Professional Documents
Culture Documents
in Ocean
Technology
2013 Annual report
Trust
Blue Whale
PASSION
001
World Leader
in Ocean Technology
We develop customer-oriented solutions,
provide more competitive products,
and select and concentrate on services
laying a foundation for becoming a
market-leading general contractor.
Contents
002 Company Profile
004 CEO Message
006 Board of Directors
008 2013 Major Performance
010 Operation Highlight
012 Prologue
018 Performance Narrative
032 Financial Review
128 Outstanding Vessels in 2013
130 Corporate History &
Global Network
002
003
Company
Profile
Since the ground breaking in 1973 at Okpo Bay, Geoje Island, Korea, DSME has created
numerous success stories and epoch-making records in the industry for the past 4 decades
and consequently leapfrogged into the worlds top 3 largest shipbuilder. In 2013, the
Company made a great step forward to become the World Leader in Ocean Technology and
an enterprise to ensure sustainable growth for the next 100 years.
market conditions.
With a new order for large jack-up rig awarded to us (the first
DSME SMC Inc., the largest gold mining company in Korea, for
orders of USD 960 million and secured order backlogs of USD 1.28
sales and new order targets in 2014 at KRW 15.15 trillion and
004
005
CEO
Message
Dear shareholders,
With those in mind, DSME will promote the following tasks for
the year.
for stakeholders.
The year 2013 was a difficult one in and out of the company. But
proud to say we are the only one in the industry to achieve over
USD 10 billion in new orders for 4 consecutive years.
returns to shareholders.
2014 - more than KRW 15 trillion in sales and USD 14.5 billion
competitiveness improvement.
I hope you and your families enjoy good fortune and health in
realize these goals and gain greater trust from the market.
Thank you.
March 28, 2014
President & CEO
Jaeho Ko
006
007
Board of
Directors
Internal Directors
Outside Directors
Jaeho Ko
Sanggon Ko
Gwangsik Shin
Sanggeun Lee
Non-Standing Director
Gabjoong Kim
Gyeongtaek Han
Jeonhyeok Jo
Youngjae Lee
008
009
DSME won USD 13.6 billion in new orders for commercial vessels, offshore plants, and naval ships
DSME is proud of its 30 year history in the defense industry. Especially, to improve competitiveness
becoming the only shipbuilder to achieve over USD 10 billion for 4 consecutive years in the industry.
in the defense industry, we have integrated related groups under sale, planning, and production
Especially, DSME has demonstrated the largest performance among the domestic shipbuilders
divisions and newly established the Special Ship Business HQ to engage in businesses
in drillship sector by winning new orders for 7 deep sea drillships and shown remarkable
independently. As a result, we succeeded in winning new orders to build foreign submarines for
achievements in all business areas including offshore plant, commercial ship, and naval ship.
the first time in Korea and battleships of the UK and Norway, proving our competitiveness and
2. Laid the Foundation for Leapfrogging into the Worlds Best EPCIC Company
With the start of an education for PM (Project Management) position, DSME has been running systematical
With the conclusion of the Fair Trade and Shared Growth Agreement with suppliers, we are proactive in
(Material Management) positions. The Company also signed a formal contract to build its R&D Engineering
supporting them and spreading the culture of win-win partnership. Major activities include contributing to
Center in Magok district, Seoul, and completed the construction of engineering centers in the US,
suppliers financial stability by making payments with 100% cash, extending payment period, and providing
Indonesia, and Busan to engage in basic design, detailed design, and production design of offshore plants.
financial assistances through the Shared Growth Fund. Technology transfer, talent cultivation, and other
Our global engineering network centered on Magok R&D Center will play a role in enhancing our global
competitiveness and contribute to our advancement into the worlds best EPCIC player.
3. Only Company to Build All Kinds of Offshore Products
DSME has been recognizing as the only company that can build all kinds of offshore products such as jackup rig, drillship, semisubmersible drilling rig, fixed platform, FPSO, and so on. Our knowhow, experiences, and
technological prowess in building crude oil and gas exploration and production facilities are second to none. The
proportion of offshore plant business in total sales has increased from 36% in 2010 to 54% in 2013.
4. Leader in Eco-friendly Ship Market
In 2013, DSME won new orders for all of the 5 high-efficient eco-friendly LNG carriers which were placed
in the world and successfully delivered the worlds largest containership with 18,270 TEU class to Maersk
Group. In particular, this containership is recognized as the worlds best ship that satisfies Economy
of scale, Energy efficiency, and Environmentally improved. We are confident that DSME is way ahead of
competitors in building eco-friendly ships.
5. Celebrated 40th Anniversary and Pledged to Become a Company that Can Last a
Century
Based on the strengths of the past 40 years of history, DSME began a challenge to become
the world leader in ocean technology and grow into a company that can last a century.
We selected the blue whale as the official character to symbolize our new vision and
commitment.
2013 issue
2013. 04
2013. 07
2013. 08
2013. 09
2013. 11
2013. 12
2013. 12
010
011
Operation
Highlight
1. Financial Highlight
3. Sales Breakdown
(Unit : KRW BN)
2013
2012
15,305.3
14,057.8
1,028.0
1,135.9
Operating Income
440.9
486.3
Net Income
241.9
175.9
Total Assets
18,488.9
16,122.2
10,063.3
7,160.5
Sales
Gross Profit
Current Asset
Non-current Assets
8,425.6
8,961.7
13,709.5
11,568.0
Current Liabilities
9,299.6
8,172.7
Non-current Liabilities
4,409.9
3,395.3
4,779.4
4,554.3
-1,197.9
-996.1
-157.0
-413.4
1,462.5
1,135.8
107.6
-273.7
Total Liabilities
Equity
Cash Flow From Operating Activities
(Unit : %)
Offshore
LNGC
Containership
Tanker
Others
2006
2007
2008
Total Assets
2011
2012
2013
Offshore
LNGC
Containership
Tanker
Others
43.56
37.55
Operating Income
2010
45.43
34.92
11
Sales
2009
36.54
37.84
32.76
4
22.33
14
15,305.3
18,488.9
486.3
16,122.2
14,057.8
(Unit : %)
63
440.9
2006
2012
2013
2012
2013
2012
(Unit : %)
31.46
31.26
19.11
12.15
Foreigner Ownership
17.88
19.21
1.22
1.22
37.29
29.20
Treasury Stock
Others
Offshore
LNGC
Containership
Tanker
Others
2008
2009
2010
2011
2012
2013
2013
2. Shareholder Structure
KDB
2007
15
19.47
11.01
14.29
14.27
2011
2012
13.61
11.58
9.25
(Unit : %)
60
3.59
10
2006
2007
2008
2009
2010
2013
Performance
Narrative
DSME has achieved outstanding operating performances every
year. In 2013, despite tough business environments, we won
new orders of USD 13.6 billion, which exceeded our annual
goal, and turned out 9 worlds best ships. DSME is committed
to leading the global shipbuilding industry and delivering
more values to customers, subsidiaries, suppliers, and other
stakeholders.
020
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
USD bn
4.50
Vessels
Shipbuilding
Business
36
Total
9
2011
2012
2013
new orders for LNG carriers equipped with the new concept
15
Total
4
Total
19
27
due to
declining
Capacity slump
: 159.8K
CBM
(Unit : Vessel)
43
: DNV
43
021
020
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
021
USD bn
4.50
Vessels
43
Class
Class
: ABS
Shipbuilding
Business
Capacity
: 18,270 TEU
36
Total
9
27
2011
2012
2013
new orders for LNG carriers equipped with the new concept
15
Total
4
Total
19
Capacity
: 320,000 DWT
(Unit : Vessel)
43
: ABS
020
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
USD bn
4.50
Vessels
: DNV
Shipbuilding
Business
Capacity
: 400,000 DWT
(Unit : Vessel)
36
43
Total
9
2011
2012
2013
15
new orders for LNG carriers equipped with the new concept
Total
4
Total
19
27
43
021
022
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
023
USD bn
8.10
Vessels
11
CLOV FPSO
Storage
Offshore Plant
Business
11
(Unit : Vessel)
14
11
2011
2012
2013
our technological
prowess and capability is.
Topside 31,800 MT
Weight
Delivery
to the world. New orders for the year amounted to USD 8.1
orders.
severe weather and intense cold of the North Sea where the
plant builder.
Client
Total
have: been
receiving
Production
Oil 160,000
BBL
Total
2
Total
: 1,781,000 BBLs
022
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
023
USD bn
8.10
Vessels
11
Design
: DSME 12000
Offshore Plant
Business
Capacity
Capacity
Client
: Exxon Neftegas LTD
compliance with strict conditions
and regulations
because
Client
VDL 23,000 MT
: Transocean
11
(Unit : Vessel)
14
11
2011
orders.
severe weather and intense cold of the North Sea where the
plant builder.
Total
2012
Total
2
Total
2013
to the world. New orders for the year amounted to USD 8.1
022
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
023
USD bn
8.10
Vessels
11
: GVA 7500
Offshore Plant
Business
Capacity
: Grupo R
11
(Unit : Vessel)
14
11
2011
orders.
severe weather and intense cold of the North Sea where the
plant builder.
Total
2012
to the world. New orders for the year amounted to USD 8.1
Total
2
Total
2013
024
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
025
USD bn
1.02
Vessels
Naval Ship
Business
After obtaining an order for fleet oilers from the Royal Fleet
share in the global naval ship market with our world class
Submarine
Battleship & Others
Total
Total
6
2011
2012
2013
024
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
USD bn
1.02
Vessels
Naval Ship
Business
After obtaining an order for fleet oilers from the Royal Fleet
share in the global naval ship market with our world class
Submarine
Battleship & Others
Total
Total
6
2011
2012
2013
025
026
Power Plant
Business
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
have been suffered from power shortage can make the world
more brighten.
Wind Turbine
(Unit : MW)
130
D9 Series
D8 Series
40
150
Total
190
20
20
2010
2011
20
2012
2013
shipbuilding expertise.
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
027
028
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
029
Research &
Development
More than 400 experienced researchers are working at the
Drilling Units
own design.
direction.
DSME-9000 Semi-submersible
Drill RIG
Rudder bulb).
DSMEs LNG fueled large commercial ships such as container
ships and oil carriers, the first of these types in the world boasts
research institutes and 3 teams, and will fall under the Strategic
a 2-stroke dual fuel main engine, HiVAR fuel gas supplies system
FGS system supply highly pressurized fuel gas to the main engine
in the future.
FLNG
classification societies.
FEED and EPCIC of FLNG. DSME has designed the two-row LNG
7.4
19.5
53.4
53.4
Billion
2012
2013
ME-GI Engine
ACTIB LNG
Tank
463
people
030
20 Shipbuilding
Business
22 Offshore Plant
Business
24 Naval Ship
Business
26 Power Plant
Business
28 Research &
Development
30 Health, Safety
& Environment
031
Environment
With 3 key strategies of building pollution-free workplace,
implementing global green management, and leading ecofriendly products, DSME is dedicated to realizing its vision to be a
global leader in environment.
To build pollution-free workplace, we evaluate and manage
environmental management performance index and apply
internal environmental standards which require 30% higher than
legal standards in controlling pollutants. Intensive trainings and
campaigns are also conducted to preemptively prevent air, water,
and marine pollutions. Our concerted efforts to reduce GHG
emissions resulted in selecting as an excellent company in the
pilot project for emissions trading in 2013.
Health
Safety
In order to accomplish its IIF (Incident & Injury Free) goals, DSME
by winning orders for fuel supply devices for worlds first LNG-
Like this, DSME has been taking the lead in developing eco-
improvement.
Financial
Review
In 2013, DSME recorded KRW 15.31 trillion in sales and
KRW 241.9 billion in net profit, on a consolidated basis.
In addition, DSME won over USD 10 billion in new orders for
4 consecutive years. DSME will continue to make a concerted
effort to increase profits and lay the foundation for
sustainable growth.
034
035
Overview
According to Clarkson Research, a global shipbuilding and offshore market intelligence provider of the UK, new orders for
commercial vessels in 2013 increased 165.5% year-on-year as of deadweight tons and used-ship trade also rose by 60.9%
year-on-year. Despite remaining oversupply of vessels in the world, recent increasing new orders have shown a positive signal
Offshore plants
Commercial vessels
Special vessels
17%
9%
for DSME which demonstrates unrivaled competitiveness in building LNG carriers and large containerships that require
highly advanced technologies. The global offshore plant market has enjoyed sharp growth of new orders since 2005 thanks to
7%
2012
USD
14.28
billion
74%
2013
USD
13.61
billion
33%
60%
continuously strong oil prices and the vitalization of deep sea resources development. It has been recognized as a new promising
market for large shipbuilders with comprehensive competitive advantages ranging from designing and producing to managing
projects. DSME has worlds best technologies and competitiveness in the fields of all commercial vessels as well as LNG carriers
including LNG-FSRU. In addition, DSME has succeeded in winning new orders by capitalizing on accurate demand prediction even
in tough market conditions derived from the financial crisis of Europe in 2011 and ensuing global economic recession in 2012.
11%
33%
Sales
In 2013, DSMEs non-consolidated sales amounted to KRW 14.08 trillion, an increase of 12.1% from the previous year, of which offshore
11%
2012
USD
37.84
billion
56%
2013
USD
45.43
billion
26%
63%
plants, LNG carriers, and containerships accounted for 54%, 11%, and 25%, respectively. Remaining 8% and 2% were generated from
tankers and special vessels & others, respectively. Sales proportion of offshore plants and LNG carriers has increased from the previous
year, while that of other commercial vessels excluding containerships decreased. In particular, sales proportion of offshore plants has
continuously increased and passed the 50% mark for the first time, which represents that DSMEs product portfolio is being reshaped
into high value-added lineup centered on offshore plants. The CAGR of our sales marked 12% since 2005.
Gross profit in 2013 was KRW 928.8 billion, down 14.4% from the previous year. Selling and administrative expenses decreased
25.6% year-on-year to KRW 410.3 billion mainly due to the decline of bad debt expenses and administrative service fees.
Meanwhile, R&D expenses rose by 15% year-on-year to KRW 94.3 billion. As the result, operating profit fell by 6.1% to KRW
Sales breakdown
Offshore plant
LNG carrier
Containership
Tanker
Special vessels & others
Profitability
424.2 billion. Finance income and finance costs also dwindled 23.1% and 10.7% from the previous year respectively. Losses from
2%
10%
11%
25%
investments in subsidiaries sharply reduced from KRW 154.9 billion in 2012 to KRW 30.8 billion in 2013. Meanwhile, the Company
8%
2012
KRW
12.57
trillion
7%
47%
25%
makes a concerted effort to minimize exchange rate risk by capitalizing on various financial techniques such as exchange hedge
2013
KRW
14.08
trillion
to ensure stable management activities and profits. In 2013, foreign exchange gains increased 46.3% over the previous year and
54%
11%
foreign exchange losses decreased 27.3%. Other non-operating income and costs fell by 47.2% and 25.6%, respectively, mainly
due to the decreases in gain on valuation of firm commitments and loss on valuation of firm commitments. As a result, profit
before income tax expense recorded KRW 321.5 billion, an increase of 44.6% year-on-year and net profit soared 83.7% to KRW
251.7 billion in 2013.
2013
2012
Sales
14,080,037
12,565,402
4 consecutive years. In the commercial vessels and special vessels businesses, we achieved a total of USD 5.5 billion by winning new
Cost of sales
13,151,246
11,480,459
orders for 15 tankers, 19 containerships, 6 LNG carriers, 3 LPG carriers, 2 aviation logistics support ships, and 1 frigate. In the offshore
Gross profit
928,791
1,084,943
Operating profit
424,225
451,614
321,510
222,373
Net profit
251,718
137,025
1,332
725
In 2013, DSME won USD 13.6 billion in new orders and became the only shipbuilder to achieve over USD 10.0 billion in new orders for
plants business, we had become the first shipbuilder to win more than USD 10 billion in the world in 2012 and succeeded in winning new
orders of USD 8.1 billion, the biggest amount in the industry, in 2013 despite tough market conditions. New orders in 2013 included 11
offshore plants such as drillship, jack-up rig, and fixed platform, which proved our top-notch offshore plant construction capabilities
throughout the world. In particular, the new order for a jack-up rig has led to the diversification of products. As a result, offshore plants
accounted for 60% of the Companys total new orders for the year, followed by commercial vessels with 33% and special vessels with 7%.
Order backlogs at the end of 2013 increased 20% from the previous year to USD 45.4 billion. This figure can be broken down to 63% for
offshore plants, 26% for commercial vessels, and 11% for special vessels.
036
037
Financial Status
Assets
As of the end of 2013, DSMEs non-consolidated total assets stood at KRW 16.5 trillion, a 16% increase from the previous year.
Non-current assets went down 6.8% but current assets grew by 44.6% to KRW 9.1 trillion, which was mainly driven by an increase
of 74.8% in amounts due from customers under construction contracts and a decrease of 22.9% in non-current trade and other
receivables.
