Hyundai Glovis Co., Ltd. and its subsidiaries

Transcription

1 Hyundai Glovis Co., Ltd. and its subsidiaries Interim condensed consolidated for the three-month periods ended with the independent accountants review report

2 Table of contents Report on review of interim condensed consolidated financial statements Interim condensed consolidated financial statements Page Interim condensed consolidated statements of financial position 1-2 Interim condensed consolidated statements of profit or loss 3 Interim condensed consolidated statements of other comprehensive income 4 Interim condensed consolidated statements of changes in equity 5 Interim condensed consolidated statements of cash flows 6 Notes to the interim condensed consolidated financial statements 7-42

3 111, 3-8F Tel: Fax: ey.com/kr Ernst & Young Han Young Taeyoung Building, 111, Yeouigongwon-ro, Yeongdeungpo-gu, Seoul Korea Tel: Fax: ey.com/kr Report on review of interim condensed consolidated financial statements The Shareholders and Board of Directors Hyundai Glovis Co., Ltd. We have reviewed the accompanying interim condensed consolidated financial statements of Hyundai Glovis Co., Ltd. (the Company ) and its subsidiaries (collectively referred to as the Group ), which comprise the interim condensed consolidated statements of financial position as at March 31, 2017, and the related interim condensed consolidated statements of profit or loss, interim condensed consolidated statements of other comprehensive income, interim condensed consolidated statements of changes in equity and interim condensed consolidated statements of cash flows for the threemonth periods ended, and a summary of significant accounting policies and other explanatory information. Management's responsibility for the Interim condensed consolidated financial statements Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with Korean International Financial Reporting Standards (KIFRS) 1034, and for such internal control as management determines is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. We conducted our review in accordance with the review standards for interim financial statements in the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with KIFRS 1034.

4 Other matter We have audited the consolidated statement of financial position of the Group as at December 31, 2016, and the related consolidated statements of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended in accordance with auditing standards generally accepted in the Republic of Korea (not presented herein), and our report dated March 09, 2017 expressed an unqualified opinion thereon. The accompanying consolidated statement of financial position as at December 31, 2016 presented for comparative purpose are not different, in all material respects, from the above audited consolidated statement of financial position. May 15, 2017 This review report is effective as at May 15, 2017, the independent auditors review report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the independent auditors review date to the time this review report is used. Such events and circumstances could significantly affect the accompanying interim condensed consolidated financial statements and may result in modifications to this review report.

5 Hyundai Glovis Co., Ltd. and its subsidiaries Interim condensed consolidated financial statements for the three-month periods ended The accompanying interim condensed consolidated financial statements, including all footnotes and disclosures, have been prepared by, and are the responsibility of, the Group. Kyung-Bae Kim Chief Executive Officer Hyundai Glovis Co., Ltd.

6 Interim condensed consolidated statements of financial position as at March 31, 2017 and December 31, 2016 (Korean won in thousands) Notes Mar. 31, 2017 Dec. 31, 2016 Assets Non-current assets: Other non-current accounts receivable 4,5,6,23 15,929,623 14,887,563 Other non-current financial assets 4,5 1,845,105 16,939,174 Available-for-sale financial assets 4,5,9 248,725, ,700,235 Investments in associates and joint ventures ,164, ,152,808 Property, plant and equipment, net 11,24 3,074,004,064 3,108,903,706 Intangible assets, net 12 66,157,284 70,078,612 Recourse rights, net ,602, ,133,959 Deferred tax assets 24 11,846,847 12,669,552 Other non-current assets 8 2,200,043 2,173,513 Total non-current assets 3,960,474,680 4,031,639,122 Current assets: Cash and cash equivalents 3,4,5 476,474, ,192,729 Other current financial assets 4,5 786,322, ,987,220 Trade receivables, net 4,5,6,23 1,942,545,606 1,979,948,832 Other accounts receivable, net 4,5,6,23 57,917,604 44,971,609 Inventories 7 719,501, ,264,101 Recourse rights, net 16 27,231,789 26,485,754 Other current assets 8 108,917,050 94,987,983 Total current assets 4,118,910,964 3,935,838,228 Total assets 8,079,385,644 7,967,477,350 (Continued) 1

7 Interim condensed consolidated statements of financial position as at March 31, 2017 and December 31, 2016 (cont'd) (Korean won in thousands) Notes Mar. 31, 2017 Dec. 31, 2016 Equity and liabilities Equity Issued capital 1 18,750,000 18,750,000 Share premium 153,618, ,618,863 Accumulated other comprehensive income 29,701,540 74,390,146 Retained earnings 3,365,451,704 3,231,362,056 Other components of equity (927,329) (927,328) Equity attributable to owners of the parent 3,566,594,778 3,477,193,737 Non-controlling interests 242, ,393 Total equity 3,566,837,767 3,477,446,130 Liabilities Non-current liabilities: Long-term borrowings 4,5,15 723,660, ,186,967 Other non-current financial liabilities 4,5,23 661,473, ,065,693 Deferred tax liability 175,046, ,290,380 Defined benefit pension liabilities 17 6,063,464 3,206,414 Provision for sales warranties ,464, ,783,644 Other non-current liabilities 18 3,666,282 3,550,290 Total non-current liabilities 1,687,374,400 1,872,083,388 Current liabilities: Trade payables 4,5,23 1,157,727,988 1,145,883,108 Other accounts payable 4,5,13,23 355,006, ,024,256 Short-term borrowings 4,5,15 1,073,245,255 1,013,602,783 Other current financial liabilities 4,5,23 40,834,532 46,585,921 Income tax payable 47,165,191 43,751,716 Provision for sales warranties 16 41,890,294 38,310,365 Other current liabilities ,303, ,789,683 Total current liabilities 2,825,173,477 2,617,947,832 Total liabilities 4,512,547,877 4,490,031,220 Total equity and liabilities 8,079,385,644 7,967,477,350 The notes are an integral part of the interim condensed consolidated financial statements. 2

