,714 | — | 434 | — | 17,741 | — | ||||||||||||||||||
KT M Mobile Co., Ltd. | 47,214 | — | 48 | — | 5,812 | — | ||||||||||||||||||
Nasmedia, Inc. | 1,992 | — | 3 | — | 686 | — | ||||||||||||||||||
KT MOS Bukbu Co., Ltd. | 10 | — | 8 | — | 15,605 | — | ||||||||||||||||||
KT MOS Nambu Co., Ltd. | — | — | 119 | — | 12,899 | — | ||||||||||||||||||
KT Engineering Co., Ltd | 18 | — | 809 | 2,370 | 82,831 | — | ||||||||||||||||||
KT Studio Genie Co., Ltd. | 9 | — | 1,339 | — | 30,737 | — | ||||||||||||||||||
kt cloud Co., Ltd. | 11,403 | — | 10 | — | 61,919 | 330 | ||||||||||||||||||
East Telecom LLC | 5,045 | 12,704 | — | 69 | — | — | ||||||||||||||||||
Others | 5,571 | — | 136 | 1,906 | 11,848 | 23 | ||||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||
K Bank Inc. | 203 | — | 101,267 | — | 1 | — | ||||||||||||||||||
Others | 256 | — | 3 | — | 521 | 1,331 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
88
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||||
| Receivables | Payables | |||||||||||||||||||||||
| Trade receivables | Loans and others | Other receivables | Trade payables | Other payables | Lease liabilities | |||||||||||||||||||
Subsidiaries |
| |||||||||||||||||||||||
KT Linkus Co., Ltd. | ||||||||||||||||||||||||
KT Telecop Co., Ltd. | 673 | — | 382 | 2,043 | 25,528 | — | ||||||||||||||||||
KTCS Corporation | 173 | — | 11,221 | — | 60,045 | 7 | ||||||||||||||||||
KTIS Corporation | 7,634 | — | 255 | — | 46,722 | — | ||||||||||||||||||
KT Service Bukbu Co., Ltd. | 114 | — | 6 | — | 23,105 | — | ||||||||||||||||||
KT Service Nambu Co., Ltd. | — | — | 1 | — | 25,998 | — | ||||||||||||||||||
KT Skylife Co., Ltd. | 7,091 | — | 27,642 | — | 11,411 | — | ||||||||||||||||||
KTDS Co., Ltd. | 1,245 | — | 1,421 | — | 107,863 | — | ||||||||||||||||||
KT Estate Inc. | 3,011 | — | 42,267 | — | 50,563 | 3,062 | ||||||||||||||||||
Skylife TV Co., Ltd. | 23 | — | — | — | 2,528 | — | ||||||||||||||||||
BC Card Co., Ltd. 1 | 323 | — | 4,201 | — | 1,077 | 4 | ||||||||||||||||||
KT Sat Co., Ltd. | 1,552 | — | — | — | 1,724 | — | ||||||||||||||||||
KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) | 5,869 | — | 77 | — | 9,812 | — | ||||||||||||||||||
KT Commerce Inc. | 163 | — | — | 8,017 | 21,996 | — | ||||||||||||||||||
KT M&S Co., Ltd. | 340 | 8,400 | — | — | 111,718 | — | ||||||||||||||||||
GENIE Music Corporation | 17,308 | — | 1,106 | — | 28,658 | — | ||||||||||||||||||
KT M Mobile Co., Ltd. | 30,663 | — | 131 | — | 6,160 | — | ||||||||||||||||||
Nasmedia, Inc. | 3,079 | — | 3 | — | 1,522 | — | ||||||||||||||||||
KT MOS Bukbu Co., Ltd. | 13 | — | 829 | — | 14,086 | — | ||||||||||||||||||
KT MOS Nambu Co., Ltd. | — | — | 264 | — | 14,098 | — | ||||||||||||||||||
KT Engineering Co., Ltd | 547 | — | 620 | 753 | 85,174 | 2 | ||||||||||||||||||
KT Studio Genie Co., Ltd. | 8 | — | 1,442 | — | 52,912 | — | ||||||||||||||||||
kt cloud Co., Ltd. | 15,844 | — | 2 | — | 31,816 | 290 | ||||||||||||||||||
East Telecom LLC | 5,048 | 11,974 | — | — | 525 | — | ||||||||||||||||||
Others | 9,253 | — | 156 | 121 | 26,266 | 29 | ||||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||
K Bank Inc. | 204 | — | 100,253 | — | — | — | ||||||||||||||||||
Others | 124 | — | 2 | — | 685 | 1,666 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| 1 | As of December 31, 2023, the unsettled amount of |
89
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (5) | Significant transactions with related parties for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||||||||||||||||||
| Sales | Purchases | Acquisition of right-of-use assets | Finance income | Finance costs | Dividends received | |||||||||||||||||||||||||||
| Operating revenue | Other income | Operating expenses | Others 1 | |||||||||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||||||||||
KT Linkus Co., Ltd. | ||||||||||||||||||||||||||||||||
KT Telecop Co., Ltd. 1 | 6,705 | 41 | 142,170 | 20 | 15 | 10 | — | — | ||||||||||||||||||||||||
KTCS Corporation | 81,571 | 12 | 340,547 | 2 | — | — | — | 381 | ||||||||||||||||||||||||
KTIS Corporation 1 | 73,885 | 42 | 332,931 | 381 | — | — | — | 1,224 | ||||||||||||||||||||||||
KT Service Bukbu Co., Ltd. | 13,249 | 3 | 229,500 | — | — | — | — | — | ||||||||||||||||||||||||
KT Service Nambu Co., Ltd. 1 | 14,000 | 9 | 264,362 | 374 | — | — | — | — | ||||||||||||||||||||||||
KT Skylife Co., Ltd. | 129,070 | 17 | 22,420 | — | — | — | — | 8,368 | ||||||||||||||||||||||||
KTDS Co., Ltd. 1 | 12,626 | 172 | 482,505 | 1,006 | — | 2 | — | 7,560 | ||||||||||||||||||||||||
KT Estate Inc. 1 | 56,459 | 25 | 84,057 | 4,865 | 24,492 | — | 617 | 17,500 | ||||||||||||||||||||||||
Skylife TV Co., Ltd. | 14,756 | — | 11,314 | — | — | — | — | — | ||||||||||||||||||||||||
BC Card Co., Ltd. | 9,157 | 14 | 33,458 | — | — | 5 | — | 11,320 | ||||||||||||||||||||||||
KT Sat Co., Ltd. | 7,924 | 1 | 11,009 | — | — | — | — | 7,000 | ||||||||||||||||||||||||
KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) | 62,069 | 3 | 45,253 | — | — | 1 | — | — | ||||||||||||||||||||||||
KT Commerce Inc. 1 | 1,244 | 1 | 103,495 | 98,176 | — | — | — | — | ||||||||||||||||||||||||
KT M&S Co., Ltd. | 340,290 | 43 | 259,051 | — | — | — | — | — | ||||||||||||||||||||||||
GENIE Music Corporation | 360 | 1 | 53,657 | — | — | — | — | — | ||||||||||||||||||||||||
KT M Mobile Co., Ltd. | 224,136 | 48 | 5,679 | — | — | — | — | — | ||||||||||||||||||||||||
Nasmedia, Co., Ltd. | 422 | — | 3,969 | — | — | 1 | — | 3,170 | ||||||||||||||||||||||||
KT MOS Nambu Co., Ltd. | 1,863 | 8 | 100,176 | — | — | — | — | — | ||||||||||||||||||||||||
KT MOS Bukbu Co., Ltd. | 2,840 | 8 | 100,747 | — | — | — | — | — | ||||||||||||||||||||||||
KT Engineering Co., Ltd. 1 | 3,635 | 2 | 39,144 | 154,098 | — | — | — | — | ||||||||||||||||||||||||
KHS Corporation | 4 | — | 7,296 | — | — | — | — | — | ||||||||||||||||||||||||
KT Studio Genie Co., Ltd. 1 | 113 | — | 13,708 | 99,732 | — | — | — | — | ||||||||||||||||||||||||
kt cloud Co., Ltd. 1 | 92,451 | 5 | 161,475 | 10,021 | 751 | — | 15 | — | ||||||||||||||||||||||||
Others 2,3,4 | 27,461 | 14 | 87,857 | — | 9 | 1 | 1 | 6,992 | ||||||||||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||||||||||
K Bank Inc. | 2,611 | — | 159 | — | — | 3,211 | — | — | ||||||||||||||||||||||||
Others 5 | 1,664 | 100 | 5,330 | — | 7 | — | 84 | 1,139 | ||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||||||||
Digital Pharm Co., Ltd. | 1 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 1 | Amounts include acquisition of property and equipment and others. |
| 2 | Transaction amount before being excluded from subsidiaries (KT Strategic Investment Fund No.2). |
| 3 | Transaction amount before being included in associates (LS Marine Solution Co., Ltd.). |
| 4 | Transaction amount before being excluded from subsidiaries (KT-Michigan Global Contents Fund). |
| 5 | Transaction amount before being included in subsidiaries (KD Living, Inc.) |
90
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||||||||||||||||||
| Sales | Purchases | Acquisition of right-of-use assets | Finance income | Finance costs | Dividends received | |||||||||||||||||||||||||||
| Operating revenue | Other income | Operating expenses | Others 1 | |||||||||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||||||||||
KT Linkus Co., Ltd. | ||||||||||||||||||||||||||||||||
KT Telecop Co., Ltd. | 8,543 | — | 164,091 | — | — | 13 | — | — | ||||||||||||||||||||||||
KTCS Corporation | 88,579 | 69 | 331,560 | 8 | — | — | 1 | 318 | ||||||||||||||||||||||||
KTIS Corporation | 71,136 | 345 | 319,531 | — | — | — | — | 1,020 | ||||||||||||||||||||||||
KT Service Bukbu Co., Ltd. | 13,611 | 2 | 238,377 | — | — | — | — | — | ||||||||||||||||||||||||
KT Service Nambu Co., Ltd. | 12,582 | 2 | 280,857 | — | — | — | — | — | ||||||||||||||||||||||||
KT Skylife Co., Ltd. | 104,188 | — | 38,664 | — | — | 4 | — | 8,368 | ||||||||||||||||||||||||
KTDS Co., Ltd. 1 | 14,753 | 1 | 442,263 | 108 | — | 3 | — | 4,920 | ||||||||||||||||||||||||
KT Estate Inc. | 34,246 | — | 152,000 | — | 44 | — | 481 | — | ||||||||||||||||||||||||
Skylife TV Co., Ltd. | 416 | — | 12,030 | — | — | — | — | — | ||||||||||||||||||||||||
BC Card Co., Ltd. | 11,742 | 4 | 31,515 | — | — | 5 | — | 17,439 | ||||||||||||||||||||||||
KT Sat Co., Ltd. | 12,042 | — | 10,106 | — | — | — | — | — | ||||||||||||||||||||||||
KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) | 64,318 | 5 | 83,262 | — | — | 2 | — | — | ||||||||||||||||||||||||
KT Commerce Inc. 1 | 1,710 | — | 128,254 | 92,128 | — | — | — | — | ||||||||||||||||||||||||
KT M&S Co., Ltd. 1 | 339,590 | 23 | 251,867 | 79 | — | — | — | — | ||||||||||||||||||||||||
GENIE Music Corporation | 6,545 | — | 54,925 | — | — | — | — | — | ||||||||||||||||||||||||
KT M Mobile Co., Ltd. | 192,654 | — | 25,825 | — | — | — | — | — | ||||||||||||||||||||||||
Nasmedia, Co., Ltd. | 647 | — | 5,306 | — | — | 1 | — | 3,293 | ||||||||||||||||||||||||
KT MOS Nambu Co., Ltd. 1 | 1,742 | — | 82,108 | 98 | — | — | — | — | ||||||||||||||||||||||||
KT MOS Bukbu Co., Ltd. | 2,540 | — | 82,560 | — | — | — | — | — | ||||||||||||||||||||||||
