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Annual Report of Celltrion Pharm in 2013

From 1 January 2013


To
31 December 2013

Contents

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Contents

Audit report ..................................................................................................................................................................................................................................................................................................................................................................... Error! Bookmark not defined.


Financial Statements ...................................................................................................................................................................................................................................................................................................................................................... Error! Bookmark not defined.
Financial Statement Notes ............................................................................................................................................................................................................................................................................................................................................. Error! Bookmark not defined.
Internal Accounting Management System Audit Report by External Auditor ............................................................................................................................................................................................................................................................. Error! Bookmark not defined.

-
192,941,204,820

361,353,571,655

7,069,308,500

157,246,082,013

173,797,761,474

331,043,843,487

[ ]

1.
-

7,197,689,000

168,412,366,835

2. ()

-
-
3. ()

2,613,059,447

2,613,059,447

3,622,353,632

7,493,294,238

52,657,248,020

3,551,937,372

3,551,937,372

3,383,326,662

5,079,202,472

46,967,596,162

-(
)

192,572,318,073

359,987,806,514

7,069,308,500

156,216,289,526

173,859,494,381

330,075,783,907

4.
( :)

[/ ]

5. ( : )

1.

167,415,488,441

. ( : )

7,197,689,000

2,642,628,514

3,552,827,215

7,456,923,103

50,083,248,020

3,936,476,527

3,327,916,489

5,083,772,146

44,707,596,162

-(
)

undivided

SamYoung Accounting firm


undivided

SamYoung Accounting firm

Current period

Audit report
[Consolidated financial statements of Parent Company and Holding Company based on the audit opinions and financial requirements]
(Unit: KRW)
Last period

Items
1. Audit opinions
-Audit opinion
-estimate of the uncertainty
of continued existence of
enterprises

4. Consolidated subsidiaries
(Unit: Company)

-Equity attributable to
owners of parent company

2,613,059,447

2,613,059,447

3,622,353,632

7,493,294,238

52,657,248,020

361,353,571,655
192,941,204,820
168,412,366,835
7,197,689,000

3,551,937,372

3,551,937,372

3,383,326,662

5,079,202,472

46,967,596,162

331,043,843,487
173,797,761,474
157,246,082,013
7,069,308,500

2. Consolidated financial information (WON)


-Total assets
-Total liabilities
-Total equity
-Capital stock
3. Consolidated information(Unit : KRW)
- Revenue generated by sales
and services
-Operating profit
-Profit from continuing
operations before income tax
-Net Income

5. Key Subsidiary numbers


(Unit: Company)

(Unit : KRW)
Last period

SamYoung Accounting firm


SamYoung Accounting firm
undivided
undivided

Current period

Individual financial statements


1. Audit opinion and financial
information
A. Audit opinions
-Audit opinion

undivided

330,075,783,907
173,859,494,381

undivided

359,987,806,514
192,572,318,073

Reasons on the uncertainty of


continued existence of
enterprises
- Opinion on the accouting
system conforming to the
Internal Accounting
Management System
B. Financial information (Unit : KRW)
-Total assets
-Total liabilities

7,069,308,500
44,707,596,162

156,216,289,526

50,083,248,020

5,083,772,146

7,197,689,000

7,456,923,103

3,327,916,489

167,415,488,441

3,552,827,215

3,936,476,527

-Total equity

2,642,628,514

-Capital stock
- Revenue generated by sales
and services
-Operating profit
-Profit from continuing
operations before income tax
expenses
-Net Income

2.
2014-02-25

158,757,469,582

168,412,366,835
7,069,308,500

7,197,689,000

3.
4.

[]

5.

157,246,082,013

128,268,037,104

[ 3 ]

(%)
=(-)/
100
[

(/
)100(%)

168,412,366,835
]

[ 4 ]
(
,

)

( : )

: %, )

( : %, )

2. Auditors
3. Date of audit receipt and
report
2014-02-25

Ryan accounting firm

Relevant Disclosure
[Capital erosion rate]

158,757,469,582

168,412,366,835
7,069,308,500

Last period

7,197,689,000

Current period

(Unit: KRW)

4. Whether or not the


consolidated financial
Yes
statements submitted their
target
Audit reports submitted to relevant legal entity after audited by
external auditor (Because the financial statements were not
5. Other references concerning
approved by the relevant institutional shareholdersmeeting,so
investment decisions
it can be changed through a similar approval process)

Items
Capital erosion rate (%) =
[(Capital - Equity) / Capital
100]
Equity - Parent company or
the holding company, except
if they have non-controlling
interests;
Capital

Three years
ago

(Unit: KRW)

128,268,037,104

Two fiscal
years ago

157,246,082,013

Last fiscal year

168,412,366,835

[Loss from operations before income tax expense in the past three fiscal years]
(Unit: KRW)
Current period
Last period
Before Last period
Items
(Loss from continuing
operations before income tax
expense / capital)100(%)
Losses from continuing
operations before income tax
expense
Equity - when the parent
company or holding company
includes non-controlling
interests

Current fiscal
year

[Operating losses from the last four fiscal years]

Items
Operating losses (in
the case of the
Parent Company's
separate financial
statements, or in the
case of a holding
company
consolidated
financial statements)

[ 50% ]
50% (%) =
[
/ ]x100

[ ]

No

No

[Impairment loss ratio of 50% or higher if appropriate]

Whether an impairment loss ratios over 50%


impairment ratio (%) = [impairment losses incurred
in debt other than the fiscal year, accounts
receivable / equity capital ] x100
[Corruption issues]
A separate audit report on the individual and whether
embezzlement and breach of trust matters listed

(Unit : KRW)

(Unit: KRW)

14
2013 01 01
2013 12 31

13
2012 01 01
2012 12 31

Audit report for consolidated financial statements of Celltrion Pharm Co., Ltd.

14th period

to December 31, 2013

January 1, 2013

13th period
January 1, 2012
to December 31, 2012

2013 12 31 2012 12 31 2013 12 31 2012 12 31 ,


.

. .

2013 12 31 2012 12 31 2013 12 31 2012 12 31

. .
.

25,000 , 2012 12 " " CT-P06 9 . 25,000 2,760 20 1 1

32 2008 " "


CT-P06 , CT-P13 2,780 19,460 .

, "CT-P06 " "CT-P13 " 2010 CT-P06 13,000 , 2011 CT-P13 31,600 , 2012
CT-P13 CT-P1333,82 0 .

5.41% 20.96% .

, 50,000
50,000 .

51-7

2014 2 21

(2014 2 21 ) .

.

Legal Accounting
Audit report review by external auditors
Celltrion Pharm Co., Ltd.
Shareholders and Board of Directors

The auditors audited the financial position, annual profit and loss in the period, the Statement of Changes in equity and the Statement of Cash Flows of Celltrion Pharmacy Co., Ltd as of December 31, 2013 and as of December 31, 2012.

We conducted our auditing in accordance with auditing standards. The standards require that the auditors should plan and conduct corresponding auditing procedures in order to get a reasonable assurance that the there is no material misstatements in the

financial report. An auditing procedure includes examining audit evidences supporting the figures related to the financial report and disclosures enumerated in the financial statements. An auditing procedure also includes the analysis of the overall contents

of the financial statements and the analysis of the accounting principles adopted and accounting estimates in the administrative financial statements. We believe that the auditing procedures conducted by our audits shall provide reasonable assurance for audit
opinions.

The auditors believe that in accordance with the K-IFRS, the financial statements referred to above fairly presents, in all material respects, the financial position of Celltrion Pharmacy Co., Ltd. as of 31 December 2013 and its financial performance and cash
flows from December 31, 2012 to December 31, 2013.

In respect of the items with no influence upon audit opinions such as the one presented in the 32th note, the Company signed the Basic Contract of Dealership Grant with Healthcare Co., Ltd in 2008 and the long-term advance of 25,000 KRW MN was paid

to Celltrion Healthcare. In accordance with the revised Basic Contract of Dealership Grant signed in December 2012, the prices of 9 kinds of products including CT-P06 will be settled. The CT-P06 rented in 2011 deducted 2,760 KRW MN from the long-term
advance of 25,000 KRW MN. The CT-P13 purchased this year deducted 2,780 KRW MN from the long-term advance. The residual amount of the long-term advance stands at 19,460 KRW MN.

In addition, the Company purchased and possessed a safety stock of 13,000 KRW MN worth of CT-P06 in 2010 and another of 31,600 KRW MN worth of CT-P13 in 2011 based on the CT-P06 Product-Supply Contract, and the CT-P13 Product-Supply Contract.
With the popularization of CT-P13 in 2012, the Company purchased another 33,820 KRW MN worth of CT-P13.

As of December 31, 2010, the amount recognized in the long-term advance payments and inventory assets for sales right acquisition and purchase of goods amounts to 5.41% and 20.96% of the total assets at the end of the current period, respectively.

Meanwhile, Seo Jeongjin, the acting director and controlling shareholder of the Group, regards the 50,000 shares of registered common stock of Celltrion Holdings and 50,000 shares of registered common stock of Celltrion Healthcare as the guarantee of
long-term advance payment.
51-7 Banpo-dong, Seocho-gu, Seoul
LIAN Accounting Corporation
Acting Director Jun Geun Cho
Febuary 21, 2014

This report is effective as of Febuary 21, 2014, the audit report date. Certain significant events
occurring after the audit date, which may have a material impact on the financial report, could
have the audit report revised.

10


14() 2013 12 31
13() 2012 12 31

( : )

4,6,35
-

10,071,947,222

137,318,114,434

252,077,886

2,989,438,922

140,615,319,662

13()

4,7,35

6,577,607,180

29,789,826,809

14()

34,685,000,643

5,582,500,000

4,8,35
5,893,668,688

84,372,086,361

4,8,35
-

11,051,782,504

4,9,35

6,538,188,380

80,129,309,501

11

10,32

I.

4,8,35

7,301,905,855

1,305,760,032

4,300,795,955

222,669,692,080

114,870,320,814

7,301,905,855

1,503,033,255

1,261,472,705

189,460,464,245

4,9,35

144,860,958,371

II.

12

29

14,15

13,33,34

359,987,806,514

19,460,000,000

3,327,834,852

42,112,437,015

330,075,783,907

22,240,000,000

4,902,342,604

37,381,389,012

11,32

826,128,074

20,770,803,164

166,318,153,660

651,451,004

64,065,429,067

64,966,902,712

64,388,287,635
5,555,885,908

108,892,591,669

4,16,32,35

4,5,16,32,35

91,925,869

23,641,575,001

26,254,164,413

19,366,185,948

I.

4,5,17,35

165,570,483,063

4,17,35

693,792,951

140,293,814,081

192,572,318,073

5,917,091,480

13,664,661,400

136,634,536,646

173,859,494,381

II.

19

53,877,646

21

16,307,289,914

250,022,641

20

18

505,964,483

I.

22

II.

156,216,289,526

10,814,384,446

330,075,783,907

23

359,987,806,514

167,415,488,441

III.

11

21
22
23

4,17,35
19
20

4,5,16,32,35
4,16,32,35
4,5,17,35
18

4,8,35
4,9,35
12
13,33,34
14,15
29
11,32

4,6,35
4,7,35
4,8,35
4,8,35
4,9,35
10,32
11

Annotation

Financial Statements

26,254,164,413
826,128,074
5,555,885,908
19,366,185,948
505,964,483
166,318,153,660
165,570,483,063
693,792,951
53,877,646
192,572,318,073

137,318,114,434
10,071,947,222
34,685,000,643
5,893,668,688
80,129,309,501
6,538,188,380
222,669,692,080
4,300,795,955
1,305,760,032
7,301,905,855
144,860,958,371
42,112,437,015
3,327,834,852
19,460,000,000
359,987,806,514

136,634,536,646
13,664,661,400
5,917,091,480
156,216,289,526
330,075,783,907

108,892,591,669
64,388,287,635
20,770,803,164
23,641,575,001
91,925,869
64,966,902,712
64,065,429,067
651,451,004
250,0 22,641
173,859,494,381

140,615,319,662
2,989,438,922
252,077,886
29,789,826,809
6,577,607,180
5,582,500,000
84,372,086,361
11,051,782,504
189,460,464,245
1,261,472,705
1,503,033,255
7,301,905,855
114,870,320,814
37,381,389,012
4,902,342,604
22,240,000,000
330,075,783,907

(Unit: KRW)
The 13th period

140,293,814,081
16,307,289,914
10,814,384,446
167,415,488,441
359,987,806,514

The 14th period

Balance sheet
14th period (present), ending December 31, 2013 to present
13th period (before), ending December 31, 2012 to present
Company name: Celltrion Pharm Co., Ltd.
Items
Assets
I. Current Assets
Cash and cash equivalents
Financial institution Deposits
Accounts Receivable
Other receivables
Other financial assets
Inventories
Other current assets
II. Non-current assets
Other receivables
Other financial assets
Investment in subsidiaries
Tangible assets
Intangible assets
Deferred tax assets
Other non-current assets
Total assets
Liabilities
I. Current liabilities
Trades payable
Other debt payments
Short-term loans
Other current liabilities
II. Non-current liabilities
Long-term loans
Estimated liabilities
Retirement benefit liabilities
Total liabilities
Capital
I. paid-up capital
II. Retained earnings
III. Other capital
Total equity
Liabilities and Shareholders' Equity

Additional financial statements Notes Reference

12

I.
II.
III.


14() 2013 01 01 2013 12 31

( : )

31,223,558,555

13,484,037,607

44,707,596,162

13()

34,698,390,872

15,384,857,148

2,131,004,345

24,008,782,064

50,083,248,020

14()

13() 2012 01 01 2012 12 31

24,26,32

1,441,929,964

25,799,537,805

24,34

26,32

25,26,32

301,429,754

5,083,772,146

7,456,923,103

IV.

754,463,958

571,848,031

2,241,820,656

27

27,32

1,420,350,099

1,604,885,344

1,187,507,812

28

3,327,916,489

3,552,827,215

(608,560,038)

4,908,987,773

910,198,701

28,32

29

3,936,476,527

2,642,628,514

V.
VI.
VII.

3,936,476,527

VIII.

2,642,628,514

IX.

30

145

185

310

310

X.

13

Statement of comprehensive income


14th (current) period: 2013.1.1-2013.12.31
13th (previous) period: 2012.1.1-2012.12.31
Company name: Celltrion Pharmaceutical Co., Ltd.
(Unit: KRW)
14th period
50,083,248,020
31,223,558,555

13,484,037,607

44,707,596,162

13th period

15,384,857,148

Annotation

24,34
34,698,390,872

Items
24,26,32

I. Revenue
II. Selling costs

2,131,004,345

24,008,782,064

301,429,754

5,083,772,146

1,441,929,964
7,456,923,103
2,241,820,656

25,799,537,805

571,848,031

26,32

754,463,958
1,420,350,099

1,604,885,344

25,26,32

27

27,32

4,908,987,773

(608,560,038)

3,327,916,489

1,187,507,812

910,198,701

3,552,827,215

28

29

28,32

III. Gross profits


Selling and administrative
expenses
Ordinary development expenses
IV. Operating income
Operating profit
Other costs
Financial income
Financial expenses
V. Income before income taxes
VI. Income tax expense

3,936,476,527

2,642,628,514

3,936,476,527

VII. Net Income


VIII. Other comprehensive
income
Reclassification of profit or loss

2,642,628,514
30

Reclassified items related to


profit or loss
IX. Total comprehensive income

Basic earnings per share

145

185

310

310

X. Earnings per share

Diluted earnings per share

Appendix Notes to the Financial Statements

14


14() 2013 01 01 2013 12 31
13() 2012 01 01 2012 12 31
( : )

3,936,476,527

126,809,057,574

5,983,187,227

1,030,061,599

3,521,548,969

9,728,184,873

1,030,061,599

20,919,144,857

3,936,476,527
(1,096,157,346)

156,216,289,526

104,952,047,974

5,917,091,480

6,145,637,500

4,456,746,815

13,664,661,400

20,156,433,357

2012 1 1 ()


160,959,500

129,565,228,146


762,711,500

129,565,228,146 13,664,661,400

3,530,896,935

16,307,289,914

2,642,628,514

10,814,384,446

4,615,928,359

281,364,607

167,415,488,441

4,615,928,359

3,659,277,435

281,364,607

2,642,628,514

156,216,289,526

7,069,308,500

2012 12 31 ()

7,069,308,500

5,917,091,480

2013 1 1 ()


128,380,500
133,096,125,081

14() 2013 01 01 2013 12 31


13() 2012 01 01 2012 12 31

13()

( : )

7,197,689,000


2013 12 31 ()

14()

(1,782,726,172)

(5,541,000,792)

(66,251,315,857)

(70,873,447,760)

1. ( 31)

41,626,000
(3,341,960,849)

647,510,369

(1,105,450,140)

325,408,884

(78,423,194)

(4,869,117,593)

I.

2.
3.
4.
5.

49,250,111,892

5,378,358,596

41,698,047,229

(66,961,566,554)

5,541,414,400

9,889,574,267

2,122,685,095

(27,766,635,833)

1.

II.

15

Statement of changes in Equity


14th period (this):2013.1.1-2013.12.31
13th period (this):2012.1.1-2012.12.31
Company name: Celltrion Pharmaceutical Co., Ltd.
(Unit: KRW )

126,809,057,574

sum

5,983,187,227

Other capital

3,936,476,527
1,030,061,599

156,216,289,526

9,728,184,873

3,521,548,969

Retained earnings

1,030,061,599

5,917,091,480

156,216,289,526

104,952,047,974
3,936,476,527
(1,096,157,346)

Share issue premium

5,917,091,480

2,642,628,514
281,364,607

6,145,637,500
-

capital

4,456,746,815

13,664,661,400

Items

20,156,433,357

January 1, 2012 (pre-basic)


Total comprehensive income:

160,959,500

129,565,228,146
13,664,661,400

3,659,277,435

Net Income
Stock option Recognition
762,711,500

129,565,228,146

281,364,607

4,615,928,359

20,919,144,857

Execution of stock options

7,069,308,500

December 31st, 2012 (pre-basic)


7,069,308,500
2,642,628,514
-

Execution of conversion right

January 1, 2013 (based on per-)


-

4,615,928,359

Net Income
Stock option Recognition

Total comprehensive income:


-

167,415,488,441

16,307,289,914

10,814,384,446

3,530,896,935
133,096,125,081

7,197,689,000

128,380,500

Execution of conversion rights


Bonds with warrants
December 31, 2013 (December 31,
2010)

(1,782,726,172)

(5,541,000,792)

The 13th period

(66,251,315,857)

41,626,000

647,510,369

(70,873,447,760)

The 14th period

(Unit: KRW )

Appendix Notes for the Financial Statements


Statement of Cash Flow
14th period (present):2013.1.1-2013.12.31
13th period (before):2012.1.1-2012.12.31
Company name: Celltrion Pharmaceutical Co., Ltd.
Items

325,408,884

(3,341,960,849)

I. Cash flows from operating activities

2. Interest receivable

(1,105,450,140)

1. Cash from operating activities (31 comments)

3. Dividends received

(78,423,194)

(4,869,117,593)

5. Income tax paid

4. Interest payments

49,250,111,892

(66,961,566,554)

5,378,358,596

41,698,047,229

9,889,574,267
2,122,685,095

5,541,414,400

(27,766,635,833)

Reduction of financial institutions deposit

1. Cash inflows from investing activities

II. Cash flows from investing activities

Disposal of financial assets held for trading

16

1,818,182

121,045,755

743,796,491

1,119,375,000

10,000,000

2,071,561

1,460,747,328

143,599,906

554,358,833

(116,211,678,446)

2,928,439

238,237,500

1,145,154

(37,656,210,100)

5,376,100,498

37,760,618,906

5,283,620,520

2,528,000,000

56,690

389,692,282

277,617,440

2.

3,000,000,000

818,041,387

4,500,000

670,024,200

144,847,660

1,248,020,533

289,170,026

3,181,018,802

166,614,989

1,042,834,236

250,761,464

721,600

4,789,560

58,211,772,780

7,399,660,668

148,282,778

74,117,203,682

21,160,080,716

4,511,097,501

105,725,930,677

3,521,548,969

93,709,611,443

III.

