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Fair Value | 12 Months Ended
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Dec. 31, 2018
Text block [abstract] |
Fair Value |
37. | Fair Value
| 37.1 | Fair Value of Financial Instruments by Category
Carrying amount and fair value of financial instruments by category as at December 31, 2017 and 2018, are as follows:
|  | December 31, 2017 |  |  | December 31, 2018 |
(In millions of Korean won) |  | Carrying amount |  |  | Fair value |  |  | Carrying amount |  |  | Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | ￦ | 1,928,182 |  |  |  | 1 |  |  | ￦ | 2,703,422 |  |  |  | 1 |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets measured at amortized cost |  |  | 6,793,397 |  |  |  | 1 |  |  |  | 5,425,996 |  |  |  | 1 |
Financial assets at fair value through other comprehensive income |  |  | — |  |  |  | — |  |  |  | 1,097,348 |  |  |  | 1,097,348 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets measured at amortized cost2 |  |  | 1,333,368 |  |  |  | 1 |  |  |  | 484,271 |  |  |  | 1 |
Financial assets at fair value through profit or loss2 |  |  | 5,913 |  |  |  | 5,913 |  |  |  | 777,685 |  |  |  | 777,685 |
Financial assets at fair value through other comprehensive income2 |  |  | — |  |  |  | — |  |  |  | 326,157 |  |  |  | 326,157 |
Available-for-sale financial assets3 |  |  | 319,402 |  |  |  | 319,402 |  |  |  | — |  |  |  | — |
Derivative financial assets for hedging |  |  | 7,389 |  |  |  | 7,389 |  |  |  | 29,843 |  |  |  | 29,843 |
Total |  | ￦ | 10,387,651 |  |  |  |  |  |  | ￦ | 10,844,722 |  |  |  |  |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  | ￦ | 8,427,457 |  |  |  | 1 |  |  | ￦ | 8,521,379 |  |  |  | 1 |
Borrowings |  |  | 6,683,662 |  |  |  | 6,738,326 |  |  |  | 6,648,293 |  |  |  | 1 |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities at amortized cost |  |  | 87,670 |  |  |  | 1 |  |  |  | 99,330 |  |  |  | 1 |
|  | December 31, 2017 |  |  | December 31, 2018 |
(In millions of Korean won) |  | Carrying amount |  |  | Fair value |  |  | Carrying amount |  |  | Fair value |
Financial liabilities at fair value through profit or loss |  |  | 5,051 |  |  |  | 5,051 |  |  |  | 7,758 |  |  |  | 7,758 |
Derivative financial liabilities for hedging |  |  | 93,770 |  |  |  | 93,770 |  |  |  | 57,308 |  |  |  | 57,308 |
Total |  | ￦ | 15,297,610 |  |  |  |  |  |  | ￦ | 15,334,068 |  |  |  |  |
| 1 | The Group did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value.
| 2 | In the prior year, a portion of the equity instrument was classified as available-for-sale financial assets and financial assets held-to-maturity.
| 3 | As at December 31, 2017, equity instruments that do not have a quoted price in an active market are measured at cost because their fair value cannot be measured reliably and excluded from the fair value disclosures.
| 37.2 | Fair Value Hierarchy
Assets measured at fair value or for which the fair value is disclosed are categorized within the fair value hierarchy, and the defined levels are as follows:
| • |  | Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
| • |  | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices) (Level 2).
| • |  | Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as at December 31, 2017 and 2018, are as follows:
|  | December 31, 2017 |
(In millions of Korean won) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 5,813 |  |  | ￦ | 5,813 |
Derivative financial assets for hedging |  |  | — |  |  |  | 7,389 |  |  |  | — |  |  |  | 7,389 |
Available-for-sale financial assets |  |  | 6,859 |  |  |  | 5,466 |  |  |  | 307,077 |  |  |  | 319,402 |
Disclosed fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment properties1 |  |  | — |  |  |  | — |  |  |  | 1,755,600 |  |  |  | 1,755,600 |
Total |  | ￦ | 6,859 |  |  | ￦ | 12,855 |  |  | ￦ | 2,068,490 |  |  | ￦ | 2,088,204 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities at fair value through profit or loss |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 5,051 |  |  | ￦ | 5,051 |
Derivative financial liabilities for hedging |  |  | — |  |  |  | 76,045 |  |  |  | 17,725 |  |  |  | 93,770 |
Total |  | ￦ | — |  |  | ￦ | 76,045 |  |  | ￦ | 22,776 |  |  | ￦ | 98,821 |
| 1 | The highest and best use of a non-financial asset does not differ from its current use.
