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Leases

12 Months Ended

Dec. 31, 2020

Presentation of leases for lessee [Abstract]

Disclosure of leases

24.

Lease

1)	Company as a lessee

(1)

Lease contracts

The Company applies the short-term leases recognition exemption to its lease contracts that have a lease term of 12 months or less from the commencement date, and recognized ￦20,127 million and ￦45,787 million respectively, as expense for the years ended December 31, 2019 and 2020. The Company also applies the leases of low-value assets recognition exemption to leases contracts with underlying assets considered to be low value (i.e., approximately less than ￦5 million), and recognized ￦1,616 million and ￦2,796 million respectively, as expense for the year ended December 31, 2019 and 2020. The Company has lease contracts for various items such as consecutive voyage charter contracts, power purchase agreements (PPA), real estate lease contracts including buildings, switchyard, and land for electric substation, vehicles, and other equipment.

(2)

Right-of-use assets as of December 31, 2019 and 2020 are as follows:


						2019
						Acquisition cost				Accumulated depreciation				Book value
						In millions of won
Land		￦					693,103				(49,029	)			644,074
Buildings							54,980				(20,403	)			34,577
Structures							28,198				(2,554	)			25,644
Machinery							1,308				(484	)			824
Ships							4,113,754				(425,465	)			3,688,289
Vehicles							20,817				(7,109	)			13,708
Others(*)							2,661,850				(2,285,393	)			376,457

		￦					7,574,010				(2,790,437	)			4,783,573

(*)

Including power purchase agreements (“PPA”) with GS EPS and two other LNG combined power suppliers.


						2020
						Acquisition cost				Accumulated depreciation				Book value
						In millions of won
Land		￦					811,014				(104,435	)			706,579
Buildings							82,749				(35,527	)			47,222
Structures							24,175				(3,689	)			20,486
Machinery							1,308				(613	)			695
Ships							4,280,331				(842,968	)			3,437,363
Vehicles							29,281				(15,756	)			13,525
Others(*)							2,676,356				(2,360,060	)			316,296

		￦					7,905,214				(3,363,048	)			4,542,166

(*)

Including power purchase agreements (“PPA”) with GS EPS and another LNG combined power supplier.

(3)

Changes in right-of-use assets for the years ended December 31, 2019 and 2020 are as follows:


						2019
						Beginning balance				Changes in accounting policies(*)				Increase				Depreciation				Ending balance
						In millions of won
Land		￦					—				684,386				8,717				(49,029	)			644,074
Buildings							—				36,874				18,106				(20,403	)			34,577
Structures							—				20,840				7,358				(2,554	)			25,644
Machinery							—				—				1,308				(484	)			824
Ships							—				3,986,947				126,807				(425,465	)			3,688,289
Vehicles							—				11,258				9,559				(7,109	)			13,708
Others							—				403,346				49,141				(76,030	)			376,457

		￦					—				5,143,651				220,996				(581,074	)			4,783,573

(*)

Including transferred amount of ￦195,704 million, which was classified as finance lease assets as of December 31, 2018.


						2020
						Beginning balance				Increase				Depreciation				Decrease				Others				Ending balance
						In millions of won
Land		￦					644,074				12,269				(52,069	)			—				102,305				706,579
Buildings							34,577				53,182				(37,609	)			(803	)			(2,125	)			47,222
Structures							25,644				260				(1,485	)			—				(3,933	)			20,486
Machinery							824				—				(129	)			—				—				695
Ships							3,688,289				183,789				(427,221	)			—				(7,494	)			3,437,363
Vehicles							13,708				9,009				(7,747	)			(21	)			(1,424	)			13,525
Others							376,457				32,825				(59,994	)			(3	)			(32,989	)			316,296

		￦					4,783,573				291,334				(586,254	)			(827	)			54,340				4,542,166

(4)

Lease liabilities as of December 31, 2019 and 2020 are as follows:


						2019				2020
						In millions of won
Less than 1 year		￦					686,445				614,442
1 ~ 5 years							2,334,883				2,133,538
More than 5 years							2,735,681				2,461,557

							5,757,009				5,209,537
Less : Discount							(686,876	)			(588,441	)