We have audited the accompanying separate financial statements of Daewoo Shipbuilding & Marine Engineering Co., Ltd. (the
Company). The separate financial statements consist of the separate statements of financial position as of December 31,
2013 and 2012, respectively, and the related separate statements of income, separate statements of comprehensive income,
separate statements of changes in shareholders equity and separate statements of cash flows, all expressed in Korean won, for
the years ended December 31, 2013 and 2012, respectively. The Companys management is responsible for the preparation and
fair presentation of the separate financial statements, and our responsibility is to express an opinion on these separate financial
statements based on our audits.
trade and other payables, amount due to customers under construction contracts, debentures, and long-term borrowings. There
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards
was no change in share capital during the period and an increase of 6.2% in retained earnings contributed to growing total equity
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
2013
2012
Current assets
9,109,534
6,300,835
Non-current assets
7,348,706
7,882,637
(KRW in millions)
Total assets
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
16,458,240
14,183,472
Current liabilities
8,202,000
7,269,563
Non-current liabilities
3,497,467
2,388,048
11,699,467
9,657,611
Share capital
961,954
961,954
-35,930
-35,959
43,277
30,941
Retained earnings
3,789,472
3,568,925
accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures
Total equity
4,758,773
4,525,861
and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and
Total liabilities
In our opinion, the separate financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2013 and 2012, respectively, and the results of its operations and its cash flows for the years
ended December 31, 2013 and 2012, respectively, in conformity with Korean International Financial Reporting Standards (K-IFRS).
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying separate
financial statements are not intended to present the financial position, results of operations and cash flows in accordance with
applied in other countries. Accordingly, this report and the accompanying separate financial statements are for use by those
knowledgeable about Korean accounting principles and auditing standards and their application in practice.
In 2014, the global economy seems to gradually recover. In particular, new orders for LNG carriers are expected to increase
thanks to growing shale gas production in the US. The vitalization of gas development projects in Russia, Northern Australia,
and East Africa will also boost new orders for LNG carriers in the long term. In addition, strong oil prices for vessels will unleash
demands for eco-friendly and high energy-efficiency large vessels, which will provide opportunities to lead high value-added
March 13, 2014
vessel markets to DSME that demonstrates worlds top-class technologies and track records in this area. As for special vessel
business, by capitalizing on globally recognized our technological prowess in building submarines and aviation logistics support
ship, we will spur the entrance into overseas special vessel markets to gain momentum for future growth. Based on these
forecasts and plans, we set up non-consolidated sales and new order targets for 2014 at KRW 15.15 trillion, up 8% year-on-year,
and USD 14.5 billion, up 7%, respectively. Other focuses will be on solidifying technological prowess through continuous R&D
efforts, maximizing operational efficiency, reducing costs, and improving profitability through management innovation.
Notice to Readers
This report is effective as of March 13, 2014, the auditors report date. Certain subsequent events or circumstances may have occurred
between the auditors report date and the time the auditors report is read. Such events or circumstances could significantly affect the
accompanying separate financial statements and may result in modifications to the auditors report.
038
039
(KRW million)
(KRW million)
ASSETS
CURRENT ASSETS:
CURRENT LIABILITIES:
225,672
167,360
Short-term borrowings
25,907
47,929
16,076
10,233
17
496
542,357
541,072
5,583,009
3,193,524
11,634
52,137
194,761
298,230
827,521
664,985
1,682,580
1,324,869
9,109,534
6,300,835
30
30
444,761
437,193
223,722
227,633
Investment in subsidiaries
551,972
670,767
27,537
19,750
5,044
177,295
150,262
4,216,639
4,160,031
9,809
10,097
(Continued)
66,665
61,901
168,178
181,585
7,348,706
16,458,240
7,882,637
14,183,472
3,111
1,397
154,446
218,889
381
1,241
3,256,814
3,053,891
167,538
80,319
8,202,000
7,269,563
1,820,004
1,295,517
883,035
300,347
NON-CURRENT LIABILITIES:
5,572
2,316,529
1,402,022
29,563
65,649
65,035
53
1,774,454
160,665
55
1,785,168
1,884,330
74,071
64,388
878
299,624
2,025,922
NON-CURRENT ASSETS:
Total assets
Debentures
Long-term borrowings
126
95
142,287
156,606
126,640
94,013
72,358
80,522
Provisions
Financial guarantee liabilities
Firm commitment liabilities
Currency forward liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
29,745
37,208
167,694
147,437
19,750
5,044
235,828
271,259
3,497,467
2,388,048
11,699,467
961,954
9,657,611
EQUITY:
Share capital
(35,930)
43,277
30,941
3,789,472
3,568,925
4,758,773
961,954
(35,959)
16,458,240
4,525,861
14,183,472
040
041
(KRW million)
2013
Sales
Cost of sales
14,080,037
2012
12,565,402
13,151,246
11,480,459
Gross profit
928,791
1,084,943
Selling expenses
146,913
215,866
Administrative expenses
263,388
335,465
94,265
81,998
424,225
451,614
Finance income
99,982
130,063
Finance costs
92,498
103,571
(30,768)
(154,859)
371,078
253,673
312,190
429,239
474,721
899,030
613,040
824,339
321,510
222,372
69,792
251,718
1,332
85,347
2013
137,025
725
251,718
2012
137,025
16,091
(21,820)
8,341
(16,982)
3,995
1,091
28,427
Comprehensive income for the period
See accompanying notes to separate financial statements.
280,145
(37,711)
99,314
042
043
(KRW million)
Other contributed
capital
Share capital
Components of
other capital
Retained earnings
(KRW million)
2013
Total
2012
961,954
(30,000)
46,832
3,548,243
4,527,029
Dividends paid
(94,523)
(94,523)
Change by merge
(5,959)
(5,959)
137,025
137,025
(15,891)
(21,820)
(37,711)
961,954
(35,959)
30,941
3,568,925
4,525,861
961,954
(35,959)
30,941
3,568,925
4,525,861
Others
29
29
Dividends paid
(47,262)
(47,262)
251,718
251,718
12,336
16,091
28,427
961,954
(35,930)
43,277
3,789,472
4,758,773
251,718
137,025
417,688
844,032
(1,788,966)
(1,479,621)
(1,119,560)
(498,564)
1,942
1,702
89,792
98,063
(170,435)
(131,219)
(69,790)
(244,680)
(1,268,051)
(774,698)
2,656
4,078
22,022
47
89
6,000
76
16,184
48,616
92,946
280
10,637
8,698
3,707
7,161
14,331
15,768
155,720
97,583
2,391
424
22,026
27
21,293
121,383
4,919
177,950
044
045
(KRW million)
2013
Acquisition of investment in associates and joint ventures
8,368
2012
22,200
32,908
We have reviewed the accompanying Report on the Managements Assessment of IACS (the Managements Report) of Daewoo
198,286
219,064
Shipbuilding & Marine Engineering Co., Ltd. (the Company) as of December 31, 2013. The Managements Report, and the design
10,958
16,505
918
1,839
and operation of IACS are the responsibility of the Companys management. Our responsibility is to review the Managements
269,360
592,106
(113,640)
(494,523)
Report and issue a review report based on our procedures. The Companys management stated in the accompanying
Managements Report that based on the assessment of the IACS, the Companys IACS has been effectively designed and is
operating as of December 31, 2013, in all material respects, in accordance with the IACS standards.
We conducted our review in accordance with the IACS Review Standards established by the Korean Institute of Certified Public
600,000
350,000
Accountants. Those standards require that we plan and perform a review, objective of which is to obtain a lower level of assurance
218,859
574,687
808,524
996,000
than an audit, of the Managements Report in all material respects. A review includes obtaining an understanding of a companys
1,059,661
352,594
2,687,044
2,273,281
600,000
350,000
160,665
500,000
438,566
206,240
generally accepted in the Republic of Korea, for the purpose of preparing and disclosing reliable accounting information. Because
A companys IACS represents internal accounting policies and a system to manage and operate such policies to provide
reasonable assurance regarding the reliability of financial statements prepared, in accordance with accounting principles
3,068
of its inherent limitations, IACS may not prevent or detect a material misstatement of the financial statements. Also, projections
94,523
of any evaluation of effectiveness of IACS to future periods are subject to the risk that controls may become inadequate because of
1,246,493
1,153,831
1,440,551
1,119,450
58,860
(149,771)
167,360
319,547
(548)
(2,416)
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on our review, nothing has come to our attention that causes us to believe that the Managements Report referred to above
is not fairly stated, in all material respects, in accordance with the IACS Framework established by the Korea Listed Companies
47,262
IACS and making inquiries regarding the Managements Report and, when deemed necessary, performing a limited inspection of
225,672
167,360
Association.
Our review is based on the Companys IACS as of December 31, 2013, and we did not review its IACS subsequent to December 31,
2012. This report has been prepared pursuant to the Act on External Audit for Stock Companies in the Republic of Korea and may
not be appropriate for other purposes or for other users.
Notice to Readers
This report is annexed in relation to the audit of the financial statements as of December 31, 2013, and the review of management
report on the assessment of the operations of IACS pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the
Republic of Korea.
046
047
I, as the Internal Accounting Control Officer (IACO) of Daewoo Shipbuilding & Marine Engineering Co., Ltd (the Company),
We have audited the accompanying consolidated financial statements of Daewoo Shipbuilding & Marine Engineering Co., Ltd.
assessed the status of the design and operation of the Company`s IACS for the year ended December 31, 2013.
and its subsidiaries (the Company). The consolidated financial statements consist of the consolidated statements of financial
position as of December 31, 2013 and 2012, respectively, and the related consolidated statements of income, consolidated
The Company`s management including IACO is responsible for designing and operating IACS.
statements of comprehensive income, consolidated statements of changes in shareholders equity and consolidated statements
I, as the IACO, assessed whether the IACS has been appropriately designed and is effectively operating to prevent and detect any
error or fraud which may cause any misstatement of the financial statement, for the purpose of preparing and disclosing reliable
financial statements. I, as the IACO, applied the IACS Framework established by the Korea Listed Companies Association for the
assessment of design and operation of the IACS.
of cash flows, all expressed in Korean won, for the years ended December 31, 2013 and 2012, respectively. The Companys
management is responsible for the preparation and fair presentation of the consolidated financial statements, and our
responsibility is to express an opinion on these consolidated financial statements based on our audits.
We did not audit the financial statements of DW Mangalia Heavy Industries S.A. and certain other consolidated subsidiaries, which
Based on the assessment of the IACS, the Companys IACS has been appropriately designed and is operating effectively as of
December 31, 2013, in al material respects, in accordance with the IACS Framework.
reflect total assets (before eliminating intragroup transactions) constituting 9.2% and 12.3% of consolidated total assets as of
December 31, 2013 and 2012, respectively, and total revenues (before eliminating intragroup transactions) constituting 6.6% and
11.2% of consolidated total revenues for the years then ended, respectively. Those financial statements were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Company,
is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
Jae Ho Ko,
Chief Executive Officer
In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, respectively, and
the results of its operations and its cash flows for the years ended December 31, 2013 and 2012, respectively, in conformity with
Korean International Financial Reporting Standards (K-IFRS).
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying
consolidated financial statements are not intended to present the financial position, results of operations and cash flows in
accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition,
the procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally
accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for
use by those knowledgeable about Korean accounting principles and auditing standards and their application in practice.
048
049
(KRW million)
Notes
2013
(KRW million)
2012
Notes
ASSETS
CURRENT ASSETS:
CURRENT LIABILITIES:
3, 5, 6
3, 5, 7
48,146
77,786
3, 5, 26
16,076
10,568
3, 5, 9
705
765
3, 5, 9
356
606,482
539,567
3, 5, 8, 36
382,929
266,708
37
5,868,083
3,355,443
26
11,634
52,265
3, 6, 26, 37
194,761
298,230
1,181,813
1,198,199
Inventories
10, 16
25
71
1,410
11
1,752,561
1,359,197
10,063,261
7,160,494
3, 5, 7
167
343
3, 5, 26
42,004
39,628
3, 5, 9
5,346
6,592
3, 5, 9, 16, 38
262,424
283,546
13, 16
91,574
60,637
1,247,238
1,820,553
19,750
5,044
3, 5, 16, 21, 36
3, 5, 26
3, 5, 19, 36
3, 5, 8, 37
26
3, 5, 26
14, 15, 16
177,295
150,262
6,211,056
6,218,617
2,307,814
2012
2,220,435
878
467
1,976,516
1,606,481
25
80,008
35,922
3, 5, 20
299,624
160,665
3, 5, 16, 21, 36
759,175
587,885
1,200
Current provisions
24
1,646
3, 5
287
3, 5
3,500
3,295
26
154,446
218,889
3, 5, 26, 36
381
1,369
16, 26, 37
3,458,147
3,206,178
22
NON-CURRENT ASSETS:
Short-term borrowings
2013
257,228
129,885
9,299,650
8,172,671
NON-CURRENT LIABILITIES:
Debentures
Long-term borrowings
Long-term financial liabilities designated at FVTPL
Non-current trade and other payables
Retirement benefit obligation
Provisions
3, 5, 20
1,887,901
1,361,008
3, 5, 16, 21, 36
1,609,932
1,104,846
1,324
95
3, 5, 19, 36
3, 5, 26
174,532
181,919
4, 23
148,115
106,776
24
91,684
131,868
19,457
3, 5
15,315
3, 5
3,456
Investment properties
17
10,619
10,906
26
167,694
147,437
Intangible assets
18
138,680
133,329
3, 5, 26, 36
19,750
5,044
25
292,772
332,254
22
840
1,140
4,409,859
3,395,300
13,709,509
11,567,971
25
41,711
41,448
11
177,754
190,830
8,425,618
8,961,735
18,488,879
16,122,229
050
051
(KRW million)
Notes
2013
EQUITY:
27
961,954
961,954
16, 29
(28,306)
(42,923)
25, 26, 29
66,313
44,940
3,928,091
3,707,642
4,928,052
4,671,613
Non-controlling interests
(148,682)
(117,355)
Total equity
4,779,370
4,554,258
Notes
Sales
2012
28
18,488,879
16,122,229
Cost of sales
2013
26, 35, 36
Gross profit
15,305,281
2012
14,057,819
14,277,299
12,921,887
1,027,982
1,135,932
Selling expenses
31, 35, 36
152,127
229,734
Administrative expenses
31, 35, 36
341,386
334,119
35
93,565
85,814
440,904
486,265
5, 32
106,732
141,642
Finance costs
5, 32
153,323
154,974
13, 42
10,779
590
3, 5, 33
561,045
458,129
3, 5, 33
491,273
644,454
5, 26, 34
498,265
921,082
5, 26, 34
646,182
943,184
326,947
265,096
25
85,054
241,893
89,243
175,853
30
269,039
221,892
(27,146)
(46,039)
1,423
1,174
052
053
Consolidated Statements of
Changes In Shareholders Equity
(KRW million)
2013
Profit for the year
241,893
(KRW million)
2012
175,853
Retained
earnings
Noncontrolling
interests
Subtotal
Total
12,474
(22,702)
8,014
10,450
7,460
(17,140)
3,995
1,091
(308)
1,040
31,635
Comprehensive income for the year
273,528
(27,262)
148,591
303,636
184,521
Non-controlling interests
(30,108)
(35,930)
Dividends paid
961,954
(43,276)
60,214
353
(452)
(99)
240
141
221,892
221,892
(46,039)
175,853
(15,274)
(22,097)
(1,993)
4,502,042
(94,523)
(79,672)
Capital fluctuation of
associates
(94,523)
4,581,714
3,602,822
(37,371)
(96,516)
10,109
(27,262)
961,954
(42,923)
44,940
3,707,642
4,671,613
(117,355)
4,554,258
961,954
(42,923)
44,940
3,707,642
4,671,613
(117,355)
4,554,258
Others
812
(747)
65
65
Dividends paid
(47,262)
(47,262)
(1,219)
(48,481)
Capital fluctuation of
associates
13,805
(13,805)
269,039
269,039
(27,146)
241,893
961,954
(28,306)
21,373
66,313
13,224
3,928,091
34,597
4,928,052
(2,962)
(148,682)
31,635
4,779,370
054
055
(KRW million)
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
(KRW million)
2013
2012
241,893
175,853
595,784
896,209
(1,820,296)
(1,695,339)
(982,619)
(623,277)
1,570
1,703
102,312
106,962
(238,524)
(221,898)
(80,649)
(259,544)
(1,197,910)
(996,054)
3,800
19,865
26,041
1,638
28,543
180
9,674
90
16,630
53,127
37,841
4,405
8,700
8,613
86,184
21,563
314
2,255
190,822
138,642
671
8,696
246
2,429
22
27,252
144,647
8,368
22,199
39,924
338,212
18,039
1,753
1,839
347,862
552,052
(157,040)
(413,410)
600,000
3,500,000
207,111
623,966
808,523
1,061,000
1,466,146
567,532
3,103
3,084,883
5,752,498
600,000
3,500,000
168,665
505,000
801,781
512,058
3,751
3,068
48,165
96,590
1,622,362
4,616,716
1,462,521
1,135,782
107,571
(273,682)
266,708
541,671
3,068
13,521
269,026
2012
(Concluded)
See accompanying notes to consolidated financial statements.
