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Annual Report of Celltrion Healthcare in 2012
From 1 January 2012
To
31 December 2012
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Contents
Independent Audit Report ........................................................................................................................ 2
Independent Auditors Report ................................................................................................................... 4
Financial Statement ................................................................................................................................. 8
Statement of Financial Position .............................................................................................................. 8
Statement of Comprehensive Income .................................................................................................... 12
Statement of Changes in Equity ................................................................................................ ............ 14
Statement of Cash Flows ..................................................................................................................... 16
Notes to the Financial Statement ................................................................................................ .............. 22
Internal Audit Opinions ......................................................................................................................... 108
Independent Audit Reoprt ..................................................................................................................... 110
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1
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2
Celltrion Healthcare Co., Ltd.
Financial statement
Independent Audit Report
13th Period
From 1 January 2012
To31 December 2012
An Jin Accounting Firm
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4
Independent Auditors Report
Celltrion Healthcare Co., Ltd.
To the Board of Directors and Shareholders
We have audited the Balance Sheet, the Income Statement, the Statement of Changes in Equity, the Statement
of Cash Flowsof Celltrion Healthcare Co., Ltd. as of December 31, 2012. The directors of the Company are
responsible for the preparation of these financial statements. Our responsibility is to express an opinion on these
financial statements based on our audit. Other auditors audited the annual financial report by the end of
December 31, 2011 and issued an unqualified audit report on March 2, 2012.
We conducted our auditing in accordance with auditing standards generally accepted in the Republic of Korea.
The standards require that no distorted comments should be made in the audit report and the auditing
procedures should be authentic and reasonable. An audit includes examining, on an empirical basis, evidencesupporting the figures and disclosures enumerated in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the companys management, as well as
evaluating the overall financial statement presentation.
In our opinion, the financial statement, referred to above, fairly presents, in all material respects, the financial
position of Celltrion Healthcare Co., Ltd. as of 31 December 2012, and its financial performance, changes in
equity and cash flows for the year ends, in accordance with the General Accounting Standards.
23 Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea
An Jin Accounting Firm
Legal Person Representative Lee Jae-su
March 13, 2013
This report is effective as of March 13, 2013, the audit report date. Certain subsequent events or circumstances,which may occur between the audit report date and the time of reading this report, could have a material impact
on the accompanying financial statements and notes covered in the report. Accordingly, the readers of the auditreport should understand that there is a possibility that the enclosed audit report may have to be revised to
reflect the impact of such subsequent events or circumstances, if they occur.
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Financial Statement
13th Period
From 1 January 2012
To31 December 2012
12th Period
From 1 January 2011
To31 December 2011
"Attached financial statements are provided by the
Company"
Celltrion Healthcare Co., Ltd. CEO Seo Jung-jin
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8
Financial StatementStatement of Financial Position
The 13thperiod: December 31 2012
The 12thperiod: December 31 2011
Celltrion Healthcare Co., Ltd. (Unit: KRW)
Subject Period 13 (Current) Period 12 (Last)
Assets
I. Working Capital 842,179,673,450 457,371,018,922
(1) Current assets 163,331,963,034 76,694,842,523
1. Cash and cash equivalents (note 12) 19,359,410,662 1,015,787,392
2. Trading securities (note 5,24) 8,193,287,098 -
3. Short-term investment securities 360,000,000 -
4. Trade receivables (note 9,12,13) 116,934,496,914 68,321,030,000
Allowance for bad debts (1,169,344,969) (683,210,300)
Dicounted present value (713,782,111) (1,223,560,189)
5. Account receivables (note 12,13) 32,777,882 45,280,754
Allowance for bad debts (16,382,040) -
6. Accrued revenue 22,094,604 -
7. Advance payments 308,923,664 508,363,961
8. Prepared expense 16,114,447 3,456,348
9. Value added tax payment 7,236,761,141 -
10. Current tax assets (note 18) 265,448,904 2,367,084,150
11. Deferred tax assets (note 18) 12,502,156,838 6,340,610,407
(2) Inventories (note 4,22) 678,847,710,416 380,676,176,399
II. Non-current assets 3,016,865,756 22,490,694,698
(1) Investment assets 2,227,077,224 83,277,741
1. Long-term investment securities
(note 3)2,000,000 2,000,000
2. Long-term loans (note 12,13) - 61,957,488
3. Equity method investment (note 6) 2,225,077,224 19,320,253
(2) Tangible assets (note 7) 564,211,524 666,529,942
(3) Intangible assets (note 8) 49,175,000 7,877,000
(4) Other non-current assets 176,402,008 21,733,010,015
1. Long-term trade receivables (note9,12)
- 24,219,300,000
Allowance for bad debts - (242,193,000)
Discounted present value - (2,428,539,562)
2. Cash deposit for lease 176,208,000 180,272,544
3. Long-term accrued income (note 13) - 4,170,033
4. Deferred tax assets (note 18) 194,008 -
Total assets 845,196,539,206 479,861,713,620
Liablities
I. Current liabilities 406,699,093,515 220,664,954,835
1. Trade payables(note 9,13,24) 367,593,390,314 159,500,000,000
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10
Discounted present value (3,249,668,633) (5,422,297,180)
2. Account payables (note 12,13,24) 4,266,599,159 1,486,052,434
3. Accrued expense (note 13) 8,030,606,843 1,669,855,889
4. Short-term loans (note 10,13,23,24) 30,000,000,000 62,900,000,000
5. Deposits 58,165,832 531,343,692
II. Non-current liabilities 202,968,845,756 255,056,516,032
1. Long-term advance payment 202,968,845,756 191,068,624,636
2. Long-term payables (note 9,13,24) - 71,060,000,000
Discounted present value - (8,097,472,487)
3. Deferred income tax liabilities (note
18)- 1,025,363,883
Total liability 609,667,939,271 475,721,470,867
Equity
I. Capital 2,392,215,000 1,841,815,000
1. Ordinary shares (note 14) 1,500,000,000 1,500,000,000
2. Preferred shares (note 14) 892,215,000 341,815,000
II. Capital surplus 290,078,862,896 36,623,117,416
1. Share premium (note 14) 290,078,862,896 36,623,117,416
III. Capital adjustment (57,440,550,211) (59,368,782,893)
1. Impairment loss (59,368,782,893) (59,368,782,893)
2.Stock options (note 17) 1,928,232,682 -
IV. Earned surplus 498,072,250 25,044,093,230
1. Unappropriated earned surplus (note15)
498,072,250 25,044,093,230
Total equity 235,528,599,935 4,140,242,753
Liability and shareholder's equity 845,196,539,206 479,861,713,620
Please see the appendix Notes of the Financial Statements.
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12
Statement of Comprehensive Income
The 13thperiod: from 1 January 2012 to 31 December 2012
The 12thperiod: from 1 January 2011 to 31 December 2011
Celltrion Healthcare Co., Ltd. (Unit: KRW)
Subject Period 13 (Current) Period 12 (Last)
I. Revenue (note 13,23) 33,820,351,740 31,600,000,000II. Cost of sales (note 13,25) 28,839,445,740 27,099,920,499
III. Gross profits 4,980,906,000 4,500,079,501
IV. Sales and administrative expenses(note 11,13,17,22,26,27)
27,311,189,186 11,820,203,268
V. Operating loss 22,330,283,186 7,320,123,767
VI. Operating income 8,157,276,732 4,939,280,502
1. Interest income (note 9,13) 5,885,139,563 3,724,400,267
2. Currency arbitrage 13,219,871 469,167,512
3. Foreign currency translation gains 260,389,299 721,460,480
4. Gains on trading securities (note 5) 1,973,431,648 -
5. Other service revenue 14,266,022 14,639,504
6. Labour gains 10,830,329 9,612,739
VII. Non-operating expenses 17,379,873,448 12,057,661,178
1. Interest expenses (note 9,13) 12,997,165,134 11,125,531,987
2. Loss on disposal of tangible assets 1,210,167 24,403,288
3. Loss on foreign currency 49,731,322 823,356,275
4. Loss on foreign currency translation 4,314,511,530 83,383,509
5. Other bad debt expenses 16,382,040 -
6. Donations 100,000 -
7. Labour loss 773,255 986,119
VIII. Net loss before income tax 31,552,879,902 14,438,504,443
IX. Income tax expense (profit)(note (7,006,858,922) (2,856,688,844)
X. Net loss 24,546,020,980 11,581,815,599
XI. Earnings per share
1. Basic earnings or loss per share
(note 19)(82,237) KRW (39,023) KRW
Please see the appendix Notes of the Financial Statements.
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14
Statement of Changes in Equity
The 13th period: from 1 January 2012 to 31 December 2012
The 12th period: from 1 January 2011 to 31 December 2011
Celltrion Healthcare Co., Ltd. (Unit: KRW)
Subject Capital stock
Capital
surplus
Capital
adjustment
Retained
earning Total
2011.1.1 (report
amount)1,657,630,000 19,809,451,795 (59,368,782,893) 41,010,820,120 3,109,119,022
Cumulative effect of
changes in accountingpolicies
- - - (4,384,911,291) (4,384,911,291)
Modified capital 1,657,630,000 19,809,451,795 (59,368,782,893) 36,625,908,829 (1,275,792,269)
Paid capital increases 184,185,000 16,813,665,621 - - 16,997,850,621
Current net loss - - - (11,581,815,599) (11,581,815,599
2011.12.31 (end of theprevious period)
1,841,815,000 36,623,117,416 (59,368,782,893) 25,044,093,230 4,140,242,753
2012.1.1 (reportingamount)
1,841,815,000 36,623,117,416 (59,368,782,893) 34,791,093,104 13,887,242,627
Cumulative effect ofchanges in accountingpolicies
- - - (9,746,999,874) (9,746,999,874)
Modified capital 1,841,815,000 36,623,117,416 (59,368,782,893) 25,044,093,230 4,140,242,753
Paid capital increases 550,400,000 253,455,745,480 - - 254,006,145,480
Stock options - - 1,928,232,682 - 1,928,232,682
Current net loss - - - (24,546,020,980) (24,546,020,980)
2012.12.31 (end of the
period) 2,392,215,000 290,078,862,896 (57,440,550,211) 498,072,250 235,528,599,935
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16
Statement of Cash Flows
The 13thperiod: from 1 January 2012 to 31 December 2012
The 12thperiod: from 1 January 2011 to 31 December 2011
Celltrion Healthcare Co., Ltd. (Unit: KRW)
Subject Period 13 (Current) Period 12 (Last)I. Cash flow from operating activities (193,936,000,319) (87,382,561,871)
1. Net loss (24,546,020,980) (11,581,815,599)
2. Expenses occured without cash 17,244,407,429 9,748,714,248
Retirement benefits 499,505,555 323,701,424
Depreciation 154,973,812 62,506,882
Amortization 9,702,000 2,735,333
Bad debts 243,941,669 65,252,043
Other bad debt expenses 16,382,040 -
Foreign currency exchange losses 4,120,358,470 83,375,395
Losses from disposal of tangible1,210,167 24,403,288
Share-based compensation 1,928,232,682 -
Interest expense (current valuediscount amortization)
10,270,101,034 9,186,739,883
3. Earnings reduction without cashflows
(4,911,839,793) (3,932,725,665)
Gains on foreign currency exchange 260,389,299 721,460,465
Gains on trading securities 1,973,431,648 -
Interest income (current valuediscount amortization)
2,678,018,846 3,211,265,200
4. Changes in assets and liabilities
from operating activities
(181,722,546,975) (81,616,734,855)
Increase in trade receivables (28,512,386,914) (17,909,900,000)
Decrease in account receivables 12,466,975 1,092,711,949
Decrease (increase) in accrued (22,094,604) 81,907,302
Decrease (increase) in advanced 199,440,297 (508,363,961)
Increase in prepaid expenses (12,658,099) (3,456,348)
Decrease (increase) in value added (7,236,761,141) 1,830,501,370
Decrease (increase) in current tax 2,101,635,246 (1,718,789,614)
Increase in deferred tax assets (6,161,740,439) (3,882,052,727)
Increase in inventories (298,171,534,017) (257,140,079,501Decrease (increase) in long-term
accrued income 4,170,033 (4,170,033)
Increase in trade payables 137,033,390,314 45,540,000,000
Increase (decrease) in account 2,780,600,598 (384,369,462)
Increase (decrease) in accrued 6,360,750,954 (463,036,424)
Increase (decrease) in deposits (473,177,860) 485,163,481
Increase in long-term advanced 11,900,221,120 93,634,977,546
Increase in long-term payables - 57,860,000,000
Increase (decrease) in deferred tax (1,025,363,883) 1,025,363,883
Payment of gratuity (499,505,555) (1,153,142,316)
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II. Cash flows from investing (8,826,521,891) 10,139,315,640
1. Cash inflows from investing 63,956,091 30,208,657,090
Increase in short-term loans - 30,200,000,000
Disposal of tangible assets - 909,090
Reduction of rent deposits 4,064,544 7,748,000
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59,891,547 -
2. (8,890,477,982) (20,069,341,450
360,000,000 -
6,219,855,450 -
- 19,200,000,000
2,205,756,971 19,320,253
53,865,561 624,159,902
51,000,000 -
- 160,000,000
- 65,861,295
III. 221,106,145,480 64,645,647,910
1. 254,006,145,480 112,785,169,150
254,006,145,480 16,997,850,621
- 95,787,318,529
2. (32,900,000,000) (48,139,521,240 32,900,000,000 48,139,521,240
IV. ()(+ + ) 18,343,623,270 (12,597,598,321)
V. 1,015,787,392 13,613,385,713
VI. 19,359,410,662 1,015,787,392
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Accumulated long-term loans 59,891,547 -
2. Cash outflows from investing (8,890,477,982) (20,069,341,450)
Acquisition of current assets 360,000,000 -
Acquisition of available-for-sale 6,219,855,450 -
Increase in short-term loans - 19,200,000,000
Acquisition based on equity method 2,205,756,971 19,320,253
Acquisition of tangible assets 53,865,561 624,159,902
Acquisition of intangible assets 51,000,000 -
Increase in leasehold deposit - 160,000,000
Increase in long-term loans - 65,861,295
III. Cash flows from financing activities 221,106,145,480 64,645,647,910
1. Cash inflows from financing activities 254,006,145,480 112,785,169,150
Paid capital increases 254,006,145,480 16,997,850,621
Increase in short-term loan - 95,787,318,529
2. Cash outflows from financing (32,900,000,000) (48,139,521,240)
Decrease in short-term loans 32,900,000,000 48,139,521,240
IV. Increase (decrease) in cash (++
)18,343,623,270 (12,597,598,321)
V. Cash at the beginning balance 1,015,787,392 13,613,385,713
VI. Cash at the ending balance 19,359,410,662 1,015,787,392
Please see the appendix Notes of the Financial Statements.