180,303,892,184

50,000,000,000

40,188,062,474

1.

70,303,892,184

(19,592,407,761)

(74,577,961,507)

3,930,800

19,588,476,961

110,000,000,000

74,577,086,507

2.

875,000

V. ()

10,071,947,222

2,989,438,922

7,082,508,300

(3,338,784)

2,989,438,922

1,381,157,535

1,608,281,387

(6,354,949)

VI.

IV.

VII.

17

743,796,491

1,119,375,000
2,071,561

1,460,747,328

143,599,906

Disposal of available-for-sale financial assets


Decrease in short-term loans

554,358,833

10,000,000

(116,211,678,446)

1,818,182

121,045,755

238,237,500

(37,656,210,100)
5,376,100,498

37,760,618,906

2,928,439

5,283,620,520
2,528,000,000

1,145,154

Disposal of machinery
Vehicles disposal
Gonggigu disposal of equipment

2. Cash outflows from investing activities


-

56,690

Increase in financial institution deposits


-

Reduction of long-term loans

Acquisition of financial assets held for trading

389,692,282

Reduction of deposits

Increases in short-term loans


277,617,440

Increase in deposits
3,000,000,000

1,248,020,533

818,041,387

4,500,000

670,024,200

144,847,660

Long-term loan increases


Acquisition of property

289,170,026

3,181,018,802

Acquisition of the land


Acquisition of structures
166,614,989

250,761,464

58,211,772,780

1,042,834,236

148,282,778

21,160,080,716

Acquisition of machinery
Acquisition of equipment gonggigu
Acquisition of assets under construction
Acquisition of software

721,600

4,789,560
7,399,660,668

74,117,203,682

Acquisition of Industrial Property


4,511,097,501

105,725,930,677

3,521,548,969

93,709,611,443

Acquisition of memberships
Acquisition of R & D
III. Cash flow from financing activities
-

50,000,000,000

40,188,062,474

180,303,892,184
70,303,892,184

Execution of stock options

1. Cash inflows from financing activities


Increases in short-term loans

(19,592,407,761)

110,000,000,000
(74,577,961,507)

Increase in long-term loans


2. Cash outflows from financing activities

3,930,800
(6,354,949)

19,588,476,961

(3,338,784)

1,608,281,387

875,000

7,082,508,300

74,577,086,507

IV. Cash and cash equivalents effect on exchange


rate changes

1,381,157,535

Decrease in short-term loans

V. Cash and cash equivalents increase (decrease)

2,989,438,922

2,989,438,922

Execution of conversion right

VI. Cash and cash equivalents at the beginning of


this period

10,071,947,222

VII. Cash and cash equivalents at the end

Appendix Notes to the Financial Statements

18

1.

14() 2013 12 31
13() 2012 12 31

2000 11 17 2009 . ,
2009 .
2006 2 3 , 7,197,689 .

(%)

67.97

0.01

100.00

32.02

9,785,555

4,608,692

()

14,395,378

1,131

2.

.
.
(1)

1)
2013 1 1 .
. 1001 ' '

1001 ' ' .

. .

19

14th period (present):2013.1.1-2013.12.31


13th period (before):2012.1.1-2012.12.31

1. General situation of the company

Financial Statement Notes

The company was set up on November 17, 2000. It is mainly aimed at software development. After the mid-2009 merger with Hanseo Pharmaceutical Co., Ltd., the company vigorously developed production and sales of pharmaceutical products. In the middle
of 2009, the parent company changed the name from Codinus to Celltrion, and the head office address became Yeoksam-dong, Gangnam-gu, Seoul.

Ownership (%)

67.97

0.01
100.00

32.02

9,785,555

4,608,692

14,395,378

1,131

# of shares

The parent company was listed on the Korea Exchange KOSDAQ market on February 3, 2006. After that, the company acquired 7,197,689 KRW 000 as capital at the end of the period through several paid or unpaid capital increases or decreases.
So far, the status quo of main shareholders of the parent company is as follows.
Name of Shareholder
Celltrion
Treasury Stock
The total system

Etc

2.Significant accounting policies


Financial statements are prepared in accordance with K-IFRS. These policies have been consistently applied to all the years presented, unless otherwise stated.
Significant accounting policies applied in financial statements are as follows:
(1) Changes in accounting policies and disclosures
1) New and amended standards adopted by the Company.
The Company applied the following amended standards for the annual period beginning on January 1, 2013
(a). Amendment to K-IFRS 1001, Presentation of Financial Statements

K-IFRS 1001 Presentation of Financial Statements is amended to divide items presented as comprehensive income into two groups, based on whether they have already been recognized in profit or loss for the period. Amendments have an impact on
the presentation of financial statements but not on the Companys financial position and performance.
The Company applies the changes in the accounting policies for prior periods retroactively and adjusts the financial statements for prior periods retroactively.

20

. 1019 ''

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.
. 1028 ' '

, 1111 '' 1112 ' ' 1028 ' ' '

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21

(b). Amendment to K-IFRS 1019, Employee Benefits

The amendment requires entities to immediately recognize all actuarial gains and losses incurred in other comprehensive income or loss if laws concerning actuarial gains and losses are not applicable any more.
Also, all past service costs incurred from policy changes shall be immediately recognized, and the previous separate calculation of the interest cost and the expected returns on plan assets have been revised to calculate net interest expense (income) by
applying the discount rate used in the defined benefit obligation measurement in the net defined liabilities (assets). On the other hand, past service costs that are not filled, must be immediately recognized and those incurred from policy changes are
recognized as restricting costs or released pay. There is no material impact of the application of this amendment on the financial statements.
(c). Amendment to K -IFRS 1028, Investments in Associates and Joint Ventures

K-IFRS 1111 Joint Arrangements, K-IFRS 1112 Disclosure of Interests in Other Entities, and K-IFRS 1028 Investment in Associates and Joint Ventures are amended. The Standard regulates the associates and the joint ventures in accordance with the equity
method. In addition, venture capital investment institutions, mutual funds, unit trusts and similar enterprises do not apply this Standard. Exemptions are prescribed in accordance with the equity method. There is no material impact of the application of
this amendment on the financial statements.
(d). Amendment to K-IFRS 1107, Financial Instruments: Disclosures

The amendment requires the Company to disclose information about offsetting and related rights and commitments of financial assets and financial liabilities. In addition, the amendment requires the disclosure of offsetting
of financial products in statements of the financial position, regardless of whether collective agreements or similar commitments offset financial instruments. According to K-IFRS 1032, the Company has no financial instruments
that can be offset and has not signed related agreements. Therefore, the above amendment has no material impact on the financial statements.
(e). K-IFRS 1110, Consolidated Financial Statements

financial accounting standards


K-IFRS 1110 Consolidated Financial Statements replaces the consolidated financial statements in IFRS 1027 Consolidated and Separate Financial Statements, including IAS 2012 Special Purpose Companies as well. According to the Standard, investors
have dominance over investees when they have the right and are powerful enough to affect interests of investees. The Company judges that there is no material impact of the application of this amendment on the financial statements.
(f). K -IFRS 1111, Joint Agreements

K-IFRS 1111 Joint Agreements applies to all enterprises included in the joint agreement. The agreement is to gain joint control over the two parties. Joint agreements are classified into joint operations or joint ventures. Co-concessionaires recognize and measure
their assets and liabilities, following the relevant IFRS that are applicable to particular assets, liabilities, income and expenses. Joint ventures recognize and account for assets invested in accordance with K-IFRS 1028 Investments in Associates and Joint Ventures,
using the equity method. The Company judges that there is no material impact of the application of this amendment on the financial statements.

22

. 1112 ' '

1112 ' ' 1027 ' ', 1028 ' ' 1031 ' '

. , , ,
. .
. 1113 ''

1113 '' , .

1 113 , .

2013 1 1 .

- 1001 ' '


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- 1032 ': '
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.

23

(g). K-IFRS 1112, Disclosure of Interests in Other Entities

financial accounting standards

financial accounting standards


K-IFRS 1112 Disclosure of Interests in Other Entities is the combination of IFRS 1027 Consolidated and Separate Financial Statements, IFRS 1028 Investments in Associates and IFRS 1031 Interests in Joint Ventures.
This Standard provides disclosure requirements for subsidiaries, associates, joint ventures, special purpose entities and unconsolidated structural entities. The Company judges that there is no material impact of the application of this amendment on the
financial statements.

(i). K-IFRS 1113, Fair Value Measurement

This amendment provides a precise definition of fair value, and a single source of fair value measurement and disclosure requirements to improve the consistency and reduce the complexity in K-IFRS. K-IFRS 1113 does not require fair value measurement
required or permitted by other standards. Guidelines are needed if fair value measurement is required or permitted by other standards. The Company judges that there is no material impact of the application of this amendment on the financial statements.
(j). K-IFRS annual improvements

Annual improvements adopted by the Company for the financial year begi nning on January 1, 2013 are as follows. The Co mpany judges that there is no material impact of the application of this
amendment on the financial statements.
K-IFRS 1001, Financial Statements
K-IFRS 1016, Tangible Assets
K-IFRS 1032, Financial Instruments: Presentation

Published standards, interpretations and amendments not yet adopted

K-IFRS 1032, Interim Financial Reporting


2)

Publis hed s tandards, amendments and i nterpretati o ns iss ued but no t effective for the fi nancial year begi nni ng o n J anuary 1, 2013, witho ut earli er appli cati o n by the Co mpany, are as
foll ows:
Amendment to K -IFRS 1032, Financial Instruments: Presentation

This amendment reserves the legally enforceable right to offset financial assets and liabilities. Only when settling on a net basis or assets and liabilities are settled simultaneously can financial assets and liabilities be
offset. This amendment is effective for the annual period beginning on January 1, 2014, and the Company judges that there is no material impact of the application of this amendment on the financial statements.

24

(2)
1)

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2)
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3)
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(3)

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25

(2) Basis of Preparation


1) Accounting standards

The financial statements are based on Law 13.1.1 about external audits of limited companies adopting the Korean International Financial Reporting Standards (K-IFRS) designed by the International Accounting Standards Board.

Except for those stated in the accounting policies and financial instruments, financial statements are prepared on the basis of historical costs.

2) Measurement standard

3) Functional currency

(3) Investments in subsidiaries, related corporations and joint ventures in separate financial statements

Items included in the consolidated financial statements of each of the Companys entities are measured using the currency of the primary economic environment in which the entity operates except for those
specially noted.

The Companys financial statements are prepared in accordance with IFRS 1027 Separate Financial Statements. The Company prepares financial statements at cost on the basis of investment interests held by participants from the parent company, associates
or joint ventures rather than reported result and net assets of the investees. Dividends gained from subsidiaries, associates and joint ventures are recognized as current profits (losses) when the right to receive dividends is confirmed.

(4) Foreign currency translation


Upon initial recognition in the functional currency, a foreign-currency transaction shall be recorded by applying to the foreign-currency amount the spot exchange rate between the functional currency and the foreign currency on the date of the transaction.
the dates of the transactions. Nonmonetary items that are measured at fair value in foreign currencies shall be translated using the exchange rates on the dates when the fair values were determined.

At the end of each reporting period, foreign-currency monetary items shall be translated using the relevant closing rates. Nonmonetary items that are measured in terms of historical cost in foreign currencies shall be translated using the exchange rates on

Exchange differences arising from the settlement of monetary items or from translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized
as profits or losses in the period in which they arise. Under certain requirements, exchange differences applied for hedge accounting shall be recognized under other comprehensive income.
(5) Cash and cash equivalents

The Companys cash comprises cash on hand and demand deposits. For short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value are classified as cash
equivalents. Equity instruments are excluded from cash assets. But actual cash assets like shot-term preferred stocks between the acquisition date and the maturity with a fixed maturity are included in cash assets. In accordance with the requirements of
financial companies, bank overdrafts are also included in cash and cash equivalents.
(6)Financial instruments
1) Financial assets
Recognition and measurement

For financial assets that K-IFRS 1039 are applicable to, the Company only recognizes them when becoming a contracting party. Formal purchase and sale of financial assets are recognized on the trade date or settlement date. Financial assets are classified
as financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables, and available-for-sale financial assets, depending on their nature and purpose at initial recognition.

At initial recognition, financial assets are measured at fair value. For financial assets that are not carried at fair value through profit or loss, their initially recognized costs comprise transaction costs directly associated with the acquisition of financial
assets and fair value.

26

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.

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27

Financial assets at fair value through profit or loss

Held-to-maturity financial assets

Financial assets that are held for trading and are recognized at fair value at initial recognition are classified as financial assets at fair value through profits or losses. Transaction costs that are directly related to the acquisition at initial recognition are recognized
in current profit or loss. Financial assets at fair value through profits or losses are presented at fair value in the balance sheet. Profits and losses incurred from changes of fair value are recognized in profits or losses.

Held-to-maturity financial assets are non-derivative financial assets with fixed maturity and determinable payment amount. And the Company has the intention and capability to hold the assets to maturity. After the initial recognition, the assets are valued
at amortized cost using the effective interest method.
Loans and receivables

Non-derivative financial assets with fixed or determinable payment amounts and without quoted prices in an active market are classified as loans and receivables. After the initial recognition, the assets are valued at amortized cost using the effective interest
method.
Available-for-sale financial assets

For available-for-sale financial assets whose losses in fair value are recognized in other comprehensive income, when there is objective evidence that the losses exist, cumulative changes recognized in other comprehensive income should be transferred. If
not, they should be reclassified and transferred from capital reserves to current profit or loss. When impairments losses are confirmed and an increase in the fair value of available-for-sale debt instruments in subsequent accounting periods is objectively related
to some future events, it should be charged as current profits. When fair value is not equal to the acquisition cost (net amount of principal repayment deducting impairment loss), cumulative loss that is reclassified to current profit or loss, which is previously
recognized in current profit or loss, is recognized in charged amount.
Disposal of financial assets

Financial assets are disposed of under two circumstances. The first one happens when the possibility of future cash inflows terminates or the claim right to future cash inflows is transferred, which results in the transfer of most of the risks and rewards that
ownership posed to the Group's financial assets. Under the second circumstance, the Group cannot control the financial asset even though there has been no transfer of the risks and rewards that its ownership poses to the Groups financial assets.
Impairment losses on financial assets

At each reporting date, the Company assesses whether there is any objective evidence that financial assets (or group of financial assets) are impaired. After the initial recognition, if there is more than on objective evidence to prove the result, which could
be estimated to have impacts on the future cash flow of financial assets, the impairment losses for financial assets shall be recognized. Impairment losses for available-for-sale financial assets are recognized in their carrying amount.
The carrying amount of financial assets at amortized cost

When impairment losses occur to the carrying amount of loans, receivables and held-to-maturity financial assets, which are measured at amortized cost, and objective evidence exists, the impairment losses are measured at the initial effective interest
rate (effective interest rate at initial recognition). The estimation is based on the difference between the carrying amount and the present value of expected future cash flow. In this case, estimated bad debts that do not generate future cash flows shall
not be included in impairment losses. The impairments losses are directly charged against the book value of current assets or against the account allowance.

In later periods, the value of the impairment losses may decline. If the reduction is objective and related to incidents happening at the recognition of losses, the recognized impairment losses should be charged by adjusting the allowance. If the recovering
carrying amount is not recognized as initial impairment and does not exceed the previously recognized amortized cost, the charged amount should be recognized in current profits or losses.
Cost of carrying amount of financial assets

For financial assets whose carrying amount cannot be reliably measured at fair value, related financial products with fair value or derivative assets that must be settled by delivery of an equity instrument. If there are objective evidences of impairment,
impairment losses are measured at the current market rate of return and the estimate is based on the difference between the present value of cash flow and the carrying amount.

28

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.

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1018 ''

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29

. .

, .

Available-for-sale financial assets

For available-for-sale financial assets whose losses in fair value is recognized in other comprehensive income, when there is objective evidence that losses exist, cumulative changes recognized in other comprehensive income should be transferred. If not, they
should be reclassified and transferred from capital reserves to current profits or losses. When fair value is not equal to the acquisition cost (net amount of principal repayment deducting impairment losses), cumulative losses that are reclassified to current profits
or loss, which is previously recognized in current profits or losses, is recognized in the charged amount. When impairments losses are confirmed and an increase in the fair value of available-for-sale debt instruments in subsequent accounting periods is
objectively related to some future events, it should be charged as current profits.
2) Financial liabilities
Recognition and measurement

For financial liabilities that are applicable to K-IFRS 1039, the Group only recognizes them in balance sheets when becoming a contracting party. Financial liabilities are classified as financial assets at fair value through profit or loss and other financial liabilities,
depending on their nature and purpose at initial recognition.

Financial liabilities at fair value through profit or loss

At initial recognition, financial liabilities are measured at fair value. For financial liabilities that are not carried at fair value through profit or loss, the costs directly related to issuing are measured at fair value at initial recognition.

Financial liabilities that are held for trading and are recognized at fair value at initial recognition are classified as financial liabilities at fair value through profit or loss. Costs that are directly related to issuing at initial recognition are recognized in current profit
or loss. Financial liabilities at fair value through profits or losses are presented at fair value in balance sheets. Profits and losses incurred from changes of fair value are recognized in profit or loss.
Financial liabilities not carried at fair value through profit or loss
For financial liabilities that are not carried at fair value through profit or loss, except for the following bonds, are measured at amortized cost using the effective interest method after the initial
recognition.

As for financial liabilities generated from transferring financial assets that do not qualify for recognition or for the consistent-approach method, if the transferred assets are measured by their cost after depreciation, the carrying amount of asset-related liabilities
should be transferred using the cost after depreciation to measure related liabilities so as to let the transferees preserve their rights and take on responsibilities. If the transferred assets are measured by fair value, the carrying amount of asset-related liabilities
are transferred using their independently determined fair values to measure related liabilities so as to let the transferees preserve their rights and take on responsibilities.

Agreed loan prices are determined by financial guarantee (except for those financial liabilities that do not qualify for removal or continuing approaches are not applicable to) and a lower interest rate than the market interest rate. The Companys liabilities are
measured at the higher of the following amounts: amount calculated in accordance with K-IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets; or the initial amount, less accumulated amortization recognized in accordance with K-IFRS 1018,
Revenue.
(a).Removal of financial liabilities

If financial liabilities (or part of financial liabilities) are gone (namely cancellation or expiration of contractual obligations), they can be derecognized from the statements of financial position. When existing borrower and lender exchange debt instruments with
different conditions or the condition of existing financial liabilities (or part of financial liabilities) change, initial financial liabilities should be derecognized and new financial liabilities should be recognized. The difference between the carrying amount of financial
liabilities (or part of financial liabilities) that are gone or transferred to the third party and the payment are recognized in current profits or losses.
(b).Offset of financial assets by financial liabilities

The Company preserves the legal right to offset recognized financial assets with financial liabilities; when using net value to settle assets, if there are also liabilities to be settled, financial assets can be offset by financial liabilities and presented in balance sheets.
(c).Combined financial instruments

According to the nature of the contract, the Company classified combined financial instruments (including convertible bonds) and convertible bonds issued by the Company into financial liabilities and capital respectively. Entity options with fixed amount that
are settled through fixed amount of financial assets are equity instruments. The value of liability components are estimated at market interest rates, which is to be issued and applicable to ordinary bonds. If the amount changes due to conversion, until the
expiration or maturity of financial instruments, it is measured at amortized cost using effective interest method and is recognized as liability. The equity component is determined by the amount concerning tax effect, which results from deducting the fair value
of financial liabilities from the fair value of convertible bonds. This will not be remeasured subsequently. In addition, for options that are classified as equity (conversion right price, etc.), if they are left in equity when they are exercised, the options shall be
replaced by the amount of capital. Transaction costs incurred from issuing combined financial instruments are distributed to liability and capital components. Transaction costs that are directly related to capital components are recognized in capital directly.
For transaction costs that are related to liability components, the carrying amount of liability components is depreciated at the effective interest rate during the ownership of combined financial instruments.

