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Transcript of ★연결 Part I Cover DHIC 2014 YE FINAL - Doosan Heavyen).pdf · Independent auditors’ report...
Contents
I. Independent Auditors’ Report --------------------------------------------------------------- 1
II. Consolidated Financial Statements
Consolidated Statements of Financial Position ----------------------------------------- 4
Consolidated Statements of Profit or Loss ----------------------------------------------- 6
Consolidated Statements of Comprehensive Income or Loss ------------------------ 7
Consolidated Statements of Changes in Equity ---------------------------------------- 8
Consolidated Statements of Cash Flows ------------------------------------------------- 9
Notes --------------------------------------------------------------------------------------------- 11
Independent auditors’ report
To the Board of Directors and Stockholders Doosan Heavy Industries & Construction Co., Ltd. We have audited the accompanying consolidated financial statements of Doosan Heavy Industries & Construction Co., Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”), which comprise the consolidated statements of financial position as of December 31, 2014 and 2013, and the consolidated statements of profit or loss, consolidated statements of comprehensive income or loss, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the consolidated interim financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean International Financial Reporting Standards (“KIFRS”), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries as of December 31, 2014 and 2013, and their consolidated financial performance and cash flows for the years then ended in accordance with Korean International Financial Reporting Standards.
A member fi rm of Ernst & Young Global Limited
Other matter The consolidated financial statements of the Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries for the year ended December 31, 2013 were audited in accordance with previous auditing standards generally accepted in the Republic of Korea.
March 19, 2015
This audit report is effective as at March 19, 2015, the independent auditors’ report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the auditors’ report date to the time this report is used. Such events and circumstances could significantly affect the accompanying consolidated financial statements and may result in modification to this report.
A member fi rm of Ernst & Young Global Limited
Doosan Heavy Industries & Construction Co., Ltd.
and its subsidiaries
Consolidated financial statements
for the years ended December 31, 2014 and 2013
The accompanying consolidated financial statements, including all footnotes and disclosures, have been prepared by, and are the responsibility of, the Company.
Geewon Park
Chief Executive Officer
Doosan Heavy Industries & Construction Co., Ltd.
3
(Korean won in units)
AssetsCurrent assets:
Cash and cash equivalents 4, 5, 10 \ 1,297,560,213,962 \ 942,761,662,374 Short-term financial instruments 4, 5, 10, 34 591,481,515,302 777,857,734,507 Short-term investments
in securities 4, 6, 10 31,385,470,088 11,917,827,393 Trade receivables 4, 7, 10, 26, 35 2,521,793,239,668 2,776,055,294,417 Due from customers
for contract work 26 2,078,028,129,655 2,341,388,036,045 Other receivables 4, 7, 10, 35 331,073,026,441 399,665,688,714 Prepayments 7 623,678,714,210 570,231,903,673 Prepaid expenses 97,716,964,385 119,671,338,313 Short-term loans 4, 7, 10, 35 541,593,602,039 617,545,492,572 Derivative financial assets 4, 9, 10 37,340,410,136 123,034,100,744 Firm commitment assets 9 64,068,051,449 22,095,293,873 Inventories 8 2,331,909,520,735 2,205,794,006,937 Other current assets 4, 7, 10 264,712,483,766 243,191,832,090 Non-current assets classified
as held-for-sale 37 - 23,012,326,807 Total current assets 10,812,341,341,836 11,174,222,538,459
Non-current assets:Long-term financial instruments 4, 5, 10 84,712,208,686 87,452,362,744 Long-term investments
in securities 4, 6, 10, 34 187,942,074,247 200,132,851,400 Share of investments in
associates and joint ventures 11, 34 226,744,904,296 312,921,350,015 Long-term loans 4, 7, 10, 35 719,430,932,517 519,007,967,286 Property, plant and equipment 2, 12, 34 7,190,139,774,839 7,231,823,590,854 Intangible assets 13 6,863,345,310,432 6,924,583,095,371 Investment properties 14, 34 68,163,327,038 69,939,577,561 Derivative financial assets 4, 9, 10 27,913,927,369 119,236,994,110 Firm commitment assets 9 56,626,716,041 31,003,113,369 Guarantee deposits 4, 7, 10 309,024,141,234 245,391,277,932 Deferred tax assets 31 944,406,898,458 752,356,463,180 Other non-current assets 4, 7, 10 61,114,955,310 57,408,932,470
Total non-current assets 16,739,565,170,467 16,551,257,576,292 Total assets \ 27,551,906,512,303 \ 27,725,480,114,751
As at December 31, 2014, 2013
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiariesConsolidated statements of financial position
(Continued)
December 31, 2014 December 31, 2013Notes
The accompanying notes are an integral part of the consolidated financial statements.
4
(Korean won in units)
Liabilities and equityCurrent liabilities:
Trade payables 4, 10, 35 \ 2,691,130,566,041 \ 2,285,172,690,453 Short-term borrowings 4, 10, 15, 34 2,967,464,808,128 2,401,143,971,677 Asset-backed loan 4, 10, 15, 35 397,347,705,208 270,000,000,000 Other payables 4, 10, 35 720,622,823,183 630,132,663,407 Advanced receipts 361,265,911,412 429,706,500,550 Due to customers for contract work 26 1,120,201,735,582 1,658,024,496,845 Withholdings 116,998,812,277 68,062,469,620 Accrued expenses 4, 10 488,643,525,511 510,816,836,799 Income tax payable 69,207,517,934 186,279,450,215 Current portion of long-term debt 4, 10, 15, 34 1,631,163,514,293 1,535,151,584,309 Derivative financial liabilities 4, 9, 10 185,685,205,347 119,688,709,263 Firm commitment liabilities 9 65,365,984,651 190,652,648,109 Other provisions 17 137,223,875,500 147,587,636,606 Other current liabilities 4, 10 179,750,645,637 139,854,086,690
Total current liabilities 11,132,072,630,704 10,572,273,744,543
Non-current liabilities:Debentures 4, 10, 15, 34 3,009,799,381,248 2,887,157,633,453 Long-term borrowings 4, 10, 15, 34 3,597,626,371,249 4,287,909,733,652 Long-term asset-backed loan 4, 10, 15, 35 42,677,714,962 - Long-term other payables 4, 10 51,247,058,484 47,405,256,022 Employee benefits liability 2, 16 1,020,609,311,678 930,390,792,822 Deposits received 4, 10 223,675,032,387 255,307,344,867 Derivative financial liabilities 4, 9, 10 128,730,391,781 86,766,639,332 Firm commitment liabilities 9 26,648,783,925 76,128,783,708 Deferred tax liabilities 31 82,460,285,676 173,871,721,051 Other provisions 17 237,747,776,849 270,763,381,188 Other non-current liabilities 4, 10 321,610,053,428 225,710,882,548
Total non-current liabilities 8,742,832,161,667 9,241,412,168,643 Total liabilities 19,874,904,792,371 19,813,685,913,186
Equity: Issued capital 1, 18 596,808,980,000 530,791,280,000 Capital surplus 19 1,828,284,636,585 1,521,655,341,205 Other components of equity 20 (101,795,674,821) (13,188,236,134)Accumulated other comprehensive
income (loss) 2, 6, 9, 10, 21 220,918,859,061 324,556,819,190 Retained earnings 22 2,115,202,768,057 2,362,821,296,186
Equity attributable to equity holders of the parent 4,659,419,568,882 4,726,636,500,447 Hybrid equity instruments 23 508,259,603,649 508,259,603,649 Other non-controlling interests 2, 23 2,509,322,547,401 2,676,898,097,469
Non-controlling interests 3,017,582,151,050 3,185,157,701,118 Total equity 7,677,001,719,932 7,911,794,201,565 Total liabilities and equity \ 27,551,906,512,303 \ 27,725,480,114,751
The accompanying notes are an integral part of the consolidated financial statements.
December 31, 2014Notes
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiariesConsolidated statements of financial position (cont'd)As at December 31, 2014, 2013
December 31, 2013
5
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiariesConsolidated statements of profit or lossFor the years ended December 31, 2014 and 2013(Korean won in units)
NotesRevenue 24, 25, 26, 35 \ 18,127,522,740,877 \ 19,208,173,507,456Cost of sales 27, 35 15,045,185,645,865 16,021,590,971,115Gross profit 3,082,337,095,012 3,186,582,536,341Selling and administrative expenses 10, 27, 28 2,194,098,255,309 2,228,510,805,119Operating profit 24 888,238,839,703 958,071,731,222Finance income 10, 29 922,702,760,511 1,056,743,438,486Finance costs 10, 29 1,775,057,342,066 1,770,132,965,167Other non-operating income 10, 30 139,848,397,991 144,397,423,635Other non-operating expense 10, 30 281,984,541,568 271,371,858,594Share of loss in associates and
joint ventures 11 (79,859,494,061) (47,619,865,974)Profit (loss) for the year before tax (186,111,379,490) 70,087,903,608Income tax expense (benefit) 31 (100,636,032,310) 51,425,077,676Profit (loss) for the year 24 (85,475,347,180) 18,662,825,932
Attributable to:Equity holders of the parent (94,675,179,547) 69,223,510,612Non-controlling interests 9,199,832,367 (50,560,684,680)
\ (85,475,347,180) \ 18,662,825,932
Earnings (loss) per share:- Basic, profit (loss) for the year
attributable to ordinary 32 \ (1,082) \ 772equity holders of the parent
- Diluted, profit (loss) for the yearattributable to ordinary equityholders of the parent 32 \ (1,082) \ 772
The accompanying notes are an integral part of the consolidated financial statements.
20132014
6
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiariesConsolidated statements of comprehensive income or lossFor the years ended December 31, 2014 and 2013(Korean won in units)
NotesProfit (loss) for the year \ (85,475,347,180) \ 18,662,825,932
Other comprehensive income or loss
Items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement of the net defined benefit liabilities 16 (110,461,283,972) 141,473,301,425
Net gain (loss) on revaluation of land 12 (192,140,659) 870,857,424,644(110,653,424,631) 1,012,330,726,069
Items that may be reclassified to profit or loss in subsequent periods:
Net change in unrealizedfair value of available-for-salefinancial assets 6,10 1,496,857,115 (19,947,267,764)
Effective portion of changes in fair value of cash flow hedges 9,10 (3,822,332,135) (50,657,406,284)
Equity adjustments in equity method 11 (2,626,931) (3,131,825,306)
Net gain (loss) on translation offoreign operations (226,663,971,932) (92,830,378,812)
(228,992,073,883) (166,566,878,166)
Total comprehensive income (loss), net of tax \ (425,120,845,694) \ 864,426,673,835
Attributable to:Equity holders of the parent (277,122,175,008) 728,097,030,565Non-controlling interests (147,998,670,686) 136,329,643,270
\ (425,120,845,694) \ 864,426,673,835
2014 2013
The accompanying notes are an integral part of the consolidated financial statements.
7
Doo
san
Hea
vy In
dust
ries
& C
onst
ruct
ion
Co.
, Ltd
. and
its
subs
idia
ries
For t
he y
ears
end
ed D
ecem
ber 3
1, 2
014
and
2013
(Kor
ean
won
in u
nits
)
As
at J
anua
ry 1
, 201
3 \
529,
281,
335,
000
\1,
388,
235,
128,
479
\(1
30,8
98,9
69,3
45)\
(275
,358
,393
,813
)\
2,30
7,48
3,98
1,16
9 \
2,16
7,71
6,80
1,70
8 5,
986,
459,
883,
198
Pro
fit fo
r the
yea
r-
- -
- 69
,223
,510
,612
(5
0,56
0,68
4,68
0)18
,662
,825
,932
R
emea
sure
men
t of t
he n
et d
efin
ed b
enef
it lia
bilit
ies,
net
of t
ax-
- -
- 58
,821
,074
,484
82
,652
,226
,941
14
1,47
3,30
1,42
5
Net
cha
nge
in fa
ir va
lue
of a
vaila
ble-
for-
sale
fina
ncia
l ass
ets
- -
- (1
6,94
8,72
1,67
3)-
(2,9
98,5
46,0
91)
(19,
947,
267,
764)
Effe
ctiv
e po
rtion
of c
hang
es in
fair
valu
e of
cas
h flo
w h
edge
s-
- -
(39,
443,
253,
772)
- (1
1,21
4,15
2,51
2)(5
0,65
7,40
6,28
4)
Equ
ity a
djus
tmen
ts in
equ
ity m
etho
d in
vest
men
ts –
deb
it-
- -
(2,7
59,8
77,1
45)
- (3
71,9
48,1
61)
(3,1
31,8
25,3
06)
Net
loss
on
trans
latio
n of
fore
ign
oper
atio
ns-
- -
(75,
377,
416,
616)
- (1
7,45
2,96
2,19
6)(9
2,83
0,37
8,81
2)
Net
gai
n on
reva
luat
ion
of la
nd
- -
- 73
4,44
4,48
2,20
9 13
7,23
2,46
6 13
6,27
5,70
9,96
9 87
0,85
7,42
4,64
4
Tota
l com
preh
ensi
ve in
com
e-
- -
599,
915,
213,
003
128,
181,
817,
562
136,
329,
643,
270
864,
426,
673,
835
Div
iden
ds
- -
- -
(66,
782,
821,
500)
- (6
6,78
2,82
1,50
0)
Dis
posa
l of t
reas
ury
shar
es-
138,
453,
881,
054
117,
261,
964,
907
- -
- 25
5,71
5,84
5,96
1
Incr
ease
in p
aid-
in c
apita
l1,
503,
445,
000
11,1
10,4
58,5
50
- -
- -
12,6
13,9
03,5
50
Sto
ck o
ptio
n6,
500,
000
1,68
0,18
3,61
2 2,
373,
021,
858
- -
- 4,
059,
705,
470
Cap
ital i
ncre
ase
by is
suin
g ne
w s
hare
s of
sub
sidi
arie
s-
(15,
873,
883,
811)
(893
,975
,027
)-
- 90
0,68
3,69
1,98
2 88
3,91
5,83
3,14
4
Acq
uisi
tion
of tr
easu
ry s
hare
s by
sub
sidi
arie
s-
(430
,635
,167
)-
- -
(11,
337,
366,
949)
(11,
768,
002,
116)
Div
iden
ds fr
om h
ybrid
equ
ity in
stru
men
ts
- -
- -
(6,0
61,6
81,0
45)
(7,4
77,7
14,9
55)
(13,
539,
396,
000)
Oth
ers
- (1
,519
,791
,512
)(1
,030
,278
,527
)-
- (7
57,3
53,9
38)
(3,3
07,4
23,9
77)
As
at D
ecem
ber 3
1, 2
013
\53
0,79
1,28
0,00
0 \
1,52
1,65
5,34
1,20
5 \
(13,
188,
236,
134)
\32
4,55
6,81
9,19
0 \
2,36
2,82
1,29
6,18
6 \
3,18
5,15
7,70
1,11
8 \
7,91
1,79
4,20
1,56
5
As
at J
anua
ry 1
, 201
4\
530,
791,
280,
000
\1,
521,
655,
341,
205
\(1
3,18
8,23
6,13
4)\
324,
556,
819,
190
\2,
362,
821,
296,
186
\3,
185,
157,
701,
118
\7,
911,
794,
201,
565
Pro
fit (l
oss)
for t
he y
ear
- -
- -
(94,
675,
179,
547)
9,19
9,83
2,36
7 (8
5,47
5,34
7,18
0)
Rem
easu
rem
ent o
f the
net
def
ined
ben
efit
liabi
litie
s, n
et o
f tax
- -
- -
(78,
809,
035,
332)
(31,
652,
248,
640)
(110
,461
,283
,972
)
Net
cha
nge
in fa
ir va
lue
of a
vaila
ble-
for-
sale
fina
ncia
l ass
ets
- -
- 1,
225,
076,
566
- 27
1,78
0,54
9 1,
496,
857,
115
Effe
ctiv
e po
rtion
of c
hang
es in
fair
valu
e of
cas
h flo
w h
edge
s-
- -
22,7
59,1
31,4
54
- (2
6,58
1,46
3,58
9)(3
,822
,332
,135
)
Equ
ity a
djus
tmen
ts in
equ
ity m
etho
d in
vest
men
ts –
deb
it-
- -
(285
,147
,403
)-
282,
520,
472
(2,6
26,9
31)
Net
loss
on
trans
latio
n of
fore
ign
oper
atio
ns-
- -
(127
,258
,420
,339
)-
(99,
405,
551,
593)
(226
,663
,971
,932
)
Net
loss
on
reva
luat
ion
of la
nd
- -
- (7
8,60
0,40
7)-
(113
,540
,252
)(1
92,1
40,6
59)
Tota
l com
preh
ensi
ve in
com
e-
- -
(103
,637
,960
,129
)(1
73,4
84,2
14,8
79)
(147
,998
,670
,686
)(4
25,1
20,8
45,6
94)
Div
iden
ds
- -
- -
(74,
134,
313,
250)
- (7
4,13
4,31
3,25
0)In
crea
se in
pai
d-in
cap
ital
66,0
17,7
00,0
00
306,
661,
174,
818
- -
- -
372,
678,
874,
818
Sto
ck o
ptio
n-
3,83
3,71
6,12
8 (1
,152
,593
,529
)-
- -
2,68
1,12
2,59
9
Div
iden
ds o
f the
sub
sidi
arie
s-
- -
- -
(28,
418,
000,
000)
(28,
418,
000,
000)
Tran
sact
ions
of t
reas
ury
shar
es b
y su
bsid
iarie
s-
(6,4
31,2
55,6
53)
(85,
639,
596,
240)
- -
10,3
60,2
43,5
63
(81,
710,
608,
330)
Acq
uisi
tion
of in
vest
men
ts in
sub
sidi
arie
s-
- (1
,461
,576
,738
)-
- (3
,301
,762
,262
)(4
,763
,339
,000
)
Cap
ital i
ncre
ase
by is
suin
g ne
w s
hare
s of
sub
sidi
arie
s-
(70,
366,
602)
(56,
319,
012)
- -
126,
685,
614
-
Issu
ance
of c
onve
rtibl
e bo
nds
by s
ubsi
diar
ies
- 1,
407,
042,
703
- -
- 26
2,24
5,11
7 1,
669,
287,
820
Oth
ers
- 1,
228,
983,
986
(297
,353
,168
)-
- 1,
393,
708,
586
2,32
5,33
9,40
4
As
at D
ecem
ber 3
1, 2
014
\59
6,80
8,98
0,00
0 \
1,82
8,28
4,63
6,58
5 \
(101
,795
,674
,821
)\
220,
918,
859,
061
\2,
115,
202,
768,
057
\3,
017,
582,
151,
050
\7,
677,
001,
719,
932
The
acco
mpa
nyin
g no
tes
are
an in
tegr
al p
art o
f the
con
solid
ated
fina
ncia
l sta
tem
ents
.
Con
solid
ated
sta
tem
ents
of c
hang
es in
equ
ity
Cap
ital s
urpl
usIs
sued
cap
ital
Tota
l equ
ity
Acc
umul
ated
oth
erco
mpr
ehen
sive
inco
me
(loss
)N
on-c
ontr
ollin
g in
tere
stO
ther
com
pone
nts
of e
quity
Ret
aine
d ea
rnin
gs
8
(Korean won in units)
NotesOperating activities:
Cash generated from operating activities: 36 Profit (loss) for the year \ (85,475,347,180) \ 18,662,825,932 Adjustments 1,830,501,922,424 1,777,624,103,190 Working capital adjustments (345,912,328,229) (924,436,130,462)
Interest received 55,528,847,058 65,650,972,160 Interest paid (618,203,026,965) (700,940,713,445)Dividends received 1,558,270,393 5,624,266,779 Income taxes paid (234,189,415,047) (91,747,497,840)Net cash flows provided by operating activities 603,808,922,454 150,437,826,314
Investing activities:Proceeds from disposal of short-term
financial instruments 288,798,834,598 139,897,985,814 Proceeds from disposal of short-term
investments in securities 73,071,978,911 47,109,274,754 Collection of short-term loans 181,531,790,623 119,408,535,287 Proceeds from disposal of long-term financial instruments 4,431,747,297 9,611,466,277 Proceeds from disposal of long-term
investment in securities 6,911,704,798 93,255,887,013 Collection of long-term loans 78,556,516,994 27,494,654,224 Proceeds from disposal of investments in
associates and joint ventures 6,474,033,289 - Proceeds from disposal of property, plant and equipment 14,126,457,253 109,620,267,563 Proceeds from disposal of intangible assets 3,555,188,974 4,424,797,402 Proceeds from disposal of investment property 1,486,728,579 56,475,398,106 Proceeds from disposal of non-current assets
classified as held-for-sale 9,665,880,000 4,872,000,000 Changes in scope of consolidated subsidiaries - 4,687,791,850 Acquisition of short-term financial instruments (95,207,452,344) (426,032,782,232)Acquisition of short-term investments in securities (65,228,155,478) (39,282,339,734)Increase in short-term loans (104,582,725,328) (389,349,882,306)Acquisition of long-term financial instruments (1,117,551,401) (22,234,079,904)Acquisition of long-term investment in securities (20,269,579,917) (28,438,447,392)Increase in long-term loans (293,311,264,050) (22,196,476,852)
Acquisition of investments in associates and joint ventures (268,400,000) (72,999,741,669)Acquisition of property, plant and equipment (372,668,244,664) (401,455,378,897)Acquisition of intangible assets (260,695,999,999) (262,340,746,210)Acquisition of investment property - (911,530,557)Net cash flow used in investing activities (544,738,511,865) (1,048,383,347,463)
(Continued)The accompanying notes are an integral part of the consolidated financial statements.
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries
For the years ended December 31, 2014 and 2013
20132014
Consolidated statements of cash flows
9
(Korean won in units)
NotesFinancing activities:
Net increase in short-term borrowings \ 580,935,632,821 \ - Proceeds from short-term bonds 30,000,000,000 117,000,000,000 Proceeds from asset backed loans 1,028,000,000,000 620,000,000,000 Issuance of debentures 649,688,561,247 1,155,801,483,500 Proceeds from long-term borrowings 2,842,390,469,873 1,330,355,765,610 Proceeds from disposal of treasury shares - 299,918,800,070 Proceeds from disposal of treasury shares by subsidiaries 3,963,729,410 - Capital increase by issuing new shares 372,678,874,818 - Capital increase by issuing new shares of subsidiaries - 883,915,833,144 Stock option exercised - 43,160,000 Net decrease in short-term borrowings - (17,005,645,675)Repayment of current portion of long-term debt (2,030,330,435,447) (2,336,435,388,570)Repayment of assets backed loans (829,350,000,000) (656,800,000,000)Repayment of debentures (137,771,678,621) (310,174,143,523)Repayment of long-term borrowings (1,990,867,314,625) (982,493,058,161)Dividends paid (74,134,313,250) (66,782,821,500)
Dividends paid by the subsidiaries (28,418,000,000) (17,862,000,000)Acquisition of additional shares in subsidiaries (4,763,339,000) (3,699,999,990)Acquisition of treasury shares by subsidiaries (85,674,337,740) (11,768,002,116)Net cash flows provided by financing activities 326,347,849,486 4,013,982,789
Other net increase (decrease) in cash and cash equivalents:
Net foreign exchange difference (30,619,708,487) 9,541,490,600 Net increase (decrease) in cash and cash equivalents 354,798,551,588 (884,390,047,760)Cash and cash equivalents as at January 1 942,761,662,374 1,827,151,710,134
Cash and cash equivalents as at December 31 \ 1,297,560,213,962 \ 942,761,662,374
The accompanying notes are an integral part of the consolidated financial statements.
2014 2013
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiariesConsolidated statements of cash flows (cont'd)For the years ended December 31, 2014 and 2013
10
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information Doosan Heavy Industries & Construction Co., Ltd. (the “Company”) was incorporated on September 20, 1962, with its headquarters in Changwon, Korea. Since its incorporation, the Company has grown to become one of the leading global manufacturers of advanced power generation equipment. As a power generation manufacturing company, the Company provides a variety of thermal and nuclear power generation equipment, including boilers, turbines, and generators. It also engages in engineering, procurement, and construction projects for thermal power plants. The Company also supplies seawater desalination and water treatment solutions to clients. In addition to the main domestic production facilities in Changwon, the Company operates a global network of production facilities including those in the United Kingdom, the Czech Republic, India, Romania, and Vietnam.
The Company was listed on the Korea Exchange on October 25, 2000 and its major stockholder as at December 31, 2014 is Doosan Corp. (holding 36.82% equity ownership).
Subsidiaries The Company’s subsidiaries as at December 31, 2014 are as follows:
Ownership interest held by
the parent (%) (*1)
Ownership interest held by non-
controlling interests (%) (*1)
Report-ing
date (*2) Subsidiaries
Principal business activity
Country of domicile 2014 2013 2014 2013
Doosan Asset Management Company Co., Ltd.
Property development
Korea 100 100 - - Dec. 31
Doosan Heavy Industries Vietnam Co., Ltd.
Manufacturing of machinery & equipment
Vietnam 100 100 3.89 3.74 "
Doosan HF Controls Corp. Manufacturing USA 100 100 - - " PT. Doosan Heavy Industries
Indonesia Manufacturing Indonesia 55 55 45 45 "
Doosan Heavy Industries Japan Corp.
Sales Japan 100 100 - - "
S.C Doosan IMGB S.A. Manufacturing Romania 99.85 99.76 0.15 0.24 "
Doosan Enpure Ltd. Engineering &
Services UK 100 100 - - "
Doosan Construction Site Solutions Vietnam Co., Ltd.
Rental of equipment
Vietnam 100 100 - - "
Doosan Power Systems India Private Ltd.
Engineering & Services
India 100 100 - - Mar. 31
Doosan Heavy Industries America Holdings Inc.
Holdings Company
USA 100 100 - - Dec. 31
Doosan Hydro Technology Inc.
Manufacturing USA 100 100 - - "
Doosan Engineering & Services LLC
Engineering & Services
USA 100 100 - - "
Doosan Heavy Industries America Corp.
Sales USA 100 100 - - "
Doosan ATS America, LLC
Engineering & Services
USA 100 - - - "
Doosan Skoda Power s.r.o Manufacturing Czech 100 100 - - "
Skoda Power Private Ltd.
Engineering India 100 100 - - Mar. 31
Doosan Power Systems Pension Trustee Company Ltd.
Professional services
UK 100 100 - - Dec. 31
Doosan Power Systems Overseas Investments Ltd.
Holdings Company
UK 100 100 - - "
Doosan Babcock Ltd.
Engineering & Services
UK 100 100 - - "
Doosan Power Systems Holdings Ltd.
