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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 ATTACHMENT: INDEPENDENT ACCOUNTANTS’ REVIEW REPORT INNOCEAN WORLDWIDE INC.
Transcript
Page 1: INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIESinnocean.com/upload/201508281651305.pdf · Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro Youngdeungpo-gu, Seoul 150-945, Korea

INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 ATTACHMENT: INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

INNOCEAN WORLDWIDE INC.

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Contents

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT --------------------------------------------------- 1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION -------------- 4 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ------ 6 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY -------------- 7 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------- 8 NOTES ---------------------------------------------------------------------------------------------------------- 9

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Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro Youngdeungpo-gu, Seoul 150-945, Korea

Tel: +82 (2) 6676 1000

Fax: +82 (2) 6674 2114

www.deloitteanjin.co.kr

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”),

its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities.

DTTL (also referred to as “Deloitte Global”) does not provide services to clients.

Please see www.deloitte.com/kr/about for a more detailed description of DTTL and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Independent Accountants’ Review Report

English Translation of a Report Originally Issued in Korean on May 22, 2015

To the Shareholders and the Board of Directors of

INNOCEAN WORLDWIDE INC.:

We have reviewed the accompanying condensed consolidated financial statements of Innocean Worldwide Inc. (the

“Company”) and its subsidiaries. The condensed consolidated financial statements consist of the condensed

consolidated statements of financial position as of March 31, 2015, the related condensed consolidated statements of

comprehensive income, changes in equity and cash flows for the three months ended March 31, 2015 and 2014,

respectively, all expressed in Korean Won, and a summary of significant accounting policies and other explanatory

information.

Management’s Responsibility for the Consolidated Financial Statements

The Company’s management is responsible for the preparation and fair presentation of the accompanying consolidated

financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) and for such

internal control as management determines is necessary to enable the preparation of consolidated financial statements

that are free from material misstatement, whether due to fraud or error.

Independent Accountants’ Responsibility

Our responsibility is to express a conclusion on the accompanying condensed consolidated financial statements based

on our review. We conducted our review in accordance with standards for review of interim financial statements in the

Republic of Korea. A review is limited primarily to inquiries of the Company personnel and analytical procedures

applied to financial data, and this provides less assurance than an audit. We have not performed an audit, and

accordingly, we do not express an audit opinion.

Review conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed

consolidated financial statements of the Company and its subsidiaries are not presented fairly, in all material respects, in

accordance with Korean International Financial Reporting Standards 1034, Interim Financial Reporting.

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Others

We audited the consolidated statement of financial position as of December 31, 2014, and the related

consolidated statements of comprehensive income, changes in equity and cash flows for the year ended

December 31, 2014 (not presented in the accompanying consolidated financial statements), in accordance with

auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our

independent auditors’ report dated on March 22, 2015. The consolidated statement of financial position as of

December 31, 2014, presented as a comparative purpose in the accompanying financial statements does not

differ, in all material respects, from the audited consolidated statement of financial position as of December 31,

2014.

Accounting principles and review standards and their application in practice vary among countries. The

accompanying consolidated financial statements are not intended to present the financial position, results of

operations, changes in equity and cash flows in accordance with accounting principles and practices generally

accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the

Republic of Korea to review such financial statements may differ from those generally accepted and applied in

other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by

those knowledgeable about Korean accounting procedures and review standards and their application in practice.

May 22, 2015

Notice to Readers

This report is effective as of May 22, 2015, the independent accountants’ review report date. Certain subsequent

events or circumstances may have occurred between the independent accountants’ review report date and the time

the independent accountants’ review report is read. Such events or circumstances could significantly affect the

accompanying consolidated financial statements and may result in modifications to the independent accountants’

review report.

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES (the “Group”) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

The accompanying condensed consolidated financial statements, including all footnote

disclosures, were prepared by, and are the responsibility of, the management of the Company.

Ahn, Kun Hee

Chief Executive Officer

INNOCEAN WORLDWIDE INC.

Headquarters address : 308, Gangnam-daero, Gangnam-gu, Seoul

Headquarters telephone number : +82-2-2016-2300

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

CONDEDNSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF MARCH 31, 2015 AND DECEMBER 31, 2014

ASSETS Notes March 31, 2015 December 31, 2014

(In Korean won)

Current assets:

Cash and cash equivalents 26 ₩ 179,236,798,894 ₩ 216,912,848,618

Short-term financial instruments 3,26 198,019,417,471 199,181,899,798

Trade and other receivables 4,26,29 600,003,671,227 624,929,706,505

Other financial assets 5,26 4,550,915,931 3,968,439,606

Current tax assets 2,225,165,919 2,658,916,503

Other current assets 6 37,698,159,083 33,057,804,945

Total current assets 1,021,734,128,525 1,080,709,615,975

Non-current assets:

Long-term financial instruments 3,26 334,242,767 355,006,374

Available-for-sale (“AFS”) financial assets 7,26 2,448,679,828 2,404,703,787

Other financial assets 5,26 4,930,388,886 4,792,854,044

Investments in joint venture and associates 8 15,615,772,879 14,211,520,465

Property, plant and equipment 9,32 9,988,796,555 11,199,776,954

Intangible assets 10,32 57,371,841,322 56,165,565,401

Deferred tax assets 4,496,194,848 4,299,813,938

Other non-current assets 6 59,175,110 60,620,380

Total non-current assets 95,245,092,195 93,489,861,343

Total assets ₩ 1,116,979,220,720 ₩ 1,174,199,477,318

(Continued)

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 (CONTINUED)

LIABILITIES AND EQUITY Notes March 31, 2015 December 31, 2014

(In Korean won)

Current liabilities:

Trade and other payables 11,26,29 ₩ 625,852,382,299 ₩ 682,401,196,484

Other financial liabilities 12,26 12,643,148,681 20,437,847

Current provisions 15 813,552,871 1,041,841,546

Income tax payable 3,302,503,664 10,549,120,189

Other current liabilities 13 23,882,641,241 31,396,539,734

Total current liabilities 666,494,228,756 725,409,135,800

Non-current liabilities:

Other payables 11 40,187,656 48,278,022

Retirement benefit liabilities 14 5,197,035,622 3,158,850,516

Deferred tax liabilities 13,776,197,311 13,085,677,027

Non-current provisions 15 3,847,971,905 4,979,271,689

Other non current liabilities 13 150,640,479 178,928,743

Total non-current liabilities 23,012,032,973 21,451,005,997

Total liabilities ₩ 689,506,261,729 ₩ 746,860,141,797

Equity:

Capital stock 16 9,000,000,000 9,000,000,000

Other components of equity 17 (12,890,706,215) (9,984,797,193)

Retained earnings 18 417,377,077,906 416,280,069,980

Equity attributable to the owners of the

Company

413,486,371,691 415,295,272,787

Non-controlling interests 13,986,587,300 12,044,062,734

Total equity 427,472,958,991 427,339,335,521

Total liabilities and equity ₩ 1,116,979,220,720 ₩ 1,174,199,477,318

(Concluded)

See accompanying notes.

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

2015 2014

Notes

Three months

ended March 31,

Three months

ended March 31

(In Korean won)

Sales 19,29,32 ₩ 227,079,849,778 ₩ 151,808,961,492

Cost of sales 23,29 157,403,425,630 101,830,789,440

Gross profit 69,676,424,148 49,978,172,052

Selling and administrative expenses 20,23,29 51,743,122,284 36,492,692,768

Operating income 32 17,933,301,864 13,485,479,284

Gain on investments in joint venture and

associates, net

8 1,352,488,385 2,916,636,878

Finance income 21,27 5,122,125,070 3,338,852,220

Finance expenses 21,27 4,050,688,069 995,453,593

Other income 22 1,258,783,202 184,921,246

Other expenses 22 201,426,038 86,473,688

Income before income tax 21,414,584,414 18,843,962,347

Income tax expense 24 5,878,467,241 5,674,011,710

Profit for the period 15,536,117,173 13,169,950,637

Other comprehensive income (expenses):

Items that will not be reclassified subsequently

to profit or loss:

Remeasurements of defined benefit plans 18 31,804,012 (18,600,103)

31,804,012 (18,600,103)

Items that may be reclassified subsequently to

profit or loss:

Loss on foreign operations translation, net 17 (2,904,737,079) (792,639,923)

Changes in share of earnings of equity-

accounted investees, net

8,17 51,764,029 8,676,783

Gain on AFS financial assets, net 17 18,675,335 62,495,259

(2,834,297,715) (721,467,881)

Total other comprehensive income (expenses) (2,802,493,703) (740,067,984)

Total comprehensive income 12,733,623,470 12,429,882,653

Profit attributable to:

Owners of the Company 13,665,203,914 13,169,950,637

Non-controlling interests 1,870,913,259 -

15,536,117,173 13,169,950,637

Comprehensive income attributable to:

Owners of the Company 10,791,098,904 12,429,882,653

Non-controlling interests 1,942,524,566 -

12,733,623,470 12,429,882,653

Earnings per share attributable to the owners

of the Company:

Basic and diluted earnings per common share 25 ₩ 759 ₩ 732

See accompanying notes.