|  | December 31, 2018 |
(In millions of Korean won) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through other comprehensive income |  | ￦ | — |  |  | ￦ | 1,097,348 |  |  | ￦ | — |  |  | ￦ | 1,097,348 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss1 |  |  | 121 |  |  |  | 613,964 |  |  |  | 163,600 |  |  |  | 777,685 |
Financial assets at fair value through other comprehensive income1 |  |  | 8,861 |  |  |  | 5,760 |  |  |  | 311,536 |  |  |  | 326,157 |
Derivative financial assets for hedging |  |  | — |  |  |  | 29,843 |  |  |  | — |  |  |  | 29,843 |
Disclosed fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment properties2 |  |  | — |  |  |  | — |  |  |  | 1,821,061 |  |  |  | 1,821,061 |
Total |  | ￦ | 8,982 |  |  | ￦ | 1,746,915 |  |  | ￦ | 2,296,197 |  |  | ￦ | 4,052,094 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities at fair value through profit or loss |  | ￦ | — |  |  | ￦ | — |  |  | ￦ | 7,758 |  |  | ￦ | 7,758 |
Derivative financial liabilities for hedging |  |  | — |  |  |  | 47,125 |  |  |  | 10,183 |  |  |  | 57,308 |
Total |  | ￦ | — |  |  | ￦ | 47,125 |  |  | ￦ | 17,941 |  |  | ￦ | 65,066 |
| 1 | In the prior year, a portion of the equity instrument was classified as available-for-sale financial assets.
| 2 | The highest and best use of a non-financial asset does not differ from its current use.
| 37.3 | Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements
| (a) | Details of transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements are as follows:
There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements.
| (b) | Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements as at December 31, 2017 and 2018, are as follows:
|  | 2017 |
(In millions of Korean won) |  | Financial assets at fair value through profit or loss |  |  | Available-for-sale |  |  | Other derivative financial liabilities |  |  | Derivative financial liabilities for hedging |
Beginning balance |  | ￦ | 6,277 |  |  | ￦ | 287,889 |  |  | ￦ | 1,973 |  |  | ￦ | — |
Reclassification |  |  | — |  |  |  | (277 | ) |  |  | — |  |  |  | — |
Amount recognized in other comprehensive income |  |  | — |  |  |  | 58,450 |  |  |  | — |  |  |  | (1,909 | )
Purchases |  |  | — |  |  |  | 85,287 |  |  |  | — |  |  |  | — |
Amount recognized in profit or loss |  |  | (464 | ) |  |  | (113 | ) |  |  | 3,078 |  |  |  | 19,634 |
Sales |  |  | — |  |  |  | (124,159 | ) |  |  | — |  |  |  | — |
Ending balance |  | ￦ | 5,813 |  |  | ￦ | 307,077 |  |  | ￦ | 5,051 |  |  | ￦ | 17,725 |
|  | 2018 |
|  | Financial assets |  |  | Financial liabilities |
(In millions of Korean won) |  | Financial assets at fair value through profit or loss3 |  |  | Financial assets at fair value through other comprehensive income3 |  |  | Financial liabilities at fair value through profit or loss2 |  |  | Derivative financial liabilities for hedging1 |
Beginning balance |  | ￦ | 97,547 |  |  | ￦ | 238,517 |  |  | ￦ | 5,051 |  |  | ￦ | 17,725 |
Changes in accounting policy |  |  | 32,745 |  |  |  | 2,085 |  |  |  | — |  |  |  | — |
Purchases |  |  | 21,365 |  |  |  | 8,802 |  |  |  | — |  |  |  | — |
Reclassification |  |  | 1,581 |  |  |  | (296 | ) |  |  | — |  |  |  | — |
Changes in scope of consolidation |  |  | — |  |  |  | 364 |  |  |  | — |  |  |  | — |
Sales |  |  | (1,852 | ) |  |  | (1,099 | ) |  |  | — |  |  |  | — |
Amount recognized in profit or loss1,2 |  |  | 12,214 |  |  |  | 89 |  |  |  | 2,707 |  |  |  | (17,255 | )
Amount recognized in other comprehensive income1 |  |  | — |  |  |  | 63,074 |  |  |  | — |  |  |  | 9,713 |
Ending balance |  | ￦ | 163,600 |  |  | ￦ | 311,536 |  |  | ￦ | 7,758 |  |  | ￦ | 10,183 |
| 1 | Amount recognized in profit or loss of derivative financial liabilities for hedging are comprised of both gain on valuation of derivatives and accumulated other comprehensive loss.