8 Interim condensed consolidated statements of profit or loss for the three months ended (Korean won in thousands, except earnings per share amounts) Notes Sales 23,26 3,977,250,889 3,762,847,178 Cost of sales 23 3,684,316,357 3,469,004,214 Gross profit 292,934, ,842,964 Selling and administrative expenses ,172, ,374,524 Operating profit 19,26 191,761, ,468,440 Other income (expenses): Finance income 19 7,509,776 8,052,485 Other operating income ,107, ,226,741 Finance costs 19 14,903,459 14,808,517 Other operating expenses ,671, ,953,989 Equity income on investments 10 8,205,853 9,417,204 Profit for the period before tax 302,008, ,402,364 Income tax expense 21 55,251,885 61,112,381 Profit for the period 246,756, ,289,983 Attributable to: Owners of the parent 246,772, ,261,512 Non-controlling interests (15,538) 28, ,756, ,289,982 Earnings per share: Basic and diluted, profit for the period attributable to owners of the parent 22 6,581 4,780 The notes are an integral part of the interim condensed consolidated financial statements. 3

9 Interim condensed consolidated statements of other comprehensive income for the three months ended (Korean won in thousands) Notes Profit for the period 246,756, ,289,983 Other comprehensive income: 21 Other comprehensive income to be reclassified to profit or loss in subsequent periods: Net gain (loss) on valuation of available-for-sale financial assets 9,21 (11,881,044) (16,918,169) Equity adjustment in equity method 10,21 2,355,175 3,205,919 Exchange differences on translation of foreign operations 21 (35,156,582) (678,766) (44,682,451) (14,391,016) Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Re-measurement loss on defined benefit plans 17,21 (175,571) (103,577) Others (7,243) (23,838) (182,814) (127,415) Other comprehensive income for the period, net of tax (44,865,265) (14,518,431) Total comprehensive income for the period, net of tax 201,891, ,771,552 Attributable to: Owners of the parent 201,901, ,718,666 Non-controlling interests (9,384) 52, ,891, ,771,552 The notes are an integral part of the interim condensed consolidated financial statements. 4

10 Interim condensed consolidated statements of changes in equity for the three months ended (Korean won in thousands) Attributable to the owners of the parent Issued capital Share premium Accumulated other comprehensive income Retained earnings Other components of equity Total Non-controlling interests Total equity As at January 1, ,750, ,618,863 88,388,349 2,836,796,108 (927,328) 3,096,625, ,184 3,096,765,176 Profit for the period ,261, ,261,512 28, ,289,983 Other comprehensive income for the period: Available-for-sale financial assets - - (16,918,169) - - (16,918,169) - (16,918,169) Re-measurement gain on defined benefit plans (103,577) - (103,577) - (103,577) Changes in equity adjustment in equity method - - 3,205, ,205,919-3,205,919 Exchange differences on translations of foreign operations - - (703,182) - - (703,182) 24,416 (678,766) Others (23,838) - (23,838) - (23,838) Total comprehensive income for the period, net of tax - - (14,415,432) 179,134, ,718,665 52, ,771,552 Dividend distributions (112,500,000) - (112,500,000) - (112,500,000) Change in scope of consolidated subsidiaries (21) (21) As at March 31, ,750, ,618,863 73,972,917 2,903,430,205 (927,328) 3,148,844, ,050 3,149,036,707 As at January 1, ,750, ,618,863 74,390,146 3,231,362,056 (927,329) 3,477,193, ,393 3,477,446,130 Profit for the period ,772, ,772,461 (15,538) 246,756,923 Other comprehensive income for the period: Available-for-sale financial assets - - (11,881,044) - - (11,881,044) - (11,881,044) Re-measurement loss on defined benefit plans (175,571) - (175,571) - (175,571) Changes in equity adjustment in equity method - - 2,355, ,355,175-2,355,175 Exchange differences on translations of foreign operations - - (35,162,737) - - (35,162,737) 6,155 (35,156,582) Others (7,243) - (7,243) - (7,243) Total comprehensive income for the period, net of tax - - (44,688,606) 246,589, ,901,041 (9,383) 201,891,658 Dividend distributions (112,500,000) - (112,500,000) - (112,500,000) Change in scope of consolidated subsidiaries (21) (21) As at March 31, ,750, ,618,863 29,701,540 3,365,451,703 (927,329) 3,566,594, ,989 3,566,837,767 The notes are an integral part of the interim condensed consolidated financial statements. 5