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Notes to the Financial Statement
The 13thperiod: from 1 January 2012 to 31 December 2012
The 12thperiod: from 1 January 2011 to 31 December 2011
Celltrion Healthcare Co., Ltd.
1. Company profile:
Celltrion Healthcare Co., Ltd. (hereinafter referred to as the Company) was established on December 29, 1999. Its
main business scope is manufacturing, processing and selling medical supplies. The Company is located in
Incheon, South Korea.
On November 25, 2010, the Company divided its investment department into a new legal entity, Celltrion Holdings.
As of the end of the current accounting period, equity capital includes ordinary shares of 1,500,000,000 KRW and
preferred shares of 892,215,000 KRW. And the largest shareholder is Seo Jung-jin, with an ownership of 50.31%.
2. Standards of financial statement and significant accounting policies
The current financial statement has been submitted to the regular shareholders meeting and been approved by
the board on March 5, 2013.
General accounting standards has been applied to financial statements of the Company since January 1, 2011.
General accounting standards are applicable to the companies which adopt External Audit Law but without the K-
IFRS accounting treatment.
The details of accounting policies applied to the financial statements are as follows.
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(1) The content of revised accounting standards in the current period.
Related standards Major revision
Standards: Chapter 21
Employee benefits
- For the right of staffs future paid vacation, related costs and liabilities shall be
confirmed during the accounting period.section 21.5-2- It will be implemented since November 11, 2012, and come into effect from thefirst accounting year after the implementation.- Any expenses and liabilities related to paid leaves, which were not recognizedbefore the initially appliable accounting period mentioned in section 21.5-2, areadjusted based on the initial surplus of the initially appliable period of section 21.5-2.
The corporation accounting standards revised in the last period come into effect from the beginning of the currentperiod. As of the end of the current period, net assets of the Company decreased by 91,614,000 KRW and the net
income of the current period decreased by 91,614,000 KRW.
(2) Cash and cash equivalents
Currency substitute securities including checks issued by others checking accounts, bank deposits and part of theshort-term investment are recognized as cash and cash equivalents. Notably, the securities and those short-termfinancial products which can be easily converted to cash without large transaction costs and have a relatively
stable value under the change of interest rate are recognized as cash and cash equivalents, if the contract period(repayment period) is less than three months.
(3) Allowance for bad debts
The Company separately analyzed the recovery possibility of the bonds, loans and trade receivables by the end ofreporting period, and set estimated loan loss as reserves for bad debt according to previous experience of loan
loss prediction.
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(4) Inventories
The Company applies moving average method to calculate acquisition cost using inventory assets with materialsin transit deducted and the result shall be recognized in the Balance Sheet. The quantities and amount ofinventories are calculated using perpetual inventory method. Inventories examinations are conducted and
modifications are recorded at the end of the period.
In addition, as of the end of reporting date, if the market price of the inventories is lower than the acquisition cost,inventories should be measured at the market value in the Balance Sheet. The Company is applying the low costmethod to conduct the classification of inventories and appropriately adjusting the cost of sales by adding orsubtracting depending on the situation. Inventories are stated by the low cost method, the lower amountbetween the cost and net realisable value (NRV) is listed, and this revaluation loss should be added in the cost of
sales.
On the other hand, the amount of any reversal of any write-down of inventories, arising from an increase in net
realisable value, should be reversed to the previous allowance account within the scope of the initial amount.Such write-downs of revaluation loss shall be eliminated from the cost of sales.
(5) Securities (excluding equity method investments)
On the initial recognization of the marketable securities, the market value of the securities plus the transaction
cost should be recognized as the fair value of the securities (excluding the short-term trading securities whichtake the changes of fair value as current profit or loss after initial recognization).
In addition, securities can be classified as short-term trading securities, held-to-maturity securities, available-for-sale securities based on the aims and properties. On the other hand, the cost of different securities is determined
by specific methods on the initial recognization. The Company uses identification method to identify the price ofsecurities and uses the moving average method to measure the holding securities.
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1) Short-term trading securities
The marketable securities that the Company purchases and sells frequently in order to acquire short-term tradingdifferences are recognized as short-term trading securities (including trading securities aimed at short-term profit).
The short-term trading securities are valued at fair value. During the evaluation, the unrealized valuation reservesshould be added to or deducted from the trading securities valuation gains (losses) account and recognized asnon-operating income.
2) Held-to-maturity securities
The held-to-maturity securities are nonderivative financial assets that have either fixed or determinable paymentsand a fixed maturity, and for which the Company has both the ability and the intention to hold to its maturity.However, if the time to maturity is within one year, held-to-maturity securities are classified as current assets.The value of held-to-maturity securities based on amortization cost method will be recognized in the financial
statement. The differences between the book value and the par value should be amortized based on the effectiveinterest method, and added to or subtract from the acquisition cost and interest income.
3)
Available-for-sale securities
The Company classifies the securities, which are not classified as short-term trading securities or held-to-maturitysecurities, as available-for-sale securities. However, the available-for-sale securities to be disposed in one year
from the reporting date are classified as current assets.
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The Company recognizes the fair value of available-for-sale securities in the financial statement. The unrealizedholding gains or losses of available-for-sale securities should be recognized as other comprehensive income. Theaccumulated gains or losses of available-for-sale securities will be recognized in the available-for-sale disposalprofit or loss, or recognized as accumulated impairment loss.However, when the fair value of non-marketable equity security included in available-for-sale securities, cannot be
measured liably, the value should be measured at the acquisition cost.