8,650
382,929
(1,281)
266,708
056
057
1. GENERAL:
Daewoo Shipbuilding & Marine Engineering Co., Ltd. (the Parent) was established on October 1, 2000, as part of Daewoo Heavy Industry Co.,
Ltd.s spin-off into two separate entities. The Parents major businesses are building and selling various ships, including special-purpose ships
and construction of plants. The Parents shares have been listed on Korea Exchange since February 2, 2001, and its global depositary receipts
(GDRs) were listed on Luxembourg Stock Exchange on June 10, 2003. As of December 31, 2013, the Parents major shareholders consist of Korea
Development Bank (KDB) (31.46%) and Financial Services Commission (12.15%).
058
059
Changes in the Companys ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted
for as equity transactions. The carrying amounts of the Companys interests and the non-controlling interests are adjusted to reflect the changes
in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair
value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.
When the Company loses control of a subsidiary, a gain or loss on disposal is calculated as the difference between (i)the aggregate of the fair
value of the consideration received and the fair value of any retained interest and (ii)the previous carrying amount of the assets (including
goodwill) and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or
fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts
previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of
the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the
former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under K-IFRS
1039, Financial Instruments: Recognition and Measurement , or, when applicable, the cost on initial recognition of an investment in an associate or
a joint venture.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured
at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred
by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree.
Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in
accordance with K-IFRS 1012, Income Taxes , and K-IFRS 1019, respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the
Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with K-IFRS 1102, Sharebased Payment , at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS 1105, Non-current Assets Held for Sale and
Discontinued Operations , are measured in accordance with that standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the Companys previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed. If, after reassessment, net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value
of the Companys previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entitys net assets in the
event of liquidation may be initially measured either at fair value or at the non-controlling interests proportionate share of the recognized amounts
of the acquirees identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of noncontrolling interests are measured at fair value or, when applicable, on the basis specified in another K-IFRS.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration
transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are recognized when the
adjustment results from additional information about facts and circumstances that existed at the acquisition date obtained during the measurement
period (which cannot exceed one year from the acquisition date).
060
061
The subsequent accounting for changes in fair value of the contingent consideration, which does qualify as measurement period adjustments,
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent
reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability
is remeasured at subsequent reporting dates in accordance with K-IFRS 1039 or K-IFRS 1037, Provisions, Contingent Liabilities and Contingent
Assets , as appropriate, with the corresponding gain or loss being recognized in profit or loss.
When the Company reduces its ownership interest in an associate or a joint venture but continues to use the equity method, the Company
reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to
that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. In
addition, the Company applies K-IFRS 5 to a portion of investment in an associate or a joint venture that meets the criteria to be classified as held
for sale.
When a business combination is achieved in stages, the Companys previously held equity interest in the acquiree is remeasured to fair value at
the acquisition date (i.e., the date when the Company obtains control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are
reclassified to profit or loss where such treatment would be appropriate if that interests were disposed of.
The requirements of K-IFRS 1039 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Companys
investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for
impairment in accordance with K-IFRS 1036 by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its
carrying amount, and any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss
is recognized in accordance with K-IFRS 1036 to the extent that the recoverable amount of the investment subsequently increases.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during
the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and
circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
The Company continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment
in a joint venture becomes an investment in an associate. There is no remeasurement of fair value upon such changes in ownership interests.
When a Company entity transacts with an associate or a joint venture of the Company, profits and losses resulting from the transactions with the
associate or joint venture are recognized in the Companys consolidated financial statements only to the extent of interests in the associate or joint
venture that are not related to the Company.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those policies.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations
for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity
method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with K-IFRS 1105.
Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated statement of financial position
at cost and adjusted thereafter to recognize the Companys share of the profit or loss and other comprehensive income of the associate or joint
venture. When the Companys share of losses of an associate or a joint venture exceeds the Companys interest in that associate or joint venture
(which includes any long-term interests that, in substance, form part of the Companys net investment in the associate or joint venture), the
Company discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Company has incurred
legal or constructive obligations or made payments on behalf of the associate or joint venture.
When a group entity undertakes its activities under joint operations, the Company as a joint operator recognizes in relation to its interest in a joint
operation:
Any excess of the cost of acquisition over the Companys share of the net fair value of the identifiable assets, liabilities and contingent liabilities of
an associate or a joint venture recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the
investment. Any excess of the Companys share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of
acquisition, after reassessment, is recognized immediately in profit or loss.
The Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the K-IFRSs
applicable to the particular assets, liabilities, revenues and expenses.
Upon disposal of an associate or a joint venture that results in the Company losing significant influence over that associate or joint venture, any
retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in
accordance with K-IFRS 1039. The difference between the previous carrying amount of the associate or joint venture attributable to the retained
interest and its fair value is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Company
accounts for all amounts previously recognized in other comprehensive income in relation to that associate or joint venture on the same basis it
would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognized in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related
assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss (as reclassification adjustment) when it loses significant
influence over that associate or joint venture.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the
Company is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the
transactions are recognized in the Companys consolidated financial statements only to the extent of other parties interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Company does
not recognize its share of the gains and losses until it resells those assets to a third party.
(6) Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated
impairment losses, if any. For impairment testing, goodwill is allocated to cash-generating units (or groups of cash-generating units) of the
Company that were expected, at the date of acquisition, to benefit from the synergies of the combination giving rise to the goodwill.
062
063
A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss
is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata
basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in
the consolidated statements of income. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal
of the relevant cash-generating unit, the allocated amount of goodwill is included in the determination of the profit or loss on disposal.
The Companys accounting policies with respect to the goodwill arising from acquisition of an affiliate are stated in the Note 2 (4).
3) HTM investments Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company has the
positive intent and ability to hold to maturity are classified as HTM investments. HTM investments are measured at amortized cost using the
effective interest method less any impairment, with revenue recognized on an effective yield basis.
4) AFS financial assets
Non-derivative financial assets that are not classified as HTM, held-for-trading, financial assets at FVTPL or loans
and receivables are classified as AFS financial assets. Financial assets can be designated as AFS on initial recognition. AFS financial assets
are initially recognized at fair value plus directly related transaction costs. They are subsequently measured at fair value. Unquoted equity
investments whose fair value cannot be measured reliably are carried at cost. Gains and losses arising from changes in fair value are recognized
in other comprehensive income and accumulated in the investments revaluation reserve, with the exception of impairment losses, interest
calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognized in profit or loss.
Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments
revaluation reserve is reclassified to profit or loss. Dividends on AFS equity instruments are recognized in profit or loss when the Companys right
to receive the dividends is established.
(8) Inventories
Inventories are stated at the lower of cost and net realizable value. Costs of inventories, except for those in transit, are measured under the
weighted-average method and consist of the purchase price, cost of conversion and other costs incurred in bringing the inventories to their
present location and condition. Net realizable value represents the estimated selling price in the ordinary course of business less all estimated
costs of completion and costs necessary to make the sale.
Cost of sales is recognized as a carrying amount of the inventories in the period they are sold, and the amount of any write-down of inventories to
net realizable value and all losses of inventories are recognized as expenses when occurred. In addition, the amount of any reversal of any writedown of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an
expense in the period in which the reversal occurs.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, and
derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified
impairment losses at the end of each reporting period.
5) Loans and receivables Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method
less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of
discounting is immaterial.
6) Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is
considered to be objective evidence of impairment.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition,
assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include observable changes in
national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the assets carrying amount
and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables,
where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written
off against the allowance account. If the amount previously written off is recovered, the amount is recognized in profit or loss. Changes in the
carrying amount of the allowance account are recognized in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are
reclassified to profit or loss in the period.
064
065
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through
profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized
cost would have been had the impairment not been recognized.
While land is not depreciated, other depreciation expense is computed using the straight-line method based on the estimated useful lives of the
assets as follows:
In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. In respect of
AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be
objectively related to an event occurring after the recognition of the impairment loss.
7) Derecognition of financial assets The Company derecognizes a financial asset only when the contractual rights to the cash flows from the
asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If
the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset,
the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains
substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and
also recognizes a collateralized borrowing for the proceeds received.
1251
Structures
1051
Machinery
Vessels and aircraft
Others
Buildings
50
1) Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less
accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful
lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost
less accumulated impairment losses.
2) Internally generated intangible assets - research and development expenditure
expense in the period in which it is incurred.
An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only
if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible
asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognized, development expenditure
is recognized in profit or loss in the period in which it is incurred.
534
1240
330
The Company reviews the depreciation method, the estimated useful lives and residual values of property, plant and equipment at the end of each
annual reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
Gains and losses arising from abolition or disposal of property, plant and equipment reflect the difference between net selling price and the
carrying amount at the date of disposal and are recognized in profit or loss.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated
impairment losses on the same basis as intangible assets that are acquired separately.
3) Intangible assets acquired in a business combination Intangible assets that are acquired in a business combination are recognized separately
from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and
accumulated impairment losses on the same basis as intangible assets that are acquired separately.
4) Derecognition of intangible assets An intangible asset is derecognized on disposal or when no future economic benefits are expected from its
use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds
and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
066
067
Intangible assets with definite useful lives are amortized based on the following estimated useful lives:
Useful lives (years)
Industrial rights
Development expense
Exclusive right to use facilities
Other intangible assets
310
5
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying
assets, in which case they are capitalized in accordance with the Companys general policy on borrowing costs. Contingent rentals are recognized
as expenses in the periods in which they are incurred.
2040
250
Amongst the Companys intangible assets, useful life of a membership is estimated to be indefinite since the usable period is not limited in
accordance with the terms of the contract and the economic benefits are expected to be continuously generated from the asset during the holding
period. Intangible assets that have indefinite useful lives are not amortized and are tested for impairment at the end of every fiscal year.
(14) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
1) The Company as lessor Amounts due from lessees under finance leases are recognized as receivables at the amount of the Companys
net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
Companys net investment outstanding in respect of the leases.
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the
lease term.
2) The Company as lessee Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception
of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the
consolidated statements of financial position as a finance lease obligation.
Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis
is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under
operating leases are recognized as an expense in the period in which they are incurred.
068
069
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially
ready for their intended use or sale.
Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair
value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately, unless the derivative is designated
and effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
The Company designates certain derivatives as either hedges of recognized assets or liabilities or firm commitments (fair value hedges), hedges
of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges).
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. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
The borrowing costs which are added to the cost of qualifying assets of the Company are 115,581 million and 68,704 million for the years
ended December 31, 2013 and 2012, respectively, and the capitalized interest rate used in calculating borrowing costs are 3.03% and 3.25% in the
current period.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and
it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
1) Embedded derivatives Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition
of a derivative, their risks and characteristics are closely related to those of the host contracts and the contracts are not measured at FVTPL.
An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the hybrid instrument to which
the embedded derivative relates is more than 12 months and it is not expected to be realized or settled within 12 months. Other embedded
derivatives are presented as current assets or current liabilities.
2) Hedge accounting At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the
hedged item along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception
of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair
values or cash flows of the hedged item.
3) Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss
immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the
fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the statement
of comprehensive income relating to the hedged item.
Hedge accounting is discontinued when the Company revokes the hedging relationship; when the hedging instrument expires or is sold,
terminated or exercised; or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortized to profit or loss from that date.
4) Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss.
4) Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs directly
attributable to the issuance. They are subsequently measured at amortized cost using the effective interest method, with interest expense
recognized on an effective yield basis.
5) Derecognition of financial liabilities The Company derecognizes financial liabilities when the Companys obligations are discharged, cancelled
or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized
in profit or loss.
Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the
hedged item is recognized in profit or loss in the same line of the statement of comprehensive income as the recognized hedged item. However,
when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses
previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or nonfinancial liability.
Hedge accounting is discontinued when the Company revokes the hedging relationship; when the hedging instrument expires or is sold,
terminated or exercised; or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is
recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer expected to occur, the
gain or loss accumulated in equity is recognized immediately in profit or loss.
070
071
Contributions to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them
to the contributions.
Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and
that the grants will be received.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial
valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the
changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial
position with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other
comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized
in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net
defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost, past service cost, as well as
gains and losses on curtailments and settlements), net interest expense (income) and remeasurement.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the
related costs for which the grants are intended to compensate. Specifically, government grants, which require the Company to purchase,
construct or otherwise acquire non-current assets, are recognized as deferred revenue in the consolidated statements of financial position and
transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial
support to the Company with no future related costs are recognized in profit or loss in the period in which they become receivable.
The Company recognizes revenue when the amount of revenue can be measured reliably, when it is probable that the economic benefits
associated with the transaction will flow to the Company and when the following criteria specific to each of the Companys activities are met:
The retirement benefit obligation recognized in the consolidated statements of financial position represents the actual deficit or surplus in the
Companys defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in
the form of refunds from the plans or reductions in future contributions to the plans.
1) Sale of goods, rendering of services and construction contracts The Company recognizes revenue from sale of goods at the time of transfer,
in principle, but when there are terms that require final sales decision after the transfer, it recognizes the revenue when all of the relevant terms
are satisfied. Revenues from contracts to render services and construction contracts (contracts for the rendering of services that are directly
related to the construction of the asset, contracts for the destruction or restoration of assets and the restoration of the environment following the
demolition of assets, etc.) are recognized by reference to the stage of completion of the contracts.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and
when the entity recognizes any related restructuring costs.
(20) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the
Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When a loss is expected with respect to contracts to render services and construction contracts, the Company immediately accounts for the
expected loss as a provision for estimated losses on uncompleted contracts and includes it in the cost of goods sold or construction cost in the
current operation.
2) Dividend income Dividend income from investments is recognized when the Companys right to receive payment has been established.
4) Interest income Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate
applicable. When an impairment of a receivable occurs, the Company reduces the carrying value of the receivable to the recoverable amount
(present value of the estimated future cash flows discounted at the original effective interest rate) and recognizes subsequent increase in the
recoverable amount as an interest income.
072
073
3. FINANCIAL INSTRUMENTS:
(1) Financial risk management
1) Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statements of income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible. The Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the
reporting period.
2) Deferred tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized
for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset
is realized based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement
of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of
the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, they relate to income
taxes levied by the same tax authority and the Company has intent to settle current tax liabilities and assets on a net basis.
3) Current and deferred taxes for the year Current and deferred taxes are recognized in profit or loss, except when they relate to items that
are recognized in other comprehensive income or directly in equity, in which case the current and deferred taxes are also recognized in other
comprehensive income or directly in equity. Where current tax or deferred tax arises from the initial accounting for a business combination, the
tax effect is included in the accounting for the business combination.
Assets
JPY
Liabilities
Assets
Others
Liabilities
Assets
Total
Liabilities
Assets
Liabilities
KRW
7,993,853
3,740,074
197,965
112,863
830
91,475
8,192,648
3,944,498
RON
175,994
748,176
9,039
87,161
145
185,178
835,337
CNY
25,091
127,626
10
25,091
127,636
3,996
62,754
3,996
62,754
Others
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating
the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take
those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within
the scope of K-IFRS 1102, that leasing transactions are within the scope of K-IFRS 1017, Leases, and measurements have some similarities to fair
value but are not fair value, such as net realizable value in K-IFRS 1002, Inventories, or value in use in K-IFRS 1036.
Total
8,198,934
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or
indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
Assets
Functional currency
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs
to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described
as follows:
EUR
Liabilities
4,678,630
207,004
200,034
86
86
975
91,475
8,406,913
4,970,225
EUR
JPY
Liabilities
Assets
Liabilities
Assets
Others
Liabilities
Total
Assets
Liabilities
Assets
Liabilities
Functional currency
KRW
6,200,998
2,391,728
210,598
55,383
80
5,481
33,425
6,417,077
2,480,616
RON
174,236
707,066
14,737
81,286
120
189,093
788,352
CNY
26,126
110,340
26,126
110,340
2,501
63,336
2,501
63,340
6,403,861
3,272,470
225,335
136,673
80
5,601
33,425
6,634,797
3,442,648
Others
Total
074
075
The Companys sensitivity to a 10% increase or decrease in KRW (functional currency of the Company) against the major foreign currencies as
of December 31, 2013 and 2012, is presented in the table below (Korean won in millions). The sensitivity rate used in reporting foreign currency
risk internally to key management personnel is 10% and it represents managements assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items and adjusts their translation
at the period-end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other comprehensive
income where the KRW weakens 10% against the relevant currency.
a-2) Forward foreign exchange contracts It is the policy of the Company to enter into forward foreign exchange contracts to cover specific
foreign currency payments and receipts within 70%100% of the exposure generated. The following table details the forward foreign currency
contracts outstanding as of December 31, 2013 (Korean won in millions and foreign currency in thousands):
Description
Average
contracted exchange rate
Sell amounts
Buy amounts
For a 10% strengthening of KRW against the relevant currency, there would be an equal and opposite impact on the profit and other comprehensive
income.
