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Other Financial Assets and Liabilities | 12 Months Ended
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Dec. 31, 2017
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Other Financial Assets and Liabilities |
7. | Other Financial Assets and Liabilities
Details of other financial assets and liabilities as of December 31, 2016 and 2017, are as follows:
(In millions of Korean won) |  | 2016 |  |  | 2017 |
Other financial assets |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  | ￦ | 6,277 |  |  | ￦ | 5,813 |
Derivatives used for hedge |  |  | 227,318 |  |  |  | 7,389 |
Financial instruments1 |  |  | 716,769 |  |  |  | 1,333,317 |
Available-for-sale financial assets1 |  |  | 404,774 |  |  |  | 380,953 |
Held-to-maturity investments |  |  | 30,143 |  |  |  | 151 |
Less: Non-current |  |  | (664,726 | ) |  |  | (754,992 | )
Current |  | ￦ | 720,555 | ) |  | ￦ | 972,631 | )
Other financial liabilities |  |  |  |  |  |  |  |
Financial liabilities at fair value through the profit or loss |  | ￦ | 1,973 |  |  | ￦ | 5,051 |
Derivatives used for hedge |  |  | 14,928 |  |  |  | 93,770 |
Other financial liabilities |  |  | 91,763 |  |  |  | 87,669 |
Less: Non-current |  |  | (108,431 | ) |  |  | (149,267 | )
Current |  | ￦ | 233 |  |  | ￦ | 37,223 |
1 | As of December 31, 2017, MMW(Money Market Wrap) and MMT(Money Market Trust) amounting to ￦870,453 million is included in other financial assets. As of December 31, 2017, the Group’s financial instruments amounting to ￦59,660 million (December 31, 2016: ￦49,721 million), which consist of certain proceeds from the disposal of Ustream Inc. deposited in an escrow account, checking account deposits and deposits for Win-win Growth Cooperative loans, are subject to withdrawal restrictions.
Financial instruments at fair value through profit or loss as of December 31, 2016 and 2017, are as follows:
|  | 2016 |  |  | 2017 |
(In millions of Korean won) |  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Financial instruments at fair value through profit and loss |  | ￦ | 6,277 |  |  | ￦ | — |  |  | ￦ | 5,813 |  |  | ￦ | — |
Other derivatives liabilities |  | ￦ | — |  |  | ￦ | 1,973 |  |  | ￦ | — |  |  | ￦ | 5,051 |
The valuation gains and losses on financial assets and liabilities at fair value through profit or loss and held for trading for the years ended December 31, 2015, 2016 and 2017, are as follows: Financial instruments at fair value through profit or loss
|  | 2015 |  |  | 2016 |  |  | 2017 |
(in millions of Korean won) |  | Valuation gains |  |  | Valuation losses |  |  | Valuation gains |  |  | Valuation losses |  |  | Valuation gains |  |  | Valuation losses |
Valuation gains and losses on financial assets |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 470 |  |  | ￦ | 7,654 |  |  | ￦ | — |  |  | ￦ | 464 |
Total |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 470 |  |  | ￦ | 7,654 |  |  | ￦ | — |  |  | ￦ | 464 |
Held for trading
|  | 2015 |  |  | 2016 |  |  | 2017 |
(in millions of Korean won) |  | Valuation gains |  |  | Valuation losses |  |  | Valuation gains |  |  | Valuation losses |  |  | Valuation gains |  |  | Valuation losses |
Valuation gains and losses on financial assets |  | ￦ | — |  |  | ￦ | 2,006 |  |  | ￦ | 33 |  |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 3,078 |
Total |  | ￦ | — |  |  | ￦ | 2,006 |  |  | ￦ | 33 |  |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 3,078 |
The maximum exposure of debt securities of financial instruments at fair value through profit or loss to credit risk is carrying amount as of December 31, 2017. Derivatives used for hedge as of December 31, 2016 and 2017, are as follows:
|  | 2016 |  |  | 2017 |
(in millions of Korean won) |  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Interest rate swap1 |  | ￦ | — |  |  | ￦ | 3,278 |  |  | ￦ | — |  |  | ￦ | 2,633 |
Currency swap2 |  |  | 214,648 |  |  |  | 11,650 |  |  |  | 7,389 |  |  |  | 81,300 |
Currency forwards3 |  |  | 12,670 |  |  |  | — |  |  |  | — |  |  |  | 9,837 |
Total |  |  | 227,318 |  |  |  | 14,928 |  |  |  | 7,389 |  |  |  | 93,770 |
Less: non-current |  |  | (97,220 | ) |  |  | (14,695 | ) |  |  | (4,675 | ) |  |  | (56,547 | )
Current |  | ￦ | 130,098 |  |  | ￦ | 233 |  |  | ￦ | 2,714 |  |  | ￦ | 37,223 |
| 1 | The interest rate swap contract is to hedge the risk of variability in future fair value of the bond.
| 2 | The currency swap contract is to hedge the risk of variability in cash flow from the bond. In applying the cash flow hedge accounting, the Group hedges its exposures to cash flow fluctuation until September 7, 2034.
| 3 | The currency forward contract is to hedge the risk of variability in cash flow from transactions in foreign currencies due to changes in foreign exchange rate.
The full value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months. The valuation gains and losses on the derivatives contracts for the years ended December 31, 2015, 2016 and 2017, are as follows:
(in millions of Korean won) |  | 2015 |  |  | 2016 |  |  | 2017 |
Type of Transaction |  | Valuation gain |  |  | Valuation loss |  |  | Other comprehensive income1 |  |  | Valuation gain |  |  | Valuation loss |  |  | Other comprehensive income1 |  |  | Valuation gain |  |  | Valuation loss |  |  | Other comprehensive income1 |
Interest rate swap |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | (2,858 | ) |  | ￦ | — |  |  | ￦ | 148 |  |  | ￦ | (142 | ) |  | ￦ | 38 |  |  | ￦ | — |  |  | ￦ | 637 |
Currency swap |  |  | 141,512 |  |  |  | 1,733 |  |  |  | 150,255 |  |  |  | 97,158 |  |  |  | (10 | ) |  |  | 85,479 |  |  |  | 19 |  |  |  | 187,468 |  |  |  | (146,752 | )
Currency forwards |  |  | — |  |  |  | — |  |  |  | 247 |  |  |  | 12,278 |  |  |  | — |  |  |  | 146 |  |  |  | — |  |  |  | 22,114 |  |  |  | (393 | )
Total |  | ￦ | 141,512 |  |  | ￦ | 1,733 |  |  | ￦ | 147,644 |  |  | ￦ | 109,436 |  |  | ￦ | 138 |  |  | ￦ | 85,483 |  |  | ￦ | 57 |  |  | ￦ | 209,582 |  |  | ￦ | (146,508 | )
1 | The amounts before adjustments of deferred income tax directly reflected in equity and allocation to the non-controlling interest.
The ineffective portion recognized in profit or loss on the cash flow hedge is valuation gain of ￦1,961 million for the current period (2015: valuation income of ￦2,663 million, 2016: valuation gain of ￦1,637 million). Details of available-for-sale financial assets as of December 31, 2016, and 2017 are as follows:
(In millions of Korean won) |  | 2016 |  |  | 2017 |
Marketable equity securities |  | ￦ | 5,387 |  |  | ￦ | 6,859 |
Non-marketable equity securities |  |  | 372,703 |  |  |  | 364,195 |
Debt securities |  |  | 26,684 |  |  |  | 9,899 |
Total |  |  | 404,774 |  |  |  | 380,953 |
Less: non-current |  |  | (384,798 | ) |  |  | (379,488 | )
Current |  | ￦ | 19,976 |  |  | ￦ | 1,465 |
Changes of available-for-sale financial assets for the years ended December 31, 2016, and 2017 are as follows:
(In millions of Korean won) |  | 2016 |  |  | 2017 |
Beginning |  | ￦ | 360,037 |  |  | ￦ | 404,774 |
Acquisition |  |  | 44,302 |  |  |  | 89,027 |
Disposal |  |  | (18,161 | ) |  |  | (129,682 | )
Valuation1 |  |  | 14,413 |  |  |  | 67,593 |
Impairment |  |  | (966 | ) |  |  | (6,137 | )
Reclassification |  |  | 5,149 |  |  |  | (44,622 | )
Changes in scope of consolidation |  |  | — |  |  |  | — |
Ending |  | ￦ | 404,774 |  |  | ￦ | 380,953 |
| 1 | The amounts before adjustments of deferred income tax directly reflected in equity and allocation to the non-controlling interest.
The maximum exposure of debt securities of available-for-sale financial assets to credit risk is carrying amount as of December 31, 2017. Available-for-sale financial assets are measured at fair value. However, non-marketable equity securities that do not have quoted market prices in an active market and the fair value of which cannot be reliably measured are recognized at cost and the impairment loss is recognized if any. Investment in Korea Software Financial Cooperative amounting to ￦1,000 million is provided as collateral as consideration for payment guarantees provided by Korea Software Financial Cooperative (Note 19).

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