CJ Corporation and Subsidiaries

CJ Corporation and Subsidiaries

Consolidated Financial Statements

December 31, 2018 and 2017

CJ Corporation and Subsidiaries Index

December 31, 2018 and 2017

Page(s)

Independent Auditor’s Report ..................................................................................................... 1 – 6

Consolidated Financial Statements

Consolidated Statements of Financial Position…. ...................................................................... 7 - 8

Consolidated Statements of Profit or Loss ...................................................................................... 9

Consolidated Statements of Comprehensive Income.................................................................... 10

Consolidated Statements of Changes in Equity ..................................................................... 11 - 12

Consolidated Statements of Cash Flows ................................................................................ 13 - 14

Notes to the Consolidated Financial Statements ................................................................. 15 – 144

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

To the Board of Directors and Shareholders of

CJ Corporation

Opinion

We have audited the accompanying consolidated financial statements of CJ Corporation

and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated

statements of financial position as at December 31, 2018 and 2017, and the consolidated statements

of profit or loss, consolidated statements of comprehensive income, consolidated statements of

changes in equity and consolidated statements of cash flows for the years then ended, and notes to

the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material

respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its

consolidated financial performance and its consolidated cash flows for the years then ended in

accordance with International Financial Reporting Standards as adopted by the Republic of Korea

(Korean IFRS).

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the

Consolidated Financial Statements section of our report. We are independent of the Group in

accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the

consolidated financial statements and we have fulfilled our other ethical responsibilities in accordance

with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the consolidated financial statements of the current period. These matters were

addressed in the context of our audit of the consolidated financial statements as a whole, and in

forming our opinion thereon, and we do not provide a separate opinion on these matters.

3

(1) Goodwill impairment assessment

Why it is determined to be a Key Audit Matter

As explained in Note 17 to the consolidated financial statements, the Group’s goodwill as at

December 31, 2018, amounts to \ 3,511,814 million. And, goodwill amounting to \ 2,676,177 million

is related to CJ Logistics Corporation, CJ CheilJedang Corporation and CJ Hello Co., Ltd. (collectively

referred to as ‘Cash Generating Unit (CGU) subject to valuation’), and accounts for 8.4% and 76.2%

of the Group’s total assets and goodwill, respectively.

The Group engaged independent external specialists for impairment assessment of CGU subject to

valuation. Based on historical performance and estimations for the future periods, the Group believes

there is significant headroom between the value in use of the CGUs and their carrying value.

We focused on this area due to the significance of size of goodwill balance and because the

assessment of the ‘value in use’ of the Group’s CGU involves management's judgements about the

future results of the business and the discount rates applied to future cash flow forecast.

How our audit addressed the Key Audit Matter

We have performed the following audit procedures to address the Key Audit Matter:

- Evaluating the qualification and independence of external specialists engaged.

- Evaluating the appropriateness of valuation model used in estimating the value-in-use.

- Evaluating the reasonableness of the key assumptions used in estimating the value-in-use.

- Verifying the consistency of the estimates of sales growth rate, operating margin ratio and

investment activities of the Group in comparison to the historical performance and market

conditions.

- Comparing the long-term growth rates with the economic and industry estimates

- Comparing the discount rates calculated independently using the observable information

with the discount rates applied by the Group’s management.

- Evaluating the sensitivity analysis result with respect to the discount rates and permanent

growth rates applied by the management, in order to assess the impacts of changes in key

assumptions to impairment assessment.

4

Other Matter

Auditing standards and their application in practice vary among countries. The procedures and

practices used in the Republic of Korea to audit such consolidated financial statements may differ

from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Consolidated

Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with Korean 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.

In preparing the consolidated financial statements, management is responsible for assessing the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to

liquidate the Group or to cease operations.

Those charged with governance are responsible for overseeing the Group’s financial reporting

process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial

statements as a whole are free from material misstatement, whether due to fraud or error, and to

issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

but is not a guarantee that an audit conducted in accordance with Korean Standards on Auditing will

always detect a material misstatement when it exists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these consolidated financial

statements.

As part of an audit in accordance with Korean Standards on Auditing, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal control.

· Obtain an understanding of internal control relevant to the audit 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.

5

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

· Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s

report to the related disclosures in the consolidated financial statements or, if such disclosures

are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained

up to the date of our auditor’s report. However, future events or conditions may cause the Group

to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the Group audit.

We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all relationships and

other matters that may reasonably be thought to bear on our independence, and where applicable,

related safeguards.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the consolidated financial statements of the current

period and are therefore the key audit matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure about the matter or when, in extremely rare

circumstances, we determine that a matter should not be communicated in our report because the

adverse consequences of doing so would reasonably be expected to outweigh the public interest

benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Byoung-Muk

Kim, Certified Public Accountant.

6

Seoul, Korea

March 19, 2019

This report is effective as of March 19, 2019, the audit report date. Certain subsequent events or

circumstances, which may occur between the audit report date and the time of reading this report,

could have a material impact on the accompanying consolidated financial statements and notes

thereto. Accordingly, the readers of the audit report should understand that there is a possibility that

the above audit report may have to be revised to reflect the impact of such subsequent events or

circumstances, if any.

CJ Corporation and Subsidiaries Consolidated Statements of Financial Position December 31, 2018 and 2017

7

(in thousands of Korean won) Notes 2018

2017

Assets

Current assets

Cash and cash equivalents 6 1,473,565,899 1,219,547,558

Short-term financial instruments 6,7 162,956,597 433,707,497

Short-term loan receivable 6 72,127,499 62,482,998

Current derivative assets 6,9 13,872,935 19,091,723

Trade receivables 6,8 3,534,816,257 3,551,768,653

Contract assets 29 261,651,897 -

Current available-for-sale financial assets 6,14 - 454,250

Current financial assets measured at fair value 6,14 60,736 -

Other current financial assets 6,8,9 407,716,765 408,190,478

Advance payments 406,590,563 377,993,013

Inventories 10 2,023,661,340 1,733,006,295

Biological assets 11 112,117,316 60,922,565

Other current assets 12 397,969,891 292,949,516

8,867,107,695 8,160,114,546

Non-current assets held-for-sale 13 2,246,600 173,138,454

Non-current assets

Non-current derivative assets 6,9 50,590,991 34,219,123

Long-term trade receivables 6,8 112,774,200 75,340,546

Long-term contract assets 29 39,258,788 -

Available-for-sale financial assets 6,14 - 283,894,352

Financial assets measured at fair value 6,14 277,552,729 -

Investments in joint ventures and associates 15 1,455,418,664 1,366,045,956

Property, plant and equipment 16 12,970,204,923 11,492,884,161

Intangible assets 17 6,168,778,156 6,039,033,206

Investment properties 18 260,091,195 271,916,531

Other non-current financial assets 6,8,9 717,404,670 632,803,777

Deferred tax assets 22 288,900,689 310,654,725

Other non-current assets 12 519,219,348 485,337,687

22,860,194,353 20,992,130,064

Total assets 31,729,548,648 29,325,383,064

CJ Corporation and Subsidiaries Consolidated Statements of Financial Position December 31, 2018 and 2017

8


2017

Liabilities

Current liabilities

Current derivative liabilities 6,9 12,401,221 50,441,499

Trade payables 2,088,316,945 2,034,998,735

Contract liabilities 29 61,053,922 -

Short-term borrowings 6,19 4,106,708,423 2,920,089,020

Current portion of long-term debentures and

borrowings 6,19,20 1,653,575,641 1,402,909,640

Non-trade payables 1,137,525,830 1,339,141,542

Other current financial liabilities 6,9 793,205,979 675,375,047

Current income tax liabilities 365,179,027 168,135,733

Current provisions for liabilities and charges 23 2,000,479 8,548,525

Other current liabilities 12 778,443,083 763,618,974

10,998,410,550 9,363,258,715

Non-current liabilities

Non-current derivative liabilities 6,9 238,815,741 65,271,612

Long-term contract liabilities 29 112,236,628 -

Long-term borrowings 6,19 1,767,900,780 1,592,710,545

Debentures 6,20 4,516,699,249 4,682,065,004

Guarantee deposits received 6 259,327,337 212,067,861

Other non-current financial liabilities 6,9 36,992,479 29,894,660

Net defined benefit liabilities 21 311,050,517 235,446,526

Deferred income tax liabilities 22 794,847,286 881,236,745

Non-current provisions for liabilities and charges 23 18,520,903 21,786,934

Other non-current liabilities 12 152,936,933 249,475,653

8,209,327,853 7,969,955,540

Total liabilities 19,207,738,403 17,333,214,255

Equity

Share capital 24 157,914,810 157,914,810

Share premium 24 992,993,627 992,993,627

Other components of equity 26 (428,681,903) (336,474,656)

Retained earnings 27 3,336,515,558 3,115,329,926

Equity attributable to owners of the Parent

Company

4,058,742,092 3,929,763,707

Non-controlling interest 8,463,068,153 8,062,405,102

Total equity 12,521,810,245 11,992,168,809

Total liabilities and equity 31,729,548,648 29,325,383,064

The above consolidated statements of financial position should be read in conjunction with the accompanying notes.

CJ Corporation and Subsidiaries Consolidated Statements of Profit or Loss Years Ended December 31, 2018 and 2017

9

(in thousands of Korean won, except per share

amounts) Notes 2018

2017

Sales 29,40 29,523,435,477 26,898,599,989

Cost of sales 30 (21,170,216,737) (18,608,585,681)

Gross profit 8,353,218,740 8,290,014,308

Selling and administrative expenses 30,31 (7,020,743,532) (6,964,058,969)

Operating profit 40 1,332,475,208 1,325,955,339

Finance income 32 358,181,813 731,801,535

Finance costs 32 (841,170,612) (735,192,113)

Share of profit of joint ventures and associates 15 56,374,317 86,597,239

Other non-operating income 33 1,102,538,066 631,534,708

Other non-operating expenses 33 (688,734,107) (465,515,379)

Profit before income tax 1,319,664,685 1,575,181,329

Income tax expense 22 (439,637,407) (437,452,912)

Profit for the year 880,027,278 1,137,728,417

Profit is attributable to owners of the Parent

Company 276,055,458 463,698,379

Profit is attributable to non-controlling interests

603,971,820

674,030,038

Earnings per share attributable to the equity

holders of the Parent Company 34

Basic earnings per ordinary share

9,735

16,286

Diluted earnings per ordinary share 9,735 16,264

Basic earnings per preferred share

9,785 16,336

Diluted earnings per preferred share

9,785 16,314

The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.

CJ Corporation and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31, 2018 and 2017

10


2017

Profit for the year

880,027,278 1,137,728,417

Other comprehensive income

Items that will not be reclassified to profit or loss:

Loss on valuation of equity instruments at fair value

through other comprehensive income

(36,084,430) -

Share of other comprehensive income of joint venture

and associates

(1,115,457) (1,115,457)

Remeasurements of net defined benefit liabilities (66,348,165) (15,240,850)

Items that may be subsequently reclassified to

profit or loss:

Losses on valuation of available-for-sale financial

assets

- (234,132,074)

Share of other comprehensive income of joint venture

and associates

25,967,851 24,004,006

Exchange differences on translation of foreign

operations

(132,380,193) (446,902,130)

Gains on valuation of derivative instruments (1,147,570) 216,453

Other comprehensive income for the year, net of tax (211,107,964) (673,170,052)

Total comprehensive income for the year 668,919,314 464,558,365

Total comprehensive income is attributable to :

Owners of the Parent Company 205,896,612 206,522,332

Non-controlling interests 463,022,702 258,036,033

The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.

CJ Corporation and Subsidiaries Consolidated Statements of Changes in Equity Years Ended December 31, 2018 and 2017

11

Attributable to owners of the Parent Company

Non-controlling

interests

Total Equity (in thousands of Korean won) Notes Share capital

Share premium

Other

components of

equity

Retained

earnings

Total

Balances at January 1, 2017

157,914,810 992,993,627 (114,587,283) 2,699,483,254 3,735,804,408 7,518,645,295 11,254,449,703

Comprehensive income

Profit for the year - - - 463,698,379 463,698,379 674,030,038 1,137,728,417


Changes in the fair value of available-for-sale financial

assets - - (138,280,502) - (138,280,502) (95,851,572) (234,132,074)

Share of other comprehensive income of joint ventures

and associates

- - 9,149,397 (397,765) 8,751,632 14,136,917 22,888,549

Translation of foreign currency financial statements - - (118,808,871) - (118,808,871) (328,093,259) (446,902,130)

Gains on valuation of derivative instruments 9 -

- 75,564 - 75,564 140,889 216,453

Remeasurements of net defined benefit liabilities 21 - - - (8,913,870) (8,913,870) (6,326,980) (15,240,850)

Total comprehensive income for the year - - (247,864,412) 454,386,744 206,522,332 258,036,033 464,558,365

Transactions with owners of the Parent Company

Share-based payment expenses - - (3,668,900) - (3,668,900) - (3,668,900)

Dividends paid 35 - - - (38,540,072) (38,540,072) (80,858,443) (119,398,515)

Issuance of hybrid bond - - - - - 200,000,000 200,000,000

Repayments of hybrid bond - - - - - (200,000,000) (200,000,000)

Non-controlling interests arising on business combination - - - - - 224,390,388 224,390,388

Changes in ownership interests in subsidiaries without

change of control 41 - - 37,429,141 - 37,429,141 154,097,981 191,527,122

Share of movement in other components of equity of joint

ventures and associates - - (7,783,202) - (7,783,202) (11,906,152) (19,689,354)

Total transaction with owners of the Parent Company - - 25,977,039 (38,540,072) (12,563,033) 285,723,774 273,160,741

Balance at December 31, 2017

157,914,810 992,993,627 (336,474,656) 3,115,329,926 3,929,763,707 8,062,405,102 11,992,168,809

CJ Corporation and Subsidiaries Consolidated Statements of Changes in Equity Years Ended December 31, 2018 and 2017

12

Attributable to owners of the Parent Company

Non-controlling

interests

Total Equity (in thousands of Korean won) Notes Share capital

Share premium

Other

components of

equity

Retained

earnings

Total

Balances at January 1, 2018

157,914,810 992,993,627 (336,474,656) 3,115,329,926 3,929,763,707 8,062,405,102 11,992,168,809

Effects of changes in accounting policy - - (12,792,957) 15,302,794 2,509,837 21,234,273 23,744,110

After adjustments 157,914,810 992,993,627 (349,267,612) 3,130,632,719 3,932,273,544 8,083,639,375 12,015,912,919

Comprehensive income

Profit for the year - - - 276,055,458 276,055,458 603,971,820 880,027,278


Loss on valuation of equity instruments at fair value through

other comprehensive income - - (17,877,620) - (17,877,620) (18,206,810) (36,084,430)


and associates

- - 3,439,620 52,698 3,492,318 21,360,076 24,852,394

Translation of foreign currency financial statements - - (26,565,311) - (26,565,311) (105,814,882) (132,380,193)

Gains on valuation of derivative instruments 9 -

- (369,437) - (369,437) (778,133) (1,147,570)

Remeasurements of net defined benefit liabilities 21 - - - (28,838,796) (28,838,796) (37,509,369) (66,348,165)

Total comprehensive income for the year - - (41,372,748) 247,269,360 205,896,612 463,022,702 668,919,314

Transactions with owners of the Parent Company

Issuance of ordinary share due to exercise of stock options - - (6,196,150) - (6,196,150) - (6,196,150)

Acquisition of treasury shares - - (40,558,071) - (40,558,071) - (40,558,071)

Dividends paid 35 - - - (41,386,522) (41,386,522) (92,959,930) (134,346,452)

Issuance of hybrid bond 28 - - - - - 373,414,480 373,414,480

Repayments of hybrid bond - - - - - (90,365,000) (90,365,000)

Non-controlling interests arising on business combination - - - - - 56,613,569 56,613,569

Changes in ownership interests in subsidiaries without

change of control 41 - - 21,406,218 - 21,406,218 (314,632,483) (293,226,265)

Share of movement in other components of equity of joint

ventures and associates - - (12,693,539) - (12,693,539) (15,664,560) (28,358,099)

Total transaction with owners of the Parent Company - - (38,041,542) (41,386,522) (79,428,064) (83,593,924) (163,021,988)

Balance at December 31, 2018

157,914,810 992,993,627 (428,681,903) 3,336,515,558 4,058,742,092 8,463,068,153 12,521,810,245

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

CJ Corporation and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2018 and 2017

13


2017

Cash flows from operating activities

Cash generated from operations 36 1,818,196,667 2,460,732,336

Income tax paid (277,104,316) (220,328,034)

Net cash inflow from operating activities

1,541,092,351 2,240,404,302

Cash flows from investing activities

Net Decrease in short-term financial instruments

257,588,887 77,638,683

Decrease in short-term loan receivable

41,709,919 37,146,836

Increase in short-term loan receivable

(37,979,150) (5,360,456)

Proceeds from disposal of non-current assets

held-for-sale

727,765 4,650,430

Proceeds from disposal of available-for-sale financial

assets - 370,526,940

Payment for available-for-sale financial assets -

(25,319,318)

Proceeds from disposal of financial assets measured

at fair value 23,158,170 -

Payment for financial assets measured at fair value (42,748,527) -

Proceeds from disposal of investments in joint

ventures and associates 11,510,067 6,734,724

Acquisition of investments in joint ventures and

associates (21,263,385) (29,556,359)

Proceeds from disposal of property, plant and

equipment 42,592,963 89,598,118

Payment for property, plant and equipment

(2,458,295,473) (2,272,949,492)

Proceeds from disposal of intangible assets

5,849,456 14,182,769

Payment for intangible assets

(645,345,695) (565,932,292)

Proceeds from disposal of investment properties

8,197,533 1,004,955

Payment for investment properties

(5,885,177) (56,375,247)

Proceeds from disposal of other current

financial assets 71,943,007 72,459,845

Payment for other current financial assets

(45,855,739) (93,217,936)

Proceeds from disposal of other non-current financial

assets 35,168,149 92,237,594

Payment for other non-current financial assets (145,384,212) (221,388,760)

Proceeds from disposal of other non-current assets 35,397 1,506,162

Payment for other non-current assets (12,959,538) (2,011,655)

Proceeds from disposal of investments in subsidiaries 1,164,156,992 111,930

Acquisition of investments in subsidiaries, net of cash

acquired (468,133,362) (413,626,857)

Interest received 60,741,916 38,581,769

Dividends received 39,442,650 14,191,405

Change from other investing activities

(4,985,486) 1,366,589

Net cash outflow from investing activities (2,126,012,873) (2,863,799,623)

CJ Corporation and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2018 and 2017

14

(in thousands of Korean won) Notes 2018 2017

Cash flows from financing activities

Net increase in short-term borrowings

846,806,688 123,045,999

Decrease in other current financial liabilities (1,356,084) -

Proceeds from issuance of non-current borrowings 1,007,511,677 532,966,466

Repayment of non-current borrowings (124,812,199) (102,576,220)

Increase in current portion of long-term debentures

and borrowings 1,806,069 12,043,653

Decrease in current portion of long-term debentures

and borrowings

(1,233,992,948) (1,337,421,920)

Proceeds from issuance of debentures

877,201,415 1,772,812,610

Repayment of debentures

(20,000,000) (60,304,662)

Increase in deposits received

9,660,000 18,004,010

Decrease in deposits received

(14,450,300) (5,919,708)

Payment for treasury shares (40,558,071) -

Exercise of stock options

(6,196,150) (3,668,900)

Increase in non-controlling interests

633,166,217 419,438,890

Decrease in non-controlling interests

(639,164,872) (241,140,678)

Dividends paid to non-controlling interests (92,959,930) (80,858,443)

Interest paid (331,423,448) (289,583,922)

Dividends paid 35 (41,386,522) (38,540,072)

Change from other financing activities

(2,500,762) (81,784)

Net cash inflow from financing activities

827,350,780 718,215,319

Net increase in cash and cash equivalents

242,430,258 94,819,998

Cash and cash equivalents at the beginning of the year

1,219,547,558 1,169,282,970

Effects of exchange rate changes on cash and cash

equivalents

11,588,083 (44,555,410)

Cash and cash equivalents at the end of the year

1,473,565,899 1,219,547,558

The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.

