XML 58 R46.htm IDEA: XBRL DOCUMENT
v3.19.1

Business Combination | 12 Months Ended
--- | ---
Dec. 31, 2018
Text block [abstract] |
Business Combination |
40. | Business Combination
On May 31, 2018, the Group’s subsidiary, KT Telecop Co., Ltd. acquired the unmanned security business and SI (System Integration) business of SG Safety Corporation for ￦27,570 million. The acquisition is expected to increase the Group’s market share and competitiveness in the market. The Group additionally acquired treasury stock from MOS GB Co., Ltd. and MOS Chungcheong Co., Ltd., associates of the Group, for ￦11,048 million. The business combination is expected to enhance specialization and efficiency in installation of wireless network infrastructure and its maintenance. GENIE Music Corporation, a subsidiary of the Group, merged with CJ Digital Music Co., Ltd. (“acquired company”) by issuing 8,922,685 shares of subsidiaries to CJ ENM CO., Ltd., who owns 100% of shares of the acquired company, and acquiring all shares (1,600,000 shares) of the acquired company. The merger is expected to increase the Group’s market share in music service and distribution business, and also reduce costs through economies of scale. Details of the business combination are as follows:
(In millions of Korean won) |  | Business line |  | Date |  | Purchase consideration |
SG Safety Corporation |  | Unmanned security business |  | May 31, 2018 |  | ￦ | 27,544 |
KT MOS Bukbu Co., Ltd. |  | Telecommunication facility maintenance |  | September 30, 2018 |  |  | 8,160 |
KT MOS Nambu Co., Ltd. |  | Telecommunication facility maintenance |  | September 30, 2018 |  |  | 6,310 |
CJ Digital Music Co., Ltd. |  | Music distribution |  | October 10, 2018 |  |  | 50,948 |
Fair value of the purchase consideration from the business combination is as follows:
(In millions of Korean won) |  | SG Safety Corporation |  |  | KT MOS Bukbu Co., Ltd |  |  | KT MOS Nambu Co., Ltd. |  |  | CJ Digital Music Co., Ltd. |
Cash and cash equivalents |  | ￦ | 28,000 |  |  | ￦ | 6,283 |  |  | ￦ | 4,765 |  |  | ￦ | — |
Settled receivables1 |  |  | (456 | ) |  |  | — |  |  |  | — |  |  |  | — |
Fair value of equity instruments previously held2 |  |  | — |  |  |  | 1,877 |  |  |  | 1,545 |  |  |  | — |
Fair value of equity instruments newly issued3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 50,948 |
Total |  | ￦ | 27,544 |  |  | ￦ | 8,160 |  |  | ￦ | 6,310 |  |  | ￦ | 50,948 |
1 | Uncollected amount which incurred after the payment of consideration from adjustment of purchase consideration caused by additional retirement benefit.
2 | The shares previously held by KT MOS Bukbu Co., Ltd. (93,994 ordinary shares) and KT MOS Nambu Co., Ltd. (65,831 ordinary shares), non-listed entities, were evaluated by using the profit approach.
3 | The fair value (￦50,948 million) of 8,992,685 ordinary shares of GENIE Music Corporation, the consideration transferred, was based on the share price disclosed at the merger date. The issuance cost amounting to ￦31 million were deducted from deemed issuance price.
Fair value of the assets and liabilities recognized as a result of the acquisition at the acquisition date are as follows:
(In millions of Korean won) |  | SG Safety Corporation |  |  | KT MOS Bukbu Co., Ltd |  |  | KT MOS Nambu Co., Ltd. |  |  | CJ Digital Music Co., Ltd. |
Recognized amounts of identifiable assets acquired |  | ￦ | 17,763 |  |  | ￦ | 14,924 |  |  | ￦ | 12,242 |  |  | ￦ | 28,117 |
Cash and cash equivalents |  |  | — |  |  |  | 7,864 |  |  |  | 3,340 |  |  |  | 1,556 |
Trade and other receivables |  |  | — |  |  |  | 4,827 |  |  |  | 6,318 |  |  |  | 11,200 |
Other current assets |  |  | 1,367 |  |  |  | 160 |  |  |  | 85 |  |  |  | 484 |
Inventories |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |
Current income tax assets |  |  | — |  |  |  | — |  |  |  | 75 |  |  |  | — |
Property and equipment |  |  | 4,047 |  |  |  | 855 |  |  |  | 1,104 |  |  |  | 791 |
Intangible assets |  |  |  |  |  |  | 997 |  |  |  | 478 |  |  |  | 1,860 |
Distribution agency contract (included in intangibles) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,753 |
Contractual customer relationship (included in intangibles) |  |  | 10,467 |  |  |  | — |  |  |  | — |  |  |  | 468 |