Holdings Company
UK 100 100 - - "
Doosan Power Systems Europe Limited GmbH
Engineering & Services
Germany 100 100 - - "
Doosan Power Systems Czech Investments a.s.
Holdings Company
Czech 100 100 - - "
11
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information (cont’d)
Subsidiaries (cont’d)
Ownership interest held by
the parent (%) (*1)
Ownership interest held by non-
controlling interests (%) (*1)
Report-ing
date (*2) Subsidiaries
Principal business activity
Country of domicile
2014 2013 2014 2013
Doosan Power Systems Americas LLC
Engineering & Services, Sales
USA 100 100 - - "
Doosan Lentjes UK Limited
Professional services
UK 100 100 0.96 0.96 "
Doosan Lentjes GmbH
Engineering & Services
Germany 99.04 99.04 0.96 0.96 "
Doosan Power Systems S.A (“DPS S.A.”)
Holdings Company
Luxem-bourg
100 100 - - "
Doosan Babcock Energy Technologies (Shanghai) Ltd.
Engineering & Services
China 100 100 - - "
Doosan Babcock Energy Services (Overseas) Ltd.
Engineering & Services
UK 100 100 - - "
Doosan Babcock Energy Polska Sp z.o.o
Engineering & Services
Poland 98.91 98.91 1.09 1.09 "
Doosan Babcock Energy Germany GmbH
Engineering & Services
Germany 100 100 - - "
Doosan Lentjes Czech s.r.o
Professional services
Czech 100 100 0.96 0.96 "
AE&E Lentjes Belgie N.V. Dormant Belgium 100 100 0.96 0.96 " Doosan Power
System (Scotland) Ltd. Partnership
Real estate UK 100 100 - - "
Doosan Babcock General Maintenance Services LLC(*3)
Professional services
UAE 49 - 51 - "
Doosan Babcock WLL(*3)
Professional services
Qatar 49 49 51 51 "
Doosan Infracore Co., Ltd. (“DI”) and subsidiaries (*4)
Manufacturing of machinery & equipment
Korea, etc 36.40 36.40 63.60 63.60 "
Doosan Engineering & Construction Co., Ltd. ( “DEC”) and subsidiaries
Construction and
manufacturing Korea, etc 84.29 84.90 15.71 15.10 "
Doosan Engine Co., Ltd. ( “DE”) and subsidiaries (*4)
Manufacturing of machinery & equipment
Korea, etc 42.66 42.66 57.34 57.34 "
(*1) The ownership interest held by the parent represents the aggregated total of ownership interests
directly held by each entity within the Group. The ownership interest held by non-controlling interests represents the proportion of ownership interests that is not attributable directly or indirectly to the entities within the Group, and it may differ from the aggregated total less the effective ownership interest held by the Group.
(*2) Where the reporting date of subsidiaries are not consistent with that of the Company based on local
laws, adjustments have been made to conform to the Company’s reporting date for the preparation of the consolidated financial statements.
(*3) Although the Company’s ownership interest in the investee is less than a majority, the Company
concluded that it exercises control over the investee based on the voting rights in board of directors. (*4) Although the Company’s ownership interest in the investee is less than a majority, the Company
concluded that it exercises control over the investee based on its holdings relative to the size and dispersion of ownership interests held by other holders, and the voting patterns in previous shareholders’ meetings.
12
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information (cont’d)
Main subsidiary’s financial information Summarized financial information of main subsidiaries as at and for the year ended December 31, 2014 is as follows (Korean won in millions):
Subsidiary Assets Liabilities Sales Profit (loss) for the year
Total comprehensive income (loss)
Doosan Heavy Industries Vietnam Co., Ltd.
₩ 375,364 ₩ 299,800 ₩ 227,864 ₩ (1,403)
₩ 1,612
Doosan HF Controls Corp.
19,447
6,814 13,225 4,182 4,796
Doosan Heavy Industries Japan Corp.
36,096
33,747 2,935 256 43
S.C Doosan IMGB S.A.
161,042
120,952 76,324 (7,872) (8,686)
Doosan Enpure Ltd.
10,114
6,258 19,411 287 220 Doosan Construction Site Solutions Vietnam
Co., Ltd.
12,663
746 3,022 (791) (471)
Doosan Power Systems India Private Ltd.
519,031
390,883 582,712 7,267 9,709
Doosan Heavy Industries America Holdings Inc.
140,774
202 - 114 1,063
Doosan Hydro Technology Inc.
22,517
43,312 27,227 (1,045) (1,878)
Doosan Heavy Industries America Corp.
75,986
21,421 3,844 399 2,579
Doosan Skoda Power s.r.o
607,158
255,789 440,251 85,266 65,935 Doosan Power Systems Overseas Investments
Ltd.
87,757 99,168 - (2,099) (2,099)
Doosan Babcock Ltd.
1,947,918 1,125,676 834,931 10,456 (28,995)
Doosan Power Systems Holdings Ltd.
143,216 - - 9,979 9,979
Doosan Power Systems Europe Limited GmbH
172,431 109,131 - (1,624) (3,557)
Doosan Lentjes GmbH
103,236 66,246 43,263 (6,450) (13,256)
DPS S.A.
1,392,052 1,250,283 2,123 5,726 5,726
Doosan Babcock Energy Polska Sp z.o.o.
31,917 21,801 44,813 2,350 1,997 Doosan Power Systems (Scotland) Ltd.
Partnership
29,568 1,448 3,308 (1,017) (1,017)
DI and its subsidiaries
11,957,427 8,669,139 7,688,558 23,972 (229,612)
DEC and its subsidiaries
5,133,091 3,170,495 2,363,893 (68,580) (58,524)
DE and its subsidiaries
1,540,297 839,595 888,826 (42,231) (89,531)
13
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information (cont’d)
Significant non-controlling interests Significant financial information of subsidiaries attributable to non-controlling interests is as follows (Korean won in millions):
Subsidiary
Net profit (loss) attributable to non-controlling interests
Cumulative non-controlling interests
Dividends allocated to non-
controlling interests
Doosan Infracore Co., Ltd. and subsidiaries ₩ 19,167 ₩ 2,047,288 ₩ (28,418)
Doosan Engineering &Construction Co., Ltd. and subsidiaries
11,542 683,432
-
Doosan Engine Co., Ltd. and subsidiaries. (21,480) 313,708 -
Cash flow information for subsidiaries with significant non-controlling interests Cash flow information for subsidiaries with significant non-controlling interests is as follows (Korean won in millions):
2014
DI and
subsidiaries DEC and
subsidiaries DE and
subsidiaries
Ⅰ. Net cash flows provided by (used in)
operating activities
₩ 231,296 ₩ (4,914) ₩ (85,536)
Ⅱ. Net cash flow provided by (used in)
investing activities
(428,522)
(166,769) 96,415
Ⅲ. Net cash flows provided (used in)
by financing activities
281,367
180,950 (7,660)
Ⅳ. Net foreign exchange difference
(9,026)
110 185
Ⅴ. Net increase in cash and cash equivalents
(Ⅰ+Ⅱ+Ⅲ+Ⅳ)
75,115
9,377 3,404
Ⅵ. Cash and cash equivalents as at January 1
287,838
158,121 41,595
Ⅶ. Cash and cash equivalents as at December 31
₩ 362,953
₩ 167,498 ₩ 44,999
14
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information (cont’d)
Changes in scope of consolidation Changes in scope of consolidation for the year ended December 31, 2014 are as follows:
Subsidiary Description Reason
Doosan Babcock Energy Scotland Ltd. Excluded from consolidation
Liquidation
Babcock Welding Products Ltd. Excluded from consolidation
Liquidation
Babcock Energy Ltd. Excluded from consolidation
Liquidation
Doosan Power Systems UK Investment Ltd. Excluded from consolidation
Liquidation
Doosan Power Systems Brazil Ltda Excluded from consolidation
Liquidation
Doosan Infracore U.K., Ltd. Excluded from consolidation
Liquidation
Goldwave Ltd. Excluded from consolidation
Liquidation
Goldwave Holdings Ltd. Excluded from consolidation
Liquidation
Geith Patents Ltd. Excluded from consolidation
Liquidation
Rexcon Co., Ltd. (*1) Excluded from consolidation
Merger between
consolidated entities Bobcat Parts Services GmbH (*2) Excluded from
consolidation
Merger between consolidated entities
Doosan Beteiligungs GmbH (*2) Excluded from consolidation
Merger between
consolidated entities Bobcat Bensheim GmbH Co KG (*2) Excluded from
consolidation
Merger between consolidated entities
Doosan Babcock General Maintenance Services LLC Incorporation of new connections
Establishment of new
corporation Doosan Babcock WLL Incorporation of new
connections
Acquisition control
Doosan ATS Amercia, LLC Incorporation of new connections
Establishment of new
corporation Doosan Infracore Bobcat Ireland Ltd. Incorporation of new
connections
Establishment of new corporation
Doosan Infracore Bobcat Holdings Co., Ltd. Incorporation of new connections
New corporation resulting
spin-off
(*1) Merged into DEC in 2014. (*2) Merged into Doosan Holdings Germany GmbH in 2014 and its name was changed to Bobcat
Bensheim GmbH.
15
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
1. Corporate information (cont’d)
Unconsolidated special purpose entities The Group holds loan agreements with special purpose entities (the “SPEs”). While the Group has no ownership interests directly or indirectly in the SPEs, based on the assessment of the risks and benefits the Group is exposed to from the SPEs and of the substantial relationship with the Group, the Group concluded it exercises control. However, the Group did not consolidate the SPEs, as the identifiable assets, and liabilities and the results of their financial performance are not material to the consolidated financial statements. SPEs, not included in consolidation as at December 31, 2014 and December 31, 2013, are as follows:
SPE
2014
Principal business
activity Ownership interest (%)
Country of domicile
Doosan Cuvex 1st Securitization Specialty Co., Ltd. Asset securitization - Korea
DS SOLBAT the 2nd Co., Ltd. Asset securitization - Korea
Doosan E&C 1st Co., Ltd. Asset securitization - Korea
DS Haeundae Asset Securitization Specialty Co., Ltd.
Asset securitization -
Korea
PINETREECITY 1st Co., Ltd. Asset securitization - Korea
SD 1st Co., Ltd. Asset securitization - Korea
DS SOLBAT the 3rd Co., Ltd. Asset securitization - Korea
DS SOC 1st L.L.C. Asset securitization - Korea
SPE
2013
Principal business
activity Ownership interest (%)
Country of domicile
Doosan Cuvex 1st Securitization Specialty Co., Ltd. Asset securitization - Korea
DS Gangnam Bundang Inc. Asset securitization - Korea
DS SOLBAT the 1st Co., Ltd. Asset securitization - Korea
Doosan E&C 1st Co., Ltd. Asset securitization - Korea
16
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies
2-1. Basis of preparation The Group prepares statutory financial statements in the Korean language in accordance with Korean International Financial Reporting Standards (“KIFRS”) enacted by the Corporate External Audit Law. The accompanying consolidated financial statements have been prepared on a historical cost basis, except for land and others which have been measured at fair value, and are presented in Korean won (“KRW”) in units except for the accompanying notes to the consolidated financial statements.
The accompanying consolidated financial statements have been translated into English from the Korean language financial statements. In the event of any differences in interpreting the consolidated financial statements or the independent auditors’ report thereon, the Korean version, which is used for regulatory reporting purposes, shall prevail.
2-2. Basis of consolidation The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December 31, 2014. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee, and - The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: - The contractual arrangement with the other vote holders of the investee - Rights arising from other contractual arrangements - The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit or loss and the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) or loss are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
17
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d)
2-2. Basis of consolidation (cont’d) A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
- Derecognizes the assets (including goodwill) and liabilities of the subsidiary - Derecognizes the carrying amount of any non-controlling interests - Derecognizes the cumulative translation differences recorded in equity - Recognizes the fair value of the consideration received - Recognizes the fair value of any investment retained - Recognizes any surplus or deficit in profit or loss - Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
2-3. New and amended standards The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended December 31, 2013, except for the adoption of new standards, interpretations and amendments as at January 1, 2014, noted below.
- Investment Entities – Amendments to KIFRS 1110, KIFRS 1112 and KIFRS 1027 - Offsetting Financial Assets and Financial Liabilities – Amendments to KIFRS 1032 - Recoverable Amount Disclosures for Non-Financial Assets – Amendments to KIFRS 1036
Impairment of Assets - Novation of Derivatives and Continuation of Hedge Accounting – Amendments to KIFRS 1039 - KIFRS 2121 Levies
Investment Entities – Amendments to KIFRS 1110, KIFRS 1112 and KIFRS 1027 These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under KIFRS 1110 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no impact on the Group, since none of the entities in the Group qualifies to be an investment entity under KIFRS 1110. The new disclosure requirements related to investment entities are introduced in KIFRS 1112 Disclosure of Interest in Other Entities and KIFRS 1027 Seperate Financial Statements.
Offsetting Financial Assets and Financial Liabilities – Amendments to KIFRS 1032 Amendment to KIFRS 1032 Financial Instruments: Presentation, provides that the right to offset financial assets and liabilities must not be contingent on a future event and must be legally enforceable in all of circumstances; and if an entity can settle amounts in a manner such that outcome is, in effect, equivalent to net settlement, the entity will meet the net settlement criterion. There is no impact of the application of this standard on the Group’s consolidated interim financial statements.
Recoverable Amount Disclosures for Non-Financial Assets – Amendments to KIFRS 1036 Impairment of Assets These amendments remove the unintended consequences of KIFRS 1113 on the disclosures required under KIFRS 1036. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash generating units (“CGU”) for which impairment loss has been recognized or reversed during the period.
18
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d)
2-3. New and amended standards (cont’d)
Novation of Derivatives and Continuation of Hedge Accounting – Amendments to KIFRS 1039 These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria and retrospective application is required. These amendments have no impact on the Group as the Group has not novated its derivatives during the current or prior periods.
KIFRS 2121 – Levies
KIFRS 2121 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. The financial effects which the Group applied retroactively when the Group calculates the expected return of plan assets are immaterial on consolidated financial statements.
2-4. Investment in associates and joint ventures
An associate is an entity over which the Group has significant influence, and which is neither a subsidiary nor an investment in a joint venture and the Group generally holds, directly or indirectly through subsidiaries, between 20% and 50% of the voting power of the entity. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. 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 Group’s investments in its associate and joint venture accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.
After acquisition, the Group's share of the profit or loss and other comprehensive income or loss of the associates and jointly controlled entities are recognized as profit or loss and other comprehensive income or loss and the Group's share of the changes in retained earnings of the associates and joint ventures are recognized as retained earnings. When the Group's share of losses of an associates and joint ventures exceeds the Group 's interest in those entities (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associates and joint ventures.
Unrealized gains from transactions between the Group and its associates and joint ventures are eliminated up to the interests in those entities. Unrealized losses are also eliminated unless evidence of impairment in assets transferred is provided.
When necessary, the Group may revise associates’ and joint ventures’ financial statements, to apply consistent accounting policies as the Group, prior to applying the equity method of accounting for its investments in the associates and joint ventures.
For overseas investees whose financial statements are prepared in foreign currencies, the equity method of accounting is applied after assets and liabilities are translated in accordance with the accounting treatments for the translation of the financial statements of overseas’ subsidiaries for consolidated financial statements. The Group’s proportionate share of the difference between assets net of liabilities and equity after translating into Korean Won is accounted for as “increase (decrease) in equity adjustments in equity method investments” included in accumulated other comprehensive income (loss).
19
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-5. Foreign currency translation Functional currency and presentation currency The Group’s financial statements are presented in the currency of the primary economic environment in which it operates (its functional currency). The functional currency and the presentation currency for the consolidated financial statements of the Group are Korean Won. Transactions and balances Transactions in currencies other than the entity’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. Foreign currency gain (loss) from settlements of foreign currency transactions or translation of monetary items denominated in foreign currencies are recognized in profit or loss whereas the gain (loss) from qualified cash flow hedge and net investment hedge for foreign operations is deferred as an equity item. Group companies For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations having functional currencies different from the Group’s are translated in presentation currency of the Group using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income or loss and accumulated in equity (attributed to non-controlling interests as appropriate). Exchange differences from the net investment in the foreign operation, and borrowings and other foreign currency instruments designated as hedging instrument for the net investment in the foreign operation are recognized in other comprehensive income or loss. On the disposal of a foreign operation resulting in loss of control, all of the accumulated exchange differences in respect of that operation are reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
2-6. Cash and cash equivalents Cash and cash equivalents include cash on hand, demand deposits, short-term, highly liquid investments with maturities (or date of redemption) of three months or less upon acquisition. Bank overdraft is classified as short-term borrowings on the consolidated statements of financial position. 2-7. Financial assets Initial recognition and measurement Financial assets are classified into the following specified categories: ‘financial assets at fair value through profit or loss’, ‘loans and receivables’, ‘available-for-sale (“AFS”) financial assets’, ‘held-to-maturity financial assets’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. 1) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets classified as held for trading and financial assets designated at financial assets at fair value through profit or loss upon initial recognition. A financial asset is classified as held for trading financial assets, if it has been acquired principally for the purpose of selling or repurchasing in near term. All derivative assets including an embedded derivative separated from the host contract and accounted for as derivative are classified as held for trading financial assets unless they are designated as effective hedging instruments. These categories of assets are classified as current assets or non-current assets depending on the timing of settlement.
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Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-7. Financial assets (cont’d)
2) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables, with maturities of more than 12 months from the end of the reporting period, are classified as non-current assets. Otherwise they are classified as current assets. 3) Available-for-sale financial investments
AFS financial investments are non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity financial assets or financial assets at fair value through profit or loss. AFS financial investments are classified as non-current assets unless management has intention to sell them within 12 months from the end of the reporting period. 4) Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial instruments with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. Held-to-maturity financial assets, with maturities of more than 12 months from the end of the reporting period, are classified as non-current assets. Otherwise they are classified as current assets. Subsequent measurement Financial assets are generally recognized on the trade date, which is the date the Group becomes a party to a contract to purchase or sale of a financial asset. Except for financial assets at fair value through profit or loss, all financial assets are initially measured at fair value, plus transaction costs. In the case of financial assets at fair value through profit or loss, they are initially measured at fair value and related transaction costs are recognized as expense in the consolidated statement of profit or loss.
Financial assets at fair value through profit or loss and AFS financial investments are subsequently measured at fair value. Loans and receivables and held-to-maturity investments are measured at amortized cost using the effective interest method (“EIR”). Gains or losses arising from changes in fair value of financial assets at fair value through profit or loss are recognized in the other non-operating income and expense line item in the consolidated statement of profit or loss. Dividends on financial assets at fair value through profit or loss are recognized in the finance income when the Group’s right to receive the dividends is established. Changes in fair value of monetary and non-monetary financial assets which are classified as AFS financial investments are recognized in other comprehensive income or loss. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the equity in reclassified into other non-operating income and expense in the statement of profit or loss.
Interest from AFS financial investments calculated using the EIR is recognized in finance income in the consolidated statement of profit or loss. Dividends on AFS equity instruments are recognized in the finance income when the Group’s right to receive the dividends is established. Impairment of financial assets 1) Financial assets carried at amortized cost The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. 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.
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Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-7. Financial assets (cont’d) Impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate at initial recognition. The carrying amount of the financial asset is reduced by the impairment loss and the amount of the loss is recognized in profit or loss. The Group measures impairment loss based on fair value of financial assets from observable market data. 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 and recognized in profit or loss. 2) Available-for-sale financial investments The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. For 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. If there is objective evidence of impairment on AFS financial investments, the cumulative loss that has been recognized in other comprehensive income or loss less any impairment loss previously recognized in profit or loss is reclassified from equity to profit or loss. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as AFS are not reversed through profit or loss. Meanwhile, if, in a subsequent period, the fair value of a debt instrument classified as AFS increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.
Derecognition The Group derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which all the risks and rewards of ownership of the financial asset are transferred. Offsetting of financial instruments Financial assets and financial liabilities are offset as a net amount in the consolidated statement of financial position when the Group has a legally enforceable right to set off the recognized amounts of the assets and liabilities and intends to settle on a net basis, or to realize the assets and the liabilities simultaneously. 2-8. Trade receivables
Trade receivables are amounts owed by customer for products and services provided in the ordinary course of business. Receivables expected to be collected within one year are classified as current assets. Otherwise they are classified as non-current assets. Trade receivables are initially measured at fair value and are presented as net of allowance for doubtful accounts, estimated on an individual basis based on past bad debt experience. 2-9. Due from customers for contract work and due to customers for contract work The gross amount due from customers for contract work is the net amount of:
(a) costs incurred, plus recognized profit, less
(b) the sum of recognized losses and progress billings for all contracts in progress for which costs are incurred, plus recognized profits (less recognized losses), in excess of progress billings. The costs incurred shall comprise costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract, including fixed and variable overhead costs allocated based on the normal level. If the costs incurred, plus recognized profit (or losses) exceeds progress billings, a due from customer amount is recognized as an asset; and if the progress billing exceeds the cost incurred, plus recognized profit (or losses), a due to customer amount is recognized as a liability.
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Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-10. Inventories Inventories are stated at the lower of cost and net realizable value. Cost of inventories includes fixed and variable manufacturing overhead costs which are systematically allocated to inventories by appropriate methods based on each category of inventory. The cost of inventories is determined by the specific identification method for finished goods, work-in-process, and materials in transit, and gross average method for all other inventories. The Group periodically reviews changes in net realizable value of inventories (current replacement cost for raw materials) due to damage, obsolescence, decline in selling prices and others and recognizes loss on inventory valuation. Loss on inventory valuation is charged to cost of sales when it is ordinary and to other non-operating expense when it is extraordinary. When the circumstances that previously caused inventories to be written down below cost no longer exist and the new market value of inventories subsequently recovers, the valuation loss is reversed to the extent of the original valuation loss and the reversal is deducted from cost of sales.
2-11. Property, plant and equipment Property, plant and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment losses. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of an item of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the asset including the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Subsequent costs incurred to replace part of previously recognized item of property, plant and equipment are added to the carrying amount of an asset, or recognized as a separate asset, if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of what was replaced is derecognized. Routine maintenance and repairs are expensed as incurred.
Depreciation of property, plant and equipment is calculated to the cost of each asset less residual value using the straight-line method over the estimated useful lives of the assets as follows:
Useful lives
Buildings 10~43 years
Structures 5~40 years
Machinery 2~20 years
Heavy equipment 10 years
Vehicles 3~10 years
Others 2~14 years
If a part of a property, plant and equipment has a cost that is significant in relation to the total cost property, plant and equipment, it is depreciated separately. The Group 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.
When the carrying amount of property, plant and equipment is higher than the recoverable amount, the carrying amount is adjusted to the recoverable amount and the difference is recognized as an impairment loss. Meanwhile, when the recoverable amount subsequently exceeds the carrying amount of the impaired asset, the excess is recorded as a reversal of impairment loss to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized. Upon the derecognition of a property, plant and equipment, the difference between the net disposal proceed and carrying amount of the item is recognized in other non-operating income (expense).
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Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-11. Property, plant and equipment (cont’d) A revaluation surplus is recorded in OCI and credited to the asset revaluation reserve in equity. However, to the extent that it reverses a revaluation deficit of the same asset previously recognized in profit or loss, the increase is recognized in profit and loss. A revaluation deficit is recognized in the statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognized in the asset revaluation reserve. 2-12. Intangible assets Intangible assets are initially measured at cost and are carried at cost less accumulated amortization and accumulated impairment losses. Subsequent expenditure on an intangible asset is capitalized only when it is probable that the expected future economic benefits that are attributable to the asset will increase.
Intangible assets other than goodwill and intangibles with indefinite useful lives are amortized on a straight-line basis over their estimated useful lives from the date that they are available for use. The estimated useful lives of the intangible assets are as follows: However, useful lives of certain trademarks and memberships, which are determined to be indefinite since there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows for the Group, are not amortized but tested for impairment once a year. Goodwill acquired in a business combination is measured as the excess of the sum of: a) the consideration transferred, b) the amount of any non-controlling interests in the acquiree, and c) the fair value of the acquirer's 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 and is classified as intangible assets. Goodwill is tested for impairment annually and carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. Impairment loss recognized for goodwill is not reversed. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
Expenditures relating to development activities are capitalized when the result of the development is for the development of new products or substantial improvement of functions of existing products; there is technical and commercial feasibility of completing the development; and the Group has the ability to measure reliably the expenditure attributable to the development. Capitalized development cost include expenditure on materials, salaries, wages and other employment-related costs of personnel directly engaged in generating assets and related overhead cost which is systematically allocated. Capitalized development costs are presented at the acquisition cost less accumulated amortization and accumulated impairment losses. Capitalized development costs are amortized using the straight-line method over the estimated useful life and amortization expenses are included in cost of goods manufactured and amortization in selling and administrative expenses. The expenditure on research and development which does not meet conditions noted above is recognized as an expense when it is incurred. The estimated useful life and amortization method for intangible assets with finite useful lives are reviewed at the end of each reporting period and for the assets which have been assessed as having indefinite useful life, that assessment is revisited each period, with the effect of any changes in estimate being accounted for as a change in accounting estimate.
Useful lives
Industrial property rights 5~10, 20, 40 years
Development costs 4~12 years
Others 2~20 years
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Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d)
2-13. Investment property Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, the book value of investment property is presented at the cost less accumulated depreciation and accumulated impairment. While land is not depreciated, building is depreciated using the straight-line method over the useful lives between 20 and 48 years. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for as a change in accounting estimate. 2-14 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. 2-15. Impairment of non-financial assets Assets with indefinite useful lives such as goodwill are not amortized but tested for impairment annually. Assets which are amortized or depreciated are tested for impairment to determine whether events and circumstances indicating those assets have suffered impairment exist. Impairment loss is the excess of the carrying amount over recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Except for goodwill, all non-financial assets that have incurred impairment are tested for reversal of impairment at the end of each reporting period. 2-16. Borrowings Borrowings are measured initially at fair value, net of transaction costs and subsequently at amortized cost using the EIR, with interest expense being recognized on an effective yield basis. The difference between the amount received and the redemption amount is amortized using the effective interest method and recognized in profit or loss. Borrowings are classified as non-current liabilities when the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period. Otherwise borrowings are classified as current liabilities. 2-17. Compound financial instrument Compound financial instruments issued by the Group are classified as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. The conversion right of convertible bonds and stock warranties embedded in compound financial instrument issued by the Group which can, at the option of the holder, be converted into a fixed number of equity instruments in the Group, is classified as equity. The liability component of a convertible bonds and bonds with stock warranties is recognized at the fair value of a similar liability on initial recognition and be measured at amortized cost by applying the EIR until it is extinguished. The equity component is measured by deducting the fair value of the liability component from the fair value of the compound financial instrument as a whole on initial recognition. Any tax effect is also reflected, and such instrument is not subsequently remeasured .