| 2 | Amount recognized in profit or loss of derivative financial liabilities for hedging are comprised of loss on valuation of derivatives.
| 3 | In prior year, a portion of the equity instrument was classified as available-for-sale financial assets.
| 37.4 | Valuation Technique and the Inputs
Valuation techniques and inputs used in the recurring, non-recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as at December 31, 2017 and 2018, are as follows:
|  | December 31, 2017
(In millions of Korean won) |  | Fair value |  |  | Level |  |  | Valuation techniques
Assets |  |  |  |  |  |  |  |  |  |
Other financial assets |  |  |  |  |  |  |  |  |  |
Derivative financial assets for hedging |  | ￦ | 7,389 |  |  |  | 2 |  |  | DCF Model
Available-for-sale financial assets |  |  | 312,543 |  |  |  | 2,3 |  |  | DCF Model
Financial assets at fair value through profit or loss |  |  | 5,813 |  |  |  | 3 |  |  | DCF Model
Investment properties |  |  | 1,755,600 |  |  |  | 3 |  |  | DCF Model
Liabilities |  |  |  |  |  |  |  |  |  |
Other financial liabilities |  |  |  |  |  |  |  |  |  |
Derivative financial liabilities for hedging |  | ￦ | 93,770 |  |  |  | 2,3 |  |  | Hull-White model, DCF Model
Other derivative financial liabilities |  |  | 5,051 |  |  |  | 3 |  |  | DCF Model, Comparable Company Analysis
|  | December 31, 2018
(In millions of Korean won) |  | Fair value |  |  | Level |  |  | Valuation techniques
Assets |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through other comprehensive income |  | ￦ | 1,097,348 |  |  |  | 2 |  |  | DCF Model
Other financial assets |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 777,564 |  |  |  | 2,3 |  |  | DCF Model, Adjusted net asset model
Financial assets at fair value through other comprehensive income |  |  | 317,296 |  |  |  | 2,3 |  |  | DCF Model
Derivative financial assets for hedging |  |  | 29,843 |  |  |  | 2 |  |  | DCF Model
Investment properties |  |  | 1,821,061 |  |  |  | 3 |  |  | DCF Model
Liabilities |  |  |  |  |  |  |  |  |  |
Other financial liabilities |  |  |  |  |  |  |  |  |  |
Financial liabilities at fair value through profit or loss |  | ￦ | 7,758 |  |  |  | 3 |  |  | DCF Model, Comparable Company Analysis
Derivative financial liabilities for hedging |  |  | 57,308 |  |  |  | 2,3 |  |  | Hull-White model, DCF Model
| 37.5 | Valuation Processes for Fair Value Measurements Categorized Within Level 3
The Group uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the chief financial officer (CFO), and discusses valuation processes and results with the CFO in line with the Group’s reporting dates.
| 37.6 | Gains and losses on valuation at the transaction date
In the case that the Group values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by the said valuation technique differs from the transaction price, then the fair value of the financial instruments is recognized as the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instruments. However, in the case that inputs of the valuation techniques become observable in markets, the remaining deferred difference is immediately recognized in full in profit for the year. In relation to this, details and changes of the total deferred difference for the years ended December 31, 2017 and 2018, are as follows:
(In millions of Korean won) |  | 2017 |  |  | 2018 |
| Derivatives used for hedging |  |  | Derivative held for trading |  |  | Derivatives used for hedging |  |  | Derivative held for trading |
I. Beginning balance |  | ￦ | — |  |  | ￦ | (8,470 | ) |  | ￦ | 6,532 |  |  | ￦ | (5,647 | )
II. New transactions |  |  | 7,126 |  |  |  | — |  |  |  | — |  |  |  | — |
III. Recognized at fair value through profit or loss |  |  | (594 | ) |  |  | 2,823 |  |  |  | (1,425 | ) |  |  | 2,823 |
IV. Ending balance (I+II+III) |  | ￦ | 6,532 |  |  | ￦ | (5,647 | ) |  | ￦ | 5,107 |  |  | ￦ | (2,824 | )

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