Deferred income tax assets |  |  | — |  |  |  | 113 |  |  |  | 576 |  |  |  | — |
Other non-current assets |  |  | 1,882 |  |  |  | 10 |  |  |  | — |  |  |  | — |
Other non-current financial assets |  |  | — |  |  |  | 98 |  |  |  | 266 |  |  |  | — |
Recognized amounts of identifiable liabilities assumed |  |  | 5,637 |  |  |  | 10,050 |  |  |  | 6,433 |  |  |  | 25,559 |
Trade and other payables |  |  | 120 |  |  |  | 6,767 |  |  |  | 3,327 |  |  |  | 18,947 |
Borrowings |  |  | 5,000 |  |  |  | — |  |  |  | — |  |  |  | — |
Other current liabilities |  |  | — |  |  |  | 363 |  |  |  | 703 |  |  |  | 3,481 |
Current income tax liabilities |  |  | — |  |  |  | 103 |  |  |  | — |  |  |  |  |
Post-employment benefit obligations |  |  | 517 |  |  |  | 2,768 |  |  |  | 2,360 |  |  |  | 311 |
Deferred income tax liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,497 |
Other non-current liabilities |  |  | — |  |  |  | 49 |  |  |  | 43 |  |  |  | 323 |
Total |  | ￦ | 12,126 |  |  | ￦ | 4,874 |  |  | ￦ | 5,809 |  |  | ￦ | 2,558 |
As at December 31, 2018, details of the recognized goodwill as a result of the business combination are as follows:
(In millions of Korean won) |  | SG Safety Corporation |  |  | KT MOS Bukbu Co., Ltd |  |  | KT MOS Nambu Co., Ltd. |  |  | CJ Digital Music Co., Ltd. |
Purchase consideration |  | ￦ | 27,544 |  |  | ￦ | 8,160 |  |  | ￦ | 6,310 |  |  | ￦ | 50,948 |
Add: Non-controlling interests1 |  |  | — |  |  |  | — |  |  |  | 101 |  |  |  | — |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of identifiable net assets |  |  | 12,126 |  |  |  | 4,874 |  |  |  | 5,809 |  |  |  | 2,558 |
Goodwill2 |  | ￦ | 15,418 |  |  | ￦ | 3,286 |  |  | ￦ | 602 |  |  | ￦ | 48,390 |
| 1 | Non-controlling interests for KT MOS Nambu Co., Ltd. acquired during the year ended December 31, 2018 are measured at proportionate shares of acquiree’s identifiable net assets.
| 2 | The goodwill from the business combination is attributable to economies of scale expected and the acquired customer relationships.
Details of cash outflows as a result of acquisition are as follows:
(In millions of Korean won) |  | SG Safety Corporation1 |  |  | KT MOS Bukbu Co., Ltd |  |  | KT MOS Nambu Co., Ltd. |  |  | CJ Digital Music Co., Ltd. |
Purchase consideration |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash1 |  | ￦ | 28,000 |  |  | ￦ | 6,283 |  |  | ￦ | 4,765 |  |  | ￦ | — |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recognized amounts of cash and cash equivalents |  |  | — |  |  |  | 7,864 |  |  |  | 3,340 |  |  |  | 1,556 |
Total |  | ￦ | 28,000 |  |  | ￦ | (1,581 | ) |  | ￦ | 1,425 |  |  | ￦ | (1,556 | )
| 1 | The difference from purchase considerations of ￦27,544 million is attributable to uncollected settled receivables.
Since the unmanned security business acquired from SG Safety Corporation is incorporated into the Group’s main business segment, the security services business, it is difficult to identify revenue and net profit generated from business combination during the reporting period. Since KT MOS Bukbu Co., Ltd. and KT MOS Nambu Co., Ltd. are incorporated into the network business, it is difficult to identify revenue and net profit generated from business combination during the reporting period. According to the contract, KT Telecop Co., Ltd. has the right to be reimbursed from SG Safety Corporation in the amount equivalent to 35 times the difference between the target revenue and monthly security business revenue as at December 31, 2023. However, as at the end of the reporting period, related reimbursement asset is not recognized since it is reasonably expected that the revenue will meet its target.

X
- Definition The entire disclosure for business combinations. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IFRS -Number 3 -IssueDate 2018-01-01 -Section Disclosures -URI http://eifrs.ifrs.org/eifrs/XBRL?type=IFRS&num=3&date=2018-03-01&anchor=sect_Disclosures&doctype=Standard -URIDate 2018-03-16 + Details
Name: | ifrs-full_DisclosureOfBusinessCombinationsExplanatory
Namespace Prefix: | ifrs-full_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Text block [abstract] + References No definition available. + Details
Name: | kt_TextBlockAbstract
Namespace Prefix: | kt_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration