ANNUAL REPORT 2015
HYUNDAI ENGINEERING & CONSTRUCTION
Contents
003Profile
010 Message from the CEO
012 Corporate Chronology
014 Financial Highlights
015 Financial Review / Plan for 2016
016 2015 News Highlights
Review of Operations
020 Infra & Environment Division
024 Building Division
028 Plant Division
032 Power & Energy Division
036Procurement
037 Health, Safety and Environment [HSE]
038 Research & Development
Financial Statements
041 Financial Summary
042 Consolidated Financial Statements
170 Separate Financial Statements
177 Board of Directors
177 Organization Chart
178 Global Network
02
EVOLUTION INTO
A GLOBAL CONSTRUCTION LEADER
For decades, Hyundai Engineering & Construction has been recognized as a
leader in the South Korean construction industry. Established in 1947 by Hyundai
Group’s founder, Chung Ju-Yung, Hyundai E&C has established itself as a global
construction company. Its competitiveness is based on innovative technology and
abundant expertise in all areas of construction, including civil, building, plant,
and power and energy works.
In April 2011, Hyundai E&C started a new chapter in its history by becoming a
member of the Hyundai Motor Group. As a core growth engine of the Group,
Hyundai E&C will evolve into a leader in global construction.
In 2015, South Korea's construction industry had a hard time due to a number
of unfavorable factors at home and abroad, including lower crude oil prices. In a
depression such as this, construction companies’ orders received were inevitably
going to decrease. In order to overcome these difficulties, Hyundai E&C
concentrated its efforts on ensuring internal stability rather than on quantitative
growth. As a result, it recorded sales of USD 16,315.7 million, operating income
of USD 841.8 million, and net income of USD 498.3 million.
Hyundai E&C's top priority is creating social value and fulfilling its obligations
toward society. It will continue to keep its commitment for meeting the needs of
society as a leader of the global construction industry. By focusing on balanced
growth, eco-friendly management, and respect for people, Hyundai E&C will
maximize the interests of all stakeholders.
* The translation of Korean won amounts into U.S. dollar amounts is included solely for the
convenience of readers outside of the Republic of Korea and has been made at the rate of
₩1,172.00 to $1.00 at December 31, 2015, the base rate announced by Seoul Money Brokerage
Service, Ltd.
3
Diversifying
Markets
Increasing potential and possibilities via market diversification
ORDER BACKLOG
(Unit: In millions of USD)
2015_
2014_
56,795.4
57,181.4
Hyundai E&C has contributed to the development of the global village by leading the world construction market. It
has also been dedicated to increasing its potential and possibilities by expanding its business into Africa, the CIS,
and Central and South America, based on its stable business foundations in South Korea, other Asian countries,
and the Middle East. In particular, it has accelerated market diversification by utilizing the networks and global
awareness of Hyundai Motor and Kia Motors to secure an advantage for order-taking.
New orders received included: NRP5 (New Refinery Project Pkg #5) in Kuwait; Construction and Management of
Staging Ground and Infilling Works (Phase 2) in Singapore; Hanoi Metro CP03 Project in Vietnam; Cirebon-II Coal
Fired Power Plant Project in Indonesia; and Yanbu City 380kV S/S Project in Saudi Arabia.
Major projects underway include: UAE Nuclear Power Plant Project; Kuwait Jaber Causeway Project; and
Uzbekistan Gas-To-Liquids Project.
Hyundai E&C continued to create steady sales, despite poor conditions in the overall construction market. As a
result the backlog of orders increased by 0.7% over the year to USD 57,181.4 million, remaining at a similar level to
the previous year.
2
Diversifying
businesses
Reinforcing R&D investment for a diversified business portfolio
Sales
(Unit: In millions of USD)
2015_
2014_
14,835.3
16,315.7
In 2015, Hyundai E&C posted sales of USD 16,315.7 million, a rise of 10.0% from the previous year. This was because the
backlog of orders was reflected as sales, although orders received declined due to a drop in the volume of orders from the
Middle East following falls in oil prices.
Hyundai E&C is reinforcing its R&D investment in order to diversify its business portfolio, while making ongoing efforts to
secure original technologies that will provide foundations for future growth.
Hyundai E&C works continuously to ensure its competencies in all areas, ranging from planning to operations, in addition to
EPC, by selecting new growth engine businesses. These businesses include: resource development-linked projects and water
environment and water treatment projects in the civil works sector; green smart buildings in the building works, steel plant and
nuclear power plant performance improvement projects in the plant works; and independent power plant and plant operation
projects in the power and energy works.
Hyundai E&C also plans to consolidate its status as a leader in green management by finding new and renewable energy
sources and developing eco-friendly construction technologies as part of its sustainable management.
3
Improving
profitability
Improving profitability through disciplined risk management and
selective order-taking
8
OPERATING INCOME
(Unit: In millions of USD)
2015 _
2014 _
818.2
841.8
Hyundai E&C has maintained a differentiated financial structure from other domestic and overseas construction companies,
many of whom are suffering an earnings shock due to the slowing construction industry and declines in international oil prices.
Hyundai E&C is focused on profitability and liquidity, as well as the diversification of markets and project types, rather than on
quantitative growth. It is also committed to growing its staying power so that it can successfully adapt to changes, by building a
new management system to hedge and manage risks.
In 2015, Hyundai E&C increased its operating income to USD 841.8 million, a rise of 2.9% from the previous year. Net income
edged down by 0.5% to USD 498.3 million. Hyundai E&C will continue its commitment to quality-oriented management, rather
than quantity, through disciplined risk management and selective project order taking.
9
MESSAGE FROM THE CEO
The entire team at Hyundai E&C pledges to put our
utmost effort into maintaining our approach of maximizing
shareholder values, keeping in line with the needs of our
customers.
President & CEO
Hyundai Engineering & Construction
Jung Soo-Hyun
10
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
Dear valued customers, shareholders,
and other stakeholders:
The year 2015 was a very difficult time both within the
company and in the larger economy. Significant adverse
circumstances continued to exist at home and abroad
due to unstable exchange and interest rates, a depressed
construction industry, and the low oil price shock. In
response to a fluctuating market situation, Hyundai
Engineering & Construction reinforced the screening of
order acceptances and preemptively deterred potential
risks, while also concentrating on profitability-oriented
cost-effective and practical management. As a result, we
were able to accomplish a strong financial performance,
exceeding the industry's expectations.
In 2015, our sales and operating income increased from
the previous year by 10.0% and 2.9% respectively, to USD
16,315.7 million and USD 841.8 million. on a consolidated
basis. This was a result of our sustained efforts to improve
our cost management while expanding the portion of
sales from large-scale quality overseas construction sites.
These overseas projects included the Satah Al-Razboot
Plant Facilities Package 4 in the UAE, and a gas treatment
facility project in Uzbekistan. Net income, however,
decreased slightly, due mainly to fines by the Fair Trade
Commission.
New orders received decreased by 27.1% to USD 16,906.6
million, caused primarily by delayed and cancelled
overseas project orders following falls in oil prices.
Despite this, the backlog of orders rose by 0.7% to USD
57,181.4 million, leading to the firm belief that our value
will increase even further if we continue to focus on
creating future growth drivers.
In addition to the above, our current ratio rose by 1.9%
over the year to 167.1%, thanks to our ongoing cost
reduction efforts and improved financial structure. Our
debt-to-equity ratio improved by 5.0% points to 159.7%,
allowing us to maintain a stable financial structure.
I would like to take this opportunity to extend my sincerest
thanks to our shareholders who consistently provide
steadfast support and encouragement, which allows us
to make continuous progress even in difficult market
conditions.
MESSAGE FROM THE CEO
For the upcoming year, there continue to be concerns
about existing economic uncertainties and how they
will affect the company. There is a consensus that the
construction orders will continue to decrease, combined
with interest rate hikes in the US, slowing economic
growth in China, and anxieties over low oil prices.
Given these potential challenges, Hyundai E&C plans to
continue stable performance by focusing on profitabilityoriented qualitative growth rather than quantitative growth.
Our target orders received for 2016 is USD 13,139.9 million.
To this end, we will preemptively address changes in the
market while pursuing redevelopment, reconstruction,
and new projects at home. On the international front, we
will be dedicated to augmenting profitable orders received
through our selection and concentration and market
diversification strategies. These strategies will be centered
around Iran, which is drawing attention since the lifting
of economic sanctions, and Asia, where large orders are
anticipated with a focus on infrastructure.
Marking its 69th anniversary in 2016, Hyundai E&C will
maintain its unwavering commitment to progress, based
on its corporate values of perseverance and tenacity which
enable us to be strong in difficult times.
By making 2016 the first year of "NEO HYUNDAI SPIRIT",
reestablishing our organizational identity as one of
innovation, all of the employees at Hyundai E&C will
unite as one and work diligently to allow us to establish
our place as one of the most advanced construction
companies in the world.
At the same time, we will remain committed to being
a "good company" and a "proud company", which
contributes to the nation and to social development,
by internalizing safety and ethics management and
strengthening our cooperation system of harmony and
mutual prosperity with other companies.
The entire team at Hyundai E&C pledges to put our
utmost effort into maintaining our approach of maximizing
shareholder values, keeping in line with the needs of our
customers. I look forward to your continued interest and
support.
Thank you.
11
corporate chronology
1979
1980
●
1989
1990
-
●
-
-
1947
●
1999
Concentrated on
technology and
quality, targeting
world markets
Continued strategy
of technological
advancement and
globalization
Established as Hyundai Civil
Works Company
Aug. 1980
Oct. 1991
Korea’s economic
May 1958
Began construction of oil refinery in
Oman
Completed Hyundai Petrochemical
Complex
growth. Based on the
Completed restoration of Han
River Pedestrian Bridge
Sep. 1980
Jul. 1993
directions that we
Jan. 1962
Began construction of a harbor in
Libya
have taken thus far,
Ranked first among domestic
contractors
Acquired ISO 9001 certification in
all business fields, a first among
domestic industries
Dec. 1980
Dec. 1965
Began construction of Penang Bridge
in Malaysia
The history of
Hyundai E&C over
the past 69 years is
also the history of
we are now preparing
for the next one
hundred years.
Foundation and
progress
May 1947
Won order for Pattani Narathiwat
Highway Project in Thailand
Mar. 1982
Jul. 1970
Value of contracts exceeded KRW 1
trillion
Completed full sections of
Gyeongbu Highway
Jun. 1982
Oct. 1973
Completed Soyang River MultiPurpose Dam
Dec. 1995
Completed Yonggwang Nuclear
Power Plant’s Units 3, 4
(Korean-style light-water reactor
model)
Dec. 1996
Received “USD 10 Billion Export
Tower” award
(overseas orders received: USD 10.5
billion)
Jan. 1975
Apr. 1983
Began construction of Bandar
Abbas mobilization drill shipyard
in Iran
Completed Wolseong Nuclear Power
Plant’s Unit 1
Acquired ISO 14001 certification
Apr. 1997
Received ASIA TOP 200 Companies
award for third consecutive year from
Far Eastern Economic Review
Jun. 1997
Completed Wolseong Nuclear Power
Plant’s Unit 2
Jul. 1983
Oct. 1976
Began construction of Bahrain
Arab Repair Shipyard
Completed Kori Nuclear Power
Plant’s Unit 2
Dec. 1984
Jul. 1976
Public Stock Offering
Began construction of Jubail
Industrial Harbor in Saudi Arabia
Apr. 1986
Jan. 1978
Completed Kori Nuclear Power
Plant’s Units 3, 4
Began construction of Dubai
Power Plant in UAE
Jun. 1987
Apr. 1978
Completed Yonggwang Nuclear
Power Plant’s Units 1, 2
Aug. 1997
Advanced into North Korea with
construction of KEDO Nuclear
Power Plant’s Unit 1, 2
Apr. 1999
Began the 2nd and the 3rd stage
construction of a gas production
plant in South Pars, Iran
Completed Kori Nuclear Power
Plant’s Unit 1
Yanghwa Bridge, Korea
(Jun. 1962)
12
Jubail Industrial Harbor,
Saudi Arabia
(Jul. 1976)
Kori Nuclar Power Plant, Units 4,
Korea
(Jul. 1983)
Suntec City, Singapore
(Jan. 1991)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
2010
●
-
-
2000
2009
Named No. 1 in Brand Power in
“apartment” category by KMAC
Aug. 2000
Selected as “Company with Best
Quality in 2000” by Korean
Standards Association and Ministry
of Commerce, Industry,
and Energy
Apr. 2001
Growing into a global
construction leader
towards a bright and
hopeful future
May 2006
Hyundai E&C corporate bonds and
commercial paper credit
ratings upgraded to “A-”
Mar. 2010
February 2014
Won contract for Shin-Ulchin Nuclear
Power Plant’s Units 1&2
Sep. 2006
Aug. 2010 - Ranked 23rd among Top 225
international contractors by
Engineering News Record in overseas
sales category
- Ranked first in construction
capabilities evaluation by Ministry of
Land, Transport and Maritime Affairs
for second straight year
- Won a contract worth USD 650
million for the construction of Chacao
Channel Bridge in Chile
- Completed the Jangbogo Antarctic
Research Station
Launched new apartment brand,
HILLSTATE
May 2007
Held 60th anniversary ceremony
Received 2001 Singapore
Construction Excellence Award for
Parc Palais Condominiums
Oct. 2007
Aug. 2002
May 2008
Began construction of Taean
Corporate City
Ranked No. 1 construction company
in Asia
(and 12th in the world) by ENR
Magazine
Overseas orders received reached
USD 60 billion–a first for the
domestic industry
Dec. 2002
Hyundai E&C credit ratings upgraded
to “A+”
Completed Yonggwang Nuclear
Power Plant’s Units 5, 6
Jul. 2004
Received Annual Safety Performance
Awards for GoldenHill Park
Condominiums from Singapore Land
Transportation Authority
Apr. 2005
Completed Phases 4 & 5 onshore
facilities
(worth USD 1.6 billion) of South Pars
Field in Iran
●
2015
Committed to serving
humankind and our
shared future together
Apr. 2000
corporate chronology
Jun. 2008
Jul. 2009
Ranked first in 2009 construction
capability evaluation
Sep. 2009
Credit rating upgraded to “AA-” (the
industry’s highest)
Dec. 2009
Won contract for nuclear power
plants in the UAE–first Korean
overseas exports of nuclear plants
Jan. 2012
Opened branch in South Africa
Mar. 2012
Jung Soo-Hyun appointed as
President & CEO
Sep. 2014
Completed the Jurong Rock Cavern
Project in Singapore
Nov. 2014
Received the Platinum award at the
LACP “Vision Awards” Annual Report
Competition
Dec. 2014
Signed an MOU on strategic
cooperation with Abeinsa, a Spanish
construction company
Jul. 2012
Ranked first in construction
capabilities evaluation by the Ministry
of Land, Transport and Maritime
Affairs for the fourth straight year
May 2015
Nov. 2012
Jun. 2015
Total overseas orders exceeded USD
90 billion, a first for the
Korean construction industry
July 2013
Ranked first in construction
capabilities evaluation by the Ministry
of Land, Transport and Maritime
Affairs for the fifth straight year
November 2013
Received five prizes at the Building
and Construction Authority (BCA)
of Singapore
Completed the Azito Complex Thermal
Power Plant in Cote d'Ivoire (Worth
USD 250 million)
Sep. 2015
Named “Industry Group Leader” in the
Construction and Engineering category
in the Dow Jones Sustainability
Indices (DJSI) assessment for the third
consecutive year
Total overseas orders exceeded USD
100 billion, a first for the domestic
construction industry
Shuaiba North Co-generation Project,
Kuwait
(Apr. 2006)
Qatar Pearl GTL-LPU(C5) Project,
Qatar
(Aug. 2006)
Ras Laffan C IWPP Projet, Qatar
(Jun. 2011)
Puerto La Cruz Refinery Project,
Venezuela
(Jun. 2012 )
13
Financial Highlights
Korean Won (In millions)
U.S. Dollars (In thousands)
2015
2014
2015
2014
19,122,053
17,386,959
16,315,745
14,835,289
Operating Income
986,560
958,903
841,775
818,177
Income before Income Tax
798,300
802,725
681,143
684,919
For the Year
Sales
584,027
586,697
498,316
500,595
Owners of the Parent Company
367,901
419,665
313,909
358,076
Non-controlling Interests
216,126
167,032
184,407
142,519
Net Income
At Year End
Total Assets
Current Assets
19,458,532
18,439,693
16,602,842
15,733,527
14,343,666
13,642,088
12,238,623
11,640,008
5,114,866
4,797,605
4,364,219
4,093,519
11,967,267
11,473,381
10,210,978
9,789,574
Non-Current Assets
Total Liabilities
Current Liabilities
8,582,804
8,256,605
7,323,212
7,044,886
Non-Current Liabilities
3,384,463
3,216,776
2,887,766
2,744,688
7,491,265
6,966,312
6,391,864
5,943,953
Shareholders’ Equity
Owners of the Parent Company
5,820,906
5,443,845
4,966,643
4,644,919
Non-Controlling Interests
1,670,359
1,522,467
1,425,221
1,299,034
557,273
557,273
475,489
475,489
Capital Stock
16,315.7
15,000
14,835.3
818.2
841.8
600
10,000
600
400
5,000
300
200
2014
14
900
2015
2014
2015
500.6
498.3
2014
2015
Sales
operating Income
Net Income
(Unit: In millions of USD)
(Unit: In millions of USD)
(Unit: In millions of USD)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
Financial Highlights & Financial review
Financial review
In 2015, the construction market had a difficult time overall due to a decline in orders from the Middle East in the wake of decreases in crude
oil prices. Accordingly, Hyundai E&C concentrated its efforts on consolidating internal stability rather than on quantitative growth, based on its
profitability-oriented order-taking strategy and solid cost-management capabilities.
As a result, our assets increased by 5.5% over the year to reach USD 16,602.8 million at the end of 2015. Current assets advanced by 5.1% to
USD 12,238.6 million. Consequently, both of our two financial stability indicators improved gradually: the current ratio by which to judge shortterm solvency rose by 1.9% points to 167.1%, while the debt-to-equity ratio decreased by 5.0% points to 159.7%.
Sales and operating income amounted to USD 16,315.7 million and USD 841.8 million respectively, thanks to the stable backlog of orders
despite sluggish orders received. Net income was USD 498.3 million, leading to a surge in retained earnings by 8.7% over the year to USD 3,570.9
million. Shareholders' equity also rose by 7.5% to USD 6,391.9 million.
5.5% up
15,733.5
5.0% down
7.5% up
16,602.8
164.7%
159.7%
5,944.0
2015
2014
2015
2014
2014
ASSETS
debt ratio
6,391.9
2015
SHAREHOLDERS' EQUITY
(Unit: In millions of USD)
(Unit: In millions of USD)
plan for 2016
In 2016, the outlook of the construction environment is still unclear since interest rate hikes in the U.S. were coupled with a slowdown in China's
growth and a trend of low oil prices in the overseas markets. As a way to address these difficulties, Hyundai E&C plans to seek opportunities for
earnings creation through the diversification of its markets and construction types. It will also focus on the selective taking of orders, which will
guarantee stable profitability. Through these efforts, it will achieve USD 9,812.3 million in sales and USD 13,139.9 million in the value of orders
received in 2016.
domestic
5,597.5
overseas
7,542.4
Total
•
•
13,139.9
domestic
4,191.8
overseas
5,620.5
Total
•
•
9,812.3
Orders received
Sales
(Unit: In millions of USD)
(Unit: In millions of USD)
15
2015 news Highlights
Won a high-end office
building construction
project in Singapore
Hyundai E&C won a contract worth USD
211.5 million to build the Frasers Tower,
a high-end office building, from FC
Commercial Trustee. FC Commercial
Trustee is a subsidiary of Frasers Centre
point, one of top property companies in
Singapore. The construction will include
an office building with 38 above-ground
stories and 3 below-ground (total floor
area: 77,162㎡), as well as auxiliary
buildings. Located in Cecil Street,
the best business district in southern
Singapore, it will be a landmark in the
area.
The contract was awarded in recognition
of Hyundai E&C's high reliability and
excellent construction capabilities,
established through the successful
completion of the Water Town Complex
Development project in Singapore,
worth USD 380 million, which it had
won in 2012. The company is also
carrying out the Marina South Mixed
Development Project, worth USD 1.3
billion, which it was awarded in 2013.
Signed an MOU for
Comprehensive
Collaboration with GE
Hyundai E&C signed an MOU
with General Electric of the U.S. for
comprehensive cooperation on energy
and infrastructure projects around the
world. This is expected to generate
powerful synergies, based on the
excellent competitiveness of the two
companies, and to increase business
interactions between the affiliates of
the Hyundai Motor Group and GE. The
agreement was achieved on the basis of
the relationship of trust and cooperation
which had already been established
between the Group and GE.
Received five prizes
at the Singapore
BCA Awards
Hyundai E&C received five prizes in
three categories at the BCA Awards
2015, organized by the Building and
Construction Authority (BCA) of
Singapore. Held since 1986, the annual
BCA Awards recognize construction
projects in Singapore which have
demonstrated performance excellence,
evaluated on the criteria of construction,
eco-friendliness, design, safety, and
quality.
Hyundai E&C has won these awards a
total of 18 times since 1997. The awards
received in 2015 marked the thirteenth
time that it was awarded for its nine
construction sites since it joined the
Hyundai Motor Group in 2011.
Completed the Azito
Complex Thermal Power
Plant in Cote d'Ivoire
Hyundai E&C successfully completed the USD 250 million worth of the Azito Complex
Thermal Power Plant in Cote d’Ivoire. The Azito Power Plant is located nearby Abidjan, an
administrative and economic center in Côte d'Ivoire, and it was expanded to a combined-cycle
power plant by adding a 138MW steam turbine to its existing 144MW simple cycle gas turbine.
The CCP is now capable of producing 430WM of electricity, accounting for about 25% of the
country's total power supply volume. This
was significant in that it allowed Hyundai
E&C to ensure a foothold in the south of the
Sahara Desert in the African region.
16
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
Named Industry
Group Leader in the
DJSI assessment for
three straight years
Ranked first in the
Apartments category
in the KS-CQI survey
Hyundai E&C was named the Industry
Group Leader in the Construction and
Engineering category of the Dow Jones
Sustainability Indices (DJSI) 2015 survey
for three years in a row.
Hyundai E&C ranked first in the
Apartments category in the 2015 KSCQI(Korean Standard-Contact service
Quality Index) survey by the Korean
Standards Association.
H e l d s i n c e 1 9 9 9 , t h e DJ S I a re
determined by evaluating the
sustainability performance of the largest
2,500 companies listed on the Dow
Jones Global Total Stock Market Index,
based on economic, environmental,
and social criteria. Jointly managed by
S&P Dow Jones Indices, the largest
financial information provider in the
world, and RobecoSAM, a global leading
investment specialist, these investment
indices are recognized worldwide as
reliable benchmarks.
This was the second time that the
company ranked first since 2013; this
achievement is the result of providing
speedy and accurate individualized
customer service for its HILLSTATE
apartment brand. The KS-CQI was
developed by KSA to help improve
customer satisfaction levels, corporate
growth, and the development of the
service industry.
Hyundai E&C was the only construction
company in the world to be listed on
the DJSI World Index for the sixth
consecutive year since 2010. The
DJSI World Index comprises global
sustainability leaders, representing the
top 10% of the largest 2,500 companies
in terms of market value, in 59
industries.
2015 news Highlights
Selected for Honors
Club for the second
consecutive year
Hyundai E&C was awarded the Carbon
Management Honors Club at the
2015 Carbon Disclosure Project (CDP)
Korea for the second consecutive year,
and was named the Sector Winner in
Carbon Management for four years in a
row.
The CDP is a global climate changerelated sustainability evaluation
program. It is notable that only five toptier domestic companies are included
in the Carbon Management Honors
Club. Other winners included Samsung
Corporation, LG Electronics, KT, and
Shinhan Financial Group.
Meanwhile, in 2007 Hyundai E&C was
the first in the domestic construction
industry to introduce a consultation
system at its customer service centers.
By operating the CS center at its head
office and five regional centers across
the country, with about 130 employees,
the companies dedicated to maximizing
customer satisfaction.
17
REVIEW OF
OPERATIONS
020 Intra & Environment Division
024 Building Division
028 Plant Division
032 Power & Energy Division
036 Procurement
037 Health, Safety and Environment (HSE)
038 Research & Development
THe leader in core infrastructure solutions
infra &
Environment
Division
The Infra & Environment Division
is strengthening its position as
a global construction leader
by overcoming in its overseas
management environment
through enhanced capabilities
for overseas project.
PERFORMANCE IN 2015
(Unit: In millions of USD)
*Hyundai E&C Only (separate entity basis)
New Orders
2,392.0
2015 Results
In 2015, the Infra & Environment Division marked continuous growth despite
Total
the turbulent domestic and international markets, recording USD 2,392.0
7,926.0
million (domestic USD 870.8 million, overseas USD 1,521.2 million) in orders
received. Based on its extensive experience and competitiveness in Asia
and the Middle East, the Division won orders for the New Refinery Project
sales
2,198.6
Package 5 in Kuwait, the Construction and Management of Staging Ground
and Infilling Works (Phase2) in Singapore, and the Hanoi Metro CP03 Project
in Vietnam,.
In terms of the domestic industry, the Division won a large number of
projects, including: the infrastructures for the Byeollae Line (Amsa-Byeollae)
Double-Track Railway; Southern Section of Gyeongwon Line; Southwest
Offshore Wind Farm; JuamDam Water Conduction Tunnel; Busan New Port
Total
9,095.9
West Container Terminal; and Yeosu New North Port Counter Facilities.
Being awarded these projects garnered recognition for the Division, for its
design ability and advanced technologies.
The Division’s 2015 sales stood at USD 2,198.6 million (domestic USD
828.8 million, overseas USD 1,369.8 million). In 2016, the Division will
pursue further orders for overseas large-scale projects, which will allow for
sustained growth in its sales and sales profits.
20
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Sheikh Jaber Al-Ahmad Al-Sabah Causeway Project (Main Link), Kuwait
2016 Outlook
The Infra & Environment Division’s 2016 business plan comprised
project order tenders, the Division will assist the company with
2,814.0 million (domestic USD 810.6 million, overseas USD 2,003.4
improving its reputation in the areas of infrastructures and the
million), and USD 2,269.6 million (domestic USD 815.9 million,
environment.
overseas USD 1,453.7 million) in sales.
With respect to the overseas market, the Division will strive to expand
On the domestic front, the Division’s profitability is expected to
its profitable technology-oriented projects with order-taking strategies
improve due to an increase in public projects orders, and changes
by product, through "selection and concentration".
in the bid system including the implementation of a thorough
screening and acceptance system. By increasing its focus on
21
Key and new growth businesses
The Infra & Environment Division is enhancing its technology and order-taking competitiveness by
further strengthening its technology and equipment development and engineering methods in the
areas of offshore structures, underground tunnels, and bridges. Entry into new business markets,
including ocean energy and offshore wind farms, will further augment its position as a leader in
technology.
The Division will improve its competitiveness in overseas projects by enhancing its engineering
competencies and increasing the portion of its in-house designs. This will be achieved by fostering
and hiring professional human resources and technological specialists to effectively respond to the
global market where competition is increasingly intensifying.
In order to activate investment development projects and expand its business foundations, the Division
will reinforce its capabilities for profitable investment development projects by creating an organization
to be exclusively in charge of investment development projects. In addition, it will develop a list of
potential business opportunities which will permit it to build a balanced portfolio for its mid- to longterm development. Through these efforts, it will continue to expand future growth drivers by tapping
into new markets.
Boubyan Sea Part, Kuwait
22
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Link Roads to the Pearl - Qatar (Lusail Expressway Package 1)
Bosporus Bridge, Turkey
Dangjin Coal-Fired Power Complex, Korea
Ulsan Bridge, Korea
Major projects
currently underway
Domestic
• Yeosu New North Port Counter Facilities
• Boryung ~ Taean Road Work Section 1
• Sosa ~ Wonshi Double Railway Project Section 1 & 2
• 2nd Yeongdong Expressway Section 6 & 7
• Shin-Hanul Rainfall Drainage System & Storage Tank
• Juam-Dam Water Conduction Tunnel
Overseas
• Sheikh Jaber Al-Ahmad Al-Sabah Causeway Project (Main Link),
Kuwait
• Qatar Lusail Expressway Package 1
• Bello Wastewater Treatment Plant, Columbia
• Construction of Third Bosporus Bridge, Turkey
• Dubai EYE Project, UAE
• Chacao Bridge Project, Chile
Major projects completed over
the past five years
Domestic
• Privately Financed Ulsan Grand Bridge and Access Road
Construction
• The Big-O of Expo 2012 Yeosu
• Yeosu Offshore Oil Tank Terminal
• Sungnam ~ Janghowon Expressway, Section-2
• Incheon International Airport Railroad Construction
[Sections 2-1, 2-4B]
• Embankment for Samcheok Production Plant
Overseas
• Khalifa Port and Industrial Zone (Phase 1A), UAE
• Reclamation at Pulau Ayer Merbau, Jurong Island - Phase 1
• Jebel Ali New Container Terminal, Stage1, Upland Facilities,
LCC2, UAE
• Boubyan Seaport Project Phase 1 Stage 2, Kuwait
• Parsir Panjang Stacking Yard, Singapore
23
ADVANCED and comprehensive capabilities
Building
Division
The Division of Building will
continue to reinforce its
technological leadership on the
world construction market by
selecting complex development
projects and smart green buildings
as its new growth engine.
PERFORMANCE IN 2015
(Unit: In millions of USD)
*Hyundai E&C Only (separate entity basis)
New Orders
4,302.8
2015 Results
In 2015, the Building Division recorded USD 4,302.8 million (domestic USD
3,836.6 million, overseas USD 466.2 million) in orders received, and USD 3,095.4
million (domestic USD 2,230.1 million, overseas USD 865.3 million) in sales.
Total
7,926.0
Overall, the Division exceeded its initial goals in the areas of orders received,
sales, and sales profits by actively tapping into the market, operating its
organization efficiently and continuously improving its profitability.
sales
3,095.4
In terms of key orders received, the Division won the Secil Street Office
Building project in Singapore. In Indonesia, it won the Sinarmas Lot 16
Apartment project in a non-competitive tender through pre-request for
proposal (RFP) sales activities, by offering pre-construction service.
Domestically, the Division won projects such as the Incheon Airport Second
Total
9,095.9
Passenger Terminal, Jeju Myths and History Theme Park R District, and
KorCom OPS Center, backed by its superior technologies and project
execution capabilities. Orders received in the housing works sector, based on
its cost and brand competitiveness, included the construction of apartment
complexes for HILLSTATE Unjeong, HILLSTATE Ilsan, and HILLSTATE
Geoje. The Division was recognized for its project planning and development
competencies by winning complex development projects such as the MEGA
STAR Yeongjong, and provided a bridgehead in the reconstruction market in
southern Seoul by securing construction rights for Samho Garden Apartment
Complex 3.
24
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
South Beach Mixed Development, Singapore
2016 Outlook
In 2016, the Building Division’s goal is to acquire USD 5,375.4 million
In the domestic building works sector, the Division will continue its
(domestic USD 4,693.1 million, overseas USD 682.3 million) in orders
growth through the selection and concentration of its order-taking
received, and USD 3,745.7 million (domestic USD 3,034.2 million,
capabilities in areas where it enjoys superior performance.
overseas USD 711.5 million) in sales.
Overseas, the Division will maximize its profitability by improving its
In 2016, the domestic market is forecast to suffer from increasing
project execution processes while winning highly profitable projects
uncertainties and a low growth trend in the real estate sector.
from major clients. This will be achieved by focusing on enhanced
Accordingly, the Division will conduct thorough previews and
technical sales representative programs, which will help to overcome
monitoring of sales and tenant risks in the housing works sector. It
the likely reduction in the volume of order placements due to low oil
will also strive to win more orders for urban redevelopment projects
prices.
in southern Seoul, using customized strategies and products
differentiated by project site.
25
Key and new growth businesses
The Building Division will secure future growth engines by preemptively coping with paradigm changes
in the construction industry, and carrying forward the qualitative growth of its foundation businesses
and new businesses in the mid- to long-term. Overseas, the Division will improve its profitability by
tapping into new markets like Indonesia, Vietnam, and Myanmar to seek out quality projects. It will
also diversify its business structure through the expansion of development projects, which will include
equity participation in investment development projects in addition to contract work.
Domestically, the Division will develop a variety of business models and build up its project planning
and development capabilities. This will be done by taking part in new development projects, such as
joint public-private development projects, New Stay rental housing projects, and state-owned land and
station complex development projects. In the housing works sector, the Division will increase orders
received for prime locations by concentrating its order-taking capabilities, and will continue tapping
into new project areas such as rental residences and remodeling.
Pasir Ris Condominium 2, Singapore
Busan International Financial Center, Korea
The Federation of Korean Industries Tower, Korea
26
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Suntec City, Singapore
Qatar National Museum
Incheon Asiad Main Stadium, Korea 07
08 Hamad Medical City, Qatar
Major projects
currently underway
Domestic
• AmorePacific Headquarters
• Incheon International Airport Passenger Terminal #2
• Jeju Myths and History Park Plot R
• Songpa Helio City
• HILLSTATE Yeongtong
• HILLSTATE Taejeon
• HILLSTATE Sejong II
Overseas
• Hamad Medical City, Qatar
• South Beach Mixed Development, Singapore
• Qatar National Museum
Major projects completed over
the past five years
Domestic
• The Korea Land & Housing Corporation(LH) Headquarter Office
• The Federation of Korean Industries Building
• Incheon Asiad Main Stadium
• HILLSTATE Gangseo
• Haeundae HILLSTATE We've
Overseas
• Jang Bogo Antarctic Research Station, Antarctica
• Heart of Doha, Qatar
• Specialist Shopping Centre, Singapore
• Twin Peaks Condominium, Singapore
• Pasir Ris Condominium Parcel 4, Singapore
27
THE LEADING EPC PLAYER IN THE WORLD PLANT CONSTRUCTION SECTOR
Plant
Division
The Plant Division is responding
to the business environment
where uncertainties are growing
and expand its technological
leadership in the world
construction market to become
global EPC leader.
PERFORMANCE IN 2015
(Unit: In millions of USD)
New Orders
202.0
2015 Results
Total
7,926.0
In 2015, the Plant Division recorded USD 202.0 million (domestic USD 85.5
million, overseas USD 116.5 million) in orders received, and USD 2,383.1
sales
2,383.1
million (domestic USD 294.0 million, overseas USD 2,089.1 million) in sales.
Orders received decreased from the previous year, led by a drop in the
volume of order placements following international oil market price falls and
the global economic downturn. Sales rose marginally, however, reflecting the
backlog of orders.
Domestically, the Division broadened its business territories by making its
first in roads into the Nuclear Power Plant (NPP) performance improvement
Total
9,095.9
projects, winning the Steam Generator Replacement Services for Hanbit
NPP Unit 3 & 4.
The Division recorded particularly impressive sales from projects such as the
Satah Al-Razboot Plant Facilities Package 4 and the Barakah Nuclear Power
Plant Units 1-4 in the UAE, and the MX PROJECT EPC and the Shin-Hanul
Nuclear Power Plant Units 1 & 2 in South Korea.
28
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Qatar Pearl GTL-Liquid Processing Unit (C5) Project
2016 Outlook
In 2016, the Plant Division will continue to expand its business
In order to overcome the plant market downturn following low
volume with a projected USD 3,081.9 million (domestic USD 42.7
oil prices, the Division established competitive order-winning
million, overseas USD 3,039.2 million) in orders received and USD
strategies. Specifically, it is pushing forward financing arrangement
2,440.3 million (domestic USD 308.0 million, overseas USD 2,132.3
and proposition projects, with a focus on the new markets of South
million) in sales. Its overseas worksites at the Karbala Refinery Project
America and the Commonwealth of Independent States (CIS). It has
in Iraq and the Barakah Nuclear Power Plant Units 1-4 in the UAE will
also made efforts to gain an early edge in Iran through preemptive
contribute significantly to achieving its target sales.
strategies since the lifting of sanctions there.
29
Key and new growth businesses
Oil refineries, gas treatment facilities, and NPPs are the markets selected by the Plan Division as its
key businesses, due to the competitive edge that it has already achieved in these areas. It will also
diversify its business portfolio by selecting NPP performance improvement and D&D (Decontamination
& Decommissioning) as its new growth business, due to these being value-added markets.
With regard to key businesses, the Division will advance into the Middle East, South America, and the
CIS region, based on a multitude of construction projects at home and abroad. In response to the
depressed market following low oil prices, it will push ahead with the financial arrangement business
and will secure the Iran market. In addition, it will calculate competitive prices when bidding in order to
win quality projects, by reinforcing its design and verification capabilities and upgrading its estimation
system.
As for new growth businesses, the Division will seek business diversification by pursuing NPP
performance improvement projects. It will also advance into the NPP D&D business in partnership with
other companies, targeting NPPs that are entering the full-fledged deterioration stage.
These efforts will allow the Plant Division to establish itself as a global engineering, procurement, and
construction (EPC) leader by proactively addressing rising instabilities in the business environment,
and by augmenting its technological expertise in the global construction industry.
Shin-Kori Nuclear Power Plant Units 3 & 4, Korea
30
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Hyundai Oil Bank #2 HOU Project, Korea 03
Karan Gas Facilities Project, Saudi Arabia
SK Energy Incheon Complex V-Project, Korea
Barakah Nuclear Power Plant Units 1 ~ 4, UAE 05
Major projects
currently underway
Domestic
• Shin-Hanul Nuclear Power Plant Units 1 & 2
• Shin-Kori Nuclear Power Plant Units 3 & 4
• Samcheok LNG Terminal #8, 9 Site
• HDC MX PROJECT EPC (Package-1)
• Steam Generator Replacement Services for Hanbit NPP Unit
3&4
Overseas
• Barakah Nuclear Power Plant Units 1 ~ 4, UAE
• Satah Al-Razboot Plant Facilities Package 4, UAE
• Puerto La Cruz Refinery Project, Venezuela
• Karbala Refinery Project, Iraq
Major projects completed over
the past five years
Domestic
• SK Energy Incheon Complex V-Project
• Hyundai Steel Iron Powder Project, Phase 3
• Yeosu Oil Tank Terminal Project
• Hyundai Oil Bank #2 HOU Project
• Shin-Kori Nuclear Power Plant Units 1 & 2
Overseas
• Ma’aden Alumina Refinery, Saudi Arabia
• Habshan-5 Utilities & Offsites Project, UAE
• Karan Gas Facilities Project, Saudi Arabia
• QAFCO 5 & 6 Fertilizer Project, Qatar
• Qatar Pearl GTL – Liquid Processing Unit (C5) Project
31
MEETING THE HIGH-TECH FUTURE AS
A GLOBAL PREMIER TOTAL POWER & UTILITY PROVIDER
POWER &
ENERGY
DIVISION
Hyundai e&c is consolidating its
status as a global leader in this
field by consistently winning new
contracts for power & energy
works based on its advanced
technologies.
PERFORMANCE IN 2015
(Unit: In millions of USD)
*Hyundai E&C Only (separate entity basis)
New Orders
986.8
2015 Results
In 2015, the Power & Energy Division achieved USD 986.8 million (domestic
USD 60.3 million, overseas USD 926.5 million) in orders and USD 1,376.6
million (domestic USD 157.8 million, overseas USD 1,218.8 million) in sales,
and continued to receive orders amid fierce competition in the power and
energy industry. In the power generation field, the Division acquired the
Total
Cirebon-II Coal Fired Power Plant Project in Indonesia. In the transmission
7,926.0
and substation field, the Division retained its competitive aspect in the Saudi
Arabian market by winning a total of four orders: Yanbu City 380kV S/S
Project, Jeddah Prince Fawaz Housing 380kV S/S Project, Riyadh 380kV T/L
sales
Project, and DubaIPP Tabuk-Madain 380kV T/L Project.
1,376.6
2016 Outlook
Analysis of the current market situation and measures to
follow its business plan
Total
9,095.9
The power and energy market is currently experiencing deteriorating overseas
order-taking conditions, led by ongoing reductions and delays in construction
investments due to financial setbacks in oil producing countries, following
sharply falling oil prices. These conditions are exacerbated by intensifying global
competition, due mainly to the rapid overseas expansion of Chinese companies
backed by price competitiveness and government support, and the enhanced
competitiveness of European companies due to the weak euro. The market
is also affected by strict carbon control policies, as environmental concerns
have been raised over coal-fired power generation following green economy
initiatives.
32
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Ras Laffan C IWPP Project, Qatar
In this current market situation, the Power & Energy Division
this, the Division will increase its cooperative strategies with
will proactively address external conditions and intensifying
Hyundai Engineering by mutually supplementing designs, technical
competition, securing sustainable growth potential by improving its
engineering, and construction competitiveness. Market changes will
competitiveness. To this end, the Division will ensure stable business
be addressed by encouraging overseas market diversification through
foundations by winning orders for its existing businesses (coal
the expansion into new markets, including Central and South America
and thermal power generation, gas-fired combined cycle power
and the CIS, based on its currently ongoing projects.
generation, and transmission and substation). It will also accelerate
its core competitiveness by selecting new growth engine businesses
The Division will develop risk management strategies specific to each
(waste to energy, biomass, and solar power generation) following an
project phase, while also assessing the initial risks of construction
analysis of the company's capabilities
projects in countries where the Division has not previously operated.
It will also actively manage profitability and maximize profits, using its
In 2016, the Power & Energy Division intends to earn USD 1,868.6
worksite management system. As a result of these efforts, the order-
million (domestic USD 51.2 million, overseas USD 1,817.4 million)
taking and project execution competitiveness of the Division will allow
in orders received and USD 1,356.7 million (domestic USD 33.7
the company to become a global leader in the field of power and
million, overseas USD 1,323.0 million) in sales. In order to achieve
energy.
33
Key and new growth businesses
The Power & Energy Division will strengthen its core competitiveness in the existing coal- and gas-fired combined
cycle power projects by focusing on Ultra Super Critical (USC) coal power generation and high-efficiency combined
cycle power projects among its existing businesses (coal and thermal power generation, gas-fired combined cycle
power generation, and transmission and substation).
The importance of eco-friendly and renewable energy projects is increasing in the power and energy market, due
largely to green economy initiatives and carbon control policies.
Taking this into consideration, the Power & Energy Division will accelerate the development of new growth engines by
forming strategic alliances with leading technology companies, securing construction track records, and accumulating
technologies. This will be done by selecting solar power generation (concentrated solar power/integrated solar
combined cycle, or CSP/ISCC) as its new business through the development of biomass power generation, existing
power generation, and hybrid power generation technologies, which can resolve energy shortage issues.
In addition, the Division will partner with financiers and companies that have already secured high-voltage direct
current (HVDC) technologies, based on its experience in and network for carrying out transmission and substation
projects. It will also participate in bids in the HVDC transmission and substation market, and provide relevant
technology education. The goal is to advance into the global HVDC market as a main contractor.