CJ Corporation and Subsidiaries Notes to the Consolidated Financial Statements December 31, 2018 and 2017

15

1. General Information

CJ Corporation (the "Company" or “Parent Company”, a parent company in accordance with

Korean IFRS 1110 Consolidated Financial Statements) and 69 domestic entities, including CJ

CheilJedang Corporation, and 322 foreign entities, including PT CheilJedang Indonesia, (the

"Subsidiaries") (collectively referred to as the "Group") with 93 investments accounted for using

the equity method including Netmarble Corporation (formerly, Netmarble Games Corporation),

prepare their consolidated financial statements.

CJ Corporation was incorporated in 1953 with share capital of \ 2 million. The Company’s shares

of stock were listed in the Korean Exchange in 1973.

On September 1, 2007, the Company executed the spin-off of its investment division and

manufacturing divisions, and became a holding company managing investments.

As at December 31, 2018, share capital amounts to \ 157,915 million, and its majority

shareholder is Mr. Lee Jay Hyun, who owns 42.07% of the issued shares.

Subsidiaries included in the consolidated financial statements as at December 31, 2018, are as

follows:

Ownership

interest held by

the Group (%) Closing month

Name of entity Location 2018 2017 Main business

CJ CheilJedang Corporation1 Korea 45.64 37.72 December Food manufacturing

CJ Breeding Co., Ltd. Korea 94.88 94.88 December Crop Cultivating

CJ HealthCare Corporation Korea - 100.00 December Medicine Manufacturing

and sales

CJ Freshway Corporation1 Korea 47.11 47.11 December Wholesale and brokerage

FreshOne Meat Co., Ltd. (formerly, FreshOne Inchon Co., Ltd. Korea 100.00 100.00 December Food logistic

FreshOne Gwangju Co., Ltd. Korea 96.16 96.04 December Food logistic

FreshOne NamSeoul Co., Ltd. Korea 87.67 87.67 December Food logistic

FreshOne Jungbu Co., Ltd. Korea 100.00 87.58 December Food logistic

FreshOne Gangnam Co., Ltd. Korea 51.82 51.82 December Food logistic

FreshOne DongSeoul Co., Ltd. Korea 63.28 63.28 December Food logistic

FreshOne Daegu Gyeongbuk Co., Ltd. Korea 95.96 95.96 December Food logistic

CJ Foodville Corp. Korea 96.02 96.02 December Restaurant and bar

Sinuido Solar Salt Corporation Korea 88.03 88.03 December Wholesale, retail, bay salt

and e-commerce

FreshOne Busan Co., Ltd. Korea 61.37 61.37 December Food logistic

FreshOne Jeonbuk Co., Ltd. Korea - 76.62 December Food logistic

F&D Infra Co., Ltd. Korea 100.00 100.00 December Service

SongLim Food Co., Ltd. Korea 100.00 100.00 December Food manufacturing

SongLim FS Co., Ltd. Korea 100.00 100.00 December Food manufacturing

CJ Dondonfarm Co., Ltd. Korea 99.99 99.99 December Hog raising

CJ Seafood Corporation1 Korea 46.52 46.52 December Food manufacturing


16

Ownership

interest held by



Youngwoo Frozen Foods Co., Ltd. Korea - 100.00 December Food & beverage

manufacturing

Wonji Co., Ltd. Korea 100.00 100.00 December Printing business

Cofeed Co., Ltd.5

Korea 70.02 70.02 December Holding company

CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.)

1

Korea

44.76 41.24

December

Broadcasting, game, movie, music, and

performance business

CJ Hello Co., Ltd. Korea 53.92 53.92 December CATV

CJ Telenix Co., Ltd. Korea 100.00 100.00 December Business support service

E&C Infra Co., Ltd. Korea 100.00 100.00 December Logistics

Superrace Co., Ltd. Korea 98.79 98.79 December Exhibition and event

agency

CJ Logistics Corporation Korea 50.46 51.98 December Logistics and construction

Korea Integrated Freight Terminal Co., Ltd. Korea 100.00 100.00 December Freight terminal operation

CJ Korea Express Busan Newport Distripark Co., Ltd. Korea 84.36 84.36 December

Storage and transportation

Korea Express SB Co., Ltd. Korea 70.00 70.00 December Logistics

KX Holdings Corporation Korea - 100.00 December Investment and

management of logistics Gwangyang West Container Terminal Co.,

Ltd. Korea - 100.00 December Harbor loading and

unloading Investment Association For Coexistence Of Small And Venture Businesses Korea 95.00 95.00 December Investment association

CJ Powercast Inc. Korea 100.00 100.00 December Advertising media sales

CJ CGV Co., Ltd.1 Korea 39.02 39.02 December Movie theater operation

CJ 4DPLEX Co., Ltd. Korea 90.48 90.48 December Equipment sales

Bosphorus Investment Co., Ltd. Korea 52.23 52.23 December Investment overseas

CJ E&M Corporation

Korea

- 39.52

December

Broadcasting, game, movie, music, and

performance business

Mezzomedia Inc. Korea 51.00 51.00 December Advertising media sales

JS Pictures Co., Ltd.5 Korea 70.00 70.00 December Contents production

MMO Entertainment Corporation Korea 100.00 100.00 December Management

Hi-Lite Records Co., Ltd. Korea 51.10 51.10 December Music labelling business

AOMG Co., Ltd. Korea 51.00 51.00 December Music labelling business

K Valley Co., Ltd. Korea 91.74 91.74 December Complex culture business

Studio Dragon Corporation Korea 71.24 71.33 December Broadcast program

production and supply

Hwa & Dam Pictures Co., Ltd. Korea 100.00 100.00 December Entertainment management

Culturedepot Co., Ltd. Korea 100.00 100.00 December Entertainment management

KPJ Corporation Korea 100.00 100.00 December Entertainment management

Rubicon Company, Ltd. Korea - 100.00 December Media commerce product planning and distribution

JK Film Co., Ltd.5

Korea 51.00 51.00 December Movie production

CJ Digital Music Corporation Korea - 100.00 December Music platform

TW Venture Investment No.13-New Industry Korea 95.00 95.00 December Investment association


17

Ownership

interest held by



CJ OliveNetworks Corporation

Korea

55.13 55.13

December

Wholesale and retail, system integration and

management

CJ Engineering & Construction Corp. Korea - 99.94 December Construction

CJ MD1 Co., Ltd. Korea 100.00 100.00 December Business support service

Bio Healthcare Fund Korea 98.68 98.68 December Venture capital

SAM HAE COMMERCIAL CO., LTD.(*5) Korea 80.00 - December Food manufacturing

HyeongjeFood Co.Ltd Korea 80.00 - December Food logistic

A Twosome Place Co., Ltd. Korea 60.00 - December Restaurant

Mimi bakery Korea 100.00 - December Food manufacturing

Pebblestone CGV Private Real Estate Investment Trust No. 1 Korea 51.47 51.47 December Real estate rental

Rankwave Co., Ltd Korea 100.00 100.00 December Software consulting,

development and supply

Jellyfish Entertainment Co., Ltd Korea 51.00 51.00 December

Music contents production and entertainment

management

H1GHRMUSICRECORDS.LTD. Korea 51.00 51.00 December Broadcast program

production

STUDIO TAKE ONE Korea 100.00 100.00 December Broadcast program

production

Highup Entertainment Korea - 51.00 December Cord, production and sale

David Toy & Entertainment Korea 51.00 51.00 December

Digital contents supply and toy manufacturing and

sales

Amoeba Culture Co., Ltd. Korea 60.00 60.00 December


management

dBase&co.,Ltd Korea 100.00 - December Advertising media sales

STONE MUSIC ENTERTAINMENT Co,.Ltd Korea 100.00 - December Public relations service

SWING ENTERTAINMENT CO.,LTD Korea 51.00 - December


management

Belift Lab Inc Korea 52.00 - December


management

Artworks Korea Korea 70.02 70.02 December Wholesale, retail and e-

commerce

CJ Hello Hana Broadcasting Co., Ltd. Korea 100.00 - December CATV

ICT Convergence Fund Korea 98.96 98.96 December Venture capital

Small & Venture Company Cooperation

FundⅡ Korea 98.04 98.04 December Venture capital

DIWare Co., LTD. Korea 100.00 100.00 December Software consulting,

development and supply

KVM Co., Ltd Korea - - December Asset securitization

business

CJ E&C Malaysia Sdn. Bhd. Malaysia 100.00 100.00 December Construction

CJ Food Service (Shanghai) Co., Ltd. China - 100.00 December Restaurant

CJ Shenyang Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ Tianjin Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales


18

Ownership

interest held by



CJ Harbin Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ Qingdao Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ (China) Food Co., Ltd. China 100.00 100.00 December Food & beverage

manufacturing

CJ Qingdao Foods Co., Ltd. China 100.00 100.00 December Meat processing

CJ Liaocheng Biotech Co., Ltd. China 100.00 100.00 December Lysine manufacturing and

sales

CJ Zhengzhou Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ Nanjing Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ Chengdu Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ (Shenyang) Biotech Co., Ltd. China 100.00 100.00 December Lysine manufacturing and

sales

CJ DCH Guangdong Frozen Food Co., Ltd.

China

60.00 60.00

December

Frozen food and chilled foods manufacturing and

sales

CJ (Changchun) Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ (Liaocheng) Feed Co., Ltd. China 100.00 100.00 December Feed manufacturing and

sales

CJ-Yihai (Kunshan) Foodstuffs Co., Ltd.3 China 50.00 50.00 December

Premix manufacturing and sales

CJ Foodville (SHANGHAI) CORPORATION China 100.00 100.00 December

Food manufacturing and restaurant

CJ Freshway Vietnam Co., Ltd. Vietnam 100.00 100.00 December Food logistic

CJ Freshway America Corporation USA 100.00 100.00 December Food logistic

PT CJ CheilJedang Lestari Indonesia 75.00 75.00 December Food manufacturing

CJ Freshway Qingdao Corporation China 100.00 100.00 December Food logistic

CJ Act Pty. Ltd. Australia 100.00 100.00 December Cassava plantation

Shanghai Blue Wish Catering Service Co., Ltd. China 100.00 100.00 December Catering

CJ Nutracon Pty. Ltd. Australia 100.00 100.00 December Food manufacturing

CJ Bio Malaysia Sdn. Bhd. Malaysia 86.00 86.00 December Methionine manufacturing

and sales

CJ Cheiljedang Mexico, S.A. DE C.V. Mexico 100.00 100.00 December Food sales and

distribution

CJ TMI AMERICA CORP. USA 100.00 100.00 December Food sales and

distribution

TWIN MARQUIS INC. USA 100.00 100.00 December Food sales and

distribution

CHEF ONE CORPORATION

USA

100.00 100.00

December

Food sales and distribution

CJ FOODS MANUFACTURING CORPORATION USA 100.00 100.00 December Food manufacturing

PT CJ FEED MEDAN Indonesia 100.00 100.00 December Feed manufacturing and

sales

BIBIGO INTERNATIONAL LLC USA 100.00 100.00 December Restaurant

PT CJ FOOD LESTARI Indonesia 95.00 95.00 December Food manufacturing

CJ PHILIPPINES, INC. Philippines 70.00 70.00 December Feed manufacturing and

sales

PT CHEILJEDANG INDONESIA Indonesia 100.00 100.00 December Lysine manufacturing and


19

Ownership

interest held by



sales

PT CHEILJEDANG SUPERFEED Indonesia 100.00 100.00 December Feed manufacturing and

sales

PT CJ CHEILJEDANG FEED SEMARANG Indonesia 100.00 100.00 December Feed manufacturing and

sales

PT CJ CHEILJEDANG FEED LAMPUNG Indonesia 100.00 100.00 December Feed manufacturing and

sales

PT CJ FEED JOMBANG Indonesia 100.00 100.00 December Feed manufacturing and

sales

PT AGROBIS PANCA EKATAMA Indonesia 100.00 100.00 December Breeding stock

PT SUPER UNGGAS JAYA Indonesia 100.00 100.00 December Breeding stock

CJ BIO RUS Russia 99.90 99.90 December Bio logistic

CJ CHEILJEDANG FEED (CAMBODIA) CO., LTD. Cambodia 100.00 100.00 December

Feed manufacturing and sales

S.C.F-PNH CO., LTD.2 Cambodia 49.00 49.00 December Rental

CJ VINA AGRI CO., LTD. Vietnam 100.00 100.00 December Feed manufacturing and

sales CJ FOODS MILLING VIETNAM LLC (formerly, CJ-SC GLOBAL MILLING LLC.)

Vietnam

100.00 61.11

December

Mill manufacturing and sales

TOUS LES JOURS INTERNATIONAL CORP. USA 100.00 100.00 December


CJ FEED INDIA PRIVATE LTD. India 100.00 100.00 December Feed manufacturing and

sales

CJ FOODVILLE JAPAN CO., LTD. Japan - 99.75 December Restaurant

CJ VINA FOOD CO., LTD. Vietnam 100.00 100.00 December Hog raising

CJ FOOD EUROPE LTD. UK 100.00 100.00 December Food manufacturing and

restaurant

FIDES FOOD SYSTEM CO., LTD. Vietnam 100.00 100.00 December Catering

CJ BIO AMERICA INC. USA 100.00 100.00 December Lysine manufacturing and

sales CJ KOREA EXPRESS MALAYSIA SDN. BHD Malaysia 100.00 100.00 December Logistics

PT CJ LOGISTICS INDONESIA Indonesia 95.00 95.00 December Logistics

EC DISTRIBUTION SDN BHD Malaysia 100.00 100.00 December Logistics

CJ LOGISTICS PH CORP. Philippines 100.00 100.00 December Logistics

CJ IMC CO., LTD. China 100.00 100.00 December Wholesale and brokerage

CJ GLS HONG KONG LIMITED Hong Kong 100.00 100.00 December Logistics

EC SERVICES ENTERPRISE SDN BHD Malaysia 100.00 100.00 December Logistics

CJ GLS CHINA(SHANGHAI) LTD China 100.00 100.00 December Logistics

CJ LOGISTICS MEXICO, S.A. DE C.V. Mexico 99.99 99.99 December Logistics

CJ LOGISTICS CONPAC PTE. LTD. Singapore 100.00 100.00 December Logistics

CJ LOGISTICS EUROPE B.V. Netherlands 100.00 100.00 December Logistics

CJ LOGISTICS (THAILAND) CO., LTD. Thailand 100.00 100.00 December Logistics

CJ KOREA EXPRESS FORWARDING MALAYSIA SDN. BHD Malaysia 100.00 100.00 December Logistics

CJ KOREA EXPRESS SHENZHEN CO., LTD China 100.00 100.00 December Logistics

CJ LOGISTICS RT MYANMAR CO., LTD. Myanmar 70.00 70.00 December Logistics

CJ KOREA EXPRESS QINGDAO CO., LTD China 100.00 100.00 December Logistics


20

Ownership

interest held by



CJ KOREA EXPRESS VIETNAM CO.,LTD Vietnam 100.00 100.00 December Logistics

CJ KOREA EXPRESS FREIGHT VIETNAM CO.,LTD Vietnam 100.00 100.00 December Logistics

CJ LOGISTICS PH WAREHOUSING CORP. Philippines 100.00 100.00 December Logistics

CJ PRIME SHOPPING INC. Japan - 99.78 December Wholesale and brokerage

SHANGHAI CJ FREIGHT FORWARDING CO., LTD China 100.00 100.00 December Logistics

CJ KOREA EXPRESS INDIA PRIVATE LIMITED India 100.00 100.00 December Logistics

CJ LOGISTICS U.S.A. CORPORATION USA 100.00 100.00 December Storage, brokerage of

forwarding transportation

CJ LOGISTICS JAPAN CORPORATION Japan 100.00 100.00 December Forwarding

CJ KOREA EXPRESS TIANJIN CO., LTD China 100.00 100.00 December Storage, brokerage of

forwarding transportation KOREA EXPRESS HONG KONG CO., LTD. Hong Kong 100.00 100.00 December

Storage, brokerage of forwarding transportation

KUMHO LOGISTICS(SHANGHAI) CO., LTD. China 100.00 100.00 December

Storage and inland transport business

KOREA EXPRESS SHANGHAI CO.,LTD China 100.00 100.00 December Forwarding, storage

business

WATER PIPELINE WORKS LIMITED Virgin Islands 100.00 100.00 December Construction

CJ LOGISTICS EUROPE GMBH Germany 100.00 100.00 December Storage, brokerage of

forwarding transportation

CJ IMC VIETNAM COMPANY LIMITED Vietnam 100.00 100.00 December Wholesale and brokerage

CJ IMC THAILAND CO., LTD. Thailand 100.00 100.00 December Wholesale and brokerage

CJ KOREA EXPRESS DONGGUAN CO., LTD. China 100.00 100.00 December

Storage and inland transport business

CJ OLIVE YOUNG (SHANGHAI) CORPORATION China 100.00 100.00 December Retail

PT. CJ KOREA EXPRESS RESOURCES INDONESIA Indonesia 100.00 100.00 December Logistics

CJ LOGISTICS MIDDLE EAST FZE UAE 100.00 100.00 December Inland transport

KX SMART CARGO HOLDINGS LIMITED Hong Kong 100.00 100.00 December Logistics

QINGDAO CJ SMART CARGO INTERNATIONAL SERVICES LTD. China 51.00 51.00 December Logistics

QINGDAO SMART CARGO BONDED LOGISTICS CO.,LTD China 100.00 100.00 December Logistics

SHANGHAI SMART CARGO SUPPLY CHAIN MANAGEMENT CO.,LTD China 100.00 100.00 December Logistics