Sell USD
1,124.97
USD
7,553,047
KRW
8,496,950
367,230
Sell GBP
1,781.52
GBP
225,000
KRW
400,841
(19,436)
1.31
USD
50,051
EUR
38,211
4,513
1.30
USD
205,504
EUR
158,325
24,378
0.17
USD
4,472
NOK
26,351
(187)
0.93
USD
57,159
AUD
61,176
1,304
1.57
USD
5,443
GBP
3,476
340
0.99
USD
5,618
CAD
5,688
756
1,140.29
USD
476,000
KRW
542,776
30,484
KRW
KRW
9,440,567
USD
8,357,294
USD
344,084
EUR
Equity
4,147
Profit or loss
697
JPY
Equity
248
Profit or loss
(9)
Others
Equity
-
(For trading)
Profit or loss
Equity
(9,050)
(12,008)
239,204
EUR
Equity
Profit or loss
25,603
8,866
JPY
Equity
Profit or loss
391
(8)
Others
Equity
Profit or loss
(2,765)
Equity
(1,004)
EUR
EUR
196,536
GBP
225,000
GBP
3,476
NOK
NOK
26,351
AUD
AUD
61,176
CAD
CAD
5,688
409,382
b) Price risk The Companys investment in marketable equity securities is made upon managements decision and it does not have specific
investment policies for equity securities. As of December 31, 2013, the Company has marketable equity securities that are classified as AFS
financial assets in the consolidated statements of financial position, and when the price of the marketable equity securities changes by 10%, the
effect to other comprehensive income will be 13,471million (before tax).
c) Interest rate risk The primary source of the Companys interest rate risk relates to borrowings. The Company is exposed to interest rate risk
since it has borrowings issued at floating rates. The borrowings exposed to interest rate fluctuation risk amount to USD 74,000 thousand, and in
order to hedge the risk, the Company enters into interest rate swap contracts to receive a floating rate and pay a fixed rate. Details of the interest
swap contracts as of December 31, 2013, are as follows (USD in thousands):
Contract date
End date
2010.01.21
2014.09.10
(For trading)
Standard Chartered Bank (China)
2013.08.12
2015.08.11
Total
(*) ML: Monthly LIBOR
Contractamount
(USD)
Floating rate(%)
25,000
6ML(*)+4.5
6.79
49,000
3ML(*)+2.0
3.68
74,000
076
077
The Company performs various analyses to manage interest rate risk. In order to minimize the interest rate fluctuation risk, the Company can use
various means, including refinancing, renewal of existing financing and hedging, and make decisions on the optimal financing method.
The Companys exposures to interest rates on financial assets and financial liabilities as of December 31, 2013 and 2012, are as follows (Korean
won in millions):
December 31, 2013
1,697,829
(1,139,754)
70,222
317,983
740,155
(3,713,031)
Financial liabilities
Total
2-2) Credit risk management Credit risk is being managed at the corporate level. Credit risk arises from cash and cash equivalents, bank and
financial institution deposits, derivatives as well as credit risks of customers, including receivables and firm commitments. As for banks and
financial institutions, the Company transacts only with institutions that are rated A grade and above. This information is supplied by independent
rating agencies. For other customers, customers financial status, credit history and other factors are considered to evaluate their credit status.
Maximum exposure to credit risk of loans and receivables and derivatives is represented by the carrying amount, and for financial guarantee
liabilities, it is represented by the maximum amount to be paid at the debtors request, which amounts to 568,827 million (see Notes 16 and 39).
(2,837,583)
2,017,967
(1,947,745)
The Company reviews the carrying amount of its financial assets to determine whether there is any indication that those assets have suffered an
impairment loss. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is immediately recognized as an expense.
(4,031,014)
(3,957,504)
(3,217,349)
The Company has not recognized fixed-rate financial assets as at FVTPL and has not designated derivatives as hedging instruments of fair value
hedge accounting. Therefore, changes in interest rates do not affect profit or loss.
2-3) Liquidity risk management The Company manages liquidity risk by maintaining sufficient cash and marketable securities, the availability
of funding through an adequate level of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the
underlying business, the Company maintains flexibility in funding by maintaining availability under committed credit lines.
a) The table below analyses the Companys non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the
end of reporting period to the contractual maturity date. The table has been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Company can be required to pay (Korean won in millions).
For the years ended December 31, 2013 and 2012, the effect of 100 basis point (bp) strengthening or weakening of interest rates on profit (loss) is
as follows (Korean won in millions):
Within a year
Borrowings and others (*1)
Year ended
December 31, 2013
Year ended
December 31, 2012
(37,130)
37,130
(32,173)
32,173
The sensitivity analyses above have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments
at the end of the reporting period. For floating-rate financial assets and liabilities, the analysis is prepared assuming the amount of the financial
assets and liabilities outstanding at the end of the reporting period was outstanding for whole year.
Total
3,525,068
12 years
Over 2 years
2,596,196
Total
7,317,105
1,976,516
147,959
26,573
2,151,048
3,500
3500
568,827
1,195,841
6,073,911
1,343,800
2,622,769
568,827
10,040,480
(*1) These amounts include both interest and principal cash flows.
(*2) Amount
of financial guarantee contract represents a limit of payment guarantee, which is the maximum amount payable by
the Company in case the debtor claims for the full guaranteed amount.
b) The table below analyses the Companys non-derivative financial assets into relevant maturity groupings based on the remaining period at the
end of reporting period to the contractual maturity date (Korean won in millions):
A 100 bp increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managements
assessment of the reasonably possible change in interest rates.
Within a year
Cash and cash equivalents
382,929
12 years
Over 2 years
Total
382,929
48,146
101
66
705
863
4,483
6,051
44,782
44,782
606,482
1,038,262
951,104
952,068
48,313
296,134
345,465
1,853,720
2,335,795
c) The table below analyses the Companys derivative instruments into relevant maturity groupings based on the remaining period at the end
of reporting period to the contractual maturity date. The amount of the derivative instruments that are settled in net amounts is based on
undiscounted net cash inflows and outflows in accordance with the terms of the contract. In case the amounts to be received or paid are not
settled, an interest rate estimated based on the yield curve at the end of the reporting period is used (Korean won in millions).
078
079
Within a year
12 years
Over 2 years
Total
Net settlement:
(382)
213,773
213,391
(1,198)
149,088
147,890
62,238
62,238
(1,580)
Level 1
Level 2
Level 3
Total
425,099
423,519
43,593
43,593
6,603
6,603
448,492
448,492
116,902
The Company manages its capital in order to maintain the ability to continuously provide profits to its shareholders and interest parties and
optimum capital structure to reduce capital expenses. In order to maintain such optimum, the Company adjusts dividend payments, redeems
paid-in capital to shareholders and issues stocks to reduce liabilities or sell assets. Like other entities in the field in which the Company
operates, the Company manages its capital based on the ratio of net debt to total equity. Net debt refers to total borrowings (as presented in the
consolidated statements of financial position) less cash and cash equivalents and short-term financial assets, and total equity refers to capital
presented in the consolidated statements of financial position plus net debt.
The Companys net debt to total equity ratio as of December 31, 2013 and 2012, is as follows (Korean won in millions):
December 31, 2013
6,864,446
(431,075)
Net debt
6,433,371
Capital
4,779,370
Total equity
11,212,741
(344,494)
5,090,345
4,554,258
9,644,603
57.38%
52.78%
Level 1
Level 2
Level 3
Total
58,080
58,080
372,056
372,056
123,393
123,393
11,321
11,321
7,690
22,655
30,345
Debt securities
124
124
Convertible bonds
44,658
44,658
Total
134,714
482,608
22,655
639,977
2,202
2,202
20,131
22,333
7,490
22,907
22,907
6,190
6,203
12,393
37,854
37,854
130,582
542,745
22,907
696,234
562
562
20,131
22,333
6,413
6,975
6,413
6,975
(*) There were no transfers between Level 1 and Level 2 for the years ended December 31, 2013 and 2012.
2) Management of the Company considered that the carrying amounts of financial instruments that are not measured at fair value approximate
their fair value, and details are described in Note 5.
3) The following table gives information about how the fair values of financial instruments categorized into Level 2 and Level 3 are determined; in
particular, the valuation techniques and relationship of significant unobservable inputs to fair value.
Description
7,490
Classification
116,902
Valuation techniques
Significant
unobservable
inputs
Range
(Weighted
average)
N/A
N/A
Description of
interrelationship
N/A
080
081
Description
Significant
unobservable
inputs
Range
(Weighted
average)
Stock price
volatility
N/A
Sales growth
rate
Valuation techniques
Description of
interrelationship
Unlisted
equity
securities
1.41%
2.02%
(1.88%)
N/A
N/A
Beginning
of year
Purchases
(Disposals)
Others(*)
End of
year
Valuation
(8,304)
3,597
4,455
22,655
(*) Others consist of transfer of Level 2 due to the remeasurement of the remaining shares after disposition of some of non-listed securities at the sale amount (i.e.,
Level 2 input), transfer of investment in associates (see Note 13) and others.
2012
The Company operates defined benefit pension plan, and the service cost of the plan is determined using actuarial valuations. In order to apply
actuarial valuations, it is necessary to assume a discount rate, an expected rate of return on plan assets, wage increase rate and others. The
retirement benefit plan contains significant uncertainties on the estimation due to its long-term nature. The defined benefit obligations as of
December 31, 2013 and 2012, are 148,115 million and 106,776 million, respectively, and details are described in Note 23.
At the end of the reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any
indication that those assets have suffered an impairment loss. Intangible assets with indefinite useful lives are tested for impairment at least
annually and whenever there is an indication that the asset may be impaired. Other non-financial assets are tested for impairment whenever
there is an indication that the carrying amount will not be recoverable. In assessing value in use, management estimates future expected cash
flows derived from the relevant asset or cash-generating unit and applies an appropriate discount rate to compute the present value.
Description
Purchases
(Disposals)
Others
End of
year
Valuation
18,128
4,779
22,907
5) Though principle of subsequent measurement of financial assets and liabilities is fair value, the Company could not measure reliable fair value.
The list and amount of financial assets and liabilities which did not disclose fair value information are as follows (Korean won in millions):
December 31, 2013
Non-listed securities
Equity investment
Total
For non-marketable equity instruments, it is reasonable to discount the future expected cash flows at a current market rate applied to instruments
with similar terms and risks. This valuation technique requires managements assumption on the expected future cash flows and discount rate
and, therefore, is based on uncertainty.
Description
Equity instruments that are traded in an active market are classified as AFS financial assets and measured at fair value.
2013
Non-listed securities
N/A
4) The changes in financial instruments that are measured at fair value on a recurring basis and classified as Level 3 for the years ended
December 31, 2013 and 2012, are as follows (Korean won in millions):
Non-listed securities
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods.
The following are the critical judgments, apart from those involving estimations, that the directors have made in the process of applying the
Companys accounting policies and that affect the amounts recognized in the consolidated financial statements:
(Financial instruments that are not measured at fair value but fair value disclosures are required)
Debt
instrument
In the application of the Companys accounting policies, the management is required to make judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
51,024
69,391
86,356
1,559
52,583
16,965
Meanwhile, management of the Company considered that the carrying amount of above financial assets approximates their fair value.
In assessing whether an AFS financial asset is impaired, the Company evaluates, among other factors, the duration and extent to which the fair
value of an asset is less than its cost and the financial health of and short-term business outlook for the investee, changes in technology and
operational and financing cash flows.
082
083
Classification of the Companys financial instruments as of December 31, 2013 and 2012, is as follows (Korean won in millions):
Description
Borrowings
Description
Cash and cash equivalents
Financial
liabilities at
FVTPL
Financial
assets at
FVTPL
Loans and
receivables
382,929
HTM
financial
instruments
-
AFS
financial
assets
Derivative
financial
assets
Total
(Carrying
amounts)
382,929
Debentures
Total
(Fair value)
382,929
Other
financial
liabilities
4,676,921
Derivative
financial
liabilities
Total
(Carrying
amounts)
4,676,921
2,187,525
2,202
2,202
2,202
2,151,048
2,151,048
2,151,048
20,131
20,131
20,131
15,602
48,312
48,312
15,602
15,602
58,080
58,080
58,080
3,500
3,500
6,051
6,051
6,051
262,424
262,424
262,424
1,853,720
1,853,720
1,853,720
372,056
372,056
372,056
372,056
2,983,572
2,983,572
2,284,961
58,080
6,051
262,424
Description
Cash and cash equivalents
Short- and long-term financial assets
Financial
assets at
FVTPL
Loans and
receivables
266,708
9,056,929
3,500
9,044,275
Financial
liabilities at
FVTPL
Description
Other
financial
liabilities
3,913,166
Derivative
financial
liabilities
1,521,673
Total
(Carrying
amounts)
3,913,166
Total
(Fair value)
1,521,673
3,919,538
1,543,351
562
562
562
1,788,400
1,788,400
1,788,400
6,413
6,413
6,413
78,128
19,457
19,457
19,457
50,196
50,196
50,196
7,357
7,357
7,357
283,902
283,902
283,902
2,360,120
2,360,120
2,360,120
2,704,956
50,196
7,357
(*1) Financial assets at FVTPL consist of currency forward assets held for trading and put option.
(*2) Amounts are sum of current and non-current accounts, net of allowances.
283,902
266,708
Debentures
Total
(Fair value)
20,131
266,708
Total
(Carrying
amounts)
78,128
Derivative
financial
assets
9,034,596
AFS
financial
assets
HTM
financial
instruments
2,202
2,190,503
78,128
Borrowings
4,661,289
2,187,525
48,312
Total
(Fair value)
448,492
448,492
448,492
448,492
3,494,903
3,494,903
562
6,751
7,249,447
6,413
6,751
7,256,422
6,751
7,284,472
(*) Financial liabilities at FVTPL consist of currency forward liabilities held for trading, and currency forward liabilities that are effective as a hedging instrument are
classified as derivative financial liabilities.
084
085
2) Financial liabilities
1) Financial assets
Description
Interest income
Dividend income
99,671
312
AFS financial
assets
1,003
Interest expenses
Derivative
financial assets
1,722
Total
100,986
1,722
(116,492)
(116,492)
(40,169)
(40,169)
(6,637)
HTM financial
instruments
26,488
(6,637)
247,792
274,280
(12,753)
(311)
(25,545)
(25,856)
(4,633)
(24,324)
(28,957)
5,270
5,270
4,024
4,024
(115,581)
(115,581)
(3,851)
(3,851)
9,840
9,840
4,463
4,463
Description
(63,627)
23,448
312
(3,260)
13,768
263,581
(3,260)
237,482
Description
Interest income
Dividend income
Bad debt expenses and other
impairment losses
Gains (losses) on foreign exchange
translation, net
Gains (losses) on foreign currencies
transaction, net
133,942
HTM financial
instruments
248
AFS financial
assets
753
Derivative
financial assets
Total
134,943
1,718
1,718
(84,493)
(84,493)
(215,888)
(215,888)
(100,011)
(100,011)
64,885
581,252
646,137
20,963
83,836
104,799
(15,101)
(15,101)
(22,622)
(22,622)
800
800
(266,450)
70,747
248
(2,338)
(21,689)
665,088
(2,338)
447,944
(153,322)
(12,753)
16,600
(821)
130,678
15,789
(152,501)
130,678
Total
811
Derivative financial
liabilities
Other financial
liabilities
Financial liabilities at
FVTPL
Interest expenses
(4,944)
Financial liabilities at
FVTPL
(146,133)
Other financial
liabilities
(153,287)
(45,420)
(196,497)
(154,974)
Derivative financial
liabilities
(1,687)
Total
97,569
97,569
37,858
37,858
3,513
40,484
43,997
1,373
5,031
6,404
1,440
1,440
4,981
4,981
4,886
(68,704)
(81,583)
45,268
(68,704)
(31,429)
086
087
(2) Aging analysis of trade and other receivables that are overdue but are not impaired as of December 31, 2013 and 2012, is as follows (Korean
won in millions):
The Companys cash and cash equivalents in the consolidated statements of financial position are the same as that in the consolidated statements
of cash flows. Details of cash and cash equivalents as of December 31, 2013 and 2012, are as follows (Korean won in millions):
3060 days
11,602
4,075
Loans
3,877
3,879
262,633
2,018
2,107
17,936
22,061
382,929
266,708
Accrued income
978
308
1,286
Deposits
9,122
25,997
51,813
148
118
37,747
5,011
13,264
90,388
108,663
148,472
Description
3060 days
5,385
6090 days
7,941
Exceed 90 days
135,146
Total
Loans
5,809
5,817
4,874
1,657
44,166
50,697
Accrued income
35
70
105
Deposits
2,111
2,111
61,053
12,405
9,606
185,191
207,202
(3) Aging analysis of the trade and other receivables that are impaired as of December 31, 2013 and 2012, is as follows (Korean won in millions):
(1) Details of trade and other receivables as of December 31, 2013 and 2012, are as follows (Korean won in millions):
30 days or less
81,433
Total
30 days or less
68,263
2,852
Restricted or pledged financial assets as of December 31, 2013 and 2012, are as follows (Korean won in millions):
Exceed 90 days
380,077
10,178
6090 days
Account
2,992
Current
Loans
123
123
9,363
9,363
25,258
25,258
1,759,406
(2,658)
(270,538)
(4,132)
(179,059)
Accrued income
437,910
1,002,303
317,812
1,580,347
7,808
210,485
13,105
194,961
(136)
(3,593)
(124)
(3,228)
7,672
206,892
12,981
191,733
139,795
1,792
168,505
1,385
440,568
1,272,841
321,944
1,310,298
1,275,554
1,310,298
1,753,144
3060 days
6090 days
Exceed 90 days
1,753,144
Total
(9,411)
(7,894)
Loans
123
123
130,384
1,792
160,611
1,385
7,301
7,301
51,976
2,690
54,165
2,931
Accrued income
(23,329)
(1,929)
(6,017)
28,647
761
48,148
2,931
1,869
Non-current
1,275,554
Total
Non-current
Exceed 90 days
Current
6090 days
3060 days
606,482
35,490
1,247,238
15
539,567
44,157
1,820,553
As the discount effect of trade and other receivables is considered as not significant, the fair value is considered to be the same as the book value.