Mong Duong-I 1,000MW Thermal Power Plant Project, Vietnam
34
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Al Sanabil 380Kv Bsp Project, Saudi Arabia
Sarir 750 MV Gas Turbine Project [LP-251], Libya
Shuaiba North IWPP Project, Kuwait
Azito Phase 3 Extension Project, Cote D'ivoire
Major projects
currently underway
Domestic
• Samcheok Green Power Boiler Project
• Dangjin No.9 &10 Power Plant Project
Overseas
• Mong Duong-I 1,000MW Thermal Power Plant Project, Vietnam
• Sarulla 330MW Geothermal Power Plant, Indonesia
• Cirebon II 1,000MW Coal Fired Power Plant, Indonesia
• Ute Punta Del Tigre 530MW CCPP, Uruguay
• Talimarjan 900MW CCPP, Uzbekistan
• Mirfa 1,600MW IWPP Project, UAE
• Sumatra 275kV Transmission Line, Indonesia
Major projects completed over
the past five years
Domestic
• Yulchon II Combined Cycle Power Plant Project
• Hyundai Green Power Plant Project
• Koyang Samsong Co-generation Power Plant Project
• Yeosoo Co-generation Power Plant Project
Overseas
• Azito Add-on CCPP, Cote D’ivoire
• New Haripur 360MW Power Plant, Bangladesh
• Sarir 750MW Simple Cycle Power Plant Project, Libya
• Shuaiba North 855MW IWPP, Kuwait
• Jebel Ali Power and Desalination Station 'L'-Phase II, UAE
• RasLaffan C 2,700MW IWPP Project, Qatar
• Manifa115kV Power Transmission and Substations, Saudi Arabia
35
PROCUREMENT
Construction materials and subcontracts comprise more than 70%
In 2015, Procurement Division has focused on the stabilization of
of Hyundai E&C’s expenses. Tasked with the management of these
the system and added other additional functions to the electronic
expenses, the Procurement Division uses a variety of processes and
bidding system, allowing it to be accessed easily and conveniently
procedures to deliver high-quality materials in a timely manner and
from anywhere in the world. In turn, the Division deals with world-
enhance the company's profitability. Sourcing materials overseas
leading manufacturers and suppliers. Going forward, it will develop
is becoming increasingly important due to a rise in orders from the
competitive, prime-quality companies and build cooperative relations
Middle East and other parts of the world, and a concomitant increase
with them in many countries of the world by utilizing overseas
in the company’s ratio of overseas sales to total sales.
networks of the company and other Hyundai Motor Group units.
Hyundai E&C launched the Division in 2011 by integrating its
Because the company has been advancing briskly into new overseas
procurement and outsourcing functions following its incorporation
markets, the importance is emphasized on selecting only the most
into the Hyundai Motor Group. The overall goal was to facilitate the
qualified business partners.
company’s procurement processes and enhance its efficiency.
The selection is done by closely examining and systematically
analyzing the characteristics of each nation and project. On this note,
The total value of the company’s procurement and subcontracting
the Division operates a pool of qualified overseas subcontractors
operations in 2015 was USD 6,128.2 million. This included USD
through a Web site. In 2013 Procurement Division has initiated
2,865.4 million in procurements and USD 3,262.8 million in
operating 'Global Sourcing Team' exclusively to source most qualified
subcontracting. These figures are expected to be comparatively
vendors who can be optically involved in the oversea construction.
similar in 2016. Since the company is continuing to win orders in
new markets including Southeast Asia, Africa, Commonwealth of
We are also expanding the pool by diversifying our subcontractor
Independent States Country and South America in addition to the
lines, adding China, Eastern Europe, as well as Central and South
Middle East, this amount is expected to grow concomitantly.
America to such traditional sources as Europe, United States, and
Japan. In addition to assisting us in identifying high-quality local
Our purchasing and outsourcing data are processed through a
suppliers, this program helps to ensure our cost competitiveness and
computerized enterprise resources planning system. We have also
quality, meet our deadlines, and further upgrade our project execution
put an electronic bidding system in place to maximize our business
capabilities.
efficiency and transparency. Electronic bids are operated on a web
basis, enabling all companies in the world to access with ease by
using e-Procurement/e-Subcontract systems. In processing bids by
such systems, we are ensuring that our business transactions are
both transparent and standardized while minimizing human errors.
36
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
Health, Safety, and
Environment (HSE)
Hyundai E&C has established an HSE system that allows it to identify
in advance risk factors involved in its corporate activities, and to
evaluate and minimize risks. The system is based on the Occupational
Health and Safety Assessment System (OHSAS) 18001 and the
ISO14001 environmental management system. In addition, Hyundai
E&C was the first construction company in the world to acquire
certification of the ISO 50001 energy management system and
Awards and certificates
Honors Club at the CDP(Carbon Disclosure Project) Korea
Ranked first in all categories, including climate change-related
countermeasures, strategies, and results, at the CDP Korea
Zero-accident Achievements
introduce the Green Management System. These initiatives will allow
Zero accidents in all processes (9 sites)
the company to develop as a global construction leader, proactively
addressing global issues including energy, greenhouse gases, and
Azito Phase 3 Extension Project in Cote d'Ivoire, Busan International
Passenger Terminal, and seven other sites
global warming.
Zero accidents, 20 times (1 site)
Qatar Hamad Medical City
Hyundai E&C has declared safety to be a top priority for its corporate
management, and has established the advanced prevention-centered
HSE system with an aim to develop unlimited liability management
of safety and the environment. It is also practicing global senior-level
HSE management. This involves ensuring a safe work environment
by building an autonomous HSE system through the establishment of
mid- to long-term safety management plans to be applied to all of its
worksites.
In order to achieve the eradication of fatal accidents and the reduction
of overall accidents, Hyundai E&C has confirmed its safety-first
approach by extensively increasing its focus on safety, including
conducting worksite safety inspections and providing safety training
to all employees, including senior management. Hyundai E&C is also
enhancing its global competitiveness by putting HSE management for
shared growth into action, so that the safety capabilities of its partner
companies can be improved.
Hyundai E&C continues to strengthen its own HSE culture and
policies by building an IT-based safety management information
system, and establishing customized safety management processes
and preemptive risk management and response programs through
big data analyses.
Zero accidents, 10 times (4 sites)
Royal Palace Security Quarters in Qatar, Sheikh Jaber Al Ahmad al
Sabah Causeway in Kuwait, and two other sites
Zero accidents, 5 times (4 sites)
Jurong Rock Cavern Project (JRC 1) in Singapore, Satah Al-Razboot
Plant Facilities Package 4 in UAE, and two other sites
Zero accidents, 3 times (3 sites)
DonghaeNambu Line (Busan-Ulsan) Double-Track Section 1 in South
Korea, New Harbor Project in Qatar, and one other site
Zero accidents, 2 times (4 sites)
Sosa-Wonsi Double-Track Section 1 in South Korea, Mirfa Independent
Water and Power Project (IWPP) in the UAE, and two other sites
Innovation activities, including system improvements
·Worksite safety inspection and training by management
·Diversified information-sharing of accidents
·Real-time worksite safety monitoring system
·Incentive programs for safety evaluations of partner companies
·Monthly Safety Inspection Day with the participation of senior
management
·The Permit to Work (PTW) system for all processes
·The Out System which penalizes workers who break safety rules
·HSE evaluation and inspection of domestic and overseas sites
·Year-round operation of a safety inspection group
·Establishment of guidelines for building HSE system and organization at
early stages of overseas sites
·Establishment of country-specific HSE Work Guides
·Publishing country-specific environmental management standards and
e-books for each country
·Development of greenhouse gas performance management system
·Advancement of the greenhouse gas management system (H-PMS)
37
Research &
Development
Roles
The R&D Division was highly innovative in 2015: it aimed to build an
R&D paradigm innovation system, and pursued its vision of “Securing
future technologies to create new businesses”. These efforts included
establishing three innovation policies: R&D content innovation (strengthen
integrated engineering capabilities), R&D role innovation (aim for business
creation-type R&D), and R&D way innovation (put a global culture in
place). To this end, the Division was focused the following: international
cooperation; technological cooperation through increased preemptive
technological support; empirical research to lead projects in the areas
of the environment and energy; and the recruitment of first-class
researchers.
The Division focused particularly on business creation-type R&D activities
by broadening the range of its technological assistance to include support
for order-taking and biddings. This was done by applying the company's
technologies, including the “Nearly Zero-Energy Building Model Complex
Sections 6 and 8 in Songdo, South Korea”, and the “Construction and
Management of Infilling Works (Phase2) in Singapore”.
In addition, the Division hosted the "Hyundai E&C Technology
Conference" as a venue for state-of-the-art technologies, presenting the
latest construction technology trends and the company's own excellent
research achievements. Advanced institutions from overseas, including
the AECOM of the US, were invited to give lectures at the conference.
R&D Achievements in 2015
In 2015, the R&D Division carried out 62 projects, including 44 inhouse projects, 13 government projects, and 5 consigned projects.
Notable accomplishments included 75 patent applications, 46 patent
registrations, 10 published papers, 52 academic presentations, and 242
cases of technical support (producing savings of USD 87.9 million).
In addition, the R&D Division achieved three New Excellent Technology
certificates in the construction category, including "Automated curing
method for thermal cracking reduction of mass concrete", and another
certificate in the environment category for the “Biomethane production
technology for vehicle fuels by the recovery of vent gas and the V-PSA
(Vaccum-Pressure Swing Absorption) Process applying the 2-step
decompression”. It also obtained a Green Technology certificate for
the "Carbon reduction PHC pile manufacturing technology using blast
furnace slag powder".
38
Awards
In 2015, the R&D Division won a total of twenty awards from home
and abroad. These included: the “Korea Economic Daily newspaper’s
Dasan Technology Award”, which recognizes R&D achievements and
contribution to enhancing national competitiveness; the “Energy Winner
Award” from the Energy Efficiency Commission; and “The Minister of
Land, Infrastructure and Transport Prize” at the Green Building Fair
and Festival for Green Smart Innovation Center (GSIC), an eco-friendly
research facility for building energy.
The Division's leader received the “Industrial Service Medal” at the 2015
Engineering Day jointly organized by the Ministry of Trade, Industry and
Energy and the Korea Engineering & Consulting Association. As well, four
of the Division’s researchers were listed in “Marquis Who's Who”, one of
the world's top 3 biographical databases.
Research Cooperation
In 2015, the R&D Division signed MOUs with WinSun of China, COWI A/S
of Denmark, Norwegian University of Science and Technology of Norway,
and AECOM of the US. It also concluded a research collaboration
agreement with Nanyang Technological University of Singapore in July
2015. In cooperation with NTU, the Division opened a joint research
institute named “NTU-Hyundai Urban System Centre”, and conducts
a government project from Economic Development Board, Singapore.
In South Korea, the Division established three cooperation systems,
including one with Hyundai Steel.
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
REVIEW OF OPERATIONS
RESEARCH AREAS IN 2015
Building R&D Group
Infra R&D Group
Energy & Environment R&D Group
Advanced Building
Infrastructure
Ocean Energy
- Tall building/Freeform/Large space
structure
- High-tech & modular housing
- Seismic & wind resistance structural
system
- BIM technologies on field
- Technology under extreme climate
- Wind tunnel test/Exterior wall analysis
- Design & construction of super structures
in long span bridges
- High-strength PPWS cable system and
erection technology
- High-speed railway system
- Bridge accelerated construction system
- Support system for offshore wind turbine
- Tidal current-wave ocean energy
- Foundation for offshore plant
- Large floating structure for harbor
- New type armour unit for breakwater
- Dredging and reclamation work
- Costal circulation and transport modeling
Green City
- Optimized design for green smart building
and remodeling
- Building energy performance management
and diagnostics
- Micro energy grid
- IEQ* performance monitoring and
improvement & thermal load reduction in
Buildings
* IEQ: Indoor Environmental Quality
- Sustainable buildings materials and
construction method
Geotechnical Infrastructure
- Long tunnel
- Mechanized tunneling (TBM*)/Trenchless
tunneling method/Rapid tunneling
- Intelligent multi grouting/High performance
shotcrete
- Carbon capture sequestration
- Soil-structure interaction analysis for
piled-raft foundations
- Design & construction of large diameter
pile foundations
* TBM : Tunnel Boring Machine
Advanced Material
- Resource recycling low-carbon composite
materials
- Intelligent transportation system
- Composite materials
- Sustainable long-life pavement
- Durable high-performance concrete
Building operation & total energy management
Pavement resource usability of steel byproducts and automotive waste
Water & Environment
- Ecological river restoration
- Soil remediation
- Wastewater treatment & reuse
- Seawater desalination
- Biogas production & purification
- Waste treatment & energy recovery
Energy & Plant
- Combined cycle power plant
- Renewable energy power plant
(CSP*, Biomass)
- Gas separation/recovery technology
- Plant modularization
- Waste to energy technology
- Decommissioning and decontamination
technology
* CSP: Concentrated Solar Power
Prediction technology of solid flow in the
circulating fluidized bed boiler
39
financial
statements
041Financial Summary
042 Consolidated Financial
Statements
170 Separate Financial
Statements
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
FINANCIAL SUMMARY
Korean won
2015
U.S. dollars
2014
2015
(In millions)
2014
(In thousands)
FOR THE YEAR
Sales
Operating Income
₩
19,122,053
986,560
₩
17,386,959
958,903
$
16,315,745
841,775
$
14,835,289
818,177
Income before Income Tax
798,300
802,725
681,143
684,919
Net Income
584,027
586,697
498,316
500,595
Owners of the Parent Company
367,901
419,665
313,909
358,076
Non-controlling Interests
216,126
167,032
184,407
142,519
AT YEAR END
Total Assets
Current Assets
Non-current Assets
Total Liabilities
19,458,532
18,439,693
16,602,842
15,733,527
14,343,666
13,642,088
12,238,623
11,640,008
5,114,866
4,797,605
4,364,219
4,093,519
11,967,267
11,473,381
10,210,978
9,789,574
Current Liabilities
8,582,804
8,256,605
7,323,212
7,044,886
Non-current Liabilities
3,384,463
3,216,776
2,887,766
2,744,688
Shareholders' Equity
7,491,265
6,966,312
6,391,864
5,943,953
Owners of the parent company
5,820,906
5,443,845
4,966,643
4,644,919
Non-controlling interests
1,670,359
1,522,467
1,425,221
1,299,034
557,273
557,273
475,489
475,489
Capital Stock
41
Independent Auditors’ Report
English Translation of Independent Auditors’ Report Originally Issued in Korean on March 3, 2016
To the Shareholders and the Board of Directors of
Hyundai Engineering & Construction Co., Ltd.:
We have audited the accompanying consolidated financial statements of Hyundai Engineering & Construction Co., Ltd. (the “Company”) and
its subsidiaries, which comprise the consolidated statements of financial position as of December 31, 2015 and 2014, and the consolidated
statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows, all expressed
in Korean won, for the years ended December 31, 2015 and 2014, and a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean
International Financial Reporting Standards (“K-IFRS”) and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an audit opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with Korean Standards on Auditing (“KSAs”). Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries
as of December 31, 2015 and 2014, and its financial performance and its cash flows for the years then ended, in accordance with K-IFRS.
Others
Our audits also comprehended the translation of Korean won amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis in Note 2. Such U.S. dollar amounts are presented solely for the convenience of readers outside of Korea.
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial
statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of
Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries. Accordingly, this
report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting principles and
auditing standards and their application in practice.
March 3, 2016
Notice to Readers
This report is effective as of March 3, 2016, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’
report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements
and may result in modifications to the auditors’ report.
42
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF DECEMBER 31, 2015 AND 2014
Korean won
ASSETS
Notes
December 31,
2015
Translation into U.S. dollars (Note 2)
December 31,
2014
December 31,
2015
(In millions)
December 31,
2014
(In thousands)
CURRENT ASSETS:
Cash and cash equivalents
4,23,37,39,40
￦
1,997,405 ￦
2,542,381 $
1,704,270 $
2,169,267
Short-term financial instruments
23,36,37,40
1,032,308
284,202
880,809
242,493
Trade receivables
5,23,36,40
2,507,586
1,792,310
2,139,578
1,529,275
Other receivables
5,23,29,36,37,40
1,466,345
1,342,637
1,251,148
1,145,595
Due from customers for contract work
5,29,36
4,265,762
5,101,051
3,639,729
4,352,433
Held-to-maturity financial assets
9,23,40
64,739
22,550
55,238
19,241
Current derivative assets
-
11
-
9
6,14,37
1,328,564
1,336,864
1,133,587
1,140,669
2,196
4,923
1,874
4,201
Other current assets
7,36
1,674,947
1,215,159
1,429,136
1,036,825
Assets held for sale
13
Inventories
22,23
Current tax assets
Total current assets
3,814
-
3,254
-
14,343,666
13,642,088
12,238,623
11,640,008
NON-CURRENT ASSETS:
Long-term financial instruments
23,37,40
101,396
14,372
86,515
12,263
Long-term accounts receivable
5,23,40
396,554
372,070
338,357
317,466
Long-term other receivables
Available-for-sale (“AFS”) financial assets
Held-to-maturity financial assets
5,23,29,36,37,40
1,003,689
736,272
856,390
628,218
8,23,37,40
429,791
466,564
366,716
398,092
9,23,40
45,123
56,457
38,501
48,172
Investments in joint ventures and associates
10,36
107,986
124,004
92,138
105,805
Investment property
12,37
165,104
176,414
140,874
150,524
1,459,594
1,754,185
1,710,644
1,496,745
Intangible assets
Property, plant and equipment
13,14,37,41
15
857,312
874,253
731,495
745,950
Deferred tax assets
34
128,577
165,343
109,707
141,078
Other non-current assets
7
Total non-current assets
Total assets
￦
125,149
101,212
106,781
86,357
5,114,866
4,797,605
4,364,219
4,093,519
19,458,532 ￦
18,439,693 $
16,602,842 $
15,733,527
(Continued)
43
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF DECEMBER 31, 2015 AND 2014
Korean won
Notes
LIABILITIES AND EQUITY
December 31,
2015
Translation into U.S. dollars (Note 2)
December 31,
2014
December 31,
2015
(In millions)
December 31,
2014
(In thousands)
CURRENT LIABILITIES:
Trade payables
16,23,36,40
Other payables
16,23,36,40
1,147,083
985,260
978,740
840,666
29,36
2,508,349
2,305,298
2,140,230
1,966,978
29,36
Advances from customers
Due to customers for contract work
￦
2,858,033 ￦
2,916,720 $
2,438,595 $
2,488,669
1,482,439
1,151,602
1,264,880
982,596
17,23,40
198,536
275,595
169,399
235,149
17,23,37,38,40
238,528
360,945
203,522
307,974
91,250
39,440
77,858
33,652
Other financial liabilities
19,23,36,37,38,40
15,820
16,338
13,498
13,940
Other current liabilities
20
Short-term borrowings
Current portion of long-term borrowings and
debentures
Income tax payable
Total current liabilities
42,766
205,407
36,490
175,262
8,582,804
8,256,605
7,323,212
7,044,886
NON-CURRENT LIABILITIES:
Long-term other payables
Debentures issued
Long-term borrowings
16,23,40
524,501
424,072
447,526
361,836
1,735,733
1,346,313
1,481,001
1,148,731
459,873
614,570
392,383
524,377
261
266
223
227
21
168,285
327,158
143,588
279,145
9,401
11,601
8,021
9,898
18
388,249
406,085
331,270
346,489
17,23,38,40
17,23,37,38,40
Non-current derivative liabilities
22,23,40
Retirement benefit obligation
Provision for long-term employee benefits
Provisions
Deferred tax liabilities
Other financial liabilities
34
2,912
3,721
2,485
3,175
19,23,36,37,38,40
70,781
65,800
60,393
56,143
20
24,467
17,190
20,876
14,667
3,384,463
3,216,776
2,887,766
2,744,688
11,967,267
11,473,381
10,210,978
9,789,574
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY:
EQUITY:
Capital stock
25,40
557,273
557,273
475,489
475,489
Other contributed capital
25, 40
1,035,424
1,024,542
883,468
874,183
Components of other capital
26, 40
43,172
12,760
36,835
10,887
Retained earnings
27,40
4,185,037
3,849,270
3,570,851
3,284,360
Equity attributable to the owners of the Parent
Company
5,820,906
5,443,845
4,966,643
4,644,919
Non-controlling interests
1,670,359
1,522,467
1,425,221
1,299,034
7,491,265
6,966,312
6,391,864
5,943,953
Total equity
Total liabilities and equity
(Continued) 44
￦
19,458,532 ￦
See accompanying notes.
18,439,693 $
16,602,842 $
15,733,527
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014 2015
(In millions, except per share amounts)
SALES
COST OF SALES
GROSS PROFIT
SELLING AND ADMINISTRATIVE EXPENSES
28,29,36,41
2014
(In thousands, except per share amounts)
19,122,053 ￦
17,386,959 $
16,315,745 $
14,835,289
29,33,36
17,512,570
15,845,677
14,942,466
13,520,202
41
1,609,483
1,541,282
1,373,279
1,315,087
622,923
582,379
531,504
496,910
986,560
958,903
841,775
818,177
￦
30,33,36
OPERATING INCOME
GAIN ON VALUATION USING EQUITY METHOD
10
6,853
4,587
5,847
3,914
LOSS ON VALUATION USING EQUITY METHOD
10
6,251
18,308
5,334
15,621
FINANCIAL INCOME
24,31,36
205,836
149,038
175,628
127,166
FINANCIAL EXPENSES
24,31,33
251,284
174,483
214,406
148,876
OTHER INCOME
OTHER EXPENSES
32,36
251,542
225,902
214,626
192,749
32,33,36
394,956
342,914
336,993
292,589
798,300
802,725
681,143
684,919
34
214,273
216,028
182,827
184,324
￦
584,027 ￦
586,697 $
498,316
$
500,595
￦
(1,563) ￦
(1,334)
$
(463)
INCOME BEFORE INCOME TAX EXPENSE
INCOME TAX EXPENSE
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS):
Items that will not be reclassified subsequently to
profit or loss:
Loss on valuation of equity method investments,
net
Remeasurements of defined benefit plans
(542)
$
24,302
(49,693)
20,736
(42,400)
22,739
(50,235)
19,402
(42,863)
(7,321)
(2,106)
(6,247)
(1,797)
Items that may be reclassified subsequently to
profit or loss:
Loss on AFS financial assets, net
Gain on foreign operation translation, net
24,26
26
23,391
29,233
19,959
24,943
16,070
27,127
13,712
23,146
￦
622,836 ￦
563,589
$
531,430
$
480,878
￦
367,901 ￦
419,665
$
313,909
$
358,076
216,126
167,032
184,407
142,519
Owners of the Parent Company
421,911
417,446
359,992
356,183
Non-controlling interests
200,925
146,143
171,438
124,695
TOTAL COMPREHENSIVE INCOME
NET INCOME ATTRIBUTABLE TO:
Owners of the Parent Company
27,35
Non-controlling interests
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
EARNINGS PER SHARE TO OWNERS OF THE
PARENT COMPANY
Basic earnings per share of common stock
35
￦
3,301 ￦
3,765
$
3
$
3
Basic earnings per share of preferred stock
35
￦
3,379 ￦
3,848
$
3
$
3
(Continued) See accompanying notes.
45
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Other
contributed
capital
Capital
stock
Components
of other
capital
Noncontrolling
interests
Retained
earnings
Total
amount
(In millions)
Balance at January 1, 2014
￦
557,273 ￦
(21,944) ￦
3,522,094 ￦
319,332 ￦
5,203,075
Dividends
-
-
-
(55,732)
(49,710)
(105,442)
Increase of capital from merger
-
198,222
-
-
1,104,804
1,303,026
Changes in scope for consolidation
-
-
(135)
301
1,854
2,020
Acquisition of subsidiaries
-
-
-
-
44
44
Net income
-
-
-
419,665
167,032
586,697
Gain (loss) on valuation of AFS
financial assets, net
-
-
(2,139)
-
33
(2,106)
Gain (loss) on valuation of equity
method investments, net
-
-
(542)
-
-
(542)
Gain (loss) on foreign operation
translation, net
-
-
37,520
-
(8,287)
29,233
Remeasurements of defined
benefit plans
-
-
-
(37,058)
(12,635)
(49,693)
Balance at December 31, 2014
￦
557,273 ￦
1,024,542 ￦
12,760 ￦
3,849,270 ￦
1,522,467 ￦
6,966,312
Balance at January 1, 2015
￦
557,273 ￦
1,024,542 ￦
12,760 ￦
3,849,270 ￦
1,522,467 ￦
6,966,312
Dividends
-
-
-
(55,732)
(54,588)
(110,320)
Acquisition of subsidiaries
-
-
-
-
355
355
Increase in paid-in capital of the
subsidiary
-
10,882
-
-
1,200
12,082
Net income
-
-
-
367,901
216,126
584,027
Gain (loss) on valuation of AFS
financial assets, net
-
-
(7,420)
-
99
(7,321)
Gain (loss) on valuation of equity
method investments, net
-
-
(1,563)
-
-
(1,563)
Gain (loss) on foreign operation
translation, net
-
-
39,395
-
(16,004)
23,391
Remeasurements of defined benefit plans
-
-
-
23,598
704
24,302
Balance at December 31, 2015
￦
557,273 ￦
(Continued) 46
826,320 ￦
1,035,424 ￦
43,172 ￦
4,185,037 ￦
1,670,359 ￦
7,491,265
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Other
contributed
capital
Capital
stock
Components
of other
capital
Noncontrolling
interests
Retained
earnings
Total
amount
(In thousands)
Balance at January 1, 2014
$
475,489 $
705,051 $
(18,724) $
3,005,200 $
272,468 $
4,439,484
Dividends
-
-
-
(47,553)
(42,415)
(89,968)
Increase of capital from merger
-
169,132
-
-
942,666
1,111,798
Changes in scope for consolidation
-
-
(115)
256
1,582
1,723
Acquisition of subsidiaries
-
-
-
-
38
38
Net income
-
-
-
358,076
142,519
500,595
Gain (loss) on valuation of AFS
financial assets, net
-
-
(1,825)
-
28
(1,797)
Gain (loss) on valuation of equity
method investments, net
-
-
(463)
-
-
(463)
Gain (loss) on foreign operation
translation, net
-
-
32,014
-
(7,071)
24,943
Remeasurements of defined
benefit plans
-
-
-
(31,619)
(10,781)
(42,400)
Balance at December 31, 2014
$
475,489 $
874,183 $
10,887 $
3,284,360 $
1,299,034 $
5,943,953
Balance at January 1, 2015
$
475,489 $
874,183 $
10,887 $
3,284,360 $
1,299,034 $
5,943,953
Dividends
-
-
-
(47,553)
(46,577)
(94,130)
Acquisition of subsidiaries
-
-
-
-
302
302
Increase in paid-in capital of the
subsidiary
-
9,285
-
-
1,024
10,309
Net income
-
-
-
313,909
184,407
498,316
Gain (loss) on valuation of AFS
financial assets, net
-
-
(6,332)
-
85
(6,247)
Gain (loss) on valuation of equity
method investments, net
-
-
(1,334)
-
-
(1,334)
Gain (loss) on foreign operation
translation, net
-
-
33,614
-
(13,655)
19,959
Remeasurements of defined benefit plans
-
-
-
20,135
601
20,736
Balance at December 31, 2015
$
475,489 $
883,468 $
36,835 $
3,570,851 $
1,425,221 $
6,391,864
(Continued) See accompanying notes.
47
CONSOLIDATED STATEMENTS OF CASH FLOWS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
2014
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations:
￦
Net income
730,745 $
650,362 $
623,503
584,027
586,697
498,316
500,595
Additions of expenses not involving cash
outflows and others
39
1,071,729
939,177
914,445
801,346
Deduction of income not involving cash inflows
and others
39
(329,404)
(280,716)
(281,061)
(239,519)
(438,919)
Changes in operating assets and liabilities:
(564,127)
(514,413)
(481,338)
Increase in trade receivables
(698,389)
(30,926)
(595,895)
(26,387)
Increase in other receivables
(306,664)
(70,888)
(261,659)
(60,485)
Decrease (increase) in due from customers for
contract work
665,090
(710,135)
567,483
(605,917)
Decrease in inventories
124,094
148,438
105,882
126,654
(513,285)
(173,232)
(437,956)
(147,809)
28
(8,208)
24
(7,003)
(173,503)
(103,693)
(148,040)
(88,475)
105
Increase in other current assets
Decrease (increase) in long-term accounts receivables
Increase in long-term other receivables
Decrease in other non-current assets
Decrease in derivative assets
Increase (decrease) in trade payables
1
123
1
11
4
9
3
(60,489)
154,396
(51,612)
131,737
Increase (decrease) in other payables
44,947
(221,612)
38,351
(189,089)
Increase in advances from customers
219,791
388,385
187,535
331,387
Increase (decrease) in due to customers for
contract work
375,020
(19,875)
319,983
(16,958)
Increase (decrease) in other current liabilities
(64,734)
74,455
(55,234)
63,528
Increase in long-term other payables
129,401
131,396
110,410
112,113
Increase in derivative liabilities
46
-
39
-
Decrease in provisions
(130,359)
(76,435)
(111,228)
(65,218)
Decrease in retirement benefit obligation
(227,898)
(48,897)
(194,452)
(41,721)
(1,419)
(1,141)
(1,211)
(974)
Decrease in provision for long-term employee
benefits
Increase in components of other capital
Interest income received
Dividend income received
54,184
53,432
46,232
45,590
68,662
67,849
58,585
57,892
8,720
2,787
7,440
2,378
Interest expense paid
(101,076)
(102,986)
(86,241)
(87,872)
Income taxes paid
(142,530)
(272,357)
(121,613)
(232,387)
596,001
426,038
508,533
363,514
(Continued) 48
762,225 ￦
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
2014
(In thousands)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash inflows from investing activities:
Withdrawal of short-term financial instruments
Decrease in other receivables
Withdrawal of long-term financial instruments
￦
461,405 ￦
160,804 $
393,690 $
137,205
25,617
29,905
21,858
25,516
2,584
87,305
2,205
74,492
Decrease in long-term other receivables
23,647
264
20,177
225
Disposal of AFS financial assets
13,554
21,496
11,565
18,341
Disposal of held-to-maturity financial assets
22,550
23,660
19,241
20,188
Disposal of investments in joint ventures and
associates
3,284
26,522
2,802
22,630
14,677
38,623
12,523
32,955
3,631
1,756
3,098
1,498
-
5,910
-
5,043
Disposal of property, plant and equipment
Disposal of intangible assets
Disposal of assets held for sale
Increase in other current liabilities
-
68,808
-
58,710
Cash inflows from business combination
-
381,861
-
325,820
Cash inflows from changes in scope for consolidation
-
3,616
-
3,085
(1,073,990)
(213,766)
(916,374)
(182,394)
(14,188)
(13,669)
(12,106)
(11,663)
(235,260)
(3,140)
(200,734)
(2,679)
(41,731)
(15,278)
(35,607)
(13,036)
Cash outflows for investing activities:
Acquisition of short-term financial instruments
Increase in other receivables
Acquisition of long-term financial instruments
Increase in long-term other receivables
(117,568)
(26,362)
(100,314)
(22,493)
Acquisition of held-to-maturity financial assets
Acquisition of AFS financial assets
(53,405)
(6,217)
(45,567)
(5,305)
Acquisition of investments in joint ventures and
associates
(7,007)
(45,070)
(5,979)
(38,455)
Net cash outflow on acquisition of subsidiaries
(5,302)
-
(4,524)
-
Net cash outflow on disposal of subsidiary
-
(4,176)
-
(3,563)
Acquisition of investment property
-
(1,863)
-
(1,590)
(186,517)
(188,053)
(159,144)
(160,455)
(9,793)
(8,381)
(8,356)
(7,151)
(1,173,812)
324,555
(1,001,546)
276,924
Acquisition of property, plant and equipment
Acquisition of intangible assets
(Continued) 49
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
2014
(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash inflows from financing activities:
Proceeds from short-term borrowings
856,389
1,562,906
730,707
1,333,538
Issuance of debentures
597,930
547,961
510,179
467,544
-
527,776
-
450,321
2,559
44
2,183
38
Proceeds from long-term borrowings
Increase in paid-in capital
Cash outflows for financing activities:
Repayment of short-term borrowings
(855,300)
(1,458,103)
(729,778)
(1,244,115)
Repayment of current portion of long-term borrowings and debentures
(357,601)
(760,160)
(305,120)
(648,601)
Repayment of long-term borrowings
(104,138)
(266,299)
(88,855)
(227,218)
(10)
-
(9)
-
-
(130,692)
-
(111,512)
(109,120)
(103,654)
(93,105)
(88,443)
30,709
(80,221)
26,202
(68,448)
(466,811) $
571,990
Repayment of debentures
Exercise of stock option
Payment of dividends
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
￦
CASH AND CASH EQUIVALENTS, AT THE
BEGINNING OF YEAR
EFFECT OF EXCHANGE RATE ON CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, AT THE END
OF YEAR
(Continued) 50
39
￦
(547,102) ￦
670,372 $
2,542,381
1,883,560
2,169,267
1,607,133
2,126
(11,551)
1,814
(9,856)
1,997,405 ￦
See accompanying notes.
2,542,381 $
1,704,270 $
2,169,267
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
1. GENERAL INFORMATION:
(1) The Parent Company
Hyundai Engineering & Construction Co., Ltd. (the “Company” or the “Parent Company” according to Korean International Financial
Reporting Standards (“K-IFRS”) 1110, Consolidated Financial Statements), was incorporated on January 10, 1950, under the laws of
the Republic of Korea to engage in civil engineering and construction business. On December 22, 1984, the Parent Company listed
its shares on the Korea Stock Exchange. Total common stock and preferred stock as of December 31, 2015, are ￦556,779 million
($475,067 thousand) and ￦494 million ($422 thousand), respectively. The details of the Company’s shareholders as of December 31,
2015, are as follows:
Number of shares
Common
stock
Shareholders
Ownership (%)
Preferred
stock
Common
stock
Preferred
stock
Hyundai Motor Company
23,327,400
-
20.95
-
Hyundai Mobis Co., Ltd.
9,719,750
-
8.73
-
Kia Motors Corporation
5,831,850
-
5.24
-
72,476,765
98,856
65.08
100.00
111,355,765
98,856
100.00
100.00
Other shareholders
(2) Subsidiaries
A summary of the Parent Company’s 30 subsidiaries, including Hyundai Engineering Co., Ltd., as of December 31, 2015 and 2014, is as
follows:
The proportion of ownership
and voting rights owned by
companies in the Group (%)
Name of subsidiaries
Nature of business
Hyundai Engineering & Steel Industries Co.,
Ltd.
Hyundai Farm Land &Development Co.,
Ltd.
Architectural design and construction
supervision
Architectural design and facility
maintenance
Steel structure manufacturing and
installation
Agricultural management and livestock
industry
Hyundai City Corporation
Real estate suppliers
Hyundai Engineering Co., Ltd. (*1)
Hyundai Architects & Engineers Assoc.
Hyundai Engineering &Construction (Wuxi)
Construction
Co., Ltd.
Location
End date of
reporting
period
Korea
Dec. 31
38.62
38.62
Korea
Dec. 31
84.79
84.79
Korea
Dec. 31
100.00
100.00
Korea
Dec. 31
84.67
84.67
Korea
Dec. 31
100.00
100.00
China
Dec. 31
100.00
100.00
December 31, December 31,
2015
2014
Hyundai Asian Technics (Pte) Ltd.
Construction
Singapore
Dec. 31
100.00
100.00
Hatay RNC Co., Ltd.
Real estate developer
Korea
Dec. 31
100.00
100.00
Hyundai Rnc HATAY Co., Ltd.
Real estate developer
Vietnam
Dec. 31
100.00
100.00
Middle East Engineering& Development
Co., Ltd.
Construction
Saudi Arabia
Dec. 31
95.00
95.00
Hyundai E&C Vina Song Gia Co., Ltd.
Management of resort condominium
Vietnam
Dec. 31
100.00
100.00
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The proportion of ownership
and voting rights owned by
companies in the Group (%)
Nature of business
Location
End date of
reporting
period
Hyundai Energy Inc. (*2)
Production of steam, c
old and hot water
and air-conditioning
Korea
Dec. 31
49.00
49.00
Korea
Dec. 31
50.26
-
Name of subsidiaries
December 31, December 31,
2015
2014
Songdo Landmark City, LLC
Real estate development and supply
Hyundai Engineering Pakistan Private
Limited
Construction
Pakistan
Dec. 31
99.99
99.99
PT. Hyundai Engineering Indonesia
Construction
Indonesia
Dec. 31
95.00
95.00
Hyundai Engineering India Private Limited
Construction and engineering services
India
Mar. 31
99.99
99.99
HYUNDAI ENG AMERICA, INC.
Construction of commercial building
USA
Dec. 31
100.00
100.00
HEC Engineering India Private Limited
Construction of commercial building
India
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING RUS. L.L.C.
Construction of commercial building
Russia
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING iNS.TRZ.SAN.
ve TiC.LTD.STi.
Construction of commercial building
Turkey
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING CHINA (BEIJING) CO., LTD.
Construction of commercial building
China
Dec. 31
90.00
90.00
HYUNDAI ENGINEERING DEUTSCHLAND GmbH
Construction of commercial building
Germany
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING BRASIL
CONSTRUTORAE GESTAO DE
PROJETOS LTDA.
Construction of commercial building
Brazil
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING AUSTRALIA
PTY LTD.
Construct and retail business of building
Australia
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING CZECH s.r.o.
Construction of commercial building
Czech
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING SLOVAKIA s.r.o.
Construction of commercial building
Slovakia
Dec. 31
100.00
100.00
HYUNDAI ENGINEERING HUNGARY Kft
Construction of commercial building
Hungary
Dec. 31
-
100.00
CK ID CO., LTD.
Construct and retail business of building
Cambodia
Dec. 31
100.00
100.00
GALING POWER & ENERGY
CONSTRUCTION CO. INC. (*1)
Construction
Philippines
Dec. 31
40.00
40.00
HYUNDAI ENGINEERING MEXICO, S. DE
R.L. DE C.V.
Construction
Mexico
Dec. 31
100.00
100.00
PT.HEIN GLOBAL UTAMA
Construction
Indonesia
Dec. 31
67.00
-
(*1) Hyundai Engineering Co., Ltd. is substantially controlled by the Hyundai Engineering & Construction Co., Ltd. and its subsidiaries (the “Group”) in accordance with the
agreement with other investors.
(*2) The Group owns 49.00% of common stocks and 51.81% in consideration of convertible preferred stocks.
52
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) Subsidiaries newly included in consolidation for the year ended December 31, 2015, are as follows:
Company
Description
Songdo Landmark City, LLC
Obtained control by additional acquisition of subsidiary’s equity interest
PT.HEIN GLOBAL UTAMA
New establishment
(4) Company excluded from consolidated subsidiaries for the year ended December 31, 2015, is as follows:
Company
Description
HYUNDAI ENGINEERING HUNGARY Kft
Liquidation
(5) Condensed financial performance of subsidiaries of which non-controlling interests are material to the Group’s
consolidated financial statements for the years ended December 31, 2015 and 2014, are summarized as follows:
December 31, 2015
Hyundai Engineering Co., Ltd.
Description
Current assets
Korean won
Translation into U.S. dollars
(Note 2)
(In millions)
(In thousands)
￦
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity attributable to the owners of the Parent Company
Non-controlling interests
Total equity
5,102,445 $
4,353,622
1,309,901
1,117,663
6,412,346
5,471,285
3,039,573
2,593,492
687,835
586,890
3,727,408
3,180,382
2,680,692
2,287,280
4,246
3,623
2,684,938
2,290,903
December 31, 2014
Hyundai Engineering Co., Ltd.
Description
Current assets
￦
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity attributable to the owners of the Parent Company
Non-controlling interests
Total equity
Korean won
Translation into U.S. dollars
(Note 2)
(In millions)
(In thousands)
4,491,852 $
3,832,638
1,276,511
1,089,173
5,768,363
4,921,811
2,729,812
2,329,191
569,469
485,895
3,299,281
2,815,086
2,466,649
2,104,649
2,433
2,076
2,469,082
2,106,725
Fair value adjustment and the adjustment made in adopting the Parent Company’s accounting policies arising from business
combination are reflected in the summary of financial position, based on the consolidated statements of financial position of
subsidiaries. However, the intercompany transactions are not eliminated in consolidation.
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(6) Condensed financial performance of subsidiaries, of which non-controlling interests are material to the Group’s
consolidated financial statements, for the years ended December 31, 2015 and 2014, is summarized as follows:
For the year ended December 31, 2015
Hyundai Engineering Co., Ltd.
Description
Sales
￦
Korean won
Translation into U.S.
dollars (Note 2)
(In millions)
(In thousands)
7,348,520 $
6,270,068
Operating income
442,989
377,977
Net income
329,183
280,873
Other comprehensive loss
(26,092)
Total comprehensive income
￦
(22,263)
303,091 $
258,610
For the year ended December 31, 2014
Hyundai Engineering Co., Ltd.
Description
Sales
￦
Korean won
Translation into U.S.
dollars (Note 2)
(In millions)
(In thousands)
5,689,177 $
4,854,247
Operating income
408,396
348,461
Net income
314,985
268,759
Other comprehensive loss
(31,170)
Total comprehensive income
￦
(26,596)
283,815 $
242,163
Fair value adjustment and the adjustment made in adopting the Parent Company’s accounting policies arising from business
combination are reflected in the summary of financial performance, based on the consolidated financial performance of subsidiaries.
However, the intercompany transactions are not eliminated in consolidation.
(7) Condensed cash flows of subsidiaries, of which non-controlling interests are material to the Group’s consolidated
financial statements, for the years ended December 31, 2015 and 2014, are summarized as follows:
For the year ended December 31, 2015
Hyundai Engineering Co., Ltd.
Description
Cash flows from operating activities
￦
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents, at the beginning of year
(In millions)
(In thousands)
148,674 $
￦
126,855
(628,393)
(43,763)
(37,341)
(631,566)
(538,879)
1,438,222
1,227,152
517
Effect of exchange rate on cash and cash equivalents
54
Translation into U.S.
dollars (Note 2)
(736,477)
Net decrease in cash and cash equivalents
Cash and cash equivalents, at the end of year
Korean won
807,173 $
441
688,714
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
For the year ended December 31, 2014
Hyundai Engineering Co., Ltd.
Description
Cash flows from operating activities
Korean won
Translation into U.S.
dollars (Note 2)
(In millions)
(In thousands)
￦
Cash flows from investing activities
314,104 $
268,007
464,873
396,649
Cash flows from financing activities
(14,365)
(12,257)
Net decrease in cash and cash equivalents
764,612
652,399
Cash and cash equivalents, at the beginning of year
680,233
580,404
(6,623)
Effect of exchange rate on cash and cash equivalents
Cash and cash equivalents, at the end of year
(5,651)
1,438,222 $
￦
1,227,152
Fair value adjustment and the adjustment made in adopting the Parent Company’s accounting policies arising from business
combination are reflected in the cash flow summary, based on the consolidated cash flow of subsidiaries. However, the intercompany
transactions are not eliminated in consolidation.
(8) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of December
31, 2015, are as follows:
For the year ended December 31, 2015
Hyundai Engineering Co., Ltd.