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

Capital

stock

Other components

of equity

Retained

earnings

Total equity

attributable to the

owners of the

Company

Non-

controlling

interests

Total

equity

(In Korean won)

Balance at

January 1, 2014

₩ 9,000,000,000 ₩ (3,949,468,201) ₩ 342,591,997,543 ₩ 347,642,529,342 ₩ - ₩ 347,642,529,342

Payment of cash

dividends - - (7,200,000,000) (7,200,000,000) - (7,200,000,000)

Profit for the period - - 13,169,950,637 13,169,950,637 - 13,169,950,637

Gain on AFS financial

assets, net - 62,495,259 - 62,495,259 - 62,495,259

Remeasurements of

defined benefit plans

- - (18,600,103) (18,600,103) - (18,600,103)

Loss on foreign

operations

translation, net

- (792,639,923) - (792,639,923) - (792,639,923)

Changes in valuation

of equity-accounted

investees, net

- 8,676,783 - 8,676,783 - 8,676,783

Balance at

March 31, 2014

9,000,000,000 (4,670,936,082) 348,543,348,077 352,872,411,995 - 352,872,411,995

Balance at

January 1, 2015 9,000,000,000 (9,984,797,193) 416,280,069,980 415,295,272,787 12,044,062,734 427,339,335,521

Payment of cash

dividends

- - (12,600,000,000) (12,600,000,000) - (12,600,000,000)

Profit for the period - - 13,665,203,914 13,665,203,914 1,870,913,259 15,536,117,173

Gain on AFS financial

assets, net

- 18,675,335 - 18,675,335 - 18,675,335

Remeasurements of

defined benefit plans

- - 31,804,012 31,804,012 - 31,804,012

Loss on foreign

operations

translation, net - (2,976,348,386) - (2,976,348,386) 71,611,307 (2,904,737,079)

Changes in valuation

of equity-accounted

investees, net - 51,764,029 - 51,764,029 - 51,764,029

Balance at

March 31, 2015 ₩ 9,000,000,000 ₩ (12,890,706,215) ₩ 417,377,077,906 ₩ 413,486,371,691 ₩ 13,986,587,300 ₩ 427,472,958,991

See accompanying notes.

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

2015 2014

Notes

Three months

ended March 31,

Three months

ended March 31

(In Korean Won)

Cash flows from operating activities:

Cash generated from operations:

Profit for the period 30 ₩ 15,536,117,173 ₩ 13,169,950,637

Adjustments 4,840,675,779 2,164,408,510

Changes in operating assets and liabilities (42,501,460,525) (11,545,866,695)

22,124,667,573 3,788,492,452

Interest received 1,509,617,557 2,970,694,573

Dividend received 100,000,000 100,000,000

Income tax paid (12,211,894,413) (8,762,658,313)

Net cash used by operating activities (32,726,944,429) (1,903,471,288)

Cash flows from investing activities:

Proceeds from withdrawal(purchases) of short-

term financial instruments, net 1,264,098,511 (1,774,206,235)

Proceeds from disposals of other financial assets 8,100,000 -

Proceeds from disposals of property, plant and

equipment 1,804,200 369,131

Acquisitions of other financial assets (1,135,391) (268,648,000)

Acquisitions of property, plant and equipment 9 (413,965,366) (633,329,474)

Acquisitions of intangible assets 10 (1,395,118,449) (8,576,724)

Net cash used by investing activities (536,216,495) (2,684,391,302)

Cash flows from financing activities: - -

Net decrease in cash and cash equivalents (33,263,160,924) (4,587,862,590)

Cash and cash equivalents, beginning of the period 216,912,848,618 91,370,483,561

Effect of exchange rate changes on cash and

cash equivalents (4,412,888,800) (84,934,277)

Cash and cash equivalents, end of the period ₩ 179,236,798,894 ₩ 86,697,686,694

See accompanying notes.

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INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2015 AND DECEMBER 31, 2014

AND FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

1. GENERAL:

(1) Innocean Worldwide Inc. (the “Company” or “Parent Company”) was incorporated on May 17, 2005 under

the laws of the Republic of Korea. The Company and its susbsidiaries (the “Group”) conduct their business

as an advertising agency, and are engaged in the production of commercial advertising and promotional

materials, and other related business activities. The Company’s head office is located at 308, Gangnam-

daero, Gangnam-gu, Seoul, Korea. As of March 31, 2015, the Company’s capital stock amounts to

₩9,000,000 thousand and the stockholders of the Company are as follows:

Name Number of shares Equity interest (%)

Seong-Yi Chung 7,200,000 40.00

MSPE Highlight Holdings AB 3,600,000 20.00

Ui-Seon Chung 1,800,000 10.00

Hyundai Chung Mong-Koo Foundation 1,800,000 10.00

Others 3,600,000 20.00

Total 18,000,000 100.00

(2) The Company’s consolidated subsidiaries as of March 31, 2015 and December 31, 2014 are as follows:

Ownership percentage

Subsidiaries

Nature of

the business Location

Closing

Date

March 31,

2015

December 31,

2014

Innocean Worldwide Communication

Private Ltd. (IWI)

Ad-agency India 3.31 100.00 100.00

Innocean Worldwide UK Ltd. (IWUK) Ad-agency UK 12.31 100.00 100.00

Innocean Worldwide Europe GmbH (IWE) Ad-agency Germany 12.31 100.00 100.00

Innocean Worldwide Italy Srl (IWIt) Ad-agency Italy 12.31 100.00 100.00

Innocean Worldwide China Shanghai (IWC

Shanghai)

Ad-agency China 12.31 100.00 100.00

Innocean Worldwide China Beijing (IWC

Beijing)

Ad-agency China 12.31 100.00 100.00

Innocean Worldwide Holdings, Inc.(IWH) Holdings US 12.31 100.00 100.00

Innocean Worldwide Americas, LLC (IWA) Ad-agency US 12.31 60.00 60.00

Innocean Worldwide Australia Pty Ltd.

(IWAu)

Ad-agency Australia 12.31 100.00 100.00

Innocean Worldwide Rus LLC. (IWR) Ad-agency Russia 12.31 100.00 100.00

Innocean Worldwide Canada Inc. (IWC) Ad-agency Canada 12.31 100.00 100.00

Innocean Worldwide Spain S.L. (IWS) Ad-agency Spain 12.31 100.00 100.00

Innocean Worldwide France (IWF) Ad-agency France 12.31 100.00 100.00

Innocean Worldwide Turkey (IWTr) Ad-agency Turkey 12.31 100.00 100.00

Innocean Worldwide Brazil (IWB) Ad-agency Brazil 12.31 100.00 100.00

Innocean Worldwide Mexico (IWM) Ad-agency Mexico 12.31 100.00 100.00

In addition, two Money Market Trusts, over which the Company has the control, are included as consolidated

subsidiaries.

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(3) Condensed financial positions and results of operations of the Company’s consolidated subsidiaries as of

and for the three months ended March 31, 2015, are as follows:

Name of subsidiaries Assets Liabilities Sales

Profit

for the period

(In thousands of Korean Won)

IWI ₩ 15,024,355 ₩ 5,667,343 ₩ 7,465,998 ₩ 696,586

IWUK 15,754,541 12,636,006 2,906,377 619,579

IWE 53,232,197 38,416,549 28,058,622 2,382,456

IWIt 11,385,647 8,691,903 2,740,931 260,428

IWC Shanghai 94,910,931 69,651,579 8,285,010 1,197,478

IWC Beijing 6,957,617 5,085,402 1,740,310 164,960

IWH(*) 29,270,247 1,461,865 - (1,028)

IWA 244,417,652 209,451,183 70,435,246 4,677,283

IWAu 22,357,387 17,591,878 5,438,685 446,796

IWR 17,000,823 7,362,687 1,161,684 (53,062)

IWC 26,699,572 21,301,501 9,410,107 574,628

IWS 9,752,905 8,900,515 2,605,963 5,166

IWF 5,268,244 4,033,470 2,958,517 377,938

IWTr 2,937,837 2,281,106 917,097 (88,967)

IWB 1,829,528 169,158 897,371 371,631

IWM 1,219,963 1,056,602 975,217 (40,479)

(*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost.

(**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial statements,

are prepared for the same reporting periods as that of the Company’s.

(***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after

adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and

subsidiaries and before elimination of intercompany transactions and balances.

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Condensed financial positions and results of operations of the Company’s consolidated subsidiaries as of and for

the three months ended March 31, 2014, are as follows:

Name of subsidiaries Assets Liabilities Sales

Profit

for the period

(In thousands of Korean Won)

IWI ₩ 16,158,221 ₩ 7,521,077 ₩ 8,863,654 ₩ 588,980

IWUK 9,160,694 7,174,381 3,979,639 318,442

IWE 62,052,462 46,901,629 32,821,523 2,434,647

IWIt 15,763,947 12,960,669 2,914,592 252,371

IWC Shanghai 51,927,232 33,793,302 5,139,170 1,006,020

IWC Beijing 5,719,206 3,499,927 1,853,972 193,901

IWH(*) 20,171,073 702,843 - 1,107

IWAu 23,923,344 19,049,883 7,414,147 523,564

IWR 56,720,191 38,558,017 3,202,457 499,781

IWC 6,742,058 1,776,029 6,791,256 468,619

IWS 9,217,686 8,600,824 2,483,106 (281,961)

IWF 4,613,442 3,392,912 2,663,853 163,518

IWTr 3,081,686 2,556,515 1,045,918 (43,878)

IWB ₩ 2,090,901 ₩ 243,545 ₩ 1,001,874 ₩ 620,719 (*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost.

(**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial

statements, are prepared for the same reporting periods as the Company’s. (***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after

adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and

subsidiaries and before elimination of intercompany transactions and balances.

(4) Summarized cash flows of non-wholly owned subsidiary that have material non-controlling interests to the

Group as of March 31, 2015, are as follows:

Description IWA

(In thousands of Korean Won)

Cash flows from operating activities ₩ (47,895,811)

Cash flows from investing activities (22,557)

Cash flows from financing activities -

Effect of exchange rate changes on cash and cash equivalents 235,281

Net decrease in cash and cash equivalents ₩ (47,683,087)

(5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of

March 31, 2015, are as follows:

Description IWA

(In thousands of Korean Won)

Ownership percentage of non-controlling interests 40.00%

Non-controlling interests ₩ 13,986,587

Profit attributable to non-controlling interests ₩ 1,870,913

Comprehensive income attributable to non-controlling interests ₩ 1,942,524

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company maintains its official accounting records in Korean Won and prepares its consolidated financial

statements in conformity with Korean International Financial Reporting Standards (“K-IFRS”), in Korean

language (Hangul). Accordingly, these consolidated financial statements are intended for use by those who are

informed about K-IFRS and Korean practices. The accompanying consolidated financial statements have been

condensed, restructured and translated into English with certain expanded descriptions from Korean language

consolidated financial statements. Certain information included in Korean language consolidated financial

statements, but not required for a fair presentation of the Group’s consolidated statements of financial position,

comprehensive income, changes in equity or cash flows, is not presented in the accompanying consolidated

financial statements.