PT CJ LOGISTICS SERVICE INDONESIA

2 Indonesia 49.00 49.00 December Logistics

CJ KOREA EXPRESS TIANTIAN TIANJIN CO.,LTD China 90.00 90.00 December Logistics

CJ SC LOGISTICS (T) LIMITED Tanzania 100.00 100.00 December Logistics

CJ LOGISTICS L.L.C.2 UAE 49.00 49.00 December Logistics

CJ IMC S.A. DE C.V. Mexico 99.00 99.00 December Wholesale and brokerage

CJ SMART CARGO LOGISTICS SA(PTY) LTD

Republic of South Africa 100.00 100.00 December Logistics

CJ ROKIN LOGISTICS HOLDINGS LIMITED (formerly, CJKX ROKIN HOLDINGS LIMITED)

Hong Kong 52.29 52.29 December Logistics

CJ LOGISTICS DO BRASIL LTDA Brazil 99.99 99.99 December Logistics


21

Ownership

interest held by



CJ ENTERTAINMENT JAPAN INC. Japan 100.00 100.00 December Film and broadcast

program production supply

CJ E&M TIANJIN CO., LTD. China 100.00 100.00 December Broadcasting service

CJ VICTOR ENTERTAINMENT, INC. Japan - 51.00 December Music

ROLEMODEL ENTERTAINMENT GROUP LIMITED Hong Kong 99.04 99.04 December Contents consulting

CJ E&M VIETNAM CO., LTD. Vietnam 100.00 100.00 December Movie production

consulting

SHANGHAI YIHEYA MEDIA CO., LTD. China 100.00 100.00 December Media, entertainment and

consulting

FUZHOU CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ E&M HONG KONG LIMITED Hong Kong 100.00 100.00 December Broadcasting service

YANJI CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ CGV (SICHUAN) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

YUNNAN CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

GANZHOU CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (XIAN) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CROWN JADE COMPANY PTE. LTD. Singapore 100.00 100.00 December Investment overseas

CJ CGV (HUBEI) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

NEIMENGGU CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CROSS JUNCTION INVESTMENT CO., PTE. LTD. Singapore 100.00 100.00 December Investment overseas

DALIAN CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

HENAN CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (QINGDAO) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ 4DPLEX AMERICA, INC. USA 100.00 100.00 December Equipment sales

CJ 4DPLEX AMERICAS, LLC. USA 100.00 100.00 December Equipment sales

CGV TIANHE (WUHAN) CINEMA CO., LTD. China 70.00 70.00 December Movie theater operation

JIANGMEN CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

JIANGSU CGV CINEMA INVESTMENT CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (CHANGZHOU) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

YUYAO CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ 4DX (BEIJING) CINEMA TECHNOLOGY CO., LTD. China 100.00 100.00 December Equipment sales

CGV (CHONGQING) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (CHENGDU) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (TIANJIN) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (HUAIAN) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

LIAONING CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (TANGSHAN) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV ORSUN (WUHAN) CINEMA CO., LTD. China 70.00 70.00 December Movie theater operation

WUHU CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ 4DPLEX HONGKONG LIMITED Hong Kong 100.00 100.00 December Investment overseas

ZIBO CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation


22

Ownership

interest held by



CGV(CHANGSHA) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

YANTAI CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (BEIJING) INTERNATIONAL CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ CGV(SHANGHAI) ENTERPRISE MANAGEMENT CO., LTD. China 100.00 100.00 December Movie theater operation

UVD ENTERPRISE LTD. Hong Kong 100.00 100.00 December Movie theater operation

CJ CGV VIETNAM HOLDINGS CO., LTD(formerly, ENVOY MEDIA PARTNERS LTD.)

Virgin Islands 100.00 100.00 December Investment overseas

CJ CGV VIETNAM CO., LTD. Vietnam 80.00 80.00 December Movie theater operation

CJ CGV (SHEN YANG) FILM INTERNATIONAL CINEPLEX CO., LTD. China 100.00 100.00 December Movie theater operation

PANJIN CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ CGV (HARBIN) INTERNATIONAL CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ CGV AMERICA, INC. USA 100.00 100.00 December Investment overseas

CJ CGV (SHANG HAI) FILM INTERNATIONAL CINEPLEX CO., LTD. China 100.00 100.00 December Movie theater operation

SHANGHAI C MEDIA CO., LTD. China 58.00 58.00 December Advertising agency

IMAGINASIAN ENTERTAINMENT, INC. USA 95.05 95.05 December Broadcasting service

CJ CGV AMERICA LA, LLC. USA 100.00 100.00 December Movie theater operation

CGI HOLDINGS LTD. Hong Kong 100.00 100.00 December Investment overseas

CJ E&M AMERICA, INC. USA 100.00 100.00 December Holding company

CJ CENTURY ENTERTAINMENT & MEDIA CONSULTING CO., LTD. China 100.00 100.00 December

Media, entertainment and consulting

CJ AMERICA INC. USA 100.00 100.00 December Trade

SICHUAN JIXIANGJU FOOD CO., LTD. China 60.00 60.00 December Food manufacturing

CJ FOODS MYANMAR CO., LTD. Myanmar 100.00 100.00 December Food manufacturing

CJ FOODS VIETNAM CO., LTD. Vietnam 100.00 100.00 December Food manufacturing

CJ FEED INGREDIENT VIETNAM CO., LTD. Vietnam 100.00 100.00 December

Raw material of feed manufacturing and sales

PT CJ CHEILJEDANG FEED KALIMANTAN Indonesia 51.00 51.00 December


CJ HAIDE (NINGBO) BIOTECH CO., LTD. China 100.00 100.00 December Functional amino acids

manufacturing and sales CJ HAIDE (NINGBO) AMINO ACID INDUSTRY CO., LTD. China 100.00 100.00 December

Functional amino acids manufacturing and sales

CJ EUROPE GMBH. Germany 100.00 100.00 December Trade

COFEED FEEDMILL (CHANGCHUN) CO., LTD. China 100.00 100.00 December


COFEED FEEDMILL (TIANJIN) CO., LTD. China 100.00 100.00 December Feed manufacturing and

sales COFEED FEEDMILL (QIQIHAER) CO., LTD. China 100.00 100.00 December


HEILONGJIANG JIUSAN COFEED FEEDMILL CO., LTD. China 60.00 60.00 December


COFEED FARM (FUYU) TECHNOLOGY CO., LTD. China 100.00 100.00 December


CJ FOODVILLE (GUANGZHOU) CORPORATION China 100.00 100.00 December


CJ FOODVILLE (CHONGQING) China 100.00 100.00 December Food manufacturing and


23

Ownership

interest held by



CORPORATION restaurant

CJ RESEARCH CENTER LLC. USA 100.00 100.00 December Research and development

CJ FRESHWAY YONGHUI (SHANGHAI) TRADE CO., LTD. China 70.00 70.00 December Food logistic

CJ JAPAN CORP. Japan 100.00 100.00 December Food processing sales

CJ (FOSHAN) BIOTECH CO., LTD. China 100.00 100.00 December Raw material of feed

manufacturing and sales CJ CAU TRE FOODS JOINT STOCK COMPANY (formerly, CJ CAU TRE EXPORT GOODS PROCESSING JOINT STOCK COMPANY)

Vietnam 71.60 71.60 December Food manufacturing

CJ TMI MANUFACTURING AMERICA LLC. USA 100.00 100.00 December Food manufacturing

CJ CHINA, LTD. Hong Kong 100.00 100.00 December Trade

CJ VIETNAM COMPANY LIMITED Vietnam 100.00 100.00 December Rental

CJ GLOBAL HOLDINGS LTD. Hong Kong 100.00 100.00 December Holding company

CMI HOLDINGS LIMITED Hong Kong 100.00 100.00 December Business consulting

CJ DO BRAZIL IND. COM. PROD. ALIM. LTDA. Brazil 100.00 100.00 December

Lysine manufacturing and sales

CJ BIBIGO (BEIJING) F&B MANAGEMENT CO., LTD. China 100.00 100.00 December


CJ FOODVILLE USA, INC. USA 100.00 100.00 December Food manufacturing and

restaurant

CJ BEIJING BAKERY CO., LTD. China 100.00 100.00 December Food manufacturing and

restaurant

CJ BAKERY VIETNAM CO., LTD. Vietnam 100.00 100.00 December Food manufacturing and

restaurant

GUANGZHOU CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

ZUNYI CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

MARS ENTERTAINMENT GROUP INC. Turkey 87.61 87.61 December Investment overseas

MARS CINEMA, TOURISM AND SPORTS FACILITIES MANAGEMENT INC. Turkey 100.00 100.00 December Movie theater operation

IKT HOLDINGS LIMITED Hong Kong 100.00 100.00 December Investment overseas

CGV (HAIKOU) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

PT GRAHA LAYAR PRIMA TBK. Indonesia 51.00 51.00 December Movie theater operation

PT GRAHA LAYAR MITRA Indonesia 99.82 99.82 December Movie theater operation

CJ CHINA CONSULTING, LTD. China 100.00 100.00 December Consulting

CJ MAJOR ENTERTAINMENT CO., LTD.

4,5 Thailand 50.00 50.00 December

Entertainment planning and movie distribution

CJ BLUE CORPORATION Vietnam 50.90 50.90 December Business consulting

BLUE OCEAN COMMUNICATION ADVERTISING COMPANY LIMITED Vietnam 100.00 100.00 December

Broadcast program production

BLUE LIGHT FILM COMPANY LIMITED Vietnam 100.00 100.00 December Broadcast program

production INDOCHINA LINK MARKETING AND COMMUNICATION COMPAMY LIMITED Vietnam 100.00 100.00 December Other advertising business

TRUE CJ CREATIONS CO., LTD.4 Thailand 49.00 49.00 December

Broadcast program production

CJ ENTERTAINMENT AMERICA, LLC. USA 100.00 100.00 December Movie distribution and

production

CJ E&M JAPAN INC.4 Japan 46.71 46.71 December Broadcast program supply


24

Ownership

interest held by



CH HOLDINGS LIMITED Hong Kong 100.00 100.00 December Holding company

CJ ROKIN LOGISTICS AND SUPPLY CHAIN CO. LTD. China 71.40 71.40 December Logistics

SHANGHAI XIAORONG LOGISTICS CO., LTD. China 100.00 100.00 December Logistics

ROKIN LOGISTICS SUPPLY CHAIN(BEIJING)CO.,LTD. China 100.00 100.00 December Logistics

SHANGHAI ROKIN INTERNATIONAL STORAGE AND TRANSPORTATION CO.,LTD.

China 100.00 100.00 December Logistics

GUANGZHOU ROKIN LOGISTICS SUPPLY CHAIN CO.,LTD. China 100.00 100.00 December Logistics

LINYI ROKIN LOGISTICS AND SUPPLY CHAIN CO.,LTD. China 100.00 100.00 December Logistics

SHANGHAI ROKIN LOGISTICS AND SUPPLY CHAIN CO.,LTD. China 100.00 100.00 December Logistics

QINGDAO ROKIN LOGISTICS SUPPLY CHAIN CO.,LTD. China 100.00 100.00 December Logistics

SHANDONG XIAORONG CHEMICAL AND DANGEROUS GOODS TRANSPORTATION CO.,LTD.


BEIJING QIANSHENG YUNTAI TRANSPORTATION CO., LTD China 100.00 100.00 December Logistics

TIANJIN XIAORONG LOGISTICS CO., LTD. China 100.00 100.00 December Logistics

PT CJ LOGISTICS NUSANTARA2 Indonesia 49.00 49.00 December Logistics

CJ KOREA EXPRESS (CHINA) INVESTMENT CO., LTD China 100.00 100.00 December

Other industries headquarters

PT CJ LOGISTICS WAREHOUSE SERVICE INDONESIA Indonesia 67.00 67.00 December Logistics

CJ LOGISTICS CANADA CORPORATION Canada 100.00 100.00 December Freight transportation

CJ SPEEDEX LOGISTICS CO.,LTD1 China 50.00 50.00 December Freight transportation

CJ CENTURY LOGISTICS HOLDINGS BERHAD

1 Malaysia 30.89 30.69 December Storage and transportation

CJ CENTURY LOGISTICS SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CENTURY LOGISTICS SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CJ CENTURY FORWARDING SDN. BHD. Malaysia 70.00 70.00 December Storage and transportation

CJ CENTURY TECHNOLOGY SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CENTURY LOGISTICS (JOHORE) SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CJ CENTURY PROCUREMENT SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CJ CENTURY DMS SDN. BHD. Malaysia 70.00 70.00 December Storage and transportation

STOREWELL (M) SDN. BHD. Malaysia 100.00 100.00 December Storage and transportation

CENTURY YES LOGISTICS (YICHUN) CO. LTD. China 75.00 75.00 December Storage and transportation

CENTURY LOGISTICS (S'PORE) PTE. LTD. Singapore 100.00 100.00 December Storage and transportation

CJ LOGISTICS ASIA PTE. LTD. Singapore 100.00 100.00 December Logistics

LIAOCHENG LANTIAN COGENERATION PLANT CO., LTD. China 100.00 100.00 December

Power generation steam supply

CJ IMC MALAYSIA SDN. BHD. Malaysia 100.00 100.00 December Wholesale and brokerage

CJ SE ASIA PTE. LTD. Singapore 100.00 100.00 December Intermediary trade


25

Ownership

interest held by



CJ INTERNATIONAL TRADING CO., LTD. China 100.00 100.00 December Trade

CJ MINH DAT FOODS JOINT STOCK COMPANY Vietnam 100.00 100.00 December Food manufacturing

CJ RAVIOLLO RUS Russia 100.00 100.00 December Food manufacturing

CJ FEED MYANMAR CO., LTD. Myanmar 100.00 100.00 December Feed manufacturing and

sales CJ-TEREOS SWEETENERS EUROPE SAS

3 France 50.00 50.00 December Food manufacturing

CJ FOODS MANUFACTURING BEAUMONT CORPORATION USA 100.00 100.00 December Food manufacturing

CJ LIAOCHENG FOOD. CO., LTD. China 100.00 100.00 December Food manufacturing

TMI LOGISTICS CORPS USA 100.00 - December Logistics

CJ FOODS SERVICE HOLDINGS USA, INC. USA 100.00 - December Food service

CJ SELECTA S.A.5,6

Brazil 56.00 56.00 December Raw material of feed

manufacturing and sales

CJ MAINFROST FOODS GMBH5 Germany 74.00 - December Food manufacturing

KAHIKI FOODS, INC. USA 100.00 - December Food manufacturing

PT. CJ FOODVILLE BAKERY AND CAFE INDONESIA Indonesia 100.00 100.00 December


CJ FOODVILLE (ZHEJIANG) CO., LTD. China 100.00 100.00 December Food manufacturing and

restaurant A TWOSOME PLACE SHANGHAI CO.,LTD China 100.00 - December Restaurant

GUANGZHOU JIANZHONG TRANSPORTATION CO., LTD China 100.00 100.00 December Logistics

CJ SMART CARGO HONG KONG LIMITED Hong Kong 100.00 - December Logistics

CJ ROKIN LOGISTICS (TAICANG) CO.,LTD. China 100.00 100.00 December

Overland transport and warehousing

CJ TRANSNATIONAL PHILIPPINES INC. Philippines 60.00 60.00 December Logistics

CJ ICM FZCO UAE 51.02 51.02 December Logistics

IBRAKOM CARGO LLC.2 UAE 49.00 49.00 December Logistics

CJ ICM SERVICES DWC LLC (formerly, IBRAKOM SERVICES DWC LLC) UAE 100.00 100.00 December Logistics

CJ ICM (UK) LTD(formerly, LLOYDS MARITIME & TRADING LTD.) UK 100.00 100.00 December Logistics

CJ ICM TASHKENT MCHJ (formerly, IBRAKOMTASHKENT LIMITED) Uzbekistan 100.00 100.00 December Logistics

IBRAKOM LOGISTICS SERVICES LTD. STI Turkey 100.00 100.00 December Logistics

QQ LOTIN PAXTA MAHSULATLARI BAZASI Uzbekistan 74.63 74.63 December Logistics

CABA & MISNAK Turkey 100.00 100.00 December Logistics

CJ ICM ITALIA S.R.L (formerly, IBRAKOM ITALY SRL) Italy 100.00 100.00 December Logistics

CJ ICM LOGISTICS (formerly, IBRAKOM LLP) Kazakhstan 100.00 100.00 December Logistics

CJ ICM LOGISTICS LLC (formerly, IBRAKOM LOGISTIC SERVICES LTD.) Georgia 100.00 100.00 December Logistics

CJ ICM LOGISTICS GMBH (formerly, IBRAKOM DEUTSCHLAND GMBH.) Germany 100.00 100.00 December Logistics

MISNAK TURKMENISTAN HOJALYK Turkmenistan 99.00 99.00 December Logistics

CJ DARCL LOGISTICS LIMITED2 India 50.00 50.00 December Logistics


26

Ownership

interest held by



TRANSRAIL LOGISTICS LIMITED India 100.00 100.00 December Logistics

FR8OLOGY PRIVATE LIMITED India 100.00 100.00 December Logistics

DARCL LOGISTICS NEPAL PRIVATE LIMITED Nepal 100.00 100.00 December Logistics

CJ KOREA EXPRESS SHENYANG CO.,LTD. China 100.00 100.00 December Logistics

TIANJIN DONGFANG XINSHENG SUPPLY CHAIN MANAGEMENT WAREHOUSING AND TRANSPORTATION CO.,LTD.


SHENGSHI SHUNTONG(TIANJIN)LOGISTICS CO., LTD.