KT Engineering Co., Ltd. 1 | 2,094 | — | 40,160 | 173,025 | — | — | — | — | ||||||||||||||||||||||||
KHS Corporation | 13 | — | 13,834 | — | — | — | — | — | ||||||||||||||||||||||||
KT Studio Genie Co., Ltd. | 78 | — | — | 49,263 | — | — | — | — | ||||||||||||||||||||||||
kt cloud Co., Ltd. | 77,641 | 150 | 86,884 | — | 775 | 937 | 14 | — | ||||||||||||||||||||||||
kt seezn Co., Ltd. 2 | 36,185 | — | 78,952 | — | — | — | — | — | ||||||||||||||||||||||||
Others | 22,065 | — | 103,440 | 97 | — | 2 | 1 | 243 | ||||||||||||||||||||||||
Associates and joint ventures | ||||||||||||||||||||||||||||||||
K-REALTY CR REITs No.1 3 | — | — | — | — | — | — | — | 45,549 | ||||||||||||||||||||||||
K Bank Inc. | 10,287 | — | 167 | — | — | 599 | — | — | ||||||||||||||||||||||||
Others 1 | 816 | 100 | 6,868 | 3,170 | 1,966 | — | 48 | 8,741 | ||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||||||||
Digital Pharm Co., Ltd. | 1 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| 1 | Amounts include acquisition of property and equipment and others. |
| 2 | Transaction amount before being excluded from subsidiaries. |
| 3 | Transaction amount before being excluded from associates. |
91
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (6) | Key management compensation for the years ended December 31, 2023 and 2022, consists of: |
| (in millions of Korean won) | 2023 | 2022 | ||||||
Salaries and other short-term benefits | ||||||||
Post-employment benefits | 153 | 294 | ||||||
Stock-based compensation | 569 | 976 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
| (7) | Fund transactions with related parties for the years ended December 31, 2023 and 2022, are as follows: |
| (in millions of Korean won) | 2023 | |||||||||||||||||||
| Loan transactions | Borrowing transactions1 | Equity contributions in cash and others | ||||||||||||||||||
| Loans | Collections | Borrowings | Repayments | |||||||||||||||||
Subsidiaries | ||||||||||||||||||||
KT M&S Co., Ltd. | 62,300 | 62,300 | — | — | — | |||||||||||||||
KT Estate Inc. | — | — | 29 | 25,218 | — | |||||||||||||||
KT HEALTHCARE VINA COMPANY LIMITED. | — | — | — | — | 13,001 | |||||||||||||||
K-Realty Qualified Private Real Estate Investment Trust No. 4 | — | — | — | — | (16,720 | ) | ||||||||||||||
Others2 | 730 | — | — | 757 | (2,008 | ) | ||||||||||||||
Associates | ||||||||||||||||||||
K-Realty 11th Real Estate Investment Trust Company | — | — | — | 423 | — | |||||||||||||||
Kiamco Data Center Blind Fund | — | — | — | — | 7,500 | |||||||||||||||
Telco Credit Bureau Co., Ltd. Investment Fund | — | — | — | — | 6,500 | |||||||||||||||
Others | — | — | — | — | 11,305 | |||||||||||||||
Others | ||||||||||||||||||||
Rebellions Co., Ltd. | 19,998 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1 | Lease transactions are included in borrowing transactions |
| 2 | Transaction amount before being excluded from subsidiaries (KT Strategic Investment Fund No. 2). |
92
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||||||
| Loan transactions | Borrowing transactions1 | Equity contributions in cash and others | ||||||||||||||||||
| Loans | Collections | Borrowings | Repayments | |||||||||||||||||
Subsidiaries | ||||||||||||||||||||
KT Strategic Investment Fund 6 | ||||||||||||||||||||
KT M&S Co., Ltd. | 62,300 | 60,988 | — | — | — | |||||||||||||||
KT Estate Inc. | — | — | 44 | 37,452 | — | |||||||||||||||
kt cloud Co., Ltd. | 95,900 | 95,900 | 775 | 500 | 901,504 | |||||||||||||||
Others | 995 | — | — | 33 | 5,837 | |||||||||||||||
Associates | ||||||||||||||||||||
K-Realty 11th Real Estate Investment Trust Company | — | — | 1,916 | 176 | — | |||||||||||||||
Megazone Cloud Corporation | — | — | — | — | 130,001 | |||||||||||||||
IBK-KT Emerging Digital Industry Investment Fund | — | — | — | — | 9,000 | |||||||||||||||
Others | — | — | — | — | 39,753 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1 | Lease transactions are included in borrowing transactions. |
| (8) | As of December 31, 2023, the Company entered into a credit card agreement with a limit of |
| (9) | The Company has an obligation to invest in Kiamco Data Center Blind Fund, a related party, and others according to the agreement. As of December 31, 2023 the Company is planning make an additional investment of |
93
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 35. | Financial Risk Management |
| (1) | Financial Risk Factors |
The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. The Company uses derivatives to hedge certain financial risk exposures such as cash flow risk.