(1) Basis of consolidated financial statements preparation

The Group’s condensed consolidated financial statements for the three months ended March 31, 2015 and 2014,

respectively, are prepared in accordance with K-IFRS 1034, Interim Financial Reporting. The condensed

consolidated financial statements should be read in conjunction with the annual consolidated financial statements

for the year ended December 31, 2014, which have been prepared in accordance with K-IFRS.

The significant accounting policies used for the preparation of the interim condensed consolidated financial

statements are consistent with those applied to the annual consolidated financial statements for the year ended

December 31, 2014, except for the adoption effect of the new and revised accounting standards and

interpretations described below.

1) New and revised standards that have been applied from the year beginning on January 1, 2015, are as follows:

- K-IFRS 1019 (Amendments): ‘Employee Benefits’

The amendments to K-IFRS 1019 permit to recognize amount of contributions as a reduction in the service cost

in which the related service is rendered if the amount of the contributions are independent of the number of years

of service. The effect of the above mentioned enactments and amendments are not significant on the Group’s

interim condensed consolidated financial statements.

- Annual Improvements to K-IFRS 2010-2012 Cycle

The amendments to K-IFRS 1102 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii)

add definition for ‘performance condition’ and ‘service condition’ which were previously included within the

definition of ‘vesting condition’. The amendments to K-IFRS 1103 clarify the classification and measurement of

the contingent consideration in business combination. The amendments to K-IFRS 1108 clarify that a

reconciliation of the total of the reportable segments’ assets should only be provided if the segment assets are

regularly provided to the chief operating decision maker. The effect of the above mentioned enactments and

amendments are not significant on the Group’s interim condensed consolidated financial statements.

- Annual Improvements to K-IFRS 2011-2013 Cycle

The amendments to K-IFRS 1103 clarify the scope of the portfolio exception for measuring the fair values of the

group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope the

standard does not apply to the accounting for the formation of all types of joint arrangement in the financial

statements of the joint arrangement itself. The amendments to K-IFRS 1113 ‘Fair Value Measurement’ and K-

IFRS 1040 ‘Investment Property’ exist. The effect of the above mentioned enactments and amendments are not

significant on the Group’s interim condensed consolidated financial statements.

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2) New and revised standards that have been issued but are not yet effective as of the authorization date for issue

of financial statements, and that have not been applied earlier by the Group are as follows:

- K-IFRS 1016 (Amendments): ‘Property, Plant and Equipment’

The amendments to K-IFRS 1016 prohibit from using a revenue-based depreciation method for items of property,

plant and equipments. The amendments are effective for the annual periods beginning on or after January 1, 2016.

- K-IFRS 1038 (Amendments): ‘Intangible Assets’

The amendments to K-IFRS 1038 rebut presumption that revenue is not an appropriate basis for the amortization

of intangible assets, which presumption can only be rebutted when the intangible asset is expressed as a measure

of revenue or when it can be demonstrated that revenue and consumption of the economic benefits of the

intangible asset are highly correlated. The amendments to K-IFRS 1038 are effective for annual periods

beginning on or after January 1, 2016.

- K-IFRS 1111(Amendments): ‘Joint Arrangements’

The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of a joint operation that

constitues a business as defined in K-IFRS 1103 ‘Business Combinations’. A joint operator is also required to

disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The

amendments to K-IFRS 1111 are effective for the annual periods beginning on or after January 1, 2016.

The Group does not anticipate that the above mentioned enactments and amendments will have any significant

effect on the Group’s consolidated financial statements.

(2) Significant accounting judgments and key sources of estimation uncertainties

In the preparation of the Group’s interim consolidated financial statements, management is required to apply

accounting policies and make judgments, estimation and assumptions affecting the carrying amounts of assets

and liabilities, income and expenses. Actual results may be different from those estimations.

The management’s significant judgments about the application of the Group’s accounting policies and the main

resources of the uncertainty are consistent with those of the annual consolidated financial statements for the year

ended December 31, 2014.

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3. FINANCIAL INSTRUMENTS:

Financial instruments as of March 31, 2015 and December 31, 2014, consist of the following:

Accounts Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Short-term financial

instruments Time deposits ₩ 103,862,507 ₩ 104,597,960

Financial assets at fair value

through profit or loss

(“FVTPL”)(*)

94,156,910 94,583,940

₩ 198,019,417 ₩ 199,181,900

Long-term financial

instruments

Guarantee deposit for checking

accounts

₩ 6,000 ₩ 6,000

Long-term financial institution

deposits

328,243 349,006

₩ 334,243 ₩ 355,006

(*) It consist of MMT(Money Market Trust) designated as FVTPL and the Company has power of control as of

March 31, 2015 and December 31, 2014.

4. TRADE AND OTHER RECEIVABLES:

(1) Trade and other receivables as of March 31, 2015 and December 31, 2014, consist of the following:

Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Trade receivables ₩ 604,505,957 ₩ 627,820,267

Less: Allowance for doubtful accounts (7,106,482) (7,181,210)

Other receivables 2,608,780 4,313,002

Less: Allowance for doubtful accounts (4,584) (22,353)

₩ 600,003,671 ₩ 624,929,706

(2) The changes in allowance for doubtful accounts for the three months ended March 31, 2015, are as follows:

Description Trade receivables Other receivables

(In thousands of Korean won)

Beginning balance ₩ 7,181,210 ₩ 22,353

Reversal for allowance for doubtful

accounts, net (68,789) (17,769)

Foreign exchange differences (5,939) -

Ending balance ₩ 7,106,482 ₩ 4,584

The changes in allowance for doubtful accounts for the three months ended March 31, 2014, are as follows:

Description Trade receivables Other receivables

(In thousands of Korean won)

Beginning balance ₩ 2,712,110 ₩ 37,675

Reversal for allowance for doubtful

accounts, net (758,803) (1,876)

Foreign exchange differences 506 -

Ending balance ₩ 1,953,813 ₩ 35,799

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(3) The aging analysis of trade and other receivables that is delinquent but not impaired as of March 31, 2015 a

nd December 31, 2014, is as follows:

March 31,2015

Accounts

Less than

3 months

Over 3 months,

less than 6

months

Over

6 months

Total

(In thousands of Korean won)

Trade receivables

₩ 59,020,155 ₩ 8,766,764 ₩ 3,714,710 ₩ 71,501,629

Other receivables 51,358 - 31,574 82,932

December 31, 2014

Accounts

Less than

3 months

Over 3 months,

less than 6

months

Over

6 months Total

(In thousands of Korean won)

Trade receivables

₩ 57,167,347 ₩ 5,868,381 ₩ 6,915,333 ₩ 69,951,062

Other receivables 573,665 677,680 100,407 1,351,752

(4) Aging analysis of impaired trade and other receivables as of March 31, 2015 and December 31, 2014, is as

follows:

March 31, 2015

Accounts

Less than

3 months

Over 3 months,

less than 6

months

Over

6 months Total

(In thousands of Korean won)

Trade receivables

₩ - ₩ 3,021,714 ₩ 3,985,962 ₩ 7,007,676

Less: Allowance for doubtful

accounts - (2,872,744) (3,789,454) (6,662,198)

₩ - ₩ 148,970 ₩ 196,508 ₩ 345,478

December 31, 2014

Accounts

Less than

3 months

Over 3 months,

less than 6

months

Over

6 months Total

(In thousands of Korean won)

Trade receivables

₩ 3,021,714 ₩ 3,985,962 ₩ - ₩ 7,007,676

Less: Allowance for doubtful

accounts (2,872,744) (3,789,454) - (6,662,198)

₩ 148,970 ₩ 196,508 ₩ - ₩ 345,478

Besides the allowances for doubtful accounts on above impaired trade and other receivables, the Group

accounted for allowance for doubtful accounts amounting to ₩448,868 thousand and ₩541,365 thousand as of

March 31, 2015 and December 31, 2014 respectively, by the collective impairment test.

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5. OTHER FINANCIAL ASSETS:

Other financial assets as of March 31, 2015 and December 31, 2014, consist of the following:

Accounts

March 31, 2015 December 31, 2014

Current Non-current Current Non-current

(In thousands of Korean won)

Currency foward ₩ 125,177 ₩ - ₩ - ₩ -

Stock warrants 182,881 - 182,881 -

Accrued income 3,099,379 - 2,536,664 -

Leasehold deposits 18,454 4,930,389 130,909 4,792,854

Short-term loans 1,125,025 - 1,117,986 -

₩ 4,550,916 ₩ 4,930,389 ₩ 3,968,440 ₩ 4,792,854

6. OTHER ASSETS:

Other assets as of March 31, 2015 and December 31, 2014, consist of the following:

Accounts

March 31, 2015 December 31, 2014

Current Non-current Current Non-current

(In thousands of Korean won)

Due from customers for

contract work

₩ 28,209,727 ₩ - ₩ 15,095,843 ₩ -

Advanced payments 2,841,858 - 8,027,254 -

Prepaid expenses 1,275,438 59,175 1,103,935 60,620

Prepaid value added tax 1,502,560 - 3,094,879 -

Others 3,868,576 - 5,735,894 -

₩ 37,698,159 ₩ 59,175 ₩ 33,057,805 ₩ 60,620

7. AFS FINANCIAL ASSETS:

Available-for-sale (AFS) financial assets as of March 31, 2015 and December 31, 2014, consist of the following:

March 31, 2015

December 31,

2014

Description

Ownership

percentage Amortized cost

Valuation

difference Book value Book value

(In thousands of Korean won)

Non-marketable securities:

ISU-S&M Contents

Investment Fund

5% ₩ 500,000

₩ -

₩ 500,000

₩ 500,000

Debt securities:

The Education Co., Ltd. - 1,924,042 24,638 1,948,680 1,904,704

₩ 2,424,042 ₩ 24,638 ₩ 2,448,680 ₩ 2,404,704

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8. INVESTMENTS IN JOINT VENTURE AND ASSOCIATES:

(1) Investments in joint venture and associates as of March 31, 2015 and December 31, 2014, are as follows:

March 31, 2015

December 31,

2014

Description

Nature of

business Location

Ownership

percentage Book value Book value

(%) (In thousands of Korean won)

Joint venture:

Beijing Innocean-CBAC

Advertising Co., Ltd.