WUHAN NORTH TRANSPORT INTERNATIONAL LOGISTICS CO., LTD. China 100.00 100.00 December Logistics

CJ LOGISTICS WAREHOUSE(SHANGHAI) CO., LTD. China 100.00 59.38 December Logistics

CJ SPEEDEX(HONGKONG) LOGISTICS CO.,LTD Hong Kong 100.00 - December Logistics

CJ LOGISTICS HONG KONG HOLDINGS LIMITED Hong Kong 70.00 - December Logistics

CJ GEMADEPT LOGISTICS HOLDINGS COMPANY LIMITED Vietnam 50.90 - December Logistics

CJ GEMADEPT SHIPPING HOLDINGS COMPANY LIMITED

2 Vietnam 49.00 - December Logistics

GEMADEPT LOGISTICS ONE MEMBER COMPANY LIMITED Vietnam 100.00 - December Logistics

GEMADEPT HAI PHONG ONE MEMBER COMPANY LIMITED Vietnam 100.00 - December Logistics

GEMADEPT SHIPPING LIMITED COMPANY Vietnam 100.00 - December Logistics

GEMADEPT SHIPPING SINGAPORE PTE. LTD. Singapore 100.00 - December Logistics

GEMADEPT (MALAYSIA) SDN. BHD. Malaysia 100.00 - December Logistics

MEKONG LOGISTICS COMPANY Vietnam 50.95 - December Logistics

GN TRANSPORTATION CORP. USA 100.00 - December Transportation

CJ SPEEDEX LOGISTICS CHENGDU CO.,LTD China 100.00 - December Transportation

CJ LOGISTICA DO BRASIL LTDA. Brazil 99.99 - December Transportation

DSC LOGISTICS, LLC5 USA 90.00 - December Logistics

DSC INTEGRATED LOGISTICS, LLC USA 100.00 - December Logistics

DRY STORAGE CORPORATION USA 100.00 - December Logistics

CJ SMART CARGO NEPAL PVT.LTD. Nepal 100.00 - December Logistics

CJ ICM AUSTRIA GMBH Austria 100.00 - December Logistics

CJ ROKIN LOGISTICS(SUZHOU) CO.,LTD. China 100.00 - December Logistics

JL HOLDINGS (THAILAND) CO., LTD. Thailand 100.00 - December Logistics

JL TRANSPORT (THAILAND) CO., LTD. Thailand 100.00 - December Logistics

CJ SMART CARGO KENYA LIMITED Kenya 100.00 - December Logistics

CJ SMART CARGO UGANDA-SMC LIMITED Uganda 100.00 - December Logistics

CJ SMART CARGO ZAMBIA LIMITED Zambia 100.00 - December Logistics


27

Ownership

interest held by



QINGHAI CGV CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (SHANGHAI) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (SUZHOU) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CGV (NANCHANG) CINEMA CO., LTD. China 100.00 100.00 December Movie theater operation

CJ CGV ADG INVESTMENT CO., LIMITED Hong Kong 70.00 - December Investment overseas

GUANGXI CGV CINEMA CO., LTD China 100.00 - December Movie theater operation

SHANGHAI CJ CGV YONGTAI ROAD CINEMA CO.,LTD. China 100.00 - December Movie theater operation

LIMITED LIABILITY COMPANY MODERN Russia 100.00 - December Movie theater operation

CJ ENTERTAINMENT TURKEY Turkey 100.00 100.00 December Movie distribution and

production

JELLYFISH ENTERTAINMENT JAPAN INC. Japan 100.00 100.00 December


management

CJ HK ENTERTAINMENT CO., LTD. Vietnam 50.90 51.00 December Movie distribution

NNNY PRODUCTIONS LLC USA 100.00 - December Movie production

H&S PRODUCTIONS, LLC USA 100.00 - December Movie production

ECCHO RIGHTS AB Sweden 100.00 - December Contents distribution

ECCHO RIGHTS TR Turkey 100.00 - December Contents distribution

H&S PRODUCTIONS, CORP USA 100.00 - December Movie production

CJ GRAND, S.A. DE C.V. Mexico 100.00 - December Wholesale and brokerage

DAMUL TRADING PRIVATE LIMITED India 98.00 - December Wholesale and brokerage

DADA STUDIO VIETNAM CO., LTD. Vietnam 99.90 - December Advertising service

CJ OLIVENETWORKS VINA CO., LTD. Vietnam 100.00 100.00 December System integration and

management

CJ OLIVEYOUNG AMERICA, INC USA 100.00 - December Wholesale and retail

CJ OLIVEYOUNG NEW YORK, LLC USA 100.00 - December Wholesale and retail

CJ E&C VIETNAM CO., LTD. Vietnam 100.00 100.00 December Construction

1 Although the Group owns less than 50% of the voting rights of entities, the percentage of

shareholdings by the Group is significantly higher than those owned by any other shareholders

and remaining shareholdings are widely spread among minority shareholders. It is clearly

demonstrated that the Group has control as it exercises the majority voting rights in its decision-

making processes.

2 Included as subsidiary since the Group is entitled to over more than half of the voting rights of

entities by virtue of an agreement with other investors although the Group owns less than 50% of

the voting rights of the entities.

3 Included as subsidiary since the Group holds additional potential voting rights for the remaining

interests although the Group owns less than 50% of the voting rights of the entities.

4 The Group exercises its voting rights by Board of Directors.


28

5The Group has entered into an option contract with the shareholders, who own the residual

interests of the entity, for disposal or acquisition of residual interests.

6In 2018, CJ SELECTA S.A changed its functional currency from Brazilian real to US dollars as

the currency of the primary economic environment in which the entity operates has changed.

The following entities are excluded from the consolidated subsidiaries although the Group owns

more than majority of the voting rights as the Group is unable to exercise its voting rights by virtue

of an agreement with other investors:

Name of entity Percentage of ownership (%)

Ulsan Port Operating Co. Ltd. 51.54

PT CJ FOODVILLE INDONESIA 88.67

Summarized financial information of major consolidated subsidiaries as at and for the years

ended December 31, 2018 and 2017, is as follows:

(in millions of Korean won) 2018

Name of entity Assets Liabilities Equity Sales

Profit (loss)

for the year

Total

comprehensive

income

CJ CheilJedang Corporation 8,589,526 3,828,202 4,761,324 6,045,732 926,269 896,024

CJ Freshway Corporation 872,383 689,487 182,896 2,107,460 11,791 8,230

CJ Foodville Corp. 607,354 552,368 54,986 983,077 (3,659) 115

CJ Seafood Corporation 126,515 64,748 61,767 150,703 2,155 1,713

CJ ENM CO., LTD. (formerly, CJ O Shopping

Co., Ltd.)

4,491,182 1,977,968 2,513,214 2,017,373 110,764 64,318

CJ Hello Co., Ltd. 1,932,022 874,275 1,057,747 1,172,373 40,836 38,345

CJ Logistics Corporation 5,801,997 3,251,435 2,550,562 6,228,286 22,127 9,493

Korea Integrated Freight Terminal Co., Ltd. 609,626 319,744 289,882 151,584 34,697 34,691

CJ Powercast Inc. 247,099 73,467 173,632 250,679 8,075 10,641

CJ CGV Co., Ltd. 1,352,114 1,010,567 341,547 974,760 (325,093) (326,337)

CJ 4DPLEX Co., Ltd. 148,416 82,182 66,234 83,599 9,208 9,230

Bosphorus Investment Co., Ltd. 207,894 - 207,894 - (397,809) (397,809)

Mezzomedia Inc. 130,865 113,073 17,792 23,381 1,492 1,842

K Valley Co., Ltd. 326,268 194,311 131,957 - (11,073) (10,935)

Studio Dragon Corporation 491,308 102,511 388,798 220,470 12,447 11,409

CJ OliveNeworks Co., Ltd. 1,164,903 649,401 515,501 2,084,008 54,655 65,865

A Twosome Place Co., Ltd. 166,195 96,099 70,096 268,710 19,927 19,597

CJ LIAOCHENG BIOTECH CO., LTD. 468,914 222,176 246,738 342,962 33,782 33,714

CJ (SHENYANG) BIOTECH CO., LTD. 506,623 365,826 140,797 331,656 31,979 31,781

CJ BIO MALAYSIA SDN. BHD. 572,456 402,423 170,033 304,987 (18,865) (19,662)

PT CHEILJEDANG INDONESIA 1,293,343 547,423 745,920 660,927 4,187 8,003

PT CHEILJEDANG SUPERFEED 383,610 194,103 189,507 156,084 (4,369) (4,477)

PT CJ FEED JOMBANG 186,345 133,544 52,801 210,642 8,454 8,768

PT SUPER UNGGAS JAYA 140,427 129,402 11,025 265,003 9,562 8,619


29



Profit (loss)

for the year

Total

comprehensive

income

CJ VINA AGRI CO., LTD. 421,074 251,512 169,562 443,972 27,181 28,781

CJ VINA FOOD CO., LTD. 136,465 205,212 (68,747) 215,116 (1,025) (4,130)

CJ BIO AMERICA INC. 377,261 346,350 30,911 191,382 2,154 2,227

CJ LOGISTICS U.S.A. CORPORATION 336,475 98,789 237,686 138,223 (2,393) (2,394)

CJ ROKIN LOGISTICS HOLDINGS LIMITED

(formerly, CJKX ROKIN HOLDINGS

LIMITED)

426,563 3 426,560 - (34) (37)

CJ LOGISTICS DO BRASIL LTDA 188,821 973 187,848 13,660 (610) (710)

CJ CGV(SHANGHAI) ENTERPRISE

MANAGEMENT CO., LTD.

126,121 102,829 23,292 20,277 656 517

UVD ENTERPRISE LTD. 369,682 23,466 346,216 2,130 5,472 18,532

CJ CGV VIETNAM CO., LTD. 169,480 145,396 24,084 137,577 (1,299) (799)

CGI HOLDINGS LTD. 386,321 228,984 157,337 318 (5,444) 966

CJ AMERICA INC. 384,281 256,479 127,802 590,202 (3,192) (3,133)

CJ EUROPE GMBH. 133,758 105,006 28,752 336,255 5,197 5,109

CJ CAU TRE FOODS JOINT STOCK

COMPANY

111,250 99,392 11,858 61,358 1,351 1,574

CJ CHINA, LTD. 110,516 90,354 20,162 17,301 1,032 1,116

CJ GLOBAL HOLDINGS LTD. 296,017 217,496 78,521 - (5,531) (5,550)

CJ DO BRAZIL IND. COM. PROD. ALIM.

LTDA.

141,748 113,347 28,401 192,246 563 (616)

MARS CINEMA, TOURISM AND SPORTS

FACILITIES MANAGEMENT INC.

187,428 81,267 106,161 167,703 (2,206) (40,218)

PT GRAHA LAYAR PRIMA TBK. 133,037 46,211 86,826 91,618 1,443 (855)

CJ ROKIN LOGISTICS AND SUPPLY

CHAIN CO. LTD.

509,475 377,618 131,857 236,311 7,603 8,744

SHANGHAI ROKIN INTERNATIONAL

STORAGE AND TRANSPORTATION

CO.,LTD.

181,040 156,742 24,298 213,347 4,340 4,305

CJ KOREA EXPRESS (CHINA)

INVESTMENT CO., LTD

124,455 16,730 107,725 235 (783) (765)

CJ CENTURY LOGISTICS SDN. BHD. 127,622 103,599 24,023 74,562 (971) (969)

CJ LOGISTICS ASIA PTE. LTD. 303,406 182,349 121,057 315,105 (1,999) (1,278)

LIAOCHENG LANTIAN COGENERATION

PLANT CO., LTD.

105,046 9,723 95,322 51,510 7,572 7,629

CJ SELECTA S.A. 343,655 272,919 70,736 512,845 25,353 12,678

CJ DARCL LOGISTICS LIMITED 153,905 93,726 60,179 352,736 8,572 7,835

DSC LOGISTICS, LLC 172,184 101,535 70,649 270,959 7,345 7,449



Profit (loss)

for the year

Total

comprehensive

income

CJ CheilJedang Corporation 7,180,700 3,925,106 3,255,594 5,267,128 234,614 80,333

CJ Healthcare Co., Ltd. 521,250 146,835 374,415 534,506 56,547 56,843

CJ Freshway Corporation 866,555 686,060 180,495 1,797,613 (5,778) (5,934)


30



Profit (loss)

for the year

Total

comprehensive

income

CJ Foodville Corp. 625,648 564,796 60,852 1,258,938 (36,859) (38,064)

CJ Seafood Corporation 120,215 60,161 60,054 164,630 4,590 4,769

CJ ENM CO., LTD. (formerly, CJ O Shopping

Co., Ltd.)

1,149,206 346,472 802,734 1,136,459 128,169 134,671

CJ Hello Co., Ltd. 1,866,687 881,033 985,654 1,119,895 28,609 26,002

CJ Logistics Corporation 4,726,069 2,404,950 2,321,119 5,188,813 19,315 20,033

Korea Integrated Freight Terminal Co., Ltd. 632,367 356,664 275,703 153,523 34,671 34,730

KX Holdings Corporation 508,301 28,754 479,547 - 602 597

CJ Powercast Inc. 259,215 78,992 180,223 235,229 21,723 19,925

CJ CGV Co., Ltd. 1,595,659 1,068,225 527,434 932,126 (13,299) (14,187)

CJ 4DPLEX Co., Ltd. 107,393 49,311 58,082 69,064 (2,661) (2,701)

Bosphorus Investment Co., Ltd. 605,702 - 605,702 - (320) (320)

CJ E&M Corporation 2,273,296 1,027,295 1,246,001 1,320,306 21,675 3,564

Mezzomedia Inc. 142,709 129,988 12,721 29,468 1,690 1,874

K Valley Co., Ltd. 226,839 78,434 148,405 - (30,066) (30,493)

Studio Dragon Corporation 438,480 75,401 363,079 255,707 19,033 18,951

CJ OliveNeworks Co., Ltd. 1,063,048 590,652 472,396 1,824,417 71,051 73,047

CJ Engineering & Construction Corp 769,716 602,720 166,996 871,032 17,961 17,133

CJ LIAOCHENG BIOTECH CO., LTD. 405,553 188,915 216,638 302,251 15,079 14,747

CJ (SHENYANG) BIOTECH CO., LTD. 511,531 401,415 110,116 269,419 22,049 21,445

CJ BIO MALAYSIA SDN. BHD. 524,634 342,655 181,979 275,192 (8,625) (10,098)

PT CHEILJEDANG INDONESIA 1,279,609 559,767 719,842 726,819 57,050 52,373

PT CHEILJEDANG SUPERFEED 397,424 189,112 208,312 188,951 (3,764) (3,680)

PT CJ FEED JOMBANG 178,390 130,835 47,555 252,031 5,337 4,643

PT SUPER UNGGAS JAYA 114,021 112,155 1,866 240,926 (16,317) (15,212)

CJ VINA AGRI CO., LTD. 323,997 184,054 139,943 397,510 29,221 26,998

CJ BIO AMERICA INC. 333,601 306,079 27,522 178,413 717 881

CJ ROKIN LOGISTICS HOLDINGS LIMITED

(formerly, CJKX ROKIN HOLDINGS

LIMITED)

408,781 3 408,778 - (34) (17)

CJ LOGISTICS DO BRASIL LTDA 212,586 1,023 211,563 4,474 (1,492) (1,348)


MANAGEMENT CO., LTD.

104,338 81,563 22,775 20,352 362 365

UVD ENTERPRISE LTD. 304,943 89 304,854 701 5,607 5,297

CJ CGV VIETNAM CO., LTD. 143,785 119,722 24,063 130,639 6,667 6,177

CGI HOLDINGS LTD. 347,608 186,814 160,794 329 (1,336) (992)

CJ AMERICA INC. 285,147 223,860 61,287 484,337 2,108 1,877

CJ EUROPE GMBH. 137,743 114,108 23,635 345,161 4,763 4,797

CJ CHINA, LTD. 131,913 113,563 18,350 190,613 1,199 1,115

CJ GLOBAL HOLDINGS LTD. 289,643 213,454 76,189 - 1,353 1,521

CJ DO BRAZIL IND. COM. PROD. ALIM.

LTDA.

158,998 127,711 31,287 167,254 (13,202) (10,819)

MARS CINEMA, TOURISM AND SPORTS

FACILITIES MANAGEMENT INC.

152,197 71,981 80,216 210,923 17,559 15,321

PT GRAHA LAYAR PRIMA TBK. 136,324 48,610 87,714 71,631 1,177 957


31



Profit (loss)

for the year

Total

comprehensive

income

CJ ROKIN LOGISTICS AND SUPPLY

CHAIN CO. LTD.

348,112 221,754 126,358 220,494 4,187 4,122

SHANGHAI ROKIN INTERNATIONAL

STORAGE AND TRANSPORTATION

CO.,LTD.

109,850 89,687 20,163 159,221 2,660 2,628

CJ KOREA EXPRESS (CHINA)

INVESTMENT CO., LTD

109,894 9,036 100,858 - 37 36

CENTURY TOTAL LOGISTICS SDN. BHD. 146,191 121,747 24,444 65,452 5,038 5,096

CJ LOGISTICS ASIA PTE. LTD. 265,114 144,697 120,417 152,939 (1,721) (1,678)

CJ SELECTA S.A. 224,023 179,934 44,089 204,179 (4,107) (3,749)

CJ DARCL LOGISTICS LIMITED 132,618 78,588 54,030 137,147 443 426

Subsidiaries newly included in the consolidated financial statements for the year ended December

31, 2018, are as follows:

Location Name of entity Remark

Korea SAM HAE COMMERCIAL CO., LTD.(*5) Additional acquisition

Korea HyeongjeFood Co.Ltd Additional acquisition

Korea A Twosome Place Co., Ltd. Newly established

Korea Mimi bakery Acquisition

Korea dBase&co.,Ltd Newly established

Korea STONE MUSIC ENTERTAINMENT Co,.Ltd Newly established

Korea SWING ENTERTAINMENT CO.,LTD Newly established

Korea Belift Lab Inc Newly established

Korea CJ Hello Hana Broadcasting Co., Ltd. Acquisition

Korea KVM Co., Ltd Newly established

USA TMI LOGISTICS CORPS Newly established

USA CJ FOODS SERVICE HOLDINGS USA, INC. Newly established

Germany CJ MAINFROST FOODS GMBH Acquisition

USA KAHIKI FOODS, INC. Acquisition

China A TWOSOME PLACE SHANGHAI CO.,LTD Newly established

Hong Kong CJ SMART CARGO HONG KONG LIMITED Newly established

Hong Kong CJ SPEEDEX(HONGKONG) LOGISTICS CO.,LTD Newly established

Hong Kong CJ LOGISTICS HONG KONG HOLDINGS LIMITED Newly established

Vietnam CJ GEMADEPT LOGISTICS HOLDINGS COMPANY LIMITED Acquisition

Vietnam CJ GEMADEPT SHIPPING HOLDINGS COMPANY LIMITED Acquisition

Vietnam GEMADEPT LOGISTICS ONE MEMBER COMPANY LIMITED Acquisition

Vietnam GEMADEPT HAI PHONG ONE MEMBER COMPANY LIMITED Acquisition

Vietnam GEMADEPT SHIPPING LIMITED COMPANY Acquisition

Singapore GEMADEPT SHIPPING SINGAPORE PTE. LTD. Acquisition

Malaysia GEMADEPT (MALAYSIA) SDN. BHD. Acquisition

Vietnam MEKONG LOGISTICS COMPANY Acquisition

USA GN TRANSPORTATION CORP. Newly established

China CJ SPEEDEX LOGISTICS CHENGDU CO.,LTD Newly established

Brazil CJ LOGISTICA DO BRASIL LTDA. Newly established

USA DSC LOGISTICS, LLC Acquisition


32


USA DSC INTEGRATED LOGISTICS, LLC Acquisition

USA DRY STORAGE CORPORATION Acquisition

Nepal CJ SMART CARGO NEPAL PVT.LTD. Newly established

Austria CJ ICM AUSTRIA GMBH Newly established

China CJ ROKIN LOGISTICS(SUZHOU) CO.,LTD. Newly established

Thailand JL HOLDINGS (THAILAND) CO., LTD. Newly established

Thailand JL TRANSPORT (THAILAND) CO., LTD. Newly established

Kenya CJ SMART CARGO KENYA LIMITED Newly established

Uganda CJ SMART CARGO UGANDA-SMC LIMITED Newly established

Zambia CJ SMART CARGO ZAMBIA LIMITED Newly established

Hong Kong CJ CGV ADG INVESTMENT CO., LIMITED Newly established

China GUANGXI CGV CINEMA CO., LTD Newly established

China SHANGHAI CJ CGV YONGTAI ROAD CINEMA CO.,LTD. Newly established

Russia LIMITED LIABILITY COMPANY MORDERN Acquisition

USA NNNY PRODUCTIONS LLC Newly established

USA H&S PRODUCTIONS, LLC Newly established

Sweden ECCHO RIGHTS AB Acquisition

Turkey ECCHO RIGHTS TR Acquisition

USA H&S PRODUCTIONS, CORP Newly established

Mexico CJ GRAND, S.A. DE C.V. Additional acquisition

India DAMUL TRADING PRIVATE LIMITED Acquisition

Vietnam DADA STUDIO VIETNAM CO., LTD. Newly established

USA CJ OLIVEYOUNG AMERICA, INC Newly established

USA CJ OLIVEYOUNG NEW YORK, LLC Newly established

Subsidiaries excluded from the consolidated financial statements for the year ended December

31, 2018, are as follows:


Korea CJ Healthcare Co., Ltd.1 Disposal

Korea FreshOne Jeonbuk Co., Ltd. Merged

Korea Youngwoo Frozen Foods Co., Ltd. Merged

Korea KX Holdings Corporation Merged

Korea Gwangyang West Container Terminal Co., Ltd. Disposal

Korea CJ E&M Corporation Merged

Korea Rubicon Company, Ltd. Liquidated

Korea CJ Digital Music Corporation Merged

Korea CJ Engineering & Construction Corp Merged

Korea Highup Entertainment Disposal

China CJ FOOD SERVICE(SHANGHAI) CO., LTD. Liquidated

Japan CJ PRIME SHOPPING INC. Liquidated

Japan CJ VICTOR ENTERTAINMENT, INC. Liquidated

Japan CJ FOODVILLE JAPAN CO., LTD. Liquidated

1During the year ended December 31, 2018, the Group lost control over CJ Healthcare Co., Ltd.

due to the disposal of its shares in CJ Healthcare Co., Ltd. Accordingly, the Group recognized

gain on disposal of investments in subsidiary as other non-operating income.