30

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20

30

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31

(7) Inventory
The cost of inventories shall comprise all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present locations and conditions. The cost of inventories shall be assigned by using the first-in, first out (FIFO) formula.
Transit raw materials shall be assigned by using specific identification of their individual costs.

Inventories shall be measured using the lower cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Net
realizable value shall be evaluated in each subsequent period.

When inventories are sold, the carrying amount of those inventories shall be recognized as an expense in the period in which the related revenue is recognized. The amount of any write-downs of inventories to net realizable value and all losses of inventories
shall be recognized as expenses in the periods in which the write-downs or losses occur. The amount of any reversal of a write-down of inventories arising from an increase in net realizable value shall be recognized as a reduction in the amount of inventories
recognized as an expense in the period in which the reversal occurs.

(8) Tangible assets


Tangible assets are measured at cost upon initial recognition, after which cumulative depreciation costs and impairment losses are deducted from acquisition costs as reflected in book value.

The cost of tangible assets upon initial recognition shall comprise the acquisition costs after adding tariffs and nonrefundable taxes and deducting purchase discounts and tax refunds, adding related costs needed for operating the assets according to the will
of the management, deducting costs for asset liquidation, disposal and maintenance.

If inflows of future economic benefits generated from an asset are highly likely and its cost can be calculated, the after-cost is included in the assets book value or the asset is recognized as a special asset when appropriate. Costs generated from everyday
maintenance should be recognized as current profits or losses.

Useful life
30 years
20 years
515 years
5 years

Depreciation method
Straight-line depreciation
Straight-line depreciation
Straight-line depreciation
Straight-line depreciation

Land is not considered to depreciate in value; for other tangible assets, the following useful lives and depreciation methods are used to determine their depreciation.

Asset type
Buildings
Construction materials
Mechanical devices
Other tangible assets

For the part of cost that is related to the formation of tangible assets and significant to the total cost of tangible assets, depreciation should be calculated separately.

The depreciation methods used for tangible assets, their residual values, and their service lives are reviewed at the end of each reporting period..
When it comes to dealing with the book values of tangible assets, when future economic benefits cannot be expected, they are removed. Liabilities generated during disposal should be recognized as current profits or losses.
(9) Intangible assets
1) Recognition and measurement

An intangible asset shall be recognized if and only if (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and
(b) the cost of the asset can be measured reliably. After initial recognition, the cumulative value of depreciation and impairment losses is subtracted from the cost of the intangible asset and the result is treated as the book value of the intangible asset.
(a). Separate acquisition

The cost of a separately acquired intangible asset comprises (a) its purchase price, including import duties and nonrefundable purchase taxes, after the deduction of trade discounts and rebates and (b) any cost directly attributable to preparing the asset for
its intended use.

32

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33

(b). Goodwill

Goodwill is measured as the difference between (a) the aggregate of the consideration transferred, any non controlling interest in the acquired entity, and, in a business combination achieved in stages, the acquisition-date fair value of the acquirers previously
held equity interest in the acquired entity and (b) the net identifiable assets acquired.

(c). Goodwill acquired in a business


Separate from goodwill acquired in a business, the cost of an intangible asset is measured at fair value.
Internally generated intangible assets

Expenditures on research (or in the research phase of an internal project) shall be recognized as expenses when they are incurred. An intangible asset arising from development (or from the development phase of an internal project) shall be recognized if and
only if an entity can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or sale; its intention to complete the intangible asset and use or selling of it; its ability to use or sell the intangible
asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset; and its ability to measure reliably the
expenditures attributable to the intangible asset during its development. The cost of an internally generated intangible asset is the sum of expenditures incurred from the date when the intangible asset first meets the recognition criteria and needed costs directly
related to the creation of the asset, its manufacture, and its management according to the operators intention. Internally generated goodwill shall not be recognized as an asset.
2) Useful life and depreciation

For intangible assets with finite useful lives, depreciation shall begin when the asset is available for use and the straight-line method will be used to determine its residual value over its useful life. Depreciable amount is the cost of an asset less its residual value.
When the asset is at the end of its useful life, the residual value is determined by a commitment by a third party to purchase the asset or by the active market for the intangible asset. If no such active market exists at the end of its useful life, the residual value
shall be assumed to be zero. The depreciation period and the depreciation method for an intangible asset with a finite useful life shall be reviewed at the end of each financial year. If changes are needed, such changes shall be accounted for as changes in
accounting estimates.

intangible assets are as follows.


Useful life
Depreciation method
Indefinite
Indefinite
5 years
Straight-line method

An intangible asset with an indefinite useful life shall not be amortized. At the end of each financial year or whenever there is an indication that the intangible asset may be impaired, a test for asset impairment comparing its recoverable amount with its carrying
amount is required. The indefinite useful life of an intangible asset shall be reviewed at the end of each financial year. If changes are needed, such changes shall be accounted for as changes in accounting estimates.

Useful life and depreciation methods of


Asset type
Goodwill
Membership
Other intangible assets

3) Disposal of intangible assets

If there will be no future economic profit arising from using or disposing of an intangible asset, it shall be eliminated from the statement of financial position. Any profit or loss arising from the disposal of the intangible asset shall be determined by the difference
between the net sales price and the carrying amount and shall be recognized as a profit or loss in the period in which the disposal occurs.

34

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35

(10) Impairment of assets

For all assets, except inventories, assets arising from construction contracts, deferred tax assets, assets arising from employee benefits, financial assets, investment properties measured at fair value, and noncurrent assets held for sale, impairment losses should
be recognized in the following ways.

Whenever there is any indication of impairment for an intangible asset with an indefinite useful life, an intangible asset not yet available for use, or goodwill acquired in a business combination, impairment should be tested annually by comparing the carrying
amount with the recoverable amount. An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount shall be estimated for the individual asset.
If it is not possible to estimate the recoverable amount of the individual asset, the entity shall determine the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its
recoverable amount. The impairment loss shall be recognized immediately in profit or loss.

For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirers cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies
of the combination. The impairment test for a cash-generating unit to which goodwill has been allocated shall be performed annually or whenever there are indications of impairment by comparing the carrying amount with the recoverable amount. If the
recoverable amount is less than the carrying amount, an impairment loss shall be recognized. An impairment loss for a cash-generating unit shall be recognized in the following order. Firstly, decrease the book value of the cash-generating unit which is allocated
the impairment loss of goodwill. Secondly, decrease the book value of other assets on a pro rated basis.

An entity shall assess at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity
shall estimate the recoverable amount of that asset. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount
since the last impairment loss was recognized. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount (net of amortization or depreciation) when the impairment loss
had not been recognized for the asset in prior years. A reversal of an impairment loss for an asset other than goodwill shall be recognized immediately in profit or loss. A reversal of an impairment loss for a cash-generating unit shall be allocated to the assets
of the unit, except for goodwill, pro rata with the carrying amounts of those assets. An impairment loss recognized for goodwill shall not be reversed in a subsequent period.

(11) Borrowing cost

Borrowing costs that are directly attributable to the ajcquisition, construction or production of a qualifying asset shall be capitalized as part of the cost of that asset.
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Other borrowing costs are recognized as an expense during the period in which they occur.

To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing less any investment
income on the temporary investment of those borrowings. To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalization by applying
a capitalization rate to the expenditures on that asset. The capitalization rate shall be the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period, other than borrowings made specifically for
the purpose of obtaining a qualifying asset. The amount of borrowings costs that an entity capitalizes during a period shall not exceed the amount of borrowing costs it incurred during that period.
(12) Government grant

Government grants shall not be recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Income arising from government loans that are received below market interest
rates shall be recognized in government grants.

Grants related to income shall be recognized in income on a systematic basis over the periods in which the grants are intended to compensate for the related costs. Grants related to assets shall be used to deduct the depreciation of the asset (valued at carrying
amount) and are recognized as current loss or profits.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs shall be recognized in profit or loss of the period in which
it becomes receivable. A government grant may take the form of a transfer of a non-monetary asset. In these circumstances, the fair value of the non-monetary asset shall be accessed. Both grant and asset shall be accounted for at that fair value.
A government grant that requires repayment in the future shall be recognized based on changes in accounting estimate.

36

(13)
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37

(13) Equipment leasing

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
1) Finance leasing

At the commencement of the lease term, finance leases as assets and liabilities shall be recognized at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of
the lease. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. Any initial direct costs are added to the amount recognized as an asset.

Minimum lease payments shall be apportioned between the finance charge and the reduction of the outstanding liability. The finance charge shall be allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability. Contingent rents shall be charged as expenses in the periods in which they are incurred.
2) Operating leases

Lease payments under an operating lease shall be recognized as an expense on a straight-line basis over the lease term. All incentives created by new policy or renewed operating lease contracts shall be deducted from lease payments on a straight-line basis
over the lease term. The result shall be recognized as a comprehensive income.

(14) Provision
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, provisions should be recognized.

Expected gains from the disposal there of


The amount recognized as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Inevitable risk and uncertainty of related events and conditions are considered to measure the best
estimate. If the effect of time value of money is more important, the amount estimated as provisions required to settle the obligation is being assessed. Discount rate is an interest rate reflecting the current market assessment related to the risks of liabilities
and to time value of money. The risks reflected by discount rate are not included in the risks of future cash flow measurement. If the expenditure required to settle the present obligation will be affected by the occurrence of some future event, which is proved
by sufficient objective evidences, the future event shall be taken into account of the measurement of the amount of provision. Expected gains from the disposal of assets are not taken into account of the provisional measurement.

If part of or all of the expenditure expected to settle the provision shall be transferred to a third party to offset the liability, the amount of offset shall be recognized and accounted as other assets only to the extent that Group will be certain to receive the offset
by obligation settlement. The amount recognized as assets shall not exceed the amount of provision.

Residual value shall be discussed and the present best estimate shall be reflected and adjusted at the end of the reporting period. If the possibility of an outflow of assets embodying economic benefits required to settle the obligation is not high, related provisions
could be reduced. Provisions shall only refer to the expenditure related to the initial recognition.

(15) Common stock


If the entity reacquires its own equity instruments, those instruments are recognized as treasury stock and shall be deducted from equity. No gain or loss shall be recognized in profit or loss on the purchase, sale, issue or cancellation of an entitys own equity
instruments. Consideration paid or received shall be recognized directly in equity.
(16) Short for Share-based Payment

Goods or services received in the share-based payment transactions shall be recognized on the reception day. The goods and services received from equity-settled share-based payment transactions shall be recognized as the corresponding increase in capital.
The goods or services received from cash-settled share-based payment transactions shall be recognized as the corresponding increase in liabilities. The goods and services received from share-based payment transactions shall be recognized as expenses if they
fail to satisfy the conditions of being recognized as assets.
1) Equity-settled share-based payment transactions

38

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39

During a share-based payment transactions in which Group receives good or services as consideration for equity instruments of the entity (including shares and share options), or in which the entity fails to fulfill the obligation to settle the transaction after
receiving goods or services, the entity shall measure the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received. If the entity cannot estimate reliably the fair value of the goods or services
received, the entity is required to measure the goods or services received and the corresponding increase in equity, indirectly, at the fair value of the equity instruments granted. If only services acquired in specific period are as consideration for equity
instruments granted, services corresponding to equity instruments shall be distributed in the vesting period and recognized as the increase of equity.

Vesting conditions, other than market conditions, are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount. Ultimately, the amount recognized for goods or services received as consideration
for the equity instruments granted is based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, the number of equity instruments granted shall be renewed if the equity instruments granted do not vest because of failure
to satisfy a vesting condition. The fair value of equity instruments granted shall be based on market prices.

Apart from the deficiency of vesting conditions (other than market conditions) and the failure of equity instruments granted, whether to change the granting conditions of equity instruments is not associative with whether to cancel or to liquidate the equity
instruments. The services received shall be measured at the fair value estimated by the smallest equity instrument on the measurement date. The change shall be recognized if the conditions are changed to be beneficial for employees by increasing the fair
value of the equity payment agreement.

If the equity instruments granted are canceled or liquidated during the vesting period, these equity instruments shall be recognized as vesting ahead. Conversely, recognizing the amount of services received in the rest of the vesting period at present. The amount
paid for employees during cancellation or liquidation shall be recognized as a repurchase of equity instruments and a reduction in the amount of repurchasing, and recognized in expenses during the period.
2) Cash-settled share-based payment

The entity acquires goods or services by incurring cash or liabilities to the supplier of those goods or services for amounts that are based on the price (or value) of the entitys equity instruments (share or share options). For cash-settled share-based payment
transactions, the entity is required to measure the goods or services acquired and the liability incurred at the fair value of the liability at each reporting date. Until the liability is settled, the entity is required to re-measure the fair value of the liability at each
reporting date and at the date of settlement, with any changes in value recognized in profits or losses for the period. The services acquired by employees and incurred liability shall be recognized during the working period.

Sale of goods

(17) Revenue
Revenue shall be measured at the fair value of the consideration received or receivable taking into account the amount of any discounts and volume rebates allowed by the entity.
1)

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 effective control over the goods sold. The
amount of revenue can be measured reliably. It is probable that the economic benefits associated with the transaction will flow to the entity. And the costs incurred or to be incurred in respect to the transaction can be measured reliably.
2) Lease income
Lease income shall be recognized over the lease period on an accrual basis.

3) Interest i ncome, dividend income


It is probable that the economic benefits associated with interest received from transferring assets to others and dividends received from associated economic transactions will flow to the entity. The revenue shall be recognized if the amount can be measured
reliably. Interest shall be recognized using the effective interest method. Dividends shall be recognized when the shareholders right to receive payment is established.

Short-term employee benefits

(18) E mployee benefits


1)

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41

Short-term employee benefits are non-currency salary, salary, social security contributions during the 12 months from the beginning of accounting cycle. Short-term vacations such as annual paid vacation and sick leave during the 12 months from the beginning
of accounting period are taken into consideration. When the employees are providing services, in exchange for other services, the company recognizes payable amounts as payable expenses after deducting the paid amount; when the paid amount is larger
than payable amount, the company decrease the future payable amount or recognize it as payable expenses according to the amount that can be discounted as cash. Some salaries are recognized as costs according to K-IFRS, and other salaries are recognized
as expenses.

2) Retirement benefits
The retirement benefits system applies to the company. As for retirement benefit system, we pay a certain amount of money to other party (fund). The companys legal obligation and constructive obligation are limited to the agreed-upon amount with the fund.
The amount of retirement benefit is determined according to the retirement benefit system established according to the contribution as well as its interests from the employees and the insurance company.

During a certain period, employees provide services and pay a certain amount of obligatory contributions according to retirement benefit system; deduct already-paid amounts and we get accrued expenses. The part of already-paid contributions that exceed
previous obligatory amounts will be deducted as cash rebate from future contributions, and be recognized as prepaid expenses. Contributions should be recognized as expenses except when we include contributions in cost of assets according to K-IFRS.
On the other hand, the company has set accrued severance benefits for the employees working for the company for less than one year and do not qualify for retirement benefits.

(19) Income tax


Income tax expense (income) consists of current income tax expense (income) and deferred tax expenses (income). Current income tax and deferred tax are recognized as expense or income, and they are included in current profits or losses. During the same
or different accounting period, current taxes or deferred taxes related to the increase or decrease of assets should be deducted from assets.

1) Current income tax


Current income tax is the tax related to taxable income (receive refunds) paid during the current accounting period. Taxable income (tax loss) is charged with income taxes in accordance with the laws and regulations enacted (receive refunds). It is different
from the profit and loss recorded in the comprehensive income statement as profit (loss). Current income tax liabilities (assets) of current and prior periods shall be measured at the amount expected to be paid to (recovered from) the taxation authorities, using
the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Current tax for current and prior periods shall, to the extent unpaid, to be recognized as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset. The
part of deducted tax of current income tax of each accounting period that can be deducted from tax loss shall be recognized as assets.

2) Deferred income tax


The company recognizes all deductible temporary differences as deferred income tax. However, deferred income tax from the following situations is not recognized as liabilities: a) it is initially recognized as goodwill; b) the assets and liabilities are not from
business transactions, and do not affect the accounting income or taxable income (tax loss) of investment assets of branches and associates; c) it is related to joint venture stock investment, and the investors and participants of the company can control it;
d) in the foreseeable future, it is of high possibility not to reverse.

The initially recognized goodwill generated during business combination, as well as other transactions, if the transaction doesnt affect the accounting profit or payable income tax, we dont recognize the temporary differences between the initially recognized
assets and liabilities and tax base as deferred income tax liabilities. Deductible temporary difference related to joint venture share right investment with low possibility to reverse in foreseeable future, and temporary differences with low possibility to generate
companys taxable income tax should not be recognized as deferred income tax assets. If unused deductible tax losses and tax credits can be used to deduct future taxes, we recognized unused tax losses carried forward and tax credits as deferred income
tax assets.

We review the carrying value of deferred income tax assets at the end of each reporting period. When there is low possibility that part of or the whole of deferred income tax assets are taxable, we deduct the carrying value of deferred income tax; when there
is high possibility that the deducted amount of taxable income will increase, we write them down. Until the end of each reporting period, during the accounting period of the realization of related assets and liabilities, we use the proper tax rate to calculate deferred
income tax assets and liabilities according to substantially enacted tax rates (and tax laws). Deferred income tax assets and liabilities cannot be discounted.
The company has the right to offset current income tax assets and liabilities. We can offset income tax assets and liabilities according to tax law.

42

(20)
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43

(20) Earnings per share

An entity shall present in the statement of comprehensive income basic and diluted earnings per share for profit or loss from continuing operations and current profit or loss attributable to the ordinary equity holders for the purpose of calculations.
1) Basic Earnings Per Share
Basic earnings per share shall be calculated by dividing current net profits of ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. The amounts of basic earnings per share shall be the amounts in profit
or loss from continuing operations and current profit or loss, adjusted for the after-tax amounts of preference dividends, differences arising on the settlement of preference shares, and other similar effects.
2) Diluted earnings per share
For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss and the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary.

3. Critical accounting estimates and judgments


When preparing and consolidating financial statements, management must judge and estimate the influence of the carrying amount of the assets, liabilities, profit, expenses and contingent liabilities applicable to accounting policies. At the end of reporting period,
the estimates will be realized according to the best estimates of management team; further researches will be done on the estimates and related judgments, and the results might be vastly different.

Disclosures of the application process of accounting policies, in particular, judgments and future assumptions made by the management team that could have apparent influence on consolidated financial statements, and uncertainty of important adjustments
that are related could affect the book value of assets and liabilities of the next accounting period are as follows.

(1)Deferred income tax


Deferred income tax assets and liabilities are calculated in accordance with the tax rate formulated at the end of the accounting period, or with the expected tax rate during the accounting period. The book value of deferred income tax assets is confirmed by
the expectation of a tax deduction. The expected tax may not be exactly the same as the amount of income tax actually delivered in the future.
(2) Goodwill impairment

In order to determine whether the goodwill is impaired, we need to deduce the present value of the cash-generating unit allocating the goodwill. We need to formulate the discount rate, which is based on the expected and present values of the future cash
flow produced from the cash-generating unit.
(3) Fair value of financial instruments

If the financial product is not marketable, we will use the evaluation method to appraise it. There are several evaluation methods, such as using recent transactions with parties equipped with reasonable judgment and trading consciousness, referring to the
fair value of other financial products which are essentially the same, the cash flow discount method, options pricing model and so on. With the group company periodically adjusting evaluation method, we use the observable market transaction price and base
our deductions on the observable market information to assess the appropriateness of the methods and above evaluation hypothesis.
(4) Provisions
The company recognizes the expected value of sales returns in liabilities. This kind of liability is predicted based on the past experience rate.