The Company’s financial policy is set up in the long-term perspective and annually reported to the Board of Directors. The financial risk management is carried out by the Value Management Office, which identifies, evaluates and hedges financial risks. The treasury department in the Value Management Office considers various market conditions to estimate the effect from the market changes.
1) Market risk
The Company’s market risk management focuses on controlling the extent of exposure to the risk in order to minimize revenue volatility. Market risk is a risk that decreases value or profit of the Company’s portfolio due to changes in market interest rate, foreign exchange rate and other factors.
| (i) | Sensitivity analysis |
Sensitivity analysis is performed for each type of market risk to which the Company is exposed. Reasonably possible changes in the relevant risk variable such as prevailing market interest rates, currency rates, equity prices or commodity prices are estimated and if the rate of change in the underlying risk variable is stable, the Company does not alter the chosen reasonably possible change in the risk variable. The reasonably possible change does not include remote or ‘worst case’ scenarios or ‘stress tests’.
| (ii) | Foreign exchange risk |
The Company is exposed to foreign exchange risk arising from operating, investing and financing activities. Foreign exchange risk is managed within the range of the possible effect on the Company’s cash flows. Foreign exchange risk (i.e. foreign currency translation of overseas operating assets and liabilities) not affecting the Company’s cash flows is not hedged but can be hedged at a particular situation.
As of December 31, 2023 and 2022, if the foreign exchange rate had strengthened or weakened by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:
| (in millions of Korean won) | Fluctuation of foreign exchange rate | Impact on profit before income tax 1 | Impact on equity | |||||||||
2023.12.31 | + 10 | % | ||||||||||
| - 10 | % | 8,253 | 14,603 | |||||||||
2022.12.31 | + 10 | % | ||||||||||
| - 10 | % | 7,672 | 17,684 | |||||||||
| 1 | Computed with consideration of derivatives hedging effect applied by the Company to hedge foreign exchange risk of liabilities in foreign currencies. |
94
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
The analysis above is a simple sensitivity analysis, which assumes that all the variables other than foreign exchange rates are held constant. Therefore, the analysis does not reflect any correlation between foreign exchange rates and other variables, nor management’s decision to decrease the risk.
Details of financial assets and liabilities in foreign currencies as of December 31, 2023 and 2022, are as follows:
| (in thousands of foreign currencies) | December 31, 2023 | December 31, 2022 | ||||||||||||||
| Financial assets | Financial liabilities | Financial assets | Financial liabilities | |||||||||||||
USD | ||||||||||||||||
SDR | 254 | 722 | 255 | 722 | ||||||||||||
JPY | — | 400,000 | — | 400,000 | ||||||||||||
EUR | 1 | 6 | 1 | 6 | ||||||||||||
RWF | 402 | — | 462 | — | ||||||||||||
VND | 169,366 | — | 280,226 | — | ||||||||||||
TZS | 21,958 | — | 1,464 | — | ||||||||||||
BWP | 680 | — | 183 | — | ||||||||||||
SGD | — | — | — | 284,000 | ||||||||||||
PKR | 114,025 | — | — | — | ||||||||||||
THB | 244 | — | 265 | — | ||||||||||||
| (iii) | Price risk |
As of December 31, 2023 and 2022, the Company is exposed to equity securities price risk because the securities held by the Company are traded in active markets. If the increased or decreased by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:
| (in millions of Korean won) | Fluctuation of price | Impact on profit before tax | Impact on equity | |||||||||
2023.12.31 | + 10 | % | ||||||||||
| - 10 | % | — | (120,533 | ) | ||||||||
2022.12.31 | + 10 | % | ||||||||||
| - 10 | % | — | (112,222 | ) | ||||||||
The analysis above is based on the assumption that the equity index increased or decreased by 10% with all other variables held constant and all the Company’s marketable equity instruments moved according to the historical correlation with the index. Equity would increase or decrease as a result of gain or loss on equity securities classified as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.
95
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (iv) | Cash flow and fair value interest rate risk |
The Company’s interest rate risk arises from liabilities in foreign currency such as foreign currency debentures. Debentures in foreign currency issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by swap transactions. Debentures and borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company sets the policy and operates to minimize the uncertainty of changes in interest rates and financial costs.
As of December 31, 2023 and 2022, if the market interest rate increased or decreased by 100bp with other variables held constant, the effects on profit before income tax and equity would be as follows:
| (in millions of Korean won) | Fluctuation of interest rate | Impact on profit before tax | Impact on equity | |||||||||
2023.12.31 | + 100 bp | |||||||||||
| - 100 bp | 34 | 3,047 | ||||||||||
2022.12.31 | + 100 bp | |||||||||||
| - 100 bp | (4 | ) | 2,361 | |||||||||
The analysis above is a simple sensitivity analysis which assumes that all the variables other than market interest rates are held constant. Therefore, the analysis does not reflect any correlation between market interest rates and other variables, nor the management’s decision to decrease the risk.
| 2) | Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s trade receivables from customers, debt securities and others.
| • | Risk management |
Credit risk is managed on the Company basis with the purpose of minimizing financial loss. Credit risk arises from the normal transactions and investing activities, where clients or other party fails to discharge an obligation on contract conditions. To manage credit risk, the Company considers the counterparty’s credit based on the counterparty’s financial conditions, default history and other important factors.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as outstanding receivables. To minimize such risk, only financial institutions with strong credit ratings are accepted.