33

Dividends of CJ CheilJedang Corporation and PT CheilJedang Indonesia, PT CheilJedang

Superfeed will be restricted if PT CheilJedang Indonesia and PT CheilJedang Superfeed,

consolidated subsidiaries, postpone the payment of the principal and interests for its hybrid

securities.

2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial

statements are set out below. These policies have been consistently applied to all the years

presented, unless otherwise stated.

2.1 Basis of Preparation

The Group maintains its accounting records in Korean won and prepares statutory financial

statements in the Korean language (Hangul) in accordance with International Financial Reporting

Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated

financial statements have been condensed, restructured and translated into English from the

Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a

fair presentation of the Group's financial position, financial performance or cash flows, is not

presented in the accompanying consolidated financial statements.

The consolidated financial statements of the Group have been prepared in accordance with

Korean IFRS. These are the standards, subsequent amendments and related interpretations

issued by the International Accounting Standards Board (IASB) that have been adopted by the

Republic of Korea.

The preparation of financial statements requires the use of critical accounting estimates.

Management also needs to exercise judgement in applying the Group’s accounting policies. The

areas involving a higher degree of judgment or complexity, or areas where assumptions and

estimates are significant to the consolidated financial statements are disclosed in Note 3.

2.2 Changes in Accounting Policy and Disclosures

(a) New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual

reporting period commencing January 1, 2018.

- Amendment to Korean IFRS 1028 Investments in Associates and Joint Ventures

When an investment in an associate or a joint venture is held by, or is held indirectly through, an

entity that is a venture capital organization, or a mutual fund, unit trust and similar entities

including investment-linked insurance funds, the entity may elect to measure each investment

separately at fair value through profit or loss in accordance with Korean IFRS 1109. The


34

amendment does not have a significant impact on the financial statements because the Group is

not a venture capital organization.

- Amendment to Korean IFRS 1040 Transfers of Investment Property

The amendment to Korean IFRS 1040 clarifies that a transfer to, or from, investment property,

including property under construction, can only be made if there has been a change in use that is

supported by evidence, and the list of evidence for a change of use in the standard was re-

characterized as a non-exclusive list of example. The amendment does not have a significant

impact on the financial statements.

- Amendment to Korean IFRS 1102 Share-based Payment

Amendments to Korean IFRS 1102 clarify accounting for a modification to the terms and

conditions of a share-based payment that changes the classification of the transaction from cash-

settled to equity-settled. Amendments also clarify that the measurement approach should treat

the terms and conditions of a cash-settled award in the same way as for an equity-settled award.

The amendment does not have a significant impact on the financial statements.

- Enactment of Interpretation 2122 Foreign Currency Transaction and Advance Consideration

According to the enactment, the date of the transaction for the purpose of determining the

exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is

the date on which an entity initially recognizes the non-monetary asset or non-monetary liability

arising from the payment or receipt of advance consideration. The enactment does not have a

significant impact on the financial statements.

- Korean IFRS 1109 Financial Instruments

The Group has applied Korean IFRS 1109 Financial Instruments on January 1, 2018, the date of

initial application. In accordance with the transitional provisions in Korean IFRS 1109,

comparative figures have not been restated, and the differences between previous book amounts

and book amounts at the date of initial application are recognized to retained earnings (or equity).

See Note 42 for further details on the impact of the application of the standard.

- Korean IFRS 1115 Revenue from Contracts with Customers

The Group has applied to apply Korean IFRS 1115 Revenue from Contracts with Customers. In

accordance with the transition provisions in Korean IFRS 1115, comparative figures have not

been restated. The Group elected the modified retrospective approach, and recognized the

cumulative impact of initially applying the revenue standard as an adjustment to retained earnings

as at January 1, 2018, the period of initial application. See Note 42 for further details on the

impact of the application of the standard.


35

(b) New standards and interpretations not yet adopted by the Group

Certain new accounting standards that have been published that are not mandatory for annual

reporting period commencing January 1, 2018 and have not been early adopted by the Group are

set out below.

- Korean IFRS 1116 Leases

Korean IFRS 1116 Leases issued on May 22, 2017 is effective for annual periods beginning on or

after January 1, 2019, with early adoption permitted. This standard will replace Korean IFRS 1017

Leases. The Group will apply the standards for annual periods beginning on or after January 1,

2019.

Under the new standard, with implementation of a single lease model, lessee is required to

recognize assets and liabilities for all lease which lease term is over 12 months and underlying

assets are not low value assets. A lessee is required to recognize a right-of-use asset and a lease

liability representing its obligation to make lease payments.

The Group performed an impact assessment to identify potential financial effects of applying

Korean IFRS 1116. The Group is analyzing the effects on the financial statements based on

available information as at December 31, 2018 to identify effects on 2018 financial statements;

however, it is difficult to provide reasonable estimates of financial effects until the analysis is

complete.

- Korean IFRS 1109 Financial Instruments

The narrow-scope amendments made to Korean IFRS 1109 Financial Instruments enable entities

to measure certain prepayable financial assets with negative compensation at amortized cost.

When a modification of a financial liability measured at amortized cost that does not result in the

derecognition, a modification gain or loss shall be recognized in profit or loss. These amendments

will be applied for annual periods beginning on or after January 1, 2019, with early adoption

permitted.

- Amendments to Korean IFRS 1019 Employee Benefits

The amendments require that an entity shall calculate current service cost and net interest for the

remainder of the reporting period after a plan amendment, curtailment or settlement based on

updated actuarial assumptions from the date of the change. The amendments also require that a

reduction in a surplus must be recognized in profit or loss even if that surplus was not previously

recognized because of the impact of the asset ceiling. The amendments are effective for plan

amendments, curtailments and settlements occurring in reporting periods that begin on or after 1

January 2019.

- Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures

The amendments clarify that an entity shall apply Korean IFRS 1109 to financial instruments in an

associate or joint venture to which the equity method is not applied. These include long-term


36

interests that, in substance, form part of the entity’s net investment in an associate or joint venture.

These amendments will be applied for annual periods beginning on or after January 1, 2019, with

early adoption permitted. In accordance with the transitional provisions in Korean IFRS 1109, the

restatement of the comparative information is not required and the cumulative effects of initially

applying the amendments retrospectively should be recognized in the beginning balance of

retained earnings (or other components of equity, as appropriate) at the date of initial application.

- Enactment to Interpretation of Korean IFRS 2123 Uncertainty over Income Tax Treatments

The Interpretation explains how to recognize and measure deferred and current income tax

assets and liabilities where there is uncertainty over a tax treatment, and includes guidance on

how to determine whether each uncertain tax treatment is considered separately or together. It

also presents examples of circumstances where a judgement or estimate is required to be

reassessed. This Interpretation will be applied for annual periods beginning on or after January 1,

2019, and an entity can either restate the comparative financial statements retrospectively or

recognize the cumulative effect of initially applying the Interpretation as an adjustment in the

beginning balance at the date of initial application.

- Annual Improvements to Korean IFRS 2015 – 2017 Cycle:

Korean IFRS 1103 Business Combination

The amendments clarify that when a party to a joint arrangement obtains control of a business

that is a joint operation, and had rights to the assets and obligations for the liabilities relating to

that joint operation immediately before the acquisition date, the transaction is a business

combination achieved in stages. In such cases, the acquirer shall remeasure its entire previously

held interest in the joint operation. These amendments will be applied to business combinations

for which the acquisition date is on or after the beginning of the first annual reporting period

beginning on or after 1 January 2019, with early adoption permitted.

Korean IFRS 1111 Joint Agreements

The amendments clarify that when a party that participates in, but does not have joint control of, a

joint operation might obtain joint control of the joint operation in which the activity of the join

operation constitutes a business. In such cases, previously held interests in the joint operation are

not remeasured. These amendments will be applied to transactions in which an entity obtains joint

control on or after the beginning of the first annual reporting period beginning on or after 1

January 2019, with early adoption permitted.

Paragraph 57A of Korean IFRS 1012 Income Tax

The amendment is applied to all the income tax consequences of dividends and requires an entity

to recognize the income tax consequences of dividends in profit or loss, other comprehensive

income or equity according to where the entity originally recognized those past transactions or

events. These amendments will be applied for annual reporting periods beginning on or after

January 1, 2019, with early adoption permitted.


37

Korean IFRS 1023 Borrowing Costs

The amendments clarify that if a specific borrowing remains outstanding after the related

qualifying asset is ready for its intended use (or sale), it becomes part of general borrowings.

These amendments will be applied to borrowing costs incurred on or after the beginning of the

first annual reporting period beginning on or after January 1, 2019, with early adoption permitted.

2.3 Consolidation

The Group has prepared the consolidated financial statements in accordance with Korean IFRS

1110 Consolidated Financial Statements.

(a) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when

the Group is exposed to, or has rights to, variable returns from its involvement with the entity and

has the ability to affect those returns through its power to direct the activities of the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred is measured at the fair values of the assets transferred, and

identifiable assets acquired and liabilities and contingent liabilities assumed in a business

combination are measured initially at their fair values at the acquisition date. The Group

recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition

basis either at fair value or at the non-controlling interest’s proportionate share of the acquired

entity’s net identifiable assets. All other non-controlling interests are measured at fair values,

unless otherwise required by other standards. Acquisition-related costs are expensed as incurred.

The excess of consideration transferred, amount of any non-controlling interest in the acquired

entity and acquisition-date fair value of any previous equity interest in the acquired entity over the

fair value of the net identifiable assets acquired is recoded as goodwill. If those amounts are less

than the fair value of the net identifiable assets of the business acquired, the difference is

recognized directly in the profit or loss as a bargain purchase.

Intercompany transactions, balances and unrealized gains on transactions between group

companies are eliminated. Unrealized losses are also eliminated unless the transaction provides

evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.

The Group treats transactions with non-controlling interests that do not result in a loss of control

as transactions with equity owners of the Group. A changed in ownership interest results in an

adjustment between the carrying amounts of the controlling and non-controlling interest to reflect

their relative interest in the subsidiary. Any difference between the amount of the adjustment to

non-controlling interest and any consideration paid or received is recognized in a separate

reserve within equity attributable to owners of the Parent Company.


38

When the Group ceases to consolidate for a subsidiary because of a loss of control, any retained

interest in the subsidiary is remeasured to its fair value with the changed in carrying amount

recognized in profit or loss.

(b) Associates

Associates are entities over which the Group has significant influence but not control or joint

control. Investments in associates are accounted for using the equity method of accounting, after

initially being recognized at cost. Unrealized gains on transactions between the Group and its

associates are eliminated to the extent of the Group’s interest in the associates. If there is an

objective evidence of impairment for the investment in the associate, the Group recognizes the

difference between the recoverable amount of the associate and its book amount as impairment

loss.

(c) Joint Arrangements

A joint arrangement, wherein two or more parties have joint control, is classified as either a joint

operation or a joint venture. A joint operator recognizes its direct right to the assets, liabilities,

revenues and expenses of joint operations and its share of any jointly held or incurred assets,

liabilities, revenues and expenses. Interests in joint ventures are accounted for using the equity

method, after initially being recognized at cost in the consolidated statement of financial position.

2.4 Foreign Currency Translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the

currency of the primary economic environment in which each entity operates (the “functional

currency”). The consolidated financial statements are presented in Korean won, which is the

Parent Company’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates

at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement

of such transactions and from the translation of monetary assets and liabilities denominated in

foreign currencies at year end exchange rates are generally recognized in profit or loss. They are

deferred in other comprehensive income if they relate to qualifying cash flow hedges and

qualifying effective portion of net investment hedges, or are attributable to monetary part of the

net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of

profit or loss, within finance costs. All other foreign exchange gains and losses are presented in

the statement of profit or loss within ‘other income or other expenses’.

Non-monetary items that are measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value was determined. Translation differences on assets


39

and liabilities carried at fair value are reported as part of the fair value gain or loss. For example,

translation differences on non-monetary assets and liabilities such as equities held at fair value

through profit or loss are recognized in profit or loss as part of the fair value gain or loss and

translation differences on non-monetary assets such as equities classified as available-for-sale

financial assets are recognized in other comprehensive income.

2.5 Financial Assets

(a) Classification

From January 1, 2018, the Group classifies its financial assets in the following measurement

categories:

those to be measured at fair value through profit or loss

those to be measured at fair value through other comprehensive income, and

those to be measured at amortized cost.

The classification depends on the Group’s business model for managing the financial assets and

the contractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or

loss or other comprehensive income. For investments in debt instruments, this will depend on the

business model in which the investment is held. The Group reclassifies debt investments when,

and only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, this will depend on whether the

Group has made an irrevocable election at the time of initial recognition to account for the equity

investment at fair value through other comprehensive income. Changes in fair value of

investments in equity instruments for those the company did not make an irrevocable election, are

recognized in profit and loss.

(b) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a

financial asset not at fair value through profit or loss, transaction costs that are directly attributable

to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value

through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining

whether their cash flows are solely payment of principal and interest.

A. Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for

managing the asset and the cash flow characteristics of the asset. The Group classifies its debt

instruments into one of the following three measurement categories:


40

Amortized cost: Assets that are held for collection of contractual cash flows where those

cash flows represent solely payments of principal and interest are measured at amortized

cost. A gain or loss on a debt investment that is subsequently measured at amortized

cost and is not part of a hedging relationship is recognized in profit or loss when the asset

is derecognized or impaired. Interest income from these financial assets is included in

‘finance income’ using the effective interest rate method.

Fair value through other comprehensive income: Assets that are held for collection of

contractual cash flows and for selling the financial assets, where the assets’ cash flows

represent solely payments of principal and interest, are measured at fair value through

other comprehensive income. Movements in the carrying amount are taken through other

comprehensive income, except for the recognition of impairment loss (reversal of

impairment loss), interest income and foreign exchange gains and losses which are

recognized in profit or loss. When the financial asset is derecognized, the cumulative gain

or loss previously recognized in other comprehensive income is reclassified from equity

to profit or loss. Interest income from these financial assets is included in ‘finance income’

using the effective interest rate method. Foreign exchange gains and losses are

presented in ‘finance income or costs’ and impairment losses are presented in ‘finance

costs’.

Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or

fair value through other comprehensive income are measured at fair value through profit

or loss. A gain or loss on a debt investment that is subsequently measured at fair value

through profit or loss and is not part of a hedging relationship is recognized in profit or

loss and presented net in the statement of profit or loss within ‘finance income or costs’ in

the year in which it arises.

B. Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s

management has elected to present fair value gains and losses on equity investments, which held

for long-term investment or strategic purpose, in other comprehensive income, there is no

subsequent reclassification of fair value gains and losses to profit or loss following the

derecognition of the investment. Dividend income from such investments continue to be

recognized in profit or loss as ‘finance income’ when the right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in

‘finance income or costs’ in the statement of profit or loss as applicable. Impairment loss (reversal

of impairment loss) on equity investments measured at fair value through other comprehensive

income are not reported separately from other changes in fair value.

(c) Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its

debt instruments carried at amortized cost and fair value through other comprehensive income.

The impairment methodology applied depends on whether there has been a significant increase


41

in credit risk. For trade receivables and lease receivables, the Group applies the simplified

approach, which requires expected lifetime credit losses to be recognized from initial recognition

of the receivables.

(d) Recognition and Derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on trade-

date, the date on which the Group commits to purchase or sell the asset. Financial assets are

derecognized when the rights to receive cash flows from the financial assets have expired or have

been transferred and the Group has transferred substantially all the risks and rewards of

ownership.

(e) Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statements of

financial position where there is a legally enforceable right to offset the recognized amounts and

there is an intention to settle on a net basis or realize the assets and settle the liability

simultaneously. The legally enforceable right must not be contingent on future events and must

be enforceable in the normal course of business and in the event of default, insolvency or

bankruptcy of the Group or the counterparty.

2.6 Derivative Instruments

Derivatives are initially recognized at fair value on the date when a derivative contract is entered

into and are subsequently remeasured at their fair value at the end of each reporting period.

Changes in the fair value of any derivative instrument that does not qualify for hedge accounting

are recognized immediately in profit or loss within 'other non-operating income (expenses)' or

'finance income (costs)' based on the nature of transactions.

2.7 Trade Receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized

cost using the effective interest method, less loss allowance.

2.8 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the

first-in, first-out (FIFO) method, the weighted average cost method and the moving average cost

method, except for materials-in-transit which are stated at actual cost as determined using the

specific identification method.

CJ Logistics Corporation, a consolidated subsidiary, determines the acquisition cost of housing,

and building and site under construction using the specific identification method.

2.9 Biological Assets

Biological assets such as growing breed, broiler breed and others are measured at their fair value


42

less costs to sell. The fair value of biological assets are measured as market prices of growing

breed, broiler breed and others with similar age and breed less the costs to sell. Biological assets

for production, of which fair value cannot be reliably measured, are measured at their acquisition

costs less any accumulated depreciation and impairment losses.