(ICBAC)(*)

Ad-agency China 51.00 ₩ 7,260,015 ₩ 5,945,479

Associates :

Mate Communications

Co., Ltd.

Ad-agency Korea 28.31 5,107,035 5,048,632

Inspirecorp. Co., Ltd. Education Korea 29.08 226,891 232,322

UNION Contents Value-

Up Investment Fund

Investment Korea 27.27 3,021,832 2,985,087

IWA (**) Ad-agency U.S.A - - -

₩ 15,615,773 ₩ 14,211,520

(*) ICBAC is categorized as a joint venture although the Group owns the majority of shares, because the Group have joint

control over the entity by virtue of an agreement with the other investors.

(**) The subsidiary is newly included in the consolidation scope because the Group obtained additional shares for the year

ended December 31, 2014.

(2) The changes in investments in joint venture and associates for the three months ended March 31, 2015, are

as follows:

Description

Beginning of the

period

Share of profits

for the period

Others

End of

the period

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 5,945,479 ₩ 1,262,771 ₩ 51,765 ₩ 7,260,015

Associates :

Mate Communications

Co., Ltd. 5,048,632 58,403 - 5,107,035

Inspirecorp. Co., Ltd. 232,322 (5,431) - 226,891

UNION Contents

Value-Up Investment

Fund 2,985,087 36,745 - 3,021,832

₩ 14,211,520 ₩ 1,352,488 ₩ 51,765 ₩ 15,615,773

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The changes in investments in joint venture and associates for the three months ended March 31, 2014, are as

follows:

Description

Beginning of the

period

Share of profits

for the period

Others

End of

the period

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 5,139,332 ₩ 1,257,891 ₩ (74,652) ₩ 6,322,571

Associates :

Mate Communications

Co., Ltd. 4,772,135 (127,101) - 4,645,034

Inspirecorp. Co., Ltd. 300,120 (17,786) - 282,334

IWA 13,424,412 1,803,633 83,329 15,311,374

₩ 23,635,999 ₩ 2,916,637 ₩ 8,677 ₩ 26,561,313

(3) Condensed financial information of the Group’s joint venture and associates as of and for the three months ended

March 31, 2015, is as follows:

Description

Current

assets

Non-current

assets

Current

liabilities

Non-current

liabilities

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 54,606,145 ₩ 67,140 ₩ 40,437,963 ₩ -

Associates :

Mate Communications Co., Ltd. 15,919,680 2,135,588 4,477,939 87,428

Inspirecorp. Co., Ltd. 26,117 97,210 37,607 -

UNION Contents

Value-Up Investment Fund ₩ 6,645,603 ₩ 4,436,867 ₩ 2,420 ₩ -

Description Sales

Profit for the

period

Other

comprehensive

income

Total

comprehensive

income

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 8,054,077 ₩ 2,476,021 ₩ - ₩ 2,476,021

Associates :

Mate Communications Co., Ltd. 5,073,730 206,290 - 206,290

Inspirecorp. Co., Ltd. 59,495 (18,658) - (18,658)

UNION Contents

Value-Up Investment Fund ₩ 82,722 ₩ 8,644 ₩ - ₩ 8,644

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Condensed financial information of the Group’s joint venture and associates as of and for the three months ended

March 31, 2014, is as follows:

Description

Current

assets

Non-current

assets

Current

liabilities

Non-current

liabilities

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 31,034,763 ₩ 229,272 ₩ 18,866,836 ₩ -

Associates :

Mate Communications Co., Ltd. 14,658,974 1,976,081 4,675,259 101,760

Inspirecorp. Co., Ltd. 194,173 85,210 2,995 -

IWA 178,563,045 4,928,972 162,420,805 -

Description Sales

Profit for the

period

Other

comprehensive

income

Total

comprehensive

income

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 5,455,022 ₩ 2,466,453 ₩ - ₩ 2,466,453

Associates :

Mate Communications Co., Ltd. 2,896,574 (448,941) - (448,941)

Inspirecorp. Co., Ltd. 7,236 (61,168) - (61,168)

IWA 64,592,468 4,509,083 - 4,509,083

(4) Condensed additional financial information of the Group’s joint venture as of and for the three months ended

March 31, 2015, is as follows:

Name of

the

company

Cash and

cash equivalents

Current

financial

liabilities

Non-current

financial

liabilities

Depreciation

and

amortization

Interest

income

Interest

expenses

Income tax

expense

(In thousands of Korean won)

ICBAC ₩ 24,921,701 ₩ 40,437,963 ₩ - ₩ 38,158 ₩ 74,441 ₩ - ₩ 825,340

Condensed additional financial information of the Group’s joint venture as of and for the three months ended

March 31, 2014, is as follows:

Name of

the

company

Cash and

cash equivalents

Current

financial

liabilities

Non-current

financial

liabilities

Depreciation

and

amortization

Interest

Income

Interest

Expenses

Income tax

Expense

(In thousands of Korean won)

ICBAC ₩ 12,227,972 ₩ 18,866,836 ₩ - ₩ 44,336 ₩ 38,180 ₩ - ₩ 822,151

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(5) Reconciliations of the Group’s share of net assets of the Group’s joint venture and associates to their carrying

amounts as of March 31, 2015, are as follows:

Description

Net asset

Ownership

percentage

Group’s share of

net asset

Goodwill Book value

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 14,235,324 51.00% ₩ 7,260,015 ₩ - ₩ 7,260,015

Associates :

Mate Communications

Co., Ltd.

13,489,929 28.31% 3,818,999 1,288,036 5,107,035

Inspirecorp. Co., Ltd. 85,736 29.08% 24,932 201,959 226,891

UNION Contents

Value-Up Investment Fund ₩ 11,080,062 27.27% ₩ 3,021,832 ₩ - ₩ 3,021,832

Reconciliations of the Group’s share of net assets of the Group’s joint venture and associates to their carrying

amounts as of December 31, 2014, are as follows:

Description

Net asset

Ownership

percentage

Group’s share of

net asset

Goodwill Book value

(In thousands of Korean won)

Joint venture:

ICBAC ₩ 11,657,804 51.00% ₩ 5,945,479 ₩ - ₩ 5,945,479

Associates :

Mate Communications

Co., Ltd.

13,283,609 28.31% 3,760,596 1,288,036 5,048,632

Inspirecorp. Co., Ltd. 104,396 29.08% 30,363 201,959 232,322

UNION Contents

Value-Up Investment Fund ₩ 10,945,320 27.27% ₩ 2,985,087 ₩ - ₩ 2,985,087

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9. PROPERTY, PLANT AND EQUIPMENT:

The changes in property, plant and equipment (“PP&E”) for the three months ended March 31, 2015, are as

follows:

Description

Beginning of

the period

Acquisitions

Disposals

Depreciation

Others

End of

the period

(In thousands of Korean won)

Structures ₩ 69,510 ₩ - ₩ - ₩ (16,044) ₩ - ₩ 53,466 Equipments 6,010,777 356,341 (672) (676,633) (159,881) 5,529,932 Leasehold

improvements

4,737,250 15,628 - (485,185) (218,571) 4,049,122 Others 382,240 41,996 - (44,699) (23,260) 356,277

₩ 11,199,777 ₩ 413,965 ₩ (672) ₩ (1,222,561) ₩ (401,712) ₩ 9,988,797

The changes in PP&E the three months ended March 31, 2014, are as follows:

Description

Beginning of

the period

Acquisitions

Disposals

Depreciation

Others

End of

the period

(In thousands of Korean won)

Structures ₩ 133,680 ₩ - ₩ - ₩ (16,040) ₩ - ₩ 117,640 Equipments 4,479,564 215,654 - (388,851) (131,491) 4,174,876 Leasehold

improvements

3,917,191 412,132 (1,360) (410,349) 199,611 4,117,225 Others 369,955 5,543 (82) (45,055) 9,567 339,928

₩ 8,900,390 ₩ 633,329 ₩ (1,442) ₩ (860,295) ₩ 77,687 ₩ 8,749,669

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10. INTANGIBLE ASSETS:

(1) The changes in intangible assets for the three months ended March 31, 2015, are as follows:

Description

Beginning

of the period Acquisition Amortization Impairment loss Others

End of the

period

(In thousands of Korean Won)

Goodwill ₩ 25,358,287 ₩ - ₩ - ₩ - ₩ 138,726 ₩ 25,497,013

Software 657,358 19,618 (56,063) - (59,717) 561,196

Membership 10,013,644 1,375,500 - (120,000) - 11,269,144 Customer

Relationships 14,642,752 - (128,364) - 698,700 15,213,088

Others 5,493,524 - (43,400) - (618,724) 4,831,400

₩ 56,165,565 ₩ 1,395,118 ₩ (227,827) ₩ (120,000) ₩ 158,985 ₩ 57,371,841

The changes in intangible assets for the three months ended March 31, 2014, are as follows:

Description

Beginning

of the period Acquisition Amortization Others End of the period

(In thousands of Korean Won)

Goodwill ₩ 3,773,588 ₩ - ₩ - ₩ (38,800) ₩ 3,734,788

Software 822,731 8,577 (51,199) 4,522 784,631

Membership 10,003,644 - - - 10,003,644

Others 5,048,380 - (43,410) - 5,004,970

₩ 19,648,343 ₩ 8,577 ₩ (94,609) ₩ (34,278) ₩ 19,528,033

(2) Goodwill of the Group as of March 31, 2015 and December 31, 2014, consist of the following :

Description March 31, 2015 December 31, 2014

(In thousands of Korean Won)

IWA(*) ₩ 21,639,322 ₩ 21,525,740

IWC Beijing (*)

3,857,691

3,832,547

₩ 25,497,013 ₩ 25,358,287

(*) Changes of book value are due to the effect of foreign currency exchange differences.