The Company’s investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
96
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| • | Security |
For some trade receivables, the Company may obtain security in the form of guarantees or letters of credit, etc. which can be called upon if the counterparty defaults under the terms of the agreement.
| • | Impairment of financial assets |
The Company has three types of financial assets that are subject to the expected credit loss model:
| • | trade receivables for sales of goods and provision of services, |
| • | contract assets relating to provision of services, and |
| • | other financial assets carried at amortized cost. |
While cash equivalents are also subject to the impairment requirement, the identified expected credit loss is immaterial.
The maximum exposure to credit risk of the Company’s financial instruments without considering the value of collaterals as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Cash and cash equivalents (except for cash on hand) | ||||||||
Trade and other receivables | ||||||||
Financial assets at amortized costs | 3,444,788 | 3,453,513 | ||||||
Financial assets at fair value through other comprehensive income | 116,198 | 129,124 | ||||||
Contract assets | 774,435 | 724,500 | ||||||
Other financial assets | ||||||||
Derivatives financial assets for hedging purposes | 156,774 | 185,989 | ||||||
Financial assets at fair value through profit or loss | 441,321 | 410,388 | ||||||
Financial assets at amortized costs | 377,996 | 416,294 | ||||||
|
|
|
| |||||
Total | ||||||||
|
|
|
| |||||
The Company is exposed to credit risk for financial guarantee contracts. As of December 31, 2023, the Company’s maximum exposure amount isW 595 million (2022:W 653 million).
97
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (i) | Trade receivables at amortized costs |
The Company applies the simplified approach to measuring expected credit loss allowance, which uses lifetime expected credit loss for all trade receivables at amortized costs.
The Company measures the expected credit loss by considering the future irrecoverability rate of the remaining balance of trade receivables and other receivables at the end of the reporting period. Each trade receivables and other receivables are classified considering the credit risk characteristics and overdue periods in order to measure expected credit loss. The expected credit loss rate calculation is based on historical payment and credit loss information in relation to revenue for 36 months period up to December 31, 2023.
The expected credit losses reflect forward-looking information. Provision for impairment as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
Less than 6 months | 7-12 months | More than 1 years | Total | |||||||||||||
Expected credit loss rate | 5.87 | % | 16.17 | % | 47.95 | % | ||||||||||
Gross carrying amount | ||||||||||||||||
Provision for impairment | (171,816 | ) | (9,752 | ) | (98,075 | ) | (279,643 | ) | ||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
Less than 6 months | 7-12 months | More than 1 years | Total | |||||||||||||
Expected credit loss rate | 5.72 | % | 17.38 | % | 63.85 | % | ||||||||||
Gross carrying amount | ||||||||||||||||
Provision for impairment | (168,974 | ) | (6,646 | ) | (103,384 | ) | (279,004 | ) | ||||||||
Details of changes in provisions for impairment the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning balance | ||||||||
Increase in loss allowance recognized in profit or loss during the year | 55,121 | 49,727 | ||||||
Receivables written off during the year as uncollectible | (54,482 | ) | (53,384 | ) | ||||
|
|
|
| |||||
Ending balance | ||||||||
|
|
|
| |||||
98
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
As of December 31, 2023, the maximum exposure of the trade receivables carrying amount to credit risk isW 2,914,580 million (2022:W 2,873,865 million).
Losses recognized in profit or loss in relation to impaired trade receivables for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Impairment loss | ||||||||
Bad debt expenses | ||||||||
| (ii) | Cash equivalents (except for cash on hand) |
The Company is also exposed to credit risk in relation to cash equivalents. The maximum exposure, as of December 31, 2023, is the carrying amount of these investments.
| (iii) | Other financial assets at amortized costs |
Other financial assets at amortized cost include time deposits, other long-term financial instruments, and others.
All of the financial assets at amortized costs are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Management considers ‘low credit risk’ for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
Details of changes in provisions for impairment the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
Beginning balance | ||||||||
Increase in loss allowance recognized in profit or loss during the year | 25,636 | 13,866 | ||||||
Receivables written off during the year as uncollectible | (26,568 | ) | (27,262 | ) | ||||
|
|
|
| |||||
Ending balance | ||||||||
|
|
|
| |||||
| (iv) | Financial assets at fair value through profit or loss |
The Company is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as of December 31, 2023, is the carrying amount of these investments.
99
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 3) | Liquidity risk |
The Company manages its liquidity risk by liquidity strategy and plans. The Company considers the maturity of financial assets and financial liabilities and the estimated cash flows from operations.
The table below analyzes the Company’s liabilities (including interest expenses) into relevant maturity groups based on the remaining period at the report date to the contractual maturity date and these amounts are contractual undiscounted cash flows and can differ from the amount in the separate financial statement:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
Less than 1 year | 1-5 years | More than 5 years | Total | |||||||||||||
Trade and other payables | ||||||||||||||||
Borrowings (including debentures) | 1,873,302 | 4,750,825 | 1,665,353 | 8,289,480 | ||||||||||||
Lease liabilities | 224,478 | 171,022 | 275,584 | 671,084 | ||||||||||||
Others1 | 595 | — | — | 595 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
Less than 1 year | 1-5 years | More than 5 years | Total | |||||||||||||
Trade and other payables | ||||||||||||||||
Borrowings (including debentures) | 1,180,004 | 5,367,808 | 1,877,126 | 8,424,938 | ||||||||||||
Lease liabilities | 240,518 | 441,836 | 321,393 | 1,003,747 | ||||||||||||
Others1 | 653 | — | — | 653 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 1 | Consists of the maximum limit related to joint responsibility and agreement of assumption of debts. The cash flows on agreements are classified based on the earliest period that the agreement can be executed (Note 19). |
100
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
As of December 31, 2023, the cash outflows and inflows by maturity of the Company’s derivatives held for trading and gross-settled derivatives, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
Less than 1 year | 1-5 years | More than 5 years | Total | |||||||||||||
Derivatives held for trading1 | ||||||||||||||||
Inflows | ||||||||||||||||
Outflows | — | — | 1,064 | 1,064 | ||||||||||||
Derivatives settled gross2 | ||||||||||||||||
Outflows | ||||||||||||||||
Inflows | 534,176 | 2,139,775 | 35,845 | 2,709,796 | ||||||||||||
| 1 | During the year ended December 31, 2023, derivative liabilities held-for-trading are classified under the ‘more than 5 years’ category as they are relevant to the fair value of derivatives liabilities in the amount of |
As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taking into consideration to understand the timing of cash flows.