2.10 Non-current Assets (or Disposal Group) Held for Sale

Non-current assets (or disposal group) are classified as held for sale when their carrying amount

will be recovered principally through a sale transaction rather than through continuing use and a

sale is considered highly probable. The assets are measured at the lower amount between their

carrying amount and the fair value less costs to sell.

2.11 Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and

accumulated impairment losses. Historical cost includes expenditure that is directly attributable to

the acquisition of the items.

Depreciation of all property, plant and equipment, except for land, course and art works, is

calculated using the straight-line method to allocate their cost or revalued amounts, net of their

residual values, over their estimated useful lives as follows:

Useful lives

Buildings 8 - 40 years

Structures 4 - 40 years

Machinery 4 - 10 years

Vehicles 4 - 5 years

Tools, equipment and supplies 3 - 10 years

Heavy equipment 5 - 15 years

Others 4 - 30 years

The assets’ depreciation method, residual values and useful lives are reviewed, and adjusted if

appropriate, at the end of each reporting period.

2.12 Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction

or production of a qualifying asset are capitalized during the period of time that is required to

complete and prepare the asset for its 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. Other borrowing costs are expensed

in the period in which they are incurred.

2.13 Government Grants

Grants from the government are recognized at their fair value where there is a reasonable

assurance that the grant will be received and the Group will comply with all attached conditions.


43

Government grants related to assets are presented in the statement of financial position by

deducting the grant in arriving at the carrying amount of the asset, and government grants related

to income are deferred and later deducted from the related expense.

2.14 Intangible Assets

Goodwill is measured as described in Note 3.(1), and carried at cost less accumulated impairment

losses.

Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at

cost less accumulated amortization and accumulated impairment losses.

Development costs that are directly attributable to internally generated by the Group are

recognized when the criteria; such as, technically feasible, generate probable future economic

benefits and other, are met. Customer contracts acquired in a business combination are

recognized at fair value at the acquisition date. Membership rights, brand, and other intangible

assets (rights of using wharf, registration plate of transporters, trademarks, and others) that have

an indefinite useful life are not subject to amortization because there is no foreseeable limit to the

period over which the assets are expected to be utilized. The Group amortizes intangible assets

with a limited useful life using the straight-line method over the following periods:

Useful lives

Development costs 5 - 10 years

Publication rights and copyrights to music contents Contract terms or terms for realization

of revenue

Service concession arrangement 1

10 – 37 years

Other intangible assets 1 – 20 years

1 Service concession arrangement:

On the real estate owned by the Korea Rail Network Authority and the Ministry of Land, Transport

and Maritime Affairs, the Group built a cargo terminal with its own fund. The Group owns and

operates the cargo terminal for a certain period and then donates the terminal to the government.

The transfer period of ownership is under discussion with the Ministry of Land, Transport and

Maritime Affairs. Its estimated useful life will be determined after reaching an agreement on the

transfer period.

2.15 Investment Property

Investment property is property held to earn rentals or for capital appreciation or both. An

investment property is measured initially at its cost. An investment property is measured after

initial measurement at depreciated cost (less any accumulated impairment losses). After

recognition as an asset, investment property is carried at cost less accumulated depreciation and

impairment losses. The Group depreciates investment properties, except for land, using the

straight-line method over their useful lives.

Useful lives

Buildings 10 – 40 years


44

Structures 15 – 40 years

2.16 Impairment of Non-financial Assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization

and are tested annually for impairment, or more frequently if events or changes in circumstances

indicate that they might be impaired. Other assets are tested for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An

impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its

recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of

disposal and value in use. Non-financial assets other than goodwill that suffered an impairment

are reviewed for possible reversal of the impairment at the end of each reporting period.

2.17 Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Group prior to the end

of reporting period which are unpaid. The amounts are unsecured and are usually paid within 30

days of recognition. Trade and other payables are presented as current liabilities, unless payment

is not due within 12 months after the reporting period. They are recognized initially at their fair

value and subsequently measured at amortized cost using the effective interest method.

2.18 Financial Liabilities

(a) Classification and measurement

The Group’s financial liabilities at fair value through profit or loss are financial instruments held for

trading. A financial liability is held for trading if it is incurred principally for the purpose of

repurchasing in the near term. A derivative that is not a designated as hedging instruments and

an embedded derivative that is separated are also classified as held for trading.

The Group classifies non-derivative financial liabilities, except for financial liabilities at fair value

through profit or loss, financial guarantee contracts and financial liabilities that arise when a

transfer of financial assets does not qualify for derecognition, as financial liabilities carried at

amortized cost and present as ‘trade payables’, ‘short-term borrowings’, ‘current portion of long-

term debentures and borrowings’, ‘non-trade payables’, ‘other current financial liabilities’, ‘long-

term borrowings’, ‘debentures’, ‘deposits received’ and ‘other non-current financial liabilities’ in the

statement of financial position.

(a) Derecognition

Financial liabilities are removed from the statement of financial position when it is extinguished;

for example, when the obligation specified in the contract is discharged or cancelled or expired or

when the terms of an existing financial liability are substantially modified. The difference between

the carrying amount of a financial liability extinguished or transferred to another party and the

consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized

in profit or loss.


45

2.19 Financial Guarantee Contract

Financial guarantee contracts are recognized as a financial liability at the time the guarantee is

issued. The liability is initially measured at fair value, subsequently at the higher of following and

recognized in the statement of financial position within ‘other financial liabilities’.

the amount determined in accordance with the expected credit loss model under Korean

IFRS 1109 Financial Instruments and

the amount initially recognized less, where appropriate, the cumulative amount of income

recognized in accordance with Korean IFRS 1115 Revenue from Contracts with

Customers

2.20 Compound Financial Instruments

Compound financial instruments are convertible notes and the convertible redeemable preferred

share that can be converted into equity instruments at the option of the holder. The liability

component of a compound financial instrument is recognized initially at the fair value of a similar

liability that does not have an equity conversion option. The equity component is recognized

initially on the difference between the fair value of the compound financial instrument as a whole

and the fair value of the liability component. Any directly attributable transaction costs are

allocated to the liability and equity components in proportion to their initial carrying amounts.

2.21 Provisions

Provisions for service warranties, make good obligation, and legal claims are recognized when

the Group has a present legal or constructive obligation as a result of past events, it is probable

that an outflow of resources will be required to settle the obligation and the amount can be reliably

estimated. Provisions are measured at the present value of management’s best estimate of the

expenditure required to settle the present obligation at the end of the reporting period, and the

increase in the provision due to the passage of time is recognized as interest expense.

2.22 Current and Deferred Tax

The tax expense for the period consists of current and deferred tax. Current and deferred tax is

recognized in profit or loss, except to the extent that it relates to items recognized in other

comprehensive income or directly in equity. In this case, the tax is also recognized in other

comprehensive income or directly in equity, respectively.

The tax expense is measured at the amount expected to be paid to the taxation authorities, using

the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the

reporting period.

Management periodically evaluates positions taken in tax returns with respect to situations in

which applicable tax regulation is subject to interpretation. The Group recognizes current income

tax on the basis of amounts expected to be paid to the tax authorities.


46

Deferred income tax is provided in full, using the liability method, on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the consolidated

financial statements. However, deferred income tax is not accounted for if it arises from initial

recognition of an asset or liability in a transaction other than a business combination that at the

time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognized only if it is probable that future taxable amounts will be

available to utilize those temporary differences and losses.

The Group recognizes a deferred tax liability all taxable temporary differences associated with

investments in subsidiaries, associates, and interests in joint arrangements, except to the extent

that the Group is able to control the timing of the reversal of the temporary difference and it is

probable that the temporary difference will not reverse in the foreseeable future. In addition, The

Group recognizes a deferred tax asset for all deductible temporary differences arising from such

investments to the extent that it is probable the temporary difference will reverse in the

foreseeable future and taxable profit will be available against which the temporary difference can

be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset

current tax assets and liabilities and when the deferred tax balances relate to the same taxation

authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable

right to offset and intends either to settle on a net basis.

2.23 Employee Benefits

(a) Post-employment benefits

The Group operates both defined contribution and defined benefit pension plans.

For defined contribution plans, the Group pays contribution to publicly or privately administered

pension insurance plans on mandatory, contractual or voluntary basis. The Group has no further

payment obligation once the contribution have been paid. The contribution are recognized as

employee benefit expense when they are due.

A defined benefit plan is a pension plan that is not a defined contribution plan. Generally, post-

employment benefits are payable after the completion of employment, and the benefit amount

depended on the employee’s age, periods of service or salary levels. The liability recognized in

the statement of financial position in respect of defined benefit pension plans is the present value

of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.

The defined benefit obligation is calculated annually by independent actuaries using the projected

unit credit method. The present value of the defined benefit obligation is determined by

discounting the estimated future cash outflows using interest rates of high-quality corporate bonds

that are denominated in the currency in which the benefits will be paid, and that have terms

approximating to the terms of the related obligation. Remeasurement gains and losses arising

from experience adjustments and changes in actuarial assumptions are recognized in the period

in which they occur, directly in other comprehensive income.


47

Changes in the present value of the defined benefit obligation resulting from plan amendments or

curtailments are recognized immediately in profit or loss as past service costs.

(b) Share-based payments

Equity-settled share-based payment is recognized at fair value of equity instruments granted, and

employee benefit expense is recognized over the vesting period. At the end of each period, the

Group revises its estimates of the number of options that are expected to vest based on the non-

market vesting and service conditions. It recognizes the impact of the revision to original

estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When the options are exercised, the Group issues new shares. The proceeds received, net of any

directly attributable transaction costs, are recognized as share capital (nominal value) and share

premium.

However, in accordance with approval of the Board of Directors, the Group can distribute treasury

shares or make payment in share or cash for the valuation difference

(c) Long-term employee benefits

The Group has a long-term employee benefits to employees who stay with the Group for a certain

length of time. The expected costs of these benefits are accrued over the period of employment

using the same accounting methodology as used for defined benefit pension plans. The Group

recognizes service cost, net interest on long-term employee benefits and remeasurements as

profit or loss for the year. These liabilities are valued annually by an independent qualified actuary.

2.24 Revenue Recognition

From January 1, 2018, the Group has applied Korean IFRS 1115 Revenue from Contracts with

Customers.

(a) Identification of performance obligation

CJ OliveNetworks Co., Ltd., a consolidated subsidiary, engages in providing comprehensive total

IT service including consulting, system development, operation, maintenance, and managent

service to customers. The Group identifies performance obligations from comprehensive IT

contract with customers such as (a) sales of software, (b) installation, (c) software update and (d)

maintenance.

Since the Group is obliged to provide software update and maintenance services to customers

during the term of the contract, the Group recognizes the transaction price allocated to each

performance obligation as revenue over the service period.

CJ Hello Co., Ltd., a consolidated subsidiary, engages in providing broadcasting, internet and

internet phone service to customers. Under Korean IFRS 1115, the Group identifies performance

obligations from the combined service contract with customers such as (a) sales of handsets and

(b) telecommunication service.


48

The Group has not identified any significant performance obligations from contracts with

customers in relation to other divisions. The Group recognizes the transaction price allocated to

each performance obligation as revenue over the service period.

(b) Performance obligation satisfied over time

With respect to logistics related service and construction service, the Group measures the

percentage-of-completion for the satisfaction of performance obligation, and recognizes revenue

over the service period for each performance obligation that is satisfied over the period of beneifts

provided to customers. The Group measures the percentage-of-completion to represent the level

of performance while transferring control over promised goods or services (satisfying the

performance obligation) to customers. In addition, costs to fulfil a contract are expensed based on

the percentage-of-completion for the services.

(c) Variable consideration

The Group estimates an amount of variable consideration by using the method exepcted to better

predict the amount of consideration to which it will be entitled. The Group recognizes revenue by

including the transaction price some or all of an amount of variable consideration esimated only to

the extent that it is highly probable that a significant reversal in the amount of cumulative revenue

recognized will not occur when the refund period has lapsed. The contract liability is recognized

for an amount of consideration received for which the Group does not expect to be entitled.

(d) Allocation of transaction price

The transaction price in an arrangement must be allocated to each separate performance

obligation based on the relative stand-alone selling prices of the goods or services being provided

to customers. The Group determines the stand-alone selling price for each separate performance

obligation by using ‘adjust market assessment approach’. In limited circumstances, the Group

uses ‘expected cost plus a margin approach’ to estimate expected cost plus a reasonable margin.

(e) Incremental costs of obtaining a contract

The cable broadcasting division of the Group makes payments and recognizes them as costs that

an entity incurs to obtain a contract with a customer that it would not have incurred if the contract

had not been obtained. With implementation of Korean IFRS 1115, the Group recognizes the

incremental costs of obtaining a contract with a customer of the Group expects to recover as an

asset, and costs that are recognized as assets are amortized over the period of the related goods

or services transfer to the customer. However, the Group elected a practical expedient that

permits an entity to expense the costs to obtain a contract as incurred when the expected

amortization period is one year or less.

(f) Principal versus agent

The Group provides logistics services in accordance with the contracts with customers. The

Group recognizes the gross amount of revenue from the sale of goods and services whose


49

controls have not been transferred to customers as the Group is considered to be ‘Principal’.

(g) Return

The Group recognizes a refund liability for the expected portion of the consideration received from

a customer and adjusts salles accordingly. At the same time, the Group recognizes an asset of

the returned product as the Group has a right to recollect the product from the customer when the

customer exercises the right to return and adjusts cost of sales accordingly. The right to collect

the product is measured by carrying amount of the product less costs incurred in the course of

collecting the products.

2.25 Lease

A lease is an agreement, whereby the lessor conveys to the lessee, in return for a payment or

series of payments, the right to use an asset for an agreed period of time. Leases in which a

significant portion of the risks and rewards of ownership are not transferred to the Group are

classified as operating leases. Payments made under operating leases are charge to profit or loss

on a straight-line basis over the period of lease.

Leases where the Group, as a lessee, has substantially all the risks and rewards of ownership are

classified as finance leases. Finance leases are capitalized at the lease’s inception at the fair

value of the leased property or, if lower, the present value of the minimum lease payments. The

corresponding rental obligations, net of finance charges, are included in other short-term and

long-term payables. Each lease payment is allocated between the liability and finance cost.

If the Group is a lessor, a lease is classified as a finance lease if it transfers substantially all the

risks and rewards incidental to ownership at the inception of the lease. A lease other than a

finance lease is classified as an operating lease. Lease income from operating leases is

recognized in income on a straight-line basis over the lease term. Initial direct costs incurred by

the lessor in negotiating and arranging an operating lease is added to the carrying amount of the

leased asset and recognized as an expense over the lease term on the same basis as the lease

income.

A sale and leaseback transaction involves the sale of an asset and the leasing back of the same

asset. If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds

over the carrying amount is not be immediately recognized as income by a seller-lessee (the

Group). Instead, it is deferred and amortized over the lease term. If a sale and leaseback

transaction results in an operating lease, and it is clear that the transaction is established at fair

value, any profit or loss is recognized immediately. Also, if the sale price is below fair value, any

profit or loss is recognized immediately, unless the loss is compensated for by future lease

payments at below market price, and it then is deferred and amortized in proportion to the lease

payments over the period for which the asset is expected to be used. If the sale price is above fair

value, the excess over fair value is deferred and amortized over the period for which the asset is

expected to be used.

2.26 Business Combination of Entities Under a Common Control


50

The company used book value method as the business consolidation under same controlling

company. Assets and liabilities transferred to a business consolidation are measured at the book

value method of the parent entity's consolidated financial statements. In the case that no

consolidated financial statements are prepared, assets and liabilities are measured at the book

value method of the acquiree’s financial statements. The difference of the book value of assets

and liabilities, the accumulated other comprehensive income and expenses with the amount of

consideration transferred is reflected in other adjustment to stockholder's equity.

2.27 Segment Reporting

Information of each operating segment is reported in a manner consistent with the business

segment reporting provided to the chief operating decision-maker who is the Chief Executive

Officer.

2.28 Approval of Issuance of the Financial Statements

The consolidated financial statements 2018 were approved for issue by the Board of Directors on

February 11, 2019 and are subject to change with the approval of shareholders at their Annual

General Meeting.

3. Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Group to make estimates and assumptions

concerning the future. Management also needs to exercise judgement in applying the Group’s

accounting policies. Estimates and assumptions are continually evaluated and are based on

historical experience and other factors, including expectations of future events that are believed to

be reasonable under the circumstances. As the resulting accounting estimates will, by definition,

seldom equal the related actual results, it can contain a significant risk of causing a material

adjustment.

The estimates and assumptions that have a significant risk of causing a material adjustment to

the carrying amounts of assets and liabilities within the next financial year are addressed below.

Additional information of significant estimates and judgements about certain items is included in

the separate notes.

(a) Estimated impairment of goodwill

The Group tests whether goodwill has suffered any impairment on an annual basis. The

recoverable amount of a cash generating unit (CGU) is determined based on value-in-use

calculations.

(b) Income taxes

The Group’s taxable income generated from these operations are subject to income taxes based

on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many

transactions and calculations for which the ultimate tax determination is uncertain.


51

If certain portion of the taxable income is not used for investments or increase in wages in

accordance with the Tax System For Recirculation of Corporate Income, the Group is liable to pay

additional income tax calculated based on the tax laws. Accordingly, the measurement of current

and deferred income tax is affected by the tax effects from the new tax system. As the Group’s

income tax is dependent on the investments, and increase in wages, there is an uncertainty

measuring the final tax effects.

(c) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by

using valuation techniques. The Group uses its judgment to select a variety of methods and make

assumptions that are mainly based on market conditions existing at the end of each reporting

period.

(d) Impairment of financial assets

The provision for impairment for financial assets are based on assumptions about risk of default

and expected loss rates. The Group uses judgement in making these assumptions and selecting

the inputs to the impairment calculation based on the Group’s past history, existing market

conditions as well as forward looking estimates at the end of each reporting period.

(e) Net defined benefit liability

The present value of net defined benefit liability depends on a number of factors that are

determined on an actuarial basis using a number of assumptions including the discount rate.

(f) Revenue recognition

A refund liability and a right to the returned goods are recognized for the products expected to be

returned once they are sold. Accumulated experience is used to estimate such returns at the time

of sale at a portfolio level (expected value method), and the Group’s revenue is affected by

changes in expected return rate.

4. Financial Risk Management

4.1 Financial Risk Factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk,

price risk and interest risk), credit risk and liquidity risk. In order to manage such risks, the Group

established financial risk management policies and programs which enable to closely monitor and

react to individual risk causes.

Certain subsidiaries invest on derivatives to hedge certain risk exposures. The Group documents

at the inception of the transaction the relationship between hedging instruments and hedged

items, as well as its risk management objectives and strategy for undertaking various hedging


52

transactions.

(a) Market Risk

i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from foreign

currency transactions, primarily with respect to the US dollar, the Euro and the Chinese yuan.

Foreign exchange risk arises from future commercial transactions, recognized assets and

liabilities and net investments in foreign operations.

The Group applies hedge accounting to each entities individually with considering the entity’s

business characteristics and existence of alternatives against foreign exchange risk.