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11. TRADE AND OTHER PAYABLES :

Trade and other payables as of March 31, 2015 and December 31, 2014, consist of the following:

March 31, 2015 December 31, 2014

Accounts Current Non-current Current Non-current

(In thousands of Korean won)

Trade payables ₩ 603,465,170 ₩ - ₩ 653,290,925 ₩ -

Other payables 12,366,048 - 13,448,016 -

Accrued expenses 10,021,164 40,188 15,662,255 48,278

₩ 625,852,382 ₩ 40,188 ₩ 682,401,196 ₩ 48,278

12. OTHER FINANCIAL LIABILITIES:

Other financial liabilities as of March 31, 2015 and December 31, 2014, consist of the following:

Accounts

March 31, 2015

December 31, 2014

(In thousands of Korean won)

Currency foward

₩ 43,149

₩ 20,438

Dividends payable 12,600,000 -

₩ 12,643,149 ₩ 20,438

13. OTHER LIABILITIES:

Other liabilities as of March 31, 2015 and December 31, 2014, consist of the following:

March 31, 2015 December 31, 2014

Accounts Current Non-current Current Non-current

(In thousands of Korean won)

Advance received ₩ 17,704,116 ₩ - ₩ 21,127,135 ₩ -

Value-added tax

withholding

3,983,432 - 1,424,343 -

Withholdings 1,168,130 - 2,240,970 -

Unearned income 991,241 - 694,777 -

Others 35,722 150,640 5,909,315 178,929

₩ 23,882,641 ₩ 150,640 ₩ 31,396,540 ₩ 178,929

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14. RETIREMENT BENEFIT PLAN:

(1) The main actuarial assumptions used by the Company as of March 31, 2015 and December 31, 2014, are as

follows:

Description March 31, 2015 December 31, 2014

Discount rate 2.78% 2.79%

Expected rate of salary increase 6.59% 6.61%

(2) The amounts recognized in the condensed consolidated statements of financial position related to defined

benefit plans as of March 31, 2015 and December 31, 2014, are as follows:

Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Present value of defined benefit obligations ₩ 24,265,577 ₩ 23,559,645

Fair value of plan assets

(19,068,541)

(20,400,794)

Net defined benefit liabilities ₩ 5,197,036 ₩ 3,158,851

(3) The changes in the net defined benefit liability for the three months ended March 31, 2015, are as follows:

Description

Present value of the

defined benefit obligations

Fair value of the

plan assets

Net defined benefit

liabilities

(In thousands of Korean won)

Beginning of the period ₩ 23,559,645 ₩ (20,400,794) ₩ 3,158,851

Current service cost 1,227,171 - 1,227,171

Interest expenses (income) 159,507 (123,926) 35,581

Subtotal 24,946,323 (20,524,720) 4,421,603

Remeasurements:

Actuarial loss arising from

changes in financial

assumptions

(43,595) - (43,595)

Subtotal (43,595) - (43,595)

Benefits paid (595,067) 1,456,179 861,112

Effect of exchange rate

and others

(42,084) - (42,084)

End of the period ₩ 24,265,577 ₩ (19,068,541) ₩ 5,197,036

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The changes in the net defined benefit liability for the three months ended March 31, 2014, are as follows:

Description

Present value of the

defined benefit obligations

Fair value of the

plan assets

Net defined benefit

liabilities

(In thousands of Korean won)

Beginning of the period ₩ 19,391,273 ₩ (13,732,654) ₩ 5,658,619

Current service cost 1,202,815 - 1,202,816

Interest expenses (income) 164,221 (111,175) 53,046

Subtotal 20,758,309 (13,843,829) 6,914,481

Remeasurements:

Actuarial loss arising from

changes in financial

assumptions 29,267 - 29,267

Subtotal 29,267 - 29,267

Benefits paid (285,766) 642,523 356,757

Effect of exchange rate

and others 9,594 - 9,593

End of the period ₩ 20,511,404 ₩ (13,201,306) ₩ 7,310,098

(4) The fair value of the plan assets as of March 31, 2015 and December 31, 2014, consists of the following:

Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Insurance instruments ₩ 19,068,541 ₩ 20,400,794

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15. PROVISIONS:

The changes in provisions for the three months ended March 31, 2015, are as follows:

Description

Provision for

restoration

liabilities

Other long-

term

employee

benefits

Others

Total

(In thousands of Korean Won)

Beginning of the period ₩ 646,601 ₩ 1,632,614 ₩ 3,741,899 ₩ 6,021,114

Charged (14,537) 49,261 (1,304,060) (1,269,336)

Utilized - - - -

Amortization of present value discounts

and change of discount rate 195 - -

195

Others (2,343) - (88,105) (90,448)

End of the period ₩ 629,916 ₩ 1,681,875 ₩ 2,349,734 ₩ 4,661,525

Classification:

Current ₩ - ₩ - ₩ 813,553 ₩ 813,553

Non current 629,916 1,681,875 1,536,181 3,847,972

The changes in provisions for the three months ended March 31, 2014, are as follows:

Description

Provision for

restoration

liabilities

Other long-term

employee

benefits

Others

Total

(In thousands of Korean Won)

Beginning of the period ₩ 598,732 ₩ 1,188,384 ₩ 2,819,228 ₩ 4,606,344

Charged 21,478 38,351 96,444 156,273

Utilized - - (480,408) (480,408)

Amortization of present value discounts

and change of discount rate 170 - -

170

Others 728 - (2,535) (1,806)

End of the period ₩ 621,109 ₩ 1,226,735 ₩ 2,432,729 ₩ 4,280,573

Classification:

Current ₩ - ₩ - ₩ 1,076,362 ₩ 1,076,362

Non current 621,109 1,226,735 1,356,367 3,204,211

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16. CAPITAL STOCK :

Capital stock as of March 31, 2015 and December 31, 2014, consists of the following:

Type of share Authorized Issued Par value March 31, 2015 December 31, 2014

(In thousands of Korean Won)

Common share 24,000,000 shares 18,000,000 shares ₩ 500 ₩ 9,000,0000 ₩ 9,000,000

(*) The Group split face value to ₩ 500 per share from ₩ 5,000 at the General Meeting of Shareholders on

March 23rd, 2015.

17. OTHER COMPONENTS OF EQUITY:

(1) The details of other components of equity as of March 31, 2015 and December 31, 2014, are as follows:

Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Gain on valuation of AFS financial assets, net ₩ 66,214 ₩ 47,539 Gain on share of the other comprehensive income

of equity-accounted investees

416,507

364,743 Loss on foreign operations translation, net

(13,373,427)

(10,397,079)

₩ (12,890,706) ₩ (9,984,797)

(2) Changes in gain on valuation of AFS assets for the three months ended March 31, 2015 and 2014, are as

follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean won)

Beginning of the period ₩ 47,539 ₩ -

Gain on changes in fair value of AFS financial assets

24,638

82,448

Tax effect

(5,963)

(19,953)

End of the period ₩ 66,214 ₩ 62,495

18. RETAINED EARNINGS:

(1) Retained earnings as of March 31, 2015 and December 31, 2014, are as follows:

Description March 31, 2015 December 31, 2014

(In thousands of Korean won)

Legal reserve (*) ₩ 4,500,000 ₩ 4,500,000

Discretionary reserve

Reserve for establishment of research center

for brand

18,000,000 18,000,000

Reserve for development for overseas markets 21,500,000 21,500,000

Unappropriated 373,377,078 372,280,069

₩ 417,377,078 ₩ 416,280,070

(*) The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve,

a minimum of 10% of annual cash dividends declared, until such reserve equals 50% of its capital stock

issued. The Company’s accumulated legal reserve has already reached 50% of its paid-in capital as of March

31, 2015.The legal reserve may not be utilized for cash dividends, but may only be used to offset a deficit, if

any, or be transferred to capital stock.

