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Fair Value | 12 Months Ended
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Dec. 31, 2019
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, 2018 and 2019, are as follows:
|  | December 31, 2018 |  |  | December 31, 2019 |
(In millions of Korean won) |  | Carrying amount |  |  | Fair value |  |  | Carrying amount |  |  | Fair value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | ￦ | 2,703,422 |  |  |  | 1 |  |  | ￦ | 2,305,894 |  |  |  | 1 |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets measured at amortized cost 2 |  |  | 5,425,996 |  |  |  | 1 |  |  |  | 5,748,459 |  |  |  | 1 |
Financial assets at fair value through other comprehensive income |  |  | 1,097,348 |  |  |  | 1,097,348 |  |  |  | 1,256,266 |  |  |  | 1,256,266 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets measured at amortized cost |  |  | 484,271 |  |  |  | 1 |  |  |  | 441,804 |  |  |  | 1 |
Financial assets at fair value through profit or loss |  |  | 777,685 |  |  |  | 777,685 |  |  |  | 632,324 |  |  |  | 632,324 |
Financial assets at fair value through other comprehensive income |  |  | 326,157 |  |  |  | 326,157 |  |  |  | 557,342 |  |  |  | 557,342 |
Derivative financial assets for hedging |  |  | 29,843 |  |  |  | 29,843 |  |  |  | 58,576 |  |  |  | 58,576 |
Total |  | ￦ | 10,844,722 |  |  |  |  |  |  | ￦ | 11,000,665 |  |  |  |  |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  | ￦ | 8,357,520 |  |  |  | 1 |  |  | ￦ | 8,679,698 |  |  |  | 1 |
Borrowings |  |  | 6,648,293 |  |  |  | 1 |  |  |  | 7,298,867 |  |  |  | 1 |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities at amortized cost |  |  | 99,330 |  |  |  | 1 |  |  |  | 129,945 |  |  |  | 1 |
Financial liabilities at fair value through profit or loss |  |  | 7,758 |  |  |  | 7,758 |  |  |  | 38 |  |  |  | 38 |
Derivative financial liabilities for hedging |  |  | 57,308 |  |  |  | 57,308 |  |  |  | 20,096 |  |  |  | 20,096 |
Total |  | ￦ | 15,170,209 |  |  |  |  |  |  | ￦ | 16,128,644 |  |  |  |  |
| 1 | The Group did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value
| 2 | With the application of IFRS 7, lease receivables is excluded from fair value disclosure.
| 37.2 | Fair Value Hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:
| • |  | Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
| • |  | Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
| • |  | Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in 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, 2018 and 2019, are as follows:
(In millions of Korean won) |  | December 31, 2018 |
| 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 loss |  |  | 121 |  |  |  | 613,964 |  |  |  | 163,600 |  |  |  | 777,685 |
Financial assets at fair value through other comprehensive income |  |  | 8,861 |  |  |  | 5,760 |  |  |  | 311,536 |  |  |  | 326,157 |
Derivative financial assets for hedging |  |  | — |  |  |  | 29,843 |  |  |  | — |  |  |  | 29,843 |
Disclosed fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment properties |  |  | — |  |  |  | — |  |  |  | 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 |
(In millions of Korean won) |  | December 31, 2019 |
| Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through other comprehensive income |  | ￦ | — |  |  | ￦ | 1,256,266 |  |  | ￦ | — |  |  | ￦ | 1,256,266 |
Other financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 232 |  |  |  | 136,951 |  |  |  | 495,141 |  |  |  | 632,324 |
Financial assets at fair value through other comprehensive income |  |  | 6,738 |  |  |  | 508,550 |  |  |  | 42,054 |  |  |  | 557,342 |
Derivative financial assets for hedging |  |  | — |  |  |  | 40,788 |  |  |  | 17,788 |  |  |  | 58,576 |
Disclosed fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment properties |  |  | — |  |  |  | — |  |  |  | 2,304,583 |  |  |  | 2,304,583 |
Total |  | ￦ | 6,970 |  |  | ￦ | 1,942,555 |  |  | ￦ | 2,859,566 |  |  | ￦ | 4,809,091 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities at fair value through profit or loss |  | ￦ | — |  |  | ￦ | 38 |  |  | ￦ | — |  |  | ￦ | 38 |
Derivative financial liabilities for hedging |  |  | — |  |  |  | 20,096 |  |  |  | — |  |  |  | 20,096 |
Total |  | ￦ | — |  |  | ￦ | 20,134 |  |  | ￦ | — |  |  | ￦ | 20,134 |
37.3 Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements. Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements as at December 31, 2018 and 2019, are as follows:
|  | 2018 |
|  | Financial assets |  |  | Financial liabilities |
(In millions of Korean won) |  | Financial assets at fair value through profit or loss |  |  | Financial assets at fair value through other comprehensive income |  |  | Financial liabilities at fair value through profit or loss 2 |  |  | Derivative financial liabilities for hedging 1 |
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 loss 1,2 |  |  | 12,214 |  |  |  | 89 |  |  |  | 2,707 |  |  |  | (17,255 | )
Amount recognized in other comprehensive income 1 |  |  | — |  |  |  | 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.