Description
Korean won
Translation into U.S.
dollars (Note 2)
(In millions)
(In thousands)
61.38
61.38
Ownership percentage of non-controlling interests (%)
Non-controlling interests
￦
1,603,685 $
1,368,332
Net income attributable to non-controlling interests
197,110
168,183
Total comprehensive income attributable to non-controlling interests
181,561
154,916
52,393
44,704
Dividends paid to non-controlling interests
(9) As of December 31, 2015, condensed financial position and performance of major subsidiaries, which are material to
the Group’s consolidated financial statements, are summarized as follows:
For the year ended December 31, 2015
Korean won
Total assets
Total liabilities
Sales
Net income
(In millions)
Hyundai Engineering Co., Ltd.
￦
6,100,915 ￦
3,448,710 ￦
6,181,216 ￦
295,657
Hyundai Engineering & Steel Industries Co., Ltd.
655,037
223,980
510,770
16,146
Middle East Engineering & Development Co., Ltd.
414,209
361,955
654,938
45,963
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
For the year ended December 31, 2015
Translation into U.S. dollars (Note 2)
Total assets
Total liabilities
Sales
Net income
(In thousands)
Hyundai Engineering Co., Ltd.
$
5,205,559 $
2,942,585 $
5,274,075 $
252,267
Hyundai Engineering & Steel Industries Co., Ltd.
558,905
191,109
435,811
13,776
Middle East Engineering & Development Co., Ltd.
353,421
308,835
558,821
39,218
2. SIGNIFICANT ACCOUNTING POLICIES:
The Group maintains its official accounting records in the Republic of Korean won (“￦”) and prepares its consolidated financial
statements in conformity with Korean statutory requirements and K-IFRS, in the Korean language (Hangul). Accordingly, these
consolidated financial statements are intended for use by those who are informed about K-IFRS and Korean practices. The
accompanying consolidated financial statements have been condensed, restructured and translated into English with certain
expanded descriptions from the Korean language consolidated financial statements. Certain information included in the Korean
language consolidated financial statements, but not required for a fair presentation of the Group’s financial position, comprehensive
income, changes in equity or cash flows, is not presented in the accompanying consolidated financial statements.
The accompanying consolidated financial statements are stated in Korean won, the currency of the country in which the Group is
incorporated and operates. The translation of Korean won amounts into U.S. dollar amounts is included solely for the convenience of
readers outside of the Republic of Korea and has been made at the rate of ￦1,172.00 to $1.00 at December 31, 2015, the base rate
announced by KEB Hana Bank. Such translations should not be construed as representations that the Korean won amounts could
be converted into U.S. dollars at that or any other rate.
(1) Basis of preparing consolidated financial statements
The Group has prepared the consolidated financial statements in accordance with K-IFRS.
The significant accounting policies used for the preparation of the consolidated financial statements are summarized below. These
accounting policies are consistent with those applied to the consolidated financial statements for the year ended December 31, 2014,
except for the adoption effect of the new accounting standards and interpretations described below.
The accompanying consolidated financial statements have been prepared on the historical cost basis, except for certain non-current
assets and financial instruments that are measured at revalued amounts or fair values, at the end of each reporting period. Historical
cost is generally based on the fair value of the consideration given.
1) Amendments to K-IFRSs and new interpretations that are mandatorily effective for the current year
In the current year, the Company has applied a number of amendments to K-IFRSs and new interpretations issued that are
mandatorily effective accounting periods beginning on or after January 1, 2015.
- K-IFRS 1019 (Amendment): ‘Employee Benefits’
The amendments to K-IFRS 1019 permit to recognize amount of contributions as a reduction in the service cost in which the related
service is rendered if the amount of the contributions is independent of the number of years of service. The application of these
amendments has no significant impact on the disclosure in the Group’s consolidated financial statements.
56
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
- Annual Improvements to K-IFRS 2010-2012 Cycle
The amendments to K-IFRS 1102 ‘Share-based payment’ (i) change the definitions of ‘vesting condition’ and ‘market condition;’
and (ii) add definition for ‘performance condition’ and ‘service condition’ that were previously included within the definition of ‘vesting
condition’. The amendments to K-IFRS 1103 ‘Business Combinations’ clarify the classification and measurement of the contingent
consideration in business combination. The amendments to K-IFRS 1108 ‘Operating Segments’ clarify that a reconciliation of the
total of the reportable segments’ assets should only be provided if the segment assets are regularly provided to the chief operating
decision maker. The application of these amendments has no significant impact on the disclosure in the Group’s consolidated
financial statements.
- Annual Improvements to K-IFRS 2011-2013 Cycle
The amendments to K-IFRS 1103 clarify the scope of the portfolio exception for measuring the fair values of the group of financial
assets and financial liabilities on a net basis and include all contracts that are within the scope. The standard does not apply to
the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The
amendments to K-IFRS 1113 ‘Fair Value Measurement.’ and K-IFRS 1040 ‘Investment Property’ exist. The application of these
amendments has no significant impact on the disclosure in the Group’s consolidated financial statements.
2) New accounting standards that have been issued when the consolidated financial statements were authorized for
issue, but are not yet effective and have not yet been applied as of December 31, 2015, are as follows:
- K-IFRS 1001 (Amendment): ‘Presentation of Financial Statements’
The amendments to K-IFRS 1001 clarify the concept of applying materiality in practice and restrict an entity reducing the
understandability of its financial statements by obscuring material information with immaterial information or by aggregating material
items that have different natures or functions. The amendments to K-IFRS 1001 are effective for annual periods beginning on or after
January 1, 2016.
- K-IFRS 1016 (Amendment): ‘Property, Plant and Equipment’
The amendments to K-IFRS 1016 prohibit the Group from using a revenue-based depreciation method for items of property, plant
and equipment. The amendments to K-IFRS 1016 are effective for the annual periods beginning on or after January 1, 2016.
- K-IFRS 1038 (Amendment): ‘Intangible Assets’
The amendments to K-IFRS 1038 do not allow presumption that revenue is not an appropriate basis for the amortization of
intangible assets, which the presumption can only be limited when the intangible asset expressed as a measure of revenue or when
it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The
amendments to K-IFRS 1038 are effective for the annual periods beginning on or after January 1, 2016.
- K-IFRS 1110 (Amendment): ‘Consolidated Financial Statements’, K-IFRS 1112 (Amendment): ‘Disclosure of interests in
other entities’ and K-IFRS 1028 (Amendment): ‘Investment in associates’
The amendments clarify that in applying the equity method of accounting to an associate or a joint venture that is an investment
entity, an investor may retain the fair value measurements that the associate or joint venture used for its subsidiaries. The
amendments are effective for annual periods beginning on or after January 1, 2016.
- K-IFRS 1111 (Amendment): ‘Joint Arrangements’
The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of joint operation that constitutes a
business as defined in K-IFRS 1103. A joint operator is also required to disclose the relevant information required by K-IFRS 1103
and other standards for business combinations. The amendments to K-IFRS 1111 are effective for the annual periods beginning on
or after January 1, 2016.
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
- Enactment to K-IFRS 1109 (Enactment): ‘Financial Instruments’
The enactment to K-IFRS 1109 contains the requirements for the classification and measurement of financial assets and financial
liabilities based on a business model whose objective is achieved both by collecting contractual cash flows and selling financial
assets and based on the contractual terms that give rise on specified dates to cash flows, impairment methodology based on the
expected credit losses, and broadened types of instruments that qualify as hedging instruments and the types of risk components
of non-financial items that are eligible for hedge accounting and the change of the hedge effectiveness test. The enactment is
effective for annual periods beginning on or after January 1, 2018.
- Enactment to K-IFRS 1115 (Enactment): ‘Revenue from Contracts with Customers’
The core principle under K-IFRS 1115 is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The enactment introduces a five-step approach to revenue recognition and measurement: 1) Identify the contract with a
customer, 2) Identify the performance obligations in the contract, 3) Determine the transaction price, 4) Allocate the transaction price
to the performance obligations in the contract and 5) Recognize revenue when (or as) the entity satisfies a performance obligation.
This standard will supersede K-IFRS 1011 ‘Construction Contracts’, K-IFRS 1018 ‘Revenue’, K-IFRS 2113 ‘Customer Loyalty
Programmes’, K-IFRS 2115 ‘Agreements for the Construction of Real Estate’, K-IFRS 2118 ‘Transfers of Assets from Customers’,
and K-IFRS 2031 ‘Revenue: Barter Transactions Involving Advertising Services’. The enactment is effective for annual periods
beginning on or after January1, 2018.
-Annual Improvements to K-IFRS 2012-2014 cycle
The Annual Improvements include amendments to a number of K-IFRSs. The amendments introduce specific guidance in K-IFRS
1105 ‘Non-current Assets Held for Sale and Discontinued Operations’ for when an entity reclassifies an asset (or disposal group)
from held for sale to held for distribution to owners (or vice versa), such a change is considered as a continuation of the original
plan of disposal not as a change to a plan of sale. Other amendments in the Annual Improvements include K-IFRS 1107 ‘Financial
Instruments: Disclosures’, K-IFRS 1019 and K-IFRS 1034 ‘Interim Financial Reporting’.
The Group is in the process of evaluating the impact on the consolidated financial statements upon the application of new and
revised K-IFRS that have been issued, but are not yet effective.
The consolidated financial statements of the Parent Company as of and for the year ended on December 31, 2015, to be submitted
at the ordinary shareholder’s meeting on March 11, 2016, were authorized at the board of directors’ meeting on February 23, 2016.
(2) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities)
controlled by the Company (and its subsidiaries). Control is achieved where the Company 1) has the power over the investee; 2) is
exposed, or has rights, to variable returns from its involvement with the investee and 3) has the ability to use its power to affect its
returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights
are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all
relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power,
including:
• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
58
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statements of
comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the noncontrolling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the
Group’s accounting policies.
All intragroup transactions and related assets and liabilities, income and expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted
to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners
of the Company.
When the Group loses control of a subsidiary, a gain or loss on disposal is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill) and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried
at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and
accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted
for as if the Company had directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained
earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair
value on initial recognition for subsequent accounting under K-IFRS 1039 or, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
(3) Business combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of the fair values of the assets transferred by the Group, liabilities incurred by
the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition
date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured
in accordance with K-IFRS 1012, ‘Income Taxes’ and K-IFRS 1019, respectively;
• liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in
accordance with K-IFRS 1102 at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS 1105 are measured in accordance with
that standard.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Goodwill is measured as the excess of the sum of a) the consideration transferred, b) the amount of any non-controlling interests in
the acquiree and c) the fair value of the acquirer’s previously held equity interest in the acquiree (if any), over the net of the acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of a) the consideration transferred, b) the amount
of any non-controlling interests in the acquiree and c) the fair value of the acquirer’s previously held interest in the acquiree (if any), the
excess is recognized immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net
assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share
of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-bytransaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in
another K-IFRS.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of
the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as
measurement-period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurementperiod adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot
exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement-period
adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration
that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with K-IFRS 1039 or K-IFRS
1037, ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognized
in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit
or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other
comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
(4) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee, but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of
the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.
60
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements
using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in
accordance with K-IFRS 1105. Under the equity method, an investment in an associate or a joint venture is initially recognized in the
consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and
other comprehensive income of the associate or joint venture. When the Group’s share in losses of an associate or a joint venture
exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of
the Group’s net investment in the associate or joint venture), the Group discontinues recognizing its share of further losses. Additional
losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of
the associate or joint venture.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of an associate or a joint venture recognized at the date of acquisition is recognized as goodwill, which is included within
the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and
contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.
Upon disposal of an associate or a joint venture that results in the Group losing significant influence over that associate or joint
venture, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial
recognition as a financial asset in accordance with K-IFRS 1039. The difference between the previous carrying amount of the
associate or joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss
on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognized in other
comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint
venture had directly disposed of the related assets or liabilities.
Therefore, if a gain or loss previously recognized in other comprehensive income by that associate or joint venture would be
reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit
or loss (as reclassification adjustment) when it loses significant influence over that associate or joint venture.
When the Group reduces its ownership interest in an associate or a joint venture, but continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income
related to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related
assets or liabilities. In addition, the Group applies K-IFRS 1105 to a portion of investment in an associate or a joint venture that meets
the criteria to be classified as held for sale.
The requirements of K-IFRS 1039 are applied to determine whether it is necessary to recognize any impairment loss with respect to
the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with K-IFRS 1036, ‘Impairment of Assets,’ by comparing its recoverable amount
(higher of value in use and fair value, less costs to sell) with its carrying amount, and any impairment loss recognized forms part of the
carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with K-IFRS 1036 to the extent
that the recoverable amount of the investment subsequently increases.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an
investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in
ownership interests.
When a Group’s entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions
with the associate or joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the
associate or joint venture that are not related to the Group.
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(5) Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and
obligations for the liabilities, related to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
When a Group’s entity undertakes its activities under joint operations, the Group as a joint operator recognizes in relation to its interest
in a joint operation:
• its assets, including its share of any assets held jointly;
• its liabilities, including its share of any liabilities incurred jointly;
• its revenue from the sale of its share of the output arising from the joint operation;
• its share of the revenue from the sale of the output by the joint operation; and
• its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses related to its interest in a joint operation in accordance with the
K-IFRS applicable to the particular assets, liabilities, revenues and expenses.
When a Group’s entity transacts with a joint operation in which the Group’s entity is a joint operator (such as a sale or contribution of
assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses
resulting from the transactions are recognized in the Group’s consolidated financial statements only to the extent of other parties’
interests in the joint operation.
When a Group’s entity transacts with a joint operation in which the Group’s entity is a joint operator (such as a purchase of assets),
the Group does not recognize its share of the gains and losses until it resells those assets to a third party.
(6) Cash and cash equivalents
Cash and cash equivalents include cash, checks issued by others, checking accounts, ordinary deposits, and financial instruments
with maturities (or date of redemption) of three months or less from acquisition, which can be easily converted into cash and whose
value changes are not material due to changes in interest rates.
(7) Financial Instruments
Financial assets and financial liabilities are recognized when a Group’s entity becomes a party to the contractual provisions of the
instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss (“FVTPL”) are recognized immediately in profit or loss.
All regular-way purchases or sales of financial assets are recognized and derecognized on a trade-date basis. Regular-way purchases
or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace.
Financial assets are classified into the following specified categories: ‘financial assets at FVTPL,’ ‘held-to-maturity investments,’ ‘AFS
financial assets’ and ‘loans and receivables.’ The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
62
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
1) Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and allocating interest income over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and
points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial
recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
2) Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is contingent consideration that may be paid by an acquirer as
part of a business combination to which K-IFRS 1103 applies, or held for trading, or it is designated as at FVTPL. A financial asset
is classified as held for trading if it has been acquired principally for the purpose of selling it in the near term. Derivatives, including
embedded derivatives that are not designated as a hedging instrument, are classified as held-for-trading financial assets. Financial
assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss.
A financial asset is classified as held for trading if:
• It has been acquired principally for the purpose of selling it in the near term;
• On initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has a recent
actual pattern of short-term profit taking; or
• It is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading or contingent consideration that may be paid by an acquirer as part of a
business combination may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance
is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 permits the entire combined contract
(asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The
net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the
‘[financial income and expenses]’ line item in the consolidated statements of comprehensive income.
3) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent
and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are measured at amortized
cost using the effective interest method, less any impairment, with revenue recognized on an effective yield basis.
4) AFS financial assets
AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) heldto-maturity investments or (c) financial assets at FVTPL.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
They are subsequently measured at fair value at the end of each reporting period. Changes in the carrying amount of AFS monetary
financial assets relating to changes in foreign currency rates (see below), interest income calculated using the effective interest method and
dividends on AFS equity investments are recognized in profit or loss. Other changes in the carrying amount of AFS financial assets are
recognized in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment
is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in other comprehensive income is
reclassified to profit or loss.
Dividends on AFS equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.
The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss
are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other
comprehensive income.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured
and derivatives that are linked to, and must be settled by, delivery of such unquoted equity investments are measured at cost, less any
identified impairment losses at the end of each reporting period.
5) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments and are not quoted in an active market are
classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective interest method, less
any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect
of discounting is immaterial.
6) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial
assets are considered to be impaired when there is objective evidence that more events have occurred after the initial recognition of
the financial asset and the estimated future cash flows of the investment have been affected.
For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its
cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment includes:
• Significant financial difficulty of the issuer or counterparty,
• Default or delinquency in interest or principal payments,
• It becoming probable that the borrower will enter bankruptcy or financial reorganization, or
• The disappearance of an active market for that financial asset because of financial difficulties.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition,
assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past
experience of collecting payments, as well as observable changes in national or local economic conditions that correlate with default on
receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
64
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
For financial assets that are carried at cost, the amount of the impairment loss recognized is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset. Such
impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income
are reclassified to profit or loss in that period.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed
through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what
the amortized cost would have been had the impairment not been recognized.
In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any
increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of AFS debt securities,
impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to
an event occurring after the recognition of the impairment loss.
7) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers
nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks
and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognize a
collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and
accumulated in equity is recognized in profit or loss.
On derecognition of a financial asset other than in its entirety (e.g., when the Group retains an option to repurchase part of a
transferred asset, or it retains a residual interest and such a retained interest indicates that the transferor has neither transferred nor
retained substantially all the risks and rewards of ownership and has retained control of the transferred asset), the Group allocates
the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement and the
part it no longer recognizes on the basis of the relative fair value of those parts on the date of the transfer. The difference between
the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part that
is no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is
recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between
the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair value of those parts.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(8) Inventory
Inventories are stated at the lower of cost or net realizable value. The cost of inventories is determined using the first-in, firstout method for merchandise, supplies and raw materials; specific identification method for land for construction and materials in
transit; and weighted-average method for finished and unfinished housing units. The cost of construction support materials is
determined at cost, less an accumulated expense incurred. The amount of any write-down of inventories to net realizable value due
to obsolescence or excess inventory and other losses of inventories occurring in the normal course of business is recognized as
cost of revenues, and such valuation losses are deducted from the inventories as allowance for valuation losses. The amount of any
reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of
inventories recognized as an expense in the period in which the reversal occurs.
(9) Investment property
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured
initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost, less
accumulated depreciation and accumulated impairment losses.
Subsequent costs are recognized in the carrying amount of an asset or as a separate asset if it is probable that future economic
benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance
and repairs are expensed as incurred.
While land is not depreciated, all other investment property is depreciated based on the respective assets’ estimated useful lives
ranging from 5 to 50 years using the straight-line method.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no
future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which
the property is derecognized.
(10) Property, plant and equipment
Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and accumulated impairment losses.
The cost of an item of property, plant and equipment is directly attributable to its purchase or construction, which includes any costs
directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site
on which it is located.
Subsequent costs are recognized at the carrying amount of an asset or as a separate asset if it is probable that future economic
benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance
and repairs are expensed as incurred.
66
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The Group does not depreciate land and construction in progress. Depreciation is computed using the straight-line method based on
the estimated useful lives of the assets as follows:
Estimated useful lives (years)
Buildings
5–60
Structures
2–48
Machinery and equipment
1–30
Vehicles
3–7
Tools, furniture and fixtures
3–20
Ships
3–15
Others
4–50
The Group reviews the depreciation method, the estimated useful lives; and residual values of property, plant and equipment at the
end of each annual reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in an
accounting estimate.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on derecognition of the property (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is
derecognized.
(11) Intangible assets
Intangible assets are initially recognized at acquisition cost (purchase cost, plus expenditure directly related to preparing the assets
ready for its use) and subsequently presented at amortized cost. In relation to intangible assets with indefinite useful lives, the
estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes
in estimate being accounted for as a change in accounting estimates. In relation to intangible assets with definite useful lives,
depreciation is computed using the straight-line method based on the estimated useful lives (usually 3–70 years) of the assets.
Intangible assets that are acquired in a business combination are recognized separately from goodwill and are initially recognized at
their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost, less accumulated amortization and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from its use or disposal. Gains
or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
(12) Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units,
or otherwise, they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis
can be identified.
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually,
and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value, less costs to sell, and value in use. If the recoverable amount of an asset (or a cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is
reduced to its recoverable amount and the reduced amount is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the
revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognized for the asset (or the cash-generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in profit or loss.
(13) Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual
arrangement and the definitions of financial liability and an equity instrument.
1) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recognized as the proceeds are received, net of direct issue costs.
Repurchase of the Group’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in
profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
2) Financial liabilities
Financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments. Financial liabilities
are initially measured at fair value. Transaction cost directly attributable to the issue of financial liabilities is deducted from the fair
value of the financial liabilities on initial recognition. Transaction cost directly attributable to acquisition of financial liabilities at FVTPL is
recognized immediately in profit or loss.
3) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due in accordance with the terms of debt instruments.
Financial guarantee contract liabilities are initially measured at their fair values and, if not designated as at FVTPL, are subsequently
measured at the higher of:
• The amount of the obligation under the contract, as determined in accordance with K-IFRS 1037, ‘Provisions, Contingent
Liabilities and Contingent Assets,’; and
• The amount initially recognized, less cumulative amortization recognized in accordance with K-IFRS 1018.
4) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is a contingent consideration that may be paid by an acquirer
as part of a business combination to which K-IFRS 1103 applies, or held for trading, or it is designated as at FVTPL. Financial
liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain
or loss recognized in profit or loss incorporates any interest occurred on the financial liability and is included in the ‘other gains and
losses’ line item in the consolidated statements of comprehensive income.
68
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
5) Other financial liabilities
Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense
recognized on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments, including all fees
and points paid or received (that form an integral part of the effective interest rate) and transaction costs and other premiums or
discounts through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial
recognition.
6) Derecognition of financial liabilities
The Group derecognizes financial liabilities when the Group’s obligations are discharged, canceled or they expire. The difference
between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or
loss.
(14) Derivative financial instruments
Derivatives are initially recognized at fair value at the date the derivative contract is entered into and transaction cost is immediately
recognized as gain/loss.
The Group designates certain derivatives either as hedges of recognized assets or liabilities or firm commitments (fair value hedges),
hedges of highly probable forecast transactions, hedges of foreign currency risk of firm commitments (cash flow hedges) or hedges of
net investments in foreign operations (net investment hedges).
Derivatives are measured to their fair value subsequently and gain/loss following changes of fair values is recognized as follows:
1) Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the
fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the
consolidated statements of comprehensive income relating to the hedged item.
2) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in
other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is
included in the ‘other gains and losses’ line item. Amounts previously recognized in other comprehensive income and accumulated
in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss in the same line of the
consolidated statements of comprehensive income as the recognized hedged item. However, when the forecast transaction that is
hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in
equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship; the hedging instrument expires or is sold,
terminated or exercised; or it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains
in equity and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no
longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Changes in fair values of derivatives that do not qualify the requirements of hedge accounting or designate as hedge are recognized
as gain/loss.
(15) Retirement benefit obligation
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial
valuations being carried out at the end of each reporting period. Remeasurement, comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the
consolidated statements of financial position, with a charge or credit recognized in other comprehensive income in the period in
which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will
not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs
are composed of service cost (including current service cost and past service cost, as well as gains and losses on curtailments and
settlements), net interest expense (income) and remeasurement.
The Group presents the service cost and net interest expense (income) components in profit or loss and the remeasurement
component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination
benefit or when the entity recognizes any related restructuring costs.
(16) Provisions
A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value
of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the current best
estimate is being recognized. If the existence of an obligation to transfer economic benefit is no longer probable, the related provision
is reversed during that period.
(17) Revenue recognition
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the
stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs
incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of
the stage of completion. For revenues from lotting-out contracts, material risks and compensations in relation to title and control
of uncompleted contracts are transferred to buyer. When the criteria for revenue recognition requirements are met, revenue is
recognized based on the stage of completion of a contract. Variations in contract work, claims and incentive payments are included
to the extent that the amount can be measured reliably and its receipt is considered probable.
70
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract
costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are
incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense
immediately.
When the billings on uncompleted contracts are less than the income earned to date, the difference is presented as due from
customers for contract work. When the billings are greater than the income earned on uncompleted contracts, the difference
is presented as due to customers for contract work. Received payment before the corresponding construction is processed is
recognized as advance from customers. Billing that is sent, but not received, is recognized as trade receivables in the consolidated
statements of financial position.
Revenues from other than the above are recognized when the Group’s revenue-earning activities have been substantially completed,
the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow
into the Group.
(18) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings, pending their expenditure on qualifying assets, is
deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in
which they are incurred.
(19) Foreign currency translation
The consolidated financial statements of the Group are presented in the currency of the primary economic environment in which
the entity operates (its functional currency). The Parent Company’s functional currency, as well as the reporting currency for the
consolidated financial statements, is Korean won.
In preparation of the Group’s consolidated financial statements, any transaction occurred in currency other than its functional currency
will be recorded in translated amount using the exchange rate of the transaction. At the end of the reporting period, all monetary
assets and liabilities will be translated using the exchange rate. Meanwhile, non-monetary assets and liabilities measured at fair value
will be retranslated using the exchange rate at the date of fair value evaluation, whereas non-monetary assets and liabilities measured
at historical cost will not be translated.
Exchange differences are recognized in profit or loss in the period in which they arise, except for:
• Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which
are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency
borrowings; and
• Exchange differences on monetary items receivable from, or payable to, a foreign operation for which settlement is neither
planned nor likely to occur (therefore, forming part of the net investment in the foreign operation), which are recognized initially in
other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
For the consolidated financial statements, assets and liabilities in foreign business are translated to Korean won using the year-end
exchange rate of that period. Profit and loss are translated with average exchange rate for that period, unless the exchange rate
during that period has materially fluctuated, in which case the transaction-date exchange rate will be used. The foreign currency
difference that arises is accumulated in equity as other comprehensive income (distributed to non-controlling interests, if appropriate).
On the disposal of a foreign operation (i.e., a disposal of the Group’s entire interest in a foreign operation, a disposal involving loss of
control over a subsidiary that includes a foreign operation or partial disposal of an interest in a joint arrangement or an associate that
includes a foreign operation of which the retained interest becomes a financial asset), all of the accumulated exchange differences in
respect of that operation attributable to the owners of the Company are reclassified to profit or loss. Any exchange differences that
have previously been attributed to non-controlling interests are derecognized, but they are not reclassified to profit or loss.
In the case of a partial disposal (i.e., no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of
accumulated exchange differences are reattributed to non-controlling interests in equity and are not recognized in profit or loss. For
all other partial disposals (i.e., partial disposals of associates or joint arrangements that do not result in the Group losing significant
influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate. Exchange differences arising are recognized in other comprehensive income.
(20) Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continued use. This condition is regarded as met only when the sale is highly probable and the
non-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the
sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all the assets and liabilities of that subsidiary are
classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling
interest in its former subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or
joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria
described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held
for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues
to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the
disposal results in the Group losing significant influence over the associate or joint venture.
After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in accordance with
K-IFRS 1039, unless the retained interest continues to be an associate or a joint venture, in which case the Group uses the equity
method.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and
fair value, less costs to sell.
(21) Income tax expense and deferred tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
72
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
1) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized
for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the
extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such
deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognized to the extent it is probable that there will be sufficient taxable
profits against which the benefits of the temporary differences can be utilized and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied in the period in which the liability is
settled or the asset is realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the
reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the manner
in which the Group expects to recover or settle the carrying amount of its assets and liabilities at the end of the reporting period.
Deferred tax assets and liabilities are offset if, and only if the Group has a legally enforceable right to set off current tax assets against
current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to
realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.
3) Current tax and deferred tax for the year
Current tax and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other
comprehensive income or directly in equity or items arising from initial accounting treatments of a business combination. The tax
effect arising from a business combination is included in the accounting for the business combination.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(22) Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability
if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair
value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except
for share-based payment transactions that are within the scope of K-IFRS 1102; leasing transactions that are within the scope of
K-IFRS 1017, ‘Leases’; and measurements that have some similarities to fair value, but are not fair value, such as net realizable value
in K-IFRS 1002, ‘Inventories’ or value in use in K-IFRS 1036.
In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
Level 1:
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2:
Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3:
Inputs are unobservable inputs for the asset or liability.
3. SIGNIFICANT ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTIES:
In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that cannot be identified from other sources. The estimations and assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results may be different from those
estimates. The estimates and underlying assumptions are continually evaluated. Revisions to accounting estimates are recognized in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
4. CASH AND CASH EQUIVALENTS:
Cash and cash equivalents as of December 31, 2015 and 2014, are as follows:
Korean won
Translation into U.S. dollars(Note 2)
December 31, 2015 December 31, 2014 December 31, 2015
(In millions)
Cash on hand
￦
Checking deposits
Ordinary deposits
￦
74
1,991 ￦
December 31, 2014
(In thousands)
1,847 $
1,699 $
270,095
1,576
316,551
227,587
194,187
1,678,863
2,312,947
1,432,476
1,973,504
1,997,405 ￦
2,542,381 $
1,704,270 $
2,169,267
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
5. TRADE, OTHER RECEIVABLES, LONG-TERM ACCOUNTS RECEIVABLES AND LONG-TERM OTHER RECEIVABLES:
(1) Trade receivables, other receivables, due from customers for contract work, long-term accounts receivables and longterm other receivables as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Accounts
December 31,
2015
Translation into U.S. dollars(Note 2)
December 31,
2014
December 31,
2015
(In millions)
Trade receivables
Trade receivables
Allowance for doubtful accounts
Receivables from real estate sales
Construction work t rade
receivables
Allowance for doubtful accounts
Other receivables
26,210 $
15,341
(365)
(169)
(311)
(144)
161,024
94,599
137,392
80,716
2,439,505
1,782,960
2,081,488
1,521,297
(103,060)
(105,201)
(87,935)
1,792,310
2,139,578
1,529,275
Short-term guarantee deposits
481,412
410,025
410,761
349,851
Allowance for doubtful accounts
(10,911)
(9,323)
(9,310)
(7,955)
60,361
57,135
51,503
48,750
Allowance for doubtful accounts
(42,452)
(41,138)
(36,222)
(35,101)
Accounts receivable
899,236
723,025
767,266
616,916
Allowance for doubtful accounts
(66,863)
(43,931)
(57,050)
(37,484)
(43)
(120)
(36)
(103)
38,435
32,143
32,794
27,426
Accrued income
Allowance for doubtful accounts
(18,947)
(11,262)
(16,166)
(9,609)
Current portion of long-term loans
126,117
226,083
107,608
192,904
1,466,345
1,342,637
1,251,148
1,145,595
Due from customers for contract
work
4,269,195
5,101,051
3,642,658
4,352,433
Allowance for doubtful accounts
(3,433)
-
(2,929)
-
4,265,762
5,101,051
3,639,729
4,352,433
399,072
374,982
340,505
319,951
-
(10)
-
(9)
(2,534)
(2,902)
(2,162)
(2,476)
16
-
14
-
396,554
372,070
338,357
317,466
38,461
45,209
32,817
38,574
(14,391)
(14,391)
(12,279)
(12,279)
Long-term accounts receivable
Allowance for doubtful accounts
Present value of discount
Long-term construction work
trade receivables
Long-term other r eceivables
(In thousands)
17,980 $
(123,296)
Present value of discount
Long-term accounts r eceivable
30,718 ￦
2,507,586
Short-term loan
Due from customers for contract
work
￦
December 31,
2014
Long-term other receivables
Allowance for doubtful accounts
Present value of discount
(388)
(1,033)
(331)
(881)
Long-term loan
292,683
175,788
249,730
149,990
(78,849)
Allowance for doubtful accounts
(94,249)
(92,411)
(80,417)
Present value of discount
(12,306)
(4,995)
(10,500)
(4,262)
Guarantee deposits
845,185
666,956
721,148
569,075
Allowance for doubtful accounts
Present value of discount
(6)
-
(5)
-
(51,300)
(38,851)
(43,771)
(33,149)
1,003,689
736,272
856,390
628,218
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in allowance for doubtful accounts on receivables (trade receivables, other receivables, due from
customers for contract work, long-term accounts receivable and long-term other receivables) for the years ended
December 31, 2015 and 2014, are as follows:
Korean won
For the year ended December 31, 2015
Description
Beginning
balance
Reversal of
allowance
for doubtful
accounts
Disposal
of accounts
receivable
Bad debt
expenses
Effect of
exchange
differences
Transfer
Ending
balance
(In millions)
Trade receivables
￦
Construction work trade receivables
Short-term guarantee deposits
(169) ￦
(196) ￦
- ￦
- ￦
- ￦
- ￦
(365)
(103,060)
(23,297)
895
1,976
-
190
(123,296)
(9,323)
(37)
37
48
(1,063)
(573)
(10,911)
Short-term loan
(41,138)
(1,643)
-
-
329
-
(42,452)
Accounts receivable
(43,931)
(33,707)
13,661
12
(3,341)
443
(66,863)
Accrued income
(11,262)
(7,357)
-
-
(328)
-
(18,947)
-
(5,229)
1,796
-
-
-
(3,433)
(10)
-
-
10
-
-
-
Due from customers for contract work
Long-term accounts receivable
Long-term other receivables
(14,391)
-
-
-
-
-
(14,391)
Long-term loan
(92,411)
(8,043)
-
1,575
4,630
-
(94,249)
Guarantee deposits
￦
(6)
(315,695) ￦
-
(79,515) ￦
-
16,389 ￦
-
3,621 ￦
-
227 ￦
(6)
60 ￦
(374,913)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Beginning
balance
Reversal of
allowance
for doubtful
accounts
Disposal
of accounts
receivable
Bad debt
expenses
Effect of
exchange
differences
Transfer
Ending
balance
(In thousands)
Trade receivables
$
Construction work trade receivables
(167) $
- $
- $
- $
- $
(311)
(87,935)
(19,878)
764
1,686
-
162
(7,955)
(32)
32
41
(907)
(489)
(9,310)
Short-term loan
(35,101)
(1,402)
-
-
281
-
(36,222)
Accounts receivable
(37,484)
(28,759)
11,656
10
(2,851)
378
(57,050)
(9,609)
(6,277)
-
-
(280)
-
(16,166)
(2,929)
Short-term guarantee deposits
Accrued income
Due from customers for contract work
(105,201)
-
(4,461)
1,532
-
-
-
(9)
-
-
9
-
-
-
Long-term other receivables
(12,279)
-
-
-
-
-
(12,279)
Long-term loan
(78,849)
(6,863)
-
1,344
3,951
-
(80,417)
-
(5)
-
-
-
-
3,090 $
194 $
Long-term accounts receivable
Guarantee deposits
$
76
(144) $
(269,365) $
(67,844) $
13,984 $
51 $
(5)
(319,890)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
For the year ended December 31, 2014
Description
Beginning
balance
Reversal of
Disposal
allowance
of accounts
for doubtful
receivable
accounts
Bad debt
expenses
Effect of
Effect of
exchange
business
differences combination
Transfer
Ending
balance
(In millions)
Trade receivables
- ￦
- ￦
- ￦
(171)
171
-
-
-
-
-
-
Construction work trade receivables
(60,112)
(36,545)
1,531
-
(1,920)
4
(6,018)
(103,060)
Short-term guarantee deposits
(10,446)
-
-
1,460
-
(337)
-
(9,323)
-
(8,738)
-
-
-
-
(32,400)
(41,138)
(16,081)
(25,855)
5,047
356
(7,508)
110
-
(43,931)
-
(7,501)
-
-
-
-
(3,761)
(11,262)
￦
Receivables from real estate sales
(199) ￦
Short-term loan
Accounts receivable
Accrued income
Long-term accounts receivable
Long-term other receivables
Long-term loan
- ￦
- ￦
30 ￦
(169)
(10)
-
-
-
-
-
-
(10)
(14,391)
-
-
-
-
-
-
(14,391)
(58,802)
(11,422)
10,314
200
-
-
(32,701)
(92,411)
(89,890) ￦
16,892 ￦
￦ (160,212) ￦
2,046 ￦
(9,428) ￦
(223) ￦
(74,880) ￦ (315,695)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Description
Beginning
balance
Reversal of
Disposal
allowance
of accounts
for doubtful
receivable
accounts
Bad debt
expenses
Effect of
Effect of
exchange
business
differences combination
Transfer
Ending
balance
(In thousands)
Trade receivables
Receivables from real estate sales
Construction work trade receivables
Short-term guarantee deposits
Short-term loan
Accounts receivable
Accrued income
Long-term accounts receivable
$
(170) $
- $
- $
- $
- $
- $
-
-
-
-
-
1,306
-
(1,638)
4
(5,135)
(87,935)
-
1,247
-
(289)
-
(7,955)
(7,456)
-
-
-
-
(27,645)
(35,101)
(13,721)
(22,061)
4,306
304
(6,406)
94
-
(37,484)
-
(6,400)
-
-
-
-
(3,209)
(9,609)
(9)
-
-
-
-
-
-
(9)
(146)
146
-
(51,290)
(31,182)
(8,913)
-
-
26 $
(144)
Long-term other receivables
(12,279)
-
-
-
-
-
-
(12,279)
Long-term loan
(50,172)
(9,746)
8,800
170
-
-
(27,901)
(78,849)
$ (136,700) $
(76,699) $
14,412 $
1,747 $
(8,044) $
(191) $
(63,890) $ (269,365)
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) The details of allowance for doubtful accounts on receivables (trade receivables, other receivables, due from customers
for contract work, long-term accounts receivable and long-term other receivables) as of December 31, 2015 and 2014,
are as follows:
Korean won
December 31, 2015
Accounts
Description
Receivables
December 31, 2014
Allowance
Receivables
Allowance
(In millions)
Trade receivables
Individual analysis
Collective analysis
Receivables from real estate sales
280 ￦
(280) ￦
120 ￦
(120)
29,916
(85)
17,563
(49)
30,196
(365)
17,683
(169)
42,190
-
45,752
-
42,190
-
45,752
-
237,230
(123,296)
344,761
(103,060)
Construction work trade receivables
Individual analysis
237,230
(123,296)
344,761
(103,060)
Short-term guarantee deposits
Individual analysis
9,936
(9,848)
9,323
(9,323)
Collective analysis
73,041
(1,063)
-
-
82,977
(10,911)
9,323
(9,323)
Short-term loan
Individual analysis
42,452
(42,452)
41,138
(41,138)
42,452
(42,452)
41,138
(41,138)
Accounts receivable
Individual analysis
231,431
(62,007)
73,871
(43,377)
Collective analysis
196,841
(4,856)
24,484
(554)
428,272
(66,863)
98,355
(43,931)
Accrued income
Individual analysis
18,947
(18,947)
11,262
(11,262)
18,947
(18,947)
11,262
(11,262)
Current portion of long-term loans
Individual analysis
94,976
-
-
-
94,976
-
-
-
10,379
(3,433)
-
-
10,379
(3,433)
-
-
-
10
(10)
Due from customers for contract work
Individual analysis
Long-term accounts r eceivable
Individual analysis
-
-
10
(10)
Long-term other r eceivables
Individual analysis
14,391
(14,391)
14,391
(14,391)
14,391
(14,391)
14,391
(14,391)
Individual analysis
264,391
(94,249)
101,896
(87,781)
Collective analysis
-
-
27,923
(4,630)
264,391
(94,249)
129,819
(92,411)
6
(6)
-
-
6
(6)
-
-
Long-term loan
Guarantee deposits
78
Individual analysis
￦
Individual analysis
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015
Accounts
Description
Receivables
December 31, 2014
Allowance
Receivables
Allowance
(In thousands)
Trade receivables
Individual analysis
Collective analysis
Receivables from real estate sales
Construction work trade receivables
Short-term guarantee deposits
$
239 $
(239) $
102 $
(102)
25,526
(73)
14,985
(42)
25,765
(311)
15,088
(144)
35,998
-
39,038
-
35,998
-
39,038
-
202,415
(105,201)
294,165
(87,935)
202,415
(105,201)
294,165
(87,935)
Individual analysis
8,478
(8,403)
7,955
(7,955)
Collective analysis
62,322
(907)
-
-
70,799
(9,310)
7,955
(7,955)
(36,222)
35,101
(35,101)
Individual analysis
Individual analysis
Short-term loan
Individual analysis
36,222
36,222
(36,222)
35,101
(35,101)
Accounts receivable
Individual analysis
197,467
(52,907)
63,030
(37,011)
Collective analysis
167,953
(4,143)
20,891
(473)
365,420
(57,050)
83,921
(37,484)
Accrued income
Individual analysis
16,166
(16,166)
9,609
(9,609)
16,166
(16,166)
9,609
(9,609)
Current portion of long-term loans
Individual analysis
81,038
-
-
-
81,038
-
-
-
8,856
(2,929)
-
-
8,856
(2,929)
-
-
-
-
9
(9)
-
-
9
(9)
(12,279)
12,279
(12,279)
Due from customers for contract work
Long-term accounts r eceivable
Individual analysis
Individual analysis
Long-term other r eceivables
Individual analysis
12,279
12,279
(12,279)
12,279
(12,279)
Long-term loan
Individual analysis
225,590
(80,417)
86,942
(74,898)
Collective analysis
-
-
23,825
(3,951)
225,590
(80,417)
110,767
(78,849)
5
(5)
-
-
5
(5)
-
-
Guarantee deposits
Individual analysis
The Group performs impairment by individual test for each receivable with separate collaterals, receivables sure to receive and
defaulted receivables. For other receivables, the Group performs impairment test as a group based on collection rate in the past.
(4) Aging analysis of receivables that are past due, but not impaired
The balances of receivables overdue, but not impaired, as of December 31, 2015 and 2014, are zero.