37,867
1,798,435
37,867
1,798,435
Impaired trade and other receivables do not include normal receivables, rate of allowance of which is less than 1% or below based on the collective
assessment. Among the impaired trade and other receivables, receivables from construction contracts represent delayed receivables related to
the delivered vessel, and the principal and the accrued interest are being collected in accordance with the contract agreement.
088
089
(4) Changes in allowance for trade and other receivables for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Receivables from
construction
contracts and trade
Beginning balance
183,191
Loans
3,352
Other accounts
receivables
7,894
Accrued income
6,017
Deposits
Total
127,171
932
1,656
23,066
13
152,838
(32,381)
(139)
(3,825)
(36,345)
Other (*)
(4,785)
273,196
(555)
3,729
9,411
25,258
(13)
(5,353)
Details of AFS financial assets as of December 31, 2013 and 2012, are as follows (Korean won in millions):
200,454
311,594
Receivables from
construction
contracts and trade
115,469
Loans
3,289
Other accounts
receivables
6,120
Deposits
Total
124,878
72,926
12
4,726
6,017
83,681
Other (*)
(5,204)
51
(2,952)
(8,105)
183,191
3,352
7,894
Current
Current
Non-current
Listed securities
Beneficiary certificates
123,393
6,017
11,321
82,928
217,642
Convertible bonds
44,658
Others
124
Debt securities
Accrued income
Non-current
Equity securities
Non-listed securities
2012
Beginning balance
116,902
7,490
109,263
233,655
44,782
262,424
37,854
356
12,037
356
356
49,891
283,546
200,454
(*) Other consists of reversal of allowance, exchange rates fluctuations and others.
The Company estimates an allowance for doubtful receivables that are assessed to be impaired individually based on an individual basis, and the
amount of the impairment loss recognized is the difference between the assets carrying amount and the recoverable amount. The receivables
with 30 days past due are classified as normal receivables and the Company maintain an allowances policy for them. The receivables more than
30 days past due are classified as overdue receivables and the Company recognize an impairment loss for them based on aging of receivables and
historical loss experience.
Allowance for impaired receivables is included in administrative expenses or other non-operating expenses in the statement of income and
reversal of allowance is deducted from the provision for doubtful accounts. When a trade receivable is considered uncollectible, it is written off
against the allowance account.
(5) The Companys maximum exposure to credit risk for receivables is represented by the aforementioned carrying amount. Meanwhile, the
Company holds collaterals or other credit enhancements to cover its credit risk associated with some of receivables.
Current
Current
705
Non-current
5,346
Non-current
765
6,592
10. INVENTORIES:
(1) Details of inventories as of December 31, 2013 and 2012, are as follows (Korean won in millions):
December 31, 2013
Acquisition
cost
Merchandise
97,988
Valuation
allowance
Carrying
amount.
97,988
Acquisition
cost
185,320
Valuation
allowance
Carrying
amount.
185,320
Products
42,919
42,919
58,474
58,474
Work in process
24,359
(747)
23,612
41,616
(391)
41,225
585,117
(2,179)
582,938
527,029
(1,490)
525,539
25,194
25,194
24,713
24,713
326,473
326,473
248,867
248,867
467
(1)
466
634
(1)
633
82,223
82,223
113,428
113,428
Raw materials
Supplies
Goods in transit
Temporary resources
Others
1,184,740
(2,927)
1,181,813
1,200,081
(1,882)
1,198,199
Inventories are stated at the lower of cost or net realizable value in case the market value is lower than the acquisition cost. In subsequent
periods, if the market value of impaired inventory recovers, the Company reverses the valuation loss up to the previously written-down amount.
090
091
(2) Changes in allowance for loss on valuation of inventories during the years ended December 31, 2013 and 2012, are as follows (Korean won in
millions):
12. SUBSIDIARIES:
(1) Details of the consolidated subsidiaries of the Company as of December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Beginning balance
1,882
2012
283
579
Others (*)
762
(89)
Ending balance
2,927
1,882
(*) Others consist of increase or decrease resulting from foreign exchange fluctuation.
Advance payments
Current
Current
1,574,615
Non-current
-
Non-current
1,178,429
(1,063)
(1,673)
1,573,552
1,176,756
50,952
13,827
Prepaid expenses
99,053
150,418
158,127
164,131
VAT receivables
14,895
10,304
Others
14,109
1,752,561
27,336
177,754
183
26,699
1,359,197
190,830
(2) Changes in allowance for doubtful accounts of other current assets for the years ended December 31, 2013 and 2012, are as follows (Korean
won in millions):
2013
2012
Advance payments
Beginning balance
(*) Others consist of increase or decrease resulting from the recovery, write-offs, changes in consolidation scope
Ownership of
the Company (%)
1,392
Advance payments
1,673
928
812
637
(1,281)
34
(67)
1,063
1,673
Subsidiaries
Location
Financial
year-end
Primary business
Romania
Dec. 31
Busan
Dec. 31
Welliv Corp.
Geoje
Dec. 31
FLC Corp.
Yongin
Incheon
December
31, 2013
December
31, 2012
December
31, 2013
December
31, 2012
Shipbuilding
51.00
51.00
49.00
49.00
70.07
70.07
29.93
29.93
Service
100.00
100.00
Dec. 31
Service
100.00
100.00
Dec. 31
Construction
95.06
95.06
4.94
4.94
China
Dec. 31
100.00
100.00
Ulsan
Dec. 31
83.39
83.39
16.61
16.61
Seoul
Dec. 31
100.00
DeWind Co.
USA
Dec. 31
100.00
100.00
Gwangyang
Dec. 31
100.00
100.00
Canada
Dec. 31
Holding company
100.00
100.00
Panama
Dec. 31
Shipping
100.00
DK Maritime S.A.
Panama
Dec. 31
Shipping
100.00
100.00
DE Maritime Inc.
Marshall
Dec. 31
Shipping
100.00
100.00
70.00
70.00
30.00
30.00
100.00
Oman
Dec. 31
Russia
Dec. 31
Shipbuilding
Busan
Dec. 31
Warehousing, packager,
shipping
51.04
51.04
64.24
64.24
USA
Dec. 31
100.00
100.00
USA
Dec. 31
100.00
100.00
Germany
Dec. 31
100.00
100.00
Canada
Dec. 31
51.00
51.00
49.00
49.00
(*) Ownership of the non-controlling interests, directly or indirectly not attributable to owners of the Parent, and ownership calculated by subtracting subsidiary (or
subsidiaries) within the Company that holds the simple sum of the direct shares from 100% of the shares in each subsidiary may differ.
(2) Companies included in consolidated subsidiaries for the year ended December 31, 2013, are as follows :
Subsidiaries
Reason
Launched
(*) DSME Far East LLC was established before prior period and classified as a consolidated subsidiary because financial status of the company has been considered
important.
(3) Companies excluded from consolidated subsidiaries for the year ended December 31, 2013, are as follows :
Subsidiaries
Reason
092
093
(4) The summarized financial information of the consolidated subsidiaries of the Company as of December 31, 2013, is as follows (Korean won in
millions):
Subsidiaries
DW Mangalia Heavy Industries S.A.
Assets
672,823
Liabilities
Net assets
Net income
(loss)
Sales
1,073,023
(400,200)
231,473
90,163
141,310
236,065
11,746
10,467
68,923
19,316
49,607
185,658
10,220
10,365
FLC Corp.
187,559
101,291
86,268
15,779
(1,032)
(1,058)
410,513
348,855
61,658
524,049
4,100
3,199
493,565
286,606
206,959
170,694
1,691
4,260
293,035
207,040
85,995
267,294
3,045
1,499
157,087
127,175
29,912
36,750
(9,904)
(10,135)
355,999
298,166
57,833
191,641
(18,502)
(18,381)
20,214
20,214
(1,738)
DK Maritime S.A.
489,792
509,019
(19,227)
69,267
(12,650)
(12,085)
DE Maritime Inc.
181,885
187,085
(5,200)
8,826
(7,728)
(7,568)
39,438
63,088
(23,650)
4,485
(16,616)
(15,883)
44,131
44,828
(697)
66,430
30,446
35,984
61,555
6,197
6,121
29,368
26,607
2,761
19,010
278
347
35,796
35,144
652
7,793
(8,595)
(8,753)
358,049
(53,124)
Comprehensive
income (loss)
(5) Significant financial information attributable to non-controlling interests as of December 31, 2013, is as follows (Korean won in millions):
Non-controlling interests
DW Mangalia Heavy Industries S.A.
(196,098)
(26,031)
Comprehensive income
(loss) attributable to noncontrolling interests
(28,402)
Dividends
attributable to noncontrolling interests
-
42,531
3,565
3,182
159
(26,597)
(39)
(84)
(6) Significant summarized information of cash flows to non-controlling interests as of December 31, 2013, is as follows (Korean won in millions):
Beginning of
the year
DW Mangalia Heavy Industries S.A.
17,772
Net cash
from operating
activities
(55,615)
(3,861)
81,968
Effects of
the foreign
currency
exchange rate
changes
(36)
(8) The Parent or subsidiaries of the Company in connection with financial support of consolidated structured entities as of December 31, 2013, are
as follows (Korean won in millions and foreign currency in thousands):
(57,964)
(*) This financial information is based on the consolidated financial statements incorporating the financial statements of DWS Frisco LLC and DeWind Novus III LLC.
Income (loss)
attributable to noncontrolling interests
(7) There is no variation of the Companys ownership of the subsidiary without a loss of control of the subsidiary for the year ended December 31,
2013.
Company providing
Company provided
Purpose
Guarantee amount
Borrowing amount
Parent
USD
72,855
72,799
USD
72,855
72,799
Daewoo-Mangalia Ltd.
41,600
32,000
There is no additional payment except the above borrowing amount at the debtors request because the Company recognized the above borrowings
in the consolidated statement of financial position as of December 31, 2013.
(9) The Company consolidates entities whichsharesare owned by the Company more than 50%. Subsidiaries which areownedby the Company
more than 50% but not consolidated are as follows (Korean won in millions):
Ownership
ratio (%)
Subsidiaries
Location
Primary business
Parent company
Brazil
Parent
99.00
Book value
Indonesia
Integrated engineering
Parent
95.00
5,814
Ecuador
Parent
100.00
18
Singapore
Development of natural
resources and others
Parent
100.00
Singapore
Trades
Parent
51.00
Singapore
Parent
100.00
114
USA
Integrated engineering
Parent
100.00
2,344
Geoje
Ship design
100.00
Geoje
Ship design
100.00
100
40,228
5,616
54,602
(1,232)
(16,632)
(323)
42,031
3,482
2,768
(2,222)
(3,063)
965
100
Romania
Constructions
100.00
78
Oman
Constructions
70.00
Romania
DW Mangalia Heavy
Industries S.A.
95.00
Romania
DW Mangalia Heavy
Industries S.A.
95.00
End of
the year
904
9,474
The Company could not obtain reliable financial statements of the above subsidiaries and change in the Companys share of equity interest in
them is immaterial. So, they are not classified as consolidated subsidiaries. However, management of the Company expects that there will not be
significant differences in the consolidated financial statements.
094
095
(2) Changes in the investments in the securities of affiliates and joint ventures for the years ended December 31, 2013 and 2012, are as follows
(Korean won in millions):
(1) The Companys affiliates and jointly controlled entities as of December 31, 2013, are as follows:
2013
2013
Location
Financial
year-end
Primary business
Nigeria
Dec. 31
Holding company
49.00
Cyprus
Dec. 31
Shipping
Seoul
Dec. 31
Daejeon
Seoul
Entities
Ownership
ratio (%)
2012
Book
value
Ownership
ratio (%)
Book
value
46.00
13.00
Service
35.29
3,666
23.53
2,637
Dec. 31
23.20
4,325
Dec. 31
Technology fund
(Associates)
26.61
23,975
Seoul
Dec. 31
Service
32.45
3,437
32.45
3,622
USA
Dec. 31
48.00
10,115
48.00
11,998
(Joint ventures)
D&H Solutions AS
Norway
Dec. 31
Development of natural
resources
Indonesia
Dec. 31
50.00
50.00
85.00
13,225
85.00
12,260
Angola
Dec. 31
Holding company
33.33
2,162
33.33
Netherland
Dec. 31
Development of natural
resources
70.00
19,690
70.00
15,075
USA
Dec. 31
50.00
10,979
50.00
91,574
15,045
Beginning
balance
NIDAS Marine Ltd. (*)
Acquisition
(disposal)
97
(70)
Net change in
interests of
equity method
securities
(542)
Other
changes (*)
515
Ending
balance
-
90
(686)
70
526
2,637
900
241
(12)
(100)
3,666
1,000
(657)
3,982
4,325
23,975
Dominus
(1,172)
25,147
3,622
(160)
(25)
3,437
11,998
(1,770)
(113)
10,115
(15)
104
(89)
12,260
957
13,225
3,178
491
(1,507)
2,162
15,075
6,280
(1,258)
(407)
19,690
15,045
(3,988)
(78)
60,637
8,367
(5,400)
(313)
28,383
10,979
91,574
(*) Other
changes consist of an allowance for loans of 515 million and 526 million to NIDAS Marine Ltd. and NIDAS Shipping Services Ltd., respectively, and a reversal
of an allowance for loans of 89 million and 1,507 million to D&H Solutions AS and SBM Shipyard Ltd., respectively, and the reclassification of Wing Ship Technology
Corp. and Dominus from AFS financial assets to investments in the securities of affiliates and joint ventures.
2012
60,637
(*1) The Parents new investment in the subsidiary of NIDAS Marine Ltd. for the year ended December 31, 2013, and effective ownership of the Company is 55.6%.
Beginning
balance
(*2) SBM Shipyard Ltd., previously considered as AFS financial asset, was converted into a joint venture.
(*3) Due to the accumulated losses of NIDAS Marine Ltd., NIDAS Shipping Services Ltd. and D&H Solutions AS., unrecognized losses of 1,106 million, 526 million and
1,042 million, respectively, are recognized as an allowance for doubtful accounts with respect to a loan provided to the respective equity method investee.
Gain (loss) on
valuation of
equity method
securities
Acquisition
(disposal)
Gain (loss) on
valuation of
equity method
securities
(596)
Net change in
interests of
equity method
securities
348
Other
changes (*)
248
Ending
balance
-
2,521
114
3,681
(69)
10
3,622
534
11,464
11,998
2,637
1,702
(10)
(1,692)
12,835
636
(1,188)
(23)
12,260
(3,247)
1,733
1,514
15,075
15,075
19,037
1,352
426
895
13,693
40,279
15,045
60,637
(*) Other
changes consist of an allowance for loans of 248 million and 1,507 million to NIDAS Marine Ltd. and SBM Shipyard Ltd., respectively, and a reversal of an
allowance for loan of 1,692 million to D&H Solutions AS and of the establishment of KODE NOVUS II LLC by investment in kind.
096
097
(3) The summarized financial information of the significant affiliates and joint ventures of the Company as of December 31, 2013, is as follows
(Korean won in millions):
(5) Details of investments in joint ventures as of December 31, 2013, are as follows (Korean won in millions and foreign currency in thousands):
Company
Associates
KODE
NOVUS II LLC
Dominus
Current assets
Non-current assets
67
1,243
91,145
Non-current liabilities
1,116
PT. DSME
ENR CEPU
56,688
91,212
Current liabilities
Joint ventures
4,106
31,595
57,931
47,576
Pangea
LNG B.V.
8,592
30,649
79,171
2,479
KODE NOVUS I
LLC
33,128
4,999
1,497
113,953
115,450
7,749
% of ownership
50.00
85.00
Cost
NOK
54
USD
5,000
2,400
Other owners
Hemla II AS: 50%
GNG Holdings Inc.: 15%
33.33
USD
70.00
USD
19,150
50.00
USD
13,341
(*1) The Company acquired shares from Hemla II AS for the purpose of utilization of its capabilities of manufacturing of marine products and operation of mining areas.