4) Impairment Loss of Securities
The Company judges the occurrence of impairment loss at each end of the reporting period. If the recoverablevalue of the bond is less than the acquisition cost of the equity securities or the amortized cost of the debtsecurities, the impairment loss of the held-to-maturity securities (or available-for-sale securities) is recognized as
impairment loss and recognized in the non-operating expenses. If the recovery of the impairment is objectivelyrelated to an event occuring after the recording of the impairment loss, the reserval amount of the held-to-maturity or available-for-sale securities should be recognized as the impairment loss reversals and be recognizedin non-operating income. If the carrying amount after recovery does not exceed the original amount of the
amortized cost, it should not be recognized in the current restoration (in the case of available-for-sale securities isthe acquisition cost). And the fair value of the available-for-sale securities should be extented based on theimpairment loss recorded previously and the recovered amount should be recognized as the impairment loss
reversal and recognized in non-operating income.
5) Reclassification of securities
Short-term trading securities cannot be re-classified to the securities subjects, or other securities subjects cannotbe re-classified to the short-term trading securities. But there are rare circumstances that the short-term trading
securities can be classified as available-for-sale securities. Also, when short-term trading securities lost the marketvalue, it is re-classified as available-for-sale.
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When the short-term trading securities are re-classified as available-for-sale securities or held-to-maturitysecurities, the fair value from the re-classified date can be recognized as the new acquisition cost, and theunrealized gains and losses until the date of reclassification should be recognized in the current period.
(6) Equity method investments
The Company has evaluated the equity investments of the investee companies, which have significant influences
on (hereinafter referred to as "investee companies"), using the equity method.
1) Accounting treatment for change of shares
When the equity method is applied, the amount of the Group's shareholding in net assets changes of the investeecompany (hereinafter referred to as "movements in equity"), can be accounting treated as the source offluctuations in net asset value of the investee companies.
Besides,fluctuations arising from the net profit (loss) of investee companies in the current period is classified as profit(loss) and recognized as operating income (expense);
fluctuations arising from the prior retained earnings of investee companies in the last period is classified asretained earning changes and recognized as prior retained earnings in the last period.fluctuations arising from both increase and decrease in capital surplus, excluding the net profit (loss) in thecurrent period and retained earnings in the last period of investee companies, is classified as stock right transfer
and recognized as other comprehensive accumulative income.However, under equity method, if the investees changes of retained earnings carried forward arising fromcorrections of significant accounting errors do not have the significant impact on the Groups consolidated
financial statements, changes in long-term equity investment should be classified as investment income (loss),treated as non-operating income. If the accounting policies in investee company change, the impact ofmovements in accounting policies, accounting estimates and corrections of errors in long-term equity investmentsshould be reflected in accumulated retained earnings carried forward according to the Accounting Standards.
On the other hand, when investee determines to distribute its dividends, in terms of distribution resolution, thedividend receivables of the Group should be minus directly from the carrying amount of long-term equity
investment.
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2) Accounting treatment for investment difference
At the date of acquiring investment stock under equity method, the Company is accounting the differencesbetween the acquisition consideration cost and the fair value of the holding shares of identifiable net assets ofthe invested unit (a.k.a. Investment Difference) by taking the difference as goodwill in accordance with Korean
Corporate Accounting Standard of business combination. Therefore, the goodwill should be amortized in 20 yearsaccording to a straight-line-method. And the recoverable amount of it should be assessed at each balance sheet
date, so as to determine the impairment loss. The goodwill cannot be restored after impairment.When the difference of bargain purchase occurs at the time of acquisition, it should be recognized as currentprofit or loss at the reception date.
In addition, if the Companys stock ownership increases for the investee company increases its capital (including
paid capital reduction, unpaid capital increase, free capital reduction. The term hereinafter referred to as "paidcapital increase") under the equity method, the value of stock ownship changes should be recognized asinvestment differentials. Otherwise, if its stake decreases, the difference between the changes in capital should
be recognized as gain or loss on disposal of assets. However, in case that investee companies are subsidiaries ofthe investing company under the equity method, change in long-term equity investment due to the increase ofpaid capital should be treated as capital surplus (capital adjustment).
3) Accounting treatment for the difference between fair value of net assets of investee companies under the
equity method and book value
Under the equity method, when the investing company acquires the long-term equity investment, the differencebetween fair value of net assets of investee companies and carrying amount, which belongs to the Groupsproportionately, should be depreciated and reversed in proper methods of investee company and reflected in
current gains or losses under the equity method.
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4) The deduction of unrealized gains and losses from internal transactions
Under the equity method, the Groups shareholding ratio multiplied by gains and losses from internal transactionsbetween the Group and the investee companies, from the balance sheet date to the present, should be reflectedin the carrying amount of goods and seen as the Groups unrealized gains and losses. However, in case that the
investee company is one of subsidiaries of the group company, the unrealized profits, which are generated fromthe transaction of asset sales (downstream sales) between the Group and its subsidiaries, should be removed in
full and counted in the stock investment applying equity method.
5) Consistency of accounting policies
For the same or similar transactions and events, the accounting policies of related enterprises and the Groupshould be consistent. Therefore, the financial statements should be revised properly and apply to equity method.
However, the treatments of the Group and related enterprises are based on special cases of K-IFRS for affiliatedsubsidiaries; therefore, the financial statements do not need modification even if the accounting policies areinconsistent.
6) Consistency of net assets of subsidiaries
Under the equity method, when the investee company is a subsidiary, the balance of investment account is"0". Inthe accounting treatment, if the equity method is not applied, the net profits and net assets in individual financialstatements of the parent company should be consistent with net profits and net assets in the parent company'sconsolidated financial statements in accordance with the shareholding ratio of the parent company in the current
period.
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7) Impairment loss of investment stock under the equity method
If there is an objective evidence of impairment loss that the recoverable amount of investment stock is less thancarrying amount, the company recognizes impairment loss on the non-operating expenses (impairment loss ofinvestment stock under equity method). When the Company recognizes the impairment loss of investment stock
under the equity method, if there is unamortized investment difference, it should be deducted first. On the otherhand, when the impairment loss has been recognized and the recoverable amount of equity investment is
recovered, the reversal amount should be recognized as current profit or loss, which is subject to the amount ofimpairment loss previously. But after the reversal, the carrying amount of equity investment should not exceedthe previous carrying value assuming that it had not been impaired. However, the impairment loss belonging tothe investment difference balance should not be reversed.
8) Exchange conversion of overseas business
In order to incorporate the offshore company's annual reports by the equity method, the Company should convertthe balance sheet items of the foreign enterprises annual reports with the closing rate of the last day of thereporting period and convert the income and expense items in the income statement with the exchange rate (orthe average exchange rate) at the trading date, then apply to the equity method.
After being converted to South Korean won, amount represented by the companys shares in the differencebetween the net assets (the asset minus the liability) and the equity assets should be counted in the item ofcapital change using equity method and reflected in "Other comprehensive income".
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(7) Tangible assets
The Company recognizes the acquisition costs (acquisition costs consist of purchase costs, production costs andany relevant and necessary expenses that the executives spend to operate the assets as they intended. If there
are discounts on purchases, the amount of discounts should be deducted.) as the initial cost of tangible assets.The initial cost of some tangible assets, which are obtained by investment in kind, donations and or other unpaid
ways is the fair value. The initial cost of assets acquired through non-monetary asset exchange is calculated inaccordance with the fair value of received assets. If the fair value of the received asset is uncertain, its initial costcan be calculated at the fair value of the surrendered assets.