The conversion right that is an embedded derivative is recognized at the market value of a similar derivative or at the fair value derived from an appropriate valuation model. Subsequent changes in fair value of the conversion right are recognized in profit or loss.
25
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-18. Financial guarantee contracts The Group has financial guarantee contract liabilities, which are obligations to pay specific amounts for indemnifying creditors’ loss on insolvency of specific debtors according to initial or revised contract provisions of liabilities on the payment date. Financial guarantee contract liabilities are initially measured at their fair value less the direct transaction cost relating to the issuance. Subsequently, financial guarantee contract liabilities are measured at the higher of the amount of the obligations under the contract, as determined in accordance with KIFRS 1037 Provisions, Contingent Liabilities and Contingent Assets, and the amount initially recognized less the cumulative amortizations recognized in accordance with the KIFRS 1018 Revenue. 2-19. Employee benefits liability The Group operates various types of benefit plans, and generally makes contributions calculated based on periodic actuarial calculations to separately administered funds such as qualifying insurance companies or trust funds. A defined contribution plan is a post-employment benefit plan, under which the Group pays fixed contribution to a separately administered fund. The Group does not assume any legal or constructive obligation to pay the additional contribution even if the fund does not hold sufficient assets to pay benefits, relating to employee’s service in the current and prior periods, in full. The contribution is recognized as pension benefit at the date of payment. If the contribution already paid exceeds the contribution due for services rendered prior to the end of the reporting period, the Group recognizes such excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund. Defined benefit plans are post-employment benefit plans other than defined contribution plans. Generally, under the defined benefit plan, amounts to be paid as retirement benefits are determined by reference to a formula usually based on employees' earnings, years of service, ages and other considerations. The retirement benefit obligation recognized in the consolidated statements of financial position represents the present value of the defined benefit obligation, less fair value of plan assets and adjustment for unrecognized past service cost. The defined benefit obligation is calculated by an independent actuary using the projected unit credit method. The present value of the defined benefit obligation is denominated in the same currency in which the benefits are expected to be paid, and calculated at the discount rate which is the yield at the reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligation.
Actuarial gain or loss from changes in actuarial assumptions or differences between actuarial assumptions and actual results is recognized in other comprehensive income or loss, which is immediately reflected in retained earnings. Past service cost is directly recognized in profit or loss in the period the plan amendment or curtailment occurs. 2-20. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. A provision is measured using the present value of the cash flows estimated to settle the present obligation when the effect of the time value of money is material. At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the current best estimate is being recognized. The increase in provision due to passage of time is recognized as interest expense. If the existence of an obligation to transfer economic benefit is no longer probable, the related provision is reversed during the period. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. In this case, any income arising from the third party reimbursement is netted off against the related expense to be recognized in the consolidated statements of profit or loss from the recognition of provisions.
26
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-21. 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.
2-22. Derivative financial instruments and hedge accounting 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 generally recognized as profit or loss when it is incurred. However, 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 or loss. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
1) Hedge accounting The Group operates fair value hedges to avoid the risk of fair value change, which is incurred from specific risk on assets, liabilities and firm contracts, and cash flow hedges to avoid the risk of future cash flow change, which is incurred from specific risk on expecting contracts. At the inception of the hedge relationship, the Group 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 Group assesses whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item. Fair value hedges Changes in the fair value of derivatives that are designated and qualified as fair value hedges (or gain or loss on foreign currency translation, when a financial instrument, not derivative is designated as the hedging instrument) 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. Cash flow hedges The effective portion of change in the fair value of derivatives that are designated and qualify as cash flow hedges for decreasing risk incurred from change of future cash flow on forecast transaction is recognized in other comprehensive income or loss. Amounts previously recognized in other comprehensive income or loss and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, or is reflected in the carrying amount of the associated asset or liability when the forecasted transaction occurs. Even when hedge accounting is discontinued due to the expiration, termination or exercise of hedging instrument, subsequent accounting treatment of amounts recognized in other comprehensive income or loss and accumulated in equity is the same. However, when hedge accounting is discontinued due to forecast transaction being no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss. 2) Separable embedded derivatives Embedded derivatives are separated from the host contract and accounted for separately only if the following criteria has been met: (a) the economic characteristics and risks of the host contract and the embedded derivatives are not clearly and closely related to a separate instrument with the same terms as the embedded derivative that would meet the definition of a derivative, and (b) the hybrid (combined) instrument is not measured at fair value through profit or loss. Changes in the fair value of separable embedded derivatives are recognized immediately in profit or loss. 3) Other derivative financial instruments Derivative financial instruments other than the effective portion of derivative financial instruments that are designated as the hedging instruments are measured at fair value. Gain or loss arising from changes in fair value is recognized in profit or loss.
27
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-23. Dividend Dividend payable is recognized as liability when declaration of the dividend is approved in the shareholders’ meeting.
2-24. Issued capital Common stocks are classified as equity, and the incremental costs directly arising from capital transactions, net of tax are deducted from equity. Preferred stocks are classified as equity only if the preferred stocks are not redeemable or redeemable solely upon the Group’s decision, or the distribution of dividends is solely upon the Group's decision. Once a general meeting of shareholders meeting approves dividends, the Group recognizes the dividend liability accordingly. Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
2-25. Share-based payments The Group measures the cost of share options granted to employees by reference to the estimated fair value at the date at which they are granted. The share-based payment expenses are recognized on a straight-line basis over the vesting period reflecting expected forfeiture rate. The Group determines the fair value of share option using the Black-Scholes option pricing model.
2-26. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and rendering of services arising in the course of the ordinary activities of the Group. Revenue is reduced for value added tax, estimated customer returns, rebates and trade discounts and is presented after eliminating intercompany transactions. The Group recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group and when transaction meets the revenue recognition criteria specified by activity. When measuring revenue, the Group reliably estimates on contingencies related to sales based on historical data such as customer type, transaction type and trading terms. Sale of goods Revenue from the sale of goods is recognized when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods. Revenue is recognized on initial delivery of the goods net of expected discounts and returns estimated based on historical data. The Group estimates and recognizes provision for warranty and sales return arising from sale of goods. Rendering of services If the outcome of a contract can be reliably measured, contract revenue and contract cost associated with the construction contract are recognized by reference to the stage of completion of the contract activity at the end of the reporting period. The stage of completion of the contract is assessed by reference to the proportion of the actual contract costs incurred to the costs to complete the contract. Should the construction contract expect to incur loss (total contract cost exceeds total contract revenue), such loss is immediately recognized in profit or loss. Revenue from service transactions other than a construction contract is recognized by using percentage of completion method. Other income Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement. Revenues arising from dividends are recognized when the right to receive the dividend payment is established. Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is recognized using the effective interest method. Lease income is accounted for on a straight-line basis over the lease terms.
28
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d) 2-27. Government grants Government grants that are earmarked for the acquisition of assets are recognized as a deduction from the acquisition cost of the received assets or other assets for temporarily investing received assets before the intended assets are acquired. When the intended assets are acquired, they are recorded as a deduction from the acquisition cost. Government grants that have no specific condition for their use are recognized in operating income when it is directly related to primary operations. If not, government grants are recognized in other non-operating income. If there are specific expenses related to government grants, the Group offsets the income from government grants with such expenses and recognizes the net amount in profit or loss.
2-28. Taxes and deferred tax Income tax expense is composed of current and deferred tax. Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or loss or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or loss or directly in equity, respectively. Income tax (current tax) expense is the sum of corporate tax for each fiscal year and tax added to corporate tax under corporate income tax law and other applicable laws. Additional income taxes or tax refunds for the prior periods are included in income tax expense for the current period when recognized. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. 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 income. Deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. 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 realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, joint ventures and associates except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable income against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
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 income will be available to allow all or part of the asset to be recovered.
29
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
2. Summary of significant accounting policies (cont’d)
2-29. Non-current assets held for sale Non-current assets and disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell and are no longer depreciated or amortized. If the fair value less costs to sell of the non-current assets held-for-sale (and disposal groups) decrease, impairment loss is recognized immediately in profit or loss. A gain should be recognized for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss previously recognized. 2-30. Operating segments Operating segments are reported on the same basis as the financial information that is reported to the management of the Group. The management of the Group is responsible for the allocation of resources and assessment of performance for the operating segments. 2-31. Standards issued but not yet effective The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below.
Amendments to KIFRS 1019 Defined Benefit Plans: Employee Contributions KIFRS 1019 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after July 1, 2014. Amendments to KIFRS 1111 Joint Arrangements: Accounting for Acquisitions of Interests The amendments to KIFRS 1111 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business must apply the relevant KIFRS 1103 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to KIFRS 1111 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. Amendments to KIFRS 1016 and KIFRS 1038: Clarification of Acceptable Methods of Depreciation and Amortization The amendments clarify the principle in KIFRS 1016 and KIFRS 1038 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are effective prospectively for annual periods beginning on or after January 1, 2016, with early adoption permitted.
30
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
3. Significant accounting estimates and assumptions The estimates and underlying assumptions are reviewed on an ongoing basis. The estimates and underlying assumptions are based on historical experiences and other factors including expectation on possible future events. Actual results may differ from these estimates. The following are critical assumptions and key sources of estimation uncertainty at the end of reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of the Group’s assets and liabilities within the next financial year.
Revenue recognition based on percentage of completion Revenue for construction contracts is recognized using the percentage-of-completion method, under which revenue is recognized as work progresses in the ratio of actual costs incurred to estimated total costs. Any changes in the early stages of long-term projects in the scope and costs of project implementation in the construction period, and in construction plans may have a significant effect on the amount of revenue recognized. Impairment of goodwill Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Recoverable amount of CGU is calculated based on the value in use, This calculation requires the use of accounting estimates. Employee benefit liability The Group operates a defined benefit plan. Defined benefit liability is calculated by annual actuarial valuations as at the reporting date. In order to perform the actuarial valuations, assumptions for discount rates, future salary increases and others are required to be estimated. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. In accordance with the relevant laws and practices, the estimated amounts may change to allow for additional provisions to be recognized in future periods. Deferred tax Recognition and measurement of deferred tax assets and liabilities require judgement of the Group’s management. Especially, the recognition of deferred tax asset and the scope of recognition are influenced by assumptions about future circumstances and judgement of management.
Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs.
31
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
4. Financial risk management The Group is exposed to various financial risks such as market risk, credit risk and liquidity risk relating to its operations. The objective of the Group’s risk management policy is to improve financial structure and enhance the efficiency of treasury operations for sustainable business performance.
Financial risk management activities are performed by the Group’s treasury department in accordance with risk management policies. In addition, the Group monitors financial risks regularly to minimize the effect from such relevant risks.
Market risk
(1) Foreign currency risk
The Group’s exposure to the risk of changes in foreign currency exchange rates relates primarily to the Group’s operating activities and net investments in foreign subsidiaries. The Group’s objective of foreign currency risk management is to minimize uncertainty and volatility arising from fluctuations in foreign currency exchange rates. Foreign currency risk is managed in accordance to the Group’s policy on foreign currencies, and currency trading for speculative purposes is prohibited.
The Group manages foreign currency risk by matching the inflow and the outflow of foreign currencies (natural hedge) and by using currency derivatives, such as currency forwards, for the remaining exposure.
The Group’s book value of financial assets and liabilities denominated in foreign currencies as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
USD
EUR
JPY GBP
Others (*1)
Total
I. Financial assets ₩ 1,958,448 ₩ 314,100 ₩ 2,846 ₩ 61,882 ₩ 183,389 ₩ 2,520,665
II. Financial liabilities 3,135,018 806,002 128,050 42,678 74,409 4,186,157
Net (I-II) ₩ (1,176,570) ₩ (491,902) ₩ (125,204) ₩ 19,204 ₩ 108,980 ₩ (1,665,492)
2013
USD
EUR
JPY GBP
Others (*1)
Total
I. Financial assets ₩ 1,510,635 ₩ 229,589 ₩ 8,386 ₩ 3,023 ₩ 178,318 ₩ 1,929,951
II. Financial liabilities 3,092,995 523,037 40,039 16,954 172,725 3,845,750
Net (I-II) ₩ (1,582,360) ₩ (293,448) ₩ (31,653) ₩ (13,931) ₩ 5,593 ₩ (1,915,799)
(*1) Others are translated into Korean won in millions from foreign currencies except for USD, EUR, JPY and GBP.
The following table demonstrates the sensitivity of a 10% fluctuation in foreign currency exchange rates, with all other variables held constant, on the Group’s profit (loss) before tax for the years ended December 31, 2014 and 2013 (Korean won in millions):
2014
2013
10% increase
10% decrease
10% increase
10% decrease
Profit (loss) before tax ₩ (166,549) ₩ 166,549
₩ (191,580) ₩ 191,580
The above sensitivity analysis is for financial assets and liabilities denominated in foreign currencies as at December 31, 2014 and 2013.
32
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
4. Financial risk management (cont’d)
Market risk (cont’d)
(2) Interest rate risk Interest rate risk is the risk of fluctuations in interest rates, which mainly occur in floating rate deposits and borrowings. The objective of the interest rate risk management is to minimize the financial costs and uncertainty associated with interest rate changes.
The Group utilizes internally reserved funds to minimize external borrowings, improve the structure of short-term and long-term borrowings, maintain optimal levels of floating rate borrowings compared to fixed rate borrowings, and regularly monitor trends in domestic and overseas interest rate movements in order to manage such risk.
Floating rate financial assets and liabilities exposed to interest rate risk as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
I. Financial assets
₩ 308,665
₩ 322,793
II. Financial liabilities
4,389,496
4,451,531
Net (I-II)
₩ (4,080,831)
₩ (4,128,738)
Assuming all other variables are held constant, the effect of a 100 basis point (bp) change in interest rates on profit (loss) before tax for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
100 bp
increase
100 bp decrease
100 bp increase
100 bp decrease
Profit (loss) before tax ₩ (40,808) ₩ 40,808
₩ (41,287) ₩ 41,287
(3) Other market price risk The Group is exposed to market price risk arising from changes in the fair value or future cash flows of financial investments, especially equity instruments listed on stock exchanges. The Group assesses market price risk on a regular basis. Significant investments within a portfolio are individually managed and all decisions related to the purchase and disposal of such investments are approved by the Board of Directors.
Credit risk
The Group is exposed to credit risk, which is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk arises from trade and other receivables, held-for-sale financial assets except for equity instruments, deposits in financial institutions, derivative financial instruments and financial guarantee contracts.
The Group enters into transactions with customers having met a certain level of credit quality and maintains policies and procedures on financial assets to manage such risks. The credit quality of a new customer is assessed based on publicly announced financial information and the information provided by credit rating agencies, Such assessment is used as a basis for determining a customer’s credit limit. Furthermore, collaterals and credit guarantees are obtained as security, if necessary. In addition, the Group periodically reassesses the credit quality of customers by auditing credit limits and adjusts the amount covered by collaterals when deemed necessary. The Group also monitors whether the collection of financial assets have been impaired to take relevant actions.
33
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
4. Financial risk management (cont’d)
Credit risk (cont’d) The following table presents, is the carrying amounts of the Group’s financial instruments that are exposed to the credit risk. The carrying amounts indicate maximum exposure of credit risk (Korean won in millions).
Description 2014 2013
Loans and other receivables Cash and cash equivalents \ 1,297,560 \ 942,762
Short and long- term financial instruments 676,194 865,310
Trade receivables and other receivables 3,289,846 3,314,338
Loans 1,261,025 1,338,004 Held-to-maturity financial assets 36,310 21,192 Available-for-sale financial assets (excluding equity securities)
2,950 18,220
Derivative financial assets 65,254 242,271
Total \ 6,629,139 \ 6,792,097
Excluding the above financial instruments, the maximum guarantee amounts based on the Group’s payment guarantee contracts are described in Note 33.
The aging analysis of trade and other receivables (excluding guarantee deposits) as at December 31, 2014 and December 31, 2013 is as follows (Korean won in millions):
2014
Past due 0~3 months
Past due 3~6 months
Past due 6~12 months
More than 12 months
Total
Trade receivables ₩ 1,438,132 ₩ 149,873 ₩ 154,335 ₩ 2,336,631 ₩ 4,078,971
Loans and other
receivables 463,001 78,114 69,675 1,387,391 1,998,181
Accrued income 7,855 461 1,769 107,189 117,274
₩ 1,908,988 ₩ 228,448 ₩ 225,779 ₩ 3,831,211 ₩ 6,194,426
2013
Past due
0~3 months
Past due 3~6 months
Past due 6~12 months
More than 12 months
Total
Trade receivables ₩ 1,410,847 ₩ 242,008 ₩ 408,145 ₩ 2,224,173 ₩ 4,285,173
Loans and other
receivables 387,630 81,914 184,381 1,221,292 1,875,217
Accrued income 21,545 3,597 4,899 108,464 138,505
₩ 1,820,022 ₩ 327,519 ₩ 597,425 ₩ 3,553,929 ₩ 6,298,895
Based on historic experience, the Group believes that no impairment assessment is necessary in respect of trade receivables not past due or past due by up to three months.
An allowance is recognized by applying appropriate allowance rates for receivables that can be assessed
to be impaired individually due to insolvency, bankruptcy and others. A group of financial assets that are
not individually significant and have similar credit risk characteristics are assessed for impairment on a
collective basis based on aging analysis and the Group’s past experience of receivables collection.
Available-for-sale financial assets, held-to-maturity financial assets, deposits in financial institutions and
derivative financial instruments are individually assessed for impairment.
34
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
4. Financial risk management (cont’d)
Liquidity risk
The Group is exposed to the liquidity risk, which is the risk that it will encounter difficulties in fulfilling the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.
The Group manages liquidity risk by matching the duration of financial assets and liabilities through estimating future cash flows from its operating, investing and financing activities, and securing moderate levels of liquidity in advance.
The maturity profiles of the Group’s major financial liabilities based on contractual amounts as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Book value
Total
Less than 1 year
2 years or less
5 years or less
More than 5 years
Principal ₩ 15,657,720 ₩15,701,611 ₩ 8,743,750 ₩ 2,745,686 ₩ 2,458,749 ₩ 1,753,426
Interest - 1,083,603 413,774 231,105 329,747 108,977
₩ 15,657,720 ₩16,785,214 ₩ 9,157,524 ₩ 2,976,791 ₩ 2,788,496 ₩ 1,862,403
2013
Book value
Total
Less than 1 year
2 years or less
5 years or less
More than 5 years
Principal ₩ 15,136,060 ₩15,163,875 ₩ 7,740,123 ₩ 2,836,523 ₩ 4,321,172 ₩ 266,057
Interest - 975,005 365,314 283,256 320,280 6,155
₩ 15,136,060 ₩16,138,880 ₩ 8,105,437 ₩ 3,119,779 ₩ 4,641,452 ₩ 272,212
The contractual amounts of financial liabilities in the above tables are not discounted and differ from their book value. Besides the above non-derivative liabilities, the maximum guarantee amounts based on financial guarantee contracts provided by the Group as at December 31, 2014, are described in Note 33.
Capital risk management The objective of the Group’s capital risk management is to secure its ability to provide earnings to its shareholders and interested parties and sustain optimal capital structure to reduce the cost of capital. In order to sustain optimal capital structure, the Group uses a debt-to-equity ratio similar to other entities in the industry. Debt-to-equity ratio is calculated by dividing total liabilities by total equity.
The Group’s debt-to-equity ratio as at December 31, 2014 and 2013 are as follows (Korean won in millions, except debt-to-equity ratio):
2014
2013
Total liability ₩ 19,874,905
₩ 19,813,686
Total equity 7,677,002
7,911,794
Debt-to-equity ratio 258.89%
250.43%
35
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
5. Restricted financial instruments
Restricted financial instruments as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Restrictions
Cash and cash equivalents ₩ 29,083 ₩ 69,777 Restricted deposit, import
deposit
Short-term financial
instruments 438,981 347,587
Government R&D projects (*1), advanced receipts from contractors (*2), collateral for long-term borrowings and others
Long-term financial
instruments
56,770
57,667
Security deposits for maintenance of checking accounts, beneficiary certificates (*3) and others
₩ 524,834
₩ 475,031
(*1) Deposits are restricted and are to be used for specific national R&D projects. (*2) Amounts may be used only for designated construction projects. (*3) Consists of a Carbon Fund, Mutual Growth Fund and deposits in the Korea Securities Depository.
6. Short and long-term investments in securities
6-1. Short and long-term investments in securities as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Description
2014 2013
Short-term
investments
in securities
Available-for-sale financial assets ₩ 3,385 ₩ 11,907
Held-to-maturity financial assets 28,000 11
31,385 11,918
Long-term
investments
in securities
Available-for-sale financial assets 179,632 178,952
Held-to-maturity financial assets 8,310 21,181
187,942 200,133
₩ 219,327 ₩ 212,051
36
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
6. Short and long-term investments in securities (cont’d)
6-2. Available-for-sale financial assets as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Description 2014 (*1) 2013
Marketable equity securities
Hana Financial Group Inc. ₩ 126 ₩ 1,646
Others 574 692
700 2,338
Non-marketable equity securities
Incheon-Gimpo Expressway Co., Ltd.
28,479 25,146
Hwaseong City Expressway Co., Ltd.
6,859 2,699
Korea Housing Guarantee Co., Ltd.
11,554 9,295
Alpha Dome City Co., Ltd.
15,498 15,754
Kangnam Beltway Co., Ltd. 5,187 5,232 Pohang Yeongil New Port
Corporation
7,432 7,337 Masan Sewage Pipe Co.,
Ltd.
848 1,104 S-Y Highway Co., Ltd. 16,215 12,941 Sudokwon Seobu
Expressway Co., Ltd.
9,174 9,174 Daegu South Circulation
Road Corporation
3,965 4,013 UITrans LRT Co., Ltd. 6,025 5,387 Kyunggi South Road
Co., Ltd.
4,181 4,229 Busan New Port the 2nd
Rear Road Co,.Ltd.
4,532 4,532 New Challenge Kodit
Construction the Securitization Specialty
Co., Ltd.
- 1,250 Others 5,385 8,654
125,334 116,747
Other equity investments
Lanco Kondapalli Power Ltd.
12,050 12,050
Machinery Financial Cooperative
5,855 5,717
Construction Guarantee 31,291 30,400 Korea Finance Corporation
Neoplux 2010-7
3,735 5,000 Others 397 387
53,328 53,554
Beneficiary certificate Change 15 C-2 and others 705 239 Investment trust Asset Backed Commercial
Paper
2,943 9,585 Debit securities Regional development
bonds and others
7 8,396
₩ 183,017 ₩ 190,859
(*1) As at December 31, 2014, a portion of the Group’s available-for-sale financial assets have been pledged as collateral for Group’s borrowings and developers’ project financing (See Note 34).
37
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
6. Short and long-term investments in securities (cont’d)
6-3. Change in fair value of available-for-sale financial assets for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Balance at
January 1 Valuation
Reclassified to profit or
loss
Balance at
December 31
Marketable equity securities
₩ (3,461) ₩ (111) ₩ (14) ₩ (3,586)
Non-marketable equity securities
(2,525) 982 - (1,543)
Debit securities
49 - (49) -
Other equity investments 3,939 766 - 4,705
Tax effect
569 (356) 8 221
₩ (1,429) ₩ 1,281 ₩ (55) ₩ (203)
2013
Balance at
January 1 Valuation
Reclassified to profit or
loss
Balance at
December 31
Marketable equity securities
₩ (4,010) ₩ 602 ₩ (53) ₩ (3,461)
Non-marketable equity securities
19,883 (1,438) (20,970) (2,525)
Debit securities 32 27 (10) 49
Other equity investments
3,793 146 - 3,939
Tax effect
(4,178) 135 4,612 569
₩ 15,520 ₩ (528) ₩ (16,421) ₩ (1,429)
6-4. Held-to-maturity financial assets as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Current
Non-current
Current
Non-current
Government and corporate bonds ₩ -
₩ 9
₩ 11
₩ 179
Other debt securities 28,000
8,301
-
21,002
₩ 28,000
₩ 8,310
₩ 11
₩ 21,181
38
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
7. Trade and other receivables
7-1. Trade and other receivables as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Gross amounts
Allowance for doubtful accounts
Book value
Current assets: Trade receivables
₩ 4,063,362 ₩ (1,541,569) ₩ 2,521,793
Other receivables 453,968 (122,895) 331,073
Accrued income 117,274 (1,910) 115,364
Short-term loans 557,799 (16,205) 541,594
5,192,403 (1,682,579) 3,509,824
Non-current assets:
Long-term trade receivables 6,707 (80) 6,627
Long-term other receivables 5,965 - 5,965
Long-term loans 976,964 (257,533) 719,431 Guarantee deposits 310,709 (1,685) 309,024
1,300,345 (259,298) 1,041,047
₩ 6,492,748 ₩ (1,941,877) ₩ 4,550,871
2013
Gross amounts
Allowance for doubtful accounts
Book value
Current assets: Trade receivables
₩ 4,271,638 ₩ (1,495,583) ₩ 2,776,055
Other receivables 486,434 (86,768) 399,666
Accrued income 138,505 (2,378) 136,127
Short-term loans 629,465 (11,920) 617,545
5,526,042 (1,596,649) 3,929,393
Non-current assets:
Long-term trade receivables 8,303 (37) 8,266
Long-term other receivables 284 - 284
Long-term loans 758,539 (239,531) 519,008 Guarantee deposits 247,096 (1,705) 245,391
1,014,222 (241,273) 772,949
₩ 6,540,264 ₩ (1,837,922) ₩ 4,702,342
39
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
7. Trade and other receivables (cont’d)
7-2. Changes in allowance for doubtful accounts for the years ended December 31, 2014 and 2013 are summarized as follows (Korean won in millions):
2014
Balance at January 1
Provision for (reversal of) allowance
Write-off of uncollectible
amounts
Changes in foreign
currency translation
Balance at December 31
Trade and other receivables
Trade receivables ₩ 1,495,620 ₩ 112,001 ₩ (58,502) ₩ (7,470) ₩1,541,649
Other receivables 86,768 36,592 (5,142) 4,677 122,895
Accrued income 2,378 (468) - - 1,910 Short and long-term
loans 251,451 21,967 - 320 273,738
Guarantee deposits 1,705 (9) - (11) 1,685
1,837,922 170,083 (63,644) (2,484) 1,941,877
Others
Prepayments 19,828 3,914 (2,625) 52 21,169 Due from customers for contract work
3,798 726 (3,523) - 1,001
23,626 4,640 (6,148) 52 22,170
₩ 1,861,548 ₩ 174,723 ₩ (69,792) ₩ (2,432) ₩1,964,047
2013
Balance at January 1
Provision for allowance
Write-off of uncollectible
amounts
Changes in foreign
currency translation
Balance at December 31
Trade and other receivables
Trade receivables ₩ 1,466,368 ₩ 119,487 ₩ (91,134) ₩ 899 ₩ 1,495,620
Other receivables 82,512 6,993 (2,750) 13 86,768
Accrued income 2,070 308 - - 2,378 Short and long-term loans 231,036 21,896 (1,207) (274) 251,451
Guarantee deposits 392 1,335 - (22) 1,705
1,782,378 150,019 (95,091) 616 1,837,922
Others
Prepayments 19,432 449 (55) 2 19,828 Due from customers for contract work
8,885 (2,167) (2,920) - 3,798
28,317 (1,718) (2,975) 2 23,626
₩ 1,810,695 ₩ 148,301 ₩ (98,066) ₩ 618 ₩ 1,861,548
40
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
7. Trade and other receivables (cont’d)
The Group deems trade and other receivables that are overdue as impaired. An allowance for doubtful account is individually recognized for receivables that can be assessed individually for impairment. An allowance for doubtful account is recognized based on the aging analysis and the Group’s past collection experience for the group of receivables that are not individually significant and have similar characteristics. Provision for doubtful accounts is included in selling and administrative expenses and other non-operating expenses in the consolidated statements of profit or loss.