34,416
64,173
88,693
1,116
38,522
72,765
4,999
96,442
23,975
9,316
5,445
19,690
9,504
(*3) The Company participated in SBM Shipyard Ltd. investment with SBM and SONANGOL, using the Angolan governments energy industry policy and the Companys
ability to produce offshore structures.
Non-controlling interests
66,121
10,093
961
8,439
9,504
(*4) The Company participated in Pangea LNG B.V. investment to develop LNG resources.
90,096
19,409
6,406
28,129
19,008
Sales
727
1,530
159
1,205
2,819
(1,828)
(2,717)
(20)
(58)
(5,462)
(1,828)
(3,959)
1,125
(399)
(7,416)
(1,828)
(3,959)
1,125
(399)
(7,416)
(4) The net assets of the above significant affiliates and joint ventures of the Company reconciled with the carrying amount of the investments in
the securities of affiliates and joint ventures as of December 31, 2013, are as follows (Korean won in millions):
Associates
90,096
19,409
PT. DSME
ENR CEPU
6,406
Pangea
LNG B.V.
28,129
KODE NOVUS I
LLC
19,008
26.61%
48.00%
85.00%
70.00%
50.00%
9,504
23,975
9,316
5,445
19,690
Investment difference
7,780
799
1,475
23,975
10,115
13,225
19,690
(*5) About
50% of Novus Wind I LLCs shares were disposed to Korea South-East Power Co., Ltd., which is constructing wind farm, and this entity has been reclassified as
a joint venture during the prior period.
(6) Investments in associates for which the equity method has not been applied even though the Company holds 20% or more of the voting power
of them are as follows (Korean won in millions):
Investments in associates
Location
Primary business
Parent company
Seoul
44.60
Seoul
Constructions
25.00
Oman
Book value
10,979
695
1,013
50.00
13,710
Joint ventures
KODE
NOVUS II LLC
Dominus
(*2) The Company has invested in overseas oil fields in CEPU, Indonesia, in the form of a consortium consisting of the Company and GNG Holdings Inc.
15,418
(*) The Companys investment in Duqum Development Co. is not accounted for under the equity method since the Company does not have significant influence over
Duqum Development Co., although the Company holds more than 50% of the voting power.
The Companys investment in the above associates is not accounted for under the equity method given that the Company could not obtain reliable
financial statements and change in the Companys share of equity interest in associates is immaterial. Also, management of the Company expects
that there will not be significant differences in the consolidated financial statements.
098
099
2012
Beginning
balance
(1) Carrying values of property, plant and equipment as of December 31, 2013 and 2012, are as follows (Korean won in millions):
Land
Buildings
1,889,586
Buildings and
structures
2,959,650
Machinery and
equipment
1,287,384
Others
2,229,817
Total
8,366,437
Government grants
(5,387)
(302)
(86)
(5,775)
Accumulated depreciation
(767,576)
(607,529)
(640,918)
(2,016,023)
(6,173)
(1,200)
(126,210)
1,889,586
2,180,514
678,353
1,462,603
Acquisition costs
1,845,811
2,761,334
1,254,630
Others
2,429,708
43,931
1,182,617
Structures
882,381
715
(211)
(41,144)
60,176
901,917
692,674
27,341
(2,335)
(59,772)
44,471
702,379
Vehicles
128,472
10,866
(400)
(13,952)
(2,035)
122,951
735,139
(37,625)
(120,348)
(23,808)
5,061
87,419
(133,583)
46,680
29,440
(418)
(18,937)
45,977
102,742
6,211,056
8,291,483
(5,110)
(673,493)
(551,916)
(595,324)
(1,820,733)
(247,023)
(247,023)
1,585,893
6,218,617
(2) Changes in property, plant and equipment for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
23,052
1,223
(3,019)
(7,815)
13,441
721,963
223,019
(14,637)
(406,144)
524,201
6,503,690
336,715
(23,114)
(252,638)
Land
1,845,811
2013
Acquisition
1,549
Disposal
(5,606)
Depreciation
Others (*)
47,832
Ending balance
Beginning balance
1,889,586
Receipt
11,550
(734)
(51,164)
9,447
1,151,716
Return
901,917
1,391
(102)
(40,349)
165,941
1,028,798
Acquisition
702,379
26,385
(670)
(61,409)
11,668
678,353
120,798
Others
122,951
12,697
735,139
87,419
23,756
(14,416)
(79,897)
(605)
582
(34,176)
(24,105)
73,224
8,994
694,290
95,459
102,742
24,106
(191)
(24,312)
626
102,971
13,441
(1,398)
708
12,751
524,201
(1,016)
6,218,617
167,592
269,026
(88,821)
(251,329)
(255,459)
63,563
436,334
6,211,056
6,218,617
The Company received government grants from the Ministry of Labors Tongyeong Office and Human Resources Development Service of the
Republic of Korea for operating a job training consortium facility for small- and medium-sized enterprises and acquisition of equipment. In
addition, DeWind Co., the Companys subsidiary, receives government grants from the U.S. Ministry of Finance for wind farm development.
Accordingly, changes in the Companys government grants for the years ended December 31, 2013 and 2012, are as follows (Korean won in
millions):
1,182,617
Vehicles
(346,036)
Structures
Buildings
(*) Others consist of transfer of construction in progress to accounts; impairments of property, plant and equipment; change in scope of consolidation and increase
(decrease) resulting from changes in exchange rates and others.
2013
Beginning
balance
1,845,811
(54,381)
(2,030)
Accumulated depreciation
702,379
Ending balance
(2,380)
(1,468)
(9,310)
13
(335)
2,084,534
Others (*)
30,528
(3,307)
77,668
1,845,811
Depreciation
895,479
Government grants
(697)
Tools
Total
Disposal
(6)
Machinery and
equipment
11,726
1,844
Acquisition
1,191,229
Construction in progress
Land
1,844,092
(*) Unused balance as of December 31, 2013, consists of unearned income of 352 million and withholdings of 1,629 million.
2012
18,391
2,703
3,800
19,865
(3,068)
(671)
(16,180)
(1,497)
(956)
(1,346)
(6)
(663)
1,981
18,391
100
101
(1) As of December 31, 2013, the Companys material assets, except deposits (see Note 7), that are pledged as collaterals for borrowings and
others are summarized as follows (Korean won in millions and foreign currency in thousands):
(1) Carrying amounts of investment properties as of December 31, 2013 and 2012, are as follows (Korean won in millions):
December 31, 2013
Assets
Treasury stock
Book value
11,007
Pledged amount
(*1)
Guarantee for
Borrowings amount
Performance of
contracts
41,852
41,852
3,362
3,362
Performance of
contract and other
Investments in joint
ventures
9,383
9,383
Borrowings in
foreign currencies
(*2)
Borrowings in local
currencies
689,189
Intangible assets
2,376,917
977,278
Borrowings in local
currencies and other
12,080
318,466
CNY
178,104
Inventories
84,972
USD
2,527,493
-
2,000
USD
880,000
Borrowings in
foreign currencies
USD
335,607
RON
261,053
Borrowings in
foreign currencies
RON
96,850
CNY
223,000
113,500
29,600
Borrowings in
foreign currencies
CNY
USD
USD
16,425
(*3)
USD
116,560
Borrowings in local
currencies
1,148,435
Construction Guarantee
and others
60,200
763,469
909,600
USD
352,032
RON
318,466
RON
261,053
RON
96,850
CNY
178,104
CNY
223,000
CNY
113,500
5,471
8,473
Total
13,944
(3,325)
5,148
Land
Accumulated depreciation
(3,325)
10,619
13,944
5,471
4,456
228,528
KC Caspian Explorer
USD
132,000
5,190
12,969
4,591
27,360
8,473
Beginning balance
(3,038)
5,435
Land
5,471
5,435
Ending balance
5,471
Total
10,906
(287)
5,148
Land
Beginning balance
19,424
Depreciation
Ending balance
(287)
10,619
26,832
Building
7,408
Total
(337)
(337)
(13,953)
(1,636)
(15,589)
5,471
5,435
10,906
(3) Income generated from the investment properties for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Rental income
179
2012
243
(4) Fair values of the investment properties as of December 31, 2013 and 2012, are as follows (Korean won in millions):
(3) As of December 31, 2013, the Export-Import Bank of Korea and others provide performance guarantees amounting to 1,545,806 million,
USD 9,202 million, EUR 112 million, GBP 91 million, JPY 40 million, NOK 7 million, RON 1 million to the Company in relation to export of ships and
others. In return, the Company provides shipbuilding materials, ships under construction and certain receivables as collaterals.
10,906
2012
(3,038)
Building
Lender
AKA
Total
(2) Changes in carrying amounts of investment properties for the years ended December 31, 2013 and 2012, are as follows (Korean won in
millions):
Disposal
Guarantee amount
Building
Carrying amount
(2) Significant guarantees provided to those entities which are not part of the Companys related parties as of December 31, 2013, are as follows
(Korean won in millions and foreign currency in thousands):
USD
5,471
Building
Acquisition cost
2013
(*3) Pledged amounts include 40,600 million that will be received from the sale of construction in house.
Accumulated depreciation
Carrying amount
(*2) The Company is guarantor to borrowing of PT.DSME ENR CEPU, joint ventures; book value of pledged asset is recognized in separate financial statements (before
valuation equity method).
EUR
5,471
(*1) 860,000 shares of the Parents treasury stock are pledged to guarantee performance of the contract executed with the provincial government of Gyeongsangnam-do.
Depreciation
Provided for
Land
Acquisition cost
Performance of
contract
RON
Lender
Gyeongsangnam-do
(Provincial government)
Book value
Land
Buildings
5,471
5,148
10,619
Book value
5,148
10,619
5,471
Fair value
5,471
10,906
5,435
10,906
5,435
102
103
The Company assessed the fair value of land through an independent appraiser on November 30, 2009, and the Company has not reassessed
the fair value of land since such date as it believes that the change in fair value between the revaluation date and December 31, 2013, will not be
significant. As the difference between buildings carrying amount and fair value is not expected to be significant, the book value is considered to be
the same as fair value and buildings are recognized at book value.
Current
Trade payables
(1) Details of the carrying amounts as of December 31, 2013 and 2012, are as follows (Korean won in millions):
December 31, 2013
Acquisition cost
Current
749,731
Non-current
-
Other payables
851,740
134,552
559,576
156,638
176
Accrued expenses
191,267
4,697
290,745
Dividends payable
192
129
Deposits received
3,658
35,283
6,300
25,105
193,809
182,196
(55,129)
(48,867)
138,680
133,329
1,976,516
174,532
1,606,481
181,919
20. DEBENTURES:
Details of debentures as of December 31, 2013 and 2012, are as follows (Korean won in millions and foreign currency in thousands):
2013
Beginning
balance
47,598
Acquisition and
disposal
(4,375)
Other
changes (*)
Depreciation
Ending balance
43,223
4,170
2,494
(755)
5,909
Development costs
40,733
8,531
(5,135)
5,026
Computer software
4,645
930
(1,675)
28,443
7,740
1,185
133,329
8,765
Beginning
balance
47,598
Acquisition and
disposal
2013.04.29
388
4,288
Unsecured debenture
2014.11.03
4.41
300,000
300,000
(756)
390
28,077
Unsecured debenture
2015.07.23
3.52
200,000
200,000
(369)
(528)
8,028
Unsecured debenture
2017.07.23
3.73
300,000
300,000
138,680
Unsecured debenture
2015.11.30
3.34
300,000
300,000
Unsecured debenture
2017.11.29
3.50
200,000
200,000
2015.06.22
7.30
15,000
15,000
2016.04.01
2.81
300,000
Ending balance
2018.04.02
2.86
200,000
47,598
2016.09.09
3.05
400,000
(8,690)
(541)
Development costs
29,526
13,309
Computer software
5,196
1,224
32,003
6,358
123,383
Korean won
equivalent
Unsecured debenture
2,009
Foreign
currency
49,155
2,702
Foreign currency
Korean won
equivalent
Maturity date
5,276
Other
changes (*)
Depreciation
Annual
interest
rate (%)
Type
2012
Goodwill
Non-current
Changes in intangible assets for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
Goodwill
929,659
USD
150,000
160,665
4,170
Convertible debenture
2016.12.19
1.50
36,000
36,000
(2,301)
199
40,733
Convertible debenture
2017.02.20
1.50
14,000
14,000
(1,660)
(115)
4,645
(1,049)
(766)
(1,745)
28,443
132
(348)
1,598
7,740
15,625
(5,616)
(*) Other changes include impairment losses on intangible assets, increase and decrease resulting from changes in exchange rates and others.
(63)
133,329
Subtotal
2,265,000
150,000
1,525,665
(88,065)
(14,958)
10,966
10,966
(300,000)
(150,000)
(160,665)
Debentures, net
(*) Commercial papers issued by the Parent are recognized by debentures.
1,887,901
USD
USD
1,361,008
104
105
21. BORROWINGS:
Borrowings as of December 31, 2013 and 2012, are as follows (Korean won in millions and foreign currency in thousands):
Local
borrowings
Lender
Annual
interest rate (%)
KDB
4.79, other
Kwangju Bank
4,000
Kookmin Bank
6.78, other
18,370
65,000
791
27,830
9.00
63
63
Busan Bank
3.99
1,000
5,900
Shinhan Bank
6M Financial debenture+0.96
4,653
100,000
Woori Bank
3.89, other
17,397
31,532
Hana Bank
Foreign
currency
6.57, other
3.83, other
EXIM
Korean won
equivalent
Foreign
currency
69,092
10,200
Korean won
equivalent
303,958
116,880
10,600
70,000
2.752.78
128,378
144,834
NH Bank
5.97
4,868
Hyosung Capital
6.00
48,559
313,971
Foreign
borrowings
Local
borrowings
6ML+0.59, other
869,997
USD
1,303,656
1,375,748
USD
882,556
945,306
EUR
185
269
EUR
2,463
3,488
50,000
53,555
Shinhan Bank
3ML+1.60
USD
50,000
53,131
Hana Bank
3ML+1.50
USD
90,000
94,977
PBOC
CNY
8,000
1,393
CNY
50,000
8,594
EXIM
3ML+1.99, other
USD
409,063
431,684
USD
153,249
164,145
USD
Banca Transilvania
8.25
RON
63,850
20,811
RON
100,000
32,487
Woori Bank
3ML+1.30
USD
15,000
15,830
USD
56,669
61,012
SC Bank
CNY
29,400
5,053
CNY
105,400
23,022
Sovereign Bank
KDB
Annual
interest rate (%)
Foreign
currency
Korean won
equivalent
Foreign
currency
1.00
100
499,563
Korean won
equivalent
4.325.44
99,010
23,200
EXIM
188,921
KOFC
Debentures (1 year)+1.90
50,000
40,000
49,000
50,000
70,000
28,000
1.00
520
520
Woori Bank
2.00, other
4,849
2,978
20,000
5.71
33,250
Shinhan Bank
6M Financial debenture+0.96
6,000
6,000
Hana Bank
15,000
Construction Guarantee
11,560
Kookmin Bank
5.71
15,250
20,000
Busan Bank
5.50, other
20,300
12,800
KEB
5.95
13,000
15,000
4.508.50
16,050
37,541
876,892
Foreign
borrowings
900
424,136
KDB
896,556
3ML+2.123.60
USD
216,653
230,295
USD
104,259
112,055
3ML+3.50, other
USD
30,367
32,232
USD
27,600
29,818
PBOC*90PBOC*110
CNY
433,628
75,490
CNY
350,000
60,158
Hana Bank
PBOC*105
CNY
84,000
14,624
CNY
115,000
19,766
2.50
USD
10,801
11,957
USD
10,011
EXIM
6ML+2.734.50
USD
103,000
108,696
USD
128,000
3ML+2.602.81
USD
497,194
524,689
USD
91,774
98,299
3ML+3.3
USD
12,405
13,090
PBOC*90
CNY
67,772
11,798
CNY
239,000
41,079
3ML+1.30
USD
10,133
10,755
USD
19,800
21,700
6ML+1.02, other
USD
1,397
1,474
USD
2,162
2,316
3ML+3.30
USD
5,316
5,610
USD
17,721
18,981
CAD
27,905
27,469
CAD
27,102
29,163
4.50
-
11,104
137,101
-
USD
35,923
37,709
Atlantic Canada
Opportunity Agency
CAD
5,420
5,371
CAD
5,422
5,835
USD
15,000
16,067
KOFC
3ML+2.60
USD
112,946
119,129
USD
122,452
131,158
1,350,438
SC Bank
3ML+2.40
USD
49,000
52,009
USD
49,000
52,937
2,220,435
4.955.00
USD
28,536
30,275
USD
29,428
31,683
2.49
USD
200,000
211,060
CEC Bank
3ML+2.00
RON
33,000
10,756
1,993,843
2,307,814
1,496,779
803,153
(759,175)
(587,885)
(4,564)
(6,977)
1,609,932
1,104,847
The above long-term borrowings in local currency and foreign currencies are repaid in installments, and the Companys property, plant and
equipment are pledged as collaterals for those borrowings (see Note 16).