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(2) Changes in retained earnings for the three months ended March 31, 2015 and 2014, are as follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean won)

Beginning of the period ₩ 416,280,070 ₩ 342,591,998

Net income attributable to the owners

of the Company

13,665,204

13,886,688

Payment of dividends (12,600,000) (7,200,000)

Remeasurements of defined benefit plans

43,595

(29,267)

Tax effect (11,791) 10,667

End of the period ₩ 417,377,078 ₩ 349,260,086

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19. SALES:

(1) Sales for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Rendering of services ₩ 223,594,707 ₩ 146,692,069

Sales of goods 3,485,143 5,116,892

₩ 227,079,850 ₩ 151,808,961

(2) The sales revenue from the customer who accounts for more than 10% of the Group’s sales revenue are as

follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Hyundai Motor Company ₩ 30,165,036 ₩ 23,258,477

20. SELLING AND ADMINISTRATIVE EXPENSES:

Selling and administrative expenses for the three months ended March 31, 2015 and 2014, consist of the

following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Payroll ₩ 33,370,700 ₩ 22,576,908

Post-employment benefits 1,262,752 1,255,862

Welfare expenses 3,597,688 2,338,696

Travel expenses 939,537 718,119

Entertainment expenses 724,085 561,503

Communication expenses 421,145 336,773

Tax and dues 367,379 365,505

Depreciation 1,194,881 860,295

Amortization 227,827 94,609

Rent 3,565,995 2,752,920

Repairs 193,913 227,560

Vehicles maintenance 286,932 284,128

Employee training cost 131,053 257,292

Publication expenses 264,708 141,927

Office supplies expenses 354,959 98,247

Supplies expenses 80,837 204,771

Service charges 2,808,329 2,329,307

Advertisements 357,871 501,017

Reversal for allowance for doubtful accounts (86,558) (760,679)

Market development expenses 479,961 678,646

Others 1,199,128 669,287

₩ 51,743,122 ₩ 36,492,693

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21. FINANCE INCOME AND EXPENSES:

(1) Finance income for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Interest income ₩ 1,854,184 ₩ 1,964,007

Dividend income 100,000 100,000

Gain on foreign exchange transactions 2,883,270 919,225

Gain on foreign currency translation 153,055 315,444

Gain on disposals of other financial assets 6,440 -

Gain on valuation of derivatives 125,176 40,176

₩ 5,122,125 ₩ 3,338,852

(2) Finance expenses for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Loss on foreign exchange transactions ₩ 3,146,168 ₩ 703,144

Loss on foreign currency translation 879,939 231,478

Loss on valuation of derivatives 22,711 59,053

Others 1,870 1,779

₩ 4,050,688 ₩ 995,454

22. OTHER INCOME AND EXPENSES: (1) Other income for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Gain on disposals of PP&E ₩ 1,132 ₩ 287

Miscellaneous revenues 1,256,531 167,446

Others 1,120 17,188

₩ 1,258,783 ₩ 184,921

(2) Other expenses for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Loss on disposals of PP&E ₩ - ₩ 1,360

Impairment loss on intangible assets 120,000 -

Miscellaneous losses 4,996 24,224

Donations 17,898 3,747

Others 58,532 57,143

₩ 201,426 ₩ 86,474

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23. EXPENSES BY NATURE:

Expenses by nature for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Outsourced production expenses ₩ 135,769,378 ₩ 90,803,649

Salaries 38,231,140 26,171,465

Depreciation 1,222,561 860,295

Amortization 227,827 94,609

Service charges 16,658,606 4,606,663

Others 17,037,036 15,786,801

₩ 209,146,548 ₩ 138,323,482

24. INCOME TAX EXPENSE:

(1) Income tax expenses for the three months ended March 31, 2015 and 2014, consist of the following:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Income tax currently payable ₩ 5,450,344 ₩ 4,670,726

Adjustments recognized in the current period in

relation to the prior periods (19,723) 612

Changes in deferred income tax due to:

Temporary differences (224,451) 630,778

Items directly charged to equity 5,829 (30,619)

Others 666,468 402,515

Income tax expense ₩ 5,878,467 ₩ 5,674,012

(2) The reconciliations between income before income tax and income tax expense pursuant to Corporate

Income Tax Law of Korea for the three months ended March 31, 2015 and 2014, are as follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Income before income tax ₩ 21,414,584 ₩ 18,843,962

Income tax expense calculated at current applicable

tax rates

5,159,293 4,994,852

Adjustments:

Non-taxable income - -

Non-deductible expenses 179,190 234,296

Tax credits - -

Others 539,984 444,864

719,174 679,160

Income tax expense ₩ 5,878,467 ₩ 5,674,012

Effective tax rate 27.45% 30.11%

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25. EARNINGS PER COMMON SHARE:

Basic earnings per common share are computed by dividing profit for the period attributable to owners of the

company by the weighted-average number of common shares outstanding during the period. The Group did not

compute diluted earnings per common share for the three months ended March 31, 2015 and 2014 since there

were no dilutive items during the periods.

Basic earnings per common share for the three months ended March 31, 2015 and 2014, are computed as follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In Korean Won)

Profit attributable to the owners of the Parent Company ₩ 13,665,203,914 ₩ 13,169,950,637

Weighted-average number of common shares outstanding 18,000,000 shares 18,000,000 shares

Basic earnings per common share ₩ 759 ₩ 732

(*) The Group split face value to ₩ 500 per share from ₩ 5,000 at the General Meeting of Shareholders on

March 23rd, 2015.

26. FINANCIAL INSTRUMENTS:

(1) Financial assets by categories as of March 31, 2015, are as follows:

Description

Financial

assets

at FVTPL

Loans

and

receivables

AFS

financial

assets

Book value Fair value

(In thousands of Korean Won)

Cash and

cash equivalents

₩ - ₩ 179,236,799 ₩ - ₩ 179,236,799 ₩ 179,236,799

Short-term and long-

term financial

instruments

94,156,910 104,196,750 - 198,353,660 198,353,660

Trade and other

receivables

- 600,003,671 - 600,003,671 600,003,671

AFS financial assets - - 2,448,680 2,448,680 2,448,680

Other financial assets

308,057

9,173,248

-

9,481,305

9,481,305

₩ 94,464,967 ₩ 892,610,468 ₩ 2,448,680 ₩ 989,524,115 ₩ 989,524,115

Financial assets by categories as of March 31, 2014, are as follows:

Description

Financial

assets

at FVTPL

Loans

and

receivables

AFS

financial

assets

Book value Fair value

(In thousands of Korean Won)

Cash and

cash equivalents

₩ - ₩ 216,912,849 ₩ - ₩ 216,912,849 ₩ 216,912,849

Short-term and long-

term financial

instruments

94,583,940 104,952,966 - 199,536,906 199,536,906

Trade and other

receivables

- 624,929,706 - 624,929,706 624,929,706

AFS financial Assets - - 2,404,704 2,404,704 2,404,704

Other financial assets

182,881

8,578,413

-

8,761,294

8,761,294

₩ 94,766,821 ₩ 955,373,934 ₩ 2,404,704 ₩ 1,052,545,459 ₩ 1,052,545,459

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(2) Financial liabilities by categories as of March 31, 2015, are as follows:

Description

Financial liabilities

at FVTPL

Financial liabilities

carried at

amortized cost

Book value Fair value

(In thousands of Korean Won)

Trade notes and

other payable

₩ - ₩ 625,892,570 ₩ 625,892,570 ₩ 625,892,570

Other financial liabilities 43,149 12,600,000 12,643,149 12,643,149

₩ 43,149 ₩ 638,492,570 ₩ 638,535,719 ₩ 638,535,719

Financial liabilities by categories as of March 31, 2014, are as follows:

Description

Financial liabilities

at FVTPL

Financial liabilities

carried at

amortized cost

Book value Fair value

(In thousands of Korean Won)

Trade notes and

other payable

₩ - ₩ 682,449,474 ₩ 682,449,474 ₩ 682,449,474

Other financial liabilities 20,438 - 20,438 20,438

₩ 20,438 ₩ 682,449,474 ₩ 682,469,912 ₩ 682,469,912

(3) Financial assets and liabilities measured at fair value are categorized into the following three-level fair

value hierarchy.

Level 1 : Fair value measurements are those derived from quoted prices (unadjusted) in active markets for

identical assets or liabilities.

Level 2 : Fair value measurements are those derived from inputs other than quoted prices included within

Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.

derived from prices).

Level 3 : Fair value measurements are those derived from valuation techniques that include inputs for the asset

or liability that are not based on observable market data (unobservable inputs).

Fair value measurements of financial instruments by fair-value hierarchy levels as of March 31, 2015, are as follows:

March 31, 2015

Description Level 1 Level 2 Level 3 Total

(In thousands of Korean Won)

Financial assets at FVTPL ₩ - ₩ 94,156,910 ₩ - ₩ 94,156,910

AFS financial assets - 1,948,680 - 1,948,680

Derivatives assets - 125,177 - 125,177

Derivatives liabilities - 43,149 - 43,149

Fair value measurements of financial instruments by fair-value hierarchy levels as of December 31, 2014, are as

follows:

December 31, 2014

Description Level 1 Level 2 Level 3 Total

(In thousands of Korean Won)

Financial assets at FVTPL ₩ - ₩ 94,583,940 ₩ - ₩ 94,583,940

AFS financial assets - 1,904,704 - 1,904,704

Derivatives liabilities - 20,438 - 20,438

The Group recognizes transfers between levels of the fair-value hierarchy at the date of the event or change in

circumstances that caused the transfer.

Descriptions of the valuation techniques and the inputs used in the fair value measurements categorized within

Level 2 of the fair-value hierarchy are as follows:

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- Debt instruments including corporate bonds

Fair value of debt instruments including corporate bonds is measured by applying the discounted cash flow

method. The rate used to discount cash flows is determined based on yield to maturity, which have the similar

credit rating and period quoted in the current market with those of debt instruments including corporate bonds

that should be measured. The Group classifies fair value measurements of debt instruments including corporate

bonds as Level 2 of the fair-value hierarchy since the rate, which has significant effects on fair value of debt

instruments including corporate bonds, is based on observable market data.

- Currency forwards

Fair value of currency forwards is measured based on forward exchange rate quoted in the current market at the

end of the reporting period, which has the same remaining period of derivatives to be measured. As the inputs

used to measure fair value of currency forwards and options are supported by observable market data, such as

forward exchange rates, the Group classified the estimates of fair value measurements of the currency forwards

and options as Level 2 of the fair-value hierarchy.

There are no changes in valuation techniques used in the fair value measurements of financial instruments categorized

within Level 2.

(4) The description for financial assets and liabilities which should be measured at fair value but have not been

disclosed at fair value due to non-reliable measurement of fair value is as follows:

Categories Description March 31, 2015 December 31, 2014

(In thousands of Korean Won)

Financial assets at FVTPL Stock warrants(*) ₩ 182,881 ₩ 182,881

AFS financial assets Unlisted equity securities(*) 500,000 500,000

(*) It is measured at the acquisition cost because the Group can neither obtain reliable financial imformation for

fair value nor assess the probability for the significant and various estimations about the fair value

measurement.