8. Inventories
Inventories as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Acquisition cost
Provision for loss on valuation
Carrying amounts
Finished goods ₩ 575,581 ₩ (50,265) ₩ 525,316
Merchandise 422,997 (25,138) 397,859
Semi-finished goods 50,599 - 50,599
Work-in-process 440,291 (17,701) 422,590
Raw materials 601,715 (46,489) 555,226
Supplies 20,991 (347) 20,644
Materials-in-transit 356,805 - 356,805
Unfinished houses 2,871 - 2,871
₩ 2,471,850 ₩ (139,940) ₩ 2,331,910
2013
Acquisition cost
Provision for loss on valuation
Carrying amounts
Finished goods ₩ 538,401 ₩ (41,937) ₩ 496,464
Merchandise 350,707 (18,242) 332,465
Semi-finished goods 32,468 (84) 32,384
Work-in-process 467,385 (19,095) 448,290
Raw materials 603,380 (36,155) 567,225
Supplies 17,733 (104) 17,629
Materials-in-transit 310,767 - 310,767
Unfinished houses
570 - 570
₩ 2,321,411 ₩ (115,617) ₩ 2,205,794
Loss on valuation and reversal of allowance for valuation of inventories amounting to \24,323 million and
\22,046 million were recognized in cost of sales for the years ended December 31, 2014 and 2013,
respectively.
41
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
9. Derivative financial instruments
9-1. Derivative financial instruments as at December 31, 2014 and December 31, 2013 are summarized as follows (Korean won in millions and USD, EUR and JPY in thousands):
2014
Buy Sell
Derivative financial assets
(liabilities)
Gain (loss) on valuation of derivative financial
instruments
Accumulated other
comprehensive income (loss)
(*1)
Firm commitment
assets (liabilities) (*2)
Foreign currency forward
KRW 6,376,222 USD 5,857,419 ₩ (93,400) ₩ (122,533) ₩ (24,052) ₩ 43,549
KRW 287,154
EUR 202,778
13,233 2,328 11,980 (1,461)
KRW 301,941
JPY 28,539,929
23,479 20,384 15,686 (19,431)
KRW 103,522
Others
3,608 397 966 (2,629)
USD 2,388,001
KRW 2,643,095
(7,288) 35,228 10,144 (17,409)
EUR 321,234
KRW 461,702
(24,431) (10,393) (14,437) 8,325
JPY 37,720,809
KRW 462,015
(93,138) (19,333) (61,600) 4,516
Others
KRW 82,252 (3,508) (1,338) (1,637) 1,561
GBP and others
EUR and others
(27,689) (20,399) (13,509) (1,061)
Long-term borrowings denominated in foreign currency (*3) KRW 152,160
USD 150,000
- - - 12,720
Embedded derivatives (*4)
(39,860) (73,084) - -
Put back option (See 9-2)
(167) (682) - -
(249,161) (189,425) (76,459) 28,680
Tax effect
- - 18,763 -
Adjustments for consolidation
- - 20,756 -
₩ (249,161) ₩ (189,425) ₩ (36,940) ₩ 28,680
(*1) In consideration of the amounts adjusted in revenue, the effective portion of changes in fair value of
cash flow hedges amounting to ₩(36,940) million, net of tax, was recognized in accumulated other
comprehensive income or loss.
(*2) In consideration of the amounts adjusted in revenue, firm commitment assets of ₩120,695 million
and firm commitment liabilities of ₩92,015 million were recognized in the consolidated statement of
financial position by applying the fair value hedge accounting. (*3) The Group designated its long-term borrowings denominated in foreign currencies as hedging
instruments to hedge the fair value change of firm commitment. (*4) Represents amounts related to the exchange rights on exchangeable bonds issued by the Company
and the valuation of the share purchase contract between the Company and the shareholders of redeemable convertible preferred stock issued by DEC.
42
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
9. Derivative financial instruments (cont’d)
2013
Buy Sell
Derivative financial assets
(liabilities)
Gain (loss) on valuation of derivative
financial instruments
Accumulated other
comprehensive income (loss)
(*1)
Firm commitment
assets (liabilities) (*2)
Foreign currency forward
KRW 8,121,367
USD 7,345,113
₩ 251,084 ₩ 181,826 ₩ 55,202 ₩ (285,438)
KRW 395,406
EUR 267,540
1,872 812 543 (1,107)
KRW 372,173
JPY 30,619,493
38,866 15,587 28,596 (15,602)
KRW 118,159
Others
4,316 2,472 (139) (4,452)
USD 2,758,884
KRW 3,094,502
(139,062) (71,240) (40,329) 81,090
EUR 334,641
KRW 505,731
(11,821) (4,094) (5,583) 4,287
JPY 33,406,835
KRW 475,327
(111,356) (6,833) (85,849) 1,269
Others
KRW 53,164 (2,627) (1,324) (493) 1,982
GBP and others
EUR and others (28,165) (18) (22,366) (25)
Long-term borrowings denominated in foreign currency (*3) KRW 90,876
USD 60,000
- - - 4,313
Embedded derivatives (*4)
32,708 35,866 - -
Put-back option (See 9-2)
- 2,196 - -
35,815 155,250 (70,418) (213,683)
Tax effect
- - 16,551 -
Adjustments for consolidation
- - (5,832) -
₩ 35,815 ₩ 155,250 ₩ (59,699) ₩ (213,683)
(*1) In consideration of the amounts adjusted in revenue, the effective portion of changes in fair value of
cash flow hedges amounting to ₩(59,699) million, net of tax, was recognized in accumulated other
comprehensive income or loss.
(*2) In consideration of the amounts adjusted in revenue, firm commitment assets of ₩53,098 million
and firm commitment liabilities of ₩266,781 million were recognized in the consolidated statement of
financial position by applying the fair value hedge accounting. (*3) The Group designated its long-term borrowings denominated in foreign currencies as hedging
instruments to hedge the fluctuations of foreign currency denominated sales as at December 31, 2013.
(*4) Represents amounts related to the exchange rights on exchangeable bonds issued by the Company and the valuation of the share purchase contract between the Company and the shareholders of redeemable convertible preferred stock issued by DEC.
Derivative financial instruments are classified as non-current assets (liabilities) if the remaining time to maturity from the reporting date is over 12 months; otherwise, they are classified as current assets (liabilities).
43
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
9. Derivative financial instruments (cont’d) 9-2. Option contract given to financial investors (1) The subsidiary, DEC, as a member of construction investors in the SOC project, Shinbundang Line, entered into the following option contracts with respect to the shares acquired by financial investors for the purpose of attracting investments. DEC classified the corresponding option contracts as derivative financial instruments. For the changes in fair value, DEC recognized loss on valuation of derivative
financial instruments amounting to ₩682 million for the year ended December 31, 2014 and the related
derivative liabilities amounting to ₩167 million as at December 31, 2014. Details of option contract are as
follows:
(2) DEC, as a member of construction investors in developmental projects, such as Cheongna International Business Town, Gwanggyo Power Center and Sangam DMC, entered into the following option contracts with respect to the shares acquired by financial investors for the purpose of attracting investments. DEC classified the corresponding option contracts as derivative financial instruments. For the changes in fair value, DEC recognized gain on valuation of derivative financial instruments amounting
to ₩2,281 million and loss on valuation of derivative financial instruments amounting to ₩85 million for
the year ended December 31, 2013. Resulting from the exercise of option and/or cancellation of related development plans, the option contracts were extinct in 2013. As such there were no balances of derivative liabilities as at December 31, 2014 and 2013.
9-3. In connection with the issuance of redeemable convertible preferred shares by DEC, the Company entered into contracts with preferred shareholders. The details of contract are as follows:
Description
Settlement The Company and the investor shall settle the contract in cash for the amount of the net selling price less issuance price on December 16, 2016. If the settlement amount is positive (net selling price exceeds issuance price) the investor pays the amount to the Company; otherwise, the Company makes payment to the investor.
Early settlement
The investor, under certain circumstances, may request a settlement to the Company even before the settlement date, for the amount calculated by the same method as above.
Early call option
The Company may request, from September 14 to 16, 2015, for the purchase of up to 30% of the redeemable convertible preferred stock owned by the investor at the issuance price plus a certain level of incentive.
Settlement call option
The Company may request, from September 14 to 16, 2016, for the purchase of a whole or part of the redeemable convertible preferred stock owned by the investor, at the issuance price.
The Group recognized the fair value of above contracts between shareholders as derivative financial instruments as at December 31, 2014.
Project Option
type
Option holder
Exercise period
Exercise price
Sinbundang Line
Put option ① KDB
② Nonghyup Bank
③ Korea Infrastructure Fund Ⅱ
2014.6.28 ~ 2015.6.27
Stock purchase price plus stipulated amount
44
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments
10-1. Financial assets as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Financial assets
at fair value through profit or
loss
Loans and
receivables
Available-for-sale financial assets
Held-to-maturity financial assets
Derivatives designated as hedging instruments
Carrying amount
Fair value
Cash and cash equivalents ₩ - ₩1,297,560 ₩ - ₩ - ₩ - ₩1,297,560 ₩1,297,560
Short and long-term financial instruments
- 676,194 - - - 676,194 676,194
Short and long-term investments in securities
- - 183,017 36,310 - 219,327 219,327
Derivative financial assets 12,102 - - - 53,152 65,254 65,254
Trade and other Receivables
- 3,289,846 - - - 3,289,846 3,289,846
Loans - 1,261,025 - - - 1,261,025 1,261,025
₩ 12,102 ₩6,524,625 ₩ 183,017 ₩ 36,310 ₩ 53,152 ₩6,809,206 ₩6,809,206
2013
Financial assets
at fair value through profit or
loss
Loans and
receivables
Available-for-sale financial assets
Held-to-maturity financial assets
Derivatives designated as hedging instruments
Carrying amount
Fair value
Cash and cash equivalents ₩ - ₩ 942,762 ₩ - ₩ - ₩ - ₩ 942,762 ₩ 942,762
Short and long-term financial instruments - 865,310 - - - 865,310 865,310
Short and long-term investments in securities - - 190,859 21,192 - 212,051 212,051
Derivative financial assets 34,759 - - - 207,512 242,271 242,271
Trade and other receivables
- 3,314,338 - - - 3,314,338 3,314,338
Loans
- 1,388,004 - - - 1,388,004 1,388,004
₩ 34,759 ₩ 6,510,414 ₩ 190,859 ₩ 21,192 ₩ 207,512 ₩6,964,736 ₩6,964,736
45
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d) 10-2. Financial liabilities as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Financial liabilities
at fair value through
profit or loss
Financial liabilities
measured at amortized cost
Derivatives designated as
hedging instruments
Carrying amount
Fair value
Trade and other payables ₩ - ₩ 3,463,000 ₩ - ₩ 3,463,000 ₩ 3,463,000
Borrowings and debentures - 11,646,079 - 11,646,079 11,646,079
Derivative financial liabilities 69,291 - 245,125 314,416 314,416
Financial guarantee liabilities
- 220,322 - 220,322 220,322
Others - 535,667 - 535,667 535,667
₩ 69,291 ₩ 15,865,068 ₩ 245,125 ₩ 16,179,484 ₩ 16,179,484
2013
Financial liabilities
at fair value through
profit or loss
Financial liabilities
measured at amortized cost
Derivatives designated as
hedging instruments
Carrying amount
Fair value
Trade and other payables ₩ - ₩ 2,962,711 ₩ - ₩ 2,962,711 ₩ 2,962,711
Borrowings and debentures - 11,381,363 - 11,381,363 11,381,363
Derivative financial liabilities 15,171 - 191,285 206,456 206,456
Financial guarantee liabilities
- 110,683 - 110,683 110,683
Others - 791,986 - 791,986 791,986
₩ 15,171 ₩ 15,246,743 ₩ 191,285 ₩ 15,453,199 ₩ 15,453,199
46
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d)
10-3. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique. The level of hierarchy of fair value is as follows:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly. Level 3: Inputs that are not based on observable market data (unobservable inputs).
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily listed equity investments classified as trading securities or available-for-sale.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Specific valuation techniques used to value financial instruments include: - Quoted or dealer price of similar instruments. - The fair value of forward foreign exchange contracts determined by using forward exchange rates at
the reporting date, with the resulting value discounted to present value. - Other financial techniques such as discounted cash flow analysis.
As for trade and other receivables, the book value approximates a reasonable estimate of fair value. The level of fair value measurements of financial instruments as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value:
Financial assets at fair value through profit or loss
₩ - ₩ 12,102 ₩ - ₩ 12,102
Available-for-sale financial assets 986 - 130,721 131,707
Derivatives designated as hedging instruments - 53,152 - 53,152
Financial assets disclosed at fair value:
Trade receivables and other receivables
- 1,973,754 4,550,871 6,524,625
Available-for-sale financial assets
- - 51,310 51,310
Held-to-maturity financial assets - - 36,310 36,310
₩ 986 ₩ 2,039,008 ₩ 4,769,212 ₩ 6,809,206
47
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d)
2014
Level 1
Level 2
Level 3
Total
Financial liabilities measured at fair value:
Financial liabilities at fair value through profit or loss
₩ - ₩ 69,291 ₩ - ₩ 69,291
Derivatives designated as hedging instruments
- 245,125 - 245,125
Financial liabilities disclosed at fair value:
Financial liabilities carried at amortized cost
- 11,646,079 4,218,989 15,865,068
₩ - ₩ 11,960,495 ₩ 4,218,989 ₩ 16,179,484
2013
Level 1 Level 2 Level 3 Total
Financial assets measured at fair value:
Financial assets at fair value through profit or loss
₩ - ₩ 34,759 ₩ - ₩ 34,759
Available-for-sale financial assets
2,578 1,308 122,961 126,847
Derivatives designated as hedging instruments
- 207,512 - 207,512
Financial assets disclosed at fair value:
Trade receivables and other receivables
- 1,808,072 4,702,342 6,510,414
Available-for-sale financial assets
- - 64,012 64,012
Held-to-maturity financial assets
- - 21,192 21,192
₩ 2,578 ₩ 2,051,651 ₩ 4,910,507 ₩ 6,964,736
Financial liabilities measured at fair value:
Financial liabilities at fair value through profit or loss
₩ - ₩ 15,171 ₩ - ₩ 15,171
Derivatives designated as hedging instruments
- 191,285 - 191,285
Financial liabilities disclosed at fair value:
Financial liabilities carried at amortized cost
- 11,381,363 3,865,380 15,246,743
₩ - ₩ 11,587,819 ₩ 3,865,380 ₩ 15,453,199
48
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d)
Assumptions used for the measurement of available-for-sale financial assets at fair value based on level 3 valuation techniques as at December 31, 2014 are as follows (Korean won in millions):
Valuation techniques Discount rate Note Incheon-Gimpo
Expressway Co., Ltd. Fair value as a current exit
price model
- Current share issuance
amount Daegu South
Circulation Road Corporation
and others
Dividend discount model
and others
5.99%~13.63%
Expected dividend cash flow for each financial
period and others
Korea Housing Guarantee Co., Ltd.
Shareholder’s discounted cash flow model
4.11%~4.14%
Shareholder’s cash flow
Others Net asset value assessment and others
-
Fair value of net asset and others
The changes in carrying amount of available-for-sale financial assets measured at fair value based on level 3 valuation techniques for the years ended December 31, 2014 and 2013 are as follows:
Total comprehensive income
Balance at January 1
Buy
Sell
Profit for the year
Other comprehens-ive income
Transferred
(*1)
Balance at December
31
2014 ₩ 122,961 ₩ 7,091 ₩ (1,401) ₩ - ₩ 2,070 ₩ - ₩ 130,721
2013 ₩ 168,156 ₩ 7,732 ₩ (85,201) ₩ 6,238 ₩ (26,130) ₩ 52,166 ₩ 122,961
(*1) The Group reclassified a certain potion of its non-marketable equity securities as level 3 for the year
ended December 31, 2013. 10-4. Gains or losses on financial instruments for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Profit or loss
Other comprehensive income (loss)
(*1)
Interest income
(expense)
Dividend income
(Reversal of)
allowance for
doubtful accounts
Impairment loss on financial
instruments
Gain or loss on disposal
Gain or loss financial
guarantee
Net change in fair value of
available-for-sale financial
assets
Financial assets:
Loans and other receivables
₩ 52,023 ₩ - ₩(170,083) ₩ - ₩ (23,478) ₩ - ₩ -
Available-for-sale financial assets
1,463 537 - (7,285) 30 - 1,911
Held-to-maturity financial assets
2,199 - - - - - -
₩ 55,685
₩ 537 ₩(170,083)
₩ (7,285) ₩ (23,448) ₩ - ₩ 1,911
Financial liabilities:
Financial liabilities carried at amortized cost ₩(640,218) ₩ - ₩ - ₩ - ₩ (38,359) ₩ (91,848) ₩ -
(*1) Amounts in other comprehensive income or loss exclude deferred tax effect.
49
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d)
2013
Profit or loss
Other comprehensive income (loss)
(*1)
Interest income
(expense)
Dividend income
(Reversal of)
allowance for
doubtful accounts
Impairment loss on financial
instruments
Gain or loss on disposal
Gain or loss financial
guarantee
Net change in fair value of
available-for-sale financial
assets
Financial assets:
Loans and other receivables
₩ 69,990 ₩ - ₩(150,019) ₩ - ₩ (22,527) ₩ - ₩ -
Available-for-sale financial assets
1,721 1,162 - (24,447) 25,766 - (25,563)
Held-to-maturity financial assets
1,747 - - - (12) - -
₩ 73,458
₩ 1,162 ₩(150,019)
₩ (24,447) ₩ 3,227 ₩ - ₩ (25,563)
Financial liabilities:
Financial liabilities carried at amortized cost ₩(711,406) ₩ - ₩ - ₩ - ₩ (4,286) ₩ (59,432) ₩ -
(*1) Amounts in other comprehensive income or loss exclude deferred tax effect.
Gain or loss on translation or transaction of foreign currencies arising from foreign currency transactions except for derivative financial instruments have been mostly incurred from financial assets classified as loans and receivables and financial liabilities measured at amortized cost.
Details of gains and losses on valuation and settlement of derivative financial instruments for the year ended December 31, 2014 and 2013 is as follows (Korean won in millions):
2014
Gain (loss) on valuation of derivative
financial instruments
Gain (loss) on settlement of derivative
financial instruments
Other comprehensive
income (loss) (*1)
Derivatives held for trading ₩ (70,597) ₩ 18,645 ₩ -
Fair value hedge derivatives (76,100) 3,688 -
Cash flow hedge derivatives (42,728) (20,933) (6,041)
₩ (189,425) ₩ 1,400 ₩ (6,041)
(*1) Other comprehensive income or loss does not reflect the deferred tax effect.
2013
Gain (loss) on valuation of derivative
financial instruments
Gain (loss) on settlement of derivative
financial instruments
Other comprehensive
income (loss) (*1)
Derivatives held for trading ₩ 28,293 ₩ (12,198) ₩ -
Fair value hedge derivatives 136,879 (3,546) -
Cash flow hedge derivatives (9,922) (17,172) (62,812)
₩ 155,250 ₩ (32,916) ₩ (62,812)
(*1) Other comprehensive income or loss does not reflect the deferred tax effect.
50
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
10. Categories of financial instruments (cont’d)
Above gains or losses on financial instruments include amounts in selling and administrative expenses, finance income or cost and other comprehensive income or loss. Gain or loss from translation or transaction of foreign currencies arising from foreign currency transactions, except for derivative financial instruments, have been mostly incurred from financial assets classified as loans and receivables and financial liabilities measured at amortized cost. 10-5. Financial assets and financial liabilities subject to an enforceable master netting arrangement or similar agreement as at December 31, 2014 are as follows (Korean won in millions):
Eligible for legal right to offset
Total assets (liabilities) Offset amount Amount after offset
Derivative financial instrument assets ₩ 92,746 ₩ (51,699) ₩ 41,047
Derivative financial instrument liabilities (235,709) 51,699 (184,010) Other receivables 753 (753) - Trade payables (4,105) 753 (3,352) Long-term borrowings (50,000) 50,000 -
11. Share of investments in associates and joint ventures
11-1. Details of share of investments in associates and joint ventures as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Country of
domicile
Equity owner-
ship (%)
Acquisition cost Book value Net assets
2014
2013
2014 2013
2014 2013
Associates:
Doosan Capital Co., Ltd. Korea
33.30 ₩166,000
₩166,000 ₩48,902 ₩ 105,511
₩38,905 ₩ 95,514
Tamra Offshore Wind Power Co., Ltd. (“Tamra”) Korea
36.00 9,864
9,864 9,673 9,622
9,673 9,622
Doosan (China) Financial Leasing Corp. (“DCFL”) China
49.00 96,248
96,248 96,996 101,371
83,783 87,494 Dalian Samyoung Doosan
Metal Product Co., Ltd. (“DSDMP”) (*1)
China
10.80
2,675
2,675 3,647 3,390
3,647 3,390
Shinbundang Railroad Co., Ltd. (*2) Korea
29.03 62,552
62,552 46,538 67,785
46,538 67,785
Kyunggi Railroad Co., Ltd. Korea
13.06 7,067
7,049 5,737 4,946
5,737 4,946
Neo Trans Co., Ltd. Korea
42.86 43
43 13,335 10,745
13,335 10,745
New Seoul Railway Corporation
Korea 32.65
1,373 1,123 727 776
525 644
Others
- 2,707
3,217 - 25
(209)
(184)
348,529
348,771 225,555 304,171
201,934 279,956
Joint ventures:
Haman Industrial Complex (*2 and 3)
Korea 80.00
3,600 3,600 1,190 2,394
1,190 3,548
Hanjung Power Ltd. (*4)
Papua New
Guinea
-
-
4,364 - 6,066
- 6,067
Doosan Babcock WLL (*5)
Qatar -
- 290 - 290
- 290 Xuzhou Xugong Doosan
Engine Co., Ltd. (“Xuzhou”) (*6)
China
50.00
16,232
16,232 - -
-
-
19,832
24,486 1,190 8,750
1,190 9,905
₩ 368,361 ₩ 373,257 ₩ 226,745 ₩ 312,921
₩ 203,124 ₩ 289,861
51
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
11. Share of investments in associates and joint ventures (cont’d)
(*1) Although the Group’s equity interest is less than 20%, the investee is accounted for as an associate
as the Company is able to exercise voting rights at the meeting of the Board of Directors of the investee.
(*2) Investments in the investee have been provided as collateral in connection with project financing. (*3) Although the Group’s equity interest in the investee is more than 50%, the investee is classified as a
joint venture considering the agreement between shareholders. (*4) Investments in the investee were disposed during the year during 2014. (*5) The investee has been included in subsidiaries as the Company acquired control over the investee
during the year 2014. (*6) The Group recognized its total investment in the joint venture as an impairment loss as the joint
venture was in the process of liquidation. 11-2. Changes in share of investments in associates and joint ventures for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
(*1) The above income on equity method investments included net of gain on disposal of investment in
associates amounting to ₩2,979 million. With respect to changes in equity interest resulting from
increase in paid-in capital of associates, the Group recognized income on an equity method investments amounting to ₩1,204 million.
2014
Balance at
January 1,
Acquisitions (disposal)
Dividend received
Share of profit (loss)
(*1)
Changes in equity
adjustments
Others
Balance at December
31,
Associates:
Doosan Capital Co., Ltd. ₩ 105,511 ₩ - ₩ - ₩ (57,909) ₩ 1,300 ₩ - ₩ 48,902
Tamra 9,622 - - 51 - - 9,673
DCFL 101,371 - - (5,790) - 1,415 96,996
DSDMP 3,390 - - 197 60 - 3,647
Shinbundang Railroad Co., Ltd. 67,785 - - (21,247) - - 46,538
Kyunggi Railroad Co., Ltd. 4,946 18 - 773 - - 5,737
Neo Trans Co., Ltd. 10,745 - - 2,590 - - 13,335 New Seoul
Railway Corporation
776 250 - (299) - - 727
Others 25 (25) - 212 - (212) -
304,171 243 - (81,422) 1,360 1,203 225,555
Joint ventures:
Haman Industrial Complex
2,394 - - (1,204) - - 1,190
Hanjung Power Ltd.
6,066 (6,066) (1,494) 2,767 (1,103) (170) -
Doosan Babcock WLL 290 - - - - (290) -
8,750 (6,066) (1,494) 1,563 (1,103) (460) 1,190
₩ 312,921 ₩ (5,823) ₩ (1,494) ₩ (79,859) ₩ 257 ₩ 743 ₩ 226,745
52
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
11. Share of investments in associates and joint ventures (cont’d)
(*1) The above share of profit (loss) includes impairment loss on investment in an associate amounting
to \19,019 million.