| 2 | Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the separate statement of financial position. |
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
Less than 1 year | 1-5 years | More than 5 years | Total | |||||||||||||
Derivatives held for trading1 | ||||||||||||||||
Outflows | ||||||||||||||||
Derivatives settled gross2 | ||||||||||||||||
Outflows | ||||||||||||||||
Inflows | 483,374 | 2,622,968 | 36,878 | 3,143,220 | ||||||||||||
| 1 | During the year ended December 31, 2022, derivative liabilities held-for-trading are classified under the ‘more than 5 years’ category as they are relevant to the fair value of derivatives liabilities in the amount of |
As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taken into consideration to understand the timing of cash flows.
| 2 | Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the separate statement of financial position. |
Meanwhile, as of December 31, 2023, the Company has an investment obligation ofW 59,135 million to invest Kiamco Data Center Blind Fund, a related party, and others, andW 4,132 million and USD 30,350 thousand to make payment using the future Capital Call method (Notes 19 and 34).
101
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | Capital Risk Management |
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company’s capital structure consists of liabilities including borrowings, cash and cash equivalents, and shareholders’ equity. The treasury department monitors the Company’s capital structure and considers cost of capital and risks related to each capital component.
The Company’s debt-to-equity ratios as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Total liabilities | ||||||||
Total equity | 15,043,539 | 14,858,080 | ||||||
Debt-to-equity ratio | 101 | % | 105 | % | ||||
The Company manages capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the separate statement of financial position plus net debt.
The Company’s gearing ratios as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||
Total borrowings | ||||||||
Less: cash and cash equivalents | (1,242,005 | ) | (966,307 | ) | ||||
|
|
|
| |||||
Net debt | 6,317,928 | 6,529,254 | ||||||
Total equity | 15,043,539 | 14,858,080 | ||||||
|
|
|
| |||||
Total capital | ||||||||
|
|
|
| |||||
Gearing ratio | 30 | % | 31 | % | ||||
102
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (3) | Offsetting Financial Assets and Financial Liabilities |
Details of the Company’s financial assets recognized, subject to enforceable master netting arrangements or similar agreements, as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||
| Gross assets | Gross liabilities offset | Net amounts presented in the statement of financial position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade receivables | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||||
| Gross assets | Gross liabilities offset | Net amounts presented in the statement of financial position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade receivables | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.
103
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
Details of the Company’s financial liabilities recognized, subject to enforceable master netting arrangements or similar agreements, as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||||||||||
| Gross liabilities | Gross offset | Net amounts position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade payables | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||||||||||
| Gross liabilities | Gross offset | Net amounts position | Amounts not offset | Net amount | ||||||||||||||||||||
| Financial instruments | Cash collateral | |||||||||||||||||||||||
Trade payables | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.
104
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| 36. | Fair Value |
| (1) | Fair Value by Financial Instruments Category |
Carrying amounts and fair values of the financial assets and financial liabilities by category as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | December 31, 2022 | ||||||||||||||
| Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||||
Financial assets | ||||||||||||||||
Cash and cash equivalents | 1 | 1 | ||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets measured at amortized cost | 3,444,788 | 1 | 3,453,513 | 1 | ||||||||||||
Financial assets at fair value through other comprehensive income | 116,198 | 116,198 | 129,124 | 129,124 | ||||||||||||
Other financial assets | ||||||||||||||||
Financial assets measured at amortized cost | 377,996 | 1 | 416,294 | 1 | ||||||||||||
Financial assets at fair value through profit or loss | 441,321 | 441,321 | 410,388 | 410,388 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,437,684 | 1,437,684 | 1,214,059 | 1,214,059 | ||||||||||||
Derivative financial assets for hedging purpose | 156,774 | 156,774 | 185,989 | 185,989 | ||||||||||||
|
|
|
| |||||||||||||
Total | 7,216,766 | |||||||||||||||
|
|
|
| |||||||||||||
Financial liabilities | ||||||||||||||||
Trade and other payables2 | 1 | 1 | ||||||||||||||
Borrowings | 7,559,933 | 7,328,734 | 7,495,561 | 6,968,828 | ||||||||||||
Other financial liabilities | ||||||||||||||||
Financial assets at fair value through profit or loss | 1,403 | 1,403 | 5,164 | 5,164 | ||||||||||||
Derivative financial liabilities for hedging purpose | 23,076 | 23,076 | 32,402 | 32,402 | ||||||||||||
|
|
|
| |||||||||||||
Total | ||||||||||||||||
|
|
|
| |||||||||||||
| 1 | The Company did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value. |
| 2 | Amounts related to employee benefit plans are included in trade and other payables at the end of the previous year |
105
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (2) | Fair Value Hierarchy |
Assets measured at fair value or for which the fair value is disclosed are categorized within the fair value hierarchy, and the defined levels are as follows:
| • | Level 1: The quoted (unadjusted) price in active markets for identical assets or liabilities that an entity can access at the measurement date. |
| • | Level 2: All inputs other than quoted prices included in Level 1 that are observable (either directly that is, or indirectly that is, derived from prices) for the asset or liability. |
| • | Level 3: The unobservable inputs for the asset or liability. |
Fair value hierarchy classifications of the financial assets and financial liabilities that are measured or disclosed at fair value or its fair value is disclosed as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Other financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | — | — | 441,321 | 441,321 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,236,495 | — | 201,189 | 1,437,684 | ||||||||||||
Derivative financial assets for hedging | — | 156,774 | — | 156,774 | ||||||||||||