44

10,071,947
34,685,001
10,194,465
54,951,413

4.
(1)

(2)

(3)
1)

1,305,760
1,305,760

826,128
5,555,886
184,936,669
191,318,683

10,071,947
34,685,001
10,194,465
1,305,760
56,257,173

826,128
5,555,886
184,936,669
191,318,683

2,989,439
252,078
29,789,827
7,839,080
40,870,424

1,503,033
1,503,033

64,388,288
20,770,803
87,707,004
172,866,095

5,582,500
5,582,500

( : )

2,989,439
252,078
29,789,827
7,839,080
7,085,533
47,955,957

( : )

64,388,288
20,770,803
87,707,004
172,866,095

, ()

( )

45

4. T h e f a i r v a l u e a n d c l a s s i f i c a t i o n o f f i n a n c i a l i n s t r u m e n t s

Current period

10,071,947

7,839,080

29,789,827

252,078

2,989,439

5,582,500

5,582,500

1,503,033

1,503,033

47,955,957

7,085,533

7,839,080

29,789,827

252,078

2,989,439

sum

34,685,001

Loans
and
Receiva
bles

10,194,465

40,870,424

sum

10,071,947
-

1,305,760

Financial
assets
Available
-for-sale

56,257,173

Financial
assets
Taking
the fair
value into
the
current
profit and
loss

34,685,001
-

1,305,760

1,305,760

Last period
Financia
l assets
Takin
Financial
g the
assets
fair
value
Available-f
or-sale
into the
current
profit
and
loss

10,194,465

(Unit:KRW 000)

20,770,803

64,388,288

sum

64,388,288

Financial
liabilities
Measured at
amortized
cost

Last period

sum

54,951,413

Loans
and
Receiva
bles

(1) Classification of financial assets

Items

Cash and cash


equivalents
Financial
institution
Deposits
Accounts
Receivable
Other
receivables
Other financial
assets
sum

Current period
Financial
liabilities
Measured at
amortized
cost

20,770,803

Financial
liabilities
Taking the
fair value into
the current
profit and
loss
-

826,128

5,555,886

826,128

5,555,886

87,707,004
172,866,095

184,936,669
191,318,683

87,707,004
172,866,095

184,936,669
191,318,683

Financial
liabilities
Taking the
fair value into
the current
profit and
loss

(2) Classification of financial liabilities

Items

Trades payable
Other debt
payments
Loans
sum
(3) Financial instruments measured by fair value

level 1

directly or indirectly observable input variables of assets or liabilities

the market price of the same assets or liabilities on active market

Significance of inputs

1) Fair value hierarchy


For financial instruments and input variables measured at fair values, the fair value hierarchy is classified as follows.

level 2

input variables of assets or liabilities not based on observable commercial information(unobservable


input variables)

Items

level 3

46

2)

. , , , ,

, .

. 1 . 1 KOSPI , KOSDAQ
.

. .

1,305,760

1,305,760

( : )

1,305,760

1,503,033

3 .

, 2 .

.
-

-
-
3)

. .
<>

<>

( : )

1,503,033

5,582,500

5,582,500

5,582,500

1,503,033

5,582,500

7,085,533

1,503,033

7,085,533

47

1) Assessment methods and assumptions applicable to fair value


Financial instruments at fair value traded in the active market are measured based on the market price at the end of the reporting period. If the company can regularly and easily get quotes from the exchange, sellers, intermediaries, industry associations,
rating agencies or supervision departments and others, and the quotes represent market transactions under normal circumstances, it means that the financial instruments have quotes on an active market. The public market prices of financial assets held
by the listed company look to the purchase price. Such financial instruments are included in hierarchy level 1. Financial instruments concerned with hierarchy level 1 are mostly short term investments and listed equity investments belonging to KOSPI
KOSDAQ in financial assets available for sale.

For the fair values of financial assets which are not traded on an active market, their values are decided by valuation techniques. Such valuation techniques maximize the use of observable market information and minimize the use of firm-specific
information. At this time, if all significant input variables of financial instruments measured at fair values can be observed, the relevant financial instruments will be included.
If one or more important input value based on market data are unobservable, the relevant financial instruments will be included in hierarchy level 3.
The valuation techniques used to measure the fair value of financial instruments are as follows.
Published market prices or dealer price of similar products
The fair values of interest rate swaps are measured using the present value of estimated future cash flows based on the observable yield curves

Carrying amount

1,305,760

Subtotal

1,305,760

level1

Fair value

level2

(Unit:KRW 000)

level3

1,305,760

(Unit:KRW 000)

level3

1,503,033

level2

5,582,500

1,503,033

Fair value

5,582,500

level1

5,582,500

1,503,033

5,582,500

Subtotal

1,503,033

7,085,533

Carrying amount

7,085,533

The fair values of forward exchange are measured using the forward rate at the end of the reporting period to discount relevant amounts into present value.
The fair values of other financial instruments are measured using other techniques such as discounted cash flow technique.
2) Different hierarchies of the fair value

Items

A. Fair value hierarchy classifications of the financial instruments that are measured at fair value are
as follows.
The end of the current period

Assets

Items

available-for-sale financial
assets

Assets
Financial assetsTaking the fair
value into the current profit and
loss
Available-for-sale financial
assets
sum

48


1,503,033

97,943

. 3 .

4)

295,216

( : )
1,305,760

( : )

15,706,691

14,065,429

11,870,936
-

11,373,580
54,201,297

54,196,903

( : )

.
(4)

<>

( 2)

414,489

( 1)

(24,555)

824,159

(3,459,815)

83,625

(3,459,815)

355,419

(2,221,167)

(24,555)

(1,443,639)

824,159

(1,443,639)

(2,552,031)

2,195

2,195

(2,314)

(2,314)

355,419

() + () + ()

(1,443,520)

() + ()

(1,443,520)

( 1)

( 2)

49

97,943

Acquisition
295,216

Disposal

B. Changes in fair values that are recognized in hierarchy 3 during the current period are as follows:

Foundation
1,503,033

1,305,760

(Unit:KRW 000)
Current period

Last period

(Unit:KRW 000)

The book values and carrying amounts of financial instruments which are not measured at fair value in the subsequent periods

Items
Financial
assets
Available-for-sale
1)

Current period

14,065,429
-

15,706,691

Fair value

11,870,936

Carrying amount

54,201,297

Fair value

11,373,580

Carrying amount

54,196,903

Items

Convertible bonds

Borrowings

Bonds With Warrants

Management has determined that, except for the items disclosed in the table above, the carrying amounts of financial assets and financial liabilities valued at amortized cost are similar to the fair values recognized
in the financial statements.
(4) Net profits or losses for different financial instruments
Current period

(2,552,031)

824,159

(3,459,815)

83,625

(24,555)

(24,555)

(2,221,167)

824,159

(3,459,815)

414,489

Sum

(Unit:KRW 000)

Valuation (week 2)

355,419

(1,443,639)

Trading profit (week1)

2,195

(1,443,639)

Dividend Income

355,419

(2,314)

2,195

Interest income

(2,314)

Items

(1,443,520)

Financial assets

(1,443,520)

Loans and receivables

Financial liabilities measured at


amortized cost

Financial liabilitiesTaking the fair


value into the current profit and loss

Financial liabilities

Sum

Available-for-sale financial assets

Financial assets Taking the fair value


into the current profit and loss

Sum

(Note 2) Foreign currency translation gains (losses) + financial assets gains (losses)

(Note 1) Foreign exchange gains (losses) + trading profit (loss) + financial asset impairment losses (reversals)

50

<>

( 2)

( : )

320,197

( 1)

201,563

(107,523)

271,924

(109,410)
391,570

(231,633)

537,130
41,626

(819,818)

793,684

(819,818)

67,346

284,047

67,346

271,924

(69,119)

41,626

(887,164)

537,130

(887,164)

5.

.
.

( : )

944,300

1,563,064

552,264

6,093,779

( : )

2,507,364

6,646,043

6.

672,696

2,316,743

8,816,140

1,255,807

2,989,439

10,071,947

51

537,130

41,626

(69,119)

271,924

(231,633)

(109,410)

Trading profit ( Note 1)

284,047

391,570

(107,523)

Valuation ( Note

(819,818)

793,684

271,924

201,563

320,197

Last period

41,626

67,346

(819,818)

Loans and receivables


Financial assets (taking the
fair value into the current profit
and loss

Sum

Available-for-sale financial
assets

Financial liabilities

Sum

537,130

67,346

Dividend Income

Sum

Interest income

(887,164)
-

Items

Financial liabilities (taking the


fair value into the current profit
and loss

(887,164)

Financial assets

Financial liabilities measured at


amortized cost

5. Transfer of financial assets

The Company has collected accounts receivable by transferring some of the account receivables to others or by giving discounts. When recovering at the end of current period, accounts receivable that are transferable or discounted with recourse are
not removed from the balance sheet, but recognized in short-term borrowing and account payables.

Last period

(Unit:KRW 000)

Details of discounting of financial institutions and endorsement of other customers in unfulfilled due accounts receivable are as follows.

Current period

944,300

1,563,064

Items

552,264

6,093,779

2,507,364

(Unit:KRW 000)

2,989,439

672,696

2,316,743
1,255,807

Last period

10,071,947

8,816,140

6,646,043

Trade receivable discounts

Current period

Trade receivable endorsements


Sum
6.Cash and cash equivalents
Details of cash and cash equivalents are as follows.

Items
Savings Account
Foreign Currency Savings
Sum

52

7.

8.

37,308,106

(2,623,105)

252,078

( : )

( : )

34,685,001

30,989,391

(1,199,564)

29,789,827

36,367,434

6,577,607

78,126

29,006
78,126

(6,354,228)

(5,154,664)

6,470,475

11,732,271

(616,989)
108,136

42,721,662

(5,261)

1,261,472

1,261,472

(4,537,675)

5,893,669

(147,524)

1,261,472

645,995

40,578,670

5,261

(152,785)

37,628,906

11,008,150

(5,000,507)

1,408,996

(152,785)

2,795

108,136

(7,623,612)

2,999,943

1,414,257

(6,507,013)

5,782,738

10,894,176

1,300,852

1,414,257

(518,891)

48,202,282

(100,671)

4,300,795

44,135,919

(4,481,616)

100,671

(147,524)

4,300,795

521,686

2,999,943

(248,195)

44,879,465

10,264,354

1,448,376

(248,195)

4,548,990

(7,871,807)

4,548,990

52,751,272

(1) .

53

Regular stored Fund

Items

7. Deposits in financial institutions


Details of financial institution deposits are as follows.

Flow

Current period

Current period

(Unit:KRW 000)

Total debt

252,078

Last period

(Unit: KRW 000)

Carrying amount

Last period
Carrying amount
29,789,827

Total debt

(1,199,564)

reserve for bad


debt

78,126

30,989,391

6,577,607

34,685,001

36,367,434

(2,623,105)

reserve for bad


debt

37,308,106

78,126

(6,354,228)

(5,154,664)

29,006

108,136

42,721,662

11,732,271

(5,261)

1,261,472

1,261,472

6,470,475

5,893,669

(147,524)

1,261,472

(616,989)

40,578,670

5,261

(152,785)

37,628,906

(4,537,675)

1,408,996

(152,785)

645,995

(5,000,507)

2,999,943

1,414,257

(6,507,013)

11,008,150

108,136

(7,623,612)

1,300,852

1,414,257

2,795

48,202,282

10,894,176

(100,671)

4,300,795

44,135,919

5,782,738

Accrued income

100,671

(147,524)

4,300,795

(518,891)

Subtotal

2,999,943

(248,195)

44,879,465

(4,481,616)

Sum

1,448,376

(248,195)

521,686

Dishonored bill

4,548,990

(7,871,807)

10,264,354

Long-term loans

4,548,990

Other receivables

Deposit
Subtotal

52,751,272

Accounts receivable

loans

Other receivables

Accounts Receivable

Items

(1) Details of account receivables and other receivables are as follows.

8. Account receivables and other receivables

Current

Non-curr
ent

Sum
Sum

54

( : )

2,554

1,146,245

19,568,037

2,359,993

2,359,993

9,400,260

7,721,470

2,370,447

93,947

2,276,500

5,351,023

100,671

7,989,534

5,000,748

519,132

4,481,616

2,988,786

1,448,376

2,999,943

100,671

48,202,282

10,894,176

108,136

521,686

10,264,354

37,308,106

14,189

11,760,253

1,162,988

669,922

6 ~
1

20,731,025

748,454

2,999,943

3 ~
6

30,000

3,748,397

3,748,397

770,593

770,593

4,548,990

4,548,990

52,751,272

8,760,127

30,000

11,469,867

30,000

11,760,253

20,761,025

( : )

6,979,912

70,336

2,457,700

3,797,988

10,071,127

9,167,439

616,989

8,550,450

903,688

42,721,662

11,732,271

78,126

645,995

11,008,150

30,989,39

19,307,803

2,528,036

3,731

6,326,024

6 ~
1

29,006

3,731

3 ~
6

4,059

6,983,643

33,065

19,340,868

(2) .
<>

<>

55

(Unit:KRW 000)

14,189

2,554

1,146,245

19,568,037

2,359,993

2,359,993

9,400,260

7,721,470

2,370,447

93,947

2,276,500

5,351,023

100,671

7,989,534

5,000,748

519,132

4,481,616

2,988,786

1,448,376

2,999,943

100,671

48,202,282

10,894,176

108,136

521,686

10,264,354

37,308,106

Sum

1,162,988
11,760,253

669,922

More than 1
year

20,731,025

748,454

2,999,943

6 months ~
1 year

Accrued income

3 ~
6months

Subtotal

3 months or less

Dishonored bills

30,000

Sum

Subtotal
30,000

30,000

11,760,253

11,469,867

3,748,397

3,748,397

8,760,127

770,593

770,593

4,548,99

4,548,990

52,751,272

20,761,025

Deposits

Other receivables

Sum

Accounts
receivable

Loans

Other receivables

Long-term loans

Accounts
Receivable

Items

(2) Aging of account receivables and other receivables are as follows.


The end of current period

Current

Non-curr
ent

Sum

(Unit:KRW 000)

6,979,912

2,457,700

3,797,988

9,167,439

616,989

8,550,450

903,688

42,721,662

11,732,271

78,126

645,995

11,008,150

30,989,39

Sum

70,336

10,071,127

More than 1 year

19,307,803

2,528,036

6 months ~
1 year

3,731

6,326,024

3 ~
6months

29,006

3,731

3 months or less

4,059

6,983,643

Accounts Receivable

33,065

Accounts receivable

Loans

Other receivables

Accrued income

19,340,868

Items

The end of last period

Current

Subtotal
Sum

56

<>

56,000

56,000

56,000

51,000

51,000

51,000

21,000

21,000

21,000

1,286,257

1,286,257

1,280,996

5,261

44,135,919

1,414,257

1,414,257

1,408,996

5,261

11,357,384

6,347,024

2,623,105

( : )

7,034,643

19,396,868

4,481,616

1,423,541

(56,059)

1,199,564

7,623,612

4,537,675

100,671

(154,157)

147,524

518,891

248,195

5,000,507

248,195

(98,098)

1,423,541

7,871,807

(154,157)

6,354,228

95,410

5,261

95,410

(154,157)

147,524

95,410

616,989

152,785

1,518,951

5,154,664

152,785

6,507,013

(3) .

57

Noncurrent

56,000

56,000

56,000

51,000

51,000

51,000

6,347,024

21,000

21,000

21,000

11,357,384

1,286,257

1,286,257

1,280,996

5,261

44,135,919

1,414,257

1,414,257

1,408,996

5,261

Other receivables

Subtotal

7,034,643

Dishonored bills

Sum
19,396,868

Deposits

Sum

5,154,664

616,989

4,537,675

1,199,564

95,410

1,423,541

1,423,541

(154,157)

(154,157)

(98,098)

(56,059)

7,871,807

248,195

248,195

147,524

100,671

7,623,612

5,000,507

518,891

4,481,616

2,623,105

Deposit

Dishonored bills

Other receivables

Accounts receivable

Loans

(Unit:KRW 000)

6,354,228

End of the period

5,261

95,410

(154,157)

Increase/Decrease

147,524

95,410

Liquidation

Subtotal

152,785

1,518,951

Beginning of the period

Sum

152,785

Accounts Receivable

Subtotal

6,507,013

Other receivables

Sum

Items

(3)Changes in allowance for bad debts are as follows.


<Current period>

Current

Non-curr
ent
current

sum

58

<>

( : )

4,120,089

462,244

616,989

417,586

776,801

(39,481)

5,261

6,354,228

5,154,664

616,989

4,537,675

1,199,564

1,034,575
(39,481)

(1,598)

147,524

4,120,089
1,811,376

152,785

4,582,333

(1,598)

152,785

6,859
72,524
-

(1,598)

75,000
72,524

81,859
72,524

81,859

6,507,013

(1,598)

5,582,500

( : )

(39,481)

1,883,900

1,503,033

()

5,582,500

391,570

()

( : )

4,664,192

9.

7,085,533

5,190,930

1,305,760

1,503,033

1,305,760

1,305,760

(1) .

(2) .

59

Last period

Current

Noncurrent

Items

(Unit:KRW 000)

417,586
-

6,354,228

5,154,664

616,989

4,537,675

1,199,564

End of the period

4,120,089
616,989
-

5,261

1,034,575
(39,481)

(1,598)

147,524

Increase/Decrease

4,120,089
1,811,376

152,785

(39,481)

removal

4,582,333

(1,598)

776,801

Liquidation

6,859
72,524
-

462,244

Beginning of the period

75,000
72,524

152,785

Accounts
Receivable
Other receivables

Accounts
receivable
Subtotal

Loans

Sum

81,859

(1,598)

Deposit

Dishonored bill

Other receivables

Subtotal
-

6,507,013

1,305,760

7,085,533

1,503,033

1,503,033

5,582,500

5,582,500

Fair value /
book value

Last period

1,305,760

Gains (losses)

Acquisition
cost

Last period

(Unit:KRW 000th

(1,598)

72,524

Current period
Fair value /
book value

5,190,930

1,305,760

Current period

(39,481)

81,859

Acquisition
cost

391,570

Gains (losses)

(Unit:KRW 000an

1,883,900

Sum
sum
9. Other financial assets

Subtotal

Non-marketable debt securities

Non-tradable equity securities

Available-for-sale Financial
assets

Financial assetsTaking the fair


value into the current profit and
loss

Items

(1) Details of other financial assets are as follows.

Current

Non-current

Sum

Invested
company
Tera resource

(2) Details of financial assets at fair value through profits or losses are as follows.

Items
Listed
securities

60

(3) .
1)

( : )

1,000,000

1,000,000

1,000,000

295,216

( 4)

207,817

1,000,000
-

207,817

12.99%
217,952

200,000

556,000

1.65%

111,200

( 1)

(,) ( 2)

1,503,033

1,305,760

97,943
97,943

1,315,895

1,000,000

1.26%
97,943

1.96%

Almapharm Invest, LLP( 3)


2,653,943

200,000

( 1) , 295,216 824,159 .
( 2) .
( 3) .

( : )

( 4) .
2)

900,000

660,000

1,410,974

900,000

510,974

2010.12.18

1,560,000

()
2010.04.01

()

() , .

61

Current period

(Unit:KRW 000)
Last period

1,000,000

1,000,000

207,817

295,216

1,000,000

Book value

1,000,000
-

207,817

Book value

12.99%
217,952

Fair value
(Note 4)

200,000
556,000

Acquisition cost

1.65%

Ownership

111,200

97,943

1,503,033

97,943

1,305,760

1,000,000
97,943

1,315,895

1.96%

1.26%
2,653,943

200,000

Number of shares

(3) Details of available-for-sale financial assets are as follows


1) Non-tradable equity securities

Items
Ka Gyeong Development-Oriented Real Esta
te Investment Trust INC
Bio infra(note1)
YTN DMB
Winnerstudy(acstudy)(Note 2)
Alm Pharm Invest, LLP (Note 3)
Sum

Shares of the investee held by the company have been fully disposed in the current period. The book value of the relevant shares when disposed is 295.216 million (KRW), the confirmed amount of profit and loss is KRW 824.159 million.
Because of the capital encroachment of the investee, our company has drawn the full provisions of the asset impairment before the purchase.