Only if the possibility of future economic profits inflow from the capitalis is high and the cost can be measuredreliably, the subsequent costs after tangible asset acquisition can be classified as capital expense. Under some
proper suitations it can be presented as individual asset, and the substituted capital can be removed from thebalance sheet. Meanwhile, the maintenance cost that occurs in the current period can be recognized as expense.
When the tangible assets turn into the available-for-use condition, (in which that the assets operation isconducted as the operators intention) the depreciation value shall be calculated using fixed depreciation methodaccording to the classification and useful life of assets. The depreciation cost in each period should be recognized
as sale cost and administrative cost.
Division Estimated useful lives
Vehicles 5 years
Equipments 5 years
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(8) Intangible assets (excluding goodwill)
When the Company acquired intangible assets alone, the acquisition cost (purchase price and the expenditurewhich makes the intangible asset usablel) should be recognized as the initial book value.
Intangible assets (software) are amortized over five years using the straight-line amortization method, thecarrrying amount is the residual amount after deduction of accumulated amortization. Amortization of intangible
assets shall be recognized as administrative expenses and selling expenses.
(9) Impairment of assets
At the end of the accounting period, the Company should conduct impairment test to all the Companys assetsexcept financial assets, inventories and deferred income tax to verify whether there are signs of depreciation. Ifsigns are detected, the Company should measure the recoverable amount. If the recoverable amount is less than
the book value, the book value should be adjusted to recoverable amount, and the difference should berecognized as impairment loss. As for tangible assets, when the impairment signs indicate that the present valueof the future cash flows is lower than the book value, the book value should be adjusted to recoverable amount
and the difference should be recognized as impairment loss.
Moreover, no matter whether there are signs of impairment, the recoverable amount is estimated at the end of
each accounting period for the unusable intangible assets and the holding assets for sales.
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The Company conducts impairment test on individual assets. If it is not possible to estimate the recoverableamount of the individual asset, then the recoverable amount is determined by the cash-generating unit (thesmallest identifiable asset class that is independent and able to generate cash inflows) to which the asset belongsto. If the recoverable amount of cash-generating unit is less than the carrying amount, an impairment loss shouldbe recognized. The impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the
cash-generating unit (group of units) in the following order: (a) first, to reduce the carrying amount of anygoodwill allocated to the cash-generating unit (group of units); and (b) then, to the other assets of the unit
(group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). However,an entity shall not reduce the carrying amount of an asset below the highest of: (a) its fair value less costs to sell(if determinable); (b) its value in use (if determinable); and (c) zero
(10) Long-term payables
Long-term payables include the extended payment transactions, long-term loan transactions or other similar
transactions which have a relationship of debt and credit. The cost of acquisition assets should be recognizedbased on its extended payments present value because of the big difference between the nominal value and thefair value, which has the financing substance. The difference between the actual payment and the purchasingprice (unrecognized finance cost) should be amortized by the actual interest rate. However, the loan which havespecific usage purposes (such as the entity offered the housing fund loan with low or no interest rate to theemployees) the loan would be limited to use or required to repay in rules or lease deposit, are not included in this
scope.
(11) Foreign currency exchange rate effects
1) Functional currency and presentation currency
KRW is the main currency used in operating activities and used in financial statements.
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2) Foreign exchange transactions
For the transactions accomplished not by functional currency, the Company uses the exchange rate at the date oftransaction. Non-monetary foreign currency items measured by historical cost are translated with the exchangerate at the date of the transaction. Non-monetary items measured at fair value are translated with the exchange
rate at the date of fair value determination. If the gains or losses of non-monetary items are recognized as otheraccumulated comprehensive income, the exchange rate fluctuation effect contained in the profit or loss shall be
also recognized as other accumulated comprehensive income. When the gains or losses of non-monetary itemare recognized as current profit or loss, the exchange rate fluctuation effect shall also be recognized as currentprofit or loss.
In addition, monetary foreign currency assets and l iabilities are translated with the exchange rate at the end ofthe reporting period. The profit and loss arising from translation is recognized as current profit or loss. However,in the case of available-for-sale securities in foreign currency, the same amount is recognized in otheraccumulated comprehensive income.
3) Translation of Foreign operation
If the functional currency of the foreign operation is different from bookkeeping base currency of the Company,
the translation from functional currency intobookkeeping base currency in financial statements and incomestatements are as follows:
The assets and liabilities in financial statements are translated with the exchange rate at the reporting date. Therevenues and expenses in income statements are translated with the exchange rate of the transaction date.
Exchange differences arising from translation are recognized in financial statement as other comprehensiveincome. The other comprehensive income is reclassified as current profit or loss faced with overseas companies.
The goodwill and the differences between thecarrying amount and fair value of assets and liabilities generatedfrom the acquisition of overseas companies are recognized as assets and liabilities of overseas companies andpresented in functional currencies of foreign countries. While other assets and liabilities should be translated to
KRW at the exchange rate of the reporting date of financial statements.
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4) Translation of overseas net investment
The monetary items acquired from or paid to the foreign operations, which will not be settled or cannot be
settled, are classified as part of the net investment of foreign operations. The relevant foreign currency
differences are recognized as net profit of current period in foreign operation financial statement.
(12)
Retirement benefit liabilities
The Company conducts defined contribution plan. It should contribute a certain amount of money, regardless of
the operating results. During the accounting year, the amount should be identified as paid retirement benefits.
(13) Provisions
A provision exists as a result and a present obligation of a past event. It is most likely 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. If these conditions are met, provision should be recognized. Besides,
when the difference between the nominal amount and present value is significant, to fulfill the obligations, the
predicted expenditure should be estimated by the present value.
When it is certain to receive the offset from the third party, the amount of offset is recognized as separate
assets. Under this situation, the amount of earnings from the reimbursement can be offset with the calculated
expenses in the income statement in accordance with the recognition of provisions.
(14) Revenue recognition
Income equals to the amount of product sales and provision of services, deducted sales allowances, discounts
and sales return.
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The entity has transferred to the buyer the significant risks and rewards of ownership of the goods. The entity
retains neither continuing managerial involvement to the degree usually associated with ownership nor effectivecontrol over the goods sold. The amount of revenue can be measured reliably. It is probable that the economicbenefits associated with the transaction will flow to the entity. And the costs incurred or to be incurred in respectof the transaction can be measured reliably. Revenue from the sales of goods shall be recognized when all of the
conditions mentioned above have been satisfied.
The revenue of rendering of services shall be recognized on percentage of completion basis. Under this method,the amount of services rendered shall be measured liably. In accordance with total transaction amount, the
completion rate, related profits that may flow into the company, and the current and future costs, the servicesrendered shall be recognized liably by reference to the percentage of completion.