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27. GAIN (LOSS) BY CATEGORIES OF FINANCIAL INSTRUMENTS;

Gain(loss) by categories of financial instruments for the three months ended March 31, 2015, consist of the

following:

Description

Loans and

receivables

Financial

assets

at FVTPL

AFS

financial

assets Derivatives

Total

(In thousands of Korean Won)

Interest income ₩ 833,426 ₩ 941,913 ₩ 78,845 ₩ - ₩ 1,854,184

Gain(loss) on

foreign exchange

transactions, net (485,324) - - 222,426 (262,898)

Gain(loss) on

foreign currency

translation, net (726,884) - - - (726,884)

Dividend income - - 100,000 - 100,000

Gain(loss) on

valuation of

derivatives

- - - 102,466 102,466

Gain on disposals

of other financial

assets 6,440 - - - 6,440

Others

(1,870)

-

-

- (1,870)

₩ (374,212) ₩ 941,913 ₩ 178,845 ₩ 324,892 ₩ 1,071,438

Gain(loss) by categories of financial instruments for the three months ended March 31, 2014, consisted of the

following:

Description

Loans and

receivables

Financial

assets

at FVTPL

AFS

financial

assets Derivatives

Total

(In thousands of Korean Won)

Interest income ₩ 981,944 ₩ 906,642 ₩ 75,421 ₩ - ₩ 1,964,007

Gain(loss) on

foreign exchange

transactions, net 234,417 - - (18,336) 216,081

Gain(loss) on

foreign currency

translation, net 83,966 - - - 83,966

Dividend income - - 100,000 - 100,000

Gain(loss) on

valuation of

derivatives

- - - (18,877) (18,877)

Gain on disposals

of other financial

assets (1,778) - - - (1,778)

₩ 1,298,549 ₩ 906,642 ₩ 75,421 ₩ (37,213) ₩ 2,343,399

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28. RISK MANAGEMENT:

(1) Capital risk management

The Group manages its capital to maintain an optimal capital structure for maximizing profit of its shareholders

and for reducing the cost of capital. Debt to equity ratio calculated as total liabilities divided by total equity is

used as an index to manage the Group’s capital. The overall capital risk management policy is consistent with

that of the prior period.

Debt to equity ratios as of March 31, 2015 and December 31, 2014, are as follows:

Description March 31, 2015 December 31, 2014

(In thousands of Korean Won)

Total liabilities ₩ 689,506,262 ₩ 746,860,142

Total equity 427,472,959 427,339,336

Debt-to-equity ratio 161.30% 174.77%

(2) Financial risk management

The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and

price risk), credit risk and liquidity risk related to its financial instruments. The purpose of risk management of

the Group is to identify potential risks related to financial performance and reduce, eliminate and evade those

risks to an acceptable level of risks to the Group. The overall financial risk management policy is consistent with

that of the prior period.

1) Market risk

The Group is exposed to the risk that fair value of future cash flows of financial instrument will fluctuate due to

changes in market prices. Market risk consists of foreign exchange risk, interest risk and price risk.

a) Foreign exchange risk management

Foreign exchange risk is the risk that fair value of financial instrument will fluctuate due to changes in foreign

currency exchange rates. The Group is mainly exposed to exchange rate risk of foreign currencies such as USD

because of overseas operating activities.

The Group monitors and manages the foreign exchange risks regularly. The Group’s sensitivity to a 5% change in exchange rate of the functional currency against each foreign currency on income before income tax for the three months ended March 31, 2015, would be as follows:

Foreign Exchange Rate Sensitivity

Foreign Currency Increase by 5% Decrease by 5%

(In thousands of Korean Won)

USD ₩ 659,046 ₩ (659,046)

EUR 491,321 (491,321)

GBP 16,872 (16,872)

AUD 11,774 (11,774)

Others ₩ 14,046 ₩ (14,046)

The sensitivity analysis is applied to the Group’s monetary assets and liabilities in foreign currencies other than

functional currency.

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b) Interest rate risk management

Interest rate risk is the risk that interest income and expenses will fluctuate following to market interest rate. The

Group is exposed to interest rate risk arising from financial instruments with floating interest rates. The Group

manages interest rate risk to minimize the uncertainty and fluctuation of the profit for the period due to changes

in interest rate.

Effect of the Group’s sensitivity to a 1% change in interest rates for the financial assets and liabilities with

floating interest rates on income before income tax for the three months ended March 31, 2015, would be as

follows:

Interest Rate Sensitivity

Accounts Increase by 1% Decrease by 1%

(In thousands of Korean Won)

Interest income ₩ 1,207,434 ₩ (1,207,434)

c) Equity price risk

Equity price risk is the risk that the fair value or future cash flow of financial instrument will fluctuate due to

changes in market price other than foreign currency risk and interest rate risk. However, the Group does not

have equity securities traded in active market.

2) Credit risk

The Group is exposed to credit risk when a counterparty defaults on its contractual obligation resulting in a

financial loss for the Group. The Group operates a policy to transact with counterparties who only meet a certain

level of credit rating which was evaluated based on the counterparty’s financial conditions, default history, and

other factors. The credit risk in the liquid funds and derivative financial instruments is limited as the Group

transacts only with financial institutions with high credit-ratings assigned by international credit-rating agencies.

The book value of financial assets in the consolidated financial statements represents the maximum amounts of

exposure to credit risk.

The trade receivables (billing basis) of customers, which represent more than 5% of total trade receivables, are as

follows:

Description March 31, 2015 December 31, 2014

(In thousands of Korean Won)

Hyundai Motor Company. ₩ 91,657,875 ₩ 134,330,142

Kia Motors America, Inc. 81,372,867 81,268,356

Dongfeng Yueda

Kia Motor Co., Ltd

72,878,160

61,969,627

Kia Motors Corporation 33,333,189 55,185,336

Hyundai Motor America 87,235,040 39,365,756

3) Liquidity risk

The Group manages liquidity risk by matching the maturity of financial liabilities and financial assets through

reviewing and analysing between actual cashflows and budgetary cashflows based on long-term and short-term

cash management plan.

The maturity analysis of non-derivative liabilities according to their remaining contract expiration as of March 31,

2015 is as follows:

Nominal cash flows

Description Less than one year One - five years Total

(In thousands of Korean Won)

Non-interest-bearing liabilities ₩ 638,452,382 ₩ 40,188 ₩ 638,492,570

The above maturity analysis have been drawn up based on the undiscounted cashflows of financial liabilites

based on earliest date on which the Group can be required to pay.

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29. RELATED-PARTY TRANSACTIONS:

(1) For the three months ended March 31, 2015, significant transactions arising from operations between the

Group and related parties or affiliates of Hyundai Motor company Group (“The Affiliates”) by the

Monopoly Regulation And Fair Trade Act of the Republic of Korea (“the Act”) are as follows:

Description

Proceeds Expenses

Sales and others Purchases and others

(In thousands of Korean Won)

Joint venture

and associates Mate Communications Co., Ltd. ₩ - ₩ 1,042,267

Inspirecorp. Co., Ltd. - 36,000

Other related

parties (*)

Hyundai Motor America 44,172,798 -

KIA Motors America, Inc. 12,707,811 -

Affiliates by the

Act

Hyundai Motor Company 30,165,036 59,023

Hyundai Card Co., Ltd. 753,121 341,671

Hyundai Capital Services, Inc. 524,764 97,717

Hyundai Autoever Corp. - 229,724

Kia Motors Corporation 7,880,462 2,421

Dongfeng Yueda

Kia Motor Co., Ltd 6,033,746 -

KIA tigers Co., Ltd 1,835,828 -

Hyundai Motor India Limited 7,170,755 -

Hyundai Motor

Deutschland GmbH 5,504,644 -

Hyundai Motor Group

China, Ltd. 3,545,881 108,643

Hyundai Motors Europe GmbH 3,413,018 -

Hyundai Motor Company

Australia Pty Limited 3,132,189 5,374

Hyundai Auto Canada Corp. 3,119,711 -

KIA Motors France SAS 1,581,182 2,253

KIA Motors Europe GmbH 6,633,648 -

KIA Canada, Inc. 6,258,734 -

KIA Motors Deutschland GmbH 4,453,579 17,251

KIA Motors Company Italy S.r.l 2,541,103 -

KIA Motors Australia Pty Ltd. 2,171,918 15,218

KIA Motors (UK) Ltd. 1,684,765 -

Hyundai Motor France SAS 1,578,120 3,677

Others(**) ₩ 10,933,226 ₩ 207,601

(*) Other related parties have significant influence over IWA which became a subsidiary since October 1, 2014.

(**) Others include subsidiaries of the Affiliates by the Act.

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For the three months ended March 31, 2014, significant transactions arising from operations between the Group

and related parties or the Affiliates by Act, are as follows:

Description

Proceeds Expenses

Sales and others Purchases and others

(In thousands of Korean Won)

Joint venture and

associates Mate Communications Co., Ltd

₩ 70,108 ₩ 383,292

Affiliates by the Act Hyundai Motor Company 23,258,477 60,660

Hyundai Card Co., Ltd. 649,442 343,358

Hyundai Capital Services, Inc. 521,049 93,141

Hyundai Autoever Corp. 548,109 222,917

Kia Motors Corporation 6,454,315 649

Dongfeng Yueda Kia

Motor Co., Ltd 4,049,522 -

Hyundai Motor India Limited 8,737,843 -

Hyundai Motor

Deutschland GmbH 5,192,492 16,343

Hyundai Motor Group

China, Ltd. 3,111,081 -

Hyundai Motors Europe GmbH 3,431,392 -

Hyundai Motor Company

Australia Pty Limited 2,774,699 8,570

Hyundai Auto Canada Corp. 3,148,463 -

Hyundai Motor (UK) Ltd. 1,854,722 3,107

KIA Motors Europe GmbH 6,355,119 -

KIA Canada, Inc. 3,642,792 -

KIA Motors Deutschland GmbH 7,576,240 38,825

KIA Motors Company Italy S.r.l 2,721,059 -

KIA Motors Australia Pty Ltd. 4,512,732 12,203

KIA Motors (UK) Ltd. 1,630,304 -

KIA Motors France SAS 1,641,684 125

KIA Motors Russia LLC 1,525,767 -

Others(*) ₩ 10,031,926 ₩ 133,433

(*) Others include subsidiaries of the Affiliates by the Act.