Last period

(Unit:KRW 000)

New additions are switched from bonds into stock in the current period.
The amount of money is calculated by the assessments of the external and independent institutions based on professional judgment and reasonable determination value assessment model.

Current period

Face Value

Carrying amount

Carrying amount

900,000

660,000

1,410,974

Fair value

900,000

510,974

2010.12.18

1,560,000

Income amount

2010.04.01

Time

2) Non-marketable debt securities

Items
Testech
Opes
Sum

The invested company delisted from the KOSDAQ market before the early term. Because of the insufficient capacity of solvency, we access that the possibility of recovering principal and interest is very low. And we will draw the full provisions of the asset
impairment in the last period.

62

10.
.

75,491,008

(8,030)

(47,823)

1,454,342

1,783,256

75,491,008

1,792,401

2,537,244

77,861,030

(12,729)

(25,577)

(114,954)

138,731

81,630

291,728

1,766,824

2,422,290

77,861,030

( : )

1,831,079

304,457
(8,719)

1,809,854

6,538,189

33,291,783

22,240,000

11,051,783

1,462,372
214,492
90,349
-

84,372,086

(9,110)
81,226
138,731
-

223,602
(5,129)
236,901

(161,979)

86,355
1,809,854

236,901

84,534,066

868,085

80,129,310

(70,092)

80,199,402

868,085

11.

( : )

4,874,489
162,160

5,907,656

5,416,184
339,114

782,891

19,460,000

107,478

25,998,189

()

1,000,000

173,934

12. 31.

( : )

100%

12. 31

100%

() ( 32 ).

869,670

1,899,200

12.
(1)

Celltrion Pharma USA, Inc

63

10. Inventory

Valuation
ll

Current period
Book value

Details of inventory evaluated at low cost and net realizable value are as follows

Items
Acquisition cost

Last period

75,491,008

Acquisition Valuation
t
ll
77,861,030

75,491,008

Goods

(Unit:KRW 000)

Book value
2,422,290

77,861,030
1,766,824

(25,577)

(114,954)

81,630

291,728

2,537,244
(12,729)
138,731

1,792,401
(8,719)

1,809,854

1,783,256
304,457
-

84,372,086

1,454,342
90,349
-

(8,030)
214,492
138,731
(161,979)

(47,823)
(9,110)
81,226
1,809,854

1,831,079
223,602
(5,129)
236,901
84,534,066

1,462,372
86,355
868,085

Products

236,901
80,129,310

(70,092)

80,199,402

868,085

Ingredients
Substitute
t i l
Supplies
Goods in transit
Semi-manufacture
s
Sum
11. Other assets

(Unit:KRW 000)

339,114

5,416,184

5,907,656

162,160

4,874,489

Last period

Advance payments

782,891

Current period

Prepaid expenses

6,538,189

33,291,783

22,240,000

11,051,783

107,478

19,460,000

Subtotal

25,998,189

Sum

Prepayments (Note)

Current tax assets

Value added tax

Items

The details of other assets are as follows:

Flow

Non-current

capital

Share
Investment
1,000,000

100%

100%

Ownership

Sectors

l
o
c
USA
a
Location
tRepublic of Korea
i
o
n

The end of the


reporting
12. 31.

Cost method

Cost method

Measured by

12. 31

Non-current prepayments is the money paid to Celltrion Healthcare to assure the exclusive rights of the Bio-similar product in Korea. ( With reference to note 32)
12. Investment of the subsidiaries

Company Name

1,899,200

173,934

(1) The current status of the subsidiaries is as follows:

Celltrion Pharma USA, Inc.

869,670

Celltrion Chemical
Laboratory

Services, Retail and


Wholesale
The New Testament and fine
chemical technologies
Research and development,
technical sales

64

(2) .

( : )

803,368

803,368

7,301,906

6,498,538

300,972

7,301,906

6,498,538

1,899,200

4,268,495

3,967,523

Celltrion Pharma USA, Inc

8,573,814

( : )

525,932

4,496,720

464,538

(53,112)

464,538

(56,457)

6,674,614

300,972

4,493,455

(3) .

Celltrion Pharma USA, Inc

13.

( : )

(3,946,081)

118,816,402

86,957,658

2,070,618

75,900


8,987,444


20,724,782

114,870,321

86,957,658

31,553,508

927,575

(1,296,585)

(1,143,043)

28,277,997

149,491,137
(4,630,179)

24,707

(998)

166,615

(1,213,610)
-

144,860,958

(51,193)
-

114,022,045
-

6,478,718

(35)

119
(319,570)

114,022,045

(2,508,726)

(265,253)

1,042,834

(15,158)

773,741

2,232,783
(1,459,042)

(243,119)

340,025
(789,435)

9,514

75,790
(66,276)

20,481,663

873,466
(172,422)

6,806,889

9,496,209
(2,689,320)

23,664,310
(415,541)

(266,286)

23,248,769

2,066,062

(1) .
<>

65

(2)The details of the investment by the subsidiary are as follows:


(Unit:KRW 000)

803,368

Last period

Net equity asset value


803,368
7,301,906

6,498,538

Current period
The total acquisition
cost
300,972
7,301,906

6,498,538

Carrying amount

1,899,200
4,268,495

3,967,523

Carrying amount

Celltrion Pharma USA, Inc.


8,573,814

6,674,614

Company Name

Sum

Celltrion Chemical Laboratory

(Unit:KRW 000)
-

464,538

(53,112)

464,538

(56,457)

Total

4,496,720

Profit or loss

Sales

525,932

Total liabilities

300,972

(U nit:K RW 000)

4,493,455

Total assets

(3) The brief financial information by the end of this accounting year of the subsidiary is as follows

Comp
Celltrion Pharma USA, Inc.
Celltrion Chemical Laboratory

(1)Changes in tangible assets are as follows:

13. Tangible assets

Current period

(3,946,081)

118,816,402

Sum

86,957,658

Assets under

(1,143,043)

2,070,618

Fixtures

(51,193)

75,900

Vehicl es

(2,508,726)

8,987,444

Machinery and

(243,119)

20,724,782

Land and

Accumulated
depreci atio n

144,860,958

(4,630,179)

149,491,137

(1,296,585)

(266,286)

31,553,508

114,022,045

114,022,045

(1,213,610)

114,870,321
(998)

86,957,658

119

28,277,997
(35)

(319,570)

927,575

166,615
(265,253)

(15,158)

340,025

24,707

(789,435)

2,232,783

6,478,718

873,466

75,790

(1,459,042)

1,042,834

(172,422)

9,496,209

(66,276)

773,741

2,066,062

23,664,310

(2,689,320)

9,514

20,481,663

(415,541)

6,806,889

Acquisition
cost

23,248,769

Book val ue

Acquisition
cost

Items
The
beginni ng
of this
year
Acquisition
Disposal
Replaced
Depreciation

The end of
this year
Book val ue

Accumulated
depreci atio n

66

<>

76,376

1,793,529

( : )

51,117,664

5,810,975


23,531,374

19,905,410

48,274,183

(2,843,481)

(8,061)

67,715,845

23,531,374
63,426,284

(1,111,646)

932,645

118,816,402

(860,884)

289,170

40,133

(5,783)

86,957,658

(36,243)

(288,457)

(3,946,081)

4,019,481
3,181,019
(206)

2,070,618

114,870,321

(1,791,494)

(2,072)

75,900

(15,220)

(154,860)

(719,710)

86,957,658

19,750,550

8,987,444

927,575

(1,143,043)

819,372

(88,259)

24,707

(51,193)

20,724,782

6,478,718

(2,508,726)

( : )

(243,119)

9,381.00

()

922,206

543,448

( : )

649,327

897,872

20,481,663

(2) .

83,062.00

()

588-2

( 2 )

() .

(3) .

26,926

51,703

213,551

170,139

188,154

1,111,646

165,931

399,052

1,296,585

67

Last perio d

The
beginni n
g of this
year

(U nit:K RW 000)

51,117,664

Sum

23,531,374

Fixtures
1,793,529

Vehicl es
76,376

Land and buildi ngs


5,810,975

(2,843,481)

Assets under
co nstruction

19,905,410
-

Machinery and
plant equi pment

Acquisition
cost
(860,884)

(8,061)

67,715,845

(36,243)

63,426,284

(1,111,646)

(1,791,494)

(154,860)

289,170

48,274,183

(5,783)

23,531,374

(288,457)

932,645

(206)

(3,946,081)

118,816,402

40,133

3,181,019
(15,220)

86,957,658

4,019,481
(2,072)
2,070,618

19,750,550
819,372
(719,710)
75,900

86,957,658

Book val ue

(88,259)
8,987,444

927,575

(1,143,043)

20,724,782

24,707

(51,193)

922,206
(shares)

897,872

Last perio d

114,870,321

6,478,718

649,327

(U nit:K RW 000)
Last perio d

(U nit:K RW 000)

(2,508,726)

9,381.00
83,062.00

543,448

26,926

51,703
213,551

170,139
188,154

1,111,646

165,931

Current period

Current period

(243,119)

Purpose
Paper facto ry
Paper facto ry

Area ()

20,481,663

Accumulated
depreci atio n

Items

Acquisition
Disposal
Acquisition
cost
Accumulated
depreci atio n
Book val ue

Depreciation
The end
of last
year

(2) Details of posted land price are as follows

Locatio n
Chungbuk Jincheon yiwolmyeon Sagokri 588-2 et
Cheongwon-gun, Chungbuk ohchangeup juseongri
(quintet second industrial park)

Items

The land price has not gone to publicity because the code is not confirmed
(3) The amounts of items including depreciation expense of tangible assets are as follows

Cost o f selli ng
Selli ng and adminis trative ex pens es

399,052

Assets under cons truction

1,296,585

Ordi nary res earch and development cos ts


Development
Sum

68

(4)


6,484,411

6,484,411
4,679,975

4,679,975

( : )

2 .

4,679,975

4,679,975

6,484,411

6,484,411

280,841

12,721,969

4,510,629

1,800,000

LIG

( : )

4,401,400

6,411,340

11,678,838

6,996,597

(5) .

, , .

( : )

(608,388)

37,994,421
-

(4,644)

7,808,937

(6) ( ) ( 33 )

22,188

()

1,127,069

(15,903)

14.
(1) .
<>

(592,485)

1,434,773
-

27,601,454
-

37,381,389

(4,644)

7,808,937

6,285

529,940

5,184,206
-

5,035,923
-

148,283

1,434,773

27,601,454

69

4,510,629

1,800,000

Income statement items

6,484,411

6,484,411

Current period

LIG Insurance
Outside

Insurance

(Unit:KRW 000)

Net income increased

Interest expense
decreased

Accounts

4,679,975

4,679,975

Last period

(4) Capi talizatio n of financial expense


Because the new plant in the second industrial park in Ochang-eup, Chungcheonbuk-do is under construction, the influences that the capitalization of related borrowing costs haven on the financial statements are as follows
(Unit:KRW 000)
Financial position items
4,679,975

Last period

6,484,411
4,679,975

Current period

The increase in assets under


construction
6,484,411

Accounts

Increase in assets

280,841
12,721,969

6,411,340

Amount insured

4,401,400

6,996,597

Carrying amount

Head Office furniture, etc.


11,678,838

Factory buildings

Insured property

(5) Details of insured tangible assets are as follows

Insurance

Fire insurance
Inventories
Sum

On the other hand, in addition to the above insurance, the company also added the products liability insurance and insurance for the construction of a new factory, as well as the automobile liability insurance and comprehensive insurance related to the group
companys transportation vehicle.

22,188

Industrial Property
1,127,069

(15,903)

Software

(592,485)

Membership

1,434,773
-

Development

(Unit:KRW 000)
Total
37,994,421
(608,388)

7,808,937
-

(4,644)
37,381,389

7,808,937

6,285

529,940

5,184,206
-

5,035,923

(4,644)

148,283

27,601,454

Goodwill

(6)From the end of this accounting year to the present, the company will take the land and buildings related to the loan contract of the financial institutions (plant in Jincheon-gun Chungcheongbuk-do) as collateral
(see note 33)

14. Intangible assets


(1) Changes in intangible assets are as follows
current perio d

Items
Acquisition cost
Accumulated
The beginning
amortization
of the
year
Government grants

1,434,773

27,601,454

Acquisition

Book value

Disposal

70

(274,234)

(176,693)
-

(2,231)
-

(274,234)

(178,924)

(1,064,479)

22,188
-

1,275,352
(18,134)

(1,711)

43,178,627

1,434,773
(772,111)

12,844,860

(274,234)
-

27,601,454
-

4,054

/
(1,711)

501,530

( : )

(7,578)

(465,897)

17,398

42,112,437

12,844,860

1,160,539

27,601,454

() .
<>

876,308

(13,937)

29,929,211

(7,578)

(451,960)

1,434,051

27,601,454
-

29,455,736

3,461

416,770

27,601,454

8,065,210

1,434,051

7,808,937

4,790

(139,557)

250,761

722

(608,388)

37,994,421

(1,966)

7,808,937

529,940

(4,644)

6,285

7,808,937

37,381,389

(4,644)

(137,591)

22,188

(15,903)

(592,485)

1,127,069

1,434,773

1,434,773

27,601,454

27,601,454

71

Amortization
-

(274,234)

(176,693)
-

(2,231)
-

(274,234)

(178,924)

(1,064,479)

Impairment of intangible assets


22,188
-

43,178,627

1,275,352
(18,134)

12,844,860

1,434,773
(772,111)

(1,711)

27,601,454
(274,234)
-

Acquisition cost
-

42,112,437

(1,711)

12,844,860

4,054

501,530

(Unit:KRW 000)

1,434,051

416,770

(7,578)

(451,960)

876,308

4,790

3,461

(13,937)

17,398

7,808,937

(139,557)

8,065,210

(7,578)

(465,897)

Total

27,601,454

250,761

(1,966)

Industrial Property

1,434,051

Software

722

(137,591)

37,994,421

Membership

27,601,454

7,808,937

(608,388)

Goodwill

22,188

(4,644)

29,929,211

1,127,069

(15,903)

37,381,389

Development

1,160,539

Accumulated
amortization
/ impairment

27,601,454

Government grants
Book value

current perio d

Items

In consideration of recoverable money of Membership Card in this term, some impairment losses are recognized.

The end of the


year

1,434,773

(592,485)

7,808,937

29,455,736

Acquisition

27,601,454

(4,644)

6,285

Disposal

529,940

Acquisition cost
The
beginning of Accumulated amortization /
Impairment
the current
accounting Government grants
year
Book value

Amortization

1,434,773

Acquisition cost

27,601,454

Book value

The end of Accumulated amortization /


the current
Impairment
accounting
Government grants
year

72

( : )

136,675

172,733

963

(2) .

155

1,764

147

4,434

1,610

178,924

139,557

(3)

() .
.
1) : ( ) .
2) : 2013 5 .
4) : (6.46%) .

3) : .

4,645

464,000

(2,934)

1,711

( : )

( : )

,
.

15.

(1) .

(2) .
<>

( )

73

(2)Items and amount including depreciation expense of intangible assets are as follows

Cost of selling

Items
Selling and administrative expenses

4,434

147

172,733

155

1,764

963

136,675

(Unit:KRW 000)
Last period

Ordinary research and development costs


1,610

Current period

Assets under construction


178,924

139,557

Total

Development

(3) Details about whether an impairment loss for goodwill should be recognized shall be reviewed.

In order to check whether the amount of goodwill is reduced, the calculated use value (recoverable amount) is the use valule of the cash income generation unit, based on the use value of the continuous use of discounted cash flow in the future. Calculation
on the use value is based on the following key assumptions

Cash flow: presume the cash flow based on the past experience, actual operating outcomes and the five-year operating plan from 2013.
Growth rate: based on the scale and market share of those products that are under development and listing plan, we evaluate the growth rate in order to reflect the expected sales volume.

Cash generating unit: we regard all those companies that has no independent capacity for generating cash, including the subsidiary, as a cash-generating unit.

Discount rate: applicable to assume the weighted average cost of capital (weighted average cost of capital) (6.46%).

1)
3)

2)
4)

Current period

Increase

464,000

Last period

(2,934)

Decrease

Processing costs
deducted

Accounting
treatment

1,711

The end of the


current accounting
year

( Unit:KRW 000)

Composites development of new


drugs for the treatment of
diabetes

Government subsidies content

( Unit:KRW 000)

By comparing the book value (including goodwill) of the cash generating unit with the calculated use value in the last period, the result comes out after the impairment test that the book value of the cash generating unit does not exceed the recoverable
amount.The impairment shall not be recognized.

(1) The accounting treatment for the government grants are as follows:

15. Government grants

Division
Industry led by Chungcheong Economic Region

4,645

The beginning of the


current accounting year

(2)Details of government grants about obtaining assets are as follows:


Current period

Items

Government grants (Software


deducted)

74

<>

( )

7,578

826,128

(2,933)

64,388,288

( : )

20,770,803

26,906

457,945

6,527

20,285,952

5,555,886

2,469,175

85,159,091

3,080,184

6,382,014

( : )

4,645

3,000,000

2,000,000

( : )

2,000,000

3,000,000

( 3)

16.
.

5.69%

5.06%

6,986,454

10,000,000

1,655,121

23,641,575

50,000,000

6,996,483

19,366,186

5.56%

50,000,000

5.60%

50,000,000

7,369,703

( 1)

6.90%

14,065,429

( 2)

11,373,580

4.00%

64,065,429

(1) .

17.

87,707,004

54,196,903
165,570,483

1.50%

184,936,669

75

<Last period>

Items
Government grants (Software
deducted)

Current

7,578

The beginning of the


current accounting year
Increase
-

Decrease
(2,933)

(unit::KRW 000 )

64,388,288

Last period

826,128

20,285,952

Current period

3,080,184

26,906

457,945

Trade payables

Accounts Payable

6,527

2,469,175

Deposits
Subtotal
6,382,014

5,555,886

85,159,091

20,770,803

( Unit:KRW 000)

4,645

The end of the


current accounting

5.69%

5.06%

19,366,186

7,369,703

6,996,483

3,000,000

The end of the


current
accounting
2,000,000

50,000,000

23,641,575

1,655,121

6,986,454

10,000,000

3,000,000

(unit::KRW 000 )

Exchange Bank

5.56%

50,000,000

Interest rate

Total

Other debt payments

Accrued expenses

Items

16. Purchase payables and other payables

17.Loans

Borrowing Sources

Industrial Bank

50,000,000
54,196,903

11,373,580

14,065,429

2,000,000

4.00%

Subtotal

The end of the last


accounting year

Industrial Bank

6.90%

5.60%

Domestic Bank

Discounted bills, etc.

Celltrion (Note2)

Domestic bank (Note1)

1.50%

64,065,429

Celltrion

87,707,004

Neptune Co., Ltd.

165,570,483

Convertible bonds

Subtotal

184,936,669

Bonds with warrants

Working Capital

Working capital

Financing facilities

History

(1) Details of loans are as follows

Items

Current

Non-current

Total

76

( 1) 2 9 3 3 .
( 2) 2 .

4.00

(%)
11.00

(%)

( : )

5,108,863

12,000,000

9,000,000

14,065,429

(3,043,434)

3,831,648

1) .

( 2) ( 13,32,33 ).

2015-08-16

(2)

2010-08-17

11,373,580

(1,458,068)

3 ()

100%

( : )

() 30 .

2) .

11,624

1 ~

(%)

(3)

(%)

60,000,000

14,741,554

5.9

(20,544,651)

1.5
:

2018-12-18

54,196,903

2013-12-19

1) .

77

(Note 1)Status of the long-term loans of the financial sector: Condition of the extension in the 3 years 3 months in installments after 2 years and 9 months
(Note 2)Status of other non-current borrowing, condition of Lump sum payment that will expire in 2 years

(Note 3)The company can offer guarantee based on the payment guaranty of the related representative director and real estate, which are related with the loan agreement of the financial institutions. (see note 13,32,33).

Expiration
date

The end of the


lastaccounting year

Issue date

12,000,000

(2) Convertible bonds


1) Details of convertible bonds are as follows.