The Company is an agent of the supplier to a transaction, rather than the parties to the transaction. Theamount of fees charged from customers after deducting the amount to be paid to the actual supplier of thegoods or services is recognized as revenue.
(15) Income tax accounting
Deferred income taxes are based on the differences between taxable profits and the carrying amount of liabilities
that are recognized in an entitys statement of financial position. Deferred tax liabilities recognize the taxabletemporaty differences. The company recognizes all deductible temporary differences as deferred income tax.
Deferredtax assets (liabilities) in accordance with the classification criteria for assets (liabilities) project, are
divided into current assets (current liabilities) or non-current assets (non-current liabilities) in the statement offinancial position. According to the tax, deferred tax assets can be recognized as the early loss. Therefore,deferred tax assets and liabilities which are unrelated to the assets or liabilities items in the balance sheet can be
divided into current items and non-current items in accordance with the expected the disappearance time oftemporary differences.
When the classification of deferredtax assetsand deferred tax liabilities in liquidity are related to the provisions oftax authorities, the Company should fully communicate with the tax authorities.
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Current income tax and deferred income tax are recognized as income tax payable in income statement.In this
case, the amount (income tax payable or tax refund ) recognized in the period is treated as the current income
tax expense (corporateincometax credit), included in income tax expenses. Temporary differences in current or
other period which can be directly recongnized as owner's equity or goodwill, can be directly deducted.
(16) Share-based compensation
The Company grants stock options or shares to employees and others who providing similar services. The
share-based compensation should be recorded as the fair value of the compensation cost and capital
adjustment. If the fair value of the goods or services cannot be reliably measured, = the fair value of the share
based compensation shall be applied in accounting treatment as compensation cost of capital (capital
adjustment). If the conditions of the equity instruments granted are very complex and can not be reliably
measured at fair value at the measurement date, the estimates are changed to measure the intrinsic value of
the vested equity instruments based on its quantity.
(17) Changes in accounting policy
In the current period, the Company prepared financial statements using retrospective adjustments to reflect
adjusted items (refer to Note 20)
1) Accounting treatment exceptions not appliable for SME
As of the end of the last accounting period, as a SME, according to the related laws, the Company used the
exception from the chapter 31 of General Accounting Standards to deal with corresponding items. From the
beginning of current period, those companies that do not match the definition of SME according to the law shall
not apply the exception to conduct accounting treatment.
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2) Changes of inventory valuation
At the end of accounting period, the Company changed the FIFO method into moving average method toevaluate the inventories in order to improve the accuracy in the carrying amount and the comparability amongother companies in the industry. It is reasonable to change the inventory evaluation method according to the
General Accounting Standards, so as to reflect the effectiveness of inventory evaluation.
(18) Reclassification of the classification in the financial statement of the last period
In order to make the comparasion between financial statements of current and last period easier, a part of theaccounting subjects in the last financial statements has been reclassified in current period. There is no influenceon the profit or loss and net asset after the reclassification.
(19) Use of evaluation
In accordance with the Korean General Accounting Standards, many assumptions and reasonable estimatesmade by the Company to disclose the amounts of assets and liabilities, which include the evaluation of the
carrying amount of tangible assets, bonds, inventories and deferred income tax assets. Accordingly, pleasepay attention to that there may be some differences between the estimated amounts and the actual amountsand possibility of adjustments.
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3. Use-restricted deposits
As of the end of the accounting period, the details related to the use-restricted deposits of the Company are asfollows.
(Unit: KRW 000)
Accounting subject Current period Last period Restrict content
Long-termm investmentsecurities
2,000 2,000 Current account deposit
4. Evaluation of inventories
As of the end of the accounting period, the inventory evaluation of the Company using low-cost method, is asfollows.
(Unit: KRW 000)
SubjectAcquisition cost Cost method valuation Losses (Losses reversed)
Current period Last period Current period Last period Current period Last period
Commodity 678,847,710 380,676,176 678,847,710 380,676,176 - -
5. Short-term trading securities
As of the end of the reporting period, the detalis of valuation of short-term trading securities are as follows.
(Unit: KRW 000)
Subject
Current period Last period
Book valuebefore
valuation
Fair valueGain or loss
on evaluation
Book valuebefore
valuation
Fair valueGain or loss
on evaluation
Equity securities 6,219,855 8,193,287 1,973,432 - - -
Fair value of marketable securities is measured at the average closing price from the end of the reporting day until
now (if there is no average closing price since the end of the reporting day, the fair value is measured at the
closing price of the last day)
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6. Equity method investments
As of the end the accounting period, the details of the Companys equity method investment are as follows.
(1) Shareholdings of the investee companies in equity method
(Current period) (Unit: KRW 000)
Company nameNumber of
sharesOwnership Settlement
Acquisition
cost
Equity
investmentBook value
Celltrion Healthcare India Privated Limited(*1)
4,999 99.98% March 12,242 5,784 12,242
Celltrion Healthcare ILAC SANAYI
ICARET LIMITED SIRKETI *1 3,699 99.97% December 118,265 60,017 118,265
Celltrion Healthcare Hungary, Kft.(*1) - 100.00% 81,976 17,323 81,976
Celltrion Healthcare Philippines Inc.(*1) 84,995 99.99% 227,392 176,470 227,392
Celltrion Healthcare Malaysia SDN
BHD(*1) 105,889 100.00%
39,119 29,609 39,119Celltrion Healthcare Hong Kong
Limited(*1)75,090 100.00% 11,264 6,635 11,264
Celltrion Healthcare (Thailand) Co.,Ltd.(*1)
599,997 100.00% 107,999 67,319 107,999
Celltrion Healthcare Distribuicao deProdutos Farmaceuticos do Brasil
LTDA(*1) 1,303,321 100.00% 1,447,875 525,664 1,447,875
Celltrion Healthcare Singapore PrivateLimited(*1)
200,000 100.00% 178,945 171,154 178,945
Total 2,225,077 1,059,974 2,225,077
(*1) The Group does not apply the equity method since it is not significiant to the shareholding changes of theinvestee companies and the method is only applicable to companies which are not related to the externalaudit.
(Last period) (Unit: KRW 000)
Company nameNumber of
sharesOwnership Settlement
Acquisitioncost
Equityinvestment
Book value
Celltrion Healthcare India PrivatedLimited *1
4,999 99.98% March 12,242 7,891 12,242
Celltrion Healthcare ILAC SANAYIICARET LIMITED SIRKETI(*1) 99 99.00% December 3,761 (19,963) 3,761
Celltrion Healthcare Hungary, Kft.(*1) - 100.00% 3,317 (41,626) 3,317
Total 19,320 (53,698) 19,320
(*1)The Group is not using the equity method since it is not significiant to the shareholding changes of theinvestee companies and the method is only applicable to companies which are not related to the
external audit.