The table below summarizes the impact of weakened/strengthened Korean won on the Group’s

equity and post-tax profit for the year. The analysis is based on the assumption that Korean won

has weakened/strengthened by 10% with all other variables held constant.

Impact on post-tax profit Impact on equity

(In millions of Korean won) 2018 2017 2018 2017

USD/

KRW

Strengthened (99,132) (84,302) (99,132) (84,302)

Weakened 99,132 84,302 99,132 84,302

EUR/

KRW

Strengthened (14,033) (10,972) (14,033) (10,972)

Weakened 14,033 10,972 14,033 10,972

CNY/

KRW

Strengthened 12,166 17,503 12,166 17,503

Weakened (12,166) (17,503) (12,166) (17,503)

ii) Price risk

The Group is exposed to price risk due to investments in equity securities including listed and

unlisted shares for the needs of operations and liquidity managements. The Group utilizes more

than one direct or indirect investment methods to reduce price risk.

The Group’s investments in equity of other entities that are publicly traded are included in one of

the following two equity indexes: KOSPI equity index and KOSDAQ equity index.

As at December 31, 2018, the impact of increases/decreases of the share price by 10% with all

other variables held constant on the Group’s equity is \ 7,646 million (2017: \ 14,432 million).

iii) Interest rate risk

Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is

partially offset by cash held at variable rates. The Group employs floating interest receipts and

fixed interest payment swaps to certain borrowings in order to minimize uncertainty and financial

expenses from interest rate changes.


53

The table below summarizes the impact of increases/decreases of interest rate on the Group’s

equity and post-tax profit for the year. The analysis is based on the assumption that the interest

rate has increased/decreased by 1% with all other variables held constant.

Impact on post-tax profit Impact on equity

(In millions of Korean won) 2018 2017 2018 2017

Interest expenses Increase (20,013) (13,586) (20,013) (13,586)

Decrease 20,013 13,586 20,013 13,586

Gains (Losses) on valuation

of derivative instruments

Increase 2,216 2,925 2,974 3,683

Decrease (2,216) (2,925) (2,974) (3,683)

(b) Credit Risk

Credit risk is managed on an individual company basis. Credit risk arises when client or

counterparty does not keep to obligations stated on terms of the contract in committed

transactions and investment activities. In order to manage credit risk, the Group continuously

evaluates credit quality of the customer through taking into account its financial position, past

experience and other factors. Major customers’ individual risk limits are set based on internal or

external ratings in accordance with limits set by the board. The utilization of credit limits is

regularly monitored.

Furthermore, Credit risk may arise from various financial institution transactions including cash

and cash equivalents, deposits with banks and derivative financial instruments. In order to reduce

the risk, the Group takes transactions only with highly rated financial institutions.

As at December, 31 2018, the maximum value of exposed credit risk is equal to book amount of

financial instruments (excluding cash and equity securities), loan commitments and guarantee

amounts (Notes 6 and 37).

(c) Liquidity Risk

In order to maintain appropriate amount of liquidity, the Group manages liquidity risk by making

cyclical expectations and adjustments of capital inflows and outflows.

In order to maintain sufficient cash to meet its’ operational needs, the Group issues factoring

trade receivables and asset-backed securities to domestic/foreign financial institutions which has

highly rated reliability. Furthermore, the Group has bank overdraft agreements with financial

institutions (Note 37).

The analysis of the Group’s liquidity risk as at December 31, 2018 and 2017, are as follows:

(In millions of Korean won) 2018

Less than

1 year

Between

1 and 5 years

Over

5 years


54

Trade payables 2,088,317 - -

Borrowings 4,846,690 1,656,340 372,200

Debentures 1,084,535 4,354,222 505,276

Non-trade payables 1,137,526 - -

Deposits received 102,743 257,255 3,419

Other financial liabilities 529,718 275,806 -

Trading derivatives (currency forward)

Outflows 1,118,566 - -

Inflows (1,111,447) - -

Financial guarantee contracts and others 503,955 199,283 119,020


Less than

1 year

Between

1 and 5 years

Over

5 years

Trade payables 2,034,999 - -

Borrowings 3,758,070 1,368,624 344,248

Debentures 1,076,044 4,640,478 354,234

Non-trade payables 1,339,142 - -

Deposits received 109,498 66,253 284,254

Other financial liabilities 601,707 87,031 -

Trading derivatives (currency forward)

Outflows 485,355 - -

Inflows (504,914) - -

Financial guarantee contracts and others 770,221 70,000 -

4.2 Capital Risk Management

The Group’s objectives when managing capital are to maintain a secured capital structure. The

Group uses debt-to-equity ratio for capital management. This ratio is calculated as total debts

divided by total equity as shown in the consolidated statement of financial position.

(In millions of Korean won) 2018 2017

Debt 19,207,738 17,333,214

Equity 12,521,810 11,992,169

Debt-to-equity ratio 153% 145%

5. Fair Value

5.1 Fair Value of Financial Instruments by Category

There is no significant difference between the book amount and the fair value of financial assets

and liabilities measured at amortized cost in respect to financial instruments of the Group. The

book amount of other financial instruments is identical to its fair value.


55

5.2 Fair Value Hierarchy

Items that are measured at fair value or for which the fair value is disclosed are categorized by

the fair value hierarchy levels, and the defined levels are as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity

can access at the measurement date (Level 1).

All inputs other than quoted prices included in level 1 that are observable (either directly that

is, prices, or indirectly that is, derived from prices) for the asset or liability (Level 2).

Unobservable inputs for the asset or liability (Level 3).

Fair value hierarchy classifications of the financial instruments that are measured at fair value or

its fair value is disclosed as at December 31, 2018, are as follows:

2018

(In millions of Korean won) Level 1 Level 2 Level 3 Total

Current derivative assets 3,112 10,761 - 13,873

Current financial assets measured at fair

value1

Debt instruments at fair value through

profit or loss 61 - - 61

Financial assets measured at fair value1

Equity instruments at fair value through

profit or loss 2,031 - 6,382 8,413

Equity instruments at fair value through

other comprehensive income 140,282 - 37,225 177,507

Debt instruments at fair value through

profit or loss 3,800 1,005 86,461 91,266

Debt instruments measured at amortized

cost 367 - - 367

Trade receivables

Financial assets at fair value through

profit or loss - 26,736 - 26,736

Other non-current financial assets

Financial assets at fair value through

other comprehensive income - 25,262 - 25,262

Non-current derivative assets - 48,588 2,003 50,591

Current derivative liabilities 3,814 8,587 - 12,401

Non-current derivative liabilities - 10,022 228,794 238,816

1 In the prior financial year, the Company had designated the financial assets at fair value as

available-for-sale financial assets in accordance with Korean IFRS 1039.


56

2017

(In millions of Korean won) Level 1 Level 2 Level 3 Total

Current derivative assets 5,119 13,973 - 19,092

Current available-for-sale financial assets 454 - - 454

Available-for-sale financial assets

Marketable equity securities 164,338 2,129 - 166,467

Non-marketable equity securities - 27,503 22,465 49,968

Non-current derivative assets - 34,219 - 34,219

Current derivative liabilities 2,235 48,206 - 50,441

Non-current derivative liabilities - 14,055 51,217 65,272

As at December 31, 2017, available-for-sale financial assets measured at cost of \ 67,459 million

were excluded from the fair value disclosures, as the book amount was a reasonable

approximation of fair value.

5.3 Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements

The Group’s policy is to recognize transfers between levels of the fair value at the end of the

reporting period.

Changes in level 3 for recurring fair value measurements for the years ended December 31, 2018

and 2017, are as follows:


Derivative

financial

assets

Financial

assets

measured at

fair value

Derivative

financial

liabilities

Beginning balance - 22,466 (51,217)

Effects of changes in accounting policies - 76,337 -

Amount after adjustments - 98,802 (51,217)

Total profit or loss

Amount recognized in profit or loss1 - 7,250 (177,577)

Amount recognized in other comprehensive

income 2 - 6,647 -

Acquisition 2,003 21,762 -

Disposal and capital reduction - (4,393) -

Ending balance 2,003 130,068 (228,794)


Available-for-

sale financial

assets

Derivative

financial

assets

Derivative

financial

liabilities

Beginning balance 38,816 149 -

Total profit or loss

Amount recognized in profit or loss1 (237) (149) (51,217)


57

Amount recognized in other comprehensive

income 2 (805) - -

Acquisition 1,131 - -

Disposal and capital reduction (3,800) - -

Transfer out of Level 3 (12,640) - -

Ending balance 22,465 - (51,217)

1During the year ended December 31, 2018, the Group recognized \ 177,577 million of loss on

valuation of derivative in relation to the financial instruments classified in level 3. In 2017, the

Group recognized \ 51,366 million of loss on valuation of derivative.

2During the year ended December 31, 2018, the Group recognized \ 6,647 million of gain on

valuation of equity instruments relating to ASTORY Co.,Ltd and others. In 2017, the Group

recognized \ 805 million of loss on valuation of available-for-sale financial assets relating to

Raine-Partners Fund and others.

5.4 Valuation Technique and the Inputs

Valuation techniques and inputs used in the recurring fair value measurements categorized within

Level 2 of the fair value hierarchy as at December 31, 2018 and 2017, are as follows:


Fair value

Valuation

techniques Inputs

Derivative assets 59,348

Present value

technique Discount rate

Biological assets 112,117

Net realizable

value technique -

Financial assets measured at fair value

Debt instruments at fair value through profit or

loss 1,005

Present value


Trade receivables

Financial assets at fair value through profit or

loss 26,736

Present value


Other non-current financial assets

Financial assets at fair value through other

comprehensive income 25,262

Present value


Derivative liabilities 18,609

Present value



Fair value

Valuation

techniques Inputs

Derivative assets for trading 48,192

Present value


Biological assets 60,922

Net realizable

value technique -



58

Marketable equity securities 2,129 Market approach -

Non-marketable equity securities 17,767

Present value


9,736 Market approach -

Derivative liabilities for trading 60,860

Present value


Derivative used for hedging 1,401

Present value


Valuation techniques and inputs used in the recurring fair value measurements categorized within

Level 3 of the fair value hierarchy as at December 31, 2018 and 2017, are as follows:


Fair

value Valuation techniques Inputs

Range of inputs

(weighted

average)

Financial assets measured

at fair value

Equity instruments at fair

value through profit or

loss

6,382

Present value technique

N/A

N/A

Equity instruments at fair

value through other

comprehensive income 37,225

Discounted cash flow,

net asset value approach

method Discount rate

8.87%-10.69%

Inflation rate 1.03%-2.03%

Debt instruments at fair

value through profit or

loss 86,461

Binominal model

Discount rate

18.67%~20.06%

Volatility 8.35%~13.05%

Non-current derivative

assets 2,003

Present value technique

Discount rate 4.87%


liabilities 228,794 Option pricing model Risk-free interest rate 21.00%

Price volatility 36.20%


Fair

value Valuation techniques Inputs

Range of inputs

(weighted

average)

Available-for-sale financial

assets

Equity investment and

debt securities

22,465

Discounted cash flow

Net asset value approach method and others

Discount rate 8.90% - 9.76%

Inflation rate 1.28% - 2.32%

Perpetual growth rate 0%


liabilities

51,217

Option pricing model

Risk-free interest rate 12.80%

Price volatility 40.58%

5.5 Valuation Processes for Fair Value Measurements Categorized as Level 3

The Group’s finance department performs the fair value measurements required for financial

reporting purposes, inc luding level 3 fair values. This department reports valuation processes and


59

results to the management at quarterly basis.

5.6 Sensitivity analysis for Recurring Fair Value Measurements Categorized as Level 3

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable

changes in the fair value of financial instruments which are affected by the unobservable

parameters, using a statistical technique. When the fair value is affected by more than two input

parameters, the most favorable or most unfavorable amounts are presented. Financial instrument,

which is categorized within Level 3 and subject to sensitivity analysis, consists of derivatives,

equity instruments and debt instruments.

6. Financial Instruments by Category

6.1 Carrying Amounts of Financial Instruments by Category

Categorizations of financial assets and liabilities as at December 31, 2018 and 2017, are as

follows:

2018

(In millions of Korean won)

Financial

assets at

amortized

cost

Financial

assets at fair

value through

profit or loss

Financial assets

at fair value

through other

comprehensive

income

Others1 Total

Cash and cash equivalents 1,473,566 - - - 1,473,566

Short-term financial instruments 162,957 - - - 162,957

Short-term loan receivable 72,127 - - - 72,127

Current derivative assets - 13,537 - 336 13,873

Trade receivables 3,508,081 26,736 - - 3,534,817

Current financial assets measured

at fair value - - 61 - 61

Other current financial assets 407,717 - - - 407,717

Non-current derivative assets - 50,591 - - 50,591

Lon-term trade receivables 112,774 - - - 112,774

Financial assets measured at fair

value - 100,166 177,387 - 277,553

Other non-current financial assets 692,143 - 25,262 - 717,405

6,429,365 191,030 202,710 336 6,823,441

1 Others financial assets include derivatives used for hedging.


60

2018


Other financial

liabilities at

amortized cost

Financial liabilities

at fair value

through profit or

loss

Others1 Total

Current derivative liabilities - 12,401 - 12,401

Trade payables 2,088,317 - - 2,088,317

Borrowings 6,483,585 - 54,981 6,538,566

Debentures 5,506,318 - - 5,506,318

Non-trade payables 1,137,526 - - 1,137,526

Other current financial liabilities 782,525 10,654 27 793,206

Non-current derivative liabilities - 238,816 - 238,816

Deposits received 259,327 - - 259,327

Other non-current financial

liabilities 36,992 - - 36,992

16,294,590 261,871 55,008 16,611,469

1 Others include financial lease liabilities and financial guarantee contract.

2017


Loans and

receivables

Assets at fair

value through

profit or loss

Assets

classified as

available-for-

sale

Others1 Total

Cash and cash equivalents 1,219,548 - - - 1,219,548

Short-term financial instruments 433,707 - - - 433,707

Short-term loan receivable 62,483 - - - 62,483

Current derivative assets 19,092 - - 19,092

Trade receivables 3,551,769 - - - 3,551,769

Current available-for-sale financial

assets - - 454 - 454

Other current financial assets 408,190 - - - 408,190

Non-current derivative assets - 33,180 - 1,039 34,219

Long-term trade receivables 75,340 - - - 75,340

Available-for-sale financial assets - - 283,894 - 283,894

Other non-current financial assets 632,804 - - - 632,804

6,383,841 52,272 284,348 1,039 6,721,500

1 Others include derivatives used for hedging.


61

2017


Liabilities at fair

value through

profit or loss

Other financial

liabilities at

amortized cost

Others1 Total

Current derivative liabilities 50,441 - - 50,441

Trade payables - 2,034,999 - 2,034,999

Borrowings - 5,258,801 62,121 5,320,922

Debentures - 5,276,852 - 5,276,852

Non-trade payables - 1,339,142 - 1,339,142

Other current financial liabilities - 675,375 - 675,375

Non-current derivative liabilities 65,272 - - 65,272

Deposits received - 212,068 - 212,068


liabilities - 29,895 - 29,895

115,713 14,827,132 62,121 15,004,966

1 Others include financial lease liabilities.

6.2 Net Gains or Losses by Category of Financial Instruments

Net gains or losses on each category of financial instruments for the years ended December 31,

2018 and 2017, are as follows:


Financial assets and liabilities at amortized cost

Impairment loss (43,380)

Interest income 52,663

Interest expenses (368,554)

Other impairment loss (2,295)

Others (22,358)

Financial assets and liabilities at fair value through profit or loss

Gain (Loss) on derivatives (124,208)

Gain (Loss) on valuation of financial assets measured at fair value 10,326

Gain (Loss) on disposal of financial assets measured at fair value 16,357

Financial assets at fair value through other comprehensive income

Gain (Loss) on valuation (other comprehensive income) (36,084)

Dividend income 3,227

Others

Gain (Loss) on valuation of derivative (Other comprehensive income)

(1,148)



Gain (Loss) on valuation

(other comprehensive income)

(234,132)


62

Interest income

31

Dividend income

6,100

Impairment loss

(20,696)

Gain (Loss) on disposal (profit or loss)

17,618

Gain (Loss) on disposal (reclassification)1 335,141

Held-to-maturity financial assets

Interest income

40

Loans and receivables

Interest income

41,680

Impairment loss

(27,043)

Other impairment loss

(29,105)

Others

(15,380)

Assets and liabilities at fair value through profit or loss

Gain (Loss) on derivatives

(128,512)

Other financial liabilities at amortized cost

Interest expenses

(315,652)

Derivatives used for hedging

Interest expenses

(1,970)

Gain (Loss) on valuation (other comprehensive income)

216 1 Reclassification to profit or loss represents amounts transferred from components of other

comprehensive income.

7. Financial Instruments Subject to Withdrawal Restrictions

Financial instruments subject to withdrawal restrictions as at December 31, 2018 and 2017, are

as follows:

(In thousands of Korean won) 2018 2017

Short-term financial instruments

Government-sponsored research and

development projects 5,311,386 930,115

Contract performance guarantee and

others 377,218 707,218

Withdrawal for support of cooperative

firm 35,000,000 51,600,000

Escrow 1,746,503 2,500,000

Real estate sales income 804,545 4,735,461

Other activities 4,657,062 5,201,989

47,896,714 65,674,782

Long-term financial instruments

Contract performance guarantee and

others 2,080,273 2,027,927

Withdrawal for support of cooperative

firm - 5,000,000

Others 3,349,502 8,213,711


63

5,429,774 15,241,638

53,326,488 80,916,420

Certain short-term and long-term financial instruments of the Group are pledged as collateral

(Note 37).

8. Trade Receivables and Other Financial Assets at Amortized Cost

As explained in Note 2, the Group has applied Korean IFRS 1109 Financial Instruments from

January 1, 2018. See Note 42 for the impact of the changes in accounting policies on the

classification of financial assets and financial statements.

Trade receivables and its loss allowance provision for impairment as at December 31, 2018 and

2017, are as follows:

2018 2017

(In thousands of Korean won)

Trade

receivables

Long-term trade

receivables

Trade

receivables

Long-term trade

receivables

Trade receivables 3,664,233,113 143,111,062 3,664,958,170 92,433,659

Less: loss allowance

provision (129,416,856) (30,336,862) (113,189,517) (17,093,114)

3,534,816,257 112,774,200 3,551,768,653 75,340,545

Details of loss allowance provision for trade receivables as at December 31, 2018, are as follows:

2018

(In thousands of Korean won) Current and

past due

up to 30 days

Past due

from

30 to 90 days

Past due

from

90 to 180

days

Past due

from

181 to 365

days

More than

365 days past

due Total

Expected loss rate 0.93% 3.89% 8.99% 28.26% 65.86% 4.20%

Gross carrying amount 3,445,202,870 102,149,138 54,667,233 43,208,995 162,115,938 3,807,344,175

Loss allowance provision (31,885,445) (3,975,454) (4,912,996) (12,209,143) (106,770,680) (159,753,718)

Movements in the loss allowance provision for trade receivables for the years ended December

31, 2018 and 2017, are as follows:


Beginning balance - Korean IFRS 1039 130,282,631 128,672,187

Amounts restated through beginning balance

of retained earnings 10,058,682 -

Loss allowance as at initial application date -

calculated under Korean IFRS 1109 140,341,313 128,672,187

Increase due to business combination 972,047 3,203,282


64

Impairment loss 43,380,252 27,043,668

Write-off (28,003,140) (26,063,441)

Effect of foreign currency translation 3,063,246 (2,573,065)

Ending balance (amount of Korean IFRS

1039 as at December 31, 2017) 159,753,718 130,282,631

The creation and release of provision for impaired trade receivables are included in ‘selling and

administrative expenses’ in the consolidated statement of profit or loss.

