Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

20.	Commitments and Contingencie s

As at December 31, 2020, major commitments with local financial institutions are as follows:

(In millions of Korean won and
thousands of foreign currencies)

Financial institution

Currency

Limit

Used
amount

Bank overdraft

Kookmin Bank and others

KRW

1,502,000

—

Inter-Korean Cooperation Fund

Export-Import Bank of Korea

KRW

37,700

2,714

Insurance for Economic Cooperation project

Export-Import Bank of Korea

KRW

3,240

1,732

Collateralized loan on electronic accounts receivable-trade

Kookmin Bank and others

KRW

522,849

23,475

Plus electronic notes payable

Industrial Bank of Korea

KRW

50,000

331

Loans for working capital

Korea Development Bank and others

KRW

243,593

152,243

Facility loans

Shinhan Bank and others

KRW

100,123

Kookmin Bank and others

USD

212,000

48,855

Derivatives transaction limit

Korea Development Bank

KRW

100,000

22,027

Woori Bank and others

USD

69,054

44,616

Total

KRW

2,559,505

202,577

USD

281,054

93,471

As at December 31, 2020, guarantees received from financial institutions are as follows:


(In millions of Korean won and thousands of foreign currencies)	Financial institution	Currency		Limit
Performance guarantee	Seoul Guarantee Insurance and others		KRW		208,386
Performance guarantee	Korea Development Bank and others		USD		8,569
Guarantee for import letters of credit	Industrial Bank of Korea and others		USD		5,000
Guarantee for payment in won currency	Shinhan Bank and others		KRW		70,962
Refund guarantee for advances received	Korea Development Bank		USD		8,536
Guarantee for payment in foreign currency	KEB Hana Bank and others		USD		40,840
Comprehensive credit line	KEB Hana Bank and others		KRW		41,100
Comprehensive credit line	KEB Hana Bank and others		USD		8,700
Bid guarantee	KEB Hana Bank		USD		400
Bid guarantee	Korea Software Financial Cooperative and others		KRW		80,246
Performance guarantee /warranty guarantee			KRW		393,019
Guarantee for advance payments/others			KRW		388,656
Warranty guarantee	Seoul Guarantee Insurance		KRW		1,305
Performance guarantee			KRW		9,690
Guarantees for licensing			KRW		7,748
Guarantees for depositions			KRW		3,792
Merchant business guarantee insurance			KRW		237

Total			KRW		1,205,141
			USD		72,045

As at December 31, 2020, guarantees provided by the Group to a third party, are as follows:

(In millions of Korean won)

Subject to payment
guarantees

Creditor

Limit

Used
amount

Period

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

Gasan Solar Power Plant Inc.

Shinhan Bank

4,700

1,371

Jan. 08, 2025

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

SPP Inc.

Suhyup Bank

3,250

932

Feb. 16, 2024

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

Korea Cell Inc.

Suhyup Bank

3,250

880

Feb. 16, 2024

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

San-Ya

Agricultural

Association Corporation

Suhyup Bank

3,250

888

Feb. 16, 2024

KT Engineering Co., Ltd.

(KT ENGCORE Co., Ltd.)

Ciocanesti Korea Co., Ltd.

NH Investment &
Securities Co.,Ltd.

7,600

Jun. 8, 2017

KT Hitel Co., Ltd.

Shinhan Bank

Cash payers

700

—

Apr. 17, 2020

~ Apr. 16, 2021

Nasmedia Co., Ltd.

Stockholders Association Members

Korea Securities
Finance Corp

5,654

2,735

—

According to the above payment guarantee, KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.), a subsidiary of the Group, will have an obligation of repayment if the principal borrower does not repay the borrowing.

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities incurred prior to

spin-off.

As at December 31, 2020, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of

￦

1,618 million.

For the years ended December 31, 2019 and 2020, the Group made agreements with the Securitization Specialty Companies (2020: First 5G 49

to 54

Securitization Specialty Co., Ltd., 2019: First 5G 43

to 48

Securitization Specialty Co., Ltd., 2018: Giga LTE Thirty seventh to Forty second Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreement the Group will receive asset management fees upon liquidation of securitization specialty company.

As at December 31, 2020, the Group is a defendant in 195 lawsuits with the total claimed amount of

￦

110,409 million (2019:

￦

214,877 million). As at December 31, 2020, litigation provisions of

￦

76,500 million (2019:

￦

62,241 million) for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated as at December 31, 2020.

According to the financial and other covenants included in certain debentures and borrowings, the Group is required to maintain certain financial ratios such as

debt-to-equity

ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restriction on provision of additional collateral and disposal of certain assets.

As at December 31, 2020, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at December 31, 2020, contract amount of property and equipment acquisition agreement made but not yet recognized amounts to

￦

596,983 million (2019:

￦

851,798 million).