11 Interim condensed consolidated statements of cash flows for the three months ended (Korean won in thousands) Operating activities Notes Profit for the period 246,756, ,289,983 Non-cash adjustments to reconcile profit for the period to net cash flows 25 (12,609,004) 59,025,045 Working capital adjustments 25 (46,705,231) 49,139,284 Interest received 4,795,590 5,190,996 Interest paid (14,926,770) (11,776,987) Dividends received 3,646,608 77,999 Income tax paid (36,749,649) (18,794,293) Net cash flows provided by operating activities 144,208, ,152,027 Investing activities Increase in other current financial assets (290,190,515) (286,008,495) Decrease in other non-current financial assets 14,607,555 - Decrease (increase) in other non-current accounts receivable 299,369 (146,905) Proceeds from disposal of investments in associates 658, ,231 Proceeds from disposal of property, plant and equipment 246, ,830 Purchase of property, plant and equipment (15,242,177) (201,134,474) Purchase of intangible assets (243,899) (220,423) Net cash flows used in investing activities (289,864,711) (486,646,236) Financing activities Decrease in other current financial liabilities (7,180,830) (41,182,909) Increase in other non-current financial liabilities Proceeds from short-term borrowings 97,943,728 62,270,065 Decrease in other accounts payable - (552,863) Proceeds from (repayment of) long-term borrowings (39,410,120) 139,953,749 Net cash flows provided by financing activities 51,352, ,488,681 Net increase (decrease) in cash and cash equivalents (94,303,466) (64,005,528) Net foreign exchange difference (24,414,677) 1,906,285 Cash and cash equivalents at January 1 595,192, ,141,077 Cash and cash equivalents at March ,474, ,041,834 The notes are an integral part of the interim condensed consolidated financial statements. 6

12 1. Corporate information 1.1 Summary of parent entity Hyundai Glovis Co., Ltd. (the Company or Parent entity ) was established on February 22, 2001 under the laws of the Republic of Korea to engage in rendering logistics, transportation, sale of completely-knock-down (CKD) parts and related activities. The Company listed its ordinary shares on the Korea Exchange ( KRX ) on December 26, 2005 and as at March 31, 2017, it issued 37,500,000 ordinary shares of issued capital amounting to 18,750,000 thousand. Information of the Company s structure is provided in Note 1.2. The Company is an affiliate of the Hyundai Automotive Group and information on the related party transactions is provided in Note 23. The shareholders of the Company and their shareholdings as at March 31, 2017 are as follows: Shareholders Number of shares Equity interest (%) Eui Sun Chung 8,732, % Mong Koo Chung 2,517, % Hyundai Motor Chung Mong Koo Foundation 1,671, % Hyundai Motor Co., Ltd. 1,830, % Den Norske Amerikalinje AS 4,513, % Others 18,234, % 37,500, % 1.2 Summary of subsidiaries 1) The consolidated subsidiaries as at March 31, 2017 are as follows: Subsidiary Equity interest (%) Country of domicile Year end Type of business Glovis America Inc. (*1) 100 USA Dec. 31 Logistics and transportation Glovis Slovakia s.r.o. 100 Slovakia Dec. 31 Transportation and C/C Operation Beijing Glovis Warehousing & Transportation Co., Ltd. (*2) 100 China Dec. 31 Logistics and transportation Glovis Europe, Gmbh (*3) 100 Germany Dec. 31 Logistics and transportation Hyundai Glovis Czech Republic s.r.o. 100 Czech Dec. 31 Transportation and C/C Operation Glovis India, Pvt. Ltd. 100 India Dec. 31 Logistics and transportation Glovis Russia LLC 100 Russia Dec. 31 Logistics and transportation Hyundai Glovis Lojistik Sanayi ve Ticaret. Ltd. Sti. 100 Turkey Dec. 31 Logistics and transportation Glovis Australia, Pty, Ltd. 100 Australia Dec. 31 Logistics and transportation Glovis Brazil Logistica LTDA 100 Brazil Dec. 31 Logistics and transportation Hyundai Glovis Mexico S de RL de CV 100 Mexico Dec. 31 Logistics and transportation GL NV15 Shipping Inc. and others (*4) - Panama and others Dec. 31 Shipping finance (*1) Glovis Alabama LLC, Glovis Georgia LLC, Glovis Canada, Inc., and Global Logistics New Jersey LLC are wholly owned by Glovis America, Inc. (*2) Tianjin Glovis Automotive Parts Co., Ltd. is wholly owned by Beijing Glovis Warehousing & Transportation Co., Ltd. (*3) Adampol s.a. is wholly owned by Glovis Europe, Gmbh. Vectura, Adampol Slovakia S.R.O. and Adampol Czech S.R.O. are wholly owned by Adampol s.a. Adampol s.a. owns 50% of the shares of BM Vehicle Logistics GmbH and Vectura own 99.9% of the shares of Vectura Invest. (*4) Although the Company does not hold a majority ownership in GL NV15 Shipping Inc. and others, the Company includes GL NV15 Shipping Inc. and others in the consolidated financial statements as the Company exercises significant influence on the financial and operating decisions of these subsidiaries. 137