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
6. INVENTORIES:
(1) Inventories as of December 31, 2015 and 2014, consist of the following:
Korean won
December 31, 2015
Description
Acquisition
cost
Valuation
allowance
December 31, 2014
Book value
Acquisition
cost
Valuation
allowance
Book value
(In millions)
Land for construction
850,524 ￦
(2,387) ￦
848,137 ￦
913,659 ￦
127,277
(2,771)
124,506
130,706
(5,640)
125,066
45,116
-
45,116
65,286
-
65,286
Merchandise
9,846
-
9,846
13,460
-
13,460
Supplies
3,733
-
3,733
2,152
-
2,152
119,441
-
119,441
113,131
-
113,131
￦
Finished housing
Unfinished housing
Work in process
(17,911) ￦
895,748
Raw materials
69,353
-
69,353
62,001
-
62,001
Materials in transit
87,254
-
87,254
40,373
-
40,373
Construction support materials
11,357
-
11,357
11,356
-
11,356
Korean native cattle
8,738
-
8,738
7,495
-
7,495
Others
1,083
-
1,083
796
-
￦
1,333,722 ￦
(5,158) ￦
1,328,564 ￦
1,360,415 ￦
796
(23,551) ￦
1,336,864
Translation into U.S. dollars (Note 2)
December 31, 2015
Description
Acquisition
cost
Valuation
allowance
December 31, 2014
Book value
Acquisition
cost
Valuation
allowance
Book value
(In thousands)
Land for construction
$
Finished housing
Unfinished housing
(2,037) $
723,666 $
779,573 $
108,598
(2,364)
106,234
111,524
(15,283) $
(4,812)
106,712
764,290
38,495
-
38,495
55,705
-
55,705
Merchandise
8,401
-
8,401
11,485
-
11,485
Supplies
3,185
-
3,185
1,836
-
1,836
101,912
-
101,912
96,528
-
96,528
Raw materials
59,175
-
59,175
52,902
-
52,902
Materials in transit
34,448
Work in process
74,449
-
74,449
34,448
-
Construction support materials
9,690
-
9,690
9,689
-
9,689
Korean native cattle
7,456
-
7,456
6,395
-
6,395
Others
924
$
80
725,703 $
1,137,988 $
(4,401) $
924
1,133,587 $
679
1,160,764 $
(20,095) $
679
1,140,669
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in allowance for valuation of inventory for the year ended December 31, 2015, are as follows:
Korean won
For the year ended December 31, 2015
Description
Reversal of
allowance for
valuation
of inventories
Beginning
balance
Disposal
Ending
balance
(In millions)
Land for construction
￦
Finished housing
(17,911) ￦
(5,640)
￦
12,000 ￦
-
(23,551) ￦
12,000 ￦
3,524 ￦
(2,387)
2,869
(2,771)
6,393 ￦
(5,158)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Reversal of
allowance for
valuation
of inventories
Beginning
balance
Disposal
Ending
balance
(In thousands)
Land for construction
$
Finished housing
(15,283) $
(4,812)
$
10,239 $
-
(20,095) $
10,239 $
3,007 $
(2,037)
2,448
(2,364)
5,455 $
(4,401)
(3) The changes in allowance for valuation of inventory for the year ended December 31, 2014, are as follows:
Korean won
For the year ended December 31, 2014
Description
Reversal of
allowance for
valuation
of inventories
Beginning
balance
Disposal
Ending
balance
(In millions)
Land for construction
￦
Finished housing
(36,858) ￦
(15,391)
￦
11,237 ￦
-
(52,249) ￦
7,710 ￦
9,751
11,237 ￦
(17,911)
(5,640)
17,461 ￦
(23,551)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Description
Beginning
balance
Reversal of
allowance for
valuation
of inventories
Disposal
Ending
balance
(In thousands)
Land for construction
$
Finished housing
(31,449) $
(13,132)
$
(44,581) $
9,588 $
9,588 $
6,578 $
8,320
14,898 $
(15,283)
(4,812)
(20,095)
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
7. OTHER CURRENT ASSETS AND OTHER NON-CURRENT ASSETS:
(1) Other current assets and other non-current assets as of December 31, 2015 and 2014, consist of the following:
Korean won
Description
Accounts
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In millions)
Other current assets
Advance payments
￦
Allowance for the doubtful accounts
Prepaid construction cost
Other non-current assets
1,067,214 ￦
(In thousands)
614,538 $
910,592 $
524,350
(9,873)
(9,100)
(8,424)
(7,765)
300,676
299,827
256,549
255,825
Allowance for the doubtful accounts
(14,677)
-
(12,523)
-
Prepaid expenses
318,236
220,040
271,533
187,747
Allowance for the doubtful accounts
(2,335)
(2,291)
(1,992)
(1,955)
Prepaid value-added tax
15,706
92,145
13,401
78,623
1,674,947
1,215,159
1,429,136
1,036,825
125,149
101,212
106,781
86,357
Long-term prepaid expenses
(2) The changes in allowance for doubtful accounts for the year ended December 31, 2015, are as follows:
Korean won
Beginning
balance
Description
Bad debt
expenses
Effect of exchange
differences
Ending
balance
(In millions)
Advance payments
￦
(9,100) ￦
Prepaid construction cost
Prepaid expenses
￦
(819) ￦
46 ￦
(9,873)
-
(14,677)
-
(14,677)
(2,291)
-
(44)
(2,335)
(11,391) ￦
(15,496) ￦
2 ￦
(26,885)
Translation into U.S. dollars (Note 2)
Beginning
balance
Description
Bad debt
expenses
Effect of exchange
differences
Ending
balance
(In thousands)
Advance payments
$
Prepaid construction cost
-
Prepaid expenses
(1,955)
$
82
(7,765) $
(9,720) $
(699) $
40
(12,523)
-
-
(37)
(13,222) $
3
$
(8,424)
(12,523)
(1,992)
$
(22,939)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) The changes in allowance for doubtful accounts for the year ended December 31, 2014, are as follows:
Korean won
Beginning
balance
Description
Bad debt
expenses
Reversal of
Effect of
allowance for exchange
doubtful
differences
accounts
Disposal
Ending
balance
(In millions)
Advance payments
￦
(12,796) ￦
Prepaid construction cost
Prepaid expenses
￦
(864) ￦
864 ￦
3,678 ￦
18 ￦
(9,100)
-
(2,894)
2,894
-
-
-
(2,236)
-
-
-
(55)
(2,291)
3,758 ￦
3,678 ￦
(15,032) ￦
(3,758) ￦
(37) ￦
(11,391)
Translation into U.S. dollars (Note 2)
Beginning
balance
Description
Bad debt
expenses
Reversal of
Effect of
allowance for exchange
doubtful
differences
accounts
Disposal
Ending
balance
(In thousands)
Advance payments
$
Prepaid construction cost
Prepaid expenses
$
(10,918) $
(737) $
737 $
3,138 $
15 $
(7,765)
-
(2,469)
2,469
-
-
-
(1,908)
-
-
-
(47)
(1,955)
3,206 $
3,138 $
(32) $
(9,720)
(12,826) $
(3,206) $
(4) Allowance for other current assets and other non-current assets as of December 31, 2015 and 2014, is as follows:
Korean won
December 31, 2015
Accounts
Description
Receivables
December 31, 2014
Allowance
Receivables
Allowance
(In millions)
Advance payments
Individual analysis
Prepaid construction cost
Individual analysis
Prepaid expenses
Individual analysis
￦
10,778 ￦
(9,873) ￦
9,100 ￦
(9,100)
10,778
(9,873)
9,100
(9,100)
34,126
(14,677)
-
-
34,126
(14,677)
-
-
2,398
(2,335)
2,354
(2,291)
2,398
(2,335)
2,354
(2,291)
Translation into U.S. dollars (Note 2)
December 31, 2015
Accounts
Description
Receivables
December 31, 2014
Allowance
Receivables
Allowance
(In thousands)
Advance payments
Prepaid construction cost
Prepaid expenses
Individual analysis
Individual analysis
Individual analysis
$
9,196 $
(8,424) $
7,765 $
(7,765)
9,196
(8,424)
7,765
(7,765)
29,118
(12,523)
-
-
29,118
(12,523)
-
-
2,046
(1,992)
2,009
(1,955)
2,046
(1,992)
2,009
(1,955)
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
8. AVAILABLE FOR SALE FINANCIAL ASSETS:
(1) AFS financial assets as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In millions)
(In thousands)
Non-current:
Marketable equity securities
￦
Non-marketable equity securities
￦
48,634 ￦
111,011 $
41,497 $
94,719
381,157
355,553
325,219
303,373
429,791 ￦
466,564 $
366,716 $
398,092
(2) Disposal of AFS financial assets that are measured by using acquisition costs as fair values and cannot be reliably
obtained for the year ended December 31, 2015, is as follows:
Korean won
Description
Book value
Translation into U.S. dollars (Note 2)
Loss on disposal
Book value
(In millions)
Loss on disposal
(In thousands)
Non-current:
Non-marketable equity securities
￦
1,978 ￦
461 $
1,688 $
393
(3)The details of impairment loss on AFS financial assets for the years ended December 31, 2015 and 2014, are as
follows
Korean won
For the year ended December 31, 2015
Description
Beginning balance
Impairment
Transfer
Ending balance
(In millions)
Non-current:
Marketable equity securities
￦
Non-marketable equity securities
(235) ￦
(73,125) ￦
44 ￦
(73,316)
(179,179)
(12,484)
45,899
(145,764)
(179,414)
(85,609)
45,943
(219,080)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Beginning balance
Impairment
Transfer
Ending balance
(In thousands)
Non-current:
Marketable equity securities
Non-marketable equity securities
84
$
(201) $
(62,393) $
38 $
(62,556)
(152,883)
(10,652)
39,163
(124,372)
(153,084)
(73,045)
39,201
(186,928)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
For the year ended December 31, 2014
Description
Beginning balance
Impairment
Removal
Ending balance
(In millions)
Non-current:
Marketable equity securities
(16,458) ￦
￦
Non-marketable equity securities
(235) ￦
16,458 ￦
(235)
(172,518)
(8,040)
1,379
(179,179)
(188,976)
(8,275)
17,837
(179,414)
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Description
Beginning balance
Impairment
Removal
Ending balance
(In thousands)
Non-current:
Marketable equity securities
(14,043) $
$
Non-marketable equity securities
(201) $
14,043 $
(201)
(147,200)
(6,860)
1,177
(152,883)
(161,243)
(7,061)
15,220
(153,084)
9. HELD-TO-MATURITY FINANCIAL ASSETS:
Held-to-maturity financial assets as of December 31, 2015 and 2014, are as follows:
Korean won
Accounts
Description
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In millions)
Held-to-maturity financial asset (current)
Government and p
ublic bonds
and others
Held-to-maturity financial asset (non-current)
Government and p
ublic bonds
￦
(In thousands)
64,739 ￦
22,550 $
55,238 $
19,241
45,123
56,457
38,501
48,172
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
10. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:
(1) Investments in joint ventures and associates as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015 December 31, 2014
Company
Main operating activity
End date
OwnerOwnerof
Location
ship Book value ship Book value
reporting
(%)
(%)
period
(In millions)
(In millions)
Busan Jungkwan Energy Co., Ltd. (*1)
Electricity production
Korea
Dec. 31
56.76
Busan Exhibition & Convention Center LTD.
Business facility management service
Korea
Dec. 31
21.70
15,596
21.70
15,438
PT. Hyundai Citra. (*2)
Equipment maintenance
Indonesia
Dec. 31
95.00
3,615
95.00
2,394
Songdo Landmark City, LLC (*6)
Real estate development
Korea
Dec. 31
-
-
41.38
1,151
The Gyeongnam Highway Co., Ltd.
Construction of road
Korea
Dec. 31
29.50
15,523
29.50
19,103
Arian International Contractors Company
Construction
Oriental Hyundai Quarry Development Corporation
Mine development
Uljuchongchun Co., Ltd. (*3)
Service for treatment of water and sewage
￦
-
56.76 ￦
-
Iran
Dec. 31
49.00
-
49.00
-
Philippine
Dec. 31
40.00
-
40.00
-
Korea
Dec. 31
18.50
-
18.50
1,450
Suwon Convention City Co., Ltd.
Real estate development
Korea
Dec. 31
29.00
1,450
29.00
Daejeon Clean Water Co., Ltd.
Service for treatment of sewage
Korea
Dec. 31
28.01
-
28.01
-
The Ulsan Harbour Bridge Co., Ltd.
Business facility management service
Korea
Dec. 31
24.50
10,426
24.50
12,567
Incheon Tower Design Limited Company
Design and consulting for real estate
Korea
Dec. 31
-
Ganghwa Tidal Power Corporation Co., Ltd.
Other electricity production
Korea
Dec. 31
22.00
Seotan ICD. Co., Ltd.
Korea
Dec. 31
Korea
Dec. 31
Jinju Chongchun Co., Ltd. (*3)
Real estate development
Construction of waste treatment and
antipollution facility
Sewage treatment
Korea
Dec. 31
7.77
-
7.77
-
Seosan Chongchun Co., Ltd. (*3)
Sewage treatment
Korea
Dec. 31
14.70
-
14.70
-
Busan Finance Center AMC Co., Ltd.
Real estate management
Korea
Dec. 31
24.63
109
24.63
82
Ohsang Construction Corporation
Construction
Korea
Dec. 31
28.93
-
28.93
-
Yulchon 2 Industrial Complex Development Inc.
Other real estate construction
Korea
Dec. 31
48.00
1,920
48.00
1,920
Ulsan Chongchun Co., Ltd. (*3)
-
22.81
1,874
11
22.00
11
-
-
20.00
1,000
4.50
-
4.50
-
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Construction of road
Korea
Dec. 31
-
-
20.88
16,699
The 2nd Beltway Co., Ltd.
Construction of road
Korea
Dec. 31
22.22
2,114
20.00
2
Miraeseum 3rd (*3)
Construction of building
Korea
Dec. 31
3.00
18
3.00
-
Hyundai Engineering (Thailand) Co., Ltd.
Engineering service
Thailand
Dec. 31
49.00
-
49.00
-
LHT International Engineering Joint Stock Company
Engineering service
Vietnam
Dec. 31
30.00
531
30.00
545
Philippine
Dec. 31
40.00
48
40.00
48
Korea
Dec. 31
3.77
533
3.77
527
12,693
Subic Clean Energy & Infra, Inc.
Electricity production
Miraseum the Fourth Co., Ltd. (*3 and 4)
Construction of building
Busan Finance Center PFV. Co., Ltd.
Real estate business
Korea
Dec. 31
24.63
11,765
24.63
Seoul Tunnel Co., Ltd.
Construction of bridge, tunnel and rail
Korea
Dec. 31
23.36
5,330
23.27
2,614
CONSORCIO PUENTE CHACAO S.A. (*5)
Construction
Chile
Dec. 31
51.00
19,376
51.00
18,011
Haevichi Country Club., Ltd.
Golf course services
Korea
Dec. 31
40.00
4,713
40.00
4,433
Damyang Green Development Co., Ltd.
Construction
Korea
Dec. 31
24.90
25
24.90
25
Incheon Ganghwa Industrial Complex Co., Ltd.
Construction
Korea
Dec. 31
20.00
2,400
20.00
2,400
1,645
KM Energy
Construction
Korea
Dec. 31
29.90
1,645
29.90
Sejong Mirae Industrial Complex Co., LTD.
Construction
Korea
Dec. 31
20.00
400
20.00
400
Hwaseong City Expressway Co.,Ltd.
Construction
Korea
Dec. 31
27.66
9,709
29.90
6,952
Hyundai Engineering (Cambodia) Co., Ltd. (*2)
Construction
Cambodia
Dec. 31
100.00
20
100.00
20
Visionride Inc.
Construction
Korea
Dec. 31
32.92
-
32.92
-
86
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
December 31, 2015 December 31, 2014
Company
Main operating activity
End date
OwnerOwnerof
Location
ship Book value ship Book value
reporting
(%)
(%)
period
(In millions)
(In millions)
Jinju Kumhyeong Industrial Complex Development Co., Ltd. Construction
Korea
Dec. 31
23.00
23
-
-
HLRT Inc. (*2)
Construction
USA
Dec. 31
100.00
55
-
-
Concast HDEC Haldia Port Pvt., Ltd.
Construction
India
Mar. 31
26.00
-
-
-
Hyunson Engineering & Construction spa.
Construction
Algeria
Dec. 31
31.85
631
-
￦ 107,986
￦ 124,004
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014
Company
Main operating activity
End date
OwnerOwnerof
Location
ship Book value ship Book value
reporting
(%)
(%)
period
(In thousands)
Busan Jungkwan Energy Co., Ltd. (*1)
Electricity production
Korea
Dec. 31
56.76
Busan Exhibition & Convention Center LTD.
Business facility management service
Korea
Dec. 31
21.70
13,307
$
-
(In thousands)
56.76 $
-
21.70
13,172
3,084
95.00
2,043
-
41.38
982
PT. Hyundai Citra. (*2)
Equipment maintenance
Indonesia
Dec. 31
95.00
Songdo Landmark City, LLC (*6)
Real estate development
Korea
Dec. 31
-
The Gyeongnam Highway Co., Ltd.
Construction of road
Korea
Dec. 31
29.50
13,245
29.50
16,299
Arian International Contractors Company
Construction
Oriental Hyundai Quarry Development Corporation
Mine development
Ulju Chongchun
Service for treatment of water and sewage
Iran
Dec. 31
49.00
-
49.00
-
Philippine
Dec. 31
40.00
-
40.00
-
Korea
Dec. 31
18.50
-
18.50
1,237
Suwon Convention City Co., Ltd.
Real estate development
Korea
Dec. 31
29.00
1,237
29.00
Daejeon Clean Water Co., Ltd.
Service for treatment of sewage
Korea
Dec. 31
28.01
-
28.01
-
The Ulsan Harbour Bridge Co., Ltd.
Business facility management service
Korea
Dec. 31
24.50
8,896
24.50
10,723
Incheon Tower Design Limited Company
Design and consulting for real estate
Korea
Dec. 31
-
-
22.81
1,599
Ganghwa Tidal Power Corporation Co., Ltd.
Other electricity production
Korea
Dec. 31
22.00
9
22.00
9
Seotan ICD. Co., Ltd.
Korea
Dec. 31
-
-
20.00
853
Korea
Dec. 31
4.50
-
4.50
-
Jinju Chongchun Co., Ltd. (*3)
Real estate development
Construction of waste treatment and
antipollution facility
Sewage treatment
Korea
Dec. 31
7.77
-
7.77
-
Seosan Chongchun Co., Ltd. (*3)
Sewage treatment
Korea
Dec. 31
14.70
-
14.70
-
Busan Finance Center AMC Co., Ltd.
Real estate management
Korea
Dec. 31
24.63
93
24.63
70
Ohsang Construction Corporation
Construction
Korea
Dec. 31
28.93
-
28.93
-
Yulchon 2 Industrial Complex Development Inc.
Other real estate construction
Korea
Dec. 31
48.00
1,638
48.00
1,638
Ulsan Chongchun Co., Ltd. (*3)
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Construction of road
Korea
Dec. 31
-
-
20.88
14,248
The 2nd Beltway Co., Ltd.
Construction of road
Korea
Dec. 31
22.22
1,805
20.00
2
Miraeseum 3rd (*3)
Construction of building
Korea
Dec. 31
3.00
15
3.00
-
Hyundai Engineering (Thailand) Co., Ltd.
Engineering service
Thailand
Dec. 31
49.00
-
49.00
-
LHT International Engineering Joint Stock Company
Engineering service
Vietnam
Dec. 31
30.00
453
30.00
465
Subic Clean Energy & Infra, Inc.
Electricity production
Philippine
Dec. 31
40.00
41
40.00
41
Miraseum the Fourth Co., Ltd. (*3 and 4)
Construction of building
Korea
Dec. 31
3.77
455
3.77
450
Busan Finance Center PFV. Co., Ltd.
Real estate business
Korea
Dec. 31
24.63
10,038
24.63
10,830
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014
Company
Main operating activity
End date
OwnerOwnerof
Location
ship Book value ship Book value
reporting
(%)
(%)
period
(In thousands)
(In thousands)
Seoul Tunnel Co., Ltd.
Construction of bridge, tunnel and rail
Korea
Dec. 31
23.36
4,548
23.27
2,230
CONSORCIO PUENTE CHACAO S.A. (*5)
Construction
Chile
Dec. 31
51.00
16,533
51.00
15,368
3,782
Haevichi Country Club., Ltd.
Golf course services
Korea
Dec. 31
40.00
4,021
40.00
Damyang Green Development Co., Ltd.
Construction
Korea
Dec. 31
24.90
21
24.90
21
Incheon Ganghwa Industrial Complex Co., Ltd.
Construction
Korea
Dec. 31
20.00
2,048
20.00
2,048
1,404
KM Energy
Construction
Korea
Dec. 31
29.90
1,404
29.90
Sejong Mirae Industrial Complex Co., LTD.
Construction
Korea
Dec. 31
20.00
341
20.00
341
Hwaseong City Expressway Co.,Ltd.
Construction
Korea
Dec. 31
27.66
8,284
29.90
5,933
Hyundai Engineering (Cambodia) Co., Ltd. (*2)
Construction
Cambodia
Dec. 31
100.00
17
100.00
17
Visionride Inc.
Construction
Korea
Dec. 31
32.92
-
32.92
-
Jinju Kumhyeong Industrial Complex Development Co., Ltd. Construction
Korea
Dec. 31
23.00
20
-
-
HLRT Inc. (*2)
Construction
USA
Dec. 31
100.00
47
-
-
Concast HDEC Haldia Port Pvt., Ltd.
Construction
India
Mar. 31
26.00
-
-
-
Hyunson Engineering & Construction spa.
Construction
Algeria
Dec. 31
31.85
538
-
$
92,138
$
105,805
(*1) Busan Jungkwan Energy Co., Ltd. is classified as an associate considering potential voting right.
(*2) PT. Hyundai Citra, Hyundai Engineering (Cambodia) Co., Ltd. and HLRT Inc., which are small companies, are considered as associates since they do not have significant
influence on the Group’s consolidated financial statements.
(*3) Although ownership percentage is less than 20%, the Group exercises significant influence on the affiliate classified as investments in associates, as an employee of the
Group is also working as a chief executive officer of the associates.
(*4) Impairment loss of ￦199 million ($170 thousand) from Miraseum the Fourth Co., Ltd. is recognized on a collective basis.
(*5) CONSORCIO PUENTE CHACAO S.A. is classified as an associate reasoned that the parties having a joint control have a right of net assets in arrangements. Because
the Company’s joint arrangement that has a joint control is structured by separated company and the agreed contractual conditions or other facts and situations, the
right of assets and obligation of debts in arrangements of the parties having joint control did not exist.
(*6) The Group purchases an additional equity interest in Songdo Landmark City, LLC for the year ended December 31, 2015, which gives it control. Accordingly, it is
transferred from investment in associate to investment in subsidiary.
88
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in investments in joint ventures and associates for the years ended December 31, 2015 and 2014, are as follows:
Korean won
For the year ended December 31, 2015
Company
Beginning
of year
Impairment
Gain (loss) on
loss on
valuation
investments
using the
Dividends
in joint
equity
ventures and
method
associates
Acquisition
Disposal
Change in
accumulated
other
comprehensive
income(loss)
Transfer
End of
year
(In millions)
Busan Jungkwan Energy
Co., Ltd.
Busan Exhibition &
Convention Center LTD.
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
15,438
-
-
158
-
-
-
-
15,596
1,151
5,800
-
-
-
-
(7,067)
116
-
19,103
-
-
(3,580)
-
-
-
-
15,523
12,567
-
-
(2,141)
-
-
-
-
10,426
16,699
-
-
(530)
-
-
(16,258)
89
-
12,693
-
(2,986)
2,008
-
-
-
50
11,765
18,011
-
-
3,101
-
-
-
(1,736)
19,376
(15)
1,586
(199)
(2,874)
1,535
(82)
35,300
(199) ￦
(2,874) ￦ (21,790) ￦
￦
Songdo Landmark City, LLC
The Gyeongnam Highway Co., Ltd.
The Ulsan Harbour Bridge Co., Ltd.
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Busan Finance Center PFV.
Co., Ltd.
CONSORCIO PUENTE
CHACAO S.A.
Others
28,342
7,007
￦ 124,004 ￦
12,807 ￦
(3,001) ￦
- ￦
602 ￦
-
(1,563) ￦ 107,986
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Company
Beginning
of year
Impairment
Gain (loss) on
loss on
valuation
investments
using the
Dividends
in joint
equity
ventures and
method
associates
Acquisition
Disposal
Change in
accumulated
other
comprehensive
income(loss)
Transfer
End of
year
(In thousands)
Busan Jungkwan Energy
Co., Ltd.
Busan Exhibition &
Convention Center LTD.
$
Songdo Landmark City, LLC
The Gyeongnam Highway Co., Ltd.
The Ulsan Harbour Bridge Co., Ltd.
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Busan Finance Center PFV.
Co., Ltd.
CONSORCIO PUENTE
CHACAO S.A.
Others
- $
- $
- $
13,172
-
-
982
4,949
16,299
- $
- $
- $
- $
135
-
-
-
-
13,307
-
-
-
-
(6,030)
99
-
-
-
(3,054)
-
-
-
-
13,245
10,723
-
-
(1,827)
-
-
-
-
8,896
14,248
-
-
(453)
-
-
(13,871)
76
-
10,830
-
(2,548)
1,713
-
-
-
43
10,038
15,368
-
-
2,646
-
-
-
(1,481)
16,533
(13)
1,353
24,183
$
105,805 $
5,979
10,928 $
(2,561) $
- $
513 $
(170)
(2,451)
(170) $
(2,451) $
-
1,309
(71)
30,119
(18,592) $
(1,334) $
92,138
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
For the year ended December 31, 2014
Company
Impairment
Gain (loss) on
loss on
valuation
investments
using the
in joint
equity
ventures and
method
associates
Acquisition
from
Acquisition
business
combination
Beginning
of year
Disposal
Change in
accumulated
other
comprehensive
income(loss)
Transfer
End of
year
(In millions)
Busan Jungkwan Energy
Co., Ltd.
Busan Exhibition &
Convention Center LTD.
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
15,180
-
-
258
-
-
-
-
15,438
14,380
-
-
(13,229)
-
-
-
-
1,151
38,451
24,667
-
(1,627)
-
(21,602)
(40,098)
209
-
21,569
-
-
(2,466)
-
-
-
-
19,103
13,367
-
-
(800)
-
-
-
-
12,567
16,196
693
-
(186)
-
-
-
(4)
16,699
-
-
-
1,023
-
-
11,720
(50)
12,693
-
17,493
-
1,404
-
-
-
(886)
18,011
13,647
1,902
(268)
(312)
1,310
189
28,342
￦
Songdo Landmark City, LLC
The 2nd Youngdong Highway Co., Ltd.
The Gyeongnam Highway Co., Ltd.
The Ulsan Harbour Bridge Co., Ltd.
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Busan Finance Center PFV.
Co., Ltd.
CONSORCIO PUENTE
CHACAO S.A.
9,657
Others
2,217
￦ 128,800 ￦
45,070 ￦
- ￦
13,647 ￦ (13,721) ￦
(268) ￦ (21,914) ￦ (27,068) ￦
-
(542) ￦ 124,004
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Company
Acquisition
from
Acquisition
business
combination
Beginning
of year
Impairment
Gain (loss) on
loss on
valuation
investments
using the
in joint
equity
ventures and
method
associates
Disposal
Change in
accumulated
other
comprehensive
income(loss)
Transfer
End of
year
(In thousands)
Busan Jungkwan Energy
Co., Ltd.
Busan Exhibition &
Convention Center LTD.
$
Songdo Landmark City, LLC
The 2nd Youngdong Highway Co., Ltd.
The Gyeongnam Highway Co., Ltd.
The Ulsan Harbour Bridge Co., Ltd.
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
Busan Finance Center PFV.
Co., Ltd.
CONSORCIO PUENTE
CHACAO S.A.
- $
- $
- $
- $
- $
- $
12,952
-
-
220
-
-
-
-
13,172
12,270
-
-
(11,288)
-
-
-
-
982
32,808
21,046
-
(1,387)
-
(18,432)
(34,213)
178
-
18,404
-
-
(2,105)
-
-
-
-
16,299
11,405
-
-
(682)
-
-
-
-
10,723
13,819
591
-
(159)
-
-
-
(3)
14,248
-
-
-
873
-
-
10,000
(43)
10,830
-
14,926
-
1,198
-
-
-
(756)
15,368
8,240
Others
$
90
- $
109,898 $
1,892
38,455 $
11,644
11,644 $
- $
1,623
(11,707) $
(229)
(229) $
(266)
1,118
(18,698) $
(23,095) $
161
(463) $
-
24,183
105,805
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The Group used unaudited financial statements of investments in joint ventures and associates when using equity method of
accounting. The Group does not anticipate that the difference between unaudited and audited financial statements will have a
significant effect on the Group’s consolidated financial statements and disclosures.
(3) Unrecognized equity method loss and accumulated loss due to discontinuation of equity method as of December 31,
2015 and 2014, are as follows:
Korean won
Translation into U.S. dollars (Note 2)
December 31, 2015
Current
loss
Company
Accumulated Accumulated
loss
equity
Current
loss
Accumulated Accumulated
loss
equity
(In millions)
Busan Jungkwan Energy Co., Ltd.
￦
Hyundai Engineering (Thailand) Co., Ltd.
5,032 ￦
49,660 ￦
1,951
16,076
(In thousands)
- $
212
Korean won
4,294 $
42,372 $
1,665
13,717
181
Translation into U.S. dollars (Note 2)
December 31, 2014
Current
loss
Company
Accumulated Accumulated
loss
equity
Current
loss
Accumulated Accumulated
loss
equity
(In millions)
Busan Jungkwan Energy Co., Ltd.
7,849 ￦
￦
Hyundai Engineering (Thailand) Co., Ltd.
-
(In thousands)
44,628 ￦
- $
13,913
-
6,697 $
-
38,078 $
-
11,871
-
(4) Condensed financial information of the joint ventures and associates that is material to the Group as of and for the
years ended December 31, 2015 and 2014, is as follows:
Korean won
For the year ended December 31, 2015
Description
Busan
Busan
The Ulsan
Busan Finance CONSORCIO
Exhibition
& Gyeongnam
Jungkwan
Highway Co., Harbour Bridge Center PFV.
PUENTE
Convention
Energy Co., Ltd. Center Ltd.
Ltd.
Co., Ltd.
Co., Ltd.
CHACAO S.A.
(In millions)
Current assets
￦
11,926 ￦
42,818 ￦
42,317 ￦
2,430 ￦
78,919 ￦
84,266
Non-current assets
154,745
51,116
342,383
305,517
-
262
Total assets
166,671
93,934
384,700
307,947
78,919
84,528
90,360
6,090
32,008
815
22,791
46,185
Current liabilities
Non-current liabilities
160,074
4,323
298,379
256,900
-
348
Total liabilities
250,434
10,413
330,387
257,715
22,791
46,533
33,253
24,685
7,946
5,755
7,065
59,466
172
(2,604)
(4,030)
(5,513)
(3,116)
5,828
(8,840)
99
(3,064)
(13,290)
6,116
5,788
Sales
Operating income (loss)
Net income (loss)
Other comprehensive income (loss)
Total comprehensive income (loss)
(24)
-
-
-
-
-
(8,864)
99
(3,064)
(13,290)
6,116
5,788
91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Busan
Busan
The Ulsan
Busan Finance CONSORCIO
Exhibition & Gyeongnam
Jungkwan
PUENTE
Highway Co., Harbour Bridge Center PFV.
Convention
Energy Co., Ltd. Center Ltd.
Co., Ltd.
CHACAO S.A.
Ltd.
Co., Ltd.
(In thousands)
Current assets
$
10,176 $
36,534 $
36,107 $
2,073 $
67,337 $
132,035
43,614
292,135
260,680
Total assets
142,211
80,148
328,242
262,753
67,337
72,123
77,099
5,196
27,310
695
19,446
39,407
Non-current liabilities
136,582
3,689
254,590
219,198
-
297
Total liabilities
213,681
8,885
281,900
219,893
19,446
39,704
28,373
21,062
6,780
4,910
6,028
50,739
Current liabilities
Sales
Operating income (loss)
Net income (loss)
224
147
(2,222)
(3,439)
(4,704)
(2,659)
4,973
(7,543)
84
(2,614)
(11,340)
5,218
4,939
(20)
-
-
-
-
-
(7,563)
84
(2,614)
(11,340)
5,218
4,939
Other comprehensive income (loss)
Total comprehensive income (loss)
-
71,899
Non-current assets
Korean won
For the year ended December 31, 2014
Description
Busan
Busan
Jungkwan Exhibition &
Energy Co., Convention
Ltd.
Center Ltd.
The 2nd
The Ulsan
SeoulBusan
CONSORCIO
Songdo Gyeongnam
Harbour
Incheon
Finance
PUENTE
Landmark Highway Co.,
Bridge Co.,
Linking
Center PFV. CHACAO
City, LLC
Ltd.
Ltd.
Highway Co., Co., Ltd.
S.A.
Ltd.
(In millions)
Current assets
13,478 ￦
43,482 ￦
38,493 ￦
6,388 ￦
6,237 ￦
8,394 ￦
139,002 ￦
39,291
Non-current assets
135,253
52,694
125
298,110
272,383
130,619
35,001
3,202
Total assets
148,731
96,176
38,618
304,498
278,620
139,013
174,003
42,493
7,128
Current liabilities
91,960
8,732
35,748
11,241
5,594
10,955
53,446
Non-current liabilities
156,746
3,816
89
226,347
209,500
47,397
60,000
50
Total liabilities
248,706
12,548
35,837
237,588
215,094
58,352
113,446
7,178
Sales
30,611
29,078
-
7,659
914
-
235,998
20,979
Operating income (loss)
(4,857)
(3,087)
(971)
(5,568)
(655)
(1,169)
24,627
2,056
(13,748)
1,520
(31,933)
(5,513)
(665)
(409)
21,629
2,753
Net income (loss)
Other comprehensive income (loss)
Total comprehensive income (loss)
92
￦
-
-
-
-
-
-
-
-
(13,748)
1,520
(31,933)
(5,513)
(665)
(409)
21,629
2,753
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Description
The 2nd
The Ulsan
SeoulBusan
CONSORCIO
Songdo Gyeongnam
Harbour
Incheon
Finance
PUENTE
Landmark Highway Co.,
Bridge Co.,
Linking
Center PFV. CHACAO
City, LLC
Ltd.
Ltd.
Highway Co., Co., Ltd.
S.A.
Ltd.
Busan
Busan
Jungkwan Exhibition &
Energy Co., Convention
Ltd.
Center Ltd.
(In thousands)
Current assets
$
11,500 $
37,100 $
32,844 $
5,451 $
5,321 $
7,162 $
118,603 $
33,525
Non-current assets
115,404
44,961
107
254,360
232,409
111,450
29,864
2,732
Total assets
126,904
82,061
32,951
259,811
237,730
118,612
148,467
36,257
6,082
78,464
7,450
30,502
9,591
4,773
9,347
45,602
Non-current liabilities
Current liabilities
133,742
3,256
76
193,129
178,754
40,441
51,195
43
Total liabilities
212,206
10,706
30,578
202,720
183,527
49,788
96,797
6,125
26,119
24,811
-
6,535
780
-
201,363
17,900
(4,144)
(2,634)
(828)
(4,751)
(559)
(997)
21,013
1,754
(11,730)
1,297
(27,247)
(4,704)
(567)
(349)
18,455
2,349
Sales
Operating income (loss)
Net income (loss)
Other comprehensive income (loss)
Total comprehensive income (loss)
-
-
-
-
-
-
-
-
(11,730)
1,297
(27,247)
(4,704)
(567)
(349)
18,455
2,349
(5) Adjustment to the carrying amount of investments in joint ventures and associates that is material to the Group as of
December 31, 2015, is as follows:
Korean won
For the year ended December 31, 2015
Company
Busan
Exhibition &
Convention
Center Ltd.
Gyeongnam
Highway Co.,
Ltd.
The Ulsan
Busan Finance
Harbour Bridge Center PFV.
Co., Ltd.
Co., Ltd.
CONSORCIO
PUENTE
CHACAO S.A.
(In millions)
Associates net asset (A)
￦
Ownership percentage (B) (%)
83,521 ￦
21.70
Net share amount (A*B)
(-) Removal of internal transaction
Book value
54,313 ￦
29.50
50,232 ￦
24.50
56,128 ￦
24.63
37,995
51.00
18,121
16,022
12,307
11,765
2,525
499
1,881
-
19,376
-
15,596
15,523
10,426
11,765
19,376
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Company
Busan
Exhibition &
Convention
Center Ltd.
Gyeongnam
Highway Co.,
Ltd.
The Ulsan
Busan Finance
Harbour Bridge Center PFV.
Co., Ltd.
Co., Ltd.
CONSORCIO
PUENTE
CHACAO S.A.
(In thousands)
Associates net asset (A)
Ownership percentage (B) (%)
Net share amount (A*B)
(-) Removal of internal transaction
Book value
$
71,263 $
21.70
46,342 $
29.50
42,860 $
24.50
47,891 $
24.63
32,419
51.00
15,461
13,671
10,501
10,038
16,533
2,154
426
1,605
-
-
13,307
13,245
8,896
10,038
16,533
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
11. INTERESTS IN JOINT OPERATIONS:
Joint arrangement projects that are material to the Group as of and for the year ended December 31, 2015, are as follows:
Name of the Project
Country of incorporation
Jubail Polysilicon Project
Proportion of participating share (%)
Saudi Arabia
50.00
Marina South Mixed Development
Singapore
60.00
Bello Wastewater Treatment Plant
Colombia
65.00
Venezuela Puerto Lacruz Refinery Project
Construction of Third Bosporus Bridge
Sri Lanka Keels City Project
Karbala Refinery Project
EPCC of The New Refinery Project
Bolivarian Republic of Venezuela
92.00
Turkey
60.00
Sri Lanka
65.00
Iraq
37.50
Kuwait
40.00
Moreover, joint arrangement projects are undertaken to complete constructions that are located in the Middle East, Asia, South
America, etc. The Group has a right to construction revenue and an obligation to incurred expenses according to the proportion of
participating share held by the Group.
12. INVESTMENT PROPERTY:
(1) The changes in investment property for the year ended December 31, 2015, are as follows:
Korean won
Description
Land
Buildings
Total
(In millions)
Acquisition cost:
Beginning of year
￦
Transfer (*)
104,670 ￦
80,160 ￦
184,830
(3,205)
(5,509)
401
2,599
3,000
101,866
77,250
179,116
Beginning of year
-
(8,416)
(8,416)
Depreciation
-
(1,783)
(1,783)
Transfer (*)
-
254
254
Effect of exchange rate
-
(401)
(401)
End of year
-
(10,346)
(10,346)
Effect of exchange rate
End of year
(8,714)
Accumulated depreciation:
Accumulated impairment loss:
Beginning of year
-
-
-
Impairment loss
-
(3,666)
(3,666)
End of year
-
(3,666)
(3,666)
Book value:
94
Beginning of year
￦
104,670 ￦
71,744 ￦
176,414
End of year
￦
101,866 ￦
63,238 ￦
165,104
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Land
Buildings
Total
(In thousands)
Acquisition cost:
Beginning of year
89,309 $
68,396 $
(2,735)
(4,701)
342
2,218
2,560
86,916
65,913
152,829
Beginning of year
-
(7,181)
(7,181)
Depreciation
-
(1,521)
(1,521)
Transfer (*)
-
217
217
Effect of exchange rate
-
(343)
(343)
End of year
-
(8,827)
(8,827)
Beginning of year
-
-
-
Impairment loss
-
(3,128)
(3,128)
End of year
-
(3,128)
(3,128)
$
Transfer (*)
Effect of exchange rate
End of year
157,705
(7,436)
Accumulated depreciation:
Accumulated impairment loss:
Book value:
Beginning of year
$
89,309 $
61,215 $
150,524
End of year
$
86,916 $
53,958 $
140,874
(*) The book value of ￦8,460 million ($7,219 thousand) is transferred from investment property to inventories.
(2) The changes in investment property for the year ended December 31, 2014, are as follows:
Korean won
Description
Land
Buildings
Total
(In millions)
Acquisition cost:
Beginning of year
￦
Acquisition
39,846 ￦
26,189 ￦
66,035
1,863
-
1,863
Acquisition from business combination
39,597
48,733
88,330
Transfer (*)
23,197
3,637
26,834
167
1,601
1,768
104,670
80,160
184,830
Beginning of year
-
(1,881)
(1,881)
Depreciation
-
(1,453)
(1,453)
Acquisition from business combination
-
(4,854)
(4,854)
Effect of exchange rate
-
(228)
(228)
End of year
-
(8,416)
(8,416)
Effect of exchange rate
End of year
Accumulated depreciation:
Book value:
Beginning of year
￦
39,846 ￦
24,308 ￦
64,154
End of year
￦
104,670 ￦
71,744 ￦
176,414
95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Land
Buildings
Total
(In thousands)
Acquisition cost:
Beginning of year
$
33,998 $
Acquisition
22,346 $
56,344
1,590
-
1,590
Acquisition from business combination
33,786
41,581
75,367
Transfer (*)
19,793
3,103
22,896
142
1,366
1,508
89,309
68,396
157,705
Effect of exchange rate
End of year
Accumulated depreciation:
Beginning of year
-
(1,605)
(1,605)
Depreciation
-
(1,240)
(1,240)
Acquisition from business combination
-
(4,142)
(4,142)
Effect of exchange rate
-
(194)
(194)
End of year
-
(7,181)
(7,181)
Book value:
Beginning of year
$
33,998 $
20,741 $
54,739
End of year
$
89,309 $
61,215 $
150,524
(*) The book value of ￦21,137 million ($18,035 thousand) is transferred from property, plant and equipment to investment property. The book value of ￦5,697 million ($4,861
thousand) is transferred from inventories to investment property.
(3) Recognized expense on investment property for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Revenues-rental
￦
Direct operating expenses arising from investment property
2014
(In thousands)
9,550 ￦
6,634 $
8,148 $
5,660
4,236
3,198
3,614
2,729
(4) The book value and fair value of investment property as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Description
Book value
December 31, 2014
Fair value(*)
(In millions)
Land
Buildings
96
￦
101,866 ￦
Book value
Fair value(*)
(In millions)
101,976 ￦
104,670 ￦
113,472
63,238
63,245
71,744
87,091
165,104
165,221
176,414
200,563
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015
Description
Book value
December 31, 2014
Fair value(*)
Book value
(In thousands)
Land
$
Buildings
Fair value(*)
(In thousands)
86,916 $
87,010 $
89,309 $
53,958
53,963
61,215
96,819
74,310
140,874
140,974
150,524
171,129
(*) The fair value of investment property is classified as Level 3 (unobservable inputs for the asset or liability) based on inputs that were used in valuation technique.