2013
Balance at
January 1,
Acquisitions
Dividend Received
Share of profit (loss)
(*1)
Changes in equity
adjustments
Others
Balance at December
31,
Associates:
Doosan Capital Co., Ltd. ₩ 61,285 ₩ 70,000 ₩ - ₩ (25,618) ₩ (156) ₩ - ₩ 105,511
Tamra 7,221 2,412 - 1 (12) - 9,622
DCFL 98,935 - - 1,201 - 1,235 101,371
DSDMP 3,434 - - (89) 45 - 3,390
Shinbundang Railroad Co., Ltd. 91,769 - - (23,984) - - 67,785
Kyunggi Railroad Co., Ltd.
5,803 - - (857) - - 4,946
Neo Trans Co., Ltd.
5,846 - - 4,899 - - 10,745 New Seoul
Railway Corporation
- 298 - (347) - 825 776
Others 69 - - (44) - - 25
274,362 72,710 - (44,838) (123) 2,060 304,171
Joint ventures:
Haman Industrial Complex
- - - 2,394 - - 2,394
Hanjung Power Ltd.
9,310 - (4,462) 3,586 (2,368) - 6,066
Doosan Babcock WLL - 290 - - - - 290
Xuzhou 8,762 - - (8,762) - - -
18,072 290 (4,462) (2,782) (2,368) - 8,750
₩292,434 ₩ 73,000 ₩ (4,462) ₩ (47,620) ₩ (2,491) ₩ 2,060 ₩ 312,921
53
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
11. Share of investments in associates and joint ventures (cont’d) 11-3. Summarized financial information of associates and joint ventures as at and for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Company
Asset
Liability
Sales
Profit (loss) for the year
Total compreh-
ensive income (loss)
Doosan Capital Co., Ltd. ₩ 1,661,977 ₩ 1,502,567 ₩ 85,809 ₩ (118,784) ₩ (115,034)
Tamra 26,880 12 - 93 93
DCFL 789,214 618,229 45,660 (10,020) (7,119)
DSDMP 54,149 20,378 25,813 1,824 2,377
Shinbundang Railroad Co., Ltd. 1,045,533 885,221 56,004 (73,188) (73,188)
Kyunggi Railroad Co., Ltd. 290,498 246,577 - (3,318) (3,318)
Neo Trans Co., Ltd. 35,546 4,433 47,226 6,044 6,044
New Seoul Railway Corporation
5,280 3,671 - (976) (976)
Haman Industrial Complex 50,281 48,793 10,525 (446) (446)
2013
Company
Asset
Liability
Sales
Profit (loss) for the year
Total compreh-
ensive income (loss)
Doosan Capital Co., Ltd. ₩ 2,346,866 ₩ 2,072,421 ₩ 187,711 ₩ (28,959) ₩ (25,431)
Tamra 26,728 - - (12) (12)
DCFL 905,372 726,812 72,055 240 2,498
DSDMP 52,000 20,606 19,912 (829) (2,670)
Shinbundang Railroad Co., Ltd. 1,082,671 849,172 49,321 (82,617) (82,617)
Kyunggi Railroad Co., Ltd. 66,939 51,150 - (2,693) (2,693)
Neo Trans Co., Ltd. 30,069 5,000 52,557 11,430 11,430
New Seoul Railway Corporation
5,338 3,167 - (1,169) (1,169)
Haman Industrial Complex 58,747 54,313 26,046 3,883 3,883
Hanjung Power Ltd. 14,815 2,919 42,090 6,668 3,991
Doosan Babcock WLL
592 - - - -
54
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
11. Share of investments in associates and joint ventures (cont’d)
11-4. The following table provides a reconciliation of the summarized financial information of the associates and joint ventures to the carrying amount of its interest in the associates and joint ventures (Korean won in millions):
2014
Company
Net asset (a)
Equity owner-
ship (%) (b)
Equity interest in
the investee (axb)
Adjustment amount
Differenti-als
Internal transaction Others Book value
Associates: Doosan Capital
Co., Ltd. (*1) ₩ 76,124
33.30
₩ 38,905 ₩ 9,997
₩ - ₩ -
₩ 48,902
Tamra 26,868 36.00 9,673 - - - 9,673
DCFL 170,985 49.00 83,783 13,213 - - 96,996
DSDMP 33,771 10.80 3,647 - - - 3,647 Shinbundang Railroad
Co., Ltd.
160,312
29.03
46,538
-
-
-
46,538
Kyunggi Railroad Co., Ltd. 43,921 13.06 5,737 - - - 5,737
Neo Trans Co., Ltd. 31,113 42.86 13,335 - - - 13,335
New Seoul Railway Corporation 1,609
32.65
525
202
-
-
727
Others (209) - (209) - - 209 -
544,494 201,934 23,412 - 209 225,555
Joint ventures: Haman Industrial Complex
1,488
80.00
1,190
-
-
-
1,190
₩ 545,982
₩ 203,124
₩ 23,412
₩ -
₩ 209
₩ 226,745
(*1) The net asset value of Doosan Capital represents only the equity holders of the parent and the
equity interest in the investee was calculated by adding the equity ownership percentage of preferred shares.
2013
Company
Net asset (a)
Equity owner-
ship (%) (b)
Equity
interest in the
investee
(axb)
Adjustment amount
Book value
Different-als
Internal transaction Others
Associates: Doosan Capital
Co., Ltd. (*1) ₩ 186,888
33.30
₩ 95,514 ₩ 9,997
₩ - ₩ -
₩ 105,511
Tamra 26,728 36.00 9,622 - - - 9,622
DCFL 178,560 49.00 87,494 13,877 - - 101,371
DSDMP 31,394 10.80 3,390 - - - 3,390 Shinbundang Railroad
Co., Ltd.
233,499
29.03
67,785
-
-
-
67,785
Kyunggi Railroad Co., Ltd. 15,789 31.33 4,946 - - - 4,946
Neo Trans Co., Ltd. 25,069 42.86 10,745 - - - 10,745
New Seoul Railway Corporation 2,171
29.66
644
132
-
-
776
Others (184) - (184) - - 209 25
699,914 279,956 24,006 - 209 304,171
Joint ventures: Haman Industrial
Complex
4,434
80.00
3,548
-
(1,154)
-
2,394 Hanjung Power Ltd.
11,896
51.00
6,067
-
(1)
-
6,066
Doosan Babcock WLL
592
49.00
290
-
-
-
290
16,922
9,905
-
(1,155)
-
8,750
₩ 716,836
₩ 289,861 ₩ 24,006 ₩ (1,155) ₩ 209 ₩ 312,921
(*1) The net asset value of Doosan Capital represents only the equity holders of the parent and the
equity interest in the investee was calculated by adding the equity ownership percentage of preferred shares.
55
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
12. Property, plant and equipment
12-1. Changes in the net book value of property, plant and equipment for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Land
Buildings & structures
Machinery
Others
Construction-in-progress Total
Balance at January 1 ₩4,082,326 ₩1,583,684 ₩1,122,030 ₩239,122 ₩204,662 ₩7,231,824
Acquisitions / capital expenditure 749 31,975 79,956 46,825 217,756 377,261
Transfer 300 98,725 104,040 24,498 (206,511) 21,052
Disposals (3,286) (1,865) (10,708) (1,666) (277) (17,802)
Depreciation - (87,505) (219,342) (79,818) - (386,665)
Impairment loss
(2,224) (8,244) (1,118) (657) - (12,243) Changes in foreign currency
translation (5,787) (3,615) (12,347) (228) (1,310) (23,287)
Balance at December 31 ₩4,072,078 ₩1,613,155 ₩1,062,511 ₩228,076 ₩214,320 ₩7,190,140
Acquisition cost ₩2,939,989 ₩2,421,844 ₩2,876,330 ₩764,364 ₩214,320 ₩9,216,847
Accumulated depreciation and impairment losses (2,335) (808,689) (1,813,819) (536,288) - (3,161,131)
Revaluation surplus
1,134,424 - - - - 1,134,424
2013
Land
Buildings & structures
Machinery
Others
Construction-in-progress Total
Balance at January 1 ₩2,990,330 ₩1,598,866 ₩1,099,211 ₩ 194,123 ₩ 273,167 ₩ 6,155,697
Acquisitions / capital expenditure (*1) 913 30,490 87,536 94,158 235,119 448,216
Transfer (988) 76,564 166,840 20,831 (299,932) (36,685)
Disposals (39,682) (26,908) (4,332) (3,534) (50) (74,506)
Depreciation - (87,835) (221,559) (72,798) - (382,192) Net gain on revaluation
of land 1,135,946 - - - - 1,135,946
Impairment loss - - (1,314) - - (1,314) Changes in foreign currency
translation
(4,193) (7,499) (4,355) (1,008) (3,642) (20,697) Changes in share of
subsidiaries - 6 3 7,350 - 7,359
Balance at December 31 ₩4,082,326 ₩1,583,684 ₩1,122,030 ₩ 239,122 ₩ 204,662 ₩ 7,231,824
Acquisition cost ₩2,948,112 ₩2,297,491 ₩2,821,094 ₩ 721,099 ₩ 205,196 ₩ 8,992,992
Accumulated depreciation and impairment losses
(1,732) (713,807) (1,699,064) (481,977) (534) (2,897,114)
Revaluation surplus 1,135,946 - - - - 1,135,946
(*1) Includes the acquisition of a business. As at December 31, 2014, certain of the Group’s property, plant and equipment have been pledged as collateral for borrowings (See Note 34).
The Group recognizes the land subsequently measured at revaluation amount, and if the land were stated
at cost as at December 31, 2014, the book value of the land would amount to ₩2,937,654 million (2013:
₩2,946,380 million). There are no significant differences between the fair value of the land at December
31, 2014 and revaluation amount as at December 31, 2013.
56
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
12. Property, plant and equipment (cont’d)
12-2. Capitalized borrowing costs for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Capitalized borrowing costs ₩ 3,572 ₩ 4,335
Interest rate of borrowing costs 4.32% ~ 4.59% 4.48% ~ 4.52%
12-3. Details of depreciation on property, plant and equipment for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Cost of sales ₩ 333,234 ₩ 334,080
Selling and administrative expenses 38,609 31,656 Research and development costs and others 14,822 16,456
₩ 386,665 ₩ 382,192
13. Intangible assets
13-1. Changes in the net book value of intangible assets for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Goodwill
Industrial property
rights
Development costs
Others
Total
Balance at January 1 ₩ 4,680,873 ₩ 1,176,404 ₩ 768,636 ₩ 298,670 ₩ 6,924,583
Acquisitions / capital expenditures - 1,338 238,528 20,830 260,696
Transfer - - (2,861) 16,134 13,273
Disposals - (12) (184) (3,327) (3,523)
Amortization - (18,161) (92,131) (72,585) (182,877)
Impairment - - (12,302) (801) (13,103) Changes in
foreign currency translation
(122,512) (11,427) (1,137) (628) (135,704)
Balance at December 31 ₩ 4,558,361 ₩ 1,148,142 ₩ 898,549 ₩ 258,293 ₩ 6,863,345
Acquisition cost ₩ 4,558,361 ₩ 1,289,373 ₩ 1,295,589 ₩ 720,244 ₩ 7,863,567
Accumulated impairment loss
- (141,231) (397,040) (461,951) (1,000,222)
57
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
13. Intangible assets (cont’d)
2013
Goodwill
Industrial property
rights
Development costs
Others
Total
Balance at January 1 ₩ 4,739,860 ₩ 1,189,247 ₩ 665,389 ₩ 279,943 ₩ 6,874,439
Acquisitions / capital expenditures(*1) 3,014 1,288 240,173 21,007 265,482
Transfer (2,814) 1,226 (25,245) 70,782 43,949
Disposals - - - (4,892) (4,892)
Amortization - (18,779) (69,482) (64,761) (153,022)
Impairment - - (40,157) (2,727) (42,884) Changes in
foreign currency translation
(59,187) 3,422 (2,042) (682) (58,489)
Balance at December 31 ₩ 4,680,873 ₩ 1,176,404 ₩ 768,636 ₩ 298,670 ₩ 6,924,583
Acquisition cost ₩ 4,680,873 ₩ 1,300,720 ₩ 949,175 ₩ 554,540 ₩ 7,485,308
Accumulated impairment loss
- (124,316) (180,539) (255,870) (560,725)
(*1) Includes the acquisition of a business.
The carrying amounts of intangible assets with indefinite useful lives including goodwill and others as at
December 31, 2014 and 2013 amounted to ₩5,704,519 million and ₩5,838,154 million, respectively.
13-2. Research and development costs expensed as incurred for the years ended December 31, 2014
and 2013 amounted to ₩295,176 million and ₩289,910 million, respectively.
13-3. Capitalized borrowing costs for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Capitalized borrowing costs ₩ 9,574 ₩ 6,273
Interest rate of borrowing costs 4.32% ~ 4.59% 3.76% ~ 4.52% 13-4. Details of amortization on intangible assets for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Cost of sales ₩ 105,144 ₩ 85,747
Selling and administrative expenses 77,377 67,066 Research and development costs and others 356 209
₩ 182,877 ₩ 153,022
58
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
13. Intangible assets (cont’d)
13-5. Carrying amount of goodwill allocated to each CGU as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Power generation ₩ 627,490 ₩ 677,188
Water 6,441 6,237 DEC 81,300 81,310 DI 3,843,130 3,916,138
₩ 4,558,361 ₩ 4,680,873
The recoverable amount of cash-generating unit is determined based on a value in use calculation, and major assumptions used as at December 31, 2014 are as follows:
Power generation Water DEC DI Long-term average
growth rate
2.00% 1.50% 1.00% ~ 1.50% 2.50%
Discount rate 8.50% 8.80% 8.85% ~ 14.40% 8.57%
A value in use is calculated using pre-tax cash flow projections based on financial budgets approved by senior management covering a five-year period. The management assessed the total profit in the budget based on past performances and market growth forecasts. Cash flows beyond the five-year period are extrapolated using a forecast growth rates, which do not exceed the long-term average growth rate for the industry where the CGU operates in and which are consistent with estimations included in industry reports. The discount rate used is the after-tax discount rate that reflects relevant risks specific to the related operating segment.
The Group has not recognized any impairment loss since the recoverable amount of each CGU calculated based on value in use calculation exceeds the carrying amount of goodwill as at December 31, 2014. The recoverable amount may change according to changes in key assumptions. Accordingly, the Group’s management regularly observes relevant turnovers and industrial trends.
59
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
14. Investment properties Changes in investment properties for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Land
Buildings
Total
Balance at January 1 ₩ 38,635 ₩ 31,305 ₩ 69,940
Transfer - (105) (105)
Disposals (683) - (683)
Depreciation - (989) (989)
Balance at December 31 ₩ 37,952 ₩ 30,211 ₩ 68,163
Acqusition cost ₩ 39,156 ₩ 40,308 ₩ 79,464
Accumulated depreciation and impairment (1,204) (10,097) (11,301)
2013
Land
Buildings
Total
Balance at January 1 ₩ 62,164 ₩ 45,785 ₩ 107,949
Acquisitions / capital expenditure 766 146 912
Transfer - (3,095) (3,095)
Disposals (24,295) (10,338) (34,633)
Depreciation - (1,193) (1,193)
Balance at December 31 ₩ 38,635 ₩ 31,305 ₩ 69,940
Acqusition cost ₩ 39,839 ₩ 40,412 ₩ 80,251
Accumulated depreciation and impairment (1,204) (9,107) (10,311)
Rental income from investment property for the years ended December 31, 2014 and 2013 are ₩5,906
million and ₩3,883 million, respectively.
60
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings
15-1. Short-term borrowings as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Type of borrowings
Borrower (*1)
Lender
Annual Interest rate (%) as at
December 31, 2014
2014 (*3)
2013
Borrowings denominated in Korean won
The Company
Kookmin Bank
3.98
\ 30,000
\ 30,000
Nonghyup Bank
4.33 ~ 4.84
50,000 38,400
Shinhan Bank
3.82
50,000 50,000
Woori Bank (*2)
3.98
58,211 74,600
KDB
3.98 ~ 4.48
200,000 250,000
Korea EXIM Bank
2.85 ~ 3.30
57,517 -
DI Korea EXIM Bank and others
2.98 ~ 5.13
388,500 236,978
DEC
Shinhan Bank
9.20 ~ 9.47
9,900 13,103
Nonghyup Bank
8.39 ~ 9.47
29,000 35,000
KEB
3.74 ~ 6.59
88,511 85,300
KDB
5.98 ~ 6.58
43,000 10,000
Construction Guarantee
1.65
24,215 24,470
Hana Bank
5.65
20,000 5,000
Woori Bank
5.02 ~ 7.58
242,219 246,377
Industrial Bank of Korea (“IBK”)
10.45
19,000 22,000
Korea EXIM Bank
5.20 ~ 6.29
59,768 44,649
Woori investment Bank and
others
8.00
6,000 36,000
Hana Bank and others (*2)
-
5,878 1,177
Kabul Construction Co., Ltd.
6.90
100 -
Kookmin Bank
-
- 10,000
61
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
Type of borrowings
Borrower(*1)
Lender
Annual Interest rate (%) as at
December 31, 2014
2014 (*3)
2013
Borrowings denominated in foreign currencies
The Company
HSBC
2.00 ~ 12.05
\ 27,404 \ 14,224
JP Morgan
3M Libor + 1.50 5,496 10,553
KBC
3M Libor + 2.75 51,314 -
SCB
2.00 ~ 11.95 24,680 85,681
Kookmin Bank
-
- 5,277
Shinhan Bank
9.90 ~ 10.75 11.821 17,200
6M Libor + 2.20
Woori Bank 3M Libor + 1.50 ~ 3.50
72,835 93,353
6M Libor + 2.20
Hana Bank
6M Libor + 2.20 4,533 3,239
KDB and others
0.58 ~ 12.25
260,348 105,459
3M Libor + 2.10
3M Eulibor + 3.00
Korea EXIM Bank
3M Libor + 1.76 ~ 2.00
222,201 262,969
3M Eulibor + 1.80 ~ 1.90
KEB 3M Libor + 2.10 ~ 2.80
28,418 47,692
DI
Hana Bank and others
1.80 ~ 9.25
566,481 416,718
Shinhan Bank and others
0.72 ~ 2.00
171,090 78,139
KEB and others
(*2)
-
37,196 15,513
DEC KEB
Libor + 0.80 ~ 4.25 4,884 2,470
Hana Bank
Libor + 2.00 6,552 6,755
KDB
Libor + 1.50 18,661
7,184
Woori Bank
Libor + 1.00 ~ 4.50 23,683
5,434
Shinhan Bank
Libor + 3.50 328
2,245
Korea EXIM Bank
Libor + 3.30
2,198 2,111
Asia Commercial bank
6.80
4,916 -
DE KEB(*2)
1.08 ~ 5.94 35,959 5,874
Korea EXIM Bank
Libor + 2.27
4,648 -
\ 2,967,465
\ 2,401,144
(*1) Includes the Company’s overseas subsidiaries and each of their consolidated subsidiaries.
62
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
(*2) As discounting of commercial papers with recourse do not qualify for the derecognition of a financial instrument, the Group continues to recognize the related receivables and the related amounts received are as short-term borrowings.
(*3) The Group’s PP&E and others have been pledged as collateral for the above borrowings (See Note 34).
15-2. Details of debentures as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Interest rate (%)
as at December 31, 2014
2014
2013
Public subscription debentures 3.57~7.80 ₩ 2,955,110
₩ 3,628,896
Private subscription debentures (*1) 3.90~8.50 380,000
230,000
Convertible bonds (See Note 15-4) 4.00 200,000
15,059
Bond with stock warrants (*2) - -
13,811
Exchangeable bonds (See Note 15-3) 1.50 155,522
219,999 Debentures denominated
in foreign currencies
7.49
29,678 28,493
3,720,310
4,136,258
Less current portion (694,004)
(1,235,152)
Less discount on bonds payable (16,507)
(13,948)
₩ 3,009,799
₩ 2,887,158
(*1) The Group's PP&E and others have been pledged as collateral (See Note 34). (*2) Bonds with stock warrants were fully redeemed at maturity in 2014. 15-3. Exchangeable bonds as at December 31, 2014 are detailed as follows:
Issue date
Maturity date
Coupon rate
YTM
Exercise period
Exchange price
Issuance value
Book value
June 14, 2011
June 14, 2016
1.50%
4.50%
June 15, 2011 ~ May 14, 2016
\ 53,480/share
\220,000
million \169,921
million
① Terms of early redemption
The right of early redemption is exercisable as a whole or in part against the face value of
exchangeable bonds at the interest payment date in three years after the date of issuance of bonds
and each interest payment date at every year thereafter.
② Method of maturity payment
Coupon rate for the bond is 1.5%. For bonds not redeemed until maturity, 116.72% of the principal
amount will be paid on June 14, 2016 with a yield to maturity rate of 4.5% compounded yearly.
63
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
③ Calculation of exchange price
Pursuant to the contract related to the issuance of bonds, in the event an increase in issued capital
without consideration, stock dividends or splits, and increase in issued capital at the price less than the
market price during the period from the date of issuance through one month before maturity, the initial
exchange price can be adjusted as at the day before the adjustment occurs. As at December 31, 2014,
the exchange price is ₩53,480. Changes in the carrying amount of exchangeable bond for the year ended December 31, 2014 are as follows (Korean won in millions):
Balance at January 1
Exercise / amortization
Balance at December 31
Exchangeable bonds ₩ 219,999 ₩ (64,477) ₩ 155,522
Redemption premium 36,777 (10,779) 25,998
Discount on bond (2,876) 1,646 (1,230)
Exchange rights adjustment (24,240) 13,871 (10,369)
Book value 229,660 (59,739) 169,921 Consideration for exchange rights (Derivative financial liabilities) 1,621 (1,618) 3
Exchange rights amounting to ₩1 million (the number of exchanged share: 18 shares) were exercised
and exchangeable bonds amounting to ₩64,476 million were redeemed by exercising early redemption
rights (the number of shares retired due to early redemption: 1,205,606 shares) for the year ended December 31, 2014. 15-4. The convertible bonds issued by DEC as at December 31, 2014 are summarized as follows:
Issue date
Maturity date
Coupon rate
YTM
Exercise period
Conversion Price
Issuance value
Book value
Sep. 4, 2014
Sep. 4, 2017
4.00%
7.50%
From 1 month after date of issue to 1 month before maturity
\ 10,200/share
\190,798
million
\192,474
million
① Terms of early redemption
The right of early redemption is exercisable as a whole or in part against the par value of convertible
bonds at the interest payment date in 1.5 years and 2.5 years after the date of issuance of bonds.
② Method of maturity payment
Coupon rate for the bond is 4.0%. For bonds not converted until maturity, 111.6534% of the principal
amount will be paid on Sep 4, 2017 with a yield to maturity rate of 7.5% compounded quarterly.
③ Calculation of conversion price
Conversion price is modified when the bond issues shares through paid-in capital increase, stock
dividends, or capitalization of reserves before claims to exercise conversion rights with the issuance
price lower than the exercise price before adjustment, or issues stock purchase warrants or
marketable securities which grant stock purchase warrants through the issuance of corporate bonds
combined with stock purchase warrant, or stock conversion warrants, resulting in the adjustment of the
conversion price occurs.
64
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
Changes in the carrying amount of convertible bonds for the year ended December 31, 2014 are as follows (Korean won in millions):
Balance at January 1,
Issuance
Redemption
Exercise / Amortization
Balance at December 31
Convertible bond ₩ 15,059 ₩ 200,000 ₩ (15,059) ₩ - ₩ 200,000
Redemption premium 1,755 23,306
(1,755) - 23,306
Discount on bond (65) (9,202)
65 901 (8,301) Conversion rights
adjustment (320) (24,976)
320 2,445 (22,531)
Book value 16,429 189,128
(16,429) 3,346 192,474 Consideration for conversion rights (Other capital surplus)
- 1,669
- - 1,669
15-5. Long-term borrowings as at December 31, 2014 and 2013 are as follows (Korean won in millions):
Type of borrowings Borrower (*1)
Lender
Annual Interest rate (%) as at December
31, 2014
2014 (*2)
2013
Long-term borrowings in Korean won
The Company
Suhyup Bank
3.20 ~ 3.70
₩ 11,791 ₩ 9,598
NH Investment Securities
4.85
50,000 50,000
Hi Investment Securities
3.50
200,000 200,000
KDB 4.00 ~ 5.57 199,167 115,833
Korea EXIM Bank
3.36 ~ 4.01
340,100 590,000
Korea Investment & Securities Co., Ltd.
3.53
100,000 100,000
Nonghyup Bank - - 50,000
IBK - - 100,000
DI KDB
4.29 ~ 4.87 185,000 208,000
NH Investment Securities
5.10
50,000 50,000
Kyongnam Bank 4.29 40,000 40,000
TY Solution and 6 others
5.10
145,000 145,000
Woori Bank and 3 others
4.77
200,000 200,000
Woori Bank 4.74 40,000 -
Busan Bank
5.00 12,000 -
DEC Shinhan Bank
6.89 419 3,369
KEB 6.71 18,500 -
La Union Co.,
Ltd. 8.20
35,000 35,000
Doosan E&C 1st
Co., Ltd 6.60, CD+2.92
110,000 110,000
Korea Housing
Guarantee Co., Ltd.
1.00
7,267 7,267
Kookmin Bank 2.70 470 530
Kwangju Bank 8.90 - 30,000
DE
La Union Co.,
Ltd. 5.15
50,000 50,000
Nonghyup Bank MOR+2.00 20,000 -
KDB 4.42 25,000 -
65
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
Type of borrowings Borrower (*1)
Lender
Annual Interest rate (%) as at December
31, 2014
2014 (*2)
2013
Long-term borrowings in foreign currency
The Company
Arab Bank and Others
2.24
₩ 164,880 ₩ -
Hana Bank 3M Libor+3.50 10,992 10,553
KDB 3M Eulibor+2.75
~ 3.50
270,707 282,979
3M Libor+3.85
Korea EXIM Bank
3M Libor+6.00
46,961 34,916
3M Eulibor+1.95
KEB
- - 7,308
DI
AKA Bank 6M Eulibor+0.45 2,824 4,005
KDB
3M Libor+3.50 54,960 52,765
Kookmin Bank 3M Libor+3.10 32,976 31,659
Bank of China
3M Libor+2.90 19,786 18,995
KEB 3M Libor+3.60 54,960 52,765
Shinhan Bank 6M Libor+3.35 43,968 47,489
Korea EXIM Bank
3M Libor+2.76 ~ 4.30
687,000 52,765
6M Libor+4.30
JP morgan and 3 Others
3M Libor+3.50
1,311,907 -
KDB and 7 others
6M Libor+4.30
- 1,814,786
Innovasion Norge
4.47
2,229 3,220
SG Finance
6.20 - 32
The Bank of New York
8.00
4,672 4,485
Hana Bank 90% of PBOC(1year)
17,681 17,409
Shell Brasil
Petroleo Ltda -
517 558
First American equipment
finance
-
- 77
DE
KDB - - 21,106
Korea EXIM Bank
-
- 10,553
Shinhan Bank
- - 8,442
IBK - - 6,332
Woori Bank - - 8,442
KEB
- - 1,900
Hana Bank - - 3,166
Kookmin Bank
- - 1,688
HSBC - - 844
First Gulf Bank
- - 844
China Construction Bank
6.40
1,591 3,134
4,568,325 4,597,814 4,597,814
Less current portion
(937,011) (288,564) (288,564)
Less discount on borrowings
(33,688) (21,340) (21,340)
₩ 3,597,626 ₩ 4,287,910
66
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
15. Debentures and borrowings (cont’d)
(*1) Includes the Company’s overseas subsidiaries and each of their consolidated subsidiaries. (*2) The Group’s PP&E and other assets have been pledged as collateral for above borrowings (See Note
34). 15-6. Securitized debt The principal feature of the securitization of DEC’s transactions is that future receivables from various construction projects are initially transferred to a SPE which in turn, issues an asset backed security (future receivables).