106
107
2012
Present value of
defined benefit
obligation
Other liabilities as of December 31, 2013 and 2012, are as follows (Korean won in millions):
Advance received
Current
Current
68,055
Income in advance
Withholdings
Others
Non-current
-
28,506
Beginning balance
Non-current
7,447
9,753
180,901
91,475
825
840
151
1,140
387,514
Other long-term
employee benefit
obligation
Plan assets
(283,922)
26,627
Total
130,219
75,908
2,422
(970)
78,330
(970)
16,444
(12,006)
970
5,408
479,866
(295,928)
29,049
212,987
Remeasurements:
-
991
991
(1,221)
(59)
(1,280)
27,644
933
28,577
(1) As of December 31, 2013 and 2012, amounts recognized in the consolidated statements of financial position in relation to retirement benefit
obligation are as follows (Korean won in millions):
257,228
840
129,885
462,244
409,778
(350,010)
(334,468)
35,881
148,115
1,140
2,503
3,312
5,815
28,926
991
4,186
34,103
Contributions
(61,725)
(61,725)
Benefits paid
(98,802)
22,194
(1,539)
(78,147)
Other
31,466
106,776
(212)
409,778
(334,468)
Present value of
defined benefit
obligation
Beginning balance
409,778
Other long-term
employee benefit
obligation
Plan assets
(334,468)
31,466
Total
(442)
106,776
3.84.2
3.43.8
2.57.0
3.06.0
(4) Details of fair value of plan assets as of December 31, 2013 and 2012, are as follows:
106,776
1,735
89,384
(136)
3,860
3,724
14,404
(11,657)
944
3,691
Others(*)
511,695
(346,125)
38,005
203,575
676
676
770
3,965
4,735
(15,899)
(4,053)
(19,952)
(2,164)
(596)
(2,760)
(17,293)
676
(684)
(17,301)
Contributions
(29,043)
(29,043)
Benefits paid
(30,812)
23,884
(1,491)
(8,419)
(1,346)
598
51
(697)
31,466
87,649
(3) The main actuarial assumptions used as of December 31, 2013 and 2012, are as follows:
(2) Changes in the defined benefit obligation for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
(230)
Remeasurements:
275,227
275,016
334,468
74,783
350,010
59,452
Other
462,244
(350,010)
35,881
148,115
(5) The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring as of
December 31, 2013, while holding all other assumptions constant.
December 31, 2013
Change of 100 bp discount rate (%)
Change of 1% expected rate of wage increase
(39,969)
47,445
46,998
(40,601)
Since there is correlation among actuarial assumptions, changes of assumptions will not occur in isolation and above sensitivity analyses will
not show the actual change of defined benefit obligations. Also, in the above sensitivity analyses, present value of defined benefit obligations
is measured by using the Projected Unit Credit Method which is applied to measure the amount of defined benefit obligations in the separate
statements of financial position.
108
109
24. PROVISIONS:
Changes in provisions for construction warranties and other provisions for the years ended December 31, 2013 and 2012 are as follows (Korean
won in millions):
(1) Income tax expenses for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
Description
2013
Beginning balance
Transfer in
98,022
12,281
172
Other provisions
34,874
138
Total
6,441
133,068
18,860
Reversal
(12,296)
(172)
(4,762)
(17,230)
Used
(18,012)
(4,802)
(22,814)
Others (*)
(929)
Ending balance
Less: current portion of accounts
Provisions, net
(17,625)
79,066
138
14,126
93,330
(945)
(138)
(563)
(1,646)
78,121
13,563
(18,554)
91,684
Transfer in
32,603
Reversal
Used
Others (*)
Ending balance
Less: current portion of accounts
Provisions, net
87,463
Provision for
contingencies
30,364
3,793
7,219
Total
166,063
43,615
(6,195)
(2)
(7,601)
(13,798)
(14,903)
(48,233)
(17)
(63,153)
(946)
(3,622)
4,909
341
98,022
172
34,874
133,068
(975)
48,236
Other provisions
97,047
172
(225)
(*) Others include increases or decreases resulting from changes in the scope of consolidation and foreign exchange fluctuations.
34,649
(1200)
131,868
130,726
(53,882)
92,845
76,844
(7,791)
12,399
85,054
89,243
Deferred income tax assets (liabilities) from temporary differences, net at end of the year
(251,061)
(290,806)
Deferred income tax assets (liabilities) from temporary differences, net at beginning of the year
Changes in deferred income tax from temporary differences
(290,806)
(39,745)
(344,688)
(53,882)
(2) Reconciliation between income before income tax and income tax expense for the years ended December 31, 2013 and 2012, is as follows (Korean
won in millions):
Provision for
construction
warranties
132,590
2012
(39,745)
Description
2012
Beginning balance
Provision for
contingencies
2013
2013
Income tax expense by applying income tax rate (Current year: 24.2%, prior year: 24.2%)
326,947
2012
265,096
78,659
64,131
Adjustments:
Tax effect of permanent differences
Tax credits
Others
Income tax expense
Effective tax rate
8,098
10,563
(6,290)
(4,024)
18,573
4,587
85,054
26.0%
89,243
33.7%
The tax rate applied to the taxable income for the years ended December 31, 2013 and 2012, is 24.2% (including residence tax), which is the
statutory income tax rate of the republic of Korea.
110
111
(3) Changes in temporary differences and deferred income tax assets (liabilities) for the years ended December31, 2013 and 2012, are as follows
(Korean won in millions):
Description
2013
Beginning
balance (*)
Description
Loss on revaluation of land
(4) Deductible temporary differences, not recognized due to uncertainty of its realization, as of December 31, 2013 and 2012, are as follows (Korean
won in millions):
897
Increase
(decrease) (*)
(271,667)
Ending
balance
897
(5,000)
(276,667)
87,245
(7,326)
79,919
51,113
(33,750)
17,363
94,273
(26,217)
68,056
(186,328)
65,508
(120,820)
372,435
(198,712)
173,723
Net change in fair value of AFS financial assets (accumulated other comprehensive
income)
(48,314)
(9,840)
(58,154)
1,138
(5,270)
(4,132)
(1,084,943)
2,183
(1,082,760)
2,390
(221,452)
409,563
390,843
800,406
(798,430)
345,635
(223,842)
(290,806)
(1,072,255)
39,745
(623,621)
448,634
(1,144,065)
174,809
(251,061)
2012
Beginning
balance (*)
Description
Loss on revaluation of land
937
Increase
(decrease) (*)
(40)
Ending
balance
897
(220,000)
(51,667)
(271,667)
79,760
7,485
87,245
49,171
1,942
51,113
101,266
(6,993)
94,273
(115,159)
(71,169)
(186,328)
193,366
179,069
372,435
Net change in fair value of AFS financial assets (accumulated other comprehensive
income)
(70,936)
22,622
(48,314)
2,578
(1,440)
1,138
(1,121,488)
36,545
(1,084,943)
(234,769)
10,927
(223,842)
273,845
135,718
(1,061,429)
262,999
409,563
(798,430)
311,346
345,635
(1,372,775)
(1,144,065)
(344,688)
53,882
(290,806)
(*) Beginning temporary differences include temporary differences recognized as deferred income tax assets (liabilities) as of December 31, 2012 and 2011, and have been
partially adjusted during actual tax adjustments for the years ended December 31, 2013 and 2012. Therefore, the Company reflected the aforementioned adjustment in
the change in temporary differences for the years ended December 31, 2013 and 2012.
448,634
2012
345,635
(5) Deferred income tax expenses directly adjusted to shareholders equity as of December 31, 2013 and 2012, are summarized as follows (Korean
won in millions):
2013
58,154
Tax effect
(14,001)
44,153
48,314
Tax effect
(11,622)
36,692
4,132
(1,000)
3,132
(1,138)
275
(863)
1,929
(15)
1,914
2,244
(22)
2,222
(39,547)
9,353
(30,194)
(56,165)
13,497
(42,668)
427
25,095
(94)
(5,757)
333
19,338
427
(6,318)
(94)
2,034
333
(4,284)
Deferred income tax assets (liabilities) directly charged or credited to shareholders equity as of December 31, 2013 and 2012, are recognized in
other comprehensive income (loss) and retained earnings. There are no gains or losses previously recognized in other comprehensive income (loss)
and retained earnings reclassified to profit or loss for the years ended December 31, 2013 and 2012.
112
113
Details of the Companys derivative instruments held for hedging or trading purposes as of December 31, 2013 and 2012, are as follows (Korean
won in millions):
(1) Details of retained earnings as of December 31, 2013 and 2012, are as follows (Korean won in millions):
December 31, 2013
Cost of
sales
Sales
For fair value
hedging (*1)
264,735
264,735
Other nonoperating
income
(expense)
(821)
(2,174)
Components
of other
capital
(8,792)
Firm commitment
liabilities
(*1)
31,384
322,140
4,132
(5,797)
Firm
commitment
assets
(*1)
4,132
31,384
322,140
Amounts due
to customers
under
construction
contracts
Currency
forward
assets
Currency
forward
liabilities
Cost of
sales
Sales
For fair value
hedging (*1)
(4,848)
15,775
Components
of other
capital
Firm
commitment
assets
(*1)
Firm commitment
liabilities
(*1)
57,308
366,325
(1,687)
(1,138)
84,226
98,314
(1,138)
57,308
366,325
(4,848)
6,707
430,136
22,333
67,740
271,667
220,000
3,090,000
3,090,000
70,000
70,000
423,884
259,902
3,928,091
3,707,642
(*) Korean
Commercial Code requires the Parent to appropriate as legal reserve an amount equal to at least 10% of cash dividends paid for each accounting period, until
the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or transfer to capital stock.
(2) Details of the calculation of dividends for the years ended December 31, 2013 and 2012, are as follows.
72,540
Amounts due
to customers
under
construction
contracts
9,018
192,390,758
192,390,758
Retirement of share
(1,000,000)
(1,000,000)
(2,343,870)
(2,343,870)
189,046,888
189,046,888
492,085
Currency
forward
liabilities
300
250
Total dividends
56,714,066,400
47,261,722,000
6,975
(*1) The Company has entered into currency forward contracts (Korean won against USD and EUR) in order to hedge exchange rate fluctuation risk and applied fair value
hedge accounting to the respective firm commitment (see Note 3).
(*2) The Company has entered into an interest rate swap contract with Goldman Sachs to hedge the exposure to changes in interest rates and recognized 289 million
as other capital component, which is equal to the loss on valuation of derivatives of 381 million, net of deferred income tax of 92 million. Also, the Company has
entered into currency forward contracts in order to hedge exchange rate fluctuation risk related with purchasing the building materials and applied cash flow hedge
accounting and recognized 3,421million as other capital component, which is equal to the gain on valuation of derivatives of 4,513million, net of deferred income
tax of 1,092 million. Meanwhile, the cash flow risk in relation to the aforementioned contracts is expected to exist until August 12, 2016.
(*3) Currency forward assets and liabilities held for trading are recognized as financial assets (liabilities) at FVTPL. As of December 31, 2013, the Company recognized
financial assets at FVTPL and financial liabilities at FVTPL amounting to58,080 million and 2,202 million, respectively.
27. CAPITAL:
On August 23, 2004, the Parent retired 1,000,000 shares of treasury stock acquired for 15,416 million upon the approval at the Board of Directors
meeting. Accordingly, the number of shares issued has been decreased. However, the amount of paid-in capital has not been reduced. The
Parent has 400,000,000 authorized shares of common stock (5,000 par value), of which 192,390,758 shares are issued as of December 31, 2013.
Others (*2)
Components of other
capital
(30,000)
(30,000)
1,694
(12,923)
(28,306)
(42, 923)
43,082
35,640
3,132
(863)
1,914
2,221
18,185
7,942
66,313
44,940
38,007
2,017
(*1) The
Parent has acquired 2,343,870 shares of treasury stock (acquisition cost: 30,000 million) for stabilization of its stock price and recognized the respective shares
as share premium. It plans to sell the stocks subsequently depending on the market condition.
(*2) Others consist of a difference arising from acquisition of additional shares of subsidiaries and others.
114
115
Basic earnings per share are calculated by dividing net income allocated to common stock by the weighted-average number of common shares
outstanding (excluding the common shares held by the Parent as treasury shares) during the period. The basic earnings per share for the years
ended December 31, 2013 and 2012, are as follows (Korean won except per share amounts):
The Company classifies interest income and costs as finance income and costs, and details of net finance income (loss) for the years ended
December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Description
2013
2012
269,038,604,372
221,891,875,094
Deposit
269,038,604,372
221,891,875,094
189,046,888
1,423
189,046,888
1,174
(*) Diluted earnings per share for the years ended December 31, 2013 and 2012,are the same as the basic earnings per share since there are no dilutive potential
common shares and dilutive effect.
Weighted-average number of common shares outstanding as of December 31, 2013 and 2012, is the same as a number of common shares
outstanding.
2013
Commission
Others
Total
1,001
134,943
Dividend income
1,722
1,718
4,024
4,981
106,732
141,642
261,152
221,471
918
1,687
(108,747)
(68,184)
Total
Interest expense:
Bank overdrafts and interests on loans
153,323
(46,591)
154,974
6,021
217,389
3,990
6,324
229,734
2013
Gain on foreign currency transactions
(2) Details of administrative expenses for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Salaries
136,129
2012
138,032
10,512
9,799
18,933
19,021
Rent
Depreciation
Amortization
Bad debt expense
Repairs and maintenance
Travel
Training
7,104
8,623
14,086
7,469
1,395
1,838
73,468
72,931
4,901
5,359
14,954
15,350
6,597
6,429
12,005
8,912
Others
41,302
40,356
Total
341,386
(13,332)
2012
140,787
152,127
18,120
115,822
1,332
7,350
100,986
Subtotal
17,486
82,168
Total
(1) Details of selling expenses for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
Advertising
2012
Interest income:
334,119
296,120
2012
240,395
264,925
217,734
Subtotal
561,045
458,129
315,510
302,548
182,597
342,426
(6,834)
(520)
175,763
341,906
491,273
69,772
644,454
(186,325)
116
117
(1) Details of other non-operating income for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
Expenses classified by nature for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Gain on valuation of firm commitment
84,736
2012
690,746
72,979
137,025
1,826
1,591
56,229
78,997
921,082
(2) Details of other non-operating expenses for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
2013
Loss on valuation of firm commitment
328,772
2012
713,858
34,071
612
85,337
25,822
4,461
2,999
42,379
11,562
151,162
188,331
646,182
12,723
282,495
498,265
2013
Changes in inventories
Raw materials
Costs of sales
(25,619)
Total
(25,619)
6,466,810
6,466,810
193,214
1,357,589
1,550,803
Depreciation
15,060
236,556
251,616
Amortization
2,049
6,641
8,690
Commission
140,864
149,103
289,967
Payroll
Travel
15,807
33,652
49,459
12,109
256,209
268,318
7,333
71,069
78,402
Rent
Others
Total
200,642
587,078
5,725,289
14,277,299
5,925,931
14,864,377
(101,180)
2012
Selling and administrative and
research and development
expenses
943,184
(*) Others include the losses on which Fair Trade Commission imposed penalties about investigation of unfair subcontracting transaction for the year ended December 31,
2013.
Changes in inventories
Raw materials
Payroll
Depreciation
Amortization
Costs of sales
Commission
Total
6,232,275
6,232,275
198,677
1,341,404
1,540,081
8,518
(101,180)
2,171
244,457
219,162
3,445
252,975
128,817
5,616
347,979
Travel
16,791
23,598
40,389
11,038
145,950
156,988
8,973
63,790
72,763
Rent
Others
Total
184,337
649,667
4,839,331
12,921,887
5,023,668
13,571,554
118
119
(3) Significant receivables from and payables to the related parties as of December 31, 2013 and 2012, are as follows (Korean won in millions):
(1) Related parties of the Company as of December 31, 2013, are as follows:
Company
Investor with significant influence over the Company
KDB
Associates
NIDAS Marine Ltd., NIDAS Shipping Services Ltd., Korea Marine Finance Corp., Wing Ship
Technology Corp, Dominus, DSON Co., Ltd., KODE NOVUS II LLC
KDB
D&H Solutions AS, PT. DSME ENR CEPU, SBM Shipyards Ltd., Pangea LNG B.V, KODE NOVUS
I LLC
DSME BRAZIL LLC, ZVEZDA-DSME LLC, DSME E&R Trading PTE Ltd., Daehan Shipbuilding
Co., Ltd, Daegu boramae Inc., DSME Construction LLC and others.