13. PROPERTY, PLANT AND EQUIPMENT:
(1) The changes in property, plant and equipment for the year ended December 31, 2015, are as follows:
Korean won
Description
Land
Buildings
Machinery
and
equipment
Structures
Tools,
furniture
and
fixtures
Vehicles
Ships
Construction
in progress
Others
Total
(In millions)
Acquisition cost:
Beginning of year
￦ 587,831 ￦ 237,680 ￦
Acquisition
Acquisition through business
combination
Disposal
Transfer (*)
Effect of exchange rate
End of year
￦
89,513 ￦ 873,761 ￦
55,569 ￦ 145,751 ￦ 362,376 ￦
58,986 ￦
65,953 ￦ 2,477,420
3,515
2,516
73
64,978
6,497
21,548
24,664
104
62,737
186,632
-
-
-
-
-
123
-
-
-
123
(483) ￦
(132) ￦
(710) ￦
-
(4,289) ￦
5,092
(256) ￦
(1,469)
(5,885) ￦
14,516
(6,260) ￦
-
(11,274) ￦
1,852
(2,617)
(8)
- ￦
(33,376)
(29,289)
(16,010)
9
156
(120)
1,464
1,263
268
-
(2,184)
(1,222)
(366)
590,645
241,155
87,741
948,834
57,069
158,268
383,940
56,766
94,092
2,618,510
Accumulated depreciation:
Beginning of year
-
(46,635)
(12,043)
(295,152)
(31,009)
(91,347)
(242,824)
(37,270)
-
(756,280)
Depreciation
-
(6,056)
(3,128)
(64,556)
(8,158)
(18,692)
(19,084)
(2,628)
-
(122,302)
Acquisition through business
combination
-
-
-
-
-
(89)
-
-
-
(89)
Disposal
-
171
90
3,033
4,562
5,500
483
62
-
13,901
10,585
Transfer (*)
-
-
174
7,847
-
(278)
1,944
898
-
Effect of exchange rate
-
(33)
7
(482)
(756)
(706)
-
2,160
-
190
End of year
-
(52,553)
(14,900)
(349,310)
(35,361)
(105,612)
(259,481)
(36,778)
-
(853,995)
-
(4,656)
(5,840)
-
-
-
-
-
-
(10,496)
Accumulated impairment loss:
Beginning of year
Disposal
-
-
166
-
-
-
-
-
-
166
End of year
-
(4,656)
(5,674)
-
-
-
-
-
-
(10,330)
Book value:
Beginning of year
￦ 587,831 ￦ 186,389 ￦
71,630 ￦ 578,609 ￦
24,560 ￦
54,404 ￦ 119,552 ￦
21,716 ￦
65,953 ￦ 1,710,644
End of year
￦ 590,645 ￦ 183,946 ￦
67,167 ￦ 599,524 ￦
21,708 ￦
52,656 ￦ 124,459 ￦
19,988 ￦
94,092 ￦ 1,754,185
97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Land
Buildings
Machinery
and
equipment
Structures
Tools,
furniture
and
fixtures
Vehicles
Ships
Construction
in progress
Others
Total
(In thousands)
Acquisition cost:
Beginning of year
Acquisition
Acquisition through business
combination
Disposal
Transfer (*)
Effect of exchange rate
End of year
$ 501,562
$ 202,799
76,376
$ 745,530
47,414
$ 124,361
$ 309,195
56,274
$ 2,113,840
2,999
2,147
62
55,442
5,544
18,386
21,044
89
53,530
159,243
-
-
-
-
-
105
-
-
-
105
(606)
(3,660)
(218)
(5,022)
(5,341)
(9,619)
(412)
(113)
-
(24,991)
-
4,345
(1,253)
12,386
-
1,580
(2,233)
(7)
(28,478)
(13,660)
$
$
$
50,329
$
8
133
(102)
1,248
1,077
229
-
(1,864)
(1,043)
(314)
503,963
205,764
74,865
809,584
48,694
135,042
327,594
48,434
80,283
2,234,223
Accumulated depreciation:
Beginning of year
-
(39,791)
(10,276)
(251,836)
(26,458)
(77,941)
(207,188)
(31,800)
-
(645,290)
Depreciation
-
(5,167)
(2,669)
(55,082)
(6,961)
(15,949)
(16,283)
(2,242)
-
(104,353)
Acquisition through business
combination
-
-
-
-
-
(76)
-
-
-
(76)
Disposal
-
146
77
2,588
3,892
4,693
412
53
-
11,861
Transfer (*)
-
-
148
6,695
-
(237)
1,659
766
-
9,031
Effect of exchange rate
-
(28)
6
(411)
(645)
(602)
-
1,843
-
163
End of year
-
(44,840)
(12,714)
(298,046)
(30,172)
(90,112)
(221,400)
(31,380)
-
(728,664)
(8,956)
Accumulated impairment loss:
Beginning of year
-
(3,973)
(4,983)
-
-
-
-
-
-
Disposal
-
-
142
-
-
-
-
-
-
142
End of year
-
(3,973)
(4,841)
-
-
-
-
-
-
(8,814)
Beginning of year
$ 501,562
$ 159,035
$
61,117
$ 493,694
$
20,956
$
46,420
$ 102,007
$
18,529
$
56,274
$ 1,459,594
End of year
$ 503,963
$ 156,951
$
57,310
$ 511,538
$
18,522
$
44,930
$ 106,194
$
17,054
$
80,283
$ 1,496,745
Book value:
(*) The book value of ￦1,045 million ($892 thousand) is transferred from property, plant and equipment to inventories. The book value of ￦1,030 million ($878 thousand)
is transferred from property, plant and equipment to intangible assets. The book value of ￦3,814 million ($3,254 thousand) is transferred from property, plant and
equipment to assets held for sale. The book value of ￦464 million ($396 thousand) is transferred from other assets to property, plant and equipment.
98
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in property, plant and equipment for the year ended December 31, 2014, are as follows:
Korean won
Description
Land
Buildings
Structures
Machinery
and
equipment
Tools,
furniture
and
fixtures
Vehicles
Ships
Construction
in progress
Others
Total
(In millions)
Acquisition cost:
Beginning of year
￦ 578,440 ￦ 239,466 ￦
Acquisition
Changes in scope for
consolidation
Disposal
Transfer (*)
Effect of exchange rate
End of year
79,944 ￦ 762,289 ￦
44,968 ￦ 114,318 ￦ 330,432 ￦
27,126 ￦ 104,643 ￦ 2,281,626
-
949
148
64,605
10,935
27,732
19,290
131
67,752
191,542
26,694
2,602
2,075
-
3,434
12,637
-
29,255
8,081
84,778
(15,239)
(17,982)
(5,371)
(6,781)
(4,607)
(10,162)
(198)
(200)
-
(60,540)
(2,068)
12,403
12,670
53,728
-
196
12,852
447
(114,423)
(24,195)
4
242
47
(80)
839
1,030
-
2,227
(100)
4,209
587,831
237,680
89,513
873,761
55,569
145,751
362,376
58,986
65,953
2,477,420
Accumulated depreciation:
Beginning of year
-
(43,834)
(12,558)
(242,679)
(24,160)
(73,347)
(226,410)
(7,651)
-
(630,639)
Depreciation
-
(5,905)
(2,594)
(59,160)
(7,636)
(16,767)
(16,784)
(2,433)
-
(111,279)
Changes in scope for
consolidation
-
(1,154)
(345)
-
(2,139)
(9,490)
-
(26,138)
-
(39,266)
Disposal
-
4,478
3,455
6,122
3,496
8,734
198
159
-
26,642
Transfer (*)
-
(168)
(2)
-
(2)
-
-
-
-
(172)
Effect of exchange rate
-
(52)
1
565
(568)
(477)
172
(1,207)
-
(1,566)
End of year
-
(46,635)
(12,043)
(295,152)
(31,009)
(91,347)
(242,824)
(37,270)
-
(756,280)
Accumulated impairment loss:
Beginning of year
￦
- ￦
(5,367) ￦
(7,399) ￦
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
(12,766)
Disposal
-
711
1,559
-
-
-
-
-
-
2,270
End of year
-
(4,656)
(5,840)
-
-
-
-
-
-
(10,496)
Book value:
Beginning of year
￦ 578,440 ￦ 190,265 ￦
59,987 ￦ 519,610 ￦
20,808 ￦
40,971 ￦ 104,022 ￦
19,475 ￦ 104,643 ￦ 1,638,221
End of year
￦ 587,831 ￦ 186,389 ￦
71,630 ￦ 578,609 ￦
24,560 ￦
54,404 ￦ 119,552 ￦
21,716 ￦
65,953 ￦ 1,710,644
99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Land
Buildings
Structures
Machinery
and
equipment
Tools,
furniture
and
fixtures
Vehicles
Ships
Construction
in progress
Others
Total
(In thousands)
Acquisition cost:
Beginning of year
Acquisition
Changes in scope for
consolidation
Disposal
Transfer (*)
Effect of exchange rate
End of year
$ 493,549
$ 204,323
68,212
$ 650,417
97,540
$ 281,939
89,286
$ 1,946,779
-
810
126
55,124
9,330
23,662
16,459
112
57,809
163,432
22,776
2,220
1,770
-
2,930
10,782
-
24,962
6,895
72,335
(13,003)
(15,343)
(4,583)
(5,786)
(3,931)
(8,671)
(169)
(171)
-
(51,657)
(1,765)
10,583
10,811
45,843
-
167
10,966
381
(97,631)
(20,645)
$
$
38,368
$
$
23,145
$
5
206
40
(68)
717
881
-
1,900
(85)
3,596
501,562
202,799
76,376
745,530
47,414
124,361
309,195
50,329
56,274
2,113,840
(538,088)
Accumulated depreciation:
Beginning of year
-
(37,401)
(10,715)
(207,064)
(20,614)
(62,583)
(193,183)
(6,528)
-
Depreciation
Changes in scope for consolidation
Disposal
-
(5,038)
(2,214)
(50,478)
(6,515)
(14,306)
(14,321)
(2,076)
-
(94,948)
-
(985)
(294)
-
(1,825)
(8,097)
-
(22,302)
-
(33,503)
-
3,821
2,948
5,224
2,983
7,452
169
136
-
22,733
Transfer (*)
-
(143)
(2)
-
(2)
-
-
-
-
(147)
Effect of exchange rate
-
(45)
1
482
(485)
(407)
147
(1,030)
-
(1,337)
End of year
-
(39,791)
(10,276)
(251,836)
(26,458)
(77,941)
(207,188)
(31,800)
-
(645,290)
Beginning of year
-
(4,580)
(6,313)
-
-
-
-
-
-
(10,893)
Disposal
-
607
1,330
-
-
-
-
-
-
1,937
End of year
-
(3,973)
(4,983)
-
-
-
-
-
-
(8,956)
Beginning of year
$ 493,549
$ 162,342
$
51,184
$ 443,353
$
17,754
$
34,957
$
88,756
$
16,617
$
89,286
$ 1,397,798
End of year
$ 501,562
$ 159,035
$
61,117
$ 493,694
$
20,956
$
46,420
$ 102,007
$
18,529
$
56,274
$ 1,459,594
Accumulated impairment loss:
Book value:
(*) The book value of ￦1,120 million ($956 thousand) is transferred from property, plant and equipment to intangible assets. The book value of ￦4,568 million
($3,898 thousand) is transferred from property, plant and equipment to inventories. The book value of ￦21,137 million ($18,035 thousand) is transferred from
property, plant and equipment to investment property. The book value of ￦2,802 million ($2,391 thousand) is transferred from other assets to property, plant
and equipment.
100
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) Allocation of depreciation on property, plant and equipment for the years ended December 31, 2015 and 2014, is as
follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Cost of sales
(In thousands)
112,203 ￦
￦
Selling and administrative expenses
102,183 $
95,736 $
87,187
10,094
9,091
8,613
7,757
5
5
4
4
Other expenses
122,302 ￦
￦
2014
111,279 $
104,353 $
94,948
14. BORROWING COSTS:
Capitalization of borrowing costs for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Qualifying assets
Capitalized interest expenses
Capitalization rate
Inventories, etc.
￦
3.27% - 3.71%
(In thousands)
Inventories, etc.
1,697 ￦
2014
4,967 $
3.09% - 4.01%
Inventories, etc.
1,448 $
3.27% - 3.71%
Inventories, etc.
4,238
3.09% - 4.01%
101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
15. INTANGIBLE ASSETS:
(1) The changes in intangible assets for the year ended December 31, 2015, are as follows:
Korean won
Description
Goodwill
Other intangible
assets
Membership
Total
(In millions)
Acquisition cost:
Beginning of year
￦
Acquisition
596,873 ￦
59,134 ￦
287,187 ￦
943,194
-
5,123
4,670
9,793
29,026
-
24,386
53,412
1,798
(5,498)
(788)
(4,488)
Transfer (*)
-
(1,000)
924
(76)
Effect of exchange rate
-
-
174
174
627,697
57,759
316,553
1,002,009
Beginning of year
-
-
(63,920)
(63,920)
Amortization
-
-
(71,739)
(71,739)
Acquisition from business combination
Disposal
End of year
Accumulated amortization:
Acquisition from business combination
-
-
(56)
(56)
Disposal
-
-
785
785
106
Transfer (*)
-
-
106
Effect of exchange rate
-
-
(24)
(24)
End of year
-
-
(134,848)
(134,848)
Beginning of year
(3,252)
(1,769)
-
(5,021)
Impairment loss
(5,851)
(11)
-
(5,862)
-
1,034
-
1,034
(9,103)
(746)
-
(9,849)
Accumulated impairment loss:
Disposal
End of year
Book value:
102
Beginning of year
￦
593,621 ￦
57,365 ￦
223,267 ￦
874,253
End of year
￦
618,594 ￦
57,013 ￦
181,705 ￦
857,312
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Goodwill
Other intangible
assets
Membership
Total
(In thousands)
Acquisition cost:
Beginning of year
$
Acquisition
Acquisition from business combination
509,277 $
50,456 $
245,040 $
804,773
-
4,371
3,985
8,356
24,766
-
20,807
45,573
(3,829)
1,534
(4,691)
(672)
Transfer (*)
-
(853)
788
(65)
Effect of exchange rate
-
-
148
148
535,577
49,283
270,096
854,956
Beginning of year
-
-
(54,539)
(54,539)
Amortization
-
-
(61,211)
(61,211)
Acquisition from business combination
-
-
(48)
(48)
Disposal
-
-
670
670
Disposal
End of year
Accumulated amortization:
Transfer (*)
-
-
90
90
Effect of exchange rate
-
-
(20)
(20)
End of year
-
-
(115,058)
(115,058)
Beginning of year
(2,775)
(1,509)
-
(4,284)
Impairment loss
(4,992)
(9)
-
(5,001)
-
882
-
882
(7,767)
(636)
-
(8,403)
Accumulated impairment loss:
Disposal
End of year
Book value:
Beginning of year
$
506,502 $
48,947 $
190,501 $
745,950
End of year
$
527,810 $
48,647 $
155,038 $
731,495
(*) The book value of ￦1,000 million ($853 thousand) is transferred from intangible assets to other assets. The book value of ￦1,030 million ($878 thousand) is
transferred from property, plant and equipment to intangible assets.
103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in intangible assets for the year ended December 31, 2014, are as follows:
Korean won
Description
Goodwill
Other intangible
assets
Membership
Total
(In millions)
Acquisition cost:
Beginning of year
￦
Acquisition
10,013 ￦
39,073 ￦
56,664 ￦
105,750
-
3,604
4,777
8,381
586,860
18,696
224,507
830,063
Disposal
-
(2,239)
(166)
(2,405)
Transfer (*)
-
-
1,120
1,120
Effect of exchange rate
-
-
285
285
596,873
59,134
287,187
943,194
Beginning of year
-
-
(16,602)
(16,602)
Amortization
-
-
(41,327)
(41,327)
(6,025)
Changes in scope for consolidation
End of year
Accumulated amortization:
Changes in scope for consolidation
-
-
(6,025)
Disposal
-
-
83
83
Effect of exchange rate
-
-
(49)
(49)
End of year
-
-
(63,920)
(63,920)
Accumulated impairment loss:
Beginning of year
￦
(3,252) ￦
(1,250) ￦
- ￦
(4,502)
Impairment loss
-
(629)
-
Disposal
-
110
-
110
(3,252)
(1,769)
-
(5,021)
End of year
(629)
Book value:
104
Beginning of year
￦
6,761 ￦
37,823 ￦
40,062 ￦
84,646
End of year
￦
593,621 ￦
57,365 ￦
223,267 ￦
874,253
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Goodwill
Other intangible
assets
Membership
Total
(In thousands)
Acquisition cost:
Beginning of year
8,544 $
$
Acquisition
33,339 $
48,348 $
90,231
-
3,075
4,076
7,151
500,733
15,952
191,559
708,244
Disposal
-
(1,910)
(142)
(2,052)
Transfer (*)
-
-
956
956
Effect of exchange rate
-
-
243
243
509,277
50,456
245,040
804,773
Beginning of year
-
-
(14,166)
(14,166)
Amortization
-
-
(35,262)
(35,262)
Changes in scope for consolidation
-
-
(5,141)
(5,141)
Disposal
-
-
71
71
Effect of exchange rate
-
-
(41)
(41)
End of year
-
-
(54,539)
(54,539)
(2,775)
(1,067)
-
(3,842)
-
(537)
-
(537)
-
95
-
95
(2,775)
(1,509)
-
(4,284)
Changes in scope for consolidation
End of year
Accumulated amortization:
Accumulated impairment loss:
Beginning of year
Impairment loss
Disposal
End of year
Book value:
Beginning of year
$
5,769 $
32,272 $
34,182 $
72,223
End of year
$
506,502 $
48,947 $
190,501 $
745,950
(*) The book value of ￦1,120 million ($956 thousand) is transferred from property, plant and equipment to intangible assets.
(3) Allocation of amortization on intangible assets for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Cost of sales
￦
Selling and administrative expenses
￦
2,159 ￦
2014
(In thousands)
2,676 $
1,842 $
2,283
69,580
38,651
59,369
32,979
71,739 ￦
41,327 $
61,211 $
35,262
105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(4) Recognized research and development expenses for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In millions)
Selling and administrative expenses
￦
63,472 ￦
(In thousands)
60,383 $
54,157 $
51,521
(5) The Group tests goodwill for impairment annually and cash-generating unit’s recoverable amount calculated by its
value in use. Its value in use, calculated based on the estimated cash flow before income tax on the basis of five
years’ budgets approved by management. Sales growth rate during the period, and long-term growth rate for the
period exceeding, are as follows:
Description
Contents
1.79% - 5.59%
Sales growth rate
0%
Long-term growth rate
14.44%
Pre-tax discount rate
Meanwhile, the result of impairment test of goodwill and cash-generating unit’s carrying amount doesn’t exceed its recoverable
amount.
16. TRADE, OTHER PAYABLES AND LONG-TERM OTHER PAYABLES:
Trade, other and long-term other payables as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Accounts
December 31, 2015 December 31, 2014
(In millions)
Trade payables
Other payables
Accounts payable-trade
Accounts payable-other
Present value of discounts
Accrued expenses
Withholdings
Long-term other payables
106
￦
2,858,033 ￦
2,916,720
2,858,033
2,916,720
760,578
728,119
(379)
(2,154)
32,555
43,299
354,329
215,996
1,147,083
985,260
Long-term accounts payable-other
25,467
31,145
Present value of discounts
(7,261)
(1,391)
Deposits received
527,441
412,196
Present value of discounts
(21,146)
(17,878)
524,501
424,072
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Accounts
December 31, 2015 December 31, 2014
(In thousands)
Trade payables
Accounts payable-trade
Other payables
$
Accounts payable-other
Present value of discounts
2,488,669
2,438,595
2,488,669
648,957
621,262
(323)
(1,838)
27,777
36,945
302,329
184,297
978,740
840,666
Long-term accounts payable-other
21,730
26,574
Present value of discounts
(6,195)
(1,187)
450,035
351,703
Accrued expenses
Withholdings
Long-term other payables
2,438,595 $
Deposits received
Present value of discounts
(18,044)
(15,254)
447,526
361,836
17. BORROWINGS AND DEBENTURES:
(1) Short-term borrowings as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Lender
Annual interest rate
at Dec. 31, 2015
December 31, 2015 December 31, 2014
(In millions)
Trade financing
Woori Bank and others
General loans
KEB Hana Bank and others
Commercial paper
A1 Black T 1st Inc. and others
Operating loans
Construction Guarantee Cooperative and
others
Manufacturing loans
The Export-Import Bank of Korea
0.20% - 1.08%
￦
-
118,044 ￦
133,646
-
1,604
2.03%, 3.03%
79,600
41,000
1.40%, 2.47%
892
901
￦
198,536 ￦
98,444
275,595
Translation into U.S. dollars
Description
Lender
Annual interest rate
at Dec. 31, 2015
December 31, 2015 December 31, 2014
(In thousands)
Trade financing
Woori Bank and others
General loans
KEB Hana Bank and others
Commercial paper
A1 Black T 1st Inc. and others
Operating loans
Construction Guarantee Cooperative and
others
Manufacturing loans
The Export-Import Bank of Korea
0.20% - 1.08%
$
-
100,720 $
114,032
-
1,369
2.03%, 3.03%
67,918
34,983
1.40%, 2.47%
761
769
-
83,997
$
169,399 $
235,149
107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) Long-term borrowings as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Lender
Annual interest rate
at Dec. 31, 2015
December 31, 2015 December 31, 2014
(In millions)
General loans
KEB Hana Bank
Credit loans
Korea Housing Urban Guarantee
Co., Ltd.
3M LIBOR+1.04%
Facility loans
Korea Development Bank and others
￦
3.99% - 8.1%, Return of
non-guaranteed bond (due in three years)
of AA- grade+1.60%
Less: present value of discounts
Less: current portion
52,153 ￦
13,085
44,667
428,105
438,920
493,343
682,684
(4,773)
(6,977)
488,570
675,707
(28,697)
￦
199,097
459,873 ￦
(61,137)
614,570
Translation into U.S. dollars (Note 2)
Description
Lender
Annual interest rate
at Dec. 31, 2015
December 31, 2015 December 31, 2014
(In thousands)
General loans
KEB Hana Bank
Credit loans
Korea Housing Urban Guarantee
Co., Ltd.
Facility loans
Korea Development Bank and others
3M LIBOR+1.04%
$
169,878
-
11,165
38,112
3.99% - 8.1%, Return of
non-guaranteed bond (due in three years)
of AA- grade+1.60%
365,277
374,505
420,941
582,495
Less: present value of discounts
Less: current portion
(4,073)
(5,953)
416,868
576,542
(24,485)
$
108
44,499 $
392,383 $
(52,165)
524,377
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) Debentures issued as of December 31, 2015 and 2014, are as follows:
Description
Year issued
Maturity
Annual
interest rate
Dec. 31, 2015
Korean won
December 31, 2015 December 31, 2014
(In millions)
Unsecured public offered bonds
10/28/2010
28/10/2015
-
Unsecured public offered bonds
06/23/2011
23/06/2015
-
- ￦
100,000
-
Unsecured public offered bonds
09/07/2011
07/09/2016
150,000
4.57%
100,000
Unsecured public offered bonds
03/06/2012
100,000
06/03/2017
4.28%
100,000
Unsecured public offered bonds
10/30/2012
100,000
30/10/2017
3.35%
200,000
200,000
Unsecured public offered bonds
04/11/2013
Unsecured public offered bonds
04/11/2013
11/04/2018
3.07%
100,000
100,000
11/04/2020
3.40%
100,000
Unsecured public offered bonds
10/11/2013
100,000
11/10/2016
3.39%
110,000
Unsecured public offered bonds
110,000
10/11/2013
11/10/2018
3.80%
90,000
90,000
Unsecured public offered bonds
02/18/2014
18/02/2019
3.77%
200,000
200,000
Unsecured public offered bonds
08/29/2014
29/08/2021
3.64%
150,000
150,000
Unsecured public offered bonds
02/16/2015
16/02/2020
2.57%
150,000
-
Unsecured public offered bonds
02/16/2015
16/02/2022
2.98%
200,000
-
Unsecured public offered bonds
07/02/2012
02/07/2015
-
-
50,000
Unsecured public offered bonds
09/25/2014
25/09/2017
2.62%
100,000
100,000
Unsecured public offered bonds
09/25/2014
25/09/2019
2.92%
100,000
100,000
Unsecured public offered bonds
04/13/2015
13/04/2020
2.12%
100,000
-
Unsecured public offered bonds
04/13/2015
13/04/2022
2.54%
100,000
-
Unsecured public offered bonds
06/17/2015
17/06/2020
3.41%
50,000
-
Privately placed bonds
09/17/2013
17/09/2018
-
￦
Discount on bonds
Current portion of debentures issued
Discount on bonds
Debentures issued (non-current)
Discount on bonds
-
10
1,950,000
1,650,010
(4,436)
(3,889)
1,945,564
1,646,121
210,000
300,000
(169)
(192)
209,831
299,808
1,740,000
1,350,010
(4,267)
￦
1,735,733 ￦
(3,697)
1,346,313
109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Description
Annual
interest rate
Dec. 31, 2015
Translation into U.S. dollars (Note 2)
Year issued
Maturity
Unsecured public offered bonds
10/28/2010
10/28/2015
-
Unsecured public offered bonds
06/23/2011
06/23/2015
-
Unsecured public offered bonds
09/07/2011
09/07/2016
4.57%
85,324
85,324
Unsecured public offered bonds
03/06/2012
03/06/2017
4.28%
85,324
85,324
Unsecured public offered bonds
10/30/2012
10/30/2017
3.35%
170,649
170,649
Unsecured public offered bonds
04/11/2013
04/11/2018
3.07%
85,324
85,324
Unsecured public offered bonds
04/11/2013
04/11/2020
3.40%
85,324
85,324
Unsecured public offered bonds
10/11/2013
10/11/2016
3.39%
93,857
93,857
Unsecured public offered bonds
10/11/2013
10/11/2018
3.80%
76,792
76,792
Unsecured public offered bonds
02/18/2014
02/18/2019
3.77%
170,649
170,649
December 31, 2015 December 31, 2014
(In thousands)
- $
$
85,324
-
127,986
Unsecured public offered bonds
08/29/2014
08/29/2021
3.64%
127,986
127,986
Unsecured public offered bonds
02/16/2015
02/16/2020
2.57%
127,986
-
Unsecured public offered bonds
02/16/2015
02/16/2022
2.98%
170,649
-
Unsecured public offered bonds
07/02/2012
07/02/2015
-
42,662
Unsecured public offered bonds
09/25/2014
09/25/2017
2.62%
85,324
85,324
Unsecured public offered bonds
09/25/2014
09/25/2019
2.92%
85,324
85,324
Unsecured public offered bonds
04/13/2015
04/13/2020
2.12%
85,324
-
Unsecured public offered bonds
04/13/2015
04/13/2022
2.54%
85,324
-
Unsecured public offered bonds
06/17/2015
06/17/2020
3.41%
42,663
-
Privately placed bonds
09/17/2013
09/17/2018
-
-
9
1,663,823
1,407,858
-
(3,785)
(3,318)
1,660,038
1,404,540
179,181
255,973
Discount on bonds
Current portion of debentures issued
(144)
(164)
179,037
255,809
1,484,642
1,151,885
Discount on bonds
Debentures issued (non-current)
(3,641)
Discount on bonds
(3,154)
1,481,001 $
$
1,148,731
18. PROVISIONS:
(1) The changes in provisions for the year ended December 31, 2015, are as follows:
Korean won
Description
Beginning
of year
Accrual
Reversal
Use
Effect of
exchange
rate
Transfer
End of
year
(In millions)
Provision for construction
warranties
￦
Provision for litigation
Other provisions
￦
110
361,184 ￦
68,225 ￦
(20,186) ￦
(42,864) ￦
6,334 ￦
6,212 ￦
378,905
38,605
3,394
(8,627)
(24,028)
-
-
9,344
6,296
57,171
-
(63,467)
-
-
-
6,334 ￦
6,212 ￦
406,085 ￦
128,790 ￦
(28,813) ￦
(130,359) ￦
388,249
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Beginning
of year
Accrual
Reversal
Use
Effect of
exchange
rate
Transfer
End of
year
(In thousands)
Provision for construction
warranties
308,177 $
$
Provision for litigation
Other provisions
(17,224) $
(36,572) $
5,404 $
5,301 $
32,939
2,896
(7,361)
(20,502)
-
-
5,373
48,781
-
(54,154)
-
-
5,404 $
5,301 $
346,489 $
$
58,212 $
109,889 $
(24,585) $
(111,228) $
323,298
7,972
331,270
(2) The changes in provisions for the year ended December 31, 2014, are as follows:
Korean won
Description
Beginning
of year
Accrual
Reversal
Use
Effect of
Business
exchange combination
rate
Transfer
End of
year
(In millions)
Provision for construction warranties
￦
Provision for litigation
267,481 ￦
(12,451) ￦
(45,888) ￦
- ￦
5,010 ￦
66,014 ￦
84,463
9,121
(32,188)
(22,791)
-
-
-
-
44,494
-
(7,756)
(30,442)
-
-
Other provisions
￦
81,018 ￦
351,944 ￦
134,633 ￦
(44,639) ￦
(76,435) ￦
(30,442) ￦
5,010 ￦
361,184
38,605
6,296
66,014 ￦
406,085
Translation into U.S. dollars (Note 2)
Description
Beginning
of year
Accrual
Reversal
Use
Effect of
Business
exchange combination
rate
Transfer
End of
year
(In thousands)
Provision for construction warranties
$
Provision for litigation
Other provisions
$
228,226 $
69,128 $
(10,624) $
(39,154) $
- $
4,275 $
56,326 $
72,067
7,782
(27,464)
(19,446)
-
-
-
-
37,964
-
(6,618)
(25,973)
-
-
300,293 $
114,874 $
(38,088) $
(65,218) $
(25,973) $
4,275 $
56,326 $
308,177
32,939
5,373
346,489
19. OTHER CURRENT FINANCIAL LIABILITIES AND OTHER NON-CURRENT FINANCIAL LIABILITIES:
Other current financial liabilities and other non-current financial liabilities as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Accounts
December 31, 2015 December 31, 2014
(In millions)
Other current financial liabilities
Current provision for financial guarantees
Other non-current financial liabilities
Non-current provision for financial guarantees
￦
15,820 ￦
16,338
70,781
65,800
111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Accounts
December 31, 2015 December 31, 2014
(In thousands)
Other current financial liabilities
Current provision for financial guarantees
Other non-current financial liabilities
Non-current provision for financial guarantees
$
13,498 $
13,940
60,393
56,143
20. OTHER CURRENT LIABILITIES AND OTHER NON-CURRENT LIABILITIES:
Other current liabilities and other non-current liabilities as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Accounts
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In millions)
Other current liabilities
Value-added tax withheld
￦
Other advance receipts
4,259
Unearned income
Other non-current l iabilities
34,813 ￦
Long-term unearned income
(In thousands)
106,737 $
93,971
29,704 $
3,634
91,073
80,180
3,694
4,699
3,152
4,009
42,766
205,407
36,490
175,262
24,467
17,190
20,876
14,667
24,467
17,190
20,876
14,667
21. RETIREMENT BENEFIT PLAN:
The Group operates a retirement benefit plan for its employees, and according to the plan, the employees will be paid their average
salary amount of the final three months multiplied by the number of years vested, adjusted for payment rate and other. The actuarial
valuation of plan assets and the retirement benefit liabilities is performed by a reputable actuary using the pension actuarial method.
(1) The amounts recognized in the consolidated statements of financial position related to retirement benefit obligation as
of December 31, 2015 and 2014, are as follows:
Korean won
Description
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In millions)
Present value of defined benefit obligation
￦
Retirement benefit obligation
112
673,241 ￦
(504,956)
Fair value of plan assets
￦
168,285 ￦
(In thousands)
678,440 $
(351,282)
327,158 $
574,438 $
(430,850)
143,588 $
578,874
(299,729)
279,145
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in present value of defined benefit obligation for the years ended December 31, 2015 and 2014, are as
follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Beginning of year
(In thousands)
678,440 ￦
￦
2014
547,740 $
578,874 $
467,355
Current service cost
91,789
72,194
78,318
61,599
Interest cost
19,779
21,762
16,876
18,568
Remeasurements:
Changes in demographic assumptions
Changes in financial assumptions
Experience adjustments
Acquisition through business combination
Transfer in between affiliates
Benefits paid
End of year
￦
(1,098)
8,177
(937)
6,977
(70,060)
59,911
(59,778)
51,119
36,061
(4,849)
30,769
(4,137)
89
38,777
76
33,086
3,983
3,269
3,398
2,789
(85,742)
(68,541)
(73,158)
(58,482)
673,241 ￦
678,440 $
574,438 $
578,874
(3) The changes in fair value of plan assets for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Beginning of year
(In thousands)
351,282 ￦
￦
325,772 $
10,073
Expected return on plan assets
2014
299,729 $
277,962
13,256
8,595
11,311
(2,444)
(2,691)
(2,085)
(2,296)
-
30,063
-
25,651
Remeasurements:
Changes in financial assumptions
Acquisition through business combination
3,983
2,426
3,398
2,070
Contributions from the employer
208,959
43,110
178,293
36,783
Benefits paid
(66,803)
(61,910)
(56,999)
(52,824)
(94)
1,256
(81)
504,956 ￦
351,282 $
430,850 $
Transfer in between affiliates
Transfer
End of year
￦
1,072
299,729
(4) Income and loss related to defined benefit plan for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
Current service cost
￦
Interest cost
Expected return on plan assets
￦
2014
(In thousands)
91,789 ￦
72,194 $
78,318 $
61,599
19,779
21,762
16,876
18,568
(10,073)
(13,256)
(8,595)
(11,311)
101,495 ￦
80,700 $
86,599 $
68,856
Selling and administrative expenses
23,612
20,238
20,147
17,268
Manufacturing costs
77,883
60,462
66,452
51,588
113
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(5) The changes in remeasurements of defined benefit plan recognized as other comprehensive income (loss) for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In millions)
Beginning of year
￦
(In thousands)
(164,188) ￦
(114,495) $
(140,092) $
(97,691)
Changes
32,653
(65,930)
27,861
(56,255)
Less: tax effect
(8,351)
16,237
(7,126)
13,854
(164,188) $
(119,357) $
End of year
￦
(139,886) ￦
(140,092)
(6) The fair value of plan assets as of December 31, 2015 and 2014, consists of the following:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In millions)
Cash and cash equivalents
(In thousands)
9,471 ￦
￦
7,446 $
8,081 $
6,353
Financial instruments
115,653
161,608
98,680
137,891
Insurance contracts
376,430
178,710
321,186
152,483
3,402
Others
￦
504,956 ￦
3,518
2,903
351,282 $
430,850 $
3,002
299,729
Investment strategies and policies for plan assets seek a balanced approach of minimization of risk and return of the highest profit.
Moreover, actual profit from plan assets as of December 31, 2015 and 2014, is ￦7,629 million ($6,509 thousand) and ￦10,565
million ($9,015 thousand), respectively.
(7) Actuarial assumptions used as of December 31, 2015 and 2014, are as follows:
Description
December 31, 2015
December 31, 2014
Discount rate
2.32% - 3.43%
2.42% - 3.11%
Expected rate of salary increase
3.80% - 4.14%
4.35% - 5.00%
(8) The sensitivity analysis below has been determined based on reasonably possible changes in actuarial assumptions
while holding all other assumptions constant as of December 31, 2015 and 2014.
Korean won
December 31, 2015
Description
Increase
December 31, 2014
Decrease
Increase
Decrease
(In millions)
1% change of discount rate
1% change in expected rate of salary increase
114
￦
(50,476) ￦
58,172
57,835 ￦
(51,652)
(59,583) ￦
68,992
69,239
(60,475)
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015
Description
Increase
December 31, 2014
Decrease
Increase
Decrease
(In thousands)
1% change of discount rate
(43,068) $
$
1% change in expected rate of salary increase
49,347 $
49,635
(50,839) $
(44,072)
59,078
58,867
(51,600)
The above sensitivity analysis does not demonstrate actual fluctuations in defined benefit obligation as their actuarial assumptions
are correlated and adjustment to a single set of assumption would not occur independent of others. Moreover, the present value of
defined benefit obligation in the above sensitivity analysis was calculated using the projected unit credit method, which was used to
calculate retirement benefit obligation in the consolidated statements of financial position.
22. DERIVATIVE INSTRUMENTS:
(1) Fair values of derivatives as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Description
Assets
(current)
Assets
(non-current)
December 31, 2014
Liabilities
(current)
Liabilities
(non-current)
Assets
(current)
Assets
(non-current)
Liabilities
(current)
Liabilities
(non-current)
(In millions)
Range forward
￦
Interest rate swap
￦
- ￦
- ￦
- ￦
-
-
-
261
- ￦
- ￦
- ￦
- ￦
261 ￦
11 ￦
11 ￦
- ￦
- ￦
-
-
266
-
- ￦
- ￦
266
Translation into U.S. dollars (Note 2)
December 31, 2015
Description
Assets
(current)
Assets
(non-current)
December 31, 2014
Liabilities
(current)
Liabilities
(non-current)
Assets
(current)
Assets
(non-current)
Liabilities
(current)
Liabilities
(non-current)
(In thousands)
Range forward
$
- $
- $
- $
9 $
- $
- $
Interest rate swap
$
-
-
-
223
- $
-
-
-
227
-
$
- $
- $
- $
223 $
9 $
- $
- $
227
(2) Gain (loss) included in net income related to the derivative instruments for the years ended December 31, 2015 and
2014, is as follows:
Korean won
2015
Description
Gain (loss) on
transaction of
derivatives
2014
Gain (loss) on
valuation of
derivatives
Gain (loss) on
transaction of
derivatives
Gain (loss) on
valuation of
derivatives
(In millions)
Currency forwards
Range forward
Interest rate swap
￦
(166) ￦
- ￦
-
-
(166)
(5) ￦
-
-
11
5
-
(266)
5
(5)
(255)
115
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2015
Gain (loss) on
transaction of
derivatives
Description
2014
Gain (loss) on
valuation of
derivatives
Gain (loss) on
transaction of
derivatives
Gain (loss) on
valuation of
derivatives
(In millions)
Currency forwards
(142) $
$
Range forward
Interest rate swap
- $
-
-
(142)
(4) $
-
-
9
4
-
(227)
4
(4)
(218)
23. FAIR VALUE AND OFFSET OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:
(1) The book value and fair value of financial assets as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Category
Consolidated statements of
financial position
Book value
December 31, 2014
Fair value
Book value
Fair value
(In millions)
Loans and receivables
Cash and cash equivalents
￦
Short-term financial instruments
1,997,405 ￦
1,997,405 ￦
1,032,308
1,032,308
2,542,381 ￦
284,202
2,542,381
284,202
Trade receivables
2,507,586
2,507,586
1,792,310
1,792,310
Other receivables
1,466,345
1,466,345
1,342,637
1,342,637
396,554
396,554
372,070
372,070
1,003,689
1,003,689
736,272
736,272
Long-term financial instruments
101,396
101,396
14,372
14,372
AFS financial assets
AFS financial assets (non-current)
429,791
429,791
466,564
466,564
Held-to-maturity fi nancial assets
Held-to-maturity financial assets
(current)
64,739
64,739
22,550
22,550
Held-to-maturity financial assets
(non-current)
45,123
45,123
56,457
56,457
Long-term accounts receivable
Long-term other receivables
Derivative assets
-
Derivative assets (current)
￦
116
9,044,936 ￦
9,044,936 ￦
11
7,629,826 ￦
11
7,629,826
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015
Consolidated statements of
financial position
Category
Book value
December 31, 2014
Fair value
Book value
Fair value
(In thousands)
Cash and cash equivalents
Loans and receivables
1,704,270 $
$
Short-term financial instruments
1,704,270 $
2,169,267 $
2,169,267
880,809
880,809
242,493
242,493
Trade receivables
2,139,578
2,139,578
1,529,275
1,529,275
Other receivables
1,251,148
1,251,148
1,145,595
1,145,595
Long-term accounts receivable
338,357
338,357
317,466
317,466
Long-term other receivables
856,390
856,390
628,218
628,218
86,515
86,515
12,263
12,263
366,716
366,716
398,092
398,092
Long-term financial instruments
AFS financial assets
AFS financial assets (non-current)
Held-to-maturity fi nancial assets
Held-to-maturity financial assets
(current)
55,238
55,238
19,241
19,241
Held-to-maturity financial assets
(non-current)
38,501
38,501
48,172
48,172
Derivative assets
-
Derivative assets (current)
$
-
7,717,522 $
9
7,717,522 $
9
6,510,091 $
6,510,091
(2) The book value and fair value of financial liabilities as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Category
Consolidated statements of
financial position
Book value
December 31, 2014
Fair value
Book value
Fair value
(In millions)
Financial liabilities carried
at amortized cost
Trade payables
￦
Other payables
Short-term borrowings
Current portion of long-term
borrowings and debentures
Long-term other p
ayables
Debentures issued
2,858,033 ￦
2,916,720 ￦
2,916,720
1,147,083
1,147,083
985,260
985,260
198,536
198,536
275,595
275,595
238,528
242,665
360,945
366,846
524,501
524,501
424,072
424,072
1,735,733
1,786,035
1,346,313
1,393,834
459,873
459,873
614,570
614,570
Other financial liabilities (current)
15,820
15,820
16,338
16,338
Other financial liabilities (noncurrent)
70,781
70,781
65,800
65,800
Long-term borrowings
Derivative liabilities
2,858,033 ￦
261
Derivative liabilities (non-current)
￦
7,249,149 ￦
261
7,303,588 ￦
266
7,005,879 ￦
266
7,059,301
117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
December 31, 2015
Category
Consolidated statements of
financial position
Book value
December 31, 2014
Fair value
Book value
Fair value
(In thousands)
Financial liabilities carried
at amortized cost
Trade payables
$
2,438,595 $
2,488,669 $
2,488,669
Other payables
978,740
978,740
840,666
840,666
Short-term borrowings
169,399
169,399
235,149
235,149
Current portion of long-term
borrowings and debentures
203,522
207,052
307,974
313,009
Long-term other p
ayables
447,526
447,526
361,836
361,836
1,481,001
1,523,921
1,148,731
1,189,278
392,383
392,383
524,377
524,377
Other financial liabilities (current)
13,498
13,498
13,940
13,940
Other financial liabilities (noncurrent)
60,393
60,393
56,143
56,143
Debentures issued
Long-term borrowings
Derivative liabilities
2,438,595 $
223
Derivative liabilities (non-current)
$
6,185,280 $
223
6,231,730 $
227
5,977,712 $
227
6,023,294
(3) The Group estimates that the acquisition cost or amortized cost of financial assets and financial liabilities is close to
the fair value, except AFS financial assets, derivative assets and liabilities. As the fair value is not reliably measurable
for 80 non-marketable equity securities, including S-Y highway Co., Ltd. (￦54,714 million ($46,684 thousand)), among
AFS financial assets, those non-marketable equity securities are reported at acquisition cost.
(4) Financial instruments that are measured at fair value subsequent to initial recognition are grouped into Levels 1, 2 or 3,
based on the degree to which the fair value is observable, as described below:
① The standard classification of fair value
Level 1:
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2:
Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3:
Inputs are unobservable inputs for the asset or liability.
②Financial instruments that are measured subsequent to initial recognition at fair value according to fair value hierarchy levels as of
December 31, 2015, are as follows:
Korean won
Description
Level 1
Level 2
Level 3
Total
(In millions)
AFS financial assets (non-current)
Derivative liabilities (non-current)
118
￦
48,634 ￦
-
202,675 ￦
261
123,768 ￦
-
375,077
261
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Level 1
Level 2
Level 3
Total
(In thousands)
AFS financial assets (non-current)
41,497 $
$
Derivative liabilities (non-current)
172,931 $
-
105,604 $
223
320,032
-
223
③ Financial instruments that are measured subsequent to initial recognition at fair value according to fair value hierarchy levels as of
December 31, 2014, are as follows:
Korean won
Description
Level 1
Level 2
Level 3
Total
(In millions)
AFS financial assets (non-current)
￦
111,011 ￦
106,197 ￦
183,324 ￦
400,532
Derivative assets (current)
-
11
-
11
Derivative liabilities (non-current)
-
266
-
266
Translation into U.S. dollars (Note 2)
Description
Level 1
Level 2
Level 3
Total
(In thousands)
AFS financial assets (non-current)
$
94,719 $
90,612 $
156,419 $
341,750
Derivative assets (current)
-
9
-
9
Derivative liabilities (non-current)
-
227
-
227
The Group recognizes transfers between levels of the fair value hierarchy at the date of the event or change in circumstances that
caused the transfer.