Items
9,000,000

Guaranteed
interest rate
(%)
11.00

The end of the


current accounting
year

4.00

Nominal
Interest
rate(%)

5,108,863

2015-08-16
3,831,648

14,065,429

(3,043,434)

2010-08-17
Plus : repayment premiums
11,373,580

(1,458,068)

Third Unsecured Convertible


Bonds (Note)

Difference of write-off

History

(unit::KRW 000 )

Deduction : adjust conversion rights

(Note)The conversion right can be exercised if the book value of the convertible bonds equals to 30 billion (KRW).

Items

Registered ordinary shares

100% of the face value of corporate bonds

2) The issue conditions of the convertible bonds in the last period are as follows.

Issue price

11,624 KRW

Nominal
Interest
rate(%)

Guaranteed The end of the current


The end of the
interest rate (%) accounting year
lastaccounting year

One year after issue date ~ the business day before expire date

repayment at expiration date

issue shares
Repayment method
Conversion rights
exercise period
Conversion price
(3) Bonds with attached warrant

Expiration date

1) Details of bonds wi th attached warrant are as follows .

Issue date

Items

60,000,000

5.9

1.5

2018-12-18

14,741,554

2013-12-19

Plus : repayment premiums

54,196,903

(20,544,651)

The first unsecured


bond with attached warrant

Difference of write-off

deduction: adjustment of warrants

78

100%

2)

10,650

1 ~

18.

( : )

91,926

54,246

451,718

505,964

91,926

19.

( : )

109,730

314,018

606,965

87,518

304,867

423,748

392,385

83,109

296,153

651,451

379,262

65,037

693,793

350,043

285,006

651,451

, .

79

2) Iss ue condi tions for bonds wi th attached warrants are as foll ows.
History

Registered ordinary shares

100% of the face value of corporate bonds

Items
Issue price

10,650 KRW

(unit::KRW 000 )
Last period
-

91,926

91,926

54,246

505,964

451,718

Current period

One year after issue date ~ the business day before expire date

Bullet repayment at maturity

Issue shares
Repayment method
Preemptive rights
exercise period
Conversion price

Total

Current tax liabilities

Advance payment

Items

The contents of other liabilities are as follows.

18. Other liabilities

Current

19. Provision

Subtotal

Actual disposal loss

Actual returns in selling profit

Subtotal

Estimated loss due to disposal provision

provision in selling profit

The beginning of the year

Items

(unit::KRW 000 ))

87,518

304,867

423,748

109,730

314,018

606,965

Last period

392,385

379,262

83,109

651,451

296,153

350,043

65,037

693,793

285,006

651,451

Current period

Under the circumstance that the company allows returns, the provision induced by returns shall be estimated at the point of sale., the changes in estimated liabilities are as follows

Increase

Decrease
Total

80

20.

38,572

734,164

143,141

110,337

298,107

59,170

721,497

204,241

100,415

( : )

351,776

1,393,352

, 1 1
.
.

104,769

(1,199,367)

250,022

1,372,422

(1,539,534)

250,022

(44,378)

53,877

500

80,000,000

7,069,309

14,138,617

500

7,197,689

14,395,378

80,000,000

( : )

(29,033)

21.
(1) .

81

20. Retirement benefit liability

Current period

351,776

38,572

734,164

143,141

1,393,352

110,337

298,107

59,170

721,497

204,241

100,415

Last period

(unit: thousand)

The entity applies defined contribution plans to their employees. The amount of retirement benefits of those employees who work for more than one year shall be recognized as expenses in the period. The estimated amount of retirement benefits
of those who work for less than one year shall be recognized as retirement benefit liabilities.
The changes in the retirement benefit liabilities are as follows.

Category

104,769

(1,199,367)

250,022

1,372,422

Selling cost

(1,539,534)

250,022

(44,378)

Foundation

53,877

(29,033)

Paid retirement benefit payment

Subtotal

Development

Selling and
administrative expenses
Ordinary research and
Current operating costs development costs
Assets under
construction

Total

Retiree payments

Pai d-i n capital


Last period

500

80,000,000 shares

7,069,309

14,138,617 shares

500

7,197,689

14,395,378 shares

80,000,000 shares

Current period

21. Paid-i n capital


(1) The contents of paid-up capital are as follo ws.

Category
Pai d-i n capi tal
Par value per share
Shares issued
Common Stock

82

(2) .

( : , )

2012-12-31

2012-12-10

2012-08-13

2012-07-23

2012-05-25

2012-04-23

2012-01-01

85,587

14,138,617

14,138,617

1,271,186

254,237

9,555

13,664

298,700

12,291,275

42,794

42,793

42,793

7,069,309

7,069,309

635,593

127,119

4,777

6,832

149,350

6,145,638

133,096,125

1,180,075

1,178,730

1,172,092

129,565,228

129,565,228

16,869,141

3,287,292

132,089

160,556

4,164,102

104,952,048

2013-01-01

85,587

7,197,689

2013-07-03

85,587

2013-07-31

14,395,378

2013-08-06

2013-12-31

(1) .

22.

( : )

13,584,506

80,155

80,155

13,664,661

16,227,135

()

16,307,290

() 50% 10% .

83

(unit: shares, thousand)

Exercise of share
rights

2012-12-31

2012-12-10

2012-08-13

2012-07-23

2012-05-25

2012-04-23

2012-01-01

14,138,617

14,138,617

1,271,186

254,237

9,555

13,664

298,700

12,291,275

42,793

7,069,309

7,069,309

635,593

127,119

4,777

6,832

149,350

6,145,638

1,178,730

1,172,092

129,565,228

129,565,228

16,869,141

3,287,292

132,089

160,556

4,164,102

104,952,048

Share issue
premium

Exercise of
conversion rights

2013-01-01
85,587
42,793

1,180,075

Capital

Exercise of
conversion rights

2013-07-03
85,587
42,794

133,096,125

Outstanding shares

The end of the last


period

2013-07-31
85,587

7,197,689

Date

(2). The changes in paid-in capi tal are as follows.

Category
Last period

Exercise of
conversion rights
2013-08-06
14,395,378

The beginning of
the last period
Exercise of share
rights

Exercise of
conversion rights
2013-12-31

The beginning of the


current period
Exercise of
conversion rights

Current period

Exercise of share
rights

The end of the


current period
22. Retai ned earni ngs

(unit: thousand)

13,584,506

80,155

13,664,661

Last period

16,227,135

Current period

(1) The components of retained earnings are as follows.

Category

16,307,290

80,155

Retained earnings

Earned surplus reserves (Note)

Total

(Note) In accordance with commercial laws, 10 percent of dividends of each settlement period shall be accumulated to be earned surplus reserve until it reaches 50 percent of the capital. Although earned surplus reserve cannot be distributed in cash, it can
be transferred to capital or used to cover the deficit in terms of the decision made by general meeting of stockholders.

84

2013 01 01

2014 03 24

13

2012 12 31

2012 01 01

( : )
13()

3,936,476,527

9,648,029,913

2013 03 25

16,277,134,954

16,277,134,954

14()

2,642,628,514

13,584,506,440

2013 12 31

(2)
14

(1) .

23.

( : )

13,584,506,440

13,584,506,440

3,955,386

(13,670)

(13,670)

3,955,386

()

426,554

1,586,045

426,554

(37,224)

1,867,410

(37,224)

4,615,928

10,814,384

5,917,091

() (1,311 ) 2009 8 5 .
(2)
1)

85

(2)
2013-01-01
to

from

2014-03-24

2013-12-31

Appropriation of retained earnings


NO.14 Period
disposal date

NO.13 period
disposal date

2012-01-01
to

from

13,584,506,440

13,584,506,440

(13,670)

(unit: thousand)
Last period

3,936,476,527

9,648,029,913

NO.13 Period(last)

(Unit: Won)

2012-12-31
2013-03-25

16,277,134,954

16,277,134,954

NO.14 Period(current)

2,642,628,514

13,584,506,440

Company name: Celltrion Pharmaceutical Co., Ltd.

Category
Retained earnings
Unappropriated retained earnings carried
over from prior period
Net Income
Profit surplus
Retained earnings carried forward the
next issue

Current period

(1) The compo nents of other capital are as fol lows.

23. Other Capital

Category

3,955,386

(13,670)
3,955,386

426,554

1,586,045

Treasury shares (Note)


Gain from disposal of treasury shares
426,554

1,867,410

(37,224)

5,917,091

(37,224)

10,814,384

4,615,928

share options
Capital changes using the equity method
The estimate of available-for-sale securities
consideration of stock warrants
Total

he ordinary shares (1,311 shares) are the add-lot stock after the combination at August 5, 2009.

Stock Optio n Grants

(2) s hare-bas ed payment


1)

In accordance with the solution found by general meeting of stockholders or council, those employees who have contributions or might have contributions to establishment, operation, business abroad or technique annovation shall be given share options.
Those given share options are as follows.

86

1 ()

2010 03 22

2011 03 25

2012 03 22

2013 03 25

17,350

2015 3 25 ~
2025 3 24

19,139

2014 3 22 ~
2024 3 21

2008 3 25

16,933

2013 3 25 ~
2023 3 24

2012 3 22 ~
2020 3 21

2010 3 25 ~
2015 3 24

11,185

( : , )

5,671

() 2009 .

2) .
<>

17,096

17,350

26,000

355,334

26,000

18,921

(20,500)

46,500

(2,500)

(18,000)

304,000

1,800

3,034

19,139

13,794

17,011

360,834

304,000

23,500

1,800

28,500

3,034

<>
( : , )

633,453

11,186

46,500

10,944

304,000

46,500

(2,700)

5
312,300

(321,919)

17,153

17,096

355,334

(2,700)

46,500

(307,800)

304,000

1,800

(14,119)

3,034

87

Equity-settled

2008-3-25

first

2012-3-22~
2020-3-21

Equity-settled

2010-03-22

third

16,933KRW

2013-3-25~
2023-3-24

new stock issuance

2011-03-25

forth

19,139KRW

2014-3-22~
2024-3-21

new stock issuance

2012-03-22

fifth

17,350KRW

2015-3-25~
2025-3-24

new stock issuance

2013-03-25

sixth

Category
Payment method
2010-3-25~
2015-3-24
11,185KRW

Grant date

Event Period
5,671KRW
Serve more than two years after the grant date

Exercise price
Possible conditions

(Note) When the combination took place 2009, the share options given to the employees of combined juridical person- HanSeo Pharmacy shall be inherited with no changes in conditions.

(unit : share, won)

46,500

26,000

(20,500)

26,000

355,334

18,921

17,350

17,096

Weighted average
Exercise price

304,000

(2,500)

Total

(18,000)

Sixth

1,800

Fifth

Quantity

3,034

Fouth

Third

First

1) The changes in exercisable amount and weighted average exercise price are as follows.
< Current period >

Category

Grant

Beginning of the
current period

Withdrawal / Lapsed

633,453

11,186

19,139

13,794

17,011

Exercise

360,834

304,000

23,500

1,800

(unit : share, won)

46,500

10,944

Weighted average
Exercise price

46,500

(2,700)

17,096

Total
304,000

355,334

(321,919)

Fifth

28,500

3,034

The end of the


current period

< Las t perio d >

Quantity

Fouth
312,300

46,500

Third

17,153

First

(2,700)

304,000

Category

Grant

1,800

(307,800)

Beginning of the last period

Withdrawal / Lapsed

3,034

(14,119)

Exercise
The end of the last period

88

3
( Black Scholes Model)

3) .

17,350

2.58%

16,100

3.59%

19,139

52.69%

18,400

3.57%

16,933

52.98%

5,559

17,000

3.23%

11,185

2.38%

45.77%

5,428

11,400

0.64

5,671

58.50%

3,259

12,100

6,590

5,447

63.38%

( : )

4) .

2,755,917

388,528

85,234

95,045

281,364

394,673

19,393

38,353

434,129
89,141

104,627

350,175

50,351

1,841,881
8,296

534,165

8,385


164,534

489,163


36,309

3,520,854

2,392,899

( : )

24.
(1) .

6,255,036

37,387,634

5,300,891

40,516,378

64,631

1,000,295

4,242,616

44,707,596

50,083,248

23,363

89

Third

Fouth

Fifth

Share prices of entitlement


2.38%

5,671won

12,100won

45.77%

2 years

3.23%

11,185won

11,400won

5,428won

52.98%

2 years

3.57%

16,933won

17,000won

5,559won

52.69%

2 years

3.59%

19,139won

18,400won

63.38%

2 years

2.58%

17,350won

16,100won

Sixth

Exercise price
0.64year
-

First

3) The method used to estimate the fair val ue of share options and ass umptions is as follow.
Category

Risk-free interest rate


58.50%
3,259won

Calculation method

Expected exercise period


-

Price solution approach


(Of option pricing model Black Scholes Model)

Expected volatility
6,590won

5,447won

Fair value

Expected dividend yield

4) The details o f the co mpensatio n cos t recognized as expenses in connection with s hare options granted are as follows.
(unit: thousand)
Total
388,528

Development
-

2,755,917

Assets under
construction

85,234

281,364

Selling cost
38,353
394,673

19,393

95,045

Category
350,175
434,129

89,141

3,520,854

1,841,881
8,296

50,351

104,627

Selling and
administrative
expenses

Recognized compensation cost


of electricity
164,534
8,385

534,165

share options

Recognized cost of profit


36,309
489,163

(unit: thousand)

23,363

4,242,616

5,300,891

44,707,596

64,631

1,000,295

6,255,036

37,387,634

Last period

50,083,248

40,516,378

Current period

2,392,899

Compensation cost to be
recognized in the current
period
The total compensation cost
24. Business volume and selling cos ts
(1)the contents of sales are as follows.

Category
Sales of domestic product
inside the country
Sales of domestic product
inside the country
Sales of foreign purchased
productsinside the country
Sales of foreign purchased
products outside the country
Total

90

12,915,140

47,897

13,415,684

1,904,538

19,280

161,979

(115,786)

12,469,346

2,537,244

(2) .

(91,887)

(187,764)

(2,537,244)

33,820,351

44,600,000

104,656

77,861,030

(1,831,079)

2,469,717

47,648

600

721,497

7,445,572

( : )

(77,861,030)

15,384,857

(4,961)

8,029,918

(75,491,008)

734,164

25.
.

59,446

641,456

585,988

137,518

72,649

583,052

83,788

124,039

1,693,985

714,062

17,549

1,283,611

28,884

1,346,041

1,538,498

5,257

86,237

110,019

( : )

12,877,068

606,969

13,484,037

91

12,915,140

Last period

12,469,346
47,897

13,415,684

1,904,538

19,280
(115,786)

2,537,244

Current period

(2)the contents of selling costs are as follows.

Category
Production cost
Basic Products

(187,764)
161,979

Product manufacturing
costs in current period
Transferred to other
accounts in the allocation

(91,887)

Transferred to other
accounts
Valuation loss
(2,537,244)

104,656

47,648

33,820,351

44,600,000

(1,831,079)
2,469,717

(4,961)

(77,861,030)

77,861,030

(75,491,008)
15,384,857

Final products
Selling cost
Basic Products
Purchases in current
d
Transferred to other
accounts in the allocation
Transferred to other
accounts
Final products
Total

25. Selling and administrative expenses


The details of expenses on sales and management are as follows
(unit: thousand)

7,445,572
721,497
600

Last period

8,029,918
734,164
-

83,788

1,693,985

Current period

Salary
Retirement Benefits
Sundry payment

28,884

1,538,498

Category

Employee benefits
Vehicle Maintenance

137,518

72,649
585,988

583,052
124,039

641,456

714,062

17,549

1,283,611

Entertainment

1,346,041

59,446

Communication costs

5,257

Consumables
Tax and Dues

86,237

Travel transportation
Water Utilities

110,019

Book printing

(unit: thousand)
12,877,068

606,969

13,484,037

92


701,485

1,222,789

86,250
946,960

1,229,180

82,793

6,515,965

176,646

1,518,951

165,931

23,731

19,160

29,062

136,675

86,048

5,443,533

258,341

775,203

170,138

26,336

7,234

39,300

1,469

816,521

160,662
359,700

3,103

172,733

852,074

381,005

17,485

269,303

23,310

272,779

606,735
24,008,782

162,994
25,799,539

2,907

26.

1,444,616

(476,794)

: )

( 2)

( 1)

914,346

3,845,114

1,222,789

8,513,646

12,510,022

782,704

856,043

1,516,590

3,149,879

1,229,180

7,320,780

13,156,605

606,969

903,115

956,140

6,422,048

875,266

2,131,004

4,027,893

882,259

1,972,676

2,469,717

1,441,930

39,623,824

3,575,612

42,626,325

( 1) .

93

Transportation costs
701,485

1,222,789

86,250
946,960

1,229,180

82,793

Premium
19,160

29,062

170,138

26,336

7,234

39,300

1,469

816,521

Power Ratio
23,731
775,203

3,103

852,074

Advertising expenses
Fees
Rent

sample fees
165,931
258,341

Repairs

Depreciation
176,646

1,518,951

Bad debt expenses


Export costs

136,675

86,048

359,700

5,443,533

172,733

160,662

381,005

6,515,965

Amortization of intangible fixed


assets

17,485

269,303

Sales commission

Conference expenses
23,310

272,779

Education costs

Building expenses

606,735

24,008,782

162,994

25,799,539

2,907

Sales incentives

Total

equity-based compensation
costs
Activity fees

26. E x p e n s e s classified by nature

1,441,930
3,575,612

875,266
882,259

8,513,646
1,222,789
3,845,114
914,346
903,115

2,469,717
12,510,022

1,444,616
4,027,893

39,623,824

2,131,004
1,972,676

782,704
956,140

7,320,780
1,229,180
3,149,879
1,516,590
856,043

606,969
13,156,605

(476,794)
6,422,048

(unit: thousand)
Last period

42,626,325

Current period

In the comprehensive income sheet, the selling cost, selling and administrative expenses shall be classified into the following categories.

Category
Semi-finished products and changes
Raw / auxiliary materials stored
Fluctuations in commodity
Employee benefits (Note1)
Sales-related costs (Note2)
Advertising expenses
Outsourced processing costs
Fees
Rent payments
Tax and Dues
Depreciation and Amortization
Research and development
Other costs
Total operating expenses

(Note1) the details of employee s alary are as follows.

94

( : )

925,738

9,571,857

877,305

9,746,114

732,590

1,926,420

260,421

252,836

( : )

13,156,605

1,715,314

12,510,022

171,289

( 2) ++

27.

(1) .

10,293

18,786

19,515

108,571
4,953
301,430

43,746

154,157

(2) .

3,740

274,234

147,230

642,660

146,219

496

3,354

128,287
101,168

( : )

571,848

30,681

1,107,099

21,216

224,729

2,638

109,900

49,900

2,241,821

754,464

2,734

95

Category
Salary
Retirement Benefits
Employee benefits
Stock-based compensation
costs
Total
732,590

9,571,857
925,738
1,926,420

(unit: thousand)
Last period

Current period
9,746,114
877,305
1,715,314

13,156,605

171,289
12,510,022

(unit: thousand)
Last period

10,293
19,515

301,430

252,836
18,786

4,953
43,746

260,421
108,571

571,848

154,157

(Note2) Trave expensesl+ Entertainment expenses +Selling Commission fees


27. Other income and other expens es

Current period

(1)The contents o f o ther income are as follows .

Category

Total

Rental income
Currency arbitrage
Other Reversal of allowance for bad
debts
Gain on disposal of tangible assets
Others

754,464

Current period
30,681
21,216
147,230
274,234
3,740
224,729
49,900
2,734

2,241,821

128,287
101,168
1,107,099
3,354
496
146,219
642,660
109,900
2,638

(unit: thousand)
Last period

(2) Details o f other ex pens es in the current and prior period are as
follows..

Total

Category
Loss on foreign currency
Foreign currency translation loss
Other bad debt expenses
Loss on disposal of tangible assets
Impairment of intangible assets
Loss on disposal of inventories
Inventory disposal loss
Subsidiary of investment assets
Donations
Others

96

28.