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(2) General financial information of the investee companies
(Current period) (Unit: KRW 000)
Company name Assets Liabilities Net assets Sales Net income
Celltrion Healthcare India Privated Limited 7,098 1,313 5,785 - (1,224)
Celltrion Healthcare ILAC SANAYI TICARETLIMITED SIRKETI 66,599 6,566 60,033 - (26,328)
Celltrion Healthcare Hungary, Kft. 17,401 78 17,323 - (11,762)
Celltrion Healthcare Philippines Inc. 186,484 10,004 176,480 - (46,569)
Celltrion Healthcare Malaysia SDN BHD 39,495 9,886 29,609 - (7,604)
Celltrion Healthcare Hong Kong Limited 6,635 - 6,635 - (3,762)
Celltrion Healthcare (Thailand) Co., Ltd. 74,795 7,476 67,319 - (38,537)
Celltrion Healthcare Distribuicao de ProdutosFarmaceuticos do Brasil LTDA
548,791 23,127 525,664 - (142,988)
Celltrion Healthcare Singapore Private Limited 175,619 4,465 171,154 - (4,045)
Total 1,122,917 62,915 1,060,002 - (282,819)
(*) The financial information above is unaudited amounts. The reliability verification procedures have beenperformed to analyze the differences between the statements and the audited financial statements.
(Last period) (Unit: KRW 000)
Company name Assets Liabilities Net assets Sales Net income
Celltrion Healthcare India Privated Limited 10,642 2,748 7,893 - (5,190)
Celltrion Healthcare ILAC SANAYI TICARETLIMITED 7,151 27,316 (20,165) - (24,590)
Celltrion Healthcare Hungary, Kft. 24,781 66,407 (41,626) - (55,156)
Total 42,574 96,471 (53,898) - (84,936)
(*) The financial information above is unaudited amounts. The reliability verification procedures have beenperformed to analyze the differences between the statements and the audited financial statements.
7. Tangible assets
The details of changes in book value of tangible assets of the Company in current and last period are as follows:
(Current period) (Unit: KRW 000)
Division Beginning Acquisition Disposal Depreciation EndingAcquisition
cost
Accumulated
amortization
Vehicles 1 - - - 1 43,956 (43,955)
Equipments 666,529 53,866 (1,210) (154,974) 564,211 797,674 (233,463)
Total 666,530 53,866 (1,210) (154,974) 564,212 841,630 (277,418)
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(Last period) (Unit: KRW 000)
Division Beginning Acquisition Disposal Depreciation EndingAcquisition
costAccumulatedamortization
Vehicles 1 - - - 1 43,956 (43,955)
Equipments 130,188 624,160 (25,312) (62,507) 666,529 745,179 (78,650)
Total 130,189 624,160 (25,312) (62,507) 666,530 789,135 (122,605)
8. Intangible asset
The details of changes in carrying amountbook value of intangible assets of the Company in current and lastperiod are as follows:
(Current period) (Unit: KRW 000)
Division Beginning Acquisition Depreciation Ending Acquisition costAccumulated
amortization
Software7,877 51,000 (9,702) 49,175 69,260 (20,085)
(Last period) (Unit: KRW 000)
Division Beginning Acquisition Depreciation Ending Acquisition costAccumulatedamortization
Software 10,613 - (2,736) 7,877 18,260 (10,383)
9. Assessment of present value of accounts receivable and payable
As of the end of the accounting period, the present value assessment of long-term trade receivables and payables
are as follows.
(Unit: KRW 000)
DivisionLong-term receivables Long-term payable
Current period Last period Current period Last period
Applicable interest rate (*1)
7.63% 7.63% 7.68% 7.68%
Nominal amount 38,388,224 41,334,272 104,060,000 188,320,000
Present value 37,674,442 37,682,172 100,810,331 174,800,230
Present value discount (713,782) (3,652,100) (3,249,669) (13,519,770)
(*1) The weighted average borrowing rate of the Group was applied to the discount rate.
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Meanwhile, as of the end of the accounting period, the classifications of the long-term receivables and payableswith respect to the liquidity are as follows.
(Unit: KRW 000)
DivisionLong-term receivables Long-term payable
Current period Last period Current period Last period
Long-term assets and liabilities
(notional principal amount)38,388,224 41,334,272 104,060,000 188,320,000
Deduction:total current value
discounts(713,782) (3,652,100) (3,249,669) (13,519,770)
Deduction: Liquidity assets andliabilities
38,388,224 17,114,972 104,060,000 117,260,000
Liquidity Present Value Discount (713,782) (1,223,560) (3,249,669) (5,422,297)
Long-term assets and liabilities (net) - 21,790,760 - 62,962,527
10.
Short-term loans
As of the end of the accounting period, the details of the short-term loans of the Company are as follows.
(Unit: KRW 000)
Borrowing soure Interest rate (%) Current period Last period
Seo Jung-jin (manager) 8.5 - 300,000
Celltrion Holdings Ltd. 8.5 - 22,600,000
Korea Exchange Bank 5.986 30,000,000 40,000,000
Total 30,000,000 62,900,000
As of the end of the current period, loans from Korea Exchange Bank are guaranteed by Celltrion Holdings andthe Companys directors (refer to Note 23).
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11. Retirement benefit plans
The Company has implemented a defined contribution plan for all qualified employees. External assets have beenoperated independently from the assets of the Company in the form of fund under the management of a trustee.If employees leave the Company before they meet the vesting conditions of the defined contribution, the amount
of contributions that the Company has to pay will be reduced by the defined contribution amount that employeesupposed to get if they stayed.
The current period cost recognized in income statement at 499,506,000 KRW (prior period: 323,701,000 KRW), isthe amount included in the contribution, calculated by the Company according to the proportion set in thepension plans. There are currently no unpaid retirement benefits by the end of the reporting period.
12. Monetary foreign currency assets and liabilities
At the end of the accounting period, the details of the monetary assets and liabilities in foreign currencies of theCompany are as follows.
(Unit: KRW 000)
Subject
Current period Last period
Foreign currency amountKRW
equivalentForeign currency amount
KRW
equivalent
Cash and cashequivalents
USD 3,090,996 3,310,766 USD 1 1
EUR 29,798 42,202 EUR 1 1
RON 133 46 RON 133 46
PLN 148 50 PLN 148 50
VEF 560 143 VEF - -
Accountsreceivable USD 4,277 4,581 USD - -
Long-term loans EUR - - EUR 41,468 61,957
AccountsReceivable
USD 50,100,000 53,662,110 USD 50,100,000 57,780,330
Total assets 57,019,898 57,842,385
Accounts Payable
USD 134,602 144,172 USD 2,458 2,835
EUR 14,668 20,774 EUR - -
RMB - - RMB 11,569 2,111
CAD 20,000 21,521 CAD - -
CHF 24,932 29,247 CHF - -
Total liabilities 215,714 4,946
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According to the above exchange rate, the translation gains of the foreign currency exchange is 260,389,000
KRW (last period: 721,460,000 KRW) and the translation losses of the foreign currency exchange is4,314,512,000 KRW (prior period: 83,384,000 KRW). Both the translation gains and losses are recognized asnon-operating gains and losses.