④ Financial liabilities that are not measured subsequent to initial recognition at fair value, but are disclosed according to fair value
hierarchy levels as of December 31, 2015 and 2014, are as follows:
Korean won
Description
December 31, 2015 December 31, 2014
Level 2
Level 2
(In millions)
Current portion of long-term borrowings and debentures
￦
Debentures issued
213,968 ￦
1,786,035
305,708
1,393,834
Translation into U.S. dollars (Note 2)
Description
December 31, 2015 December 31, 2014
Level 2
Level 2
(In thousands)
Current portion of long-term borrowings and debentures
Debentures issued
$
182,567 $
1,523,921
260,843
1,189,278
119
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
⑤ The details of valuation techniques and inputs for measuring fair values of the financial instrument classified as Level 2 are as
follows:
- AFS financial assets
AFS financial assets classified as Level 2 are valued using observable inputs rather than a quoted price in an active market.
- Derivative financial instrument
The Group’s derivative financial instrument solely consists of currency forwards. Fair value of the currency forwards is measured
based on forward market exchange rates of the same remaining terms at the end of the reporting period.
If the forward exchange rate, which has the same period with remaining period of currency forward, is not quoted in the current
market, fair value is measured using estimates of similar period of forward exchange rate by applying interpolation method with
quoted forward exchange rate. Discount rate used in the valuation was determined by yield curve derived from market interest
rates as of the reporting date.
Fair value measurement for the currency forwards is categorized within Level 2 as inputs used for valuation are derived from
observable market forward rates and the yield curve.
- Current portion of long-term borrowings and debentures and debentures issued
The fair value of unsecured debentures is calculated by discounting the future cash flow at the market interest rate that is applied
to other companies that have similar credit ratings as the issuer of debt security.
⑥ The valuation methods used to evaluate fair values of each non-marketable securities of AFS financial assets in Level 3 as of
December 31, 2015, are as follows:
Hyundai Finance
Corporation
Description
Seoul-Chuncheon
Highway Co., Ltd.
Hyundai Autoever
Corp.
Fair value (Korean won (in millions))
￦
13,204 ￦
31,855 ￦
14,864
Fair value (translation into U.S. dollars
(Note 2) (in thousands))
$
11,266 $
27,180 $
12,683
Valuation approaches
Asset-based approach
Earnings capitalized
approach
Earnings capitalized
approach, Comparable
company approach
Valuation techniques
Net asset value method
Discounted free
cash flow model
Discounted free cash flow
model,
Comparable company
approach
Discounted interest rate (%)
-
Cost of equity (11.95)
Cost of equity (12.00)
Relationship between unobservable inputs and fair value estimates
-
Fair values of unlisted
shares will increase if
cost of equity decreases.
Fair values of unlisted
shares will increase if cost
of equity decreases.
Moreover, The 2nd Youngdong Highway Co., Ltd. and The 2nd Seoul-Incheon Linking Highway Co., Ltd. are valuated at its recent
public offering price of paid-in capital increase and the fair value per stock is ￦5,000 ($4), respectively. The acquisition cost and fair
value of The 2nd Youngdong Highway Co., Ltd. are ￦45,820 million ($39,098 thousand) and ￦45,820 million ($39,098 thousand),
respectively, as of December 31, 2015. The acquisition cost and fair value of The 2nd Seoul-Incheon Linking Highway Co., Ltd. are
￦18,025 million ($15,382 thousand) and ￦18,025 million ($15,382 thousand), respectively, as of December 31, 2015.
120
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
⑦Hyundai Finance Corporation has changed its business model; therefore, valuation techniques for measuring fair value have
changed from income approach to market approach. Other than that, there are no changes in the valuation techniques for
measuring fair value of financial instruments that are classified as Level 2 and Level 3 during the current accounting period.
⑧ The influence of significant but unobservable inputs, related to the fair value measurement of Level 3 financial instruments found as
fair values on a recurring basis in the consolidated statements of financial position, for other accumulated comprehensive income
is as follows:
Korean won
2015
Description
Reasonable
fluctuations
of
Unobservable inputs unobservable
inputs
Positive
fluctuation
2014
Negative
fluctuation
Positive
fluctuation
Negative
fluctuation
(In millions)
Hyundai Finance Corporation
Discounted interest rate
+/- 1.00%
- ￦
Seoul-Chuncheon Highway Co., Ltd.
Discounted interest rate
+/- 1.00%
5,119
(4,081)
5,350
(4,490)
Hyundai Autoever Corp
Discounted interest rate
+/- 1.00%
484
(409)
-
-
￦
- ￦
347 ￦
(270)
Translation into U.S. dollars (Note 2)
2015
Description
Reasonable
of
Unobservable inputs fluctuations
unobservable
inputs
Positive
fluctuation
2014
Negative
fluctuation
Positive
fluctuation
Negative
fluctuation
(In thousands)
Hyundai Finance Corporation
Discounted interest rate
+/- 1.00%
- $
Seoul-Chuncheon Highway Co., Ltd.
Discounted interest rate
+/- 1.00%
4,368
(3,482)
4,565
(3,831)
Hyundai Autoever Corp
Discounted interest rate
+/- 1.00%
413
(349)
-
-
$
- $
296 $
(230)
⑨ The changes of book values of AFS financial assets in Level 3 for the year ended December 31, 2015, are as follows:
Korean won
Description
Beginning of year
Disposal
Valuation
Transfer (*)
End of year
(In millions)
AFS financial assets
￦
183,324 ￦
(90,675) ￦
4,727 ￦
26,392 ￦
123,768
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Disposal
Valuation
Transfer (*)
End of year
(In thousands)
AFS financial assets
$
156,420 $
(77,368) $
4,033 $
22,519 $
105,604
(*) For the year ended December 31, 2015, Kwanak Construction & Equipment Service Co., Ltd. was transferred classification of fair value from Level 3 to Level 1 and
Hyundai Autoever Corporation classified to Level 3 through valuation. The 2nd Seoul-Incheon Linking Highway Co., Ltd. was transferred from investments in associates
to AFS financial assets.
121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
⑩ The changes in book values of AFS financial assets in Level 3 for the year ended December 31, 2014, are as follows:
Korean won
Description
Beginning of year
Acquisition
Valuation
Transfer (*)
End of year
(In millions)
AFS financial assets
￦
134,069 ￦
5,590 ￦
12,304 ￦
31,361 ￦
183,324
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Acquisition
Valuation
Transfer (*)
End of year
(In thousands)
AFS financial assets
$
114,393 $
4,770 $
10,498 $
26,759 $
156,420
(*) For the year ended December 31, 2014, Busan Finance Center PFV. Co., Ltd. was transferred from AFS financial assets to investments in associates and The 2nd
Youngdong Highway Co., Ltd. was transferred from investments in associates to AFS financial assets.
⑪ The changes in accumulated other comprehensive income from AFS financial assets in Level 3 for the years ended December 31, 2015 and
2014, are as follows:
Korean won
2015
Description
Beginning of year
Valuation
Disposal
Derecognition
End of year
(In millions)
Amount before tax
￦
Tax effect
27,168 ￦
(6,575)
Amount after tax
￦
4,727 ￦
(22,937) ￦
(1,144)
20,593 ￦
5,552
3,583 ￦
(2,204) ￦
533
(17,385) ￦
(1,671) ￦
6,754
(1,634)
5,120
Translation into U.S. dollars (Note 2)
2015
Description
Beginning of year
Disposal
Valuation
Derecognition
End of year
(In thousands)
Amount before tax
$
Tax effect
23,181 $
(5,610)
Amount after tax
$
4,033 $
(19,570) $
(1,881) $
5,763
4,737
455
(1,394)
(14,833) $
(1,426) $
4,369
(976)
17,571 $
3,057 $
Korean won
2014
Description
Beginning of year
Valuation
Derecognition
End of year
(In millions)
Amount before tax
￦
Tax effect
Amount after tax
122
￦
15,166 ￦
12,304 ￦
(3,670)
(2,978)
11,496 ￦
9,326 ￦
(302) ￦
73
(229) ￦
27,168
(6,575)
20,593
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2014
Description
Beginning of year
Valuation
Derecognition
End of year
(In thousands)
Amount before tax
$
Tax effect
Amount after tax
12,940 $
10,498 $
(3,131)
(2,541)
$
9,809 $
(257) $
7,957 $
23,181
62
(5,610)
(195) $
17,571
(5) The offset between financial assets and financial liabilities
Financial assets that are subject to offsetting, enforceable master netting agreement or other similar agreements as of December 31,
2015 and 2014, consist of the following:
Korean won
For the year ended December 31, 2015
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
assets
liabilities set off
Net amounts of
financial assets
presented in the
consolidated
statement of
financial position
(In millions)
Trade receivables
￦
Other receivables
￦
139,448 ￦
122,494
261,942 ￦
(57,658) ￦
(46,730)
(104,388) ￦
81,790
75,764
157,554
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
assets
liabilities set off
Net amounts of
financial assets
presented in the
consolidated
statement of
financial position
(In thousands)
Trade receivables
$
Other receivables
$
118,983 $
104,517
223,500 $
(49,196) $
(39,872)
(89,068) $
69,787
64,645
134,432
Korean won
For the year ended December 31, 2014
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
assets
liabilities set off
Net amounts of
financial assets
presented in the
consolidated
statement of
financial position
(In millions)
Trade receivables
￦
Other receivables
227,636 ￦
225,758
￦
453,394 ￦
(42,189) ￦
185,447
(71,562)
154,196
(113,751) ￦
339,643
123
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
assets
liabilities set off
Net amounts of
financial assets
presented in the
consolidated
statement of
financial position
(In thousands)
Trade receivables
$
Other receivables
$
194,229 $
(35,998) $
158,231
192,626
(61,059)
131,567
386,855 $
(97,057) $
289,798
Financial liabilities that are subject to offsetting, enforceable master netting agreement or other similar agreements as of December 31,
2015 and 2014, consist of the following:
Korean won
For the year ended December 31, 2015
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
liabilities
assets set off
Net amounts of
financial liabilities
presented in the
consolidated
statement of
financial position
(In millions)
Trade payables
￦
1,399 ￦
137,924
Other payables
(127) ￦
(104,172)
300
Long-term other payables
￦
139,623 ￦
1,272
33,752
(89)
211
(104,388) ￦
35,235
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2015
Description
Gross amounts of
Gross amounts of
recognized financial recognized financial
liabilities
assets set off
Net amounts of
financial liabilities
presented in the
consolidated
statement of
financial position
(In thousands)
Trade payables
$
Other payables
Long-term other payables
$
124
1,194 $
(109) $
1,085
117,683
(88,884)
28,799
256
(76)
180
119,133 $
(89,069) $
30,064
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
For the year ended December 31, 2014
Gross amounts of
Gross amounts of
recognized financial recognized financial
liabilities
assets set off
Description
Net amounts of
financial liabilities
presented in the
consolidated
statement of
financial position
(In millions)
Trade payables
66,210 ￦
￦
(50,874) ￦
195,239
Other payables
77
Long-term other payables
￦
15,336
(62,834)
132,405
(43)
261,526 ￦
34
(113,751) ￦
147,775
Translation into U.S. dollars (Note 2)
For the year ended December 31, 2014
Gross amounts of
Gross amounts of
recognized financial recognized financial
liabilities
assets set off
Description
Net amounts of
financial liabilities
presented in the
consolidated
statement of
financial position
(In thousands)
Trade payables
56,493 $
$
Other payables
166,586
(53,612)
66
(37)
Long-term other payables
$
(43,408) $
223,145 $
13,085
112,974
29
(97,057) $
126,088
24. FINANCIAL INCOME (EXPENSES) AND OTHER COMPREHENSIVE INCOME (LOSS) BY CATEGORIES OF
FINANCIAL ASSETS AND LIABILITIES:
(1) Financial income (expenses) and other comprehensive income (loss) by categories of financial assets and liabilities for
the year ended December 31, 2015, are as follows:
Korean won
Description
Accounts
Loans and AFS financial
receivables
assets
Financial
liabilities
carried at
amortized
cost
Held-tomaturity
financial
assets
Derivative
instruments
Total
(In millions)
Gain (loss)
Interest income (expenses)
Dividend income
Gain (loss) on foreign currency
transactions
Gain (loss) on foreign currency translation
Other comprehensive income (loss)
￦
68,973 ￦
- ￦
1,895 ￦ (103,081) ￦
- ￦ (32,213)
-
2,805
-
-
-
2,805
5,359
-
-
(19,791)
-
(14,432)
26,555
-
-
(1,107)
-
25,448
Gain (loss) on disposal
-
35,894
-
-
(166)
35,728
Gain (loss) on valuation
-
-
-
-
5
5
Reversals (impairment loss)
-
(85,609)
-
-
-
(85,609)
100,887
(46,910)
1,895
(123,979)
(161)
(68,268)
-
(7,321)
-
-
-
(7,321)
Gain (loss) on valuation
125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Accounts
Loans and AFS financial
receivables
assets
Financial
liabilities
carried at
amortized
cost
Held-tomaturity
financial
assets
Derivative
instruments
Total
(In thousands)
Gain (loss)
Interest income (expenses)
$
Dividend income
Gain (loss) on foreign currency
transactions
Gain (loss) on foreign currency translation
Gain (loss) on disposal
Other comprehensive income (loss)
58,851 $
- $
1,617 $
(87,953) $
- $
(27,485)
-
2,393
-
-
-
2,393
4,573
-
-
(16,887)
-
(12,314)
22,658
-
-
(945)
-
21,713
-
30,627
-
-
(142)
30,485
Gain (loss) on valuation
-
-
-
-
4
4
Reversal (impairment loss)
-
(73,045)
-
-
-
(73,045)
86,082
(40,025)
1,617
(105,785)
(138)
(58,249)
-
(6,247)
-
-
-
(6,247)
Gain (loss) on valuation
(2) Financial income (expenses) and other comprehensive income (loss) by categories of financial assets and liabilities for
the year ended December 31, 2014, are as follows:
Korean won
Description
Accounts
Loans and AFS financial
receivables
assets
Financial
liabilities
carried at
amortized
cost
Held-tomaturity
financial
assets
Derivative
instruments
Total
(In millions)
Gain (loss)
Interest income (expenses)
Dividend income
Gain (loss) on foreign currency transactions
Gain (loss) on foreign currency translation
Gain (loss) on disposal
Other comprehensive income (loss)
126
￦
65,493 ￦
- ￦
2,367 ￦ (105,527) ￦
- ￦ (37,667)
-
5,675
-
-
-
5,675
(254)
-
-
(906)
-
(1,160)
9,241
-
-
(6,176)
-
3,065
-
309
-
-
(5)
304
Gain (loss) on valuation
-
-
-
-
(255)
(255)
Reversal (impairment loss)
-
(8,275)
-
-
-
(8,275)
74,480
(2,291)
2,367
(112,609)
(260)
(38,313)
-
(2,106)
-
-
-
(2,106)
Gain (loss) on valuation
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Loans and AFS financial
receivables
assets
Accounts
Financial
liabilities
carried at
amortized
cost
Held-tomaturity
financial
assets
Derivative
instruments
Total
(In thousands)
Gain (loss)
Interest income (expenses)
55,881 $
$
Dividend income
Gain (loss) on foreign currency transactions
Gain (loss) on foreign currency translation
2,020 $
(90,040) $
- $
(32,139)
4,842
-
-
-
(214)
-
-
(773)
-
(987)
7,885
-
-
(5,270)
-
2,615
-
263
-
-
(4)
259
Gain (loss) on disposal
Other comprehensive income (loss)
- $
-
4,842
Gain (loss) on valuation
-
-
-
-
(218)
(218)
Reversal (impairment loss)
-
(7,061)
-
-
-
(7,061)
63,552
(1,956)
2,020
(96,083)
(222)
(32,689)
-
(1,797)
-
-
-
(1,797)
Gain (loss) on valuation
25. CAPITAL STOCK AND OTHER CONTRIBUTED CAPITAL:
(1) Capital stock as of December 31, 2015 and 2014, is as follows:
Korean won
Description
No. of shares
authorized
No. of shares
issued
6,925,000,000
111,355,765
75,000,000
98,856
Par value
December 31, 2015 December 31, 2014
(In millions)
Common stock
Preferred stock(*)
5,000 ￦
￦
5,000
556,779 ￦
556,779
494
￦
557,273 ￦
494
557,273
Translation into U.S. dollars (Note 2)
Description
No. of shares
authorized
No. of shares
issued
6,925,000,000
111,355,765
75,000,000
98,856
Par value
December 31, 2015 December 31, 2014
(In thousands)
Common stock
Preferred stock(*)
$
4 $
4
475,067 $
422
$
475,489 $
475,067
422
475,489
(*) Preferred stocks are entitled to receive 1% above the cash dividend rate on common stocks. If common stocks are not entitled to receive cash dividend, the preferred
stocks have no rights in relation to receipt of cash dividends, non-cumulative. Residual income will be distributed equally between common stocks and preferred stocks.
127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The details of other contributed capital as of December 31, 2015 and 2014, are as follows:
Korean won
Description
December 31, 2015 December 31, 2014
(In millions)
Capital surplus
￦
Gain from reduction of capital
287,481 ￦
287,481
532,974
532,974
217
217
219,013
208,131
Gain on disposal of treasury stocks
Other capital surplus
(4,261)
Other capital adjustments
￦
1,035,424 ￦
(4,261)
1,024,542
Translation into U.S. dollars (Note 2)
Description
December 31, 2015 December 31, 2014
(In thousands)
Capital surplus
$
Gain from reduction of capital
245,291 $
245,291
454,756
454,756
185
185
186,871
177,586
Gain on disposal of treasury stocks
Other capital surplus
(3,635)
Other capital adjustments
$
883,468 $
(3,635)
874,183
26. COMPONENTS OF OTHER CAPITAL:
(1) The details of components of other capital as of December 31, 2015 and 2014, are as follows:
Korean won
Description
December 31, 2015 December 31, 2014
(In millions)
Gain (loss) on valuation of AFS financial assets
￦
24,860 ￦
Gain (loss) on valuation of equity method investments, net
(3,675)
Translation gain (loss) on foreign operation
21,987
43,172 ￦
￦
32,280
(2,112)
(17,408)
12,760
Translation into U.S. dollars (Note 2)
Description
December 31, 2015 December 31, 2014
(In thousands)
Gain (loss) on valuation of AFS financial assets
$
21,211 $
27,543
$
(3,136)
18,760
36,835 $
(1,802)
(14,854)
10,887
Gain (loss) on valuation of equity method investments, net
Translation gain (loss) on foreign operation
128
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) The changes in components of other capital for the year ended December 31, 2015, are as follows:
Korean won
Description
Beginning of year
Changes
End of year
(In millions)
Gain (loss) on valuation of AFS financial assets
￦
Less: tax effect
Amount after tax
Gain (loss) on valuation of equity method investments, net
Translation gain (loss) on foreign operation
Less: tax effect
Amount after tax
42,586 ￦
(10,306)
32,280
(2,112)
(22,964)
5,556
(17,408)
(9,789) ￦
2,369
(7,420)
(1,563)
51,971
(12,576)
39,395
32,797
(7,937)
24,860
(3,675)
29,007
(7,020)
21,987
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Changes
End of year
(In thousands)
Gain (loss) on valuation of AFS financial assets
$
Less: tax effect
Amount after tax
Gain (loss) on valuation of equity method investments, net
Translation gain (loss) on foreign operation
Less: tax effect
Amount after tax
36,336 $
(8,793)
27,543
(1,802)
(19,594)
4,740
(14,854)
(8,352) $
2,020
(6,332)
(1,334)
44,344
(10,730)
33,614
27,984
(6,773)
21,211
(3,136)
24,750
(5,990)
18,760
(3) The changes in components of other capital for the year ended December 31, 2014, are as follows:
Korean won
Description
Beginning of year
Changes
End of year
(In millions)
Gain (loss) on valuation of AFS financial assets
￦
Less: tax effect
Amount after tax
Gain (loss) on valuation of equity method investments, net
Translation gain (loss) on foreign operation
Less: tax effect
Amount after tax
45,410 ￦
(10,989)
34,421
(1,570)
(72,289)
17,494
(54,795)
(2,824) ￦
683
(2,141)
(542)
49,325
(11,938)
37,387
42,586
(10,306)
32,280
(2,112)
(22,964)
5,556
(17,408)
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Changes
End of year
(In thousands)
Gain (loss) on valuation of AFS financial assets
Less: tax effect
Amount after tax
Gain (loss) on valuation of equity method investments, net
Translation gain (loss) on foreign operation
Less: tax effect
Amount after tax
$
38,746 $
(9,376)
29,370
(1,340)
(61,680)
14,926
(46,754)
(2,410) $
583
(1,827)
(463)
42,086
(10,186)
31,900
36,336
(8,793)
27,543
(1,803)
(19,594)
4,740
(14,854)
129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
27. RETAINED EARNINGS:
(1) Retained earnings as of December 31, 2015 and 2014, are as follows:
Korean won
Description
Accounts
December 31, 2015 December 31, 2014
(In millions)
Statutory reserve
Legal reserve
Voluntary reserve
Reserve for financial structure improvements
45,113 ￦
￦
Reserve for overseas business losses
Reserve for technology development
Reserve for business expansion
Reserve for research development
Other voluntary reserves
Retained earnings b
efore appropriations
61,810
1,000,000
920,000
920,000
850,000
1,000,000
940,000
53,000
64,334
422,000
397,000
3,456,810
3,233,144
683,114
Retained earnings before appropriations
576,587
4,185,037 ￦
￦
39,539
61,810
3,849,270
Translation into U.S. dollars (Note 2)
Description
Accounts
December 31, 2015 December 31, 2014
(In thousands)
Statutory reserve
Legal reserve
Voluntary reserve
Reserve for financial structure improvements
$
33,736
52,739
52,739
Reserve for overseas business losses
853,242
784,983
Reserve for technology development
784,983
725,256
Reserve for business expansion
853,242
802,048
Reserve for research development
Other voluntary reserves
Retained earnings b
efore appropriations
38,492 $
Retained earnings before appropriations
45,222
54,892
360,069
338,738
2,949,497
2,758,656
582,862
$
491,968
3,570,851 $
3,284,360
(2) The computation of the proposed dividends of the Parent Company for the years ended December 31, 2015 and 2014,
is as follows:
① The computation of the proposed dividends
Korean won
2015
Description
Preferred shares
2014
Common shares
Preferred shares
Common shares
(In millions, except per share amounts)
Dividends per share
Dividend ratio
11.00%
Number of shares issued
Dividends declared
130
550 ￦
￦
98,856
￦
500 ￦
10.00%
54 ￦
111,355,765
55,678 ￦
550 ￦
11.00%
500
10.00%
98,856
54 ￦
111,355,765
55,678
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2015
Description
Preferred shares
2014
Common shares
Preferred shares
Common shares
(In thousands, except per share amounts)
Dividends per share
0.47 $
$
Dividend ratio
0.43 $
11.00%
Number of shares issued
Dividends declared
98,856
11.00%
111,355,765
46 $
$
0.47 $
10.00%
98,856
47,507 $
0.43
10.00%
111,355,765
46 $
47,507
② Dividends to net income
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Dividends declared
￦
Net income attributable to owners of the Parent Company
55,732 ￦
367,901
Dividends to net income
55,732 $
419,665
15.15%
2014
47,553 $
313,909
13.28%
47,553
358,076
15.15%
13.28%
③ Dividend yield ratio
Korean won
2015
Description
Dividends per share
Preferred shares
Common shares
550 ￦
￦
Market price per share
2014
40,750
Dividend yield ratio
Preferred shares
500 ￦
28,550
1.35%
Common shares
550 ￦
32,950
1.75%
500
42,100
1.67%
1.19%
Translation into U.S. dollars (Note 2)
2015
Description
Dividends per share
Market price per share
Dividend yield ratio
Preferred shares
2014
Common shares
0.47 $
$
34.77
1.35%
Preferred shares
0.43 $
24.36
1.75%
Common shares
0.47 $
28.11
1.67%
0.43
35.92
1.19%
131
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
28. REVENUES:
Profit from continuing operation, except for financial income and other income (Notes 31 and 32), for the years ended December 31,
2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In thousands)
(In millions)
Sales of goods
1,642,121 ￦
￦
Service revenue
￦
1,299,532 $
1,401,127 $
1,108,815
17,479,932
16,087,427
14,914,618
13,726,474
19,122,053 ￦
17,386,959 $
16,315,745 $
14,835,289
29. CONSTRUCTION CONTRACTS:
(1) Recognized contract revenues related to construction contracts for the years ended December 31, 2015 and 2014, are as
follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In thousands)
(In millions)
Civil works
3,414,662 ￦
3,321,381 $
2,913,534 $
2,833,943
Building works
5,705,664
4,950,551
4,868,314
4,224,020
Plant works/electrical works
8,291,773
7,780,773
7,074,892
6,638,885
17,412,099
16,052,705
14,856,740
13,696,848
￦
Lotting-out land
Housing units lotting-out construction
2,894
-
2,469
-
870,724
598,118
742,939
510,340
873,618
598,118
745,408
510,340
67,833
34,722
57,878
18,353,550 ￦
16,685,545 $
15,660,026 $
Others
￦
29,626
14,236,814
(2) Cumulative cost and income related to construction in progress or finished construction as of December 31, 2015, are
summarized as follows:
Korean won
Description
Accumulated Accumulated
cost
income
Progress
billing
Total
Due from
Due to
customers for customers for
contract work contract work
Advance
Deferred
collection
(In millions)
Civil works
122,473 ￦
255,015
Building works
13,305,999
1,301,302
14,607,301
14,779,980
163,906
653,183
828,115
180,865
Plant works/ electrical works
38,497,880
2,562,655
41,060,535
39,100,377
1,940,632
2,476,120
526,633
715,632
66,305,972
5,326,706
71,632,678
68,825,898
2,411,693
4,257,569
1,477,221
1,151,512
2,593
301
2,894
2,894
-
-
-
-
1,367,269
312,430
1,679,699
1,677,559
96,257
-
-
-
1,369,862
312,731
1,682,593
1,680,453
96,257
-
-
-
18,442
162,631
160,640
Lotting-out land
Housing units lotting-out
construction
Others
￦ 14,502,093 ￦
144,189
￦ 67,820,023 ￦
132
1,462,749 ￦ 15,964,842 ￦ 14,945,541 ￦
307,155 ￦
5,657,879 ￦ 73,477,902 ￦ 70,666,991 ￦
399
2,508,349 ￦
1,128,266 ￦
8,193
5,218
4,265,762 ￦
1,482,439 ￦
1,151,512
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Accumulated Accumulated
cost
income
Progress
billing
Total
Due from
Due to
customers for customers for
contract work contract work
Advance
Deferred
collection
(In thousands)
Civil works
1,248,080 $ 13,621,879 $ 12,752,168 $
262,078 $
962,684 $
104,499 $
217,590
Building works
$ 12,373,799 $
11,353,241
1,110,326
12,463,567
12,610,904
139,852
557,323
706,583
154,322
Plant works/ electrical works
32,848,020
2,186,566
35,034,586
33,362,096
1,655,829
2,112,730
449,346
610,608
56,575,060
4,544,972
61,120,032
58,725,168
2,057,759
3,632,737
1,260,428
982,520
2,212
257
2,469
2,469
-
-
-
-
1,166,612
266,578
1,433,190
1,431,364
82,131
-
-
-
1,168,824
266,835
1,435,659
1,433,834
82,131
-
-
-
123,028
15,736
138,764
137,065
340
6,992
4,452
-
3,639,729 $
1,264,880 $
Lotting-out land
Housing units lotting-out
construction
Others
$ 57,866,912 $
4,827,543 $ 62,694,455 $ 60,296,067 $
2,140,230 $
982,520
(3) Cumulative cost and income related to construction in progress or finished construction as of December 31, 2014, are
summarized as follows:
Korean won
Description
Accumulated Accumulated
cost
income
Progress
billing
Total
Due from
Due to
customers for customers for
contract work contract work
Advance
Deferred
collection
(In millions)
Civil works
￦ 12,369,690 ￦
416,902 ￦
1,250,381 ￦
112,656 ￦
178,958
Building works
11,296,547
1,109,930
12,406,477
11,605,323
248,288
1,096,285
314,396
126,836
Plant works/ electrical works
33,025,130
2,426,041
35,451,171
33,352,040
1,640,097
2,655,692
582,813
644,485
56,691,367
5,003,123
61,694,490
57,616,292
2,305,287
5,002,358
1,009,865
950,279
1,099,546
231,694
1,331,240
1,370,432
-
92,490
131,681
-
16,824
123,252
175,906
Housing units lotting-out
construction
Others
106,428
￦ 57,897,341 ￦
1,467,152 ￦ 13,836,842 ￦ 12,658,929 ￦
11
5,251,641 ￦ 63,148,982 ￦ 59,162,630 ￦
2,305,298 ￦
6,203
10,056
5,101,051 ￦
1,151,602 ￦
950,279
Translation into U.S. dollars (Note 2)
Description
Accumulated Accumulated
cost
income
Total
Progress
billing
Due from
Due to
customers for customers for
contract work contract work
Advance
Deferred
collection
(In thousands)
Civil works
$
Building works
Plant works/ electrical works
Housing units lotting-out
construction
Others
$
10,554,343 $
1,251,836 $
11,806,179 $
10,801,134 $
355,718 $
1,066,878 $
96,123 $
152,695
9,638,692
947,039
10,585,731
9,902,153
211,850
935,397
268,256
28,178,439
2,070,000
30,248,439
28,457,372
1,399,400
2,265,949
497,281
549,902
48,371,474
4,268,875
52,640,349
49,160,659
1,966,968
4,268,224
861,660
810,819
938,179
197,691
1,135,870
1,169,311
-
78,916
112,356
-
90,809
14,355
105,164
150,090
49,400,462 $
4,480,921 $
53,881,383 $
50,480,060 $
10
1,966,978 $
5,293
8,580
4,352,433 $
982,596 $
108,222
810,819
133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(4) Except for new construction contracts during 2015, due to changes of design and cost variation factors of contracts
in progress, for the year ended December 31, 2015, accounting estimates of total contract revenue and accounting
estimates of total contract costs increased of ￦3,134,656 million ($2,674,621 thousand) and ￦2,894,781 million
($2,469,950 thousand), respectively. These changes in accounting estimates have reduced net income ￦156,942
million ($133,910 thousand).
Effects on profit or loss of current periods were calculated by the estimates of total contract costs based on the
situation occurred since the commencement of the contract to December 31, 2015, and the estimates of contract
revenue as of December 31, 2015. The Group did not calculate the effect on future periods because the estimates of
total contract revenue and costs are subject to change in future periods.
30. SELLING AND ADMINISTRATIVE EXPENSES:
The details of selling and administrative expenses for the years ended December 31, 2015
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
￦
268,802 ￦
2014
(In thousands)
(In millions)
Salaries
and 2014, are as follows:
255,335 $
229,353 $
217,863
Postemployment benefits
23,612
20,238
20,147
17,268
Employee welfare
37,765
35,071
32,223
29,924
Travel
6,230
5,873
5,316
5,011
Utility expenses
4,645
5,944
3,963
5,072
Taxes and dues
8,543
9,966
7,289
8,503
Depreciation
10,094
9,091
8,613
7,757
Amortization of intangible assets
69,580
38,651
59,369
32,979
Advertising
14,455
13,801
12,334
11,776
Ordinary development expense
63,472
60,383
54,157
51,521
Commissions and fees
26,861
33,484
22,919
28,570
Rental
17,925
16,226
15,294
13,845
Bad debt expenses
28,773
36,374
24,550
31,036
Others
42,166
￦
134
622,923 ￦
41,942
582,379 $
35,977
531,504 $
35,785
496,910
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
31. FINANCIAL INCOME AND EXPENSES:
(1) Financial income for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In thousands)
(In millions)
Interest income
￦
70,868 ￦
67,860 $
60,468 $
Dividend income
￦
2,805 ￦
5,675 $
2,393 $
57,901
4,842
Gain on foreign currency transaction
38,778
39,418
33,087
33,635
Gain on foreign currency translation
34,381
21,032
29,335
17,945
Gain on disposal of AFS financial assets
35,939
1,906
30,665
1,626
Gain on disposal of investments in associates
23,019
4,608
19,641
3,932
-
8,528
-
7,276
46
11
39
Gain on disposal of investments in subsidiaries
Gain on valuation of derivatives
205,836 ￦
￦
149,038 $
9
175,628 $
127,166
(2) Financial expenses for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Interest expenses
103,081 ￦
￦
2014
105,527 $
87,953 $
90,040
Loss on foreign currency transaction
53,210
40,578
45,401
34,622
Loss on foreign currency translation
8,933
17,967
7,622
15,330
Loss on disposal of AFS financial assets
45
1,597
38
1,363
Impairment loss on AFS financial assets
85,609
8,275
73,045
7,061
Impairment loss on investments in associates
199
268
170
229
Loss on transaction of derivatives
166
5
142
4
41
266
35
227
251,284 ￦
174,483 $
Loss on valuation of derivatives
￦
214,406 $
148,876
32. OTHER INCOME AND EXPENSES:
(1) Other income for the years ended December 31, 2015 and 2014, consists of the following:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Gain on foreign currency transaction
￦
137,135 ￦
2014
76,723 $
117,009 $
65,463
Gain on foreign currency translation
68,943
35,217
58,825
Reversal of allowance for bad debts
3,621
5,724
3,090
4,884
Gain on disposal of property, plant and equipment
3,444
20,727
2,939
17,685
Gain on disposal of intangible assets
1,799
20
1,535
17
-
1,706
-
1,456
36,600
85,785
31,228
73,195
Gain on disposal of assets held for sale
Miscellaneous revenues
￦
251,542 ￦
225,902 $
214,626 $
30,049
192,749
135
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) Other expenses for the years ended December 31, 2015 and 2014, consist of the following:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Loss on foreign currency transaction
153,604 ￦
￦
Loss on foreign currency translation
Commission expenses
Other bad debt expenses
2014
99,347 $
131,061 $
84,767
43,004
45,760
36,693
531
1,900
453
39,044
1,621
66,238
57,274
56,517
48,869
Donations and contributions
5,300
7,672
4,522
6,546
Loss on disposal of property, plant and equipment
3,989
13,735
3,404
11,719
Loss on disposal of intangible assets
837
476
714
406
Impairment loss on intangible assets
5,862
629
5,002
537
Impairment loss on investment property
3,666
-
3,128
-
5
5
4
4
Depreciation expenses on assets not in use
Loss on foreign operation translation
18,539
7,817
15,818
6,670
Miscellaneous expenses
93,381
108,299
79,677
92,406
394,956 ￦
￦
342,914 $
336,993 $
292,589
33. CLASSIFICATION OF EXPENSES BY NATURE:
The classification of expenses by nature for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Use of inventories
￦
6,801,716 ￦
Changes in other inventories
2014
6,386,310 $
5,803,512 $
5,449,070
(20,787)
26,524
(17,736)
22,631
Salaries and employee benefits
1,591,811
1,540,530
1,358,201
1,314,445
Outside processing expenses
7,651,474
6,415,689
6,528,561
5,474,137
195,824
154,059
167,085
131,450
Bad debt expenses
95,011
93,648
81,067
79,905
Financial expenses
289,705
257,165
247,189
219,424
Depreciation, amortization and others
Others
2,176,979
￦
18,781,733 ￦
2,071,528
16,945,453 $
1,857,490
16,025,369 $
1,767,515
14,458,577
34. INCOME TAX EXPENSE:
(1) The components of income tax expense for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Income tax currently payable
￦
175,737 ￦
2014
179,173 $
149,946 $
152,878
Adjustments for past income tax expenses
15,698
109
13,394
93
Change in deferred income tax due to temporary differences
35,957
28,262
30,680
24,114
Income tax expense directly charged to equity
Income tax expense
136
(13,119)
￦
214,273 ￦
8,484
216,028 $
(11,193)
182,827 $
7,239
184,324
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) For the years ended December 31, 2015 and 2014, the differences between income before income tax expense in
financial accounting and income tax expense pursuant to Corporate Income Tax Law of Korea are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
2014
(In thousands)
(In millions)
Income before income tax expense
￦
Income tax expense calculated at applicable tax rates
798,300 ￦
802,725 $
681,143 $
684,919
197,440
197,844
168,464
168,809
Adjustments:
Disallowed income
(2,805)
(3,256)
(2,393)
(2,778)
Disallowed expenses
26,375
23,096
22,504
19,706
(12,622)
Tax credit and tax exempt for the period
(17,812)
(14,793)
(15,198)
Adjustments for past income tax expense
15,698
109
13,394
93
The changes in unrecognized deferred tax assets/liabilities
(3,074)
696
(2,623)
594
Others
(1,549)
Income tax expense
￦
Effective tax rate
12,332
214,273 ￦
26.84%
216,028 $
26.91%
(1,321)
182,827 $
26.84%
10,522
184,324
26.91%
(3) The changes in deferred income tax due to temporary differences for the year ended December 31, 2015, are as follows:
Korean won
Description
Beginning of year
Changes
End of year
(In millions)
Asset revaluation
￦
Trade receivables and other receivables
Inventories
AFS financial assets
Investment property
Property, plant and equipment
Impairment loss on long-term investment securities, etc.
Long-term borrowings
Retirement benefit obligations
Provision for long-term employee benefits
Retirement insurance fee
Provisions, etc.
Other non-current liabilities
Reserves
Foreign operation translation
Interest income
Valuation of derivatives
Gain/loss on foreign currency translation
Borrowing costs
Revaluation profit
Reflux taxes on corporate undistributed profits
Carried forward tax credit
Deficit carried forward
Gain/loss on valuation of AFS financial assets
(2,032) ￦
53,940
11,384
36,779
8,498
9,914
89
1,261
131,886
(33,135)
(83,784)
(19,420)
85,691
(12,717)
(5,641)
(7,071)
(3)
(8,404)
(4,254)
(65,817)
454
19,039
(10,464)
33 ￦
15,544
(9,890)
(3,280)
193
3,137
971
2,962
2,289
(37,536)
9,168
(5,158)
1,760
6,311
(3,514)
66
(17,088)
(113)
55
(343)
688
10,907
2,339
(1,999)
69,484
1,494
33,499
8,691
13,051
89
2,232
134,848
(30,846)
(121,320)
(10,252)
80,533
(10,957)
670
(10,585)
63
(25,492)
(4,367)
(65,762)
(343)
1,142
29,946
(8,125)
Gain/loss on foreign operation translation
2,371
(7,107)
(4,736)
Remeasurements of defined benefit plan
53,058
(8,351)
44,707
Deferred tax assets
￦
161,622 ￦
(35,957) ￦
125,665
137
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Changes
End of year
(In thousands)
Asset revaluation
$
Trade receivables and other receivables
Inventories
(1,734) $
28 $
(1,706)
46,024
13,263
59,287
9,713
(8,438)
1,275
28,583
AFS financial assets
31,381
(2,798)
Investment property
7,251
165
7,416
Property, plant and equipment
8,459
2,677
11,136
Impairment loss on long-term investment securities, etc.
Long-term borrowings
76
-
76
1,076
828
1,904
112,531 $
2,527 $
Provision for long-term employee benefits
(28,272)
1,953
(26,319)
Retirement insurance fee
(71,488)
(32,027)
(103,515)
Provisions, etc.
(16,570)
7,823
(8,747)
73,115
(4,401)
68,714
(10,851)
1,502
(9,349)
Retirement benefit obligations
$
Other non-current liabilities
Reserves
115,058
Foreign operation translation
(4,813)
5,385
572
Interest income
(6,033)
(2,999)
(9,032)
(3)
57
54
Gain/loss on foreign currency translation
(7,169)
(14,583)
(21,752)
Borrowing costs
(3,630)
(96)
(3,726)
Revaluation profit
(56,158)
47
(56,111)
-
(293)
(293)
387
587
974
Deficit carried forward
16,245
9,306
25,551
Gain/loss on valuation of AFS financial assets
(8,928)
1,996
(6,932)
Valuation of derivatives
Reflux taxes on corporate undistributed profits
Carried forward tax credit
Gain/loss on foreign operation translation
2,023
(6,064)
(4,041)
Remeasurements of defined benefit plan
45,271
(7,125)
38,146
Deferred tax assets
138
$
137,903 $
(30,680) $
107,223
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(4) The changes in deferred income tax due to temporary differences for the year ended December 31, 2014, are as
follows:
Korean won
Description
Beginning of year
Changes
End of year
(In millions)
Asset revaluation
￦
Trade receivables and other receivables
Inventories
AFS financial assets
Investment property
Property, plant and equipment
Impairment loss on long-term investment securities, etc.
Long-term borrowings
Retirement benefit obligations
Provision for long-term employee benefits
Retirement insurance fee
Provisions, etc.
Other non-current liabilities
Reserves
Foreign operation translation
Interest income
Valuation of derivatives
Gain/loss on foreign currency translation
Borrowing costs
Revaluation profit
Carried forward tax credit
Deficit carried forward
Gain/loss on valuation of AFS financial assets
Gain/loss on foreign operation translation
Remeasurements of defined benefit plan
Deferred tax assets
￦
(2,032) ￦
22,559
11,358
43,229
11,050
2,104
23,684
(584)
111,937
(24,670)
(72,691)
29,533
86,119
(15,523)
(3,929)
(7,207)
(1)
(10,754)
(3,515)
(62,287)
499
14,523
(11,114)
10,774
36,821
189,883 ￦
- ￦
31,381
26
(6,450)
(2,552)
7,810
(23,595)
1,845
19,949
(8,465)
(11,093)
(48,953)
(428)
2,806
(1,712)
136
(2)
2,350
(739)
(3,530)
(45)
4,516
650
(8,403)
16,237
(28,261) ￦
(2,032)
53,940
11,384
36,779
8,498
9,914
89
1,261
131,886
(33,135)
(83,784)
(19,420)
85,691
(12,717)
(5,641)
(7,071)
(3)
(8,404)
(4,254)
(65,817)
454
19,039
(10,464)
2,371
53,058
161,622
139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
Beginning of year
Changes
End of year
(In thousands)
Asset revaluation
$
Trade receivables and other receivables
Inventories
AFS financial assets
Investment property
Property, plant and equipment
Impairment loss on long-term investment securities, etc.
Long-term borrowings
Retirement benefit obligations
Provision for long-term employee benefits
Retirement insurance fee
Provisions, etc.