( : )

67,346

91

2,195

295,199

391,570

537,130

355,419

(1)

()

41,626

271,923

5,735

1,604,885

824,159

537,130

206,156

330,974

355,419

887,163

( : )

321,101

34,318

( : )

1,187,508

() .

(2) .

1,443,520

6,355

2,314

526,832

3,339

1,420,350

()

4,908,988

3,459,815

() .

97

(unit: thousand)
Last period

391,570

67,346

91

2,195

295,199

537,130

41,626

271,923

824,159
1,604,885

(unit: thousand)

1,187,508

5,735

355,419

Current period

28.Financial inco me and financial costs


(1) The followi ng are the details of financial income.

Category
Interest income (note)
Currency arbitrage
Foreign currency translation
gains
Trading securities gains
Gain on disposal of trading
securities

Total

Dividend income
Gain on disposal of short-term
financial instruments
Gain on disposal of
available-for-sale securities

(Note) The details of the interest income incl udi ng financial income are as

330,974
206,156

Last period
34,318

537,130

Current period
321,101

Category
Financial institutions Deposits
355,419

Total

Other loans and receivables


follows.

(unit: thousand)

6,355

887,163
2,314

526,832

Last period

3,339

1,420,350

1,443,520

Current period

(2) The following are the contents of financial expens es.

Category
Loss on foreign currency
transactions

3,459,815

Interest expense (Note)

Foreign currency translation loss

4,908,988

Total

Loss on disposal of trading


securities

(Note) T he details of the financing costs incl uding interest expense are as
follows

98

(2) .

( : )

330,974

537,130

206,156

34,318

355,419

887,163

( : )

321,101

1,443,520

6,355

2,314

526,832

3,339

()

1,420,350

( : )

4,908,988

3,459,815

407

114,781

2,099,814

3,352,136

145,097

6,377,380

1,405,454

() .

887,163

(4,679,975)

1,166,227

( : )

1,443,520

(6,484,411)

29.
(1) .

637,619

3,127,556

(1,774,787)

272,579

4,902,343

(4,902,343)

(3,327,835)

(1,301,929)

(608,560)

910,198

99

(unit: thousand)
330,974
206,156

Last period
34,318
537,130

Current period
321,101

Category
Financial institutions Deposits
355,419

Total

Other loans and receivables

(unit: thousand)
Last period

526,832

6,355

3,339

1,420,350

887,163

3,459,815

1,443,520

4,908,988

2,314

Current period

(2) The following are the contents of financial expens es.

Category
Interest expense (Note)
Loss on foreign currency
transactions
Foreign currency translation loss
Loss on disposal of trading
securities
Total

(unit: thousand)

3,352,136

Last period
145,097

407

114,781

1,405,454

Current period

(Note) T he details of the financi ng costs including interest expense are as follows.

Category
Convertible bonds
-

Bonds with warrants interest


Land purchases and accounts

2,099,814

6,377,380

887,163

(4,679,975)

Car lease interest

1,443,520

(6,484,411)

Other borrowings Interest


Total

(1,774,787)

1,166,227

Last period

272,579

3,127,556

637,619

Current period

(unit: thousand)

Eligible assets, capitalized financial

Category

29. Income tax expens e


(1) Income tax expense for current and history are as follows:.

Tax burden

4,902,343

(4,902,343)

Foundation of deferred tax assets

(3,327,835)

Income tax expense due to changes in


temporary differences
Ending value of deferred tax assets

(608,560)

(1,301,929)
910,198

Deferred income tax reflected directly in equity


Income tax expense

100

1,301,929

(2) .

(3) .

( : )

( : )

732,141

3,327,916

781,622

3,552,827

504,762

1,498,277

711,417

(2,154,402)

(402,478)

(1,292,306)

(118,610)

(608,560)

41,215

25.62%

910,198

( )

(4) () .
<>

( : )

(391,570)

6,030,998

651,451

(78,125)

68,086

(91,887)

(196,145)

35,479

391,570

1,295,475

42,342

(30,010)

1,711

70,092

53,878

348,776

1,500,000

7,394,559

693,793

(108,135)

1,500,000

(118,720)

313,297

250,023

161,979

120,431

2,933

(4,645)

(1,711)

101

Current period
1,301,929

Last period
-

(unit: thousand)

(2) Income tax expense information directly reflected i n the capital is as follows

Category
Warrants consideration
(3) T he relations hip between tax expense and profit or loss before i ncome tax expense is as follows
(unit: thousand)

781,622

3,552,827

504,762

732,141

3,327,916

Last period

1,498,277

711,417

(2,154,402)

Current period

Income before income taxes


In accordance with the
applicable tax rate
Adjustments
(1,292,306)

Category

Unauthorized expenses

41,215

Income tax expense


25.62%

910,198

(118,610)

(608,560)

(402,478)

Tax credits and tax reduction


The amount of repayed income
tax
Others (rate difference, etc.)

The effective tax rate

(unit: thousand)

Allowance for bad debts

Return reserves

Accrued income

1,500,000

(391,570)

6,030,998

651,451

(78,1250

68,086

(196,145)

35,479

391,570

1,295,475

42,342

(30,010)

1,711

70,092

53,878

348,776

1,500,000

7,394,559

693,793

(108,135)

Balance at end of year

Trading securities gains

313,297

(91,887)

Reflecting capital

Equity method loss

250,023

2,933

(118,720)

Loss

Accrued expenses

Differences based on
dj

Retirement benefit liabilities

161,979

Balance at beginning of year

(4) Source and Changes in deferred tax assets (liabilities) are as follows.
<Last period>
Category

Valuation loss

(4,645)

120,431

Temporary differences

Government Grants

(1,711)

Government subsidies

102

(1,277,216)

3,831,647

4
5,108,863

(84,025)

(222,973)

(575,879)

(1,458,068)

144,045

47,723

4,114,241

(95,972)

1,585,367

(222,973)

(704,784)

(81,729)

(228,070)

(398,178)

274,234

(3,043,435)

4,819,025
-

274,234

47,723
-

14,741,554

(20,544,651)

4,158,913

(5,917,857)

(5,917,857)

2,412,874

14,741,554

(5,917,857)

3,327,835

(20,544,651)

(4,546,386)

(1,301,929)

644,885

(13,643)

(355,320)

85,742

14,636,798

82,741

1,682,247

4,902,343

( : )

, .
<>

651,451

(78,125)

44,486

110,381

6,030,998

1,629,812

(391,570)

(391,570)

(2,572,207)

606,965

(188,506)

4,282,892

1,500,000

2,572,207

1,500,000

2
-

270,658

(49,418)

161,979

149,608

42,639

49,418

161,979

250,023

313,297

118,294

(2)

100,415

103

5,108,863
(81,729)

(95,972)

1,585,367

(1,277,216)

(575,879)

(1,458,068)

3,831,647

Bond repayment premium


(398,178)

(3,043,435)

Bankruptcy bill
Adjust conversion rights
Compressed millet reserves - land
4,819,025

(228,070)

(222,973)

274,234

(704,784)

144,045

47,723

4,114,241

(84,025)

(222,973)

Stock-based compensation costs


Temporary depreciation
ll
Impairment
losses on
-

47,723

The total temporary differences

Warrants consideration

Repayment premiums

Adjustment of warrants

4,902,343

1,682,247

14,636,798

82,741

85,742

(13,643)

(355,320)

644,885

(4,546,386)

14,741,554

(20,544,651)

(1,301,929)

(5,917,857)

(5,917,857)

3,327,835

2,412,874

4,158,913

(5,917,857)

14,741,554

(20,544,651)

274,234

bl f
l
Lossl on
valuation
of
l bl f of intangible
l
Impairment
assets

the amount of deduction of


d tax assets / liabilities
Deferred

Differences based on
adjustment

Loss

Reflecting capital

(unit: thousand)

From the next period, the estimated taxable earnings of the company will exceed the deductible temporary difference of each accounting period, which will be used to determine the possibility
of realizing deferred tax assets

Balance at beginning of year

Except the conditions that the disposal of investment assets may not be realized, income tax effects are not recognized.

<Current perio d>

Category
Temporary differences

651,451
-

6,030,998

(78,125)
1,629,812

(391,570)

44,486
(2,572,207)

1,500,000

110,381

(391,570)

1,500,000

4,282,892

606,965
2,572,207

(188,506)

Allowance for doubtful accounts


-

Accrued income

Trading securities losses

49,418

Return reserves

Trading securities gains

100,415

270,658

(49,418)

161,979

149,608

42,639

161,979

250,023

313,297

118,294

Equity method loss

(2)

Short-term financial instruments


valuation
Depreciation
Accrued expenses
Retirement benefit liabilities
Valuation loss

104

47,723

4,819,025

(372,115)

(222,973)

(186,935)

(10,014,694)

12,772,158

(7,578)

7,578

81,100

144,045

(211,243)

6,971,259

(7,663,295)

2,933

112,853

1,682,247

14,636,798

47,723

4,819,025

(228,070)

(222,973)

(398,178)

(3,043,435)

5,108,863

(4,645)

120,431

339,534

14,216,164
1,682,247

2,586,757

2,586,757

(25,014,696)

(27,601,453)

3,936,476,527

( : , )

(25,014,696)

310

12,683,456

2,642,628,514

(27,601,453)

185

14,250,977

4,902,343

1,700,090

3,127,555

( : )

74,697

(5) () .

30.
(1)

(1)
(2) ()
(1 2)

105

Bond repayment premium

(222,973)

(186,935)

(10,014,694)

12,772,158

(7,578)

7,578

144,045

(211,243)

6,971,259

(7,663,295)

2,933

112,853

1,682,247

14,636,798

47,723

4,819,025

(228,070)

(222,973)

(398,178)

(3,043,435)

5,108,863

(4,645)

120,431

Government Grants

Adjust conversion rights

(372,115)
-

81,100

Bankruptcy bill

The total temporary differences

Temporary depreciation
allowance
Impairment losses on
available-for-sale securities
Loss on valuation of
available-for-sale securities

Stock-based compensation

4,819,025
-

1,682,247

Government subsidies
t

Compressed millet

47,723
339,534
1,700,090

3,127,555

14,216,164
-

Deducted unused deductible tax

2,586,757

(25,014,696)

(27,601,453)

(unit: thousand)
Last period
2,586,757

4,902,343

74,697

Deferred tax assets / liabilities

(27,601,453)

Current period

(25,014,696)

(5) Not recognized deferred tax assets (liabilities) temporary differences are as follows:.

Category
Subsidiaries
Goodwill
Total

(unit: share, won)


Last period
12,683,456

3,936,476,527

310

14,250,977
185

2,642,628,514

Current period

Basic earnings per share for the year and are as follows

30. Earnings per s hare


(1)
Category
Net income ordinary shares (1)
The weighted average number of
common shares outstanding (2) (Note)
Basic earnings per share (1 2)

106

()

( : )

1,131

12,684,587

14,252,108

(1)

( : , )

( 1)

12,683,456

1,131

145

19,886,918

2,890,611,334

14,250,977

(2)
(1 - 2)

(2)

(1) ( 2)
(2) ( 3)
(1 2)

2,642,628,514

( 1)

( : )

( 1) .
( 2)

134,807,167

113,175,653

(*1)
(*2)

2,890,611,334

(*3)

(*2) .

(*1) .

(*3) .
( 3)

107

(unit : share)
14,252,108
1,131

12,684,587

Last period

1,131

(Note1)

(unit : won, share)


Last period

12,683,456

145

19,886,918

2,890,611,334

Current period

14,250,977

Current period

(*)Weighted average number of outstanding common share

Category
The weighted average number of
shares outstanding (1)
Weighted average shares
outstanding magnetic (2)
The weighted average number of
common outstanding shares
(1-2)
(2) Diluted earni ngs per s hare

Category
Net income diluted common shares (1)
(Note 2)
Diluted weighted average number of
common shares outstanding (2) (3)
Diluted earnings per share (1 2)

(unit : won)

(Note 1)I f If the effects induced by the po tential diluting securities in the last period fail to work, the basic and diluted earni ngs per s hare s hall be the same.

(Note1)

Last period

(Note2)The calculation of diluted earnings per share is as follows:

2,642,628,514

Current period

134,807,167

Category
Net profits of ordinary shares in the current
period
Addition
Interest expense of convertible bonds (1)

2,890,611,334

113,175,653

Equity-based compensation expense (* 2)


Interest expense of purchase of new
shares(* 3)
Net profits of diluted shares in the current
period

Becaus e the dilution effect of the converti ble bonds did not happen, it wasnt included into the increas e of the net income in the current period.
Excluding the part of asset replacement in equity-based compensation expense, the after-tax costs decreased.
Excluding the capitalized interest expenses in bond with warrants, the after-tax interest expenses decreased
(Note3)The calculation of the weighted average of outstanding diluted common shares.

108

14,250,977

2,139

(*1)

5,633,803
19,886,918

( 1)

( : )

(*1) .

31.

(1) . (2)

( : )

984,909

3,327,916

737,090

915,877

526,832

3,552,827

172,830

871,169

3,459,815

775,203

709,379

1,107,099

1,518,951

147,230

172,880

642,660

161,979

3,354

137,638

274,234
19

(295,199)

(391,570)

40,177

(271,924)

22,360

(824,159)

(5,735)

109

Category
Weighted average number of common
shares outstanding
Ordinary shares with dilutive potential
The conversion of Convertible bonds, (*
1)
Effective exercise of share options
Total

Effective exercise of share rights

14,250,977

Current period

2,139
5,633,803
19,886,918

(unit : share)
Last period

(Note1)

Because the dilution effects of convertible bonds did not happen, the dilution effects were not included in the diluted common shares.

(1) T h e a m o u n t o f c ash and cas h equivalents on the balance s heet and cas h flow statement can match.

31. Cash Flo w Statement

(unit: thousand)

915,877

526,832

737,090

984,909

3,327,916

Last period

172,830

871,169

3,552,827

Current period

(2) The breakdown of cas h generated fro m operations is as follows:.

Category
Income before income taxes
Retirement Benefits

3,459,815

775,203

Adjustment Items
Equity-based compensation costs

709,379

1,107,099

Loss on disposal of financial assets held for


trading
Depreciation
-

1,518,951

Bad debt expenses

172,880

3,354

137,638

Other bad debt expenses


Amortization

161,979

147,230

40,177

19

642,660

22,360

Loss on disposal of tangible assets


Valuation loss
A subsidiary of investment assets impairment

Foreign currency translation

(5,735)

(295,199)

274,234

Gain on disposal of short-term financial


instruments

(391,570)

Impairment of intangible assets

Gain on disposal of financial assets held for


trading

(271,924)

Miscellaneous profit and loss

For-sale financial assets valuation

(824,159)

Gain on disposal of available-for-sale financial


assets

110

(154,157)

(537,130)

(10,293)

(355,419)

887,164

(41,626)

(4,953)

(91,887)

1,443,520

5,124,765

(176,954)

(541,694)

26,211

(35,532,688)

(2,272,038)

57,925

(1,643,430)

580,624

1,598

()

4,334,664

13,815

28,590,477

(4,821,257)

()

(60,782,160)

(26,867)

(6,339,776)

()

(20,380)

(95,410)

()

(37,680)

()

()

42,640

5,770,286

35,479

44,486

(1,243,745)

(1,782,726)

(1,568,568)

(66,251,316)

42,342

(17,205,767)

()

(3) .

( : )

1,096,157

20,923,076

3,660,152

534,536

1,213,610

1,601,809

409,276

524,826

2,780,000

60,000,000

32.

111

Reversal of allowance for doubtful accounts of


other
Gain on disposal of tangible assets

(154,157)

(537,130)

(10,293)

(355,419)
887,164

(41,626)

(4,953)

(91,887)

Interest income
1,443,520

Valuation loss reversals


Dividend income

5,124,765

(176,954)

(541,694)

26,211

(35,532,688)

(2,272,038)

57,925

(1,643,430)

580,624

1,598

4,334,664
13,815

28,590,477

(4,821,257)

Decrease in prepaid expenses (increased)

The increase in prepayments

(60,782,160)

(26,867)

(6,339,776)

The decrease (increase) of withheld addition


to the tax

(20,380)

(95,410)

Interest expense
Changes in assets and liabilities from operating
activities
Increase in trade receivables
Reduction of the bankruptcy bill (increase)

Decrease in inventories (Increase)

(37,680)

Decrease in accounts receivable

Deposits increased (decreased)

42,640

5,770,286

Increase in trade payables (Decrease)


Reduction of advances
35,479

44,486

(1,243,745)

(1,782,726)

42,342
(66,251,316)

(1,568,568)

(17,205,767)

An increase in accounts payable (Decrease)


An increase in accrued expenses
Payment of severance pay
Increase in return provision
The cash flows from operating activities

(unit: thousand)
1,096,157
-

20,923,076

Category
3,660,152

1,213,610

Category

(3) T h e significant transactions without cas h i nflows and outflows are as follows:.

Category
Exercise conversion rights

Exercise of share options


Other assets under construction

Refinancing of long-term debt

2,780,000

60,000,000

524,826

1,601,809

409,276

534,536

Assets under construction including


depreciation and replacement
Alternative development, including
depreciation and amortization

Long-term prepayments offset


32. Related party transactions

112

(1)


()

, Celltrion Pharma USA, Inc

( : )

() .

(2) .

84,279

33,820,351

86,807

2,441,001

1,080,000

173,614

144,805

1,080,000

84,279

( : )

33,820,351

1,922,720

1,922,720

2,585,806

260,421

(3) .

23,000,000

23,000,000

110,000,000

23,000,000

133,000,000

113

Celltrion Chemical Laboratory, Celltrion Pharma USA, Inc

(1) R e l a t e d P a r t y S t a t u s

Celltrion Healthcare

Related party

Relation
The enterprises that exercise the influence of the
company
Significant influence companies
The enterprises that are influedced by the
company
Subsidiaries
Celltrion

Other related parties

Income

Net income
Expense

Income

Net income

(Unit : KRW 000 )


Expense
Commissions

33,820,351

Product purchases

84,279

Rent Income

Commissions

Interest expense

2,441,001

86,807

Rent Income

173,614

1,080,000

144,805

1,922,720

Repayment

Loans

23,000,000

1,080,000

84,279

33,820,351
1,922,720

2,585,806

260,421

(Note)From the end of the las t perio d to current period, the relationshi p between Celltrion Ho ldings and the co mpany is disassociat ed becaus e the dis posal of share ri ghts done by Celltrio n Holdings caused the ratio
of equity holdi ngs of the company decreased.

Relationship with
the Company
Other special
relationship
Affliated
enterprises
Affiliated
enterprises
Subsidiary

(2) The contents of signi ficant transactions wi th related parties are as follows.

Company

Celltrion Healthcare
Celltrion
Celltrion Holdings
Celltrion Chemical Laboratory
Total

3 Sig n i fica n t funding transactio ns with related parties are as follows:

(Unit : KRW 000 ))

Net income

Net income

110,000,000

23,000,000
133,000,000

Borrowingtransactions

Relationship with the


Company

23,000,000
-

Lending transactions

Company

Affiliated enterprises

Borrowing transactions

Celltrion

Affiliated enterprise

Lending
transactions

Celltrion Holdings
Sum

114

( : )

63,272,387

22,240,000

5,550

106,175,309

54,196,903

22,240,000

63,690,657

412,720

19,460,000

1,978,406

50,000,000

19,460,000

2012.3.20 ~ 2014.2.27

( : )

(4) .

6,000,000

(5) .

-2008 10 24

(6)

2009 6 30 15 , 3 , 5
.

1 -2010 5 17 , 2 -2010 10 5 ,
3 -2012 12 31

,

.