13 1. Corporate information (cont d) 2) The summarized financial information of subsidiaries as at and for the period ended March 31, 2017, which has been included in consolidation is as follows (Korean won in thousands): As at March 31, 2017 Subsidiary (*1) Assets Liabilities Equity Glovis America Inc. 519,648, ,616, ,032,406 Beijing Glovis Warehousing & Transportation Co., Ltd. 95,007,703 40,965,423 54,042,280 Glovis Europe, Gmbh 198,149, ,279,559 73,870,177 Glovis India, Pvt. Ltd. 120,554,771 50,058,568 70,496,203 Glovis Russia LLC 31,433,547 16,963,579 14,469,968 As at December 31, 2016 Subsidiary (*1) Assets Liabilities Equity Glovis America Inc. 604,336, ,472, ,864,249 Beijing Glovis Warehousing & Transportation Co., Ltd. 97,806,833 45,620,584 52,186,249 Glovis Europe, Gmbh 274,381, ,562, ,819,158 Glovis India, Pvt. Ltd. 137,205,504 47,299,193 89,906,311 Glovis Russia LLC 34,877,428 16,640,924 18,236,504 For the period ended March 31, 2017 Subsidiary (*1) Sales Profit for the period Total comprehensive income Glovis America Inc. 370,624,022 12,640,801 12,640,801 Beijing Glovis Warehousing & Transportation Co., Ltd. 67,705,667 5,350,260 5,350,260 Glovis Europe, Gmbh 169,005,174 9,699,847 9,699,847 Glovis India, Pvt. Ltd. 88,303,208 (1,853,654) (1,853,654) Glovis Russia LLC. 35,237,148 1,260,011 1,260,011 For the period ended March 31, 2016 Subsidiary (*1) Sales Profit for the period Total comprehensive income Glovis America Inc. 362,146,540 19,405,480 19,405,480 Beijing Glovis Warehousing & Transportation Co., Ltd. 67,581,480 5,138,184 5,138,184 Glovis Europe, Gmbh 162,610,875 7,712,317 7,712,317 Glovis India, Pvt. Ltd. 98,011,420 3,549,440 3,549,440 Glovis Russia LLC. 27,264, , ,193 (*1) The financial information presented above reflects the elimination of intra-group transactions. 2. Basis of financial statement preparation and changes to the Group s accounting policies 2.1 Basis of preparation The Company and its subsidiaries (collectively referred to as the Group ) prepares the interim condensed consolidated financial statements for the three months ended March 31, 2017 in Korean language in accordance with Korean International Financial Reporting Standards (KIFRS) 1034 Interim Financial Reporting enacted by the Act on External Audit of Stock Companies. The accompanying consolidated financial statements have been translated into English from the Korean language financial statements. In the event of any differences in interpreting the financial statements or the independent auditors report thereon, the Korean version, which is used for regulatory reporting purposes, shall prevail. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements as at 31 December

14 2. Basis of financial statement preparation and changes to the Group s accounting policies (cont d) 2.2 New and amended standards and interpretations The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group s annual consolidated financial statements for the year ended 31 December 2016, except for the adoption of new standards and interpretations to KIFRS effective as at January 1, The nature and the impact of each new standard or amendment are described below: KIFRS 1109 Financial Instruments The KASB issued the final version of KIFRS 1109 Financial Instruments that replaces KIFRS 1039 Financial Instruments: Recognition and Measurement and all previous versions. KIFRS 1109 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. KIFRS 1109 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group is examining its impact on the consolidated financial statements and plans to adopt the new standard on the required effective date. The Group has not made changes to its internal control procedures or the accounting system related to the adoption of the standard, and did not analyze the effect of the standard on its consolidated financial statements; however, the general effects of the standard, by major items, on the financial statements are as follows. Classification and measurement of financial assets KIFRS 1109 requires the Group to classify financial instruments as subsequently measured at amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL), on the basis of the holder s business model and instrument s contractual cash flow characteristics as shown below. Hybrid contracts with hosts that are assets, are classified in their entirety instead of bifurcating the embedded derivatives. Business model Purpose of collecting contractual cash flows Purpose of collecting and selling contractual cash flows Purpose of selling, etc. Contractual cash flow characteristics Composed solely of principal and interest Amortized cost measurement (*1) FVOCI measurement (*1) FVTPL measurement Other FVTPL measurement (*2) (*1) An entity may irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or reduces an accounting mismatch. (*2) An entity may make an irrevocable election to present in other comprehensive income changes in the fair value of an investment in an equity instrument that is not held for trading. As at March 31, 2017, the Group has financial instruments classified as loans and receivables, available-forsale financial instruments (equity instruments) and financial assets at fair value through profit or loss. According to KIFRS 1109, the loans and receivables are classified as items measured at amortized cost with the purpose of receiving contractual cash flows, and available-for-sale equity instruments can be measured at FVOCI, and financial assets at fair value through profit or loss are classified as at FVTPL measurement. These do not have a material impact on the financial statements. Classification and measurement of financial liabilities Based on the new KIFRS 1109, changes in the fair value of a financial liability designated as measured at FVTPL that arise from changes in the liability s credit risk are presented in other comprehensive income, instead of profit or loss. The changes in the liability s credit risk are recognized in profit or loss if the changes create or enlarge an accounting mismatch had it been presented in other comprehensive income. 9