Changes in the DEC’s securitized debt arising from securitized transactions for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Balance at January 1
₩ 270,000
₩ 306,800
Accrued 1,028,000 620,000
Transfer (24,600) -
Payment (829,350) (656,800)
Balance at December 31 444,050 270,000
Less discount on borrowings (4,025) -
Total 440,025
270,000
Current 397,347
270,000
Non-current 42,678
-
Details of the above securitized debt are as follows (Korean won in millions):
Term
Discount rate (%)
Principal amount in trust Doosan Cuvex 1st
Securitization Specialty Co., Ltd.
2014.04.28 ~ 2016.04.26
7.50
₩ 65,400
DS SOLBAT the 2nd Co., Ltd. (*1)
2014.10.07 ~ 2015.01.06 9.66 64,000
DS Haeundae Asset Securitization Specialty Co., Ltd.
2014.01.27 ~ 2016.01.27
8.21
110,000
PINETREECITY 1st Co., Ltd. (*1)
2014.10.08 ~ 2015.01.08 8.80 50,000
SD 1st Co., Ltd. 2014.09.30 ~ 2015.09.30 9.76 100,000
DS SOLBAT the 3rd Co., Ltd. 2014.11.14 ~ 2015.01.06 8.80 40,000
DS SOC 1st L.L.C. 2014.12.30 ~ 2015.03.30 8.50 50,000 (*1) Some portion of property, plant and equipment was provided as collateral.
The above principal amount in trust of securitized debts represents initially accrued amount of securitized debts, which is different from the carrying amount on the consolidated statements of financial position (See Note 33-13).
67
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
16. Employee benefits liability
The Group operates a defined benefit plan and the cost of providing benefit under the defined benefit plan is determined using the projected unit credit method on actuarial valuation of the present value of its defined benefit obligations.
16-1. Components of the employee benefit liability as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Present value of defined benefit obligations ₩ 2,418,728
₩ 2,134,005
Fair value of plan assets (*1) (1,398,119)
(1,203,614)
Benefit liability per statement of financial position ₩ 1,020,609
₩ 930,391
(*1) Include employer contributions amounting to \2,191 million and \2,280 million to the National
Pension Service as at December 31, 2014 and 2013, respectively.
16-2. Expenses incurred in relation to the employee benefit liability, which are reflected in the statement of profit or loss, for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Current service cost ₩ 108,252
₩ 130,931
Interest expense, net 43,113
44,434
Effect of curtailment and settlement (10,116) (196)
₩ 141,249
₩ 175,169
16-3. Classification of expenses related to the employee benefit liability for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Cost of sales ₩ 78,210
₩ 79,958
Selling and administrative expenses 46,975 83,884
Research and development costs 16,064
11,327 ₩ 141,249
₩ 175,169
68
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
16. Employee benefits liability (cont’d)
16-4. Changes in the present value of the defined benefit obligations for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Balance at January 1
₩ 2,134,005 ₩ 2,264,013
Current service costs 108,252 130,931
Transfer from related parties 2,304 4,668
Transfer to related parties (3,097) (3,704)
Interests 93,250 87,160
Remeasurement gains (losses) in OCI:
-Actuarial changes arising from changes in demographic assumptions
10,284 (1,623)
-Actuarial changes arising from changes in financial assumptions
206,975 (182,153)
-Others (702) (33,360)
Effect of curtailment and settlement (11,820) (196) Contributions by plan participants
2,380 2,353
Benefits paid (136,660) (131,364)
Others 13,557 (2,720)
Balance at December 31 ₩ 2,418,728 ₩ 2,134,005
16-5. Changes in the fair value of plan assets for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Balance at January 1 ₩ 1,203,614 ₩ 1,122,472
Expected return on plan assets 50,137 42,727
Transfer from related parties
1,325 577
Transfer to related parties
(607) (723)
Remeasurement gains (losses) in OCI 64,876 7,225
Contributions by plan participants 2,281 2,182
Contributions by employer 186,024 125,558
Benefits paid (111,205) (87,257)
Effect of curtailment and settlement (1,704) -
Others 3,378 (9,147)
Balance at December 31 ₩ 1,398,119 ₩ 1,203,614
In relation to the defined benefit plans, the reasonable estimates of future employer contributions during
the year 2015 amount to ₩216,308 million. In addition, the actual return on plan assets for the years
ended December 31, 2014 and 2013 amounted to ₩115,013 million and ₩49,952 million, respectively.
69
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
16. Employee benefits liability (cont’d)
16-6. The principal assumptions used in determining employee benefit liability as at December 31, 2014 and 2013 are as follows:
2014 2013
Discount rate 1.80% ~ 8.40% 3.74% ~ 8.10% Future salary increases 0.00% ~ 8.00% 2.40% ~ 8.00%
16-7. Components of plan assets as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014 2013
Equity investments ₩ 436,974 ₩ 422,120
Korea government public bonds 560,494 523,868 Trust assets and others 400,651 257,626
Total ₩ 1,398,119 ₩ 1,203,614
The majority of the employee benefit plan consists of quoted securities in active markets.
16-8. Details of a sensitively analysis on the defined benefit obligation from changes in the significant assumptions as at December 31, 2014 are as follows (Korean won in millions):
Amount Ratio
Discount rate:
1% increase ₩ (195,174) (8.07%) 1% decrease 232,550 9.61%
Future salary increases: 1% increase 47,040 1.94% 1% decrease (46,296) (1.91%)
16-9. The maturity of the defined benefit obligation as at December 31, 2014 is as follows (Korean won in millions):
Within the next 12 months
Between 1 and 2 years
Between 2 and 5 years
Between 5 and 10 years
Total
Expected contributions to the defined benefit
obligation ₩ 185,956 ₩ 217,241 ₩ 523,127 ₩ 862,306 ₩1,788,630
16-10. With regard to the defined contribution pension plans, the Group recognized expenses amounting to ₩22,807 million (2013: ₩34,449 million).
70
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
17. Provisions
Changes in significant provisions for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
December 31, 2014
Balance at January 1
Arising during the
year
Unused amounts reversed Utilized Others(*1)
Balance at December
31 Current Non-
current
Construction warranties ₩417,493 ₩95,850 ₩(74,213) ₩(63,507) ₩(1,848) ₩373,775 ₩(136,027)
₩237,748
Returned goods 858 1,354 (1,015) - - 1,197 (1,197) -
Total ₩418,351 ₩97,204 ₩(75,228) ₩(63,507) ₩(1,848) ₩374,972 ₩(137,224) ₩237,748
(*1) Includes gain or loss arising from changes in foreign exchange rates. December 31, 2013
Balance at January 1
Arising during the
year
Unused amounts reversed Utilized Others(*1)
Balance at December
31 Current Non-
current
Construction warranties ₩416,180 ₩127,323
₩(21,865)
₩(107,616) ₩3,471
₩417,493 ₩(146,730)
₩270,763
Returned goods 645 847 - (634) - 858 (858) -
Total ₩416,825 ₩128,170 ₩(21,865) ₩(108,250) ₩3,471 ₩418,351 ₩(147,588) ₩270,763
(*1) Includes gain or loss arising from changes in foreign exchange rates.
The Group estimates expenses required to settle the Group’s obligations from product warranties, refunds, maintenance related after-services and others based on the level of warranty period and historical experience and other considerations.
71
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
18. Equity
The Company is authorized to issue 400,000,000 shares, with a par value of ₩5,000 per share and the
number of ordinary stock issued as at December 31, 2014 and 2013 is 106,158,256. The number of redeemable convertible preferred stock (“RCPS”) issued as at December 31, 2014 is 13,203,540 (2013: nil). The number of shares with limited voting rights under the Korean Commercial Code as at December 31, 2014 and 2013 is 7,312,505.
Change in the issued capital and paid-in capital in excess of par value of the Company for the year ended December 31, 2014 is summarized as follows (Korean won in millions):
Number of shares
Issued capital
Paid-in capital in excess of par value
Ordinary
stock Preferred
stock Ordinary
stock Preferred
stock Total
Ordinary
stock Preferred
stock Total
Balance at January 1 106,158,256
-
₩ 530,791
₩ -
₩ 530,791
₩ 73,011
₩ -
₩ 73,011
Increase in paid-in capital (*1) -
13,203,540
-
66,018
66,018
-
306,662
306,662
Balance at December 31 106,158,256
13,203,540
₩ 530,791
₩ 66,018
₩ 596,809
₩ 73,011
₩ 306,662
₩379,673
(*1) On December 6, 2014, the Company issued RCPS under resolution of the Board of Directors on November 25, 2014 and details are as follows:
Description
Purpose of issuance Improve the Company’s capital structure
Issued shares Cumulative non-participating preferred stock
Number of issued shares 13,203,540 shares
Value of issued shares ₩28,250 per share
Voting right A preferred stock has one voting right per share, same as a common stock, and when a resolution of shareholders’ meeting is unfavorable to the preferred stock, such resolution must be also approved during the preferred stockholders’ meeting.
Dividend right Based on the issuance price, 3.3% per year (after 5 years, 0.75% will be added annually on the index of 5-year average rate of returns posted by the private bond value appraisal institutions)
Redeemable right ① 1 ~ 5 years: early redemption is available to the extent of 10% of total preferred stock with 10% plus issuance price.
② Redemption at year 5: redeemable all or some portion of preferred stock 5 years after the payment date. (At issue price plus 5.48% per annum less prepaid dividends)
③ 5 ~ 10 years: redeemable with adjusted amount based on the rate of returns posted by the private bond value appraisal institutions.
Convertible right ① Convertible all or some portion of preferred stocks
② Conversion period: 1~10 years after the payment date
③ Conversion ratio: 1 common stock to 1 preferred stock
The Company has the redeemable right in connection with the above RCPS and there are no contractual obligations for the company to pay in cash and/or other financial assets. Therefore, the Company classified the RCPS as equity.
72
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
19. Capital surplus
Capital surplus as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Paid-in capital in excess of par value ₩ 379,673
₩ 73,011
Revaluation surplus 594,262
594,262
Other capital surplus 854,350
854,382
₩ 1,828,285
₩ 1,521,655
20. Other components of equity 20-1. Other components of equity as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Treasury shares ₩ (175,901)
₩ (90,261)
Stock options 13,104
14,257
Others 61,001
62,816
₩ (101,796)
₩ (13,188)
20-2. Treasury shares as at December 31, 2014 and 2013 are as follows (Korean won in million, number of shares):
2014
2013
Number of shares
Amount
Number of shares
Amount
Ordinary stock 7,312,505
₩ 90,261
7,312,505
₩ 90,261
Preferred stock 3,025,532
85,640
-
-
10,338,037
₩ 175,901
7,312,505
₩ 90,261
20-3. The Company has granted stock options to its executives on numerous occasions. The settlement method for stock options include issuance of new shares, issuance of treasury shares or cash settlement. The type of settlement method chosen is determined based on the Board of Directors' decision at the time of exercise. These stock options carry a two year continuous employment vesting condition from the grant date.
73
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
20. Other components of equity (cont’d) (i) The terms and conditions of stock options granted as at December 31, 2014 are summarized as follows (Korean won in units, shares in units):
Grant date
Number of shares to be issued
Exercisable period
Exercise price
Estimated fair value as of the
grant date
2006.02.27 2,600 2009.02.27 ~ 2016.02.26 ₩ 33,200 ₩ 12,950
2007.03.16 8,600 2010.03.17 ~ 2017.03.16 50,200 22,564
2008.03.21 19,000 2011.03.21 ~ 2018.03.20 121,200 49,565
2009.03.27 15,450 2012.03.27 ~ 2019.03.26 73,000 32,595
2010.03.26 34,400 2013.03.26 ~ 2020.03.25 90,100 41,077
2011.03.25 79,100 2014.03.25 ~ 2021.03.24 65,700 24,642
2012.03.30 220,400 2015.03.30 ~ 2022.03.29 66,800 16,337
2013.03.29 279,900 2016.03.29 ~ 2023.03.28 44,900 10,860
2014.03.28 394,800 2017.03.28 ~ 2024.03.27 34,550 7,948
1,054,250
(ii) Change in the stock options for the year ended December 31, 2014 is summarized as follows (Korean won in millions, shares in units):
Number of shares to be issued
Grant date Balance at
January 1
Newly granted
Retired
Balance at December 31
2006.02.27
3,900 - (1,300) 2,600
2007.03.16
18,300 - (9,700) 8,600
2008.03.21
36,700 - (17,700) 19,000
2009.03.27 26,600 - (11,150) 15,450
2010.03.26 71,200 - (36,800) 34,400
2011.03.25
114,100 - (35,000) 79,100
2012.03.30
257,600 - (37,200) 220,400
2013.03.29 405,200 - (125,300) 279,900
2014.03.28
- 464,100 (69,300) 394,800
933,600 464,100 (343,450) 1,054,250
Valuation
Grant date Balance at
January 1
Newly granted
Retired
Balance at December 31
2006.02.27
₩ 50 ₩ - ₩ - ₩ 50
2007.03.16
413 - (219) 194
2008.03.21
1,819 - (877) 942
2009.03.27
867 - (363) 504
2010.03.26 2,925 - (1,512) 1,413
2011.03.25 2,812 - (862) 1,950
2012.03.30
3,701 483 (584) 3,600
2013.03.29 1,670 1,864 (417) 3,117
2014.03.28
- 1,348 (14) 1,334
₩ 14,257 ₩ 3,695 ₩ (4,848) ₩ 13,104
The Company’s weighted average share prices at the dates of exercise for the years ended December 31,
2014 and 2013 are ₩30,751 and ₩42,787, respectively. The Company’s weighted average expected
durations of share based payment from December 31, 2014 and 2013 are 1.5 years and 1.6 years, respectively.
74
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
20. Other components of equity (cont’d) Compensation expenses associated with stock options for the years ended December 31, 2014 and 2013
are ₩2,681 million and ₩4,017 million, respectively, and compensation expenses amounting to ₩2,597
million are expected to be recognized in the future periods.
(iii) The estimated fair value was calculated using the modified fair value method and assumptions applied to this method are summarized as follows:
Grant date
Risk free rate (*1)
Expected exercise period
Expected volatility
Expected dividend yield
2006.02.27 5.01% 3 years 53.87% 1.69%
2007.03.16 4.79% 3 years 49.33% 5.67%
2008.03.21 5.25% 3 years 56.02% 7.33%
2009.03.27 3.71% 3 years 65.15% 9.00%
2010.03.26 3.82% 3 years 66.45% 10.00%
2011.03.25 3.66% 3 years 53.12% 10.00%
2012.03.30 3.57% 3 years 38.21% 13.33%
2013.03.29 2.45% 3 years 35.98% 15.00%
2014.03.28 2.88% 3 years 34.72% 15.00%
(*1) Based on a three-year treasury bond yield rate.
21. Accumulated other comprehensive income (loss)
21-1. Accumulated other comprehensive income (loss) for the years ended December 31, 2014 and 2013 are summarized as follows (Korean won in millions):
2014
2013
Loss on valuation of available-for-sale financial assets ₩ (203)
₩ (1,429)
Loss on valuation of derivative financial instruments (36,940)
(59,699)
Change in equity of equity method investments (847)
(562)
Gain on revaluation of land 734,366 734,444
Loss on translation of foreign operations (475,457)
(348,197)
₩ 220,919
₩ 324,557
21-2. Details of income taxes on OCI items directly relected in equity for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Balance
before tax
Tax effect
Balance after tax
Gain (loss) on valuation of available-for- sale financial assets
₩ 866
₩ (1,069)
₩ (203)
Loss on valuation of derivative financial instruments
(49,182) 12,242 (36,940)
Change in equity of equity method investments
(419)
(428)
(847)
Gain on revaluation of land 971,242 (236,876) 734,366
Loss on translation of foreign operations (475,457)
-
(475,457)
₩ 447,050
₩ (226,131)
₩ 220,919
75
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
21. Accumulated other comprehensive income (loss) (cont’d)
2013
Balance before tax
Tax effect
Balance after tax
Loss on valuation of available-for-sale financial assets
₩ (700)
₩ (729)
₩ (1,429)
Loss on valuation of derivative financial instruments
(78,428)
18,729
(59,699)
Change in equity of equity method investments
(229) (333) (562)
Gain on revaluation of land 971,764 (237,320) 734,444
Loss on translation of foreign operations (347,837) (360) (348,197)
₩ 544,570
₩ (220,013)
₩ 324,557
22. Retained earnings
22-1. Retained earnings of the Group as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Legal reserve ₩ 109,168
₩ 101,668
Voluntary reserve 1,116,594
1,111,987
Unappropriated retained earnings 889,441
1,149,166
₩ 2,115,203
₩ 2,362,821
22-2. Details of dividends for the years ended December 31, 2014 and 2013 are as follows:
2014 (*1)
2013
Common stock
Preferred stock (*2) Common stock
Number of shares 98,845,751 shares 13,203,540 shares
98,845,751 shares
Par value per share (Korean won in units) ₩ 5,000 ₩ 5,000
₩ 5,000
Dividends to capital stock rate 15% 18.6%
15%
Dividends per share (Korean won in units) ₩ 750 ₩ 932.25
₩ 750
Dividends (Korean won in millions) ₩ 74,134 ₩ 12,309 ₩ 74,134
(*1) Represents the amount proposed prior to the date of approval of issuance of financial statements, but
not recognized as appropriations of retained earnings on the financial statements as of the reporting date.
(*2) The number of redeemable convertible preferred stocks issued for the year ended December 31, 2014 is 13,203,540 with dividends amounting to ₩12,309 million.
The Company paid dividends for the year ended December 31, 2013 in April 2014, and dividends for the year ended December 31, 2014 are expected to be paid in April 2015.
76
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
22. Retained earnings (cont’d)
22-3. Pay-out ratio and dividend yield ratio for the years ended December 31, 2014 and 2013 are as follows:
2014 (*1) 2013
Common stock Preferred stock Common stock
Pay-out ratio
Dividends / Profit for the year attributable to the equity holders of parent - - 107.09%
Dividend yield ratio
Dividends per share /
Share price at the reporting date
3.17% - 2.12%
(*1) The Group did not calculate pay-out ratio in 2014 as the Group recorded loss for the year.
23. Other non-controlling interests
23-1. Details of hybrid equity instruments classified as equity as at December 31, 2014 is as follows:
Description
Issuer DI
Issuance price
USD 500,000,000
Maturity 30 years and automatic revolving
Dividend conditions ① Amount: 3.25% at par value, resets every 5 years, and 5% and 2% will be added after 5 and 7 years, respectively, according to a “Step up” clause.
② Payment: semi-annually in arrears, optional deferral of distributions is available.
Others ① DI can exercise a call option on the instrument at every 5 years after the issue date and every dividend payment date afterwards.
② Investors can exercise a put option on the instrument to Core Partners Limited, a special purpose entity (“SPE”), if DI does not exercise its call option.
If investors exercise their put option and Core Partners Limited, a SPE, acquires the instruments after 5 years since issuance date, the SPE has a right to put the instruments back to DI (the “Stock Exchange Right”) under which the SPE can exchange a unit of the instrument with a par value of $15.40 for one share of DI’s common stock. The hybrid instruments are classified as equity as at December 31, 2014, as they do not contain a contractual obligation for DI to settle in cash and the Stock Exchange Right confers a right to receive a fixed number of DI’s common stock at the issuance date.
77
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
23. Other non-controlling interests (cont’d)
23-2. Pursuant to the resolution of the Board of Directors on December 6, 2013, DEC issued redeemable convertible preferred stock on December 16, 2013. The details of redeemable convertible preferred stock are as follows:
Description
Purpose of issuance To obtain liquidity and to improve the financial structure
Issued shares Cumulative non-participating preferred stock
Number of issued shares 22,727,272 shares
Value of issued shares ₩17,600 per share
Voting right
No voting right was given. However, in the case where no dividend payment for preferred stock are declared at the shareholders’ meeting , one voting right per share will be given from the next shareholders’ meeting up to the shareholders’ meeting where dividend payment for preferred stock are declared.
Dividend rate Based on the issue price, 6.5% per year
Redeemable right
① Redemption: On December 16, 2016, if there is profit available for dividends, DEC can redeem all or some portion of preferred stock.
② Early redemption: On December 16, 2015, if there is profit available for dividends, DEC can redeem all or some portion of preferred stock (limited to 30% of total issued amount).
Conversion right
① Conversion right: Both preferred stockholders and DEC hold conversion rights. However, only preferred stockholders may exercise early conversion right.
② Conversion period: From March 16, 2017 to March 15, 2018
③ Early conversion: Preferred stockholders can convert on December 16, 2015 and 2 business days prior to such date
④ Conversion ratio: 1 common stock per 1 preferred stock The Group has the redeemable right in connection with the above redeemable convertible preferred stock. In addition, there is no contractual obligation for the Group to pay in cash and /or other financial assets. Therefore, the Group classified the redeemable convertible preferred stock as equity securities.