|  | 2019 |
|  | Financial assets |  |  | Financial liabilities |
(In millions of Korean won) |  | Financial assets at fair value through profit or loss |  |  | Financial assets at fair value through other comprehensive income |  |  | Derivative financial assets (liabilities) for hedging |  |  | Financial liabilities at fair value through profit or loss |
Beginning balance |  | ￦ | 163,600 |  |  | ￦ | 311,536 |  |  | ￦ | (10,183 | ) |  | ￦ | 7,758 |
Purchases |  |  | 584,671 |  |  |  | 6,081 |  |  |  | — |  |  |  | — |
Reclassification |  |  | 225,873 |  |  |  | (444,782 | ) |  |  | — |  |  |  | — |
Disposal |  |  | (485,419 | ) |  |  | (941 | ) |  |  | — |  |  |  | (9,734 | )
Amount recognized in profit or loss |  |  | 6,416 |  |  |  | — |  |  |  | 14,462 |  |  |  | 1,976 |
Amount recognized in other comprehensive income |  |  | — |  |  |  | 170,160 |  |  |  | 13,509 |  |  |  | — |
Ending balance |  | ￦ | 495,141 |  |  | ￦ | 42,054 |  |  | ￦ | 17,788 |  |  | ￦ | — |
| 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, 2018 and 2019, are as follows:
|  | 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
|  | December 31, 2019
(In millions of Korean won) |  | Fair value |  |  | Level |  |  | Valuation techniques
Assets |  |  |  |  |  |  |  |  |  |
Trade and other receivables |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through other comprehensive income |  | ￦ | 1,256,266 |  |  |  | 2 |  |  | DCF Model
Other financial assets |  |  |  |  |  |  |  |  |  |
Financial assets at fair value through profit or loss |  |  | 632,092 |  |  |  | 2,3 |  |  | DCF Model, Adjusted net asset model
Financial assets at fair value through other comprehensive income |  |  | 550,604 |  |  |  | 2,3 |  |  | DCF Model
Derivative financial assets for hedging |  |  | 58,576 |  |  |  | 2,3 |  |  | Hull-White model, DCF Model
Investment properties |  |  | 2,304,583 |  |  |  | 3 |  |  | DCF Model
Liabilities |  |  |  |  |  |  |  |  |  |
Other financial liabilities |  |  |  |  |  |  |  |  |  |
Financial liabilities at fair value through profit or loss |  | ￦ | 38 |  |  |  | 3 |  |  | DCF Model, Comparable Company Analysis
Derivative financial liabilities for hedging |  |  | 20,096 |  |  |  | 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, 2018 and 2019, are as follows:
|  | 2018 |  |  | 2019 |
(In millions of Korean won) |  | Derivatives used for hedging |  |  | Derivative held for trading |  |  | Derivatives used for hedging |  |  | Derivative held for trading |
I. Beginning balance |  | ￦ | 6,532 |  |  | ￦ | (5,647 | ) |  | ￦ | 5,107 |  |  | ￦ | (2,824 | )
II. New transactions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
III. Recognized at fair value through profit or loss |  |  | (1,425 | ) |  |  | 2,823 |  |  |  | (1,425 | ) |  |  | 2,824 |
IV. Ending balance (I+II+III) |  | ￦ | 5,107 |  |  | ￦ | (2,824 | ) |  | ￦ | 3,682 |  |  | ￦ | — |

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