115

Total

Subsidiary

Corporate
Relations

Other special
relationship

Relationship with
the Company

(Unit : KRW 000 )

22,240,000

5,550

63,272,387

Debt

The end of last period

19,460,000

1,978,406

Bond

50,000,000

Debt

The end of this period

Accounts Payable
-

Bond

Long-term Loans

412,720

54,196,903
-

63,690,657

22,240,000

Warranty processing

2012.3.20 ~ 2014.2.27

Warranty

Debt Guarantees

Warranty details

(Unit : KRW 000 )

106,175,309

Bonds with warrants

19,460,000

Accounts Payable

Accrued expenses

Long-term
prepayments
Trade payables

Accounts

(4) Details of the mai n accounts receivables and acco unts payables resulti ng from the transactions with related parties are as follows:

Company

Celltrion Healthcare

Celltrion
Celltrion Chemical
Laboratory

Price Guarantee

6,000,000

National bank

(5) The details of payment guarantee provided by the related party are listed as follows

supplier

CEO

(6) Key agreement with related party

Contents
Primary dealership contract and grant contract modifications

Items
Agreement Name
Celltrion Healthcare
The first contract date-24 Oct 2008

Contract partner

Within 15 years since June 30, 2009, if no written agreement is presented by any party three months
before expiration, the contract will be automatically extended for 5 years.

Contract date

Term

Celltrion healthcares right of monopoly sales of specific products in domestic market would be given to
celltrion pharm, including biosimilars, therapeutic antibody and other new drugs that is being or going to
be developed by celltrion.

1Chasujeong contract date-17 may 2010 2Chasujeong contract date-5 Oct 2010
3Tea revised contract date-Dec 31 2012
Date of second contract revision-October 5.
Date of third overall contract revision- December 31, 2012

Agreement

116


25,000 9 2,780 (,
CT-P06 2,760 ),

. , 2014
2014 12 31 .

25,000

2010 ,
2009 1 23
.

2008 " " 25,000 , 2012 12 " " CT-P06

9 . 25,000 2,760 2011 CT-P06 , CT-P13 2,780


19,460 .

, "CT-P06 " "CT-P13 " 2010 CT-P06 13,000 , 2011 CT-P13 31,600 , 2012
CT-P13 CT-P1333,820 .

5.41% 20.96% .

, 50,000
50,000 .
(7)

( : )

76,216

382,500

458,716

425,500

510,010

84,510

( ) ,
.

(1)

33.

4,100

50,000

117

Notes

Mortgage offer

The settlement of the


price settled by power
of sale

The price settled by


power or sale

In 2010, celltrion healthcare transferred it investment department to celltrion holdings in the way of
spinoff. Celltrion holdings is the largest shareholder of celltrion. Meanwhile , Seo Jeongjin was elected the
companys representative director, who was also the largest shareholder of celltrionholdings.

As the price of sales right, the collateral assets shall be provided for celltrion pharm before the
prepayment liquidates or product payment is deducted.

The amount of KRW 250 BN is the prepayment of 9 types products of celltrion, each product being KRW
27.8 BN (Exception: CT-P06 being KRW 27.6 BN). The amount paid by celltrionhealthcare is first
deducted from the final payment to consumers, unless as of 2014, unliquidated prepayment was
deducted from the payment for other products that had been out of storage. As of December 31, 2014.
the total amount of unliquidated prepayment was returned to celltrion Pharm.

25,000KRW 1 MN

The company signed a "Basic Treaty Authorized Dealer" in 2008, and paid 25000 million KRW in long-term prepayments. According to Overhaul Treaty Authorized Dealer signed in December 2012, prepayments of 9 kinds of products except CT-P06 should
be liquidated at of the end of 2014,.In the 25000 million of long-term prepayments, 2760 million won has offset with the prepayment of CT-P06 in 2011. Because the 2780 million KRW prepayment of CT-P13 offset additionally, long-term prepayments are
19,460 million at the end of the current period.
In addition, based on CT-P06 supplier Treaty "and" CT-P13 supplier Treaty ", the company bought the equivalent of 13,000 million KRW CT-P06 in 2010 and 31,600 million KRW CT-P13 for early safety stock in 2011. With the CT-P13 commercialization
in 2012, additionally purchased 33,820 million KRW CT-P13.
From the end of the period to the present, long-term residual amount of unliquidated advances incurred in obtaining the right to sell and purchasing goods booked and stock amount account for 5.41% and 20.96% respectively of the total assets at the
end.

On the other hand, related to long-term prepayment, the company obtained 50000 shares o f registered ordi nary shares of celltrion holdi ngs and 50000 s hares of registered ordi nary s hares of celltrionhealthcares as
collateral fro m its largest shareholder as well as repres entative director, SeoJeo ng.
7Compensatio n of key management personnel

Current period

76,216

382,500

Competent court

Progress
Pending trial
Before the first
trial verdict

458,716

425,500
510,010

84,510

Last period

(Unit : KRW 000 )

Key administrative staff have direct/indirect authorities and respo nsibilities of planning/co mmand/controlof the co mpany's activities, all directors (whether executive directo r or not) are included. The following is the
compensation fo r key administrative staff.

Items
Short-term employee benefits
Retirement Benefits
Total
33. Contingencies and other co ntractual matters
(1) Pendi ng litigations

Others Giwon Kang

Plaintiff
4,100KRW 000

Roche Diagnostics GmbH

Litigation amounts

50,000KRW 000

Seoul Western District


Court
The Seoul Central
District Court

The contents of main pending litigations where the company is the defendant are as follows.
Types of events
Compensation for damages
Patent infringement claims and
claims prevention

118

, .

(2)

( : , USD)

(D/A)

USD

USD

USD

KRW

79,988

9,000,000

300,000

177,200

2,000,000

50,000,000

5,000,000

79,988

6,093,779

1,129,075

(17,337 )

(60 )

KRW

5,000,000

68,090,262
1,209,063

6,996,483

USD

50,000,000

KRW

71,000,000
2,557,188

7,000,000

LOCAL

KRW

USD


(1,630 USD 250,600)

KRW

(3) ( )

( : )

, 215,489 232,642 .

108,955

157,130

266,085

1 5

34.
1108 "" .
(1) .

119

Currency

Limit commitments

177,200

6,093,779

1,129,075

6,996,483

Spinning liquid

300,000

Collateral information

(Unit : KRW 000 , USD)

The impacts of final results were not reflected in the financial statements since it was difficult to make reasonable predictions about the final results of the above-mentioned litigations from the date of audit report till present.

(2) Agreements of credit lines of financial institutions

Items

USD

9,000,000
79,988

2,000,000

USD

79,988

7,000,000

Non-credit scheme

KRW

5,000,000

USD

Import letter of credit at sight

USD

50,000,000

KRW

Discount Bills

KRW

71,000,000

Small Business Loan

LOCALOthers bought

KRW

Non-credits cheme(D/A)

Driving general corporate


loans
Corporate Loan Facility
KRW
2,557,188

1,209,063

68,090,262

5,000,000 President Guarantee(60KRW 100 MN)


Bond transfer agreement (17,337KRW 1
50,000,000MN)

USD

(1,630 million and USD 250,600)

From the end of this period till now, the main agreements between the company and financial institutions are listed as follow

Financial Institutions

Industrial Bank

National
bank
Total

(3) Other agreements (operating lease and lease contract)

(Unit : KRW 000 )

The company signed a contract for the operation lease and lease o f transportation equipment with Hyundaicapital and Amazoncar. Leas e payments for the current and last period are 215,489 KRW 000 and 232,642 K RW
000.
At the end of the current period, the future annual lease payment plan is as follow.

157,130
108,955

Lease

266,085

Term
Within five years more than 1 years1

Within a year
Total

In accordance with K-I FRS 1108 the Company is considered as a single department based on the report of the sales department. The department information at an

34. Sales department

(1) The operating revenue generated by main products and service is as follow.

enterprise level is as follow.

120

( : )

3,962,570

21,807,411

26,595,095

3,892,193

2,336,407

1,899,126

3,888,159

12,081,370

2,197,607

64,631

1,000,295

38,387,929

( : )

44,707,596

4,200,178

50,083,248

65,800

10,800,002

3,328,115

44,758,994

2,552,765

(2) .

628,057

2,363,495

1,705,346

44,707,596

50,083,248

1,066,143

, () .
35.
(1)

, , , , , ,
.

, , , .

, . , BBB(S&P)

. , . .
. , , .

121

(Unit : KRW 000 )

Godex
3,888,159

2,336,407

26,595,095

12,081,370

1,899,126

3,892,193

3,962,570

21,807,411

Last period

Hepadif
2,197,607

Current period

Tomipool
10,800,002

Items

Somax

Product sales

Others
Product sales
64,631
44,707,596

1,000,295

50,083,248

4,200,178

Ram Island
Total

65,800

Others

(Unit : KRW 000 )

38,387,929

Last period

3,328,115

44,758,994

Current period

2,552,765

628,057

2,363,495

Items

(2) Regional information is as follow.

Domestic

1,705,346

Overseas
Kazakhstan

1,066,143

44,707,596

others
50,083,248

Philippines

Total

In addition, the Companys tangible assets and other no n-current assets are based in Korea (Republic of Korea).
35.Risk management
(1) Financial risk management

As the main object of risk management of the Company, fi nancial assets include cash and cash equivalents, short-term financial instruments, available-for-sale financial assets, trade receivables and other receivables .
Financial liabilities include accounts payable, borrowings, bonds and other debt.

The Company faces the risk of the changes in exchange rate, i nterest rate and market price, which may affect its assets, liabilities and expected trans actions. The goal of risk management is to control the market ris k
of operati ng activities and financial activities. B ased o n risk assess ment and the above mentioned goals, the company wo uld use derivative o r non-derivative risk hedgi ng instruments. The co mpany wo uld o nly hedge t he
risk that affects its cash flow. Derivative instruments are not for the us e of short-term sales o r other investment, but only for the use o f risk hedging. In order to manage credit risk, risk hedging transactio ns are o nly
carried out through the financial institutions with highest credit rati ng, BBB (S&P) or above. In addition, the company manages the credit risk by setting up a relative/absolute amount of mo ney aimed at such risk according
to the credit of trading partners.

122

, , .
1)

( : )

. .

252,078

2,989,439

7,839,080

29,789,827

10,071,947

34,685,001

1,305,760
47,955,957

1,503,033

5,582,500

10,194,465

56,257,173

2)

, .

,
.
.

<>

( : )

50,000,000

54,196,903

11,373,580

50,000,000

69,366,186

5,555,886

826,128

826,128

191,318,683

5,555,886

50,000,000

54,196,903

2 ~5

19,366,186

11,373,580

104,196,903

1 ~2

61,373,580

25,748,200

123

1) Credit Risk Management

The companys financial policies are established annually by the Board of directo rs. Certain trans actions require prior appro val of the Board o f Directors. T he severity and the amo unt of current risk exposure s hall be reported
on a regular basis.

not and realizes the possibilities of problems in the clients ability to pay. With such management activities, the Company will conduct supply adjustments to those clients whose affordability is at risk, and thus lowering the credit risk to the minimum level.

To conduct credit risk management, the Company has transactions with dealers whose credits are higher than a certain level. To conduct credit risk management of financial assets, the Company clearly knows whether the monthly settlement is normal or

(Unit : KRW 000 )


The end of last period
252,078

2,989,439

7,839,080

29,789,827

10,071,947

The end of current period

The maxium level exposure to credit risk of financial assets at the end of current period and at the end of last period are as follows.

Items
Cash and cash equivalents
34,685,001

Financial institutions Deposits


Accounts Receivable

1,305,760
47,955,957

1,503,033

5,582,500

10,194,465

56,257,173

Other receivables
Financial assets at fair value
h
h
fi
l
Available-for-sale financial assets
Total

2) Liquidity Risk Management


For liquidity risk management, the Company has established a short-term and a long-term funding plan to analyse and review the actual total amount of cas h outflows and deal with the expiration of fi nancial liabilities
and assets.
The Company believes that the fi nancial liabilities can be repaid by the cash flow generated by the o perating activities and financial assets. In addition, to control the liquidity risks induced by the temporary and
anomalous economic environment, the Company signs conditional debt contracts with financial institutions related with the bond disco unt agreements and trading finance.

Maturity analysis of the remaining contractual maturities of financial liabilities are as follows.
<End of this period>

826,128

50,000,000

191,318,683

54,196,903

11,373,580

50,000,000

69,366,186

5,555,886

826,128

Total

(Unit : KRW 000 )

5,555,886

50,000,000

54,196,903

2 years~5years

19,366,186

11,373,580

104,196,903

1 year~2years

Other debt payments

Less than 1 year

Financial institutions
loans
-

61,373,580

Items

Other loans

Trade payables

Convertible bonds

25,748,200

Total

Bonds with warrant

124

<>

73,641,575

20,770,803

( : )

14,065,429

64,388,288

50,000,000

172,866,095

14,065,429

2 ~5

64,388,288

64,065,429

1 ~2

20,770,803

23,641,575

108,800,666

3)

. ,
.
.

USD . ,

, . , ,
.

1,255,807

(21,061)

(3,339)

1,545,253.00

328,525.31

2,777,297.10

628,041.85

1,655,120

351,883

2,974,763

672,696

67,346

(8,345)

(92,823)

( : USD, )

1,999,807

(155)

1,190,000.29

2,195

1,895,012.50

253,786

USD

1,275,924

(6,355)

USD

240,487.00

1,209,062.50

USD

USD

1,055.30

(223,348)

10%

()

223,348

10%

1,071.10

234,422

10%

( : )

(234,422)

10%

()

. 10% .

USD

125

End of last period


(Unit : KRW 000 )
64,388,288

Total

73,641,575

20,770,803

2 years~5

50,000,000

1 year~2

64,388,288

Less than 1 year

20,770,803

Items
Trade payables

23,641,575

172,866,095

14,065,429

Other debt payments

64,065,429

14 065 429

108,800,666

Financial institutions
loans
Convertible bonds
Total

3) Market risk management

The goal of the companys market risk management is to minimize the risk to the co mpanys revenue. Market risk is the risk of losses in the revenue o r value the Co mpanys portfolio caused by changes in the interes t
rate, foreign exchange rate and other market factors.
Foreign exchange risk management

Last period

(Unit : USD, KRW 000 )

In terms of exports and i mports of raw materials, the company believes that it was exposed to US dollar foreign ex change risk. In o rder to minimize the foreign exchange risk arising fro moperating activities, the Co mpa ny
uses local currency i n exports and imports and o ther current transactions, deposits and financial transactions. Under the principle of trans fer accounts and unified money expenditure, the Co mpany tries to avoid exchange
position. The Co mpany pro hibits speculative foreign exchange transactions, and regularly mo nitors, evaluates and manages foreign exchange risk.

Current period

1,255,807

(155)

(21,061)

(3,339)

1,545,253.00

328,525.31

2,777,297.10

628,041.85

1,655,120

351,883

2,974,763

672,696

67,346

(8,345)

(92,823)

(6,355)

Translation gains

1,999,807

2,195

KRW amounts

1,190,000.29

253,786

Translation gains

1,895,012.50

1,275,924

KRW amounts

USD

240,487.00

Foreign
currency
type

USD

1,209,062.50

Items
Cash and cash
equivalents
Accounts Receivable
USD

USD

Foreign currency
amounts

Short-term loans

Accounts receivable

Foreign currency
amounts

The carrying amount of monetary assets and liabilities using foreign currency other than functional currency is as follow.

Asset
s
Debts

1,055.30

Apply Currency

Current period

(223,348)

10%rise

Exchange rate fluctuations when income increases


(decrease)
223,348

10%rise

1,071.10

Apply Currency

234,422

10%rise

(Unit : KRW 000 )

(234,422)

10%rise

Exchange rate fluctuations when income


increases (decrease)

Last period

The Company eval uates the currency risk on the exchange rate changes o n a regular basis. When the exchange rate o f functional currency for each foreign currency fl uctuates up to 10%, its influence o n profit is as follow.

Items

USD

126

, .
(2)

( : )

2,989,439

173,859,494

170,870,055

192,572,318

182,500,371

109.38%

156,216,290

109.01%

167,415,488

10,071,947

36.
(1)
2013 12 31 2014 2 25 .
(2)

2014 1 29 , 3 ( 17 ) 90 , .

127

Interest rate risk

Since the Company is fi nanced by issui ng fixed rate bo nds, therefore, it shall not be exposed to cash flow interest rate risk. In the meanti me, the company believes that the changes in fair value interest rate risk level
are not very important.
(2)Capital risk management

(Unit : KRW 000 )


Last period

2,989,439

173,859,494

170,870,055

10,071,947
182,500,371
109.38%

156,216,290

192,572,318

Current period

The Companys capital objectives are to safeguard the Companys ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.
The Company monitors capital on the basis of the geari ng ratio, which is calculated as net debt divided by total capital. Net debt is calculated as total borrowi ngs less cash and cas h equival ents. Total capital is calculated
as equity as shown i n the consolidated statement of fi nancial position pl us net debt.

Items
Total liabilities

Net debt
109.01%

167,415,488

Less: Cash and cash


equivalents
Total equity
Debt
36. Events after the reporting period
(1) Date of approved issuance of financial statements
The financial statements of 2013 ending in December 31 are expected to be approved by the Board of Directors on February 25, 2014.

(2) major financing transactions and repayment


The company, based on the day January 29, 2014, repaid the remaining total nine billion KRW for the third round of convertible bonds issued by the Company (see Note 17).

128

2013 12 31
2 3 .

2.

: 1.

129

Celltrion pharm, Inc.

Internal accounting management system audit opinion

Internal Accounting Managementl System Audit Report carries out the audit of the financial statements of Celltrion pharmaceuticals, Inc. up to 31 December 2013. The audit result of internal accounting management system is attached in accordance with the
third item in the second article of related laws on external audit. .

2. Evaluation report of the company's internal accounting management system

Attachment: 1.Internal accounting management system audit report by external auditors

130




2014 2 21

2013 12 31 . ,

, .

"2013 12 31 , 2013 12 31 ,

" .

.
.

. . ,
.

2013 12 31 2013 12 31 .
.


-2014.jpg

-2014

131

Internal Accounting Management System Audit Report by External Auditor


Celltrion pharm, Inc.
To the Representative Director

21 February 2014
We audited the operations of Celltrion Pharmaceutical, Inc. internal accounting management system up to 31 December 2011. Celltrion Pharmaceutical, Inc. is responsible for setting up its internal accounting management system and preparing its operating
condition assessment report. We are responsible for the audit and report results for the same report content. In the internal accounting management system assessment report, the companys operator wrote: as of 31 December 2011, the results of the internal
accounting management system operating condition states that our companys internal accounting management system is preparing for internal accounting management regulations and organization as well as strictly obeying the relevant control procedures
of internal accounting management.

We conducted the audit according to internal accounting management system audit standards. The standard starts from a material review, and we carried audit procedures and lower-standard recognitions on the internal accounting management system
operating condition assessment report submitted by operators. The audit should fairly convey the companys internal accounting management system, including questions on the internal accounting management system operating condition report, while
recognizing that the content is only relevant within the limited range of its prescribed scope.

Internal accounting regulations and organizations (management and operation) are established in order to collect reliable accounting information and open it to the public, as well as confirm that the financial statement functions in accordance with the
accounting principles that are generally accepted in Korea. However, because of the essential limitations of the internal accounting control system, vital misstatements might not have been identified and avoided. Additionally, when predicting future content
based on the operating assessment reports of the internal accounting control system, we must consider that changes might happen due to different situations, or improper conditions resulting from a failure to observe certain procedures and policies. We must
watch out for the risk inherent in assessment changes and predicted content in the future.

For the internal accounting management system operating condition reports submitted by operators, our audit result states that: the operation condition report, seen it from the view of content, is in accordance with the regulation in the internal accounting
management system model standard.

JoJungeon

Accountancy
Li An
Representative Director
Jo Jungeon

Our audit targeted the internal accounting control regulations up to 31 December 2013, but is not responsible for this regulation after 31 December 2013. This audit report was made based on the relevant laws for external audits of joint-stock companies,
so it may not be proper for other purposes or users.

Evaluation report of the company's internal accounting management system


Evaluation report of the internal accounting management system-2014.jpg
Evaluation report of the i nternal accounti ng management system-2014

132

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