15 2. Basis of financial statement preparation and changes to the Group s accounting policies (cont d) Impairment: financial assets and contract assets Under the current KIFRS 1039, impairment losses are recognized when there is objective evidence of impairment based on an incurred loss model; however, under KIFRS 1109, impairment losses are recognized on debt instruments, lease receivables, contract assets, loan commitment, and financial guarantee contracts that were accounted for at amortized cost, or FVOCI, based on an expected credit loss impairment model. The Group will analyze the impact of consolidated financial statements by examining the application of the expected loss model. KIFRS 1109 outlines a three-stage model for 12-month expected credit losses, or lifetime expected credit losses based on changes in credit risk since initial recognition of financial assets; as a result, credit losses can be recognized earlier than the current KIFRS Stage 1 Stage 2 Stage 3 Classification (*1) The credit risk on a financial instrument has not increased significantly since initial recognition (*2) The credit risk on a financial instrument has increased significantly since initial recognition Credit-impaired Loss allowance 12-month expected credit losses: The expected credit losses that result from default events on a financial instrument that is possible within the 12 months after the reporting date. Lifetime expected credit losses: The expected credit losses that result from all possible default events over the expected life of a financial instrument. (*1) For trade receivables or contract assets in accordance with KIFRS 1115 Revenue from Contracts with Customers, which does not contain a significant financing component, the Group is to measure the loss allowance at an amount equal to lifetime expected credit losses; however, if it contains a significant financial component, the Group can choose as its accounting policy to measure the loss allowance at an amount equal to lifetime expected credit losses. For lease receivables, the Group may choose as its accounting policy to measure the loss allowance at an amount equal to lifetime expected credit losses. (*2) For financial instruments with low credit risk at the reporting date, it may be considered that the credit risk did not increase significantly. Under KIFRS 1109, the Group is to recognize the cumulative changes in lifetime expected credit losses since initial recognition as a loss allowance for a financial asset that is considered credit-impaired at initial recognition. Hedge accounting KIFRS 1109 applies mechanics of hedge accounting (fair value hedge accounting, cash flow hedge, foreign entities net investment hedge) specified in the current KIFRS 1039; however, the Group changed from the complex and rule-based hedge accounting requirements of KIFRS 1039 to the principle-based approach which focuses on the risk management activities. Requirements for application of hedge accounting are relaxed by enlarging items designated as hedges and hedging instruments, evaluating the high risk avoidance effects, and eliminating the quantitative criteria (80 ~ 125%). Upon application of hedge accounting of KIFRS 1109, some transactions that do not meet the criteria for hedge accounting of the current KIFRS 1039 may be accounted for using the hedge accounting; therefore, volatility in profit or loss may be reduced. The Group can elect to continue to apply the current KIFRS 1039 hedge accounting requirements upon initial application of KIFRS Accordingly, the Group will review the requirements for mitigating hedge accounting related to derivative transactions and will improve and change the related system when determining accounting policies. 10

16 2. Basis of financial statement preparation and changes to the Group s accounting policies (cont d) KIFRS 1115 Revenue from Contracts with Customers Under KIFRS 1115, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under KIFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, Early adoption is permitted. The Group is examining its impact on the consolidated financial statements and plans to adopt the new standard on the required effective date. Amendments to KIFRS 1007 Statement of Cash Flows: Disclosure Initiative The amendments to KIFRS 1007 Statement of Cash Flows are part of the IASB s Disclosure Initiative and require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. Application of the amendments will result in additional disclosures provided by the Group. Amendments to KIFRS 1012 Recognition of Deferred Tax Assets for Unrealized Losses The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in the opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 January 2017 with early application permitted. If an entity applies the amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group. 3. Cash and cash equivalents Cash and cash equivalents as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Cash at banks and on hand 196,170, ,183,686 Short-term deposits 280,393, ,009,043 Government grants (90,000) - 476,474, ,192,729 11

17 4. Financial assets and liabilities by category 4.1 Details of financial assets and liabilities by category as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): At fair value through profit or loss 2017 Available-forsale financial assets Loans and Financial assets other receivables Total Cash and cash equivalents - 476,474, ,474,586 Other current financial assets 4,078, ,243, ,322,563 Trade receivables - 1,942,545,606-1,942,545,606 Other accounts receivable - 57,917,604-57,917,604 Other non-current accounts receivable - 15,929,623-15,929,623 Other non-current financial assets - 1,845,105-1,845,105 Available-for-sale financial assets ,725, ,725,232 4,078,772 3,276,956, ,725,232 3,529,760, At fair value Financial liabilities through profit or loss Other financial liabilities Total Trade payables - 1,157,727,988 1,157,727,988 Other payables - 355,006, ,006,629 Short-term borrowings - 1,073,245,255 1,073,245,255 Other current financial liabilities 4,824,319 36,010,213 40,834,532 Long-term borrowings - 723,660, ,660,353 Other non-current financial liabilities - 661,473, ,473,762 4,824,319 4,007,124,200 4,011,948,519 At fair value through profit or loss 2016 Available-forsale financial assets Loans and Financial assets other receivables Total Cash and cash equivalents - 595,192, ,192,729 Other current financial assets 3,493, ,493, ,987,220 Trade receivables - 1,979,948,832-1,979,948,832 Other accounts receivable - 44,971,609-44,971,609 Other non-current accounts receivable - 14,887,563-14,887,563 Other non-current financial assets - 16,939,174-16,939,174 Available-for-sale financial assets ,700, ,700,235 3,493,698 3,152,433, ,700,235 3,419,627, At fair value Financial liabilities through profit or loss Other financial liabilities Total Trade payables - 1,145,883,108 1,145,883,108 Other payables - 214,024, ,024,256 Short-term borrowings - 1,013,602,783 1,013,602,783 Other current financial liabilities 8,154,198 38,431,723 46,585,921 Long-term borrowings - 825,186, ,186,968 Other non-current financial liabilities - 726,065, ,065,693 8,154,198 3,963,194,531 3,971,348,729 12