24. Segment information
24-1. The reportable business segments of the Group and major products and services by segments are as follows:
Segment Products and services
Power generation NCSS, BOP, turbine and others
Water Seawater desalination plants and water treatment systems
Industrial plants Container handling cranes, national defense service and others
Castings & forgings
Power generation components, shipbuilding components, iron & steel making components, mold & tool steel and petrochemical & industrial components
Construction Plant, civil engineering, architecture
Wholesale and retail Purchasing agent service
DI Internal combustion engines, and various construction machinery, transport equipment and others
DE Marine engines, internal combustion engine, internal combustion generator, emergency generator for nuclear power plant and others
DEC Apartment building and others
78
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
24. Segment information (cont’d)
24-2. Summarized financial information by business segments as at and for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Sales
Intersegment sales
Net sales
Operating income (loss)
Profit (loss)
Power generation ₩ 6,071,899
₩ (459,346)
₩ 5,612,553
₩ 330,336
₩ 102,649
Water 588,819 (13,198) 575,621 (983) (38,206)
Industrial plants 139,333 (74) 139,259 (9,089) (27,930)
Castings & forgings 497,244 (132,413) 364,831 (30,668) (46,844)
Construction 572,219 (485) 571,734 33,342 (4,650)
Wholesale and retail 9,800 (9,800) - (310) (138)
DI 10,598,898 (2,911,095) 7,687,803 452,994 23,972
DE 897,208 (11,426) 885,782 (39,596) (42,231)
DEC 2,401,632 (111,692) 2,289,940 142,968 (68,580)
21,777,052 (3,649,529) 18,127,523 878,994 (101,958)
Consolidation adjustment (3,649,529) 3,649,529 - 9,245 16,483
Total ₩ 18,127,523
₩ -
₩ 18,127,523
₩ 888,239
₩ (85,475)
2013
Sales
Intersegment sales
Net sales
Operating income (loss)
Profit (loss)
Power generation ₩ 7,046,126
₩ (446,870)
₩ 6,599,256
₩ 527,125
₩ 213,272
Water 791,799
(10,139)
781,660
34,600
(8,410)
Industrial plants 159,555
(55)
159,500
15,848
2,674
Castings & forgings 482,510
(119,996)
362,514
(2,432)
(41,025)
Construction 582,409
(198)
582,211
(60,589)
(111,300)
Wholesale and retail 8,713
(8,589)
124
1,555
421
DI 10,317,664
(2,580,988)
7,736,676
369,500
(100,950)
DE 749,044
(8,080)
740,964
721
(5,236)
DEC 2,420,849
(175,580)
2,245,269
57,370
(60,325)
22,558,669
(3,350,495)
19,208,174
943,698
(110,879)
Consolidation adjustment (3,350,495)
3,350,495
-
14,374
129,542
Total ₩ 19,208,174
₩ -
₩ 19,208,174
₩ 958,072
₩ 18,663
79
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
24. Segment information (cont’d)
24-3. Summarized financial information on assets and liabilities by business segments as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Asset Liability
Asset
Liability
Power generation ₩ 9,032,256
₩ 5,808,694
₩ 9,819,196
₩ 6,451,471
Water 1,021,478
565,552
1,051,532
629,892
Industrial plants 316,845
105,160
295,796
136,475
Castings & forgings 1,206,074
435,758
1,086,268
422,044
Construction 1,587,625
885,386
1,430,745
913,966
Wholesale and retail 265,711
56,432
164,451
49,462
DI 11,957,427
8,669,139
11,481,494
7,932,473
DE 1,540,297
839,595
1,662,609
872,571
DEC 5,133,091
3,170,495
4,950,416
2,934,973
32,060,804
20,536,211
31,942,507
20,343,327
Consolidation adjustment (4,508,897)
(661,306)
(4,217,027)
(529,641)
Total ₩ 27,551,907
₩ 19,874,905
₩ 27,725,480
₩ 19,813,686
24-4. Summarized geographical information on sales for the years ended December 31, 2014 and 2013 is as follows (Korean won in millions):
2014
Sales
Intra-Group sales
Net sales
Domestic ₩ 9,703,308
₩ (1,702,383)
₩ 7,982,925
Americas 3,614,459 (530,853) 3,083,606
Asia 3,000,365 (533,202) 2,467,163
Middle East 1,812,193 - 1,812,193
Europe 3,607,502 (865,091) 2,742,411
Others 39,225 - 39,225
21,777,052 (3,649,529) 18,127,523
Consolidation adjustment (3,649,529) 3,649,529 -
Total ₩ 18,127,523
₩ -
₩ 18,127,523
80
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
24. Segment information (cont’d)
2013
Sales
Intra-Group sales
Net sales
Domestic ₩ 9,252,213
₩ (1,396,599)
₩ 7,855,614
Americas 3,252,460 (569,166) 2,683,294
Asia 3,577,307 (557,147) 3,020,160
Middle East 2,932,514 - 2,932,514
Europe 3,440,034 (827,583) 2,612,451
Others 104,141 - 104,141
22,558,669 (3,350,495) 19,208,174
Consolidation adjustment (3,350,495) 3,350,495 -
Total ₩ 19,208,174
₩ -
₩ 19,208,174
25. Revenue
Revenue for the years ended December 31, 2014 and 2013 consist of the following (Korean won in millions):
2014
2013
Finished goods ₩ 10,944,749
₩ 10,926,119
Construction 7,046,444 8,145,518
Other 136,330 136,537
₩ 18,127,523
₩ 19,208,174
26. Construction contracts
26-1. Accumulated profit (loss) and related assets and liabilities on construction contracts as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Accumulated construction
cost
Accumulated construction
revenue
Accumulated construction profit (loss)
Receivables from
construction contracts-
billed
Receivables from
construction contracts-unbilled
Dues to customers for contract
work
Power generation ₩ 21,928,399
₩ 26,557,392
₩ 4,628,993
₩ 233,269
₩ 583,492 ₩ 688,891
Water 3,281,925 3,607,768 325,843 12,220 243,910 4,344
Industrial plants 938,192 986,374 48,182 16,154 103,836 24,969
Castings & forgings 301,613 294,794 (6,819) 48,244 - -
Plant construction 1,145,246 1,144,332 (914) 3,845 19,234 5,588
General construction 1,852,772 2,012,338 159,566 791,435 152,210 23,226
29,448,147 34,602,998 5,154,851 1,105,167 1,102,682 747,018
Subsidiaries:
DEC 8,564,581 9,780,001 1,215,420 1,463,796 777,882 142,482
DE 147,311 188,147 40,836 - 13,000 14,568
DPS S.A and subsidiaries 6,739,164 7,748,960 1,009,796 77,568 185,465 216,134
15,451,056 17,717,108 2,266,052 1,541,364 976,347 373,184
₩ 44,899,203
₩ 52,320,106
₩ 7,420,903
₩ 2,646,531
₩ 2,079,029 ₩ 1,120,202
81
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
26. Construction contracts (cont’d)
2013
Accumulated construction
cost
Accumulated construction
revenue
Accumulated construction profit (loss)
Receivables from
construction contracts-
billed
Receivables from
construction contracts-unbilled
Dues to customers for contract
work
Power generation ₩ 20,469,446
₩ 24,871,670
₩ 4,402,224
₩ 262,463
₩ 894,698 ₩ 928,563
Water 3,137,615
3,624,809
487,194
2,529
206,715 12,272
Industrial plants 991,888
1,049,593
57,705
12,385
84,204 31,048
Castings & forgings 385,460
382,246
(3,214)
48,244
- -
Plant construction 1,126,609
1,077,770
(48,839)
19,467
43,128 74,749
General construction 1,747,847
1,987,006
239,159
715,652
144,394 19,818
27,858,865
32,993,094
5,134,229
1,060,740
1,373,139 1,066,450
Subsidiaries:
DEC 7,555,325
8,600,172
1,044,847
1,560,416
658,568 231,672
DE 128,992
167,748
38,756
-
10,721 3,773
DPS S.A and subsidiaries 5,199,634
6,002,165
802,531
234,759
302,758 356,129
12,883,951
14,770,085
1,886,134
1,795,175
972,047 591,574
₩ 40,742,816
₩ 47,763,179
₩ 7,020,363
₩ 2,855,915
₩ 2,345,186 ₩ 1,658,024
26-2. Changes in construction contracts for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Project name Term Balance at January 1
Changes in contract
Realized revenue
Balance at December 31
Power generation
Rabigh Power Plant
and others
2010.09 ~ 2017.12
₩ 9,045,337
₩ 5,251,988 ₩ 3,822,522 ₩ 10,474,803
Water
Yanbu ph.3 MSF and
others
2012.11 ~ 2016.12
1,358,239
42,472 542,180 858,531
Industrial plants
Samcheok #1 ~ 2
CSU4 and others
2013.01 ~ 2016.06
276,516
70,780 138,977 208,319
Castings& forgings
Casting, Forging
2014.01 ~ 2014.12
537,540
449,929 420,920 566,549
Plant construction
Samcheok LNG #5 ~
7 and others
2010.11 ~ 2015.12
698,691
64,605 185,392 577,904
General construction
Seoul Forest Trimage
and others
2013.07 ~ 2017.04
1,354,196
230,526 386,802 1,197,920
13,270,519 6,110,300 5,496,793 13,884,026
DE
Singori #3 and #4 emergency generators, alternative AC power diesel engine and other 13
2005.02 ~ 2017.03 84,587 33,641 20,726 97,502
DEC
Heaundae Jugong and
others
2007 05 ~ 2017.01 7,195,003 1,733,315 2,191,993 6,736,325
DPS S.A. and subsidiaries
Raipur and others
2008.12 ~ 2030.12 2,457,071 1,307,841 1,848,369 1,916,543
9,736,661 3,074,797 4,061,088 8,750,370
₩23,007,180
₩ 9,185,097 ₩ 9,557,881 ₩ 22,634,396
82
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
26. Construction contracts (cont’d)
2013
Project name Term
Balance at January 1
Changes in Contract(*1)
Realized revenue
Balance at December 31
Power generation (*1)
Rabigh Power Plant
and others
2010.09 ~ 2017.12
₩12,135,829
₩ 1,725,878 ₩ 4,816,370 ₩ 9,045,337
Water
Yanbu ph.3 MSF and
others
2012.11 ~ 2016.06
1,613,662
513,405 768,828 1,358,239
Industrial plants
Samcheok #1 ~ 2
CSU4 and others
2013.01 ~ 2016.06
317,825
118,246 159,555 276,516
Castings& forgings
Casting, Forging
2013.01 ~ 2013.12
600,916
319,032 382,408 537,540
Plant construction
Samcheok LNG #5 ~
7 and others
2010.11 ~ 2015.12
314,017
617,493 232,819 698,691
General construction
Seoul Forest Trimage
and others
2012.08 ~ 2016.11
1,371,757
329,273 346,834 1,354,196
16,354,006
3,623,327 6,706,814 13,270,519
DE
Singori #3 and #4 emergency generators, alternative AC power diesel engine and other 10
2005.02 ~ 2017.03 121,423 (1,507) 35,329 84,587
DEC (*1)
Heaundae Jugong and
others
2007 05 ~ 2017.06 9,104,762 280,155 2,189,914 7,195,003
DPS S.A. and subsidiaries
Raipur and others
2008.12 ~ 2030.12 2,315,097 2,010,505 1,868,531 2,457,071
11,541,282 2,289,153 4,093,774 9,736,661
₩27,895,2888
₩ 5,912,4800 ₩ 10,800,588 ₩ 23,007,180
(*1) The Company made a contribution-in-kind of its HRSG business unit to DEC during the year ended
December 31, 2013. Accordingly, the changes in contract amounts above reflect transfers of
₩290,395 million on the remaining contract amount for the HRSG business unit.
27. Classification of expenses based on nature
Classification of expenses based on nature of expense (cost of sales or selling and administrative expenses) for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Changes in inventories ₩ (126,116)
₩ 251,553
Purchase of raw materials and goods 9,223,580 9,102,497
Salaries 2,740,816 2,532,924
Depreciation & amortization of intangible assets 570,531 536,407
83
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
28. Selling and administrative expenses
Details of selling and administrative expenses for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Salaries ₩ 654,172
₩ 670,548
Severance and retirement benefits 103,615 99,143
Employee welfare benefits 137,415 143,138
Travel 68,194 67,554
Training 31,015 31,887
Taxes and dues 23,177 23,061
Commissions 283,965 350,144
Rental 75,964 74,133
Bad debt expenses 112,727 119,741
Transportation 16,735 18,386
Depreciation 38,662 32,849
Amortization of intangible assets 77,377 67,066
Research 277,996 270,697
Overseas marketing 28,330 27,833
Advertising 93,412 97,768
Warranty 22,009 25,628
Others 149,333 108,935
₩ 2,194,098
₩ 2,228,511
84
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
29. Finance income and cost
29-1. Details of finance income for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Interest income ₩ 55,685
₩ 73,458
Dividend income 537 1,162
Gain on foreign currency transaction 206,999 263,555
Gain on foreign currency translation 78,723 66,815
Gain on settlement of derivative financial instruments 313,362 304,150
Gain on valuation of derivative financial instruments 92,725 251,092
Gain on valuation of firm commitments 170,310 81,990
Gain on financial guarantee
4,362 14,521
₩ 922,703 ₩ 1,056,743
29-2. Details of finance costs for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Interest expenses ₩ 640,218
₩ 711,406
Loss on foreign currency Transaction 206,328 236,010
Loss on foreign currency Translation 104,802 71,796
Loss on settlement of derivative financial instruments 311,962 337,066
Loss on valuation of derivative financial instruments 282,149 95,842
Loss on valuation of firm commitments 76,866 212,593
Payment guarantee fee 112,905 101,133
Loss on redemption of debenture 38,140 2,607
Others 1,687 1,680
₩ 1,775,057
₩ 1,770,133
85
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
30. Other non-operating income and expense
30-1. Details of other non-operating income for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Gain on disposal of plant, property and equipment
₩ 4,418
₩ 45,941
Gain on disposal of intangible assets
176
177
Gain on disposal of Investment property
785
21,867
Gain on disposal of non-current assets classified as held-for-sale 45,090
-
Gain on disposal of available-for-sale assets 1,463
25,793
Others
87,916
50,619
₩ 139,848
₩ 144,397
30-2. Details of other non-operating expense for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Loss on disposal of trade receivables ₩ 23,478 ₩ 22,527
Loss on disposal of plant, property and equipment
8,094 10,827
Loss on disposal of intangible assets
144 193
Other bad debt expenses
61,996 28,560
Impairment loss on plant, property and equipment
8,691 1,314
Impairment loss on intangible assets
13,103 42,884
Donation 23,135 31,878
Restructuring expense 45,455 376
Impairment loss on available-for-sale assets 7,285
24,447
Loss on disposal of available-for-sale assets 1,433
39
Loss on revaluation of land -
17,091
Others 89,171
91,236
₩ 281,985
₩ 271,372
86
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
31. Income taxes 31-1. The component of income tax expense (benefit) for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Current income tax: ₩ 131,651
₩ 212,833
Adjustments in respect of current income tax of prior year 302
931 Relating to origination and reversal of temporary differences (283,462)
230,623
Total income tax expense (benefit) (151,509)
444,387
Current income tax related to items recognized in equity during the year (1,361) (44,203)
Deferred tax related to items recognized in equity during the year 52,234 (348,759)
Income tax expense (benefit) ₩ (100,636) ₩ 51,425
31-2. The component of income tax expense and deferred tax related to items recognized through equity for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Net gain (loss) on disposal of treasury stock ₩ (9)
₩ 44,203
Equity adjustments in equity method (260)
(680)
Net gain on revaluation of land 436
282,180
Unrealized gain (loss) on available for sale financial assets 407 (5,615)
Net loss on revaluation of cash flow hedges (2,033)
(8,648)
Remeasurement of the net defined benefit liability (46,446)
82,888
Net loss on translation of foreign operations (2,968)
(1,366)
₩ (50,873) ₩ 392,962
31-3. Changes in deferred tax assets (liabilities) for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Balance at January 1
Increase (decrease)
Balance at December 31
Provision for retirement and severance benefits ₩ 196,946 ₩ 65,660 ₩ 262,606
Allowance for doubtful accounts
458,115 (59,895) 398,220
Property, plant and equipment
49,614 (24,045) 25,569
Reserve for research and development
(144,279) 6,695 (137,584)
Intangible assets
40,876 12,570 53,446
Derivative financial instruments
24,575 33,406 57,981
Foreign currency denominated assets (liabilities)
1,059 173 1,232
Gain on revaluation of land
(700,125) 17,704 (682,421)
Others
651,704 231,194 882,898
₩ 578,485 ₩ 283,462 ₩ 861,947
87
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
31. Income taxes (cont’d)
2013
Balance at January 1
Increase (decrease)
Balance at December 31
Provision for retirement and severance benefits ₩ 115,384 ₩ 81,562 ₩ 196,946
Allowance for doubtful accounts
386,541 71,574 458,115
Property, plant and equipment
8,254 41,360 49,614
Reserve for research and development
(134,552) (9,727) (144,279)
Intangible assets
40,509 367 40,876
Derivative financial instruments
(12,247) 36,822 24,575
Foreign currency denominated assets (liabilities)
(2,010) 3,069 1,059
Gain on revaluation of land
(413,807)
(286,318)
(700,125)
Others
821,036
(169,332)
651,704
₩ 809,108 ₩ (230,623) ₩ 578,485
31-4. The amount of deductible temporary differences for which no deferred tax asset is recognized in the statements of financial position as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Deductible temporary differences
₩ 1,818,302 ₩ 1,290,293
The probability of deferred tax assets being realized depends on the Group's ability to generate taxable income in future years over which temporary differences are expected to reverse, the economic situation, industry forecast and other various factors. The Group periodically reviews such matters.
31-5. Temporary differences related to investment in subsidiaries, associates and joint ventures which are not recognized as deferred tax asset (liability) as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Investment in subsidiaries ₩ 181,173 ₩ (31,603)
Investment in associates or joint ventures 355,391 299,436
₩ 536,564 ₩ 267,833
88
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
31. Income taxes (cont’d) 31-6. Reconciliation of effective tax rate for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Profit (loss) before income tax ₩ (186,111) ₩ 70,088
Income tax using the Controlling Company's statutory tax rate (38,266) 16,961
Adjustments
Non-temporary differences 17,276 7,164 Unrealized deferred tax
related to temporary differences (37,176) 39,525
Tax credit (49,722) (17,503) Others (changes in tax rates, recovery of
income taxes, etc) 7,252 5,278
Income tax expenses (benefit) ₩ (100,636) ₩ 51,425
Effective tax rate(*1) - 73.4%
(*1) Effective tax rate for the year ended December 31, 2014 was not calculated due to loss before
income tax.
32. Earnings (loss) per share 32-1. Basic earnings (loss) per share amounts are calculated by dividing the profit (loss) for the year attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the year. Basic earnings (loss) per share for the years ended December 31, 2014 and 2013 are as follows (Korean won in units, except share information):
2014
2013
Profit (loss) for the year attributable to equity holders of the parent ₩ (94,675,179,547)
₩ 69,223,510,612
Less: preferred stock dividend 12,309,000,170 -
Profit (loss) for the year attributable to ordinary equity holders of the parent (106,984,179,717) 69,223,510,612
Weighted-average number of ordinary stock outstanding 98,845,751 shares
89,667,203 shares
Basic earnings (loss) per share ₩ (1,082)
₩ 772
Weighted-average number of ordinary shares outstanding for the year ended December 31, 2014 and 2013 are as follows (number of shares):
2014
2013
Issued ordinary shares at January 1 106,158,256
105,856,267
Effect of treasury stock held (7,312,505) (16,812,505)
Exercise of stock options -
741
Increase of paid-in capital - 102,152
Disposal of treasury stock - 520,548
Weighted average number of ordinary shares outstanding at December 31 98,845,751
89,667,203
89
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
32. Earnings (loss) per share (cont’d) 32-2. Diluted earnings (loss) per share amounts are calculated on the basis of the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Diluted earnings (loss) per share for the years ended December 31, 2014 and 2013 are as follows (Korean won in units, except share information):
2014
2013
Profit (loss) for the year attributable to equity holders of the parent ₩ (106,984,179,717)
₩ 69,223,510,612
Adjusted profit (loss) for the year -
-
Profit (loss) for the year attributable to equity holders of the parent after adjustment (106,984,179,717)
69,223,510,612
Weighted average number of ordinary shares outstanding at December 31 after adjust 98,845,751 shares
89,668,212 shares
Diluted earnings (loss) per share ₩ (1,082)
₩ 772
Adjusted weighted-average number of ordinary shares outstanding for the year ended December 31, 2014 and 2013 are as follows (number of shares):
2014
2013
Weighted average number of ordinary shares outstanding at December 31
98,845,751
89,667,203
Effect of stock options
-
1,009
Weighted average number of ordinary shares (diluted) outstanding at December 31
98,845,751
89,668,212
32-3. Diluted EPS amounts are calculated by dividing the profit (loss) attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Details of potential ordinary shares, that are potentially dilutive but were not included in the calculation of earnings (loss) per share, as there were no dilutive effects for the years ended December 31, 2014 and 2013, are as follows (number of shares):
2014
2013
Stock option (Feb 27, 2006) 2,600 -
Stock option (Mar 16, 2007) 8,600
18,300
Stock option (Mar 21, 2008) 19,000
36,700
Stock option (Mar 27, 2009) 15,450
26,600 Stock option (Mar 26, 2010) 34,400
71,200
Stock option (Mar 25, 2011) 79,100
114,100
Stock option (Mar 30, 2012) 220,400
257,600
Stock option (Mar 29, 2013) 279,900 405,200
Stock option (Mar 28, 2014) 394,800 - Redeemable convertible preferred stocks 13,203,540
-
14,257,790
929,700
90
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
33. Commitments and contingencies
(i) As at December 31, 2014, 25 promissory notes in the aggregate of ₩18,099 million, 27 blank notes
and 31 blank checks have been provided as collateral to relevant financial institutions and others for the Group’s debt and guarantees.
(ii) As at December 31, 2014, the Group holds credit lines for borrowings, bank overdrafts and others
from financial institutions for up to ₩11,524,918 million.
(iii) As at December 31, 2014, the Group is involved in pending lawsuits as a defendant with total claims
against the Group amounting to approximately ₩412,119 million. The outcome of such pending
lawsuits cannot presently be determined.
(iv) As at December 31, 2014, the Group has entered into 22 technical contracts with Mitsubishi Heavy
Industries, Ltd. and others. Royalty payments for the use of such technologies amounted to ₩86,333
million (2013: ₩81,385 million) for the year ended December 31, 2014.
(v) The Group continues to recognize factored financial assets in the statement of financial position since the Group holds virtually all the risks and rewards of ownership. The Group also recognizes the
associated financial liabilities amounting to ₩37,472 million as at December 31, 2014.
(vi) As at December 31, 2014, the Group provides joint and several guarantees amounting to ₩661,039
million for the performance of construction contracts to other construction companies. In addition, the Group provides joint and several guarantees for construction performance to Korea Housing Finance Corporation related to the guarantee for housing sales, which was provided by Korea Housing Finance Corporation to the developers.
(vii) As at December 31, 2014, payment guarantees by financial institutions amounting to ₩10,633,749
million are provided for the Group in connection with domestic and overseas construction projects and others.
(viii) As at December 31, 2014, the Group provides payment guarantees amounting to ₩2,807,155 million
to customers and purchasers of vacant lots for housing sales for the purpose of supporting reconstruction and redevelopment project unions and increasing domestic and overseas sales.
(ix) Operating lease commitments
As at December 31, 2014, the Group's total future minimum lease payments under non-cancellable operating lease contracts are as follows (Korean won in millions):
Amount
Less than 1 year \ 29,324
More than 1 year ~ Less than 5 years 105,607
More than 5 years 150,654
\ 285,585
(x) Ordinary wages related contingencies
The Supreme Court of the Republic of Korea ruled that regular bonuses and other employee benefits, which are to be paid on a regular basis, universally applicable, and at fixed term, also fall under the category of ordinary wages. Given that the Supreme Court’s ruling is expected to cause an additional financial burden for most companies, the Supreme Court ruled that such additional liability may be exempted from its retroactive obligation, should such liability lead to excessive financial hardship for the entity. In relation to the Supreme Court’s ruling, the Group did not recognize any additional provision for the liability as it is not probable that full retroactive payments will be made considering such liability may lead to excessive financial hardship for the Group.
91
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
33. Commitments and contingencies (cont’d)
(xi) As at December 31, 2014, inter-company guarantees within the Group are as follows: (Korean won in millions and CNY in thousands):
Guarantor Guarantee
Currency
Guaranteed amount
Korean won equivalent
Description
Financial Institution
Doosan Infracore China Co., Ltd.
Doosan (China)
Financial Leasing Corp.
CNY
2,508,871
\ 443,593 Debt guarantee
and others
China Everbright Bank and
others
(xii) As at December 31, 2014, details of guarantees provided by the Group for developers’ project financing are as follows (Korean won in millions):
Type Developer
Project name
Lender
Guarantee period
Garantee limit
Loan balance
Warranty type
ABCP The Company
Sangdo- dong (2nd) Doosan We’ve
Kiwoom Securities and others
2014.05.29~
2015.05.26 \ 60,000 \ 60,000 Debt
acceptance
Hanam Doosan We’ve park
HI Investment
& Securities and others
2014.11.13~ 2015.11.11 50,000 50,000
Debt acceptance
110,000
110,000
Loan
The Company
Seoul Forest Trimage
Korea Federation of Community Credit Cooperative and others
2014.04.28~ 2017.08.28 210,000 210,000
Debt acceptance
Yongin
Administration town
KDB Capital
and others
2014.04.18~ 2016.04.17 55,000 55,000
Debt acceptance
Hongcheon
Mokok CC
SC Bank
and others
2014.04.23~ 2015.04.22 124,000 124,000
Debt acceptance
DEC
Hwaseong
Nonghyup
Bank and others
2008.03.31~ 2015.06.30 123,500 95,000
Joint and several guarantee
Pohang
New port Shinhan Bank
and others 2010.03.26~
2025.12.31 7,447 7,447
Joint and several guarantee
Daejeon
Riverside Hana Bank
2004.05.06~
2024.05.06 7,167 3,987
Joint and several guarantee
\ 527,114 \ 495,434
92
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
33. Commitments and contingencies (cont’d)
Type Developer Project name Lender
Guarantee period
Garantee limit
Loan balance
Warranty type
Short- term deben-ture
The Company
Seoul Forest
Trimage
LIG Securities and others
2014.04.28~ 2017.08.28 \ 35,000 \ 35,000
Debt acceptance
Yongin Administration town
SK Securities
2014.04.18~
2016.04.17 30,000 30,000 Debt
acceptance
Sangdo- dong (2nd) Doosan We’ve
Kiwoom Securities and others
2014.05.27~ 2015.05.26 150,000 150,000
Debt acceptance
Hanam
Doosan We’ve
KTB Securities
and others
2014.11.13~ 2015.11.11 30,000 30,000
Debt acceptance
Hongcheon Mokok CC
Kyobo Investment & Securities and others
2014.04.23~ 2015.04.22 66,000 51,000
Debt acceptance
DEC
Ulsan
KTB Securities
2014.10.08~
2015.01.08 41,600 32,000
Joint and several guarantee
Cheonan
Shinyoung
Securities
2014.12.19~ 2015.03.19 65,000 50,000
Joint and several guarantee
Osong
complex Nonghyup
Bank and others
2014.12.31~ 2015.03.31 65,000 50,000
Joint and several guarantee
482,600 428,000
\ 1,119,714 \ 1,033,434
(xiii) Details of unconsolidated structured entities as at December 31, 2014 are as follows (Korean won in millions):
Entity
Nature of interests in unconsolidated structured
entities or provision of financial support
Liability amount of interests in
unconsolidated structured entities
Maximum exposure to the loss of
unconsolidated structured entities
Doosan Cuvex 1st Securitization Specialty Co., Ltd. (*1)
Obligation for financial support including principle, interest, etc.
\ 55,400
\ 55,400 DS SOLBAT the 2nd Co.,
Ltd. (*2)
Obligation for financial support including principle, interest, etc.
64,000
64,000 Doosan ENC 1st
Co., Ltd.
(*3)
Obligation for financial support including principle, interest, etc.
110,000
110,000 DS Haeundae Asset
Securitization Specialty Co., Ltd. (*4)
Obligation for financial support including principle, interest, etc.
109,600
109,600 PINETREE CITY 1st
Co., Ltd. (*5) Obligation for financial
support including principle, interest, etc
50,000 50,000
SD 1st Co., Ltd. (*6)
Obligation for financial
support including principle, interest, etc
75,050 75,050
DS SOLBAT the 3rd Co., Ltd. (*7)
Obligation for financial support including principle, interest, etc.
40,000 40,000
DS SOC 1st L.L.C. (*8)
Obligation for financial
support including principle, interest, etc.
50,000 50,000
(*1) Doosan Cuvex 1st Securitization Specialty Co., Ltd. was established for the purpose of
securitizing the shares of a subsidiary, Doosan Cuvex Co., Ltd., held by DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value presented in its
financial statements, underlying assets amounted to ₩55,400 million as at December 31, 2014.
93
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
33. Commitments and contingencies (cont’d)
(*2) DS SOLBAT the 2nd Co., Ltd. was established for the purpose of securitizing future construction receivables from Cheongju G-well City 2nd projects of DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value presented in its financial statements,
underlying assets amounted to ₩64,000 million as at December 31, 2014.
(*3) Doosan E&C 1st Co., Ltd. was established for the purpose of obtaining financing mainly from financial institutions by leveraging DEC’s Changwon 2nd plant, which have been provided as collateral. It receives funds from issuing ABS bonds to financial institutions. Based on the book
value presented in its financial statements, underlying assets amounted to ₩110,000 million as
at December 31, 2014.
(*4) DS Haeundae Asset Securitization Specialty Co., Ltd. was established for the purpose of securitizing future construction receivables from Haeundae AID reconstruction projects of DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value
presented in its financial statements, underlying assets amounted to ₩109,600 million as at
December 31, 2014.
(*5) PINETREECITY 1st Co., Ltd. was established for the purpose of obtaining financing mainly from financial institutions by leveraging DEC’s Changwon 2nd plant, which have been provided as subordinated collateral. It receives funds from issuing ABS bonds to financial institutions. Based
on the book value presented in its financial statements, underlying assets amounted to ₩50,000
million as at December 31, 2014.
(*6) SD 1st Co., Ltd. was established for the purpose of securitizing future construction receivables from nine government-ordered constructions projects including Incheon-Gimpo Expressway of DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value
presented in its financial statements, underlying assets amounted to ₩75,050 million as at
December 31, 2014.
(*7) DS SOLBAT the 3rd Co., Ltd. was established for the purpose of securitizing future construction receivables from 3 construction projects including Hanam Misa 14 District of DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value presented in its
financial statements, underlying assets amounted to ₩40,000 million as at December 31, 2014.