Present value of lease payment		￦					5,070,133				4,621,096

(5)

The details of the liquidity classification of lease liabilities as of December 31, 2019 and 2020 are as follows:


						2019				2020
						In millions of won
Current lease liabilities		￦					635,349				576,665
Non-current lease liabilities							4,434,784				4,044,431

		￦					5,070,133				4,621,096

(6)

Changes in lease liabilities for the years ended December 31, 2019 and 2020 are as follows:


						2019
						Beginning balance				Changes in accounting policies				Increase				Decrease				Interest expenses				*Others()**				Ending balance
						In millions of won
Lease liabilities		￦					283,806				4,943,584				218,800				(659,387	)			85,950				197,380				5,070,133

(*)

Including translation effect of foreign currency lease liabilities and others.


						2020
						Beginning balance				Increase				Decrease				Interest expenses				*Others()**				Ending balance
						In millions of won
Lease liabilities		￦					5,070,133				280,114				(725,759	)			111,782				(115,174	)			4,621,096

(*)

Including translation effect of foreign currency lease liabilities and others.

(7)

Details of expense relating to lease contracts as lessee for the year ended December 31, 2019 and 2020 are as follows:


						2019				2020
						In millions of won
Depreciation of right-of-use assets		￦					581,074				586,254
Interest expenses of lease liabilities							85,950				111,782
Leases expenses for short-term leases							20,127				45,787
Leases expenses for leases of low-value assets							1,616				2,796
Variable lease payments							(15,912	)			33,267

		￦					672,855				779,886

(8)

The total cash outflow related to the lease contracts, including cash outflows due to short-term leases and leases of low-value asset, amounts to ￦665,218 million and ￦807,609 million, for the years ended December 31, 2019 and 2020, respectively.

2)	Company as a lessor

(1)

Finance lease contracts

The Company entered into power purchase agreements (“PPA”) with Jordan Electric Power Company to provide a 373MW level Qatrana gas combined power plant over a 25-year lease term, and an 89.1MW level Fujeij wind power plant over a 20-year lease term. Also, the Company has provided fly-ash pipe conduit as finance leases with an average lease term of 7 years. In addition, the Company provides 29 energy storage system installation projects and 114 energy efficiency contracts as finance leases with a lease term of 2 to 10 years. Also, the Company entered into a PPA with the Comission Federal de Electricidad in Mexico to provide for 25 years (from December 2013 to November 2038) all electricity generated from the power plant after completion of its construction and collect rates consisting of fixed costs (to recover the capital) and variable costs during the contracted period.

(2)

Profit and loss related to finance lease for the years ended December 31, 2019 and 2020 are as follows:

2019

2020

In millions of won

Finance income on the net investment in the lease

￦

97,392

117,763

(3)

Maturity analysis of the lease payments receivable and reconciliation of the undiscounted lease payments to the net investment in the lease as of December 31, 2019 and 2020 are as follows:


						2019				2020
						In millions of won
Less than 1 year		￦					173,093				162,211
1 ~ 2 years							150,895				148,485
2 ~ 3 years							150,596				144,913
3 ~ 4 years							149,364				139,605
4 ~ 5 years							145,964				136,962
More than 5 years							1,740,652				1,583,576

							2,510,564				2,315,752
Less : Unearned finance income							(1,331,723	)			(1,192,686	)

Net investment in the lease(*)		￦					1,178,841				1,123,066

(*)

Including the present value of unguaranteed residual value amounting to ￦15,946 million and ￦16,407 million, as of December 31, 2019 and 2020, respectively.

The implicit interest rate for a lease term is determined on the lease contract date. The implicit interest rate of the finance lease contracts is from 1.39% up to 16.60% per year as of December 31, 2020. (prior year : 3.50% ~ 16.48%)

(4)

Changes in the allowance for doubtful accounts of finance lease receivables for the years ended December 31, 2019 and 2020 are as follows:


						2019				2020
						In millions of won
Beginning balance		￦					1,133				862
Bad debt expense							—				128
Reversal of allowance for doubtful accounts							(271	)			—

Ending balance		￦					862				990