Other non-current liabilities
Reserves
Foreign operation translation
Interest income
Valuation of derivatives
Gain/loss on foreign currency translation
Borrowing costs
Revaluation profit
Carried forward tax credit
Deficit carried forward
Gain/loss on valuation of AFS financial assets
Gain/loss on foreign operation translation
Remeasurements of defined benefit plan
Deferred tax assets
140
$
(1,734) $
19,248
9,691
36,885
9,428
1,795
20,208
(498)
95,509
(21,049)
(62,023)
25,199
73,480
(13,245)
(3,352)
(6,149)
(1)
(9,176)
(2,999)
(53,146)
426
12,392
(9,483)
9,193
31,417
162,016 $
- $
26,775
22
(5,504)
(2,177)
6,664
(20,132)
1,574
17,022
(7,223)
(9,465)
(41,769)
(365)
2,394
(1,461)
116
(2)
2,007
(631)
(3,012)
(39)
3,853
555
(7,170)
13,854
(24,114) $
(1,734)
46,023
9,713
31,381
7,251
8,459
76
1,076
112,531
(28,272)
(71,488)
(16,570)
73,115
(10,851)
(4,813)
(6,033)
(3)
(7,169)
(3,630)
(56,158)
387
16,245
(8,928)
2,023
45,271
137,902
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(5) Unrecognized deferred tax assets (liabilities) as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Temporary
differences
Description
December 31, 2014
Deferred income
tax assets
(liabilities)
Deferred income
tax assets
(liabilities)
Temporary
differences
(In millions)
Unrecognized deferred tax assets:
Investments in subsidiaries
￦
Investments in associates
Loss on foreign operation translation
Deficit carried forward
51,842 ￦
12,242 ￦
35,013 ￦
8,473
24,434
5,913
25,239
6,108
472,368
114,313
472,368
114,313
43,948
9,668
14,402
1,584
592,592
142,136
547,022
130,478
(914,403)
(205,747)
(789,317)
(191,015)
(914,403)
(205,747)
(789,317)
(191,015)
Unrecognized deferred tax liabilities:
Investments in subsidiaries
Translation into U.S. dollars (Note 2)
December 31, 2015
Temporary
differences
Description
December 31, 2014
Deferred income
tax assets
(liabilities)
Deferred income
tax assets
(liabilities)
Temporary
differences
(In thousands)
Unrecognized deferred tax assets:
Investments in subsidiaries
$
Investments in associates
Loss on foreign operation translation
Deficit carried forward
$
44,234 $
10,445 $
29,875 $
7,230
20,848
5,045
21,535
5,212
403,044
97,537
403,044
97,537
37,498 $
8,249 $
12,288 $
1,352
505,625
121,276
466,742
111,329
(780,207)
(175,552)
(673,479)
(162,982)
(780,207)
(175,552)
(673,479)
(162,982)
Unrecognized deferred tax liabilities:
Investments in subsidiaries
(6) Income tax expense directly charged to equity for the years ended December 31, 2015 and 2014, is as follows:
Korean won
Description
2015
2014
(In millions)
Deferred tax assets (liabilities) charged to equity
Gain/loss on valuation of AFS financial assets
￦
Gain/loss on foreign operation translation
Remeasurements of defined benefit plan
￦
2,339 ￦
650
(7,107)
(8,403)
(8,351)
16,237
(13,119) ￦
8,484
141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
Description
2015
2014
(In thousands)
Deferred tax assets (liabilities) charged to equity
Gain/loss on valuation of AFS financial assets
1,996 $
$
555
Gain/loss on foreign operation translation
(6,064)
(7,170)
Remeasurements of defined benefit plan
(7,125)
13,854
(11,194) $
$
7,239
35. EARNINGS PER SHARE:
(1) Basic earnings per share of common stock for the years ended December 31, 2015 and 2014, are computed as
follows. The Parent Company does not compute diluted earnings per share of common stock for the years ended
December 31, 2015 and 2014, because there is no dilution effect.
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands, except per share amounts)
(In millions, except per share amounts)
Net income attributable to owners of the Parent Company
367,901 ￦
419,665 $
313,909 $
(54)
(54)
(46)
(46)
(280)
(326)
(239)
(278)
367,567
419,285
313,624
357,752
111,355,765
111,355,765
111,355,765
111,355,765
￦
Expected dividends on preferred stocks
Expected residual income attributable to preferred stock
Net income available to common share
Weighted-average number of common shares outstanding
(shares)
Basic earnings per share of common stock
2014
3,301 ￦
￦
3,765 $
358,076
3 $
3
(2) Basic earnings per share of preferred stock for the years ended December 31, 2015 and 2014, are computed as
follows. The Parent Company does not compute diluted earnings per share of preferred stock for the years ended
December 31, 2015 and 2014, because there is no dilution effect.
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands, except per share amounts)
(In millions, except per share amounts)
Expected dividends on and residual income attributable to
preferred stock
Weighted-average number of preferred shares outstanding (shares)
Basic earnings per share of preferred stock
142
￦
334 ￦
98,856
￦
3,379 ￦
2014
380 $
98,856
3,848 $
285 $
98,856
3 $
324
98,856
3
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
36. RELATED-PARTY TRANSACTIONS:
(1) Significant transactions, sales, purchases, etc., for the years ended December 31, 2015 and 2014, between the Group
and related parties or affiliates by Monopoly Regulation and Fair Trade Act of the Republic of Korea (the “Act”) are as
follows:
Korean won
2015
Description
Sales and other
income
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In millions)
Entities with significant influence over the Group:
Hyundai Motor Company
485,544 ￦
- ￦
30,900 ￦
Kia Motors Corporation
153,770
-
11,627
Hyundai Mobis Co., Ltd.
200,838
-
16,796
-
840,152
-
59,323
1,551
The Gyeongnam Highway Co., Ltd.
15,727
-
21
-
The Ulsan Harbour Bridge Co., Ltd.
5,416
-
-
-
The 2nd Seoul Incheon Linking Highway Co., Ltd.
11,669
-
-
-
Miraseum The Fourth Co., Ltd.
28,243
-
-
-
￦
1,397
154
Associates:
Busan Finance Center PFV. Co., Ltd.
2,669
-
-
Incheon Ganghwa Industrial Complex Co., Ltd.
8,963
-
13
-
Damyang Green Development Co., Ltd.
9,556
-
-
-
Seoul Teoneol Co., Ltd.
4,746
-
-
Hwaseong City Expressway Co., Ltd.
8,839
-
-
-
Others
6,151
-
743
-
101,979
-
777
-
16,601
-
4,551
-
5,634
-
6,597
712
14,755
-
4,116
-
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Hyundai Capital Services, Inc.
Hyundai Partecs Inc.
8,577
-
-
-
32,823
-
-
-
Mobis Parts De Mexico, S. De R.L. De C.V.
200,409
-
-
-
Jiangsu Mobis Automotive Parts Co., Ltd.
23,096
-
-
-
320,188
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
25,419
-
-
-
Wuxi Mobis Automotive Parts Co., Ltd.
17,944
-
-
-
Hyundai Motor Technology & Engineering Center (China) Ltd.
50,340
-
-
-
Hyundai Kefico Corporation
KIA MOTORS MEXICO SA DE CV
9,757
-
-
-
Kia Motors Slovakia s.r.o.
HYUNDAI MOBIS INDIA LIMITED
11,735
-
-
-
MOBIS NORTH AMERICA, LLC
15,327
-
-
-
Cangzhou Hyundai Mobis Automotive Parts Co., Ltd.
22,302
-
-
-
9,774
-
-
-
11,876
-
-
-
8,759
-
-
-
22,529
-
-
-
Hyundai Motor Manufacturing Alabama, LLC
Beijing Hyundai Mobis Automotive Parts Co., Ltd.
Tianjin Mobis Automotive Parts Co., Ltd.
ChongQing Hyundai Mobis Automotive Parts Co., Ltd.
143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
2015
Sales and other
income
Description
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In millions)
HYUNDAI MOTOR BRASIL MONTADORA DE AUTOMOVEIS
LTDA
7,441 ￦
- ￦
- ￦
-
Hyundai Motor Manufacturing Czech, s.r.o.
7,887
-
-
-
Kia Motors Manufacturing Georgia, Inc.
7,034
-
-
-
HYUNDAI MOTOR EUROPE TECHNICAL CENTER GmbH
6,304
-
-
-
HYUNDAI MOTOR BRASIL MONTADORA DE AUTOMOVEIS
LTDA
7,441
-
-
-
￦
BEIJING HYUNDAI MOTOR COMPANY
Others
5,911
-
-
21,651
-
235
-
891,514
-
15,499
712
-
Affiliates by the Act (*):
Hyundai Steel Company
314,729
-
374,308
Hyundai Wia
45,629
-
236
-
Hyundai Hysco
(1,127)
-
29,736
-
Hyundai Glovis Co., LTD.
46,118
54
41,741
-
Hyundai Autoever Corp.
1,398
-
81,931
7,956
10,768
-
7
-
Hyundai PowerTech Co., Ltd.
Others
5,509
-
2,050
-
423,024
54
530,009
7,956
Translation into U.S. dollars (Note 2)
2015
Sales and other
income
Description
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In thousands)
Entities with significant influence over the Group:
Hyundai Motor Company
414,287 $
- $
Kia Motors Corporation
131,203
-
9,921
Hyundai Mobis Co., Ltd.
171,363
-
14,331
-
716,853
-
50,617
1,323
The Gyeongnam Highway Co., Ltd.
13,419
-
18
-
The Ulsan Harbour Bridge Co., Ltd.
4,621
-
-
-
The 2nd Seoul Incheon Linking Highway Co., Ltd.
9,956
-
-
-
$
26,365 $
1,192
131
Associates:
Miraseum The Fourth Co., Ltd.
144
24,098
-
-
-
Busan Finance Center PFV. Co., Ltd.
2,277
-
-
-
Incheon Ganghwa Industrial Complex Co., Ltd.
7,648
-
11
-
Damyang Green Development Co., Ltd.
8,154
-
-
-
Seoul Teoneol Co., Ltd.
4,049
-
-
-
Hwaseong City Expressway Co., Ltd.
7,542
-
-
-
Others
5,248
-
634
-
87,012
-
663
-
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2015
Description
Sales and other
income
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In thousands)
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Hyundai Capital Services, Inc.
Hyundai Partecs Inc.
Hyundai Kefico Corporation
Mobis Parts De Mexico, S. De R.L. De C.V.
Jiangsu Mobis Automotive Parts Co., Ltd.
14,165
-
3,883
-
4,807
-
5,629
608
12,590
-
3,512
-
7,318
-
-
-
28,006
-
-
-
170,997
-
-
-
19,706
-
-
-
273,198
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
21,689
-
-
-
Wuxi Mobis Automotive Parts Co., Ltd.
15,311
-
-
-
Hyundai Motor Technology & Engineering Center (China) Ltd.
42,952
-
-
-
KIA MOTORS MEXICO SA DE CV
HYUNDAI MOBIS INDIA LIMITED
8,325
-
-
-
Kia Motors Slovakia s.r.o.
10,013
-
-
-
MOBIS NORTH AMERICA, LLC
13,078
-
-
-
Cangzhou Hyundai Mobis Automotive Parts Co., Ltd.
19,029
-
-
-
8,340
-
-
-
10,133
-
-
-
Hyundai Motor Manufacturing Alabama, LLC
Beijing Hyundai Mobis Automotive Parts Co., Ltd.
Tianjin Mobis Automotive Parts Co., Ltd.
7,474
-
-
-
19,223
-
-
-
HYUNDAI MOTOR BRASIL MONTADORA DE AUTOMOVEIS
LTDA
6,349
-
-
-
Hyundai Motor Manufacturing Czech, s.r.o.
6,730
-
-
-
Kia Motors Manufacturing Georgia, Inc.
6,002
-
-
-
HYUNDAI MOTOR EUROPE TECHNICAL CENTER GmbH
5,379
-
-
-
HYUNDAI MOTOR BRASIL MONTADORA DE AUTOMOVEIS
LTDA
6,349
-
-
-
ChongQing Hyundai Mobis Automotive Parts Co., Ltd.
BEIJING HYUNDAI MOTOR COMPANY
Others
5,044
-
-
18,474
-
201
-
760,681
-
13,225
608
268,540
-
319,375
-
38,933
-
201
-
Affiliates by the Act (*):
Hyundai Steel Company
Hyundai Wia
Hyundai Hysco
(962)
-
25,372
-
Hyundai Glovis Co., LTD.
39,350
46
35,615
-
Hyundai Autoever Corp.
1,193
-
69,907
6,788
Hyundai PowerTech Co., Ltd.
9,188
-
6
-
Others
4,701
-
1,749
-
360,943
46
452,225
6,788
(*) Included in the Group of Hyundai Motor Company under the Act.
145
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
2014
Description
Sales and other
income
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In millions)
Entities with significant influence over the Group:
Hyundai Motor Company
￦
435,215 ￦
- ￦
26,293 ￦
742
235
Kia Motors Corporation
123,756
-
10,852
Hyundai Mobis Co., Ltd.
108,279
15,203
15,619
-
667,250
15,203
52,764
977
7,733
-
8
-
Associates:
The Gyeongnam Highway Co., Ltd.
The 2nd Youngdong Highway Co., Ltd.
48,836
-
-
-
The Ulsan Harbour Bridge Co., Ltd.
19,287
-
-
-
Busan Finance Center PFV. Co., Ltd.
59,862
-
-
-
Incheon Ganghwa Industrial Complex Co., Ltd.
16,376
-
-
-
Others
21,583
-
2,769
-
173,677
-
2,777
-
14,861
-
1,279
3
4,010
-
24,123
15,650
Hyundai Kefico
68,715
-
-
-
Mobis Parts De Mexico, S. De R.L. De C.V.
25,278
-
-
-
Jiangsu Mobis Automotive Parts Co., Ltd.
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
18,840
-
-
-
Kia Motors Slovakia s.r.o.
9,926
-
-
-
Hyundai Motor Manufacturing Czech, s.r.o.
7,986
-
-
-
KIA MOTORS MEXICO SA DE CV
47,394
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
12,941
-
-
-
Sichuan Hyundai Motor Company
7,877
-
-
-
80,565
-
-
-
HYUNDAI MOTOR INDIA LIMITED
6,158
-
-
-
HYUNDAI MOBIS INDIA LIMITED
14,896
-
-
-
5,785
-
-
-
Hyundai Motor Technology & Engineering Center (China) Ltd.
Hyundai Motor Manufacturing Alabama, LLC
Others
65,559
-
4,739
5
390,791
-
30,141
15,658
282,340
-
438,500
-
48,718
-
3,300
-
Affiliates by the Act (*):
Hyundai Steel Company
Hyundai Wia
Hyundai Hysco
Hyundai PowerTech Co., Ltd.
Hyundai Glovis Co., LTD.
Hyundai Autoever Corp.
HL GREEN POWER INC.
Others
146
697
-
40,796
-
12,056
-
80
-
5,657
65
36,306
-
793
-
21,627
3,806
25,400
-
-
-
8,784
-
5,124
-
384,445
65
545,733
3,806
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2014
Sales and other
income
Description
Disposal of property,
Purchases and other
plant and equipment,
expenses
etc.
Acquisition of
property, plant and
equipment, etc.
(In thousands)
Entities with significant influence over the Group:
Hyundai Motor Company
$
371,344 $
- $
22,434 $
633
Kia Motors Corporation
105,594
-
9,259
Hyundai Mobis Co., Ltd.
92,388
12,972
13,327
201
-
569,326
12,972
45,020
834
6,598
-
7
-
The 2nd Youngdong Highway Co., Ltd.
41,669
-
-
-
The Ulsan Harbour Bridge Co., Ltd.
16,456
-
-
-
Busan Finance Center PFV. Co., Ltd.
51,077
-
-
-
Incheon Ganghwa Industrial Complex Co., Ltd.
13,973
-
-
-
Others
18,416
-
2,363
-
148,189
-
2,370
-
12,680
-
1,091
3
3,422
-
20,583
13,353
Hyundai Kefico
58,631
-
-
-
Mobis Parts De Mexico, S. De R.L. De C.V.
21,568
-
-
-
Jiangsu Mobis Automotive Parts Co., Ltd.
Associates:
The Gyeongnam Highway Co., Ltd.
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
16,075
-
-
-
Kia Motors Slovakia s.r.o.
8,469
-
-
-
Hyundai Motor Manufacturing Czech, s.r.o.
6,814
-
-
-
KIA MOTORS MEXICO SA DE CV
40,439
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
11,042
-
-
-
Sichuan Hyundai Motor Company
6,721
-
-
-
68,741
-
-
-
HYUNDAI MOTOR INDIA LIMITED
5,254
-
-
-
HYUNDAI MOBIS INDIA LIMITED
12,710
-
-
-
4,936
-
-
-
Hyundai Motor Technology & Engineering Center (China) Ltd.
Hyundai Motor Manufacturing Alabama, LLC
Others
55,938
-
4,044
4
333,440
-
25,718
13,360
240,904
-
374,147
-
41,568
-
2,816
-
Affiliates by the Act (*):
Hyundai Steel Company
Hyundai Wia
Hyundai Hysco
Hyundai PowerTech Co., Ltd.
Hyundai Glovis Co., LTD.
Hyundai Autoever Corp.
HL GREEN POWER INC.
Others
595
-
34,809
10,287
-
68
-
4,827
55
30,978
-
677
-
18,453
3,247
21,672
-
-
-
7,495
-
4372
-
328,025
55
465,643
3,247
(*) Included in the Group of Hyundai Motor Company under the Act.
147
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2)Significant fund transactions and equity contribution transactions for the years ended December 31, 2015 and 2014,
between the Group and related parties or affiliates by the Act are as follows:
Korean won
2015
Transaction of financial
Investment
instruments
in cash
Borrowing Repayment Investments Collection
Loans
Description
Lending
Borrowings
Collection
(In millions)
Associates:
Songdo Landmark City, LLC
￦
Hwaseong City Expressway Co., Ltd.
Others
- ￦
- ￦
- ￦
- ￦
- ￦
- ￦
-
-
-
-
-
-
500
2,756
-
-
-
-
-
-
3,563
-
-
-
-
-
-
6,819
-
-
-
-
12,500
28,500
-
Affiliates by the Act (*):
HMC Investment Securities Co., Ltd.
Translation into U.S. dollars (Note 2)
2015
Transaction of financial
Investment
instruments
in cash
Borrowing Repayment Investments Collection
Loans
Description
Lending
Borrowings
Collection
(In thousands)
Associates:
Songdo Landmark City, LLC
$
Hwaseong City Expressway Co., Ltd.
Others
- $
- $
- $
- $
- $
- $
-
-
-
-
-
-
427
2,352
-
-
-
-
-
-
3,040
-
-
-
-
-
-
5,819
-
-
-
-
10,666
24,317
-
Affiliates by the Act (*):
HMC Investment Securities Co., Ltd.
(*) Included in the Group of Hyundai Motor Company under the Act.
With debentures issued by the Group, HMC Investment Securities Co., Ltd., an affiliate by the Act, acquired an amount of ￦180,000
million ($153,584 thousand) for the year ended December 31, 2015. The amount contributed to Hyundai Life Insurance Co., Ltd. and
HMC Investment Securities Co., Ltd. for plan assets is ￦91,137 million ($77,762 thousand) and the amount of benefit paid is ￦30,030
million ($25,623 thousand) for the year ended December 31, 2015.
148
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
2014
Transaction of financial
Investment
instruments
in cash
Borrowing Repayment Investments Collection
Loans
Description
Lending
Borrowings
Collection
(In millions)
Associates:
The 2nd Youngdong Highway Co., Ltd.
- ￦
- ￦
- ￦
- ￦
- ￦
1,835
- ￦
-
-
-
-
-
2,412
1,835
-
-
-
-
-
27,079
-
-
-
-
26,000
5,500
-
￦
Others
24,667
Affiliates by the Act (*):
HMC Investment Securities Co., Ltd.
Translation into U.S. dollars (Note 2)
2014
Transaction of financial
Investment
instruments
in cash
Borrowing Repayment Investments Collection
Loans
Description
Lending
Borrowings
Collection
(In thousands)
Associates:
The 2nd Youngdong Highway Co., Ltd.
$
Others
- $
- $
- $
- $
- $
1,566
- $
-
-
-
-
-
21,047
2,058
1,566
-
-
-
-
-
23,105
-
-
-
-
22,184
4,693
-
Affiliates by the Act (*):
HMC Investment Securities Co., Ltd.
(*) Included in the Group of Hyundai Motor Company under the Act.
With debentures issued by the Group, HMC Investment Securities Co., Ltd., an affiliate by the Act, acquired an amount of ￦170,000
million ($145,051 thousand) for the year ended December 31, 2014. The amount contributed to Hyundai Life Insurance Co., Ltd.
and HMC Investment Securities Co., Ltd. for plan assets is ￦60,299 million ($51,450 thousand) and an amount of benefit paid is
￦39,588 million ($33,778 thousand) for the year ended December 31, 2014.
149
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) As of December 31, 2015 and 2014, significant balances related to the transactions between the Group and related
parties or affiliates by the Act are as follows:
Korean won
2015
Receivables
Description
Trade
receivables
Payables
Loans
Trade
payables
Others
Borrowings
Others
(In millions)
Entities with significant influence over the Group:
Hyundai Motor Company
Kia Motors Corporation
Hyundai Mobis Co., Ltd.
￦
115,163 ￦
30,908
- ￦
-
22,694 ￦
372
37 ￦
- ￦
47,768
7
-
7,902
44,173
-
5,875
-
-
42,976
190,244
-
28,941
44
-
98,646
Associates:
The Gyeongnam Highway Co., Ltd.
Busan Jungkwan Energy Co., Ltd.
Miraseum the Fourth Co. Ltd.
Busan Finance Center PFV. Co., Ltd.
Incheon Ganghwa Industrial Complex Co., Ltd.
Others
8,395
-
-
-
-
-
-
2,401
79
-
-
-
2,439
-
-
-
-
867
290
-
3,509
-
-
251
4,055
-
-
-
-
-
10,797
-
863
33
-
2,552
25,976
2,401
4,451
33
-
3,670
4,202
-
-
-
-
2,629
406
-
7,234
2,680
-
2,644
4,202
-
-
-
-
144
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Jiangsu Mobis Automotive Parts Co., Ltd.
Cangzhou Hyundai Mobis Automotive Parts Co.,
Ltd.
Dongfeng Yueda Kia Motors Company Limited
6,246
-
-
-
-
-
6,402
-
544
-
-
-
KIA MOTORS MEXICO SA DE CV
9,979
-
16,479
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
Hyundai Motor Technology & Engineering Center
(China) Ltd.
Others
5,473
-
-
-
-
2,674
2,669
-
3,288
-
-
230
25,834
-
8,677
196
-
11,893
65,413
-
36,222
2,876
-
20,214
Hyundai Steel Company
64,887
-
27
61,880
-
7,393
Hyundai Wia
14,640
-
69
-
-
373
184
-
1,690
25,117
-
2,368
8,247
-
-
3,866
-
7,159
1,984
-
618
3,193
-
5,116
89,942
-
2,404
94,056
-
22,409
Affiliates by the Act (*):
Hyundai Autoever Corp.
Hyundai Glovis Co., LTD.
Others
150
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2015
Receivables
Description
Trade
receivables
Payables
Loans
Trade
payables
Others
Borrowings
Others
(In thousands)
Entities with significant influence over the Group:
Hyundai Motor Company
98,262 $
- $
Kia Motors Corporation
26,372
-
317
6
-
6,742
Hyundai Mobis Co., Ltd.
37,690
-
5,013
-
-
36,669
162,324
-
24,693
38
-
84,169
7,163
-
-
-
-
-
-
2,049
67
-
-
-
2,081
-
-
-
-
740
214
$
19,363 $
32 $
- $
40,758
Associates:
The Gyeongnam Highway Co., Ltd.
Busan Jungkwan Energy Co., Ltd.
Miraseum the Fourth Co. Ltd.
247
-
2,994
-
-
Incheon Ganghwa Industrial Complex Co., Ltd.
Busan Finance Center PFV. Co., Ltd.
3,460
-
-
-
-
-
Others
9,212
-
736
28
-
2,177
22,163
2,049
3,797
28
-
3,131
3,585
-
-
-
-
2,243
346
-
6,172
2,287
-
2,256
3,585
-
-
-
-
123
-
-
-
-
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Jiangsu Mobis Automotive Parts Co., Ltd.
Cangzhou Hyundai Mobis Automotive Parts Co.,
Ltd.
Dongfeng Yueda Kia Motors Company Limited
5,329
-
5,462
-
464
-
-
KIA MOTORS MEXICO SA DE CV
8,515
-
14,061
-
-
-
HYUNDAI MOTOR MANUFACTURING RUS
Hyundai Motor Technology & Engineering Center
(China) Ltd.
Others
4,670
-
-
-
-
2,282
2,277
-
2,805
-
-
196
22,043
-
7,404
167
-
10,148
55,812
-
30,906
2,454
-
17,248
Hyundai Steel Company
55,364
-
23
52,799
-
6,308
Hyundai Wia
12,491
-
59
-
-
318
157
-
1,442
21,431
-
2,020
Hyundai Glovis Co., LTD.
7,037
-
-
3,299
-
6,108
Others
1,693
-
527
2,724
-
4,365
76,742
-
2,051
80,253
-
19,119
Affiliates by the Act (*):
Hyundai Autoever Corp.
(*) Included in the Group of Hyundai Motor Company under the Fair Trade Act.
151
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
2014
Receivables
Description
Trade
receivables
Payables
Loans
Trade
payables
Others
Borrowings
Others
(In millions)
Entities with significant influence over the Group:
Hyundai Motor Company
￦
111,774 ￦
- ￦
34,656 ￦
209 ￦
- ￦
12,216
Kia Motors Corporation
28,977
-
402
92
-
6,075
Hyundai Mobis Co., Ltd.
32,634
-
2,067
1
-
18,984
173,385
-
37,125
302
-
37,275
The Gyeongnam Highway Co., Ltd.
5,920
-
2
-
-
1,205
The Ulsan Harbour Bridge Co., Ltd.
6,071
-
-
-
-
-
-
2,401
-
-
-
-
Associates:
Busan Jungkwan Energy Co., Ltd.
163
-
-
-
-
-
Busan Finance Center PFV. Co., Ltd.
Daejeon Clean Water Co., Ltd.
2,832
-
-
-
-
-
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
4,412
-
-
-
-
-
Others
5,111
682
17,852
44
-
673
24,509
3,083
17,854
44
-
1,878
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Hyundai Kefico
1,713
-
-
84
-
3,462
535
-
3,309
3,908
-
2,674
4,887
-
-
-
-
3,224
51
Hyundai Partecs Inc.
6,392
-
-
-
-
Jiangsu Mobis Automotive Parts Co., Ltd.
6,379
-
941
-
-
-
Dongfeng Yueda Kia Motors Company Limited
7,701
-
35
-
-
-
Hyundai Motor Technology & Engineering Center
(China) Ltd.
16,067
-
-
-
-
-
Others
27,148
-
3,737
182
-
7,884
70,822
-
8,022
4,174
-
17,295
67,510
-
29,863
58,507
-
3,557
64
-
-
11,215
-
355
6,425
-
5
-
-
8,880
101
-
654
16,035
-
2,477
19,446
-
-
-
-
-
Affiliates by the Act (*):
Hyundai Steel Company
Hyundai Hysco
Hyundai Wia
Hyundai Autoever Corp.
HL GREEN POWER INC.
Others
152
12,031
-
2,967
4,978
-
14,783
105,577
-
33,489
90,735
-
30,052
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Translation into U.S. dollars (Note 2)
2014
Receivables
Description
Trade
receivables
Payables
Loans
Trade
payables
Others
Borrowings
Others
(In thousands)
Entities with significant influence over the Group:
Hyundai Motor Company
$
95,370 $
- $
29,570 $
178 $
- $
10,423
Kia Motors Corporation
24,724
-
343
78
-
5,183
Hyundai Mobis Co., Ltd.
27,845
-
1,764
1
-
16,198
147,939
-
31,677
257
-
31,804
The Gyeongnam Highway Co., Ltd.
5,051
-
2
-
-
1,028
The Ulsan Harbour Bridge Co., Ltd.
5,180
-
-
-
-
-
-
2,049
-
-
-
-
Associates:
Busan Jungkwan Energy Co., Ltd.
139
-
-
-
-
-
Busan Finance Center PFV. Co., Ltd.
Daejeon Clean Water Co., Ltd.
2,416
-
-
-
-
-
The 2nd Seoul-Incheon Linking Highway Co., Ltd.
3,765
-
-
-
-
-
Others
4,361
582
15,232
38
-
574
20,912
2,631
15,234
38
-
1,602
Other related parties:
Hyundai Card Co., Ltd.
Hyundai Rotem Company
Hyundai Kefico
1,462
-
-
72
-
2,954
456
-
2,823
3,334
-
2,282
4,170
-
-
-
-
2,751
44
Hyundai Partecs Inc.
5,454
-
-
-
-
Jiangsu Mobis Automotive Parts Co., Ltd.
5,443
-
803
-
-
-
Dongfeng Yueda Kia Motors Company Limited
6,571
-
30
-
-
-
Hyundai Motor Technology & Engineering Center
(China) Ltd.
13,709
-
-
-
-
-
Others
23,164
-
3,189
155
-
6,727
60,429
-
6,845
3,561
-
14,758
57,602
-
25,480
49,921
-
3,035
55
-
-
9,569
-
303
5,482
-
4
-
-
7,577
Affiliates by the Act (*):
Hyundai Steel Company
Hyundai Hysco
Hyundai Wia
Hyundai Autoever Corp.
86
-
558
13,682
-
2,113
HL GREEN POWER INC.
16,592
-
-
-
-
-
Others
10,265
-
2,532
4,247
-
12,613
90,082
-
28,574
77,419
-
25,641
(*) Included in the Group of Hyundai Motor Company under the Fair Trade Act.
153
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(4) The details of allowance for doubtful accounts related to account balances and bad debt expenses recognized with
related parties as of December 31, 2015 and 2014, are as follows:
Korean won
December 31, 2015
Allowance for
doubtful account
Description
December 31, 2014
Bad debt
expenses
Allowance for
doubtful account
Bad debt
expenses
(In millions)
Associates
43,457 ￦
￦
5,957 ￦
38,005 ￦
769
Translation into U.S. dollars (Note 2)
December 31, 2015
Allowance for
doubtful account
Description
December 31, 2014
Bad debt
expenses
Allowance for
doubtful account
Bad debt
expenses
(In thousands)
Associates
37,079 $
$
5,083 $
32,427 $
656
(5) Pledged assets provided as collateral for related parties as of December 31, 2015, are as follows:
Korean won
Description
Description of
pledged assets
Book value
Security holder
Remarks
(In millions)
Associates:
-
The Gyeongnam Highway Co., Ltd.
Investments in associates
￦
15,523
The Ulsan Harbour Bridge Co., Ltd.
Investments in associates
10,426
Miraseum The Fourth Co., Ltd.
Investments in associates
533
Hwaseong City Expressway Co., Ltd.
Investments in associates
Busan Jungkwan Energy Co., Ltd. and
others
Investments in associates
￦
Kookmin Bank and others
Loan guarantee
Kookmin Bank and others
Loan guarantee
Korea Development Bank and Others
Loan guarantee
9,709
NongHyup Bank and others
Loan guarantee
2,843
Korea Development Bank and others
Loan guarantee
39,034
Translation into U.S. dollars (Note 2)
Description
Description of
pledged assets
Book value
Security holder
Remarks
(In thousands)
Associates:
-
The Gyeongnam Highway Co., Ltd.
Investments in associates
The Ulsan Harbour Bridge Co., Ltd.
Investments in associates
$
Kookmin Bank and others
Loan guarantee
8,896
Kookmin Bank and others
Loan guarantee
Miraseum The Fourth Co., Ltd.
Investments in associates
455
Korea Development Bank and Others
Loan guarantee
Hwaseong City Expressway Co., Ltd.
Investments in associates
8,284
NongHyup Bank and others
Loan guarantee
Busan Jungkwan Energy Co., Ltd. and
others
Investments in associates
2,426
Korea Development Bank and others
Loan guarantee
$
154
13,245
33,305
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(6) Supplemental funding arrangements and others provided to related parties as of December 31, 2015, are as follows:
Description
Korean won
Translation into
U.S. dollars
(Note 2)(*)
(In millions)
(In thousands)
Remarks
Associates
The Gyeongnam Highway Co., Ltd.
4,425 $
￦
3,776
Supplemental funding arrangements of borrowings
Supplemental funding arrangements of borrowings
Seosan Chongchun Co., Ltd.
26,097
22,267
Ulju Chongchun
26,700
22,782
Supplemental funding arrangements of borrowings
Daejeon Clean Water Co., Ltd.
24,538
20,937
Supplemental funding arrangements of borrowings
Ulsan Chongchun Co., Ltd.
25,519
21,774
Supplemental funding arrangements of borrowings
Jinju Chongchun Co., Ltd.
26,548
22,652
Supplemental funding arrangements of borrowings
Supplemental funding arrangements of borrowings
The Ulsan Harbour Bridge Co., Ltd.
12,250
10,452
Busan Jungkwan Energy Co., Ltd.
17,500
14,932
Supplemental funding arrangements of borrowings
Miraseum The Fourth Co., Ltd.
35,453
30,250
Supplemental funding arrangements of borrowings
Hwaseong City Expressway Co., Ltd.
3,511
2,996
Supplemental funding arrangements of borrowings
Hyundai Engineering (Thailand) Co., Ltd.
1,952
1,666
Overseas construction guarantee and others
￦
204,493 $
174,484
(*) Limits on payment guarantee are equal to the amount of guarantee provided as of December 31, 2015.
(7) Compensations for registered directors and unregistered directors of the Group for the years ended December 31,
2015 and 2014 are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Short-term employee salaries
￦
Postemployment benefits
Long-term employee salaries
￦
67,382 ￦
2014
62,136 $
57,493 $
6,832
8,671
5,829
11
17
9
74,225 ￦
70,824 $
63,331 $
53,017
7,398
15
60,430
155
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
37. PLEDGED ASSETS:
(1) Pledged assets provided as collateral for the Group’s borrowings and guarantees as of December 31, 2015, are as
follows:
Translation
Korean won into U.S. dollars (Note 2)
Description of
pledged assets
Detailed title
AFS financial assets
(non-current)
Construction Guarantee
Cooperative
Book value
Book value
(In millions)
(In thousands)
￦
73,054
$
Security holder
62,333 Construction Guarantee Cooperative
Remarks
For construction warranty and
others
For seizure related to lawsuit
Short-term financial instruments
Due from financial institution
5,247
Long-term financial instruments
Due from financial institution
51
Long-term financial instruments
Due from financial institution
1,344
Cash and cash equivalents
Due from financial institution
326
Other receivables
Deposit of court
33,829
28,864
Deposit of court
Cash and cash equivalents
Due from financial institution
65,979
56,296 Korea Development Bank and others
For borrowings
Long-term financial instruments
Due from financial institution
20
17 Seoul Guarantee Insurance Co., Ltd.
Deposit for license
Long-term other receivables
Other operation key money
67
57 Seoul Guarantee Insurance Co., Ltd.
Deposit for license
AFS financial assets
(non-current)
Korea Specialty Contractor
Financial Cooperative
1,153
AFS financial assets
(non-current)
Construction Guarantee
Cooperative
Investments in subsidiaries
Hyundai Energy Inc.
Property, plant and equipment
Construction in progress
317
2,370
￦ 183,757
4,477
44 KEB Hana Bank and others
1,147 First Gulf Bank
278 Abu Dhabi Islamic Bank
Current transaction deposit
For construction warranty
For construction warranty
Korea Specialty Contractor Financial
Cooperative and others
Guarantee for contract and
guarantee for advance
payment and others
270 Construction Guarantee Cooperative
Guarantee for contract and
guarantee for advance
payment and others
984
- Korea Development Bank and others
2,022 Tax office
Pledging of shares
Security for tax payment
$ 156,789
In addition to the above matter, the common stock of Hyundai Energy Inc. is established as a pledge right that is offered by the
stockholders, and the insurance (￦1,170,534 million ($998,749 thousand)) for plants is established as a pledge right. Plants located
in Yeosu will be established as a pledge right within six months from completion according to contract with lender. The book value
of property, plant and equipment that will be offered as a pledge right is ￦480,158 million ($409,691 thousand) as of December 31,
2015, and the limit of related borrowing is ￦390,000 million ($332,765 thousand). The amount of borrowing as of December 31,
2015, is ￦343,105 million ($292,752 thousand).
156
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) Pledged assets provided as collateral by the Group to other parties, excluding the Group’s related parties, as of
December 31, 2015, are as follows:
Description of
pledged assets
Description of
pledged assets
Detailed title
Kangnam Beltway Co., Ltd.
AFS financial assets
(non-current)
Kangnam Beltway Co., Ltd.
Seoul-Chuncheon Highway
Co., Ltd.
AFS financial assets
(non-current)
Seoul-Chuncheon Highway
Co., Ltd.
Kaya Railroad Co., Ltd.
AFS financial assets
(non-current)
Kaya Railroad Co., Ltd.
Mileseum Co., Ltd.
AFS financial assets
(non-current)
Mileseum Co., Ltd.
The Second Mileseum Co., Ltd.
AFS financial assets
(non-current)
Heemangsewoom Co., Ltd.
Korean won
Translation into
U.S. dollars
(Note 2)
Book value
Book value
(In millions)
(In thousands)
￦
2,070
$
31,855
Security holder
Remarks
Korea Development Bank
and others
Loan guarantee
27,180 Kookmin Bank and others
Loan guarantee
1,766
National Pension Service
and others
-
-
139
119
The Second Mileseum Co.,
Ltd.
-
-
Hanwha General
Insurance Co., Ltd., and
others
Loan guarantee
AFS financial assets
(non-current)
Heemangsewoom Co., Ltd.
-
-
Korea Finance Corporation
and others
Loan guarantee
ERail Co., Ltd.
AFS financial assets
(non-current)
ERail Co., Ltd.
1,907
1,627
Seoul Integrated Freight Terminal PFV. Co., Ltd.
AFS financial assets
(non-current)
Seoul Integrated Freight Terminal PFV. Co., Ltd.
3,500
2,986 Korea Development Bank
Seoul Integrated Freight
Terminal Asset Management
Co., Ltd.
AFS financial assets
(non-current)
Seoul Integrated Freight Terminal Asset Management Co.,
Ltd.
35
30
S-Y highway Co., Ltd.
AFS financial assets
(non-current)
S-Y highway Co., Ltd.
8,760
7,474
The 2nd Youngdong Highway
AFS financial assets
(non-current)
The 2nd Youngdong Highway
Co., Ltd.
45,820
39,096 Kookmin Bank and others
Loan guarantee
The 2nd Seoul-Incheon Linking
Highway Co., Ltd.
AFS financial assets
(non-current)
The 2nd Seoul-Incheon Linking
Highway Co., Ltd.
18,025
15,380 Kookmin Bank and others
Loan guarantee
Youngtong Project Co., Ltd.
AFS financial assets
(non-current)
Youngtong Project Co., Ltd.
Kimlatiera PFV
Investment property
Land
Co., Ltd.
Iljin Leisure Co., Ltd.
Inventories
Land
Investment property
Land
995
and others
Korea Development Bank
and others
Korea Development Bank
and others
Korea Development Bank
and others
849 KEB Hana Bank and others
Loan guarantee
Loan guarantee
Loan guarantee
Loan guarantee
Loan guarantee
Loan guarantee
40,026
34,152 Kookmin Bank and others
Loan guarantee(*1)
17,956
Meritz Securities Co., Ltd.
15,321
And others
Loan guarantee(*2)
21,733
￦
Korea Development Bank
Loan guarantee
192,821
18,544
$
164,524
(*1) Payment guarantee limits of lands in investment property are ￦59,000 million ($50,341 thousand) for loan guarantee.
(*2) Payment guarantee limits of lands in investment property are ￦61,500 million ($52,474 thousand) for loan guarantee.
157
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
38. COMMITMENTS AND CONTINGENCIES:
(1) Guarantees provided by the Group to other parties, excluding the Group’s related parties, as of December 31, 2015,
are as follows:
Korean won(*)
Beneficiary
Translation into U.S. dollars
(Note 2)(*)
(In millions)
Remarks
(In thousands)
Wangsimni Zone 3 Redevelopment Association and others
Magok Hillstate Eco Vendee and others
￦
ERail Co., Ltd. and others
Posco Engineering Co., Ltd.
1,275,889 $
1,088,642 Business drive expense
1,518,191
1,295,385 Middle payment
338,272 Fund supplement agreements
396,455
734
3,191,269 $
￦
626 Guarantee for contract and others
2,722,925
(*) Payment guarantee limits are ￦4,707,961 million ($4,017,032 thousand).
As part of commercial practice of the Korean construction industry, the Group bears joint guarantee for construction related to
housing sales guarantee provided by Korea Housing Urban Guarantee Co., Ltd., as of December 31, 2015. As of December 31,
2015, the Group bears conditional takeover of debt guarantee for the completion of work to Youngtong Project Co., Ltd. and others.
As of December 31, 2015, the Group has provided minimum revenue guarantee to a financial investor as construction investor in
connection with Pusan Finance Center PFV Co., Ltd. and others.
(2) In connection with the development company’s project financing (“PF”) borrowing, the major guarantees provided by
the Group as of December 31, 2015, are as follows:
Korean won
Area
Financial
institution
Loan
amount
Translation into
U.S. dollars
(Note 2)
Loan
amount
(In millions)
Gyeonggi
Nonmonetary institutions
Gyeonggi
Nonmonetary institutions
100,000
Gyeonggi
￦
222,100 $
Beginning
date
Maturity
189,505
08/20/2014
08/20/2018
Joint guarantee
ABCP
85,324
02/28/2013
02/28/2016
Joint guarantee
ABCP
Description
Type
(In thousands)
Nonmonetary institutions
100,000
85,324
07/01/2015
02/22/2016
Joint guarantee
ABCP
South of Choongcheng Nonmonetary institutions
87,400
74,573
11/20/2014
03/20/2018
Joint guarantee
LOAN
Gangwon
Nonmonetary institutions
83,700
71,416
10/08/2015
04/08/2016
Joint guarantee
ABCP
Gyeonggi
Nonmonetary institutions
82,100
70,051
07/01/2015
02/24/2016
Joint guarantee
ABCP
Gyeonggi
Nonmonetary institutions
69,200
59,044
10/30/2015
10/28/2016
Joint guarantee
ABCP
Seoul
Nonmonetary institutions
60,000
51,195
11/24/2014
11/24/2017
Joint guarantee
ABCP
Gyeonggi
Nonmonetary institutions
60,000
51,195
09/27/2013
12/27/2016
Joint guarantee
ABCP
Gyeonggi
Nonmonetary institutions
59,500
50,768
02/11/2015
02/04/2016
Joint guarantee
ABCP
In addition, the total PF borrowing balances that the Group guaranteed for developer’s PF borrowings are ￦1,943,500 million
($1,658,276 thousand), including the above major guarantees and consist of Asset-Backed Commercial Paper (“ABCP”) type for
￦1,479,800 million ($1,262,628 thousand) and other PF Loan type for ￦463,700 million ($395,648 thousand). Moreover, the limits
of payment guarantee for the borrowing balances of PF borrowings, which are ￦ 1,943,500 million ($1,658,276 thousand), are
￦2,219,750 million ($1,893,985 thousand).
158
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) Guarantees provided to the Group by other parties, excluding the Group’s related parties as of December 31, 2015, are as
follows:
Guarantee
Korean won
Remarks
(In thousands)
(In millions)
Construction Guarantee Cooperative
Translation into
U.S. dollars
(Note 2)
6,261,581 $
5,342,646
Guarantee for construction and others
Seoul Guarantee Insurance Co., Ltd.
1,314,014
1,121,172
Guarantee for construction and others
Korea Housing Urban Guarantee Co., Ltd.