Investment properties | — | — | 4,402,271 | 4,402,271 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Borrowings | ||||||||||||||||
Other financial liabilities | ||||||||||||||||
Financial assets at fair value through profit or loss | — | — | 1,403 | 1,403 | ||||||||||||
Derivative financial liabilities for hedging | — | 23,077 | — | 23,077 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
106
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Trade and other receivables | ||||||||||||||||
Financial assets at fair value through other comprehensive income | ||||||||||||||||
Other financial assets | ||||||||||||||||
Financial assets at fair value through profit or loss | — | — | 410,388 | 410,388 | ||||||||||||
Financial assets at fair value through other comprehensive income | 1,015,606 | — | 198,453 | 1,214,059 | ||||||||||||
Derivative financial assets for hedging | — | 185,989 | — | 185,989 | ||||||||||||
Investment properties | — | — | 3,182,157 | 3,182,157 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Borrowings | ||||||||||||||||
Other financial liabilities | ||||||||||||||||
Financial assets at fair value through profit or loss | — | — | 5,164 | 5,164 | ||||||||||||
Derivative financial liabilities for hedging | — | 32,402 | — | 32,402 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
107
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (3) | Transfers between Fair Value Hierarchy Levels of Recurring Fair Value Measurements |
| 1) | Details of transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements. |
There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements.
| 2) | Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements. |
Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements for the years ended December 31, 2023 and 2022 are as follows
| (in millions of Korean won) | 2023 | |||||||||||
| Financial assets | Financial liabilities | |||||||||||
| Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Financial liabilities at fair value through profit or loss | ||||||||||
Beginning balance | ||||||||||||
Amount recognized in profit or loss | (13,158 | ) | — | 1,444 | ||||||||
Amount recognized in other comprehensive income | — | (5,141 | ) | — | ||||||||
Acquisition | 46,437 | 10,267 | — | |||||||||
Disposal | (2,347 | ) | (6 | ) | (5,205 | ) | ||||||
Replacement | — | (2,384 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Ending balance | ||||||||||||
|
|
|
|
|
| |||||||
108
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | 2022 | |||||||||||||||
| Financial assets | Financial liabilities | |||||||||||||||
| Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Derivatives used for hedging | Financial liabilities at fair value through profit or loss | |||||||||||||
Beginning balance | ||||||||||||||||
Amount recognized in profit or loss | (1,150 | ) | — | — | (165 | ) | ||||||||||
Amount recognized in other comprehensive income | — | (14 | ) | — | — | |||||||||||
Acquisition | 115,415 | 4,646 | — | — | ||||||||||||
Disposal | (140 | ) | — | (31,565 | ) | — | ||||||||||
Replacement | (3,000 | ) | 3,000 | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Ending balance | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||
109
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (4) | Valuation Techniques and Inputs |
Valuation methods used in recurring fair value measurements categorized within Level 2 and Level 3 of the fair value hierarchy as of December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | December 31, 2023 | |||||||||||
| Fair value | Level | Valuation techniques | Inputs | |||||||||
Assets | ||||||||||||
Trade and other receivables | ||||||||||||
Financial assets at fair value through other comprehensive income | 2 | DCF Model | Guaranteed bond interest rate | |||||||||
Other financial assets | ||||||||||||
Financial assets at fair value through profit or loss | 441,321 | 3 | DCF Model, Adjusted Net Asset Model, Binomial Option Pricing | |||||||||
Financial assets at fair value through other comprehensive income | 201,189 | 3 | Market Approach Model | |||||||||
Derivative financial assets for hedging | 156,774 | 2 | DCF Model | Market observation discount rate | ||||||||
Investment properties | 4,402,271 | 3 | DCF Model | |||||||||
Liabilities | ||||||||||||
Borrowings | 7,328,734 | 2 | DCF Model | Corporate bond interest rate | ||||||||
Other financial liabilities | ||||||||||||
Financial assets at fair value through profit or loss | 1,403 | 3 | Binomial Option Pricing Model | |||||||||
Derivative financial liabilities for hedging | 23,077 | 2 | DCF Model | Market observation discount rate | ||||||||
110
KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (in millions of Korean won) | December 31, 2022 | |||||||||||
| Fair value | Level | Valuation techniques | Inputs | |||||||||
Assets | ||||||||||||
Trade and other receivables | ||||||||||||
Financial assets at fair value through other comprehensive income | 2 | DCF Model | Guaranteed bond interest rate | |||||||||
Other financial assets | ||||||||||||
Financial assets at fair value through profit or loss | 410,388 | 3 | DCF Model, Adjusted Net Asset Model, Binomial Option Pricing | |||||||||
Financial assets at fair value through other comprehensive income | 198,453 | 3 | Market Approach Model | |||||||||
Derivative financial assets for hedging purpose | 185,989 | 2 | DCF Model | Market observation discount rate | ||||||||
Investment properties | 3,182,157 | 3 | DCF Model | |||||||||
Liabilities | ||||||||||||
Borrowings | 6,968,828 | 2 | DCF Model | Corporate bond interest rate | ||||||||
Other financial liabilities | ||||||||||||
Financial assets at fair value through profit or loss | 5,164 | 3 | Binomial Option Pricing Model, Monte Carlo Simulation | |||||||||
Derivative financial liabilities for hedging purpose | 32,402 | 2 | DCF Model | Market observation discount rate | ||||||||
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KT Corporation
Notes to the Separate Financial Statements
December 31, 2023 and 2022
| (5) | Valuation Processes for Fair Value Measurements Categorized Within Level 3 |
The Company uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the chief financial officer (CFO), and discusses valuation processes and results with the CFO in line with the Company’s closing dates.
| (6) | Gains and Losses on Valuation at the Transaction Date |
In the case that the Company values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by the said valuation technique differs from the transaction price, then the fair value of the financial instruments is recognized as the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case where inputs of the valuation techniques become observable in markets, the remaining deferred difference is immediately recognized in full as profit for the year.