(*8) DS SOC 1st L.L.C. was established for the purpose of securitizing future construction receivables from SOC business held by DEC. It receives funds from issuing ABS bonds to financial institutions. Based on the book value presented in its financial statements underlying assets
amounted to ₩50,000 million as at December 31, 2014.
(xiv) Other commitments and contingencies
(a) During the year ended December 31, 2011, DI issued 19th series bonds denominated in USD 350 million. In accordance with the agreement for issuing the 19th series bonds, an early redemption clause exists for when and if DI’s guarantor, KDB, becomes privatized. However, under the agreement, the funds required for such redemption will be lent by KDB to DI. In addition, DI has provided its 20,429 shares of DII, acquired on November 25, 2011 as collateral to KDB.
(b) As at December 31, 2014, DI, a shareholder of Doosan Infracore China Co., Ltd. entered into an agreement with financial investors under which DI and the financial investors, as they mutually agree, may collectively dispose of all shares in Doosan Infracore China Co., Ltd., respectively held by each, to a third party. Upon exercise of the agreement by the financial investors, DI holds the right to sell its shares in Doosan Infracore China Co., Ltd. together pursuant to the agreement or otherwise repurchase the shares held by the financial investors.
94
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
33. Commitments and contingencies (cont’d)
(c) DEC entered into construction contracts with INTDC Co., Ltd. and Daewon Plus Constructions Co., Ltd., to develop Ilsan Zenith project and Haeundae Zenith project, respectively. DEC has provided guarantees to customers, who purchase the Ilsan Zenith and Haeundae Zenith apartments, for the consideration paid to purchase the apartments during the repurchase guarantee periods (2~3 years after the date of sale), should customers apply for such guarantees (See Note 33-8). As at December 31, 2014, the Group’s consolidated financial statements do not reflect the effect from such guarantees as the Group cannot reasonably predict the number of purchasers applying for the guarantee and the related guaranteed amount.
(d) With regard to the Incheon-Kimpo Highway Construction Project, the Group entered into a capital
supplement agreement with a limit of guarantee ₩18,880 million with Incheon-Gimpo
Expressway Co., Ltd.
34. Assets pledged as collateral
34-1.
(i) As at December 31, 2014, assets that have been pledged as collateral for the Group's borrowings and others are as follows (Korean won in millions):
Pledgor
Collateralized asset
Collateralized amount
Amount of borrowings
and others
Pledgee
The Company
Short-term financial instruments
\ 4,472 \ -
Banca Transylvania
Property, plant and
equipment 582,188
569,546 KDB
3,297
2,763 Korea EXIM Bank
26,803
- Vietnam Bank
496
- Banca Transylvania
Trade receivables 8,947
- Banca Transylvania DI
Property, plant and equipment (*1) 546,010
334,107 KDB
Short-term financial
instruments
245,235 131,399
Bank of China and others
DE Property, plant and equipment
12,295 1,591
KDB and others
DEC Investment property
30,912 265,902
Woori bank
45,500 35,000
La-union limited company
Property, plant and
equipment 90,500
111,895 KEB
119,500
61,661 KDB
2,772
470 Kookmin Bank
3,276 328
Shinhan Bank
26,000
20,000 Grand Eighth Co., Ltd.
13,000 10,000 DS Changwon the 1st
Co., Ltd.
95
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
34. Assets pledged as collateral (cont’d)
Pledgor
Collateralized asset Collateralized
amount
Amount of borrowings
and others Pledgee
DEC Property, plant and
equipment
\ 140,300 \ 110,000 Doosan E&C 1st
Co., Ltd.
65,000 50,000 PINETREECITY 1st
Co., Ltd.
195,200 64,000 DS SOLBAT the 2nd
Co., Ltd.
Property, plant and equipment and investment property
153,000 26,552
Hana Bank
Long-term investment
in securities 9,295
7,267 Construction Financial Cooperative
Trade receivables
6,974 5,400
Korea Infra Asset Management Co.,
Ltd.
\ 2,330,972 \ 1,807,881
(*1) The rights to the benefits from property insurance have been pledged as collateral to KDB.
(ii) Doosan Infracore International, Inc.("DII") and Doosan Holdings Europe Ltd.("DHEL") repaid all the long-term borrowings funded in 2011 for the the acquisition of the Compact Equipment business of Ingersoll-Rand and entered into a new loan agreement to borrow USD 1,700,000 thousand on May 28, 2014. DI provided 27,096 shares in DII, 21,820 shares in DHEL, and certain tangible and intangible assets of DII and DHEL, and their subsidiaries as collateral for borrowings amounting to USD 1,300,000 thousand. The balance of borrowings as at December 31, 2014 amounted to USD 1,193,500 thousand.
(iii) DI has provided 3,188 shares and 4,540 shares in DII and 3,413 and 4,859 shares in DHEL held by
Doosan Infracore Bobcat Holdings Co., Ltd. as collateral for borrowings amounting to \145,000 million
from TY Solution 1st Co., Ltd. and 6 other companies and \200,000 million from Woori bank and 3
others respectively.
(iv) DII and DHEL repaid the long-term borrowings totalling USD 1,720,000 thousand funded in November, 2011 and entered into a new loan agreement to borrow USD 1,700,000 thousand in May, 2014. The previous collaterals DI provided for borrowings of DII and DHEL were released upon the repayment of borrowings. DE provided Citigroup Global Market Inc. with 7,242 shares in DII and 8,354 shares in DHEL as collateral for borrowings amounting to USD 1,300,000 thousand and DE also provided certain shares in DII and DHEL in connection with an overdraft limit agreement amounting to USD 100,000 thousand. The balance of related borrowings amounted to USD 1,193,500 thousand as at December 31, 2014.
(v) DEC has provided 1,200,000 shares in Doosan Cuvex Co., Ltd. as collateral in connection with an
overdraft limit agreement amounting to \265,902 million with Woori Bank. As at December 31, 2014,
the balance of related borrowing amounted to \265,902 million.
(vi) DEC has provided 24.76% of equity interests in Doosan Heavy Industry Vietnam Co., Ltd. as collateral
in connection with an overdraft limit agreement amounting to \61,661 million with KDB. As at
December 31, 2014, the balance of related borrowing amounted to \61,661 million.
(vii) DEC has provided a certain potion of property, plant and equipment in trust with NH Investment &
Securities for the borrowings amounting to \20,000 million and \10,000 million from Grand Eighth
and DS Changwon the 1st Co., Ltd., respectively. As at December 31, 2014, the balance on the related
trust asset amounted to \245,826 million.
96
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
34. Assets pledged as collateral (cont’d)
34-2. As at December 31, 2014, assets pledged as collateral on behalf of others are summarized as follows (Korean won in millions):
Pledgor Collateralized
asset
Carrying amount
Pledgee
Beneficiary
DEC Investment in subsidiaries \ 46,538 KDB and others
Shinbundang Railroad Co. Ltd.
397
Kyungnam Bank and others
Haman Industrial Complex Company
Long-term investments in securities
59,258
KDB and others
Metropolitan Seobu Expressway and others
DE
Long-term financial instruments
1,928
Korea Securities
Finance Corp.
Employee stock ownership association
\ 108,121
35. Related party disclosures
35-1. The major related parties of the Group and nature of their relationship with the Group as at December 31, 2014 are as follows:
(1) As at December 31, 2014, the Group’s ultimate parent company is Doosan Corp. (equity ownership : 36.82%).
(2) As at December 31, 2014, the details of the Group’s associates and joint ventures, other related parties are as follows:
Relationship Related party
Associates and joint ventures (*1) Doosan Capital Co., Ltd.
Tamra Offshore Wind Power Co., Ltd.
Doosan (China) Financial Leasing Corp.
Doosan do BPL
Dalian Samyoung Doosan Metal Product Co., Ltd.
Kyunggi Railroad Co., Ltd.
Shinbundang Railroad Co., Ltd.
Neo Trans Co., Ltd.
New Seoul Railway Corporation
Haman Industrial Complex Company
Hanjung Power Ltd.
Xuzhou Xugong Doosan Engine Co., Ltd. and others
Others: Subsidiaries of controlling company (*1 and 2) Doosan Dong-A Corporation
Doosan Tower Co., Ltd.
Oricom Inc.
SRS Korea Co., Ltd.
Doosan Dst Co.Ltd.
Doosan Bears Inc.
Doosan Advertising (Beijing) Co., Ltd.
Doosan Feed & Livestock Co., Ltd.
DIP Holdings Co., Ltd.
Doosan Electro-Materials Singapore Pte Ltd.
97
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
Relationship Related party
Subsidiaries of controlling company (*1 and 2) Doosan Hongkong Ltd.
Doosan Electro-Materials(Shen Zhen) Limited
Doosan Shanghai Chemical Limited
Doosan Electro-Materials (Changshu) Co., Ltd.
Doosan Real Estate Securitization Specialty Ltd.
Doosan Second Real Estate Securitization Specialty Ltd.
Doosan Third Real Estate Securitization Specialty Ltd.
Doosan Information and Communications America LLC
Doosan Information and Communications China Co., Ltd.
Doosan Mottrol (Jiangyin) Co., Ltd.
Doosan Information and Communications Europe Ltd.
Doosan Electro-Materials America, LLC
Doosan Industrial Vehicle Europe N.A.
Doosan Industrial Vehicle U.K. Ltd.
Doosan Logistics Europe GmbH
Doosan Industrial Vehicle America Corp.
Doosan Industrial Vehicle Yantai Co., Ltd.
Doosan Electro-Materials Luxembourg Sarl
Doosan Fuel Cell America, Inc. and others
Associates and joint ventures of
controlling company Guang Dong Xingpu Steel Center
Doosan EcoBizNet Co., Ltd.
MVP No 13 Capital Co.
Sichuan Kelun-Doosan Biotechnology Company Limited
Unconsolidated subsidiaries (*3) Doosan Cuvex 1st Securitization Specialty Co., Ltd.
DS Gangnam Bundang Inc.
DS SOLBAT the 1st Co., Ltd.
DS SOLBAT the 2nd Co., Ltd.
DS SOLBAT the 3rd Co., Ltd.
Doosan E&C 1st Co., Ltd.
DS Haeundae Asset Securitization Specialty Co., Ltd.
PINETREECITY 1st Co., Ltd.
M.D.S Liquidity Project Ltd.
SD 1st Co., Ltd.
DS SOC 1st L.L.C.
Others (*1 and 2) Doosan Credit Union
Yonkang Foundation
Kyunggi Highway Co., Ltd.
Chung-Ang University
BNG Securities Brokerage Co., Ltd.
Neoplux Co., Ltd. (*1) Hanjung Power Ltd., SRS Korea Co., Ltd., Gyeonggi Expressway and Doosan Dong-A Corporation
have been disposed during the year 2014. (*2) Doosan Third Real Estate Securitization Specialty Ltd. and BNG Securities Brokerage Co., Ltd.
were liquidated during the year 2014. (*3) DS SOLBAT the 1st Co., Ltd., DS Gangnam Bundang Inc. and M.D.S Liquidity Project Ltd. have
been excluded from unconsolidated special purpose entities as at December 31, 2014.
98
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
35-2. Significant transactions with related parties for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Sales and others
Purchases and others
Sales
Disposal of property and equipments
and intangible assets
Others
revenue
Purchases
Acquisition of property
and equipments
and intangible
assets
Others expense
Parent:
Doosan Corp. \ 46,032
\ 1,640
\ 1,334
\ 160,516
\ 16,333
\ 160,605
Associates and joint ventures:
Doosan (China) Financial Leasing Corp.
-
-
4,382
- -
- Kyunggi Railroad Co., Ltd.
94,004 -
- 19 - -
Others
252 -
3 559 - -
94,256 -
4,385 578 - -
Unconsolidated
entities:
Doosan Cuvex
1st
Co., Ltd.
- - - - - 6,001 DS Gangnam Bundang Inc.
- - - - - 4,863
DS SOLBAT the 1st Co., Ltd.
- - - - - 3,836
DS SOLBAT the 2nd Co., Ltd.
- - - - - 4,243
Doosan E&C 1st Co., Ltd.
- - - - - 8,915
DS Haeundae Asset curitization Specialty Co., Ltd.
- - - - - 6,435 PINETREECITY
1st Co., Ltd.
- - - - - 3,944 M.D.S Liquidity
Project Ltd.
- - - - - 3,792
SD 1st Co., Ltd. - - - - - 3,690
Others
- -
- - - 647
\ - \ -
\ - \ - \ - \ 46,366
99
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
2014
Sales and others Purchases and others
Sales
Disposal of property and equipments
and intangible assets
Others
revenue Purchases
Acquisition of property
and equipments
and intangible
assets Others
expense
Others:
Doosan Tower Co., Ltd.
\ 40,103 \ -
\ 1 \ 761 \ - \ 10,409
Oricom Inc.
1,090 123
19 790 - 16,866 Doosan DST Co., Ltd. 6,722
-
97
- -
-
Doosan Bears Inc. 23,161
-
-
- -
17,515 Chung-Ang
University
32,285 -
- 993 - 13,547 Doosan Advertising (Beijing)Co., Ltd.
- -
- - - 3,916
Doosan Information and Communication Europe Co., Ltd.
- -
- - - 10,780 Doosan Information and Communication America LLC
- -
- - - 35,077 Doosan Information
and Communication China Co., Ltd.
- -
- - - 9,446
Others
1,726 -
824 1,913 - 4,092
105,087 123
941 4,457 - 121,648
\ 245,375
\ 1,763
\ 6,660
\ 165,551 \ 16,333
\ 328,619
100
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
2013
Sales and others
Purchases and others
Sales
Others revenue
Purchases
Acquisition of property, plant
and equipment
Others expense
Parent:
Doosan Corp. \ 14,874
\ 2,272
\ 252,122
\ 16,355
\ 251,847
Associates and
joint ventures:
Doosan (China)
Financial Leasing Corp.
- 4,368 - - -
Kyunggi Railroad Co., Ltd.
97,221 - 231 - -
Others 2,618
-
2,875 -
-
99,839 4,368 3,106 - -
Unconsolidated entities:
Doosan Cuvex 1st Co.,
Ltd.
- - - - 7,206 DS Gangnam Bundang
Inc.
- - - - 10,434 DS SOLBAT the 1st
Co., Ltd.
- - - - 6,081
Others
- - - - 11,986
- - - - 35,707
Others:
Doosan Dong-A
Corporation
96 7 1,926 - 7,597 Doosan Tower Co.,
Ltd.
1,903 - 454 - 9,625
Oricom Inc.
855 181 3,219 - 20,831
Doosan DST Co., Ltd.
5,210 16 - - -
Doosan Bears Inc.
18,841 - - - 14,523 Doosan Industrial
Vehicle Co., Ltd.
16,157 - 22 403 241 Kyunggi Highway Co.,
Ltd.
3,216 - 3 - -
Chung-Ang University
25,169 - 1,117 - 23,765 Doosan Advertising
(Beijing) Co., Ltd.
- - - - 5,090 Doosan Information
and Communication Co., Ltd.
- - 821 1,872 38,477
Others
525 407 1,970 - 5,635
71,972 611 9,532 2,275 125,784
\ 186,685 \ 7,251 \ 264,760 \ 18,630 \ 413,338
101
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d) 35-3. The outstanding receivables and payables arising from the transactions with related parties as at December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Receivables
Payables
Accounts receivable
Other receivables
Loans receivable
Accounts payable
Other payables
Borrowings
Parent:
Doosan Corp. \ 9,741
\ 1,614
\ -
\ 31,072 \ 50,393
\ -
Associates and
joint ventures:
Kyunggi Railroad
Co., Ltd. 1,550
9
12,300
6 -
- Shinbundang Railroad
Co., Ltd.
11,023 -
9,858 - - - Haman Industrial
Complex Company
11,823 5,921
- - - -
Others
- 395
1,750 104 225 -
24,396 6,325
23,908 110 225 -
Unconsolidated entities:
Doosan Cuvex 1st Co., Ltd.
- -
- - - 55,400
DS SOLBAT the 2nd Co., Ltd.
- -
- - - 64,000
DS SOLBAT the 3rd Co., Ltd.
- -
- - - 40,000
Doosan E&C 1st Co., Ltd.
- -
- - - 110,000
DS Haeundae Asset Securitization Specialty Co., Ltd.
- -
- - - 109,600 PINETREECITY 1st Co., Ltd.
- -
- - - 50,000
SD 1st Co., Ltd.
- -
- - - 75,050
DS SOC 1st L.L.C.
- -
- - - 50,000
- -
- - - 554,050
Others:
Doosan Tower Co.,
Ltd.
- 7,507
- 16 416 -
Oricom Inc.
925 10
- 5,974 6,017 -
Others
2,563 572
- 192 7,441 -
3,488 8,089
- 6,182 13,874 -
\ 37,625
\ 16,028
\ 23,908
\ 37,364 \ 64,492
\ 554,050
102
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
2013
Receivables
Payables
Accounts receivable
Other receivables
Accounts payable
Other payables
Borrowings
Parent:
Doosan Corp. \ 10,308
\ 809
\ 72,223 \ 100,891
\ -
Associates and
joint ventures:
Doosan (China)
Financial Leasing Corp.
- 5,913 - - -
Kyunggi Railroad Co., Ltd.
15,905 9 - - -
Shinbundang Railroad Co., Ltd.
11,023 - - - -
Haman Industrial Complex Company
14,373 5,921 - 64 -
Others
1,017 3,100 - 177 -
42,318 14,943 - 241 -
Unconsolidated
entities:
Doosan Cuvex 1st Co., Ltd.
- - - - 95,000
DS Gangnam Bundang Inc.
- - - - 45,000
DS SOLBAT the 1st Co., Ltd.
- - - - 130,000
Doosan E&C 1st Co., Ltd.
- - - - 110,000
- - - - 380,000
Others:
Doosan Tower Co.,
Ltd.
- 7,107 15 575 -
Oricom Inc.
839 10 12,285 4,452 -
Others
2,064 449 1,583 6,628 -
2,903 7,566 13,883 11,655 -
\ 55,529 \ 23,318 \ 86,106 \ 112,787 \ 380,000
103
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
35-4. Financial transactions (including investment) with related parties for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
Loans Borrowings Investments Dividends
Increase Decrease Increase Decrease
Capital increase Investment Income
Payment
Parent:
Doosan Corp. \ -
\ -
\ -
\ -
\ -
\ - \ - \ 32,959
Associates and joint ventures:
Doosan (China) Financial Leasing Corp.
1,396
-
-
-
-
- - -
Doosan do BPL
-
261
-
-
-
- - - Kyunggi Railroad Co., Ltd. 12,300 - - - - 18 - - Shinbundang
Railroad 9,858 - - - - - - - New Seoul Railway Corporation 354 - - - - 250 - -
Hanjung Power Ltd. - - - - - - 1,494
23,908 261 - - - 268 1,494 -
Unconsolidated entities: Doosan Cuvex 1st
Co., Ltd. - - 90,000 129,600 - - - - DS Gangnam
Bundang Inc. - - 70,000 115,000 - - - - DS SOLBAT the 1st
Co., Ltd. - - 143,000 273,000 - - - - DS SOLBAT the 2nd
Co., Ltd. - - 160,000 96,000 - - - - DS SOLBAT the 3rd
Co., Ltd. - - 40,000 - - - - - DS Haeundae Asset
Securitization Specialty Co., Ltd. - - 110,000 400 - - - -
M.D.S Liquidity Project Ltd. - - 80,000 80,000 - - - -
PINETREECITY 1st Co., Ltd. - - 150,000 100,000 - - - -
SD 1st Co., Ltd. - - 135,000 59,950 - - - - DS SOC 1st L.L.C - - 50,000 - - - - -
- - 1,028,000 853,950 - - - -
\ 23,908 \ 261 \1,028,000 \ 853,950 \ - \ 268 \ 1,494 \ 32,959
104
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d)
(*1) The Group issued new shares amounting to \12,614 million for the acquisition of DCS business
division from Doosan Corp. in 2013. (*2) The Group participated in the share issuance of Doosan Capital Co., Ltd.’s convertible preferred stock
and acquired additional 8,750,000 shares (acquisition value : \70,000 million).
2013
Loans Borrowings Investments Dividends
Increase Decrease Increase Decrease Capital
increase Investment Income
Payment
Parent:
Doosan Corp. (*1)
\ -
\ -
\ -
\ -
\ 12,614
\ - \ - \ 32,734
Associates and joint ventures:
Doosan Capital (*2)
-
-
-
-
-
70,000 - - Doosan (China)
Financial Leasing Corp.
-
20,612
-
-
-
- - -
Hanjung Power Ltd. - - - - - - 4,462 -
Others - - - - - 3,825 - -
- 20,612 - - - 73,825 4,462 -
Unconsolidated entities: RC 1st Securitization Specialty Co., Ltd. - - - 30,800 - - - -
Doosan Cuvex 1st Co., Ltd. - - - 20,000 - - - -
DUY 1st Co., Ltd.
- - - 45,000 - - - - DS Cheongju 1st
Co., Ltd. - - - 50,000 - - - - Myungji Poseidon
1st Securitization Specialty Co. Ltd. - - 50,000 50,000 - - - -
DS Gangnam Bundang Inc. - - 150,000 171,000 - - - -
DS SOLBAT the 1st Co., Ltd. - - 280,000 150,000 - - - -
Izenith 2nd Co., Ltd. - - 140,000 140,000 - - - - Doosan E&C
1st Co., Ltd. - - 110,000 - - - - -
- - 730,000 656,800 - - - -
Others: Employee stock
ownership association and managers and employees of DEC - - - - 81,531 - - -
Others - - - - 1,006 - - -
- - - - 82,537 - - -
\ - \ 20,612 \ 730,000 \ 656,800 \ 95,151 \ 73,825 \ 4,462 \ 32,734
105
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
35. Related party disclosures (cont’d) 35-5. The Group provides payment guarantees and collateral to certain related parties as at December 31, 2014 (See Note 33 and 34).
35-6. Key management personnel are standing directors who have authorities and responsibilities for planning, operation and control of the business of the Group. Compensation for key management personnel for the years ended December 31, 2014 and 2013 consists of following (Korean won in millions):
2014
2013
Short-term employee benefits
\ 98,636
\ 103,365
Severance and retirement benefits
8,009
8,781
Share-based payment
5,016
6,298
\ 111,661
\ 118,444
36. Supplementary cash flow information
36-1. Details of non-cash and working capital adjustments to reconcile profit for the year ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Profit (loss) for the period
\ (85,475)
\ 18,663
Adjustments:
Interest expenses
640,218
711,406
Loss on foreign currency translation
104,802
71,796
Bad debt expenses
112,727
119,741
Other bad debt expenses 61,996 28,560
Loss on (reversal of) valuation of inventory 24,323 (22,046)
Impairment loss on available-for-sale financial assets 7,285 24,447
Loss on valuation of derivative financial instruments 282,149
95,842
Loss on valuation of firm commitments 76,866
212,593
Loss on equity method 79,859 47,620
Depreciation 387,654
383,385
Amortization 182,877
153,022
Loss on disposal of property, plant and equipment 8,094
10,827
Impairment loss on property, plant and equipment 8,691 1,314
Impairment loss on intangible assets 13,103
42,884
Severance and retirement benefit 192,550 175,169
Share-based payments 2,681 4,017
Provision for construction warranties 21,637 105,458
Financial guarantee expenses 102,961 73,787
Loss on redemption of debenture 38,140 2,607
Income tax expenses (benefit) (100,636) 51,425
Interest income (55,685) (73,458)
Dividend income (537) (1,162)
Gain on foreign currency translation (78,723) (66,815)
Gain on valuation of derivative financial instruments (92,725) (251,092)
106
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
36. Supplementary cash flow information (cont’d)
2014 2013
Gain on valuation of firm commitments \ (170,310) \ (81,990)
Gain on disposal of property, plant and equipment (4,418) (45,941)
Gain on disposal of investment property (785) (21,867) Gain on disposal of non-current assets classified as held-for-sale
(45,090) -
Others 30,798
26,095
1,830,502
1,777,624
Working capital adjustments:
- Trade receivables 123,433 22,965
- Due from customers for contract work 283,675 (358,013)
- Other receivables 18,740 (138,031)
- Prepayments (49,002) 215,450
- Prepaid expenses (10,356) 22,319
- Imprest 13,253 (1,454)
- Inventories (184,942) 243,270
- Prepaid value added tax (70,996) 29,096
- Value added tax withheld 132 (4,227)
- Derivative financial instruments 95,399 172,703
- Firm commitment instruments (148,924) (128,998)
- Guarantee deposits (60,621) (22,327)
- Trade payables 450,391 43,443
- Other payables 38,047 (71,824)
- Advanced receipts (11,050) (125,317)
- Due to customers for contract work (554,249) (486,190)
- Income in advance 5,540 3,605
- Accrued expenses (14,023) (44,404)
- Long-term deposits received (16,708) 19,642
- Reserve for construction warranties (65,355) (104,145)
- Severance payments paid (136,660) (131,364)
- Plan assets (74,819) (38,301)
- Others 23,182 (42,334)
(345,913) (924,436)
Cash generated from operating activities \ 1,399,114 \ 871,851
107
Doosan Heavy Industries & Construction Co., Ltd. and its subsidiaries Notes to the consolidated financial statements December 31, 2014 and 2013
36. Supplementary cash flow information (cont’d)
36-2. Significant transactions not involving cash flows for the years ended December 31, 2014 and 2013 are as follows (Korean won in millions):
2014
2013
Gain on revaluation of land ₩ - ₩ 1,135,946
Transfer from construction-in-progress to property, plant and equipment
206,511 299,932
Non-cash asset increased from contribution in kind
- 71,921
Liabilities increased from the contribution in kind - 58,531
Reclassification between short-term and long-term loans
-
676,505
Transfer to current portion of debentures and borrowings
1,267,386 1,122,670
37. Non-current assets classified as held-for-sale As at December 31, 2014 and 2013, the non-current assets classified as held-for-sales are as follows (Korean won in millions):
2014
2013
Non-current assets held-for-sale in the construction segment
- Equity investments in associates ₩ -
₩ 22,571
Non-current assets held-for-sale of DI - Equity investments in associates -
441
₩ -
₩ 23,012
The share of investments in associates classified as held-for-sale amounting to ₩23,012 million as at
December 31, 2013, were disposed during the year 2014.
38. Approval of the financial statements The consolidated financial statements of the Group for the year ended December 31, 2014 were approved by the Company’s Board of Directors at their meeting on February 5, 2015 and will be presented at the annual shareholders’ meeting on March 27, 2015.
108