18 4. Financial assets and liabilities by category (cont d) 4.2 Revenues and expenses for financial assets and liabilities by category for the three months ended March 31, 2017 and 2016 are as follows (Korean won in thousands): Financial assets and liabilities at fair value through profit or loss Available-for-sale financial investments 2017 Loans and receivables Other financial liabilities Interest income - - 4,783,509-4,783,509 Dividends - 2,726, ,726,267 Gain on foreign currency transactions ,505,543 50,292,475 78,798,018 Gain on foreign currency translations ,200, ,423, ,623,481 Gain on derivatives transactions 3,703, ,703,424 Gain on derivatives valuations 4,078, ,078,772 Interest expenses (14,903,459) (14,903,459) Loss on foreign currency transactions - - (56,607,176) (24,807,550) (81,414,726) Loss on foreign currency translations - - (48,635,641) (9,473,441) (58,109,082) Loss on derivatives transactions (3,776,154) (3,776,154) Loss on derivatives valuations (4,824,319) (4,824,319) Bad debt expenses - - (3,005,537) - (3,005,537) Other bad debt expenses - - (65,783) - (65,783) Gain on available-for-sale financial assets - (11,881,044) - - (11,881,044) (818,277) (9,154,777) (61,825,080) 162,531,500 90,733,366 Total 13

19 4. Financial assets and liabilities by category (cont d) Financial assets and liabilities at fair value through profit or loss Available-for-sale financial investments 2016 Loans and receivables Other financial liabilities Total Interest income - - 5,304,216-5,304,216 Dividends - 2,748, ,748,269 Gain on foreign currency transactions 1,499-52,535,219 38,158,361 90,695,079 Gain on foreign currency translations ,191,778 73,869,417 84,061,195 Gain on derivatives transactions 1,595, ,595,553 Gain on derivatives valuations 9,061, ,061,865 Interest expenses (14,808,517) (14,808,517) Loss on foreign currency transactions (15,590) - (42,357,177) (42,535,025) (84,907,792) Loss on foreign currency translations - - (39,305,867) (3,486,670) (42,792,537) Loss on derivatives transactions (5,324,883) (5,324,883) Loss on derivatives valuations (3,960,432) (3,960,432) Reversal of allowance for doubtful accounts - - 2,397,847-2,397,847 Other bad debt expenses - - (395,822) - (395,822) Impairment loss on available-for-sale financial assets - (2,897,635) - - (2,897,635) Gain on available-for-sale financial assets - (16,918,169) - - (16,918,169) 1,358,012 (17,067,535) (11,629,806) 51,197,566 23,858,237 14

20 5. Fair value of other financial assets and liabilities 5.1 Other financial assets as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Current: Short-term financial instruments 762,769, ,055,907 Financial derivative assets (*1) 4,078,772 3,493,698 Current portion of finance lease receivables 11,356,061 13,741,714 Current loans 8,117,884 8,695, ,322, ,987,220 Non-current: Long-term financial instruments - 15,073,574 Non-current finance lease receivables 1,831,258 1,850,931 Non-current loans 13,847 14,669 1,845,105 16,939,174 (*1) The Group enters into currency forward contracts to hedge the risk of changes in foreign exchange rates related primarily to its operating activities. Currency forward contracts are not designed to hedge the risk of changes in fair value or cash flows and net investments in a foreign operation. 5.2 Other financial liabilities as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Current: Financial derivative liabilities (*1) 4,824,319 8,154,198 Current portion of long-term accounts payable (*2) 27,037,221 28,712,021 Current portion of long-term accrued expenses 8,676,055 9,394,120 Current portion of long-term finance lease payables 296, ,582 40,834,532 46,585,921 Non-current: Long-term other accounts payable (*2) 650,693, ,133,369 Long-term accrued expenses 9,511,777 12,969,157 Long-term guarantee deposits 633, ,752 Long-term finance lease payables 634, , ,473, ,065,693 (*1) The Group enters into currency forward contracts to hedge the risk of changes in foreign exchange rates related primarily to its operating activities. Currency forward contracts are not designed to hedge the risk of changes in fair value or cash flows and net investments in a foreign operation. (*2) The Group has long-term other payables in relation to the Bare Boat Charter Hire Purchase ( BBCHP ) agreements. Pursuant to this agreement, the Group makes installment payments during the period specified by the BBCHP agreements and is expected to receive title to the asset at the end of the specified hire purchase term. As at March 31, 2017, the Group has pledged a portion of its property, plant and equipment (ships) as a performance guarantee in accordance with the BBCHP agreements. The Group recognized long-term payables for potential liabilities as option contracts, which are a part of an acquisition contract that Glovis Europe GmbH has rights to buy the remaining 30% of shares from the shareholders, and the shareholders have rights to sell their remaining 30% of shares to Glovis Europe GmbH. 15

21 5. Fair value of other financial assets and liabilities (cont d) Long-term other accounts payable at present value discounts as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Long-term other accounts payable 834,653, ,800,483 Present value discounts (156,922,901) (178,955,093) Net value 677,730, ,845,390 Current 27,037,221 28,712,021 Non-current 650,693, ,133, Hedging activities and derivative instruments The Group enters into derivative contracts for the purpose of reducing exposures to foreign exchange risk and other market risk, and details as at March 31, 2017 are as follows (U.S. dollar): (1) Foreign exchange risk Currency forwards Financial institution Contract date Due date Exchange rate Contract amount Deutche Bank and others ,111 ~ 1, ,749,879 (2) Other market risks Commodity forwards Financial institution Contract date Due date Contract quantities Contract amount Triland and others , ,387, Derivative assets and liabilities as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Assets Liabilities Assets Liabilities Currency forwards 3,348,349 1,038,197 2,345,157 6,156,662 Commodity forwards 730,423 3,786,122 1,148,541 1,997,536 4,078,772 4,824,319 3,493,698 8,154, Loss and gain on derivative transactions and valuation for the three months ended March 31, 2017 and 2016 are as follows (Korean won in thousands): Gain on derivative transactions Loss on derivative transactions 2017 Gain on valuation of derivatives Loss on valuation of derivatives Currency forwards 3,598, ,576 3,348,349 1,038,197 Commodity forwards 104,474 3,318, ,423 3,786,122 3,703,424 3,776,154 4,078,772 4,824,319 Gain on derivative transactions Loss on derivative transactions 2016 Gain on valuation of derivatives Loss on valuation of derivatives Currency forwards 853,125 4,118,965 7,894,053 1,577,939 Commodity forwards 609, ,289 1,167,812 1,255,179 Commodity options 132, ,629-1,127,314 1,595,553 5,324,883 9,061,865 3,960,432 16

22 5. Fair value of other financial assets and liabilities (cont d) 5.4 Finance leases Gross lease investments and the present value of minimum lease payment as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Gross investment in lease: 13,401,195 15,891,595 Within 1 year (current) 11,535,152 13,995,139 1 ~ 5 years (non-current) 1,866,043 1,896,456 Unrealized interest revenue 213, ,950 Net investment in lease (present value of minimum lease payment) 13,187,320 15,592,645 Within 1 year (current) 3,370,946 5,095,526 1 ~ 5 years (non-current) 1,230,821 1,252,823 Present value of unguaranteed residual value (current) 7,985,115 8,646,188 Present value of unguaranteed residual value (non-current) 600, , Details of finance lease payables as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Present value Present value of minimum of minimum Minimum lease lease Minimum lease lease payment payment payment payment Within 1 year 305, , , ,582 Over 1 year and within 5 years 655, , , , , ,746 1,087,411 1,069,997 Adjustment of present value 29,390 17,414 Present value of finance lease liabilities 931,746 1,069,997 Deducted: Transfers to current portion (296,937) (325,582) 634, , Operating lease expenses As the Group has entered into operating lease agreements for warehouses and automobile, the minimum lease payments plan for operating lease expenses as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Within 1 year 15,911,019 13,133,508 Over 1 year and within 5 years 17,553,660 17,824,861 Over 5 years 6,626,059 7,928,397 40,090,738 38,886,766 17

23 5. Fair value of other financial assets and liabilities (cont d) 5.6 Fair value (1) Fair value and book value of financial instruments as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Book value Fair value Financial assets: Cash and cash equivalents 476,474, ,192, ,474, ,192,729 Trade receivables 1,942,545,606 1,979,948,832 1,942,545,606 1,979,948,832 Other accounts receivable 57,917,604 44,971,609 57,917,604 44,971,609 Other non-current accounts receivable 15,929,623 14,887,563 15,929,623 14,887,563 Other current financial assets 786,322, ,987, ,322, ,987,220 Other long-term financial assets 1,845,105 16,939,174 1,845,105 16,939,174 Available-for-sale financial assets (*1) 245,683, ,738, ,683, ,738,926 Available-for-sale financial assets (*2) 3,041,613 2,961,309 3,041,613 2,961,309 3,529,760,319 3,419,627,362 3,529,760,319 3,419,627,362 Financial liabilities: Trade payables 1,157,727,988 1,145,883,108 1,157,727,988 1,145,883,108 Other accounts payable 355,006, ,024, ,006, ,024,256 Short-term borrowings 1,073,245,255 1,013,602,783 1,073,245,255 1,013,602,783 Long-term borrowings 723,660, ,186, ,660, ,186,968 Other current financial liabilities 40,834,532 46,585,921 40,834,532 46,585,921 Other non-current financial liabilities 661,473, ,065, ,473, ,065,693 4,011,948,519 3,971,348,729 4,011,948,519 3,971,348,729 (*1) The book value of financial instruments is the fair value quoted in active markets. (*2) It is measured at acquisition costs as no quoted prices in active markets exist and fair values are not reliably measured and the investment in the special construction mutual aid association was valued at fair value. (2) Hierarchy of fair value The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data 18

24 5. Fair value of other financial assets and liabilities (cont d) (3) The following table provides the fair value measurement hierarchy of the Group s assets and liabilities. Quantitative disclosures of fair value measurement hierarchy for assets as at March 31, 2017 are as follows (Korean won in thousands): Level 1 Level 2 Level 3 Total Assets measured at fair value: Other current financial assets (derivative financial assets) - 4,078,772-4,078,772 Available-for-sale financial assets (listed share) 245,683, ,683,619 Assets for which fair values are disclosed: Cash and cash equivalents - 476,474, ,474,586 Trade receivables - - 1,942,545,606 1,942,545,606 Other accounts receivable ,917,604 57,917,604 Other non-current accounts receivable ,929,623 15,929,623 Other current financial assets - 774,125,907 8,117, ,243,791 Other non-current financial assets - 1,831,258 13,847 1,845,105 Available-for-sale financial assets (unlisted stock) - - 3,041,613 3,041,613 Liabilities measured at fair value: Other current financial liabilities (derivative financial liabilities) - 4,824,319-4,824,319 Liabilities for which fair values are disclosed: Trade payables - - 1,157,727,988 1,157,727,988 Other payables ,006, ,006,629 Short-term borrowings - 1,073,245,255-1,073,245,255 Long-term borrowings - 723,660, ,660,353 Other current financial liabilities - 27,334,158 8,676,055 36,010,213 Other non-current financial liabilities - 651,328,004 10,145, ,473,762 19