4,642,320
3,961,024
Guarantee for housing and others
KEB Hana Bank and others
6,573,116
5,608,461
Guarantee for overseas construction and others
246,677
210,475
3,171
2,706
490
418
￦
Engineering Financial Cooperative and others
Posco Engineering Co., Ltd.
KEB Hana Bank
The Export-Import Bank of Korea and others
Guarantee for contract and others
Guarantee for contract and others
Guarantee for contract
4,326,525
3,691,574
KEB Hana Bank
18,518
15,800
Guarantee for other foreign currency payment
Australia and New Zealand Bank
12,797
10,919
Guarantee for other foreign currency payment
Korea South-East Power Co., Ltd.
47,067
40,160
Pledging of shares
NH Power the 2nd Co., Ltd.
14,402
12,288
Pledging of shares
NongHyup Bank
9,601
8,192
Pledging of shares
Boim Energy Co., Ltd.
2,903
2,477
Pledging of shares
￦
23,473,182 $
Guarantee for contract and others
20,028,312
(4) As of December 31, 2015, the Group had credit limit agreements with KEB Hana Bank and others for Letter of credit (“L/
C”) amounting to $2,531,542 thousand related to the overseas construction.
(5) As of December 31, 2015, the Group is accused in 182 lawsuit cases pending as a defendant regarding claims for
damage, etc., and these litigations are valued as ￦324,292 million ($276,700 thousand). Beside lawsuit cases, five
mediation cases are currently underway and Fair Trade Commission is investigating the bid rigging, associated with
construction contracts, Korea Gas Corporation has been ordered. The outcome of such lawsuits cannot be currently
determined. The Group accounted the above lawsuit as litigation provision amounting to ￦9,344 million ($7,973
thousand) as of December 31, 2015.
(6) The Group has pledged three blank notes and six checks (￦50,299 million ($42,917 thousand)), eighteen blank checks
as collateral for borrowings and payment guarantees.
(7) The bond issuance contracts provide for such terms and conditions that the debt-to-equity ratio is to be kept at
less than 800%, 500% and 300%; collateral is not to exceed 200%, 500% and 300% of equity; and disposal of
assets should not exceed ￦2,000,000 million ($1,706,485 thousand), 100% of total assets and ￦500,000 million
($426,621 thousand) a year. Therefore, the Parent Company and its subsidiaries, Hyundai Engineering Co., Ltd. and
Hyundai Engineering & Steel Industries Co., Ltd., have to follow this contract based on separate financial statements
respectively. If the Group fails to meet such conditions, the Group’s rights may be forfeited. Bonds issued with the
above conditions amounted to ￦1,950,000 million ($1,663,823 thousand).
159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(8) Long-term contracts of Hyundai Energy Inc. are as follows:
Institution
Description
Period
Korea South-East Power Co., Ltd.
Real estate lease
Boim Energy Co., Ltd.
Coal purchases
27 years from 04/01/2010
3 years from 04/16/2015
Korea South-East Power Co., Ltd.
Coal purchases
25 years from starting of coal supply
Boim Energy Co., Ltd.
Coal unloading, storage and transit piping
management of heat
25 years from starting of unloading, storage
Korea South-East Power Co., Ltd.
Operation and maintenance of integrated energy
business
25 years from two months before completion of the
integrated energy facilities in Yeosu
GS-Caltex Corporation
Steam supplies
4 years from starting of steam supply
LG CHEM LTD.
Steam supplies
10 years from starting of steam supply
KR Copolymer Co., Ltd.
Steam supplies
10 years from starting of steam supply
IC Chemical Co., Ltd.
Steam supplies
10 years from starting of steam supply
YLEM TECHNOLOGY Inc.
Steam supplies
10 years from starting of steam supply
Gudow Chemical Co., Ltd.
Steam supplies
10 years from starting of steam supply
Hyundai Energy Inc. changed the due date from June 30, 2012, to December 31, 2012, on completion of the integrated energy
facilities with the consent of unsubordinated lender. Cause of loss of benefit of time related to ￦403,105 million ($343,946 thousand)
for borrowings may happen if the requirement of comprehensive completion is not satisfied until changed due date and it is not solved
within 30 days from the date of receipt of corrective notice of Korea Development Bank.
39. CONSOLIDATED STATEMENTS OF CASH FLOWS:
(1) The cash and cash equivalents in the consolidated statements of cash flows are the same as the cash and cash
equivalents in the consolidated statements of financial position.
160
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) Additions of expenses not involving cash outflows and others for the years ended December 31, 2015 and 2014, are as
follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Transfer to provision for construction warranties
￦
Transfer to provision for construction loss
Transfer to provision for litigation
Transfer to other provisions
2014
68,225 ￦
81,018 $
58,212 $
69,128
33,518
29,852
28,600
25,471
3,394
9,121
2,896
7,782
57,171
44,494
48,781
37,964
Postemployment benefits
101,495
80,700
86,599
68,856
Depreciation of property, plant and equipment
122,297
111,274
104,349
94,944
1,783
1,453
1,521
1,240
5
5
4
4
Depreciation of investment property
Depreciation expenses on assets not in use
Amortization of intangible assets
71,739
41,327
61,211
35,262
Bad debt expenses
28,773
36,374
24,550
31,036
Other bad debt expenses
66,238
57,274
56,517
48,869
(781)
1,064
(666)
908
23,543
8,568
20,088
7,311
Other long-term employee benefits
Loss on foreign currency transaction (financial expenses)
Loss on foreign currency translation (financial expenses)
8,933
17,967
7,622
15,330
Loss on foreign currency translation (other expenses)
43,004
45,760
36,693
39,044
Loss on foreign operation translation
18,539
7,817
15,818
6,670
41
266
35
227
Impairment loss on investment property
3,666
-
3,128
-
Loss on disposal of property, plant and equipment
3,989
13,735
3,404
11,719
Loss on disposal of intangible assets
837
476
714
406
Impairment loss on intangible assets
5,862
629
5,002
537
Loss on disposal of AFS financial assets
45
1,597
38
1,363
Impairment loss on AFS financial assets
85,609
8,275
73,045
7,061
199
268
170
229
15,621
Loss on valuation of derivatives
Impairment loss on investments in associates
6,251
18,308
5,334
Interest expenses
Loss on valuation using equity method
103,081
105,527
87,953
90,040
Income tax expense
214,273
216,028
182,827
184,324
939,177 $
914,445 $
801,346
￦
1,071,729 ￦
161
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3)Deduction of income not involving cash inflows and others for the years ended December 31, 2015 and 2014, is as
follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Reversal of provision for construction warranties
2014
20,186 ￦
12,451 $
17,224 $
10,624
45,121
50,814
38,498
43,357
Reversal of provision for litigation
8,627
32,188
7,361
27,464
Reversal of allowance for doubtful accounts
3,621
5,724
3,090
4,884
Gain on foreign currency transaction (financial income)
3,752
7,662
3,201
6,538
Gain on foreign currency translation (financial income)
34,381
21,032
29,335
17,945
Gain on foreign currency translation (other income)
68,943
35,217
58,825
30,049
46
11
39
9
Gain on disposal of property, plant and equipment
3,444
20,727
2,939
17,685
Gain on disposal of intangible assets
1,799
20
1,535
17
-
1,706
-
1,456
Gain on disposal of AFS financial assets
35,939
1,906
30,665
1,626
Gain on disposal of investments in associates
23,019
4,608
19,641
3,932
￦
Reversal of provision for construction loss
Gain on valuation of derivatives
Gain on disposal of assets held for sale
Gain on disposal of investments in subsidiaries
-
8,528
-
7,276
6,853
4,587
5,847
3,914
Interest income
70,868
67,860
60,468
57,901
Dividend income
2,805
5,675
2,393
280,716 $
281,061 $
Gain on valuation using equity method
329,404 ￦
￦
4,842
239,519
(4)Investing and financing activities of non-cash transactions for the years ended December 31, 2015 and 2014, are as follows:
Korean won
Description
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In thousands)
(In millions)
Current portion of long-term financial instruments
￦
135,020 ￦
2014
35,000 $
115,205 $
29,863
Current portion of long-term loan
49,164
41,162
41,949
35,121
Current portion of long-term borrowings
29,152
268,938
24,874
229,469
210,000
300,000
179,181
255,973
Current portion of long-term debentures issued
162
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
40. RISK MANAGEMENT:
(1)Capital risk management
The purpose of capital risk management is to protect its ability to continuously provide profits to shareholders and parties in interest
and to maintain optimum capital structure to reduce capital expenses. To maintain or to adjust capital structure, the Group can adjust
dividend, return capital to shareholders, issue new shares to reduce liabilities and dispose assets.
The Group’s capital structure consists of net liability, which is borrowings less cash and cash equivalents and equity; the overall capital
risk management policy of the Group is unchanged from the prior period. Items managed as capital by the Group as of December
31, 2015 and 2014, are as follows:
Korean won
Description
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In thousands)
(In millions)
Total borrowings
Less: Cash and cash equivalents
￦
2,632,670 ￦
(1,997,405)
Net borrowings
Total liabilities
Total equity
The ratio of net borrowings compared to equity
Debt ratio
2,597,423 $
(2,542,381)
2,246,305 $
(1,704,270)
2,216,231
(2,169,267)
635,265
55,042
542,035
46,964
11,967,267
11,473,381
10,210,978
9,789,574
7,491,265
6,966,312
6,391,864
5,943,953
8.48%
0.79%
8.48%
0.79%
159.75%
164.70%
159.75%
164.70%
(2) Financial risk management
The Group is exposed to various financial risks, such as market risk (foreign exchange risk, interest rate risk and price risk), credit risk
and liquidity risk related to financial instruments. The purpose of risk management of the Group is to identify potential risks related
to financial performance and reduce, eliminate and evade those risks to a degree acceptable to the Group. The overall financial risk
management policy of the Group is the same as the prior period.
1) Credit risk
① Management policy of credit risk
The Group makes transactions with reputable financial institutions to manage credit risk and operate with policy and procedures for
credit enhancement of financial assets. The Group decides credit transaction limits based on evaluation of client’s credit, through
information obtained from the credit bureau and disclosed financial position at committing contracts. Also, the Group is provided
collateral or payment guarantees. The Group continually reviews the credit and the limits of credit of clients to adjust necessary
collateral. For delayed collection of financial assets, current state and collection measures are reported in each quarter and
appropriate actions are taken in accordance with the reason for any delays.
The Group deposits cash and cash equivalents, long-term and short-term financial instruments in KEB Hana Bank and others. As
these financial institutions the Group makes transactions with are reputable financial institutions, the credit risks from them are
considered limited.
163
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
② The maximum exposed amounts of credit risk
As of December 31, 2015, the maximum exposed amounts of credit risk for financial assets maintained by the Group are as follows.
Korean won
Description
Translation into U.S. dollars (Note 2)
Exposed
amount
Book value
(In thousands)
(In millions)
Loans and receivables
Cash and cash equivalents
1,997,405 ￦
1,997,405 $
Short-term financial instruments
1,032,308
1,032,308
880,809
880,809
Trade receivables
2,507,586
2,507,586
2,139,578
2,139,578
Other receivables
1,466,345
1,466,345
1,251,148
1,251,148
396,554
396,554
338,357
338,357
1,003,689
1,003,689
856,390
856,390
101,396
101,396
86,515
86,515
Held-to-maturity financial assets
(current)
64,739
64,739
55,238
55,238
Held-to-maturity financial assets
(non-current)
45,123
45,123
38,501
38,501
￦
Long-term accounts receivables
Long-term other receivables
Long-term financial instruments
Held-to-maturity fi nancial assets
Financial guarantee
Exposed
amount
Book value
Other financial liability
86,601
￦
1,704,270 $
5,568,431
8,701,746 ￦
14,183,576 $
1,704,270
73,891
4,751,221
7,424,697 $
12,102,027
2) Liquidity risk
The Group establishes short-term and long-term fund management plans. The Group analyzes and reviews actual cash outflow and
its budget to correspond the maturity of financial liabilities to that of financial assets. Management believes that with proper financial
liabilities, it will be able to easily access cash when necessary for its operating activities and financial assets. The Group has overdraft
agreements with its main banks to manage liquidity risk, which may temporarily increase.
The maturity analysis of financial liabilities according to their remaining contract expiration as of December 31, 2015, is as follows:
Korean won
Remaining contractual undiscounted cash flows
Description
Less than 1 year
More than
5 years
1–5 years
Total
(In millions)
Interest-bearing liabilities
￦
Non-interest-bearing liabilities
525,454 ￦
1,776,709 ￦
741,628 ￦
3,043,791
4,005,495
544,816
8,092
4,558,403
-
261
-
261
Derivative liabilities
Translation into U.S. dollars (Note 2)
Remaining contractual undiscounted cash flows
Description
Less than 1 year
More than
5 years
1–5 years
Total
(In thousands)
Interest-bearing liabilities
Non-interest-bearing liabilities
Derivative liabilities
164
$
1,515,963 $
632,788 $
2,597,091
3,417,658
448,340 $
464,860
6,904
3,889,422
-
223
-
223
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The total guarantee amounts related to the financial guarantee contract amounted to ￦5,568,431 million ($4,751,221 thousand).
The above maturity analysis is based on the book value and the earliest maturity date by which the payments should be made.
3) Market risk
① Management policy of foreign currency risk
The Group is generally exposed to the risk of foreign currencies in USD, AED, KWD, QAR, SAR and others. The Group’s sensitivity to
a 10% increase and decrease in Korean won (functional currency of the Group) against the major foreign currencies as of December
31, 2015, is described in the below table. This 10% is a sensitivity of management’s valuation on rational changes of foreign currency
and it is applied when reporting internally the foreign currency risk to management.
The sensitivity analysis is conducted on monetary assets and liabilities denominated in foreign currencies other than functional
currency as of December 31, 2015. It only includes unsettled monetary accounts denominated in foreign currencies and adjusts
foreign currency translation expecting changes in foreign currency by 10% at the end of the fiscal year. Positive balance (+) represents
increases of gains, losses and others in equity section due to appreciation of Korean won. When Korean won is depreciated by 10%
to other currencies, gains, losses and other equity accounts are affected by the corresponding amount, which will lead to negative
balance (-).
Changes in net assets (before income tax) that are sensitive to changes in Korean won against the foreign currencies by 10% as of
December 31, 2015, are as follows:
Korean won
Currency
10% increase
against
foreign currency
Translation into U.S. dollars (Note 2)
10% decrease
against
foreign currency
10% increase
against
foreign currency
(In thousands)
(In millions)
USD
10% decrease
against
foreign currency
94,278 ￦
(94,278) $
80,442 $
(80,442)
AED
48,761
(48,761)
41,605
(41,605)
KWD
48,627
(48,627)
41,491
(41,491)
QAR
47,167
(47,167)
40,245
(40,245)
SAR
23,748
(23,748)
20,263
(20,263)
Others
37,008
(37,008)
31,577
(31,577)
￦
② Interest rate risk
The Group borrows funds with fixed and variable interest rates, and the Group is exposed to interest rate risk arising from financial
instruments with variable interest rates. To manage the interest rate risk and to avoid the future cash flow fluctuation risk, the Group
mainly uses fixed interest rate; however, it uses variable interest rates on occasion.
The Group’s sensitivity to a 1% change in interest rates on income before income tax as of December 31, 2015, is as follows:
Korean won
Description
Increase by 1%
Translation into U.S. dollars (Note 2)
Decrease by 1%
Increase by 1%
(In thousands)
(In millions)
Current portion of long-term borrowings
￦
Long-term borrowings
￦
(117) ￦
Decrease by 1%
117 $
(100) $
100
(2,137)
2,137
(1,823)
1,823
(2,254) ￦
2,254 $
(1,923) $
1,923
165
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
③ Price risks
The Group is exposed to price fluctuation risk arising from AFS equity investments. As of December 31, 2015 and 2014, the amount
of marketable AFS equity investments is as follows:
Korean won
Description
Translation into U.S. dollars (Note 2)
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In thousands)
(In millions)
AFS financial assets
48,634 ￦
￦
111,011 $
41,497 $
94,719
When the price of marketable equity investments changes by 1%, equity would increase/decrease by ￦369 million ($315 thousand)
(after income tax).
41. SEGMENT INFORMATION:
(1) The Group’s operations are divided into the following segments by type of products and services:
Segment
Products
Primary customer
Building works
Buildings, structures and others
Public Procurement Service, CDPL and others
Civil works
Roads, bridges, housing site development and others
Korea Highway Corp., ADPC and others
Plant works/electrical works
Power stations, gas facilities, electric work and others
Public Procurement Service, Korea Electric Power Corp. (KEPCO), ARAMCO and others
Others
Real estate leasing and others
KEPCO and others
(2) Information related to each operating segment of the Group for the year ended December 31, 2015, is as follows:
Korean won
Description
Building
works
Plant works/
Civil works
electrical
works
Others
Consolidation
adjustments
Total
(In millions)
Sales
￦ 6,608,935 ￦ 3,570,721
Gross profit
Property, plant and equipment
Depreciation
￦ 8,320,862 ￦
894,161 ￦
(272,626) ￦ 19,122,053
779,200
149,265
592,515
93,178
(4,675)
1,609,483
11,780
252,124
55,703
1,183,128
251,450
1,754,185
4,197
21,699
14,795
77,672
3,939
122,302
Translation into U.S. dollars (Note 2)
Description
Building
works
Civil works
Plant works/
electrical
works
Others
Consolidation
adjustments
Total
(In thousands)
Sales
Gross profit
Property, plant and equipment
Depreciation
$
5,639,023 $
3,046,690 $
7,099,712 $
762,936 $
(232,616) $ 16,315,745
664,846
127,359
505,559
79,503
(3,988)
1,373,279
10,051
215,123
47,528
1,009,495
214,548
1,496,745
3,581
18,515
12,624
66,273
3,360
104,353
Reportable segments’ accounting method is applied by the same measured metrics that are applied to the Group.
166
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(3) Information related to each operating segment of the Group for the year ended December 31, 2014, is as follows:
Korean won
Description
Building
works
Plant works/
electrical
works
Civil works
Others
Consolidation
adjustments
Total
(In millions)
Sales
￦ 5,665,301 ￦ 3,479,018
Gross profit
Property, plant and equipment
Depreciation
￦ 7,846,751 ￦
804,721 ￦
(408,832) ￦ 17,386,959
600,780
285,038
583,922
81,675
(10,134)
1,541,281
10,820
204,965
53,376
1,190,298
251,185
1,710,644
2,962
11,425
11,509
80,452
4,931
111,279
Translation into U.S. dollars (Note 2)
Description
Building
works
Plant works/
electrical
works
Civil works
Others
Consolidation
adjustments
Total
(In thousands)
Sales
$
Gross profit
4,833,875 $
2,968,445 $
6,695,180 $
686,622 $
(348,833) $ 14,835,289
512,611
243,206
498,227
69,689
(8,646)
1,315,087
Property, plant and equipment
9,232
174,885
45,543
1,015,613
214,321
1,459,594
Depreciation
2,527
9,748
9,820
68,645
4,208
94,948
Reportable segments’ accounting method is applied by the same measured metrics that are applied to the Group.
(4) Geographical analysis of income and performance of the Group for the year ended December 31, 2015, is as follows:
Korean won
Description
Korea
(domestic)
Middle
East/Africa
Asia
Others
Consolidation
adjustments
Total
(In millions)
Sales
￦ 7,583,471 ￦ 4,133,865
Property, plant and equipment
Depreciation
￦ 5,290,562 ￦ 2,386,781 ￦
(272,626) ￦ 19,122,053
1,157,108
90,144
212,884
42,599
251,450
1,754,185
40,469
18,470
53,958
5,466
3,939
122,302
Translation into U.S. dollars (Note 2)
Description
Korea
(domestic)
Asia
Middle
East/Africa
Others
Consolidation
adjustments
Total
(In thousands)
Sales
Property, plant and equipment
Depreciation
$
6,470,538 $
3,527,189
$
4,514,131 $
2,036,503 $
(232,616) $ 16,315,745
987,294
76,915
181,642
36,347
214,547
1,496,745
34,530
15,759
46,039
4,664
3,361
104,353
167
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(5) Geographical analysis of income and performance of the Group for the year ended December 31, 2014, is as follows:
Korean won
Description
Korea
(domestic)
Middle
East/Africa
Asia
Others
Consolidation
adjustments
Total
(In millions)
Sales
￦ 7,359,263 ￦ 4,047,318
Property, plant and equipment
Depreciation
￦ 5,225,324 ￦ 1,163,886 ￦
(408,832) ￦ 17,386,959
1,151,043
105,950
192,251
10,216
251,184
1,710,644
38,962
25,290
39,698
2,398
4,931
111,279
Translation into U.S. dollars (Note 2)
Description
Korea
(domestic)
Middle
East/Africa
Asia
Others
Consolidation
adjustments
Total
(In thousands)
Sales
$
Property, plant and equipment
Depreciation
6,279,235 $
3,453,343
$
4,458,468 $
993,077 $
(348,834) $ 14,835,289
982,119
90,401
164,037
8,717
214,320
1,459,594
33,244
21,578
33,872
2,046
4,208
94,948
42. BUSINESS COMBINATION:
In accordance with the approval of the Board of Directors on August 19, 2014, Hyundai Engineering & Construction Co., Ltd.
combined Songdo Landmark City, LLC. by acquiring an additional equity interest on January 9, 2015, for the Group led business
operation through reorganization of the equity structure.
Description
Contents
Company
Songdo Landmark City, LLC.
Main operation
Real estate development and supply
Date of acquisition
January 9, 2015
Proportion voting equity interests acquired (%)
51.74
Consideration transferred:
Korean won (In millions)
￦
27,925
Translation into U.S. dollars (Note 2) (In thousands)
$
23,827
168
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(2) Fair values of the consideration transferred for business combinations are as follows:
Translation into U.S.
dollars (Note 2)
Korean won
Description
December 31, 2015 December 31, 2014
(In millions)
Cash and cash equivalents
The fair value of the existing equity interest
Total consideration transferred
￦
(In thousands)
5,800 $
￦
4,949
22,125
18,878
27,925 $
23,827
(3) The values of consideration transferred for business combinations, fair values of acquired assets and liabilities and
goodwill are as follows:
Hyundai Energy Inc.
Translation into U.S.
dollars (Note 2)
Korean won
Description
December 31, 2015 December 31, 2014
(In millions)
Consideration transferred
Recognized amount of identifiable assets and liabilities:
Cash and cash equivalents
Other assets
Inventories
Property, plant and equipment
Intangible assets (*)
Long-term other receivables
Other liabilities
Short-term borrowings
Retirement benefit obligation
Deferred tax liabilities
Long-term other payables
Non-controlling interest
Goodwill
￦
(In thousands)
27,925 $
(431)
23,827
(368)
498
425
5,490
4,684
33,002
28,159
34
29
24,330
20,759
55
47
(31,340)
(26,741)
(4,408)
(3,761)
(89)
(76)
(5,879)
(5,016)
(22,124)
(18,877)
670
571
29,026
24,766
(*) Intangible assets include ￦24,294 million ($20,729 thousand), which is the fair value of unrecognized value of orders
169
Independent Auditors’ Report
English Translation of Independent Auditors’ Report Originally Issued in Korean on March 3, 2016
To the Shareholders and the Board of Directors of
Hyundai Engineering & Construction Co., Ltd.:
We have audited the accompanying separate financial statements of Hyundai Engineering & Construction Co., Ltd. (the “Company”), which
comprise the separate statements of financial position as of December 31, 2015 and 2014, and the separate statements of comprehensive
income, separate statements of changes in shareholders’ equity and separate statements of cash flows, all expressed in Korean won, for the
years ended December 31, 2015 and 2014, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Separate Financial Statements
Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with Korean International
Financial Reporting Standards (“K-IFRS”) and for such internal control as management determines is necessary to enable the preparation of
separate financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audit in accordance with
Korean Standards on Auditing (“KSAs”). Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the separate financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2015 and 2014, and its financial performance and its cash flows for the years then ended, in accordance with K-IFRS.
Others
Our audits also comprehended the translation of Korean won amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis in Note 2. Such U.S. dollar amounts are presented solely for the convenience of readers outside of Korea.
Accounting principles and auditing standards and their application in practice vary among countries. The accompanying separate financial
statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic
of Korea to audit such separate financial statements may differ from those generally accepted and applied in other countries. Accordingly, this
report and the accompanying separate financial statements are for use by those knowledgeable about Korean accounting principles and auditing
standards and their application in practice.
March 3, 2016
Notice to Readers
This report is effective as of March 3, 2016, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’
report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying separate financial statements
and may result in modifications to the auditors’ report.
170
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
SEPARATE STATEMENTS OF FINANCIAL POSITION
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF DECEMBER 31, 2015 AND 2014
Korean won
ASSETS
Notes
December 31,
2015
Translation into U.S. dollars (Note 2)
December 31,
2014
December 31,
2015
(In millions)
December 31,
2014
(In thousands)
CURRENT ASSETS:
Cash and cash equivalents
Short-term financial instruments
4,22,38,39
￦
22,36,39
1,089,111 ￦
1,031,231 $
929,276 $
879,890
109,656
80,122
93,563
68,363
1,167,069
1,218,711
995,793
1,039,856
Trade receivables
5,22,35,39
Other receivables
5,22,28,35,36,39
1,496,482
1,266,560
1,276,862
1,080,683
28,35
2,581,112
3,110,759
2,202,314
2,654,231
64,606
22,533
55,125
19,226
Due from customers for contract work
Held-to-maturity financial assets
9,22,39
Current derivative assets
21,22
-
11
-
9
Inventories
6,13
835,142
979,048
712,578
835,366
Other current assets
7,35
Total current assets
1,181,187
837,322
1,007,839
714,439
8,524,365
8,546,297
7,273,350
7,292,063
101,373
3,690
86,496
3,148
NON-CURRENT ASSETS:
Long-term financial instruments
Long-term accounts receivable
Long-term other receivables
Available-for-sale (“AFS”) financial assets
Held-to-maturity financial assets
Investments in subsidiaries, joint ventures and associates
Investment property
22,36,39
5,22,39
387,914
363,819
330,985
310,426
5,22,28,35,39
693,067
448,630
591,354
382,790
8,22,36,39
395,176
435,652
337,181
371,717
9,22,39
42,480
53,681
36,246
45,803
1,439,607
1,446,644
1,228,334
1,234,338
10,35
11
399,670
396,926
341,015
338,673
Property, plant and equipment
12
379,182
349,939
323,534
298,583
Intangible assets
14
29,837
29,876
25,458
25,492
Deferred tax assets
33
77,930
143,447
66,493
122,395
Other non-current assets
7
Total non-current assets
Total assets
￦
125,048
101,096
106,696
86,259
4,071,284
3,773,400
3,473,792
3,219,624
12,595,649 ￦
12,319,697 $
10,747,142 $
10,511,687
(Continued)
171
SEPARATE STATEMENTS OF FINANCIAL POSITION (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
AS OF DECEMBER 31, 2015 AND 2014
Korean won
Notes
LIABILITIES AND EQUITY
December 31,
2015
Translation into U.S. dollars (Note 2)
December 31,
2014
December 31,
2015
(In millions)
December 31,
2014
(In thousands)
CURRENT LIABILITIES:
Trade payables
15,22,35,39
Other payables
15,22,35,39
Advances from customers
1,350,522 ￦
1,741,391 $
1,152,323 $
1,485,828
906,669
680,319
773,608
580,477
28,35
1,332,778
1,283,122
1,137,183
1,094,814
28,35
1,203,692
849,456
1,027,041
724,792
16,22,37,39
118,044
232,090
100,720
198,029
16,22,37,39
210,267
273,826
179,409
233,640
14,788
12,006
12,618
10,244
14,711
15,488
12,552
13,215
Due to customers for contract work
Current portion of long-term borrowings and
debentures
Income tax payable
￦
Other financial liabilities
18,22,35,36,37,39
Other current liabilities
19
Total current liabilities
17,782
85,090
15,172
72,602
5,169,253
5,172,788
4,410,626
4,413,641
NON-CURRENT LIABILITIES:
15,22,39
Long-term other payables
374,116
321,969
319,212
274,718
Debentures issued
16,22,37,39
1,286,998
1,147,104
1,098,121
978,758
Long-term borrowings
16,22,37,39
7,875
33,715
6,719
28,767
132,269
282,516
112,858
241,055
9,401
11,601
8,022
9,897
20
Retirement benefit obligation
Provision for long-term employee benefits
17
302,776
327,020
258,341
279,027
18,22,35,36,37,39
64,411
59,409
54,958
50,690
19
20,586
17,191
17,565
14,669
Total non-current liabilities
2,198,432
2,200,525
1,875,796
1,877,581
Total liabilities
7,367,685
7,373,313
6,286,422
6,291,222
Provisions
Other financial liabilities
Other non-current liabilities
SHAREHOLDERS’ EQUITY:
Capital stock
24,39
557,273
557,273
475,489
475,489
Other contributed capital
24,39
828,181
828,181
706,639
706,639
Components of other capital
25,39
40,066
2,204
34,186
1,881
Retained earnings
26,39
3,802,444
3,558,726
3,244,406
3,036,456
5,227,964
4,946,384
4,460,720
4,220,465
Total shareholders’ equity
Total liabilities and shareholders’ equity
(Continued) 172
￦
12,595,649 ￦
See accompanying notes.
12,319,697 $
10,747,142 $
10,511,687
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
SEPARATE STATEMENTS OF COMPREHENSIVE INCOME
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014 2015
(In millions, except per share amounts)
(In thousands, except per share amounts)
SALES
27,28,35
COST OF SALES
28,32,35
9,803,917
856,529
859,251
730,827
733,149
29,32,35
384,169
381,280
327,789
325,324
472,360
477,971
403,038
407,825
23,30,35
217,172
164,305
185,300
140,192
23,30,32,35
209,019
127,994
178,344
109,210
￦
GROSS PROFIT
SELLING AND ADMINISTRATIVE EXPENSES
OPERATING INCOME
FINANCIAL INCOME
FINANCIAL EXPENSES
10,660,446 ￦
2014
10,755,778 $
9,896,527
9,095,944 $
9,177,285
8,365,117
8,444,136
31,35
118,918
129,971
101,466
110,896
31,32,35
219,462
214,623
187,254
183,125
379,969
429,630
324,206
366,578
INCOME TAX EXPENSE
33
103,411
116,495
88,235
NET INCOME
26
￦
276,558 ￦
313,135 $
20, 26
￦
22,892 ￦
(27,825)
22,892
(27,825)
OTHER INCOME
OTHER EXPENSES
INCOME BEFORE INCOME TAX EXPENSE
99,398
235,971
$
267,180
19,532
$
(23,741)
OTHER COMPREHENSIVE INCOME (LOSS):
Items that will not be reclassified subsequently to
profit or loss:
Remeasurements of defined benefit plans
$
19,532
(23,741)
Items that may be reclassified subsequently to
profit or loss:
Loss on AFS financial assets, net
Gain on foreign operation translation, net
23, 25
(7,500)
(2,237)
(6,399)
(1,909)
25
45,362
35,217
38,704
30,049
37,862
32,980
32,305
28,140
TOTAL COMPREHENSIVE INCOME
￦
337,312 ￦
318,290
$
287,808
$
271,579
EARNINGS PER SHARE:
Basic earnings per share of common stock
34
￦
2,481 ￦
2,809
$
2
$
2
Basic earnings per share of preferred stock
34
￦
2,551 ￦
2,883
$
2
$
2
(Continued) See accompanying notes.
173
SEPARATE STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Other
contributed
capital
Capital
stock
Components
of other
capital
Retained
earnings
Total
amount
(In millions)
Balance at January 1, 2014
￦
557,273 ￦
828,181 ￦
(30,776) ￦
3,329,148 ￦
4,683,826
Dividends
-
-
-
(55,732)
(55,732)
Net income
-
-
-
313,135
313,135
Loss on valuation of AFS financial assets, net
-
-
(2,237)
-
(2,237)
Gain on foreign operations translation, net
-
-
35,217
-
35,217
Remeasurements of defined benefit plans
-
-
-
(27,825)
(27,825)
Balance at December 31, 2014
￦
557,273 ￦
828,181 ￦
2,204 ￦
3,558,726 ￦
4,946,384
Balance at January 1, 2015
￦
557,273 ￦
828,181 ￦
2,204 ￦
3,558,726 ￦
4,946,384
Dividends
-
-
-
(55,732)
(55,732)
Net income
-
-
-
276,558
276,558
Loss on valuation of AFS financial assets, net
-
-
(7,500)
-
(7,500)
Gain on foreign operations translation, net
-
-
45,362
-
45,362
Remeasurements of defined benefit plans
-
-
-
22,892
22,892
Balance at December 31, 2015
￦
557,273 ￦
828,181 ￦
40,066 ￦
3,802,444 ￦
5,227,964
Translation into U.S. dollars (Note 2)
Other
contributed
capital
Capital
stock
Components
of other
capital
Retained
earnings
Total
amount
(In thousands)
Balance at January 1, 2014
$
475,489 $
706,639 $
Dividends
-
-
Net income
-
Loss on valuation of AFS financial assets, net
-
Gain on foreign operations translation, net
-
Remeasurements of defined benefit plans
-
(26,259) $
2,840,570 $
3,996,439
-
(47,553)
(47,553)
-
-
267,180
267,180
-
(1,909)
-
(1,909)
-
30,049
-
30,049
-
-
(23,741)
(23,741)
Balance at December 31, 2014
$
475,489 $
706,639 $
1,881 $
3,036,456 $
4,220,465
Balance at January 1, 2015
$
475,489 $
706,639 $
1,881 $
3,036,456 $
4,220,465
Dividends
-
-
-
(47,553)
(47,553)
Net income
-
-
-
235,971
235,971
Loss on valuation of AFS financial assets, net
-
-
(6,399)
-
(6,399)
Gain on foreign operations translation, net
-
-
38,704
-
38,704
Remeasurements of defined benefit plans
-
-
-
19,532
Balance at December 31, 2015
$
475,489 $
706,639 $
(Continued) See accompanying notes.
174
34,186 $
3,244,406 $
19,532
4,460,720
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
financial statements
SEPARATE STATEMENTS OF CASH FLOWS
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
2014
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations:
￦
Net income
527,970 ￦
179,471 $
450,486 $
153,133
276,558
313,135
235,971
267,180
Additions of expenses not involving cash
outflows and others
38
587,208
507,749
501,031
433,233
Deduction of income not involving cash inflows
and others
38
(297,153)
(272,059)
(253,544)
(232,132)
Changes in operating assets and liabilities:
(38,643)
(369,354)
(32,972)
(315,148)
Decrease (increase) in trade receivables
47,060
(184,084)
40,155
(157,067)
(308,054)
(62,753)
(262,845)
(53,544)
Increase in other receivables
Decrease in due from customers for contract
work
Decrease in inventories
518,226
18,110
442,172
15,452
149,782
87,423
127,800
74,593
Increase in other current assets
(365,884)
(104,983)
(312,188)
(89,576)
Increase in long-term other receivables
(152,579)
(105,905)
(130,187)
(90,363)
Decrease in derivative assets
11
4
9
3
(391,779)
(111,671)
(334,282)
(95,282)
Increase (decrease) in other payables
175,034
(244,992)
149,346
(209,038)
Increase in advances from customers
49,656
53,143
42,369
45,344
390,903
227,452
333,535
194,072
1,499
3,656
1,279
3,119
Decrease in trade payables
Increase in due to customers for contract
work
Increase in other current liabilities
101,144
80,721
86,300
68,875
Decrease in provisions
Increase in long-term other payables
(124,338)
(54,907)
(106,090)
(46,849)
Decrease in retirement benefit obligation
(178,706)
(21,730)
(152,480)
(18,541)
(1,419)
(1,186)
(1,211)
(1,012)
Decrease in provision for long-term employee
benefits
Increase in components of other capital
Interest income received
Dividend income received
Interest expense paid
Income taxes paid
50,801
52,348
43,346
44,666
44,156
39,778
37,676
33,940
42,826
59,456
36,541
50,730
(58,288)
(63,326)
(49,734)
(54,032)
(54,511)
(114,210)
(46,511)
(97,449)
502,153
101,169
428,458
86,322
(Continued) 175
SEPARATE STATEMENTS OF CASH FLOWS (CONTINUED)
HYUNDAI ENGINEERING & CONSTRUCTION CO., LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Korean won
Notes
2015
Translation into U.S. dollars (Note 2)
2014
2015
(In millions)
2014
(In thousands)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash inflows from investing activities:
Decrease in other receivables
￦
Withdrawal of long-term financial instruments
25,317 ￦
29,505 $
21,602 $
25,175
2,577
4,276
2,199
Decrease in long-term other receivables
22,841
-
19,489
-
Disposal of AFS financial assets
13,538
21,322
11,551
18,193
Disposal of held-to-maturity financial assets
22,533
22,471
19,226
19,173
Disposal of investments in subsidiaries, joint
ventures and associates
3,269
26,512
2,789
22,621
-
21
-
18
Disposal of property, plant and equipment
8,154
36,051
6,957
30,760
Disposal of intangible assets
2,440
508
2,082
433
-
68,808
-
58,710
(29,534)
(60,123)
(25,200)
(51,299)
(11,509)
Disposal of investment property
Increase in other current liabilities
3,648
Cash outflows for investing activities:
Acquisition of short-term financial instruments
Increase in other receivables
Acquisition of long-term financial instruments
Increase in long-term other receivables
Acquisition of AFS financial assets
(10,668)
(13,489)
(9,102)
(100,260)
-
(85,546)
-
(39,988)
(11,576)
(34,119)
(9,877)
(112,822)
(24,025)
(96,265)
(20,499)
Acquisition of held-to-maturity financial assets
(53,405)
(6,201)
(45,567)
(5,291)
Acquisition of investments in subsidiaries, joint
ventures and associates
(11,797)
(43,470)
(10,066)
(37,090)
Acquisition of investment property
Acquisition of property, plant and equipment
Acquisition of intangible assets
(118)
-
(101)
-
(71,964)
(89,698)
(61,403)
(76,534)
(3,438)
(2,577)
(2,933)
(2,199)
(333,325)
(41,685)
(284,407)
(35,567)
Proceeds from short-term borrowings
625,736
1,406,537
533,904
1,200,117
Issuance of debentures
348,708
348,821
297,532
297,629
-
427,776
-
364,997
(760,680)
(1,350,194)
(649,044)
(1,152,043)
(270,451)
(654,972)
(230,760)
(558,850)
-
(251,456)
-
(214,553)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash inflows from financing activities:
Proceeds from long-term borrowings
Cash outflows for financing activities:
Repayment of short-term borrowings
Repayment of current portion of long-term
borrowings and debentures
Repayment of long-term borrowings
Payment of dividends
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, AT THE
BEGINNING OF YEAR
EFFECT OF EXCHANGE RATE ON CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,AT THE END
OF YEAR
￦
￦
(55,732)
(55,732)
(47,553)
(47,553)
(112,419)
(129,220)
(95,921)
(110,256)
56,409 ￦
48,131 $
(59,501)
1,031,231
1,106,067
879,890
943,743
1,471
(5,100)
1,255
(4,352)
1,089,111 ￦
1,031,231 $
929,276 $
(Continued) See accompanying notes.
176
(69,736) $
879,890
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
BOARD OF DIRECTORS & organization chart
BOARD OF DIRECTORS
As of January, 2016
Chairman
director
director
JUNG SOO HYUN
CHUNG MONG KOO
KIM YONG HWAN
director
director
director
director
SHIN HYUN YOON
LEE SEUNG JAE
SUH CHEE HO
PARK SUNG DUCK
Plant Division
Power & Energy
Division
organization chart
PRESIDENT
JUNG SOO HYUN
Auditing Group
VICE PRESIDENT
KWAK BYUNG HAE
Infra & Environment
Division
BUILDING WORKS
Division
SENIOR VICE PRESIDENT
EXECUTIVE VICE PRESIDENT
KWON OH HYUK
KIM JUNG CHUL
KIM JONG HO
Global Marketing
Division
Research &
Development Division
Procurement Division
EXECUTIVE VICE PRESIDENT
VICE PRESIDENT
KIM HYUNG IL
Management &
Administration Division
EXECUTIVE VICE PRESIDENT
BAEK KYUNG KEE
EXECUTIVE VICE PRESIDENT
SENIOR VICE PRESIDENT
EXECUTIVE VICE PRESIDENT
BYUN DONG AN
Finance & Accounting
Division
EXECUTIVE VICE PRESIDENT
LEE SEOK HONG
SEO SANG HOON
PARK DONG WOOK
PRM Sub-Division
Planning Sub-Division
Global Business
Center Project
Division
VICE PRESIDENT
VICE PRESIDENT
RYU CHIL HEE
KIM TECK KYU
EXECUTIVE VICE PRESIDENT
KIM IN SOO
177
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JAPAN
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SAUDI ARABIA
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VIETNAM
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Ba Dinh District, Hanoi, Vietnam
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P.O.Box 2761, Riyadh 11461
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BANGLADESH
Apartment # 402, 4Th Floor, Plot # 8, Block-F,
Road #1, Banani Chairmanbari, Dhaka-1213, Bangladesh
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•FAX: 880-2-882-3241
OMAN
INDIA
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Gurgaon - 122 002, Haryana, India
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•FAX: 91-124-460-4999
QATAR
UZBEKISTAN
IRAQ
818, Poytaht Business Center, Rashidov 16 street, Tashkent,
Uzbekistan
• TEL: 998-71-140-9071
• FAX: 998-71-140-7872
Room No, 310, Hyundai Eng. & Const. Company Baghdad
Office, Sadun St. Ishtar Hotel, IRAQ
• TEL: 964-780-9171-856
178
Villa No. 2552A, Way No. 6839, Azaiba, Muscat, Sultanate of
Oman
• TEL: 968-2449-1201
• FAX: 968-2449-1025
Building #91, Haloul St. #820, Al Maamoura Zone #56, Doha,
Qatar. P.O. BOX 24466
• TEL: 974-4455-0668/9
• FAX: 974-4467-8856
HYUNDAI ENGINEERING & CONSTRUCTION 2015 Annual Report
GLOBAL NETWORK
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Beijing
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Tokyo
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Hanoi
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UNITED KINGDOM
Suite 311, Building 3 Chiswick Business Park,
566 Chiswick High Road Chiswick, London, W4 5YA
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•FAX: 44-20-8747-2929
ALGERIA
2nd Floor, 16 Rue Hamdani Lahcene, Cooperative Mohamed
Boudiaf, Sidi Yahia, Hydra, Alger, Algeria
•TEL: 213-21-43-5460/5461
•FAX: 213-21-43-5462
CHILE
Cerro el Plomo 5931 Office No. 707, Las Condes, Santiago
Chile
•TEL: 56 2 2684 9669
VENEZUELA
Av. Principal de La Castellana, Torre Banco Lara, Piso 6, Oficina
D-1, La Castellana, Caracas 1060, Venezuela
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COLOMBIA
CR 11 A 95-44 Apt 201 Bogota Colombia
•TEL: 57-1-475-8844
•FAX: 57-1-475-8844
LIBYA
P.O.BOX 80062, Al Siyahiah St., Tripoli, Libya
•TEL: 218-21-484-3264
•FAX: 218-21-483-5113
179
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