13. Related party disclosures
The details of related party disclosures of the Group and concerning information are as follows:
(1) Special relationships between the Company and related companies
Division Company name
Manager Seo Jung-jin
Subsidiaries
Celltrion Healthcare India Privated LimitedCelltrion Healthcare ILAC SANAYI TICARET LIMITED SIRKETICelltrion Healthcare Hungary, Kft.Celltrion Healthcare Philippines Inc.Celltrion Healthcare Malaysia SDN BHDCelltrion Healthcare Hong Kong LimitedCelltrion Healthcare (Thailand) Co., Ltd.
Celltrion Healthcare Distribuicao de Produtos Farmaceuticos do BrasilLTDACelltrion Healthcare Singapore Private Limited
Other related parties
Celltrion Holdings Ltd.
Celltrion GSC Ltd.
Celltrion Ltd.Celltrion Pharma Co., Ltd.Celltrion ST Ltd. (formerly. Neksol Telecom)
Dreamenm
(2) Transactions with related parties
(Unit: KRW 000)
Related partiesdivision
Sales, etc. Purchases, etc.
Current period Last period Current period Last period
Manager - - 2,515 1,188
Subsidiaries 1,507 4,170 - -
Other related parties 33,820,380 32,047,509 347,490,443 286,212,667
Total 33,821,887 32,051,679 347,492,958 286,213,855
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(3) Credit and debt with related parties
(Unit: KRW 000)
Related parties
division
Receivables Payables
Current period Last period Current period Last period
Manager - - - 301,188
Subsidiaries 6,154 66,127 - -
Other related parties 62,645,268 34,412,400 390,256,300 261,891,647
Total 62,651,422 34,478,527 390,256,300 262,192,835
14. Capital
(1) Details of Capital
As of the end of the accounting period, the details about the capital of the Company are as follows.
Division Current period Last period
Total number of shares issued 20,000,000 shares 20,000,000 shares
Face value per share 5,000 KRW 5,000 KRW
The number ofissued shares:
Ordinary shares
Preferred shares300,000 shares
178,443 shares
300,000 shares
68,363 shares
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(2) Changes in capital and share premium.
Detailed changes in capital and share premium of the company in current and prior periods are as follows.
(Unit: KRW 000)
Division
Capital Share issue premium '
Common sharesCommon shares Preferred shares
Last period beginning 1,500,000 157,630 19,809,452
Capital incresed - 184,185 16,813,665
Last period ending 1,500,000 341,815 36,623,117
Capital increased - 550,400 253,455,746
Current period beginning 1,500,000 892,215 290,078,863
(3) Redeemable and convertible preferred shares
Item Contents
Preferred sharesby category
Accumulative participating redeemable and convertible preferred sharesFirst preferred share: lowest annual yield of dividend- 1% of issue price of the redeemableand convertible preferred shareSecondpreferred share:lowest annual yield of dividend-0.01% of par value of the
redeemable and convertible preferred share
hirdpreferred share: lowest annual yield of dividend-0.01% of par value of theredeemable and convertible preferred share
Date of increase inpaid-in capital
First preferred share: July 10, 2009
Secondpreferred share: August 31, 2011
Thirdpreferred share: January 31, 2012
Voting rightcondition
With voting rights
Details regardingredemption
(1) Redemption dateFirst preferred share : Four years after the issue date, can be redeemed when theredemption conditons occur(*)
Secondpreferred share : Five years after the issue date, can be redeemed when theredemption conditons occurhirdpreferred share : Five years after the issue date, can be redeemed when the
redemption conditons occur
(2) Redemptionamount
Based on redemption reasons and redeemed at fair value
Details on
conversion
(1)Conversions ratio : the initial conversion rate is 1:1 between redeemable andconvertible preferred share and ordinary share(2)Conversion price: the issue price of each preferred share(3)Conversion period:
First preferred share : One year after the issue dateSecondpreferred share : Within five years from the issue date
Thirdpreferred share : Within five years from the issue date
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73
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(4) Losses on capital reduction
The Losses on capital reduction in current period is 59,368,783,000 KRW due to the spin-off of the parentcompany on November 25, 2010.
15. Statement of retained earnings
Details of statement of retained earnings in current and last period are as follows.
Statement of retained earnings
=====================
13th period: From January 1, 2012 to December 31, 2012 Processing date: March 22, 2013
12th period: From January 1, 2011 to December 31, 2011 Confirming date: March 23, 2012
Celltrion Healthcare Co., Ltd. (Unit: KRW)
Division Current period Last period
Unappropriated retained earnigs
Beginning balance of retained earnings 25,044,093,230 41,010,820,120
Adjustment from accounting policies changes - (4,384,911,291)
Current period reduction (24,546,020,980) (11,581,815,599)
Total 498,072,250 25,044,093,230
Appropriated retained earnings - -
Retained earning before appropriation 498,072,250 25,044,093,230
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16. Statement of Comprehensive profit or loss
Details of the statement of comprehensive profit or loss in the current and last period are as follows.
Statement of Comprehensive Income
]]]]]]]]]]]]]
13th period: From January 1, 2012 to December 31, 201212th period: From January 1, 2011 to December 31, 2011
(Unit: KRW)
Division Current period Last period
Current period net loss (24,546,020,980) (11,581,815,599)
Other comprehensive income - -
Total comprehensive income (24,546,020,980) (11,581,815,599)
17.
Share-based compensation
(1) As of the end of accounting period, the Companys share-based compensation arrangements assigned are asfollows.
- Granted date March 23, 2012
- Exercising period
Possible vesting period (incumbent only) at the Company can be
exercised three years after the date granted. 40% of initial shares
granted can be exercised after 3 years. 30% of rest initial shares
granted can be exercised after 4 years and 30% of rest initial shares
granted can be exercised after 5 years.
- Number of shares issued 14,990 shares
- Exercise price 2,307,500 KRW
- Granted method Shares issued type
The compensation for granted share options is measured at fair value and assumptions used to measure the
compensation are as follows:
- Risk-free rate 3.73%~3.88%
- Vesting period 4-6 years
- Expected volatility 25.34%~26.91%
- Expected dividend yield 0%
- Fair value 2,307,500 KRW
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(2) As of the end of the accounting period, the details of changes in granted stock options are as follow
Stock options
Quantity (shares)Weighted average exercise price
(KRW)
Beginning balance - -
Granted 14,990 2,307,500
Cancelled 1,240 2,307,500
Current period ending balance 13,750 2,307,500
Probability of exercising fromcurrent period till now
- -
At the vesting date, the weighted average price of stock options are 2,307,500 KRW (last period: 2,307,500 KRW),
the residual vesting period is 9 years (from March 23, 2012 to the maturity date).
(3) As of the end of accounting period, details ofcompensation costs are as follows:
(Unit: KRW 000)
Division Amount
The total compensation cost 3,019,291
Share-based compensation cost -
Recognized compensation cost in current period 1,928,233
Accumulated recognized compensation cost until the end
of current period 1,928,233
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