25 5. Fair value of other financial assets and liabilities (cont d) Quantitative disclosures of fair value measurement hierarchy for assets as at December 31, 2016 are as follows (Korean won in thousands): Level 1 Level 2 Level 3 Total Assets measured at fair value: Other current financial assets (derivative financial assets) - 3,493,698-3,493,698 Available-for-sale financial assets (listed share) 260,738, ,738,926 Assets for which fair values are disclosed: Cash and cash equivalents - 595,192, ,192,729 Trade receivables - - 1,979,948,832 1,979,948,832 Other accounts receivable ,971,609 44,971,609 Other non-current accounts Receivable ,887,563 14,887,563 Other current financial assets - 491,797,621 8,695, ,493,522 Other non-current financial Assets - 16,924,505 14,669 16,939,174 Available-for-sale financial assets (unlisted stock) - - 2,961,309 2,961,309 Liabilities measures at fair value: Other current financial liabilities (derivative financial liabilities) - 8,154,198-8,154,198 Liabilities for which fair values are disclosed: Trade payables - - 1,145,883,108 1,145,883,108 Other payables ,024, ,024,256 Short-term borrowings - 1,013,602,783-1,013,602,783 Long-term borrowings 825,186, ,186,968 Other current financial liabilities - 29,037,604 9,394,119 38,431,723 Other non-current financial liabilities - 712,877,785 13,187, ,065,693 20

26 6. Trade and other receivables 6.1 Trade and other receivables as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Trade receivables 1,962,378,684 1,996,790,274 Allowance for doubtful accounts (19,833,078) (16,841,442) Trade receivables 1,942,545,606 1,979,948,832 Other accounts receivable 76,814,864 63,733,872 Allowance for doubtful accounts (21,223,842) (21,318,447) Accrued revenue 661, ,902 Guarantee deposits 1,734,132 1,940,664 Allowance for doubtful accounts (68,694) (74,382) Other accounts receivable 57,917,604 44,971,609 Long-term deposits 7,787 7,797 Long-term accounts receivable 1,847,747 1,847,859 Allowance for doubtful accounts (910,566) (910,566) Long-term guarantee deposits 14,984,655 13,942,473 Other non-current accounts receivable 15,929,623 14,887,563 2,016,392,833 2,039,808,004 Trade and non-trade receivables are non-interest bearing and are normally settled on 30 to 90-day terms. 6.2 Changes in allowance for doubtful accounts for the three months ended March 31, 2017 and the year ended December 31, 2016 are as follows (Korean won in thousands): Trade receivables Other receivables December 31, ,056,807 21,137,493 Charge for the year (reversal) (2,282,439) 355,993 Retirement (1,260) (147,934) Effect of change in foreign exchange rates and etc. (21,100) 47,277 December 31, ,752,008 21,392,829 Charge for the period 3,005,818 65,783 Recovery (281) - Effect of change in foreign exchange rates and etc. (13,901) (166,076) March 31, ,743,644 21,292, Aging analysis of trade and other receivables as at March 31, 2017 and December 31, 2016 is as follows (Korean won in thousands): Neither past due nor impaired 1,982,029,621 1,980,858,091 Past due but not impaired: < 30 days 6,724,119 10,166, days 8,100,954 25,167, days 6,119,815 9,396, days 2,260,310 4,104,608 > 120 days 11,158,014 10,114,890 2,016,392,833 2,039,808,004 21

27 6. Trade and other receivables (cont d) 6.4 The restricted deposit as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Other long-term accounts receivable Short-term financial instruments Financial institution Currency Description Shinhan Bank Guarantee money KRW 3,000 3,000 deposit KEB Hana Guarantee money Bank KRW 3,000 3,000 deposit Citibank Guarantee money KRW 1,500 1,500 deposit Shinhan Bank (Canada) CAD 12,590,000 - L/C opening deposit 7. Inventories Details of inventories as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Merchandise (at net realizable value) 77,713,504 58,872,013 CKD components (at cost) 502,087, ,453,869 Goods in transit (at cost) 65,935,464 66,819,087 Goods in process 5,055 - Stored goods (at cost) 73,760,517 71,119, ,501, ,264,101 A loss on inventory valuation which was added to costs of sales amounted to 2,880,159 thousand and 8,641,823 thousand for the three months ended, respectively. The reversal of a loss on inventory valuation, which was deducted from costs of sales, amounted to 2,586,308 thousand and 4,304,084 thousand for the three months ended, respectively. 8. Other current assets and other non-current assets Other current assets as at March 31, 2017 and December 31, 2016 are as follows (Korean won in thousands): Advance payments 43,128,010 40,254,912 Prepaid expenses 65,789,040 54,733, ,917,050 94,987,983 Other non-current assets as at March 31, 2017 consist of long-term prepaid expenses. 22