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(2) As of March 31, 2015, significant balances related to the transactions between the Group and related parties

or the Affiliates by the Act are as follows:

Description

Receivables Payables

Trade

receivables

Other

receivables

and others

Trade

payables

Other

payables

and others

(In thousands of Korean Won)

Joint venture

and associates Mate Communications Co., Ltd ₩ - ₩ - ₩ - ₩ 805,980

Inspirecorp. Co., Ltd. - - - 13,200

Other related

parties

Hyundai Motor America 87,235,040 - - -

KIA Motors America, Inc. 81,372,867 - - -

Affiliates by the

Act

Hyundai Motor Company 91,657,875 15,386,150 62,607 12,894,007

Hyundai MOBIS Co., Ltd. 11,001,883 - 29,700 93,795

Kia Motors Corporation 33,333,189 2,670,041 28,057 348,622

Dongfeng Yueda

Kia Motor Co., Ltd 72,878,160 - - -

Hyundai Motor India Limited 8,085,853 - - -

Hyundai Motor

Deutschland GmbH 8,333,995 2,200 - 6,536

Hyundai Motor Europe GmbH 7,067,775 - - -

Hyundai Motor Company

Australia Pty Limited 6,770,119 - 647 -

Hyundai Auto Canada Corp. 13,985,841 278,880 - -

Hyundai Motor (UK) Ltd 8,181,579 - - 646

KIA Canada, Inc. 7,528,506 140,814 - -

Others(*) ₩ 64,534,603 ₩ 645,349 ₩ 822,638 ₩ 828,183

(*) Others include subsidiaries of the Affiliates by the Act.

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As of December 31, 2014, significant balances related to the transactions between the Group and related parties

or the Affiliates by the Act are as follows:

Description

Receivables Payables

Trade

receivables

Other

receivables

and others

Trade

payables

Other

payables

and others

(In thousands of Korean Won)

Joint venture

and associates Mate Communications Co., Ltd ₩ - ₩ - ₩ 225,675 ₩ 1,195,565

Other related

parties

Hyundai Motor America 39,365,756 - - -

KIA Motors America, Inc. 81,268,356 - - -

Affiliates by the

Act

Hyundai Motor Company 134,330,142 8,771,480 41,032 11,201,539

Hyundai MOBIS Co., Ltd. 17,212,628 1,292 14,850 129,836

Hyundai Steel Co., Ltd. 6,905,851 945 - 151,253

Hyundai Engineering &

Construction Co., Ltd. 6,415,865 2,210 - 77,493

Kia Motors Corporation 55,185,336 775,893 34,343 579,147

Dongfeng Yueda

Kia Motor Co., Ltd 61,969,627 - - -

Hyundai Motor Group China, Ltd. 10,386,430 - - 149,231

Hyundai Motor Europe GmbH - - - 5,308,105

Hyundai Motors

Australia Pty Ltd. 6,426,005 - 5,827 -

Hyundai Assan Otomotiv

Sanayi Ve Ticaret A.S. 5,856,146 - - -

KIA Motors Company Italy S.r.l 12,597,161 - 19,070 35,288

KIA Motors Australia Pty Ltd. 6,790,498 - 14,108 70,727

KIA Motors Iberia 5,932,257 - 6,020 -

Others(*) ₩ 51,252,420 ₩ 757,550 ₩ 515,720 ₩ 1,256,139

(*) Others include subsidiaries of the Affiliates by the Act.

(3) Compensation of key management personnel for the three months ended March 31, 2015 and 2014, are as

follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Short-term employee salaries ₩ 663,826 ₩ 596,261

Post-employment benefits 1,293,210 1,275,754

Other long-term benefits 53,291 38,351

₩ 2,010,327 ₩ 1,910,366

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30. CASH GENERATED FROM OPERATIONS:

Cash generated from operations for the three months ended March 31, 2015 and 2014 is as follows:

Description

Three months ended

March 31, 2015

Three months ended

March 31, 2014

(In thousands of Korean Won)

Profit for the period ₩ 15,536,117 ₩ 13,169,951

Adjustments:

Post-employment benefits 1,262,752 1,255,862

Depreciation 1,222,561 860,295

Amortization of intangible assets 227,827 94,609

Reversal for allowance for doubtful accounts (86,558) (760,679)

Loss on valuation of derivatives 22,711 59,053

Impairment losse on intangible assets 120,000 -

Income tax expense 5,878,467 5,674,012

Loss(gain) on foreign currency translation, net 726,884 (83,966)

Loss(gain) on disposals of PP&E, net (1,132) 1,073

Interest income (1,854,184) (1,964,007)

Gain on valuation of derivatives (125,176) (40,176)

Gain on investments in joint venture and

associates, net (1,352,488)

(2,916,637)

Dividend income (100,000) (100,000)

Others (1,100,988) 84,970

4,840,676 2,164,409

Changes in operating assets and liabilities:

Decrease in trade receivables 15,775,993 67,187,597

Decrease in other receivables 1,366,681 146,718

Decrease(increase) in other financial assets 184,517 (10,761,185)

Decreas in other assets (5,381,341) (3,891,311)

Decrease in trade payables (43,979,028) (66,104,111)

Increase(decrease) in other payables (5,390,096) 2,877,358

Decrease in other liabilities (1,264,646) (897,740)

Payment of severance benefits (595,067) (285,766)

Changes in net defined benefit liabilities 1,456,179 642,523

Decrease in provisions (4,674,653) (459,950)

(42,501,461) (11,545,867)

Cash generated from operations ₩ (22,124,668) ₩ 3,788,493

31. COMMITMENTS AND CONTINGENCIES:

(1) Payment guarantees provided by third parties other than related parties as of March 31, 2015, are as follows:

Description Financial institutions Provided entity Guaranteed limits Guaranteed amount

(In thousands of Korean won)

Performance

guarantee

Kookmin Bank

Seoul Line 9

Operation Co., Ltd

₩ 15,000,000 ₩ 30,600

Kookmin Bank - 12,000,000 -

Woori Bank - 5,000,000 -

Woori Bank - $ 5,000,000 -

₩ 30,600

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(2) The Group has been provided with guarantees amounting to ₩9,946,617 thousand relating to contract

performance by Seoul Guarantee Insurance Company as of March 31, 2015.

(3) The Company has entered into an agency agreement with KOBACO, which also serves as a regulatory

agency for the domestic media and advertising industry. Under the agreement, the Company should submit

all requests for advertisements received from direct advertisers or advertising sponsors to KOBACO, which

is authorized to deal with media companies for the airing of such advertisements, and from which the

Company receives an agent fee ranging from 9% to 13% of the receipts from advertisers.

(4) As of March 31, 2015, the Company maintains the lines for bank overdraft of up to ₩4,000 million and

discount of notes receivable of up to ₩3,000 million with Kookmin Bank and other financial institutions.

The Company does not have discounted the notes receivable as of March 31, 2015

(5) As of March 31, 2015, the Company is involved in lawsuits relating to service charges as a plaintiff

(aggregate claim amount of ₩3,844,318 thousand). After the Company won the case in the first trial, the

second trial has been in process.

32. SEGMENT INFORMATION:

(1) The Group has a single segment, advertising agencies, and consists of a single operating segment.

(2) Operating performance by region where the Group’s entities are located for the years ended March 31, 2015

and 2014, are as follows:

For the three months ended March 31, 2015

Korea Europe

America China Others

Consolidation

adjustments

Total

(In thousands of Korean Won)

Total sales ₩ 81,615,345 ₩ 39,270,410 ₩ 81,717,942 ₩ 10,025,320 ₩ 14,983,464 ₩ (532,631) ₩ 227,079,850

Inter-company sales (6,386) (479,112) (29,519) - (17,614) 532,631 -

Net sales 81,608,958 38,791,298 81,688,423 10,025,320 14,965,851 - 227,079,850

Operating income ₩ 3,745,547 ₩ 5,142,917 ₩ 5,839,163 ₩ 1,749,636 ₩ 1,429,519 ₩ 26,520 ₩ 17,933,302

For the three months ended March 31, 2014

Korea Europe

America China Others

Consolidation

adjustments

Total

(In thousands of Korean Won)

Total sales ₩ 72,474,746 ₩ 44,862,713 ₩ 7,793,130 ₩ 6,993,142 ₩ 20,526,176 ₩ (840,946) ₩ 151,808,961

Inter-company sales (274,873) (557,130) - - (8,943) 840,946 -

Net sales 72,199,873 44,305,583 7,793,130 6,993,142 20,517,233 - 151,808,961

Operating income ₩ 3,835,314 ₩ 4,178,886 ₩ 1,431,904 ₩ 1,471,368 ₩ 2,502,257 ₩ 65,750 ₩ 13,485,479

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(3) Non-current assets by region where the Group’s entities are located for the three months ended March 31, 2015

and 2014, are as follows:

For the three months ended March 31, 2015

Korea Europe

America China Others

Consolidation

adjustments

Total

(In thousands of Korean Won)

Non-current

assets(*) ₩ 18,294,468 ₩ 3,101,076 ₩ 19,336,485 ₩ 313,854 ₩ 817,741 ₩ 25,497,014 ₩ 67,360,638

(*) Non-current assets consist of PP&E and intangible assets.

For the three months ended March 31, 2014

Korea Europe

America China Others

Consolidation

adjustments

Total

(In thousands of Korean Won)

Non-current

assets(*) ₩ 17,093,491 ₩ 3,625,678 ₩ 20,030,964 ₩ 326,799 ₩ 930,123 ₩ 25,358,287 ₩ 67,365,342

(*) Non-current assets consist of PP&E and intangible assets.


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