Associates
NIDAS Marine Ltd. and others
Sales
Purchases
Interest and other revenue
Interest and other expenses
Joint ventures
SBM Shipyards Ltd. and others
Increase in loans
Sales
Interest and other revenue
Increase in loans
24,473
69,027
73,560
3,715,470
3,144,855
3,602,757
2,667,973
20,498
52,589
5,363
51,474
422
7,029
1,353
126,034
14,813
12,409
33
20,700
8,705
3,796
Sales
5,510
56,738
191,666
164,042
Purchases
Sales
672
Purchases
Interest and other revenue
Interest and other expenses
26,008
468,480
120,091
1,365,249
3,259
5,528
10,487
170
4,749
1,758
186,939
44,658
513,138
1,317
11,594
1,760
816
318,333
1,365,249
4,479
7,908
Trade
receivable
Other account
receivable
Loans and
others
Borrowings
Other payables
409,546
88,233
1,510,475
3,540
Associates
NIDAS Marine Ltd. and others
4,456
12,213
1,981
4,820
510
184,085
10
Joint ventures
SBM Shipyards Ltd. and others
37,854
447,400
3,678
12,954
510
1,863
286,394
1,510,475
14,931
20,462
Meanwhile, as of December 31, 3013, there is no collateral for the above receivables, and allowance for doubtful accounts is recognized in equity
method additional losses of 2,674 million (see Note 13).
235,361
197,029
215,516
59,790
36,882
69,449
Other
payables
Borrowings
Associates
Decrease in loans
44,299
Loans and
others
Joint ventures
(2) Transactions between the Parent and its subsidiaries were eliminated for consolidation and they are not presented in the notes. Significant
transactions with the related parties for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
Transaction
Other account
receivable
Joint ventures
Trade
receivable
80,589
(4) Key management compensation for the years ended December 31, 2013 and 2012, is as follows (Korean won in millions):
2013
Salaries
3,715,470
3,144,855
Redemption of borrowings
3,602,757
2,667,973
Total
Increase in loans
1,386
20,700
Decrease in loans
8,705
3,796
5,792
2012
6,639
7,564
1,068
6,860
925
The Companys key management includes directors (including outside directors) who are registered executives and members of the audit
committee.
120
121
(5) Significant collaterals and guarantees provided for the related parties as of December 31, 2013, are as follows (Korean won in millions and USD
in thousands):
(3) Details of amounts due to and from customers under construction contracts as of December 31, 2013 and 2012, are as follows (Korean won in
millions):
Description
Guaranteed amount
Guarantor
20,010,815
14,835,997
USD
154,857
1,954,765
102,504
KDB
(891,677)
(323,306)
21,073,903
16,287,600
(18,614,627)
(16,048,933)
2,459,276
238,667
5,881,937
3,403,190
(*1) The Company provided guarantees for PT. DSME ENR CEPU, joint ventures in Indonesia, to finance for the development in CEPU oil field.
(*2) The Company provided guarantees for KODE Novus I LLC to finance for the development of wind farm.
(*3) The Company obtained order and pledged as collateral to the KDB eight vessels that Daehan Shipbuilding Co., Ltd. was constructing.
(6) Significant guarantees provided by related parties as of December 31, 2013, are as follows (Korean won in millions and USD in thousands):
Guaranteed amount
Borrowing amount
USANCE
USD
520,000
USD
691,330
USD
1,211,330
USD
341,221
992
USD
341,221
992
-
1,774,909
(13,854)
(47,747)
5,868,083
3,355,443
3,422,661
3,164,523
28,778
3,451,439
32,637
3,197,160
(*) The amounts before firm commitment assets (or liabilities) are adjusted under hedge accounting.
(2) As of December 31, 2013, the Company is involved as a plaintiff in a lawsuit claiming tax refund of amount of tax payment from tax tribunal and
35 other lawsuits in the aggregate claim amount of 49,034 million and USD 10,000 thousand and RON 7,138 thousand.
2013
Beginning
balance
Shipbuilding
Offshore plant
8,987,919
New
contracts
5,947,234
Others (*1)
831,062
Revenue
recognized (*2)
(6,300,819)
Ending
balance
9,465,396
21,456,770
9,528,396
365,872
(7,797,240)
23,553,798
Construction
973,872
449,999
(400,439)
(482,935)
540,497
Other
117,009
43,765
91,765
(106,234)
146,305
Total
31,535,570
15,969,394
888,260
(14,687,228)
Acquired date
(2) Details of the significant elements of profit and loss on construction contracts in progress as of December 31, 2013, are as follows (Korean won
in millions):
Shipbuilding
Offshore plant
5,286,850
Accumulated cost
of construction contracts
in progress
(5,113,950)
Accumulated profit of
construction contracts in
progress
172,900
Delayed
receivables (*)
1,221,524
14,714,093
(14,063,408)
650,685
51,288
Construction
730,195
(680,274)
49,921
Other
342,765
(153,183)
189,582
Total
21,073,903
(20,010,815)
(4) The Company has purchased Hyundai Merchant Marine Co., Ltd.s common stock and put option from Hyundai Elevator Co., Ltd., Meanwhile,
the Company is subject to disposal restrictions on these shares, in accordance with the agreements, and these disposal restrictions are as follows:
33,705,996
(*1) Others consist of increases or decreases due to fluctuations of foreign exchange rates and changes of contract amount.
(*2) Revenue recognized excludes increase or decrease of sales related to firm commitment assets (liabilities).
Accumulated revenue
of construction contracts
in progress
(3) As of December 31, 2013, the Company is involved as a defendant in a lawsuit claiming compensation for damages and 42 other lawsuits in the
aggregate claim amount of 16,817 million, USD 27,940 thousand, CNY44,808 thousand, EUR 582 thousand and RON 1,927 thousand. However,
the Company is unable to predict the ultimate results of the above matters and the possible related cash outflows.
1,063,088
1,272,812
(*) Delayed receivables refer to the receivables related to a transferred vessel for which payment is delayed and the principal and the accrued interest are being collected
in accordance with the contract.
Number of stocks
2011. 12. 19
1,500,000
2012. 01. 20
1,365,464
Strike price
Disposal restriction
23,650
27,850
2,865,464
(5) The Company has transferred a 50,000 million of long-term loan for Daehan Shipbuilding Co., Ltd. to convertible bond by contracts for the
year ended December 31, 2012, and has an option to purchase less than 51% of additional shares at the expiration of the convertible bonds.
122
123
(6)The Company has entered into agreements with financial institutions with the following credit lines (Korean won in millions and foreign currency
in thousands):
Financial institution
Classification
Overdraft limit
(6,999)
(1,167)
1,019,000
Interest income
(100,986)
(134,943)
Dividend income
(1,722)
(1,719)
(4,024)
(4,981)
(264,925)
(217,733)
(4,376)
(4,338)
USD
11,953,430
EUR
5,436
JPY
40,143
7,000
2,515,000
7,011
1,968,021
RON
780,765
CNY
793,000
2013
2012
175,853
Adjustments to reconcile profit for the year to net cash provided by operating activities:
(374,296)
492,274
50,073
72,822
(50,904)
(262,296)
(1,015)
330,805
(70,400)
(112,041)
257,731
215,318
(1,414,879)
135,646
(50,508)
5,855
6,608
Depreciation
251,616
252,975
Amortization
8,690
5,616
84,493
328,772
713,858
34,071
612
4,461
2,999
18,460
109,104
19,367
3,260
2,338
2,536
367
Interest expenses
153,322
154,974
115,581
68,704
175,763
341,906
85,054
89,243
9,776
3,911
10,964
16,310
(15)
(39,358)
(1,310)
(84,736)
(12,723)
(282,495)
(690,746)
(4,266)
51,412
516,562
80,345
115,848
294,416
(2,469,782)
(435,502)
90,260
896,209
(67,147)
(8,250)
595,784
(411,891)
26,408
(10,864)
Increase in inventories
(1,591)
39,600
Cash flows from operating activities for the years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
USD
241,893
(162)
(1,826)
2012
USD
(16,179)
B2B E-banking
Amounts
Loan
2013
Gains from investment in associates and joint ventures
20,817
23,921
(37,463)
(139,872)
Decrease in provisions
(22,814)
(63,153)
1,040
5,491
(1,820,296)
(1,695,339)
(982,619)
(623,277)
124
125
Significant non-cash transactions from investing and financing activities that are not included in the consolidated statements of cash flows for the
years ended December 31, 2013 and 2012, are as follows (Korean won in millions):
(1) The Company classifies its segments by the type of goods, and details of the goods and services that generate income and major customers for
each segment are as follows:
2013
Transfer of AFS financial assets to investment in associates
29,130
2012
Division
Goods or service
Major customer
Shipbuilding
271,829
317,019
Offshore plant
764,091
600,423
Construction
Various customers
299,624
172,995
Others
Energy, service
Various customers
88,814
50,000
18,191
3,423
25,271
88,853
4.70
100.00
The Company presented the cash inflows and outflows from/to short-term financial instruments, short-term loans and short-term borrowings,
which consist of frequent transactions totaling to a large amount which has a short-term maturity and is reported net in the consolidated
statements of cash flows.
3.22
Sales
7,066,428
Offshore plant
7,905,421
Construction
524,049
Others
763,143
Consolidation
adjustment
(953,760)
Total after
adjustment
15,305,281
547,373
336,409
38,322
153,778
(47,900)
1,027,982
393,229
10,959
35,453
1,263
440,904
Depreciation(*)
205,615
3,296
224
40,364
2,117
251,616
Amortization(*)
8,101
71
979
(461)
8,690
184,828
3,640
(23,417)
76,842
241,893
5,263,543
26,249
946
1,225,379
(166,382)
6,349,735
18,273,662
409,320
1,555,878
(1,749,981)
18,488,879
13,564,302
348,855
1,234,161
(1,437,809)
13,709,509
Shipbuilding
Offshore plant
Construction
Others
Consolidation
adjustment
Total after
adjustment
2012
Sales
7,179,916
6,206,181
492,328
1,365,894
519,415
503,904
(4,502)
166,288
434,607
(34,156)
Depreciation(*)
217,643
216
Amortization(*)
4,755
(1,186,500)
14,057,819
(49,173)
1,135,932
(5,313)
91,127
486,265
41,258
(6,142)
252,975
1,001
(140)
5,616
61,197
(34,359)
(173,557)
322,572
175,853
5,275,825
1,117
1,229,452
(154,448)
6,351,946
15,954,867
399,081
1,653,757
(1,885,476)
16,122,229
11,407,833
342,607
1,226,492
(1,408,961)
11,567,971
(*) As
the Parents profit (loss), total assets and total liabilities cannot be divided into shipbuilding, offshore plant and other divisions, they are included in the shipbuilding
division in the above segment information.
126
127
Romania
China
USA
Germany
15,570,108
358,049
170,694
36,750
19,010
1,064,328
(34,952)
29,861
9,966
7,686
Profit (loss)
from operating
activities
485,942
(52,858)
18,204
813
(38)
Depreciation
167,680
21,633
27,428
3,512
Amortization
7,164
734
962
Sales
Gross profit
Consolidation
adjustment
Total after
adjustment
Canada
Others
7,792
96,638
(953,760)
15,305,281
(5,583)
4,576
(47,900)
1,027,982
(10,678)
(1,744)
1,263
440,904
253
1,898
27,095
2,117
251,616
134
147
(461)
8,690
During the year ended December 31, 2013, the Company disposed DSME SMC Corp. During the year ended December 31, 2012, the Company
disposed of 50% shares of KODE NOVUS I LLC subsidiary (formerly, the Company owned 100% shares), which was reclassified as a joint venture.
(1) Fair values of disposed subsidiaries are as follows (Korean won in millions and USD in thousands):
DSME SMC Corp.
Consideration received in cash and cash equivalents
KRW
38,914
16,886
(2) The book values of assets and liabilities of disposed subsidiaries as of the date when the Company lost control over were as follows (Korean
won in millions and USD in thousands):
272,483
(53,124)
1,691
(4,146)
278
(8,595)
(43,536)
76,842
241,893
Tangible and
intangible
assets
5,088,557
341,903
417,504
65,666
490
24,007
577,990
(166,382)
6,349,735
Total assets
18,070,979
672,823
493,565
160,870
29,368
56,010
755,245
(1,749,981)
18,488,879
Non-current assets:
19,132
33,793
Total liabilities
12,794,743
1,073,023
286,606
127,174
26,607
35,145
804,020
(1,437,809)
13,709,509
Current liabilities:
(2,514)
(4,002)
(5,418)
(111,129)
18,360
USD
Non-current liabilities:
Net assets of disposal
2012
Sales
Gross profit
Domestic
Romania
China
USA
Germany
Canada
Others
Consolidation
adjustment
Total after
adjustment
14,181,454
263,136
206,801
180,415
27,049
5,745
379,719
(1,186,500)
14,057,819
1,180,763
(69,976)
45,946
(1,049)
4,321
(1,147)
26,247
(49,173)
1,135,932
Profit (loss)
from operating
activities
477,072
(82,873)
32,585
(14,574)
(1,980)
(12,506)
(2,586)
91,127
486,265
Depreciation
173,303
21,280
28,724
3,172
419
1,840
30,379
(6,142)
252,975
Amortization
3,411
750
973
138
174
310
(140)
5,616
126,149
(96,017)
9,958
Tangible and
intangible
assets
(18,622)
(1,499)
(11,911)
4,978,532
354,771
438,363
Total assets
15,519,704
659,158
522,577
Total liabilities
10,594,190
1,001,394
319,877
139,496
(154,777)
322,572
175,853
70,185
2,161
27,637
634,745
(154,448)
6,351,946
177,751
30,205
70,017
1,028,293
(1,885,477)
16,122,228
27,791
38,661
855,523
(1,408,962)
11,567,970
7,160
107,029
25,691
(3) The gain on disposal subsidiaries are as follows (Korean won in millions and USD in thousands):
DSME SMC Corp.
Fair value of disposal cost
Goodwill
38,914
16,886
12,846
(18,360)
(25,691)
(3,896)
(4,375)
Gain on disposal
16,179
USD
145
The Company has recognized gain on investment in associates and joint ventures on disposal of subsidiaries amounting to 16,179 and 162
million for the years ended December 31, 2013 and 2012 due to its disposal of subsidiary.
(4) The net cash flow from the disposal of subsidiaries are as follows (Korean won in millions and USD in thousands):
(2) The major customers who account for more than 10% of the Companys revenue are A.P. Moller-Maersk A/S, amount of sales is 1,785,022
million and 1,421,342 million for the years ended December 31, 2013 and 2012.
38,914
USD
16,886
(1,073)
(13,027)
37,841
USD
3,859
Net cash flow of lost control over subsidiaries amounts to 37,841 million and 4,405 million for the years ended December 31, 2013 and 2012.
128
129
Outstanding
Vessels in 2013
Chemical Tanker(BOW PIONEER)
Odfjell SE
Containership(APL VANCOUVER)
Neptune Orient Lines
130
131
Corporate
History
Global
Network
2012
2011
2010
2009
2007
Oslo
London
Moscow
D&H Solutions
Frankfurt
Zvezda-DSME
Shipyard in Russia
Mangalia (DMHI)
Canada
Greece
Seoul
Shandong (DSSC)
California (DeWind)
Tokyo
Okpo
Yongin(FLC)
NIDAS Shipping JV in Nigeria
Houston
Seoul (DSME)
Dubai
Oman
Kuala Lumpur
Singapore
Luanda
Paenal yard in Angola
Ulsan
(ShinhanMachinery)
Gwangyang
(Samwoo Heavy
Indonesia
Jakarta
Industries)
Ecuador
Busan (DSEC)
Brazil
Geoje (Welliv)
Rejoins the KRW 10 trillion in revenue KRW 1 trillion in operating profit club
Signs an agreement with Russian United Shipbuilding Corporation (USC) to build a joint shipyard in Zvezda
Perth
Russia
Head Office
Ship Yards
Overseas Offices
Korea Seoul
Okpo
London
Singapore
Wins Korea IT Innovation Award Achieves a safety result of 10 million man-hours with IIF in the Qatargas Project
Receives ISO 27001Certification
Oslo
Jakarta
Gyeongsangnam-do, Korea
Greece
Kuala Lumpur
Wins $6 billion Export Tower Award at the 44th Trade Day Ceremony
Tel: +82-2-2129-0114
Houston
Perth
Brazil
Tokyo
Mangalia
Dubai
Frankfurt
Luanda
Moscow
Ecuador
Fax: +82-2-756-4390
2006
2005
2003
2002
2001
Concludes corporate workout program, stocks listed on the Korea Stock Exchange
2000
DHIs Shipbuilding and Heavy Machinery Division becomes an independent company, spun off from the former Daewoo
Conglomerate
Legacy Begins
Welliv. Ltd.
FLC
1999
Announces Daewoo Conglomerates restructuring plan Begins corporate workout program for DHI
1997
China
1994
1989
Romania
1981
1978
Daewoo Shipbuilding & Heavy Machinery Co, Ltd (DSHM) takes ownership the Okpo Shipyard
1973
Joint Ventures
Panama
DK Maritime
Republic of
DE Maritime
Marshall Island
Oman
Russia
Brazil
Indonesia
PT DSME Indonesia
Ecuador
Fax +82-2-756-4390