Changes in deferred amount for the years ended December 31, 2023 and 2022, are as follows:
| (in millions of Korean won) | 2023 | 2022 | ||||||
| Derivatives used for hedging | Derivatives used for hedging | |||||||
I. Beginning balance | ||||||||
II. New transactions | — | — | ||||||
III. Recognized at fair value through profit or loss | — | (832 | ) | |||||
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IV. Ending balance (I+II+III) | ||||||||
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| 37. | Events After the Reporting Period |
| (1) | The Company has decided to acquire treasury stocks ( |
| (2) | The company issued the following bonds after the end of the reporting period (unit: |
Type | Issued Date | Annual interest rates | Maturity | Korean won | ||||||||||||
The 200-1st Public bond | Feb. 27, 2024 | 3.552 | % | Feb. 27, 2026 | 120,000 | |||||||||||
The 200-2nd Public bond | Feb. 27, 2024 | 3.608 | % | Feb. 26, 2027 | 200,000 | |||||||||||
The 200-3rd Public bond | Feb. 27, 2024 | 3.548 | % | Feb. 27, 2029 | 80,000 | |||||||||||
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| Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro, Youngdeungpo-gu, Seoul 07326, Korea
Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr |
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
English Translation of Independent Auditor’s Report on Internal Control over Financial Reporting Originally Issued in Korean on March 18, 2024
To the shareholders and the Board of Directors of KT Corporation
Audit Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of KT Corporation (the “Company”) as of December 31, 2023, based on ‘Conceptual Framework for Design and Operation of Internal Control over Financial Reporting’.
In our opinion, the Company’s internal control over financial reporting is designed and operated effectively as of December 31, 2023, in all material respects, in accordance with the ‘Conceptual Framework for Design and Operation of Internal Control over Financial Reporting’.
We have also audited, in accordance with the Korean Standards on Auditing (“KSAs”), the financial statements of the Company, which comprise the statement of financial position as of December 31, 2023, and the statement of profit or loss, statement of comprehensive income, statement of changes in shareholders’ equity and statement of cash flows, for the year then ended, and notes to the financial statements, including material accounting policy information, and our report dated March 18, 2024, expressed an unqualified opinion.
Basis for Audit Opinion
We conducted our audits in accordance with the KSAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Internal Control over Financial Reporting section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the internal control over financial reporting in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Internal Control over Financial Reporting
Management is responsible for designing, operating and maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report on the Effectiveness of the Internal Control over Financial Reporting by CEO. Those Charged with Governance is responsible for the oversight of internal control over financial reporting of the Company.
Auditor’s Responsibilities for the Audit of the Internal Control over Financial Reporting
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the KSAs. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about to learn more about our global network of member firms.
Deloitte Touche Tohmatsu Limited is a private company limited by guarantee incorporated in England & Wales under company number 07271800, and its registered office is Hill House, 1 Little New Street, London, EC4a, 3TR, United Kingdom.
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The audit of internal control over financial reporting involves performing procedures to obtain audit evidence about whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of that a material weakness exists. The audit includes obtaining an understanding of internal control over financial reporting and testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risks.
Definition and Limitations of Internal Control over Financial Reporting
A group’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Korean International Financial Reporting Standards (“K-IFRS”). A group’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the group; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with K-IFRS, and that receipts and expenditures of the group are being made only in accordance with authorizations of management and directors of the group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the group’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The engagement partner on the audit resulting in this independent auditor’s report is Lee, Dong Hyun.
March 18, 2024
Notice to Readers
This report is effective as of March 18, 2024, the auditor’s report date. Certain subsequent events or circumstances may have occurred between the auditor’s report date and the time the auditor’s report is read. Such events or circumstances could significantly affect the Company’s internal control over financial reporting and may result in modifications to the auditor’s report.
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Report on the Effectiveness of
the Internal Control over Financial Reporting
To the Shareholders, Audit Committee and Board of Directors of
KT Corporation
We, as the Chief Executive Officer (“CEO”) and the Internal Control over Financial Reporting (“ICFR”) Officer of KT Corporation (“the Company”), assessed the effectiveness of the design and operation of the Company’s Internal Control over Financial Reporting for the year ended December 31, 2023.
The Company’s management, including ourselves, is responsible for designing and operating ICFR.
We assessed the design and operating effectiveness of the ICFR in the prevention and detection of an error or fraud which may cause material misstatements in the preparation and disclosure of reliable financial statements.
We designed and operated ICFR in accordance with Conceptual Framework for Designing and Operating Internal Control over Financial Reporting established by the Operating Committee of Internal Control over Financial Reporting in Korea (“the ICFR Committee”), And, we conducted an evaluation of ICFR based on Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting established by the ICFR Committee.
Based on the assessment results, we believe that the Company’s ICFR, as at December 31, 2023, is designed and operating effectively, In all material respects, in conformity with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting.
We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statement which cause material misunderstandings, and we have reviewed and verified this report with sufficient due care.
February 20, 2024
| Chief Executive Officer | | |||
Internal Control over Financial Reporting Officer |
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