Certain trade receivables are classified as financial assets at fair value through profit or loss

because the Group considers that business model of the trade receivables is for acquisition and

sale purpose. As at December 31, 2018, trade receivables classified as financial assets at fair

value through profit or loss amounts to \ 26,736 million(Note 5).

Trade receivables of subsidiaries, including CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.)

and CJ CGV Co., Ltd., are not exposed to significant credit risk since the receivables are from

individual clients. Credit of clients of other subsidiaries, including CJ CheilJedang Corp., is

valuated using disclosed and undisclosed financial information at the time of entering into new

contracts. In addition, the Group is provided with credit enhancements including pledges and

contract performance guarantees as at December 31, 2018.

Other financial assets at amortized cost and its loss allowance provision for impairment as at

December 31, 2018 and 2017, are as follows:

2018 2017

(In thousands of Korean won) Current Non-current Current Non-current

Other financial comprehensive

income at amortized cost1

542,937,766 735,630,836 539,202,135 678,642,764

Less: loss allowance provision (63,093,502) (73,728,448) (68,528,659) (74,840,117)

479,844,264 661,902,388 470,673,476 603,802,647

1 Other financial comprehensive income at amortized cost consist of short-term loan receivables

and other financial assets which include long-term loans receivable, non-trade receivables,

accrued income and deposits provided in the consolidated statement of financial position.

Movements in the loss allowance provision for other financial comprehensive income at amortized

cost for the years ended December 31, 2018 and 2017, are as follows:


Beginning balance - Korean IFRS 1039 143,368,776 124,718,052

Amounts restated through beginning balance

of retained earnings 221,937 -

Loss allowance as at initial application date -

calculated under Korean IFRS 1109 143,590,712 124,718,052

Increase due to business combination 59,576 462,517

Impairment loss 2,294,739 29,104,545


65

Write-off (10,873,279) (13,071,440)

Effect of foreign currency translation 1,750,202 2,155,101

Ending balance (amount of Korean IFRS

1039 as at December 31, 2017) 136,821,950 143,368,775

The creation and release of provision for impaired trade receivables are included in ‘finance costs’

in the consolidated statement of profit or loss.

9. Other Financial Assets and Liabilities

Other financial assets as at December 31, 2018 and 2017, are as follows:

(In thousands of Korean won) 2018

2017

Current

Non-trade receivables 332,755,266 335,083,660

Accrued income 4,466,199 6,581,105

Deposits provided1

70,495,300 66,525,713

407,716,765 408,190,478

Non-current

Long-term financial instruments 30,239,941 29,001,130

Loan receivable 89,353,923 91,086,933

Non-trade receivables 8,341,779 6,933,776

Deposits provided1

589,469,027 505,781,938

717,404,670 632,803,777

1,125,121,435 1,040,994,255

1Certain deposits provided are classified as financial assets at fair value through other

comprehensive income because the Group considers that business model of the deposits

provided is for acquisition and sale purpose. As at December 31, 2018, deposits provided

classified as financial assets at fair value through other comprehensive income amounts to

\ 25,262 million(Note 5).

Other financial liabilities as at December 31, 2018 and 2017, are as follows:


2017

Current

Accrued expenses 524,403,474 386,754,484

Deposits received 91,758,175 107,539,245

Derivative liabilities 177,044,330 181,081,318

793,205,979 675,375,047

Non-current

Non-trade payables 36,992,479 29,894,660

36,992,479 29,894,660


66

830,198,458 705,269,707

Transfers of financial assets

CJ Foodville Corp. has entered into a contract with Dong Yang CJ Franchise Investment Trust to

purchase back \ 20,000 million of leasehold deposit, which was transferred during 2015, at fair

value in October 29, 2018. CJ Foodville Corp. purchased \ 5,000 million early on May 25, 2018,

and purchased the remaining amount of \ 15,000 million on October 29, 2018. In addition, CJ

Foodville Corp. made contract with Hyundai CJ Hedge Fund to purchase \ 50,000 million, which

was transferred on October 31, 2016, at fair value in October 30, 2019, and purchased early

\ 10,000 million out of which was agreed amount on January 17, 2018. CJ Foodville Corp. has

entered into contract with Hyundai CJ Hedge Fund to purchase back \ 20,000 million of

leasehold deposit, which was transferred on September 26, 2017, at fair value in September 26,

2019 and purchased early \ 10,000 million out of which was agreed amount on April 27, 2018.

Undiscounted cash outflows of leasehold deposits which are subject to repurchase are \ 50,000

million.

CJ CGV Co. has entered into purchase agreement JB CULTUREPLEX Private Special Asset

Fund No. 2 to purchase back leasehold deposit amounting to \ 198,600 million, which was

transferred in 2018, at fair value in August 30, 2021 and the undiscounted cash outflow of this

contact is \ 198,600 million.

Derivatives as at December 31, 2018 and 2017, are as follows:

2018

2017

(In thousands of Korean won) Assets Liabilities

Assets Liabilities

Current

Commodity futures contract 1,362,046 2,759,009 1,970,479 2,021,922

Commodity option contract 1,750,393 1,055,454 3,148,077 1,485,884

Interest rate swap contract 2,826,085 625,391 1,264,906 126,559

Currency forward contract 5,481,606 6,716,242 568,297 24,617,608

Currency option contract 190,287 490,707 - 14,374,463

Currency swap contract 198,245 754,418 3,657,299 6,771,750

Other derivatives 2,064,273 - 8,482,665 1,043,313

13,872,935 12,401,221 19,091,723 50,441,499

Non-current

Interest rate swap contract 281,680 1,660,084 2,287,998 5,511,567

Currency forward contract 1,125,620 6,210,737 - 1,019,581

Currency swap contract 23,144,468 2,149,609 31,931,125 7,521,813

Total return swap contract

(Note 37) 18,783,192 228,793,501 - 51,216,841

Other derivatives1

7,256,031 1,810 - 1,810

50,590,991 238,815,741 34,219,123 65,271,612

64,463,926 251,216,962 53,310,846 115,713,111


67

1Option contract for acquiring remaining interest of CJ MAINFROST FOODS GMBH, in which the

Group acquired in 2018, is included.

Accounts which include gain and loss from derivatives for the years ended December 31, 2018

and 2017, are as follows:


2017

Finance income 106,410,653 77,235,794

Finance costs 231,466,549 179,452,812

Other non-operating income 13,509,685 44,146,682

Other non-operating expenses 12,661,856 70,441,963

Expected periods of cash flow for derivatives hedging cash flow risk are as follows:

(In thousands of Korean won) Buy/Sell

Less than

1 year

Between

1 and 2 years

Over 2 years

Interest rate swap Buy 100,000,000 - -

CJ Logistics Corporation, a consolidated subsidiary, entered into swap agreements with Shinhan

Bank to hedge expected cash flow risks which may arise from floating rate borrowings of

\ 100,000 million.

There is no ineffective portion recognized as current profit or loss under cash flow hedge. Loss on

valuation of \ 1,148 million in 2018 (2017: gain on valuation of \ 216 million), excluding the

income tax effect reflected directly on the equity account, is recognized as other comprehensive

income.

10. Inventories

Inventories as at December 31, 2018 and 2017, are as follows:


2018

2017

Merchandise

637,001,954 530,525,994

Finished goods

358,302,710 351,516,582

Work-in-process

75,546,152 50,036,099

Raw materials

512,336,713 413,601,109

Sub-materials

43,771,169 38,730,052

Supplies

94,719,797 69,383,956

Goods in transit

335,315,536 303,956,071

Others

2,520,105 2,676,148

Valuation allowance

(35,852,796) (27,419,716)

2,023,661,340 1,733,006,295


68

Inventories and biological assets recognized as an expense during the year ended December 31,

2018, amounted to \ 8,353,413 million (2017: \ 8,473,563 million). These were included in ‘cost

of sales’.

Loss on valuation of inventories amounted to \ 8,433 million (2017: \ 5,265 million). These were

recognized as an expense during the year ended December 31, 2018.

11. Biological Assets

Group of biological assets as at December 31, 2018 and 2017, are as follows:


2017

Biological assets for consumption

Growing breed 91,085,297 45,478,095

Broiler breed 18,092,134 13,231,841

Rearingcalf 2,939,885 2,212,629

112,117,316 60,922,565

Biological assets for production (Note 16)

Sows 43,980,695 34,273,180

Spawning breed 34,614,911 26,757,929

Mature Bull 2,290,187 1,677,498

80,885,793 62,708,607

193,003,109 123,631,172

Changes in biological assets for consumption for the years ended December 31, 2018 and 2017,

are as follows:

2018 2017

(In thousands of Korean won) Growing

breed Broiler breed Rearingcalf

Growing

breed Broiler breed Rearingcalf

Beginning balance 45,478,095 13,231,841 2,212,629 36,301,293 8,763,318 2,144,428

Increase from purchases 302,585,316 267,144,379 - 179,504,075 250,097,272 16

Decrease from

sales/disposals (253,937,883) (262,099,038) - (165,947,138) (243,133,312) -

Gain (loss) on valuation, net (104,865) 78,338 755,231 (400,089) (1,062,351) 191,482

Effect of foreign currency

translation (2,845,785) (393,157) (27,943) (3,980,046) (1,433,086) (123,297)

Others (89,581) 129,771 (32) - - -

Ending balance 91,085,297 18,092,134 2,939,885 45,478,095 13,231,841 2,212,629

The biological assets for consumption measured at fair value are classified to Level 2 in fair value

hierarchy (Note 5.2).


69

Valuation technique used in the fair value of biological assets for consumption categorized within

Level 2 is a net realizable value method.

12. Other Assets and Liabilities

Other assets as at December 31, 2018 and 2017, are as follows:


2017

Current

Prepaid expenses 184,765,421 141,487,470

Prepaid taxes 198,658,908 134,546,997

Others 14,545,562 16,915,049

397,969,891 292,949,516

Non-current

Advance payments 94,028,375 70,974,029

Prepaid expenses 413,494,451 403,566,162

Others 11,696,522 10,797,496

519,219,348 485,337,687

917,189,239 778,287,203

Other liabilities as at December 31, 2018 and 2017, are as follows:


2017

Current

Advances receipts 244,923,558 293,233,013

Unearned revenues 103,167,017 63,875,561

Withholdings 200,363,806 180,308,997

Others 229,988,702 226,201,403

778,443,083 763,618,974

Non-current

Accrued expenses 98,328,530 61,618,976

Unearned revenues 16,616,083 114,994,290

Deferred revenues - 47,611,335

Others 37,992,320 25,251,052

152,936,933 249,475,653

931,380,016 1,013,094,627


70

13. Assets Held-for-Sale

Assets classified as held-for-sale as at December 31, 2018 and 2017, are as follows:


2018

2017

Property, plant and equipment1 2,246,600 171,069,046

Investments in joint venture - 2,069,408

2,246,600 173,138,454

1 K Valley Co.,Ltd., a subsidiary, reclassified assets held-for-sale as land according to changes in

plans to dispose of Goyang Tourist Cultural Complex.

14. Financial Assets Measured at Fair Value

As explained in Note 2, the Group has applied Korean IFRS 1109 Financial Instruments from

January 1, 2018. See Note 42 for the impact of the changes in accounting policies on the

classification of financial assets and financial statements.

(a) Equity instruments at fair value through profit or loss


Book amount

2018 2017

Non-marketable securities

8,412,545 773,246

8,412,545 773,246

These equity instruments were classified as available-for-sale financial assets sale in 2017 in

accordance with Korean IFRS 1039.

(b) Equity instruments at fair value through other comprehensive income

2018

2017


Book amount

Book amount

Marketable securities

Samsung Life Insurance Co., Ltd.

81,600,000 124,500,000

MANIKER CO.,LTD.1

12,562,427 -

SAJOHAEPYO Corporation 9,165,450 9,887,850

VISSAN COMPANY LIMITED 6,521,460 6,375,724

Hyundai HCN Co., Ltd. 5,059,909 4,922,818

Haitai Confectionery & Foods Co., Ltd. 3,961,800 6,581,700

KT Corporation 3,893,492 3,952,283


71

Theragen Etex Co., Ltd 3,785,600 3,985,800

Gencurix Inc. 2,999,997 2,128,569

Pangen Biotech Inc. - 2,160,622

Others 1,659,107 1,969,042


Joongang Ilbo 10,473,090 9,735,686

TWO BIT CIRCUS(TBC) 6,682,298 -

ASTORY Co.,Ltd 6,231,512 -

Join Corp. 3,747,782 4,124,768

Y-Biologics Inc. 3,486,015 2,500,757

clipservice Inc. 2,635,460 -

UNCHARTEDVR, INC 2,159,797 -

MYSTA 2,030,698 -

Others 8,851,141 10,673,405

177,507,035 193,499,024

These equity instruments were classified as available-for-sale financial assets sale in 2017 in


1The Group has the put option right to collect the investment principal from MANIKER CO.,LTD.

(c) Debt instruments at fair value through profit or loss

2018

2017


Book amount

Book amount

Current

Others 60,736 -


RAINE-PARTNERS FUND 18,518,698 18,290,889

Construction Guarantee 14,461,002 14,099,943

FORMATION 8 PARTNERS FUN 10,427,245 838,137

TV Chosun-Daesung investment 6,095,909 6,000,000

The nature Holdings, Co, Ltd. 3,964,626 4,000,000

Central Convergence Contents Investment 3,346,295 4,531,500

Michigan Global Contents Investment 5th. 3,342,357 3,500,000

SV Korean-Chinese Culture ICT Convergence

Fund

3,125,149 2,700,000

Union Contents Investment 1,964,980 2,000,000

Rookiest Entertainment Co., Ltd. 1,276,172 2,000,003


72

Leading Asia Culture Industry Investment 1,130,888 2,000,000

DongMoon Media Contents & Culture

Investment

351,309 2,365,882

ISU-global contents investment - 2,702,082

Neuraclescience Co., Ltd. - 2,000,000

Others 23,261,520 22,593,646

91,326,886 89,622,082

These debt instruments were classified as available-for-sale financial assets sale in 2017 in


(d) Debt instruments at amortized cost


Book amount

2018 2017

Government bond and public bond 367,000 454,250

Current maturities (current financial asset measured

at fair value) - (454,250)

367,000 -

These debt instruments were classified as available-for-sale financial assets sale in 2017 in


Certain financial assets measured at fair value of the Group are pledged as collateral (Note 37).

15. Investments in Joint Ventures and Associates

Details of investments in joint ventures of the Group as at December 31, 2018 and 2017, are as

follows:

All of the joint ventures held by the Group are structuralized by separate companies and all of the

involved parties who have common controls over joint commitments are assumed to have rights

on the committed net assets and are classified as joint ventures.

(In thousands of Korean won, except percentage of ownership)

Percentage of ownership (%) 2018 2017

Location 2018 2017 Closing month Business Net asset value Book amount Book amount

Busan Port Terminal Co ., Ltd. Korea 37.70 42.41 December Logistics 20,761,602 26,469,080 25,786,169

BEIJING ERSHANG CJ FOOD

CO., LTD. China 49.00 49.00 December

Starch and sugar Manufacturing

12,045,517 12,045,517 11,599,038

LUCKY UNION FOODS CO., LTD. Thailand 20.00 20.00 December

Fish cake manufacturing

12,500,519 11,959,495 10,470,229

TIANTIAN CJ HOME

SHOPPING CO., LTD. China 44.00 44.00 December

Wholesale and brokerage

7,078,143 7,078,143 7,727,229

BEIJING CJ XINGXING China 49.00 49.00 December Movie theater

operation 6,699,872 6,699,873 5,932,503

javascript:endicAutoLink('asia');

javascript:endicAutoLink('culture');

javascript:endicAutoLink('industry');


73

(In thousands of Korean won, except percentage of ownership)

Percentage of ownership (%) 2018 2017

Location 2018 2017 Closing month Business Net asset value Book amount Book amount

OLYMPIC INTERNATIONAL

CINEMA CO., LTD.

SCJ TV SHOPPING CO., LTD. Vietnam 50.00 50.00 December Wholesale and

brokerage 5,658,901 5,658,901 5,420,698

Gumbo D.D.F Co., Ltd. Korea 49.00 49.00 December Breeding hog 2,406,824 5,632,552 5,371,418

THANH PHUOC VRG PORT

AND LOGISTICS JOINT

STOCK COMPANY

Vietnam 49.00 49.00 December Logistics 5,610,299 5,610,278 5,444,536

CJ XINGXING(TJ)

INTERNATIONAL CINEMA

CO., LTD.

China 49.00 49.00 December Movie theater

operation 4,697,843 4,697,803 4,301,788

SHANGHAI SHANGYING CGV

XINZHUANG CO., LTD. China 49.00 49.00 December

Movie theater operation

3,154,803 3,154,803 3,182,502

NINGBO CULTURE PLAZA CJ

CINEMA CO., LTD. China 45.00 45.00 December


2,788,283 2,788,283 3,025,923

SHENYANG BATIANCJ

ECOLOGY CO., LTD. China 32.00 32.00 December

Wastewater treatment

2,639,618 2,357,077 3,566,336

SHANGHAI SHANGYING CGV



2,640,534 2,640,534 2,633,561

CJ XINGXING（SHANGHAI）



2,582,559 2,582,559 2,207,818

ACJ O SHOPPING

CORPORATION Philippines 50.00 50.00 December

Wholesale and brokerage

2,528,340 2,528,340 3,120,881

DARBY-CJ GENETICS CO., LTD. Vietnam 33.27 33.27 December Breeding hog 2,203,790 1,979,405 2,098,338

PT. CJ PIA Indonesia 50.00 50.00 December Bio & pharma 2,146,099 1,804,879 1,570,991

Others1 - - - - - 14,166,478 16,549,501 18,740,534

112,310,024 122,237,023 122,200,492

1 Although the Group owns 88.67% of the shares in PT CJ FOODVILLE INDONESIA which are

more than the majority, the Group excluded these subsidiaries from consolidation because the

Group does not have the control through an agreement with other shareholders.

Details of investments in associates of the Group as at December 31, 2018 and 2017, are as follows:

(In thousands of Korean won,

except percentage of

ownership)

Percentage of

ownership (%) 2018 2017

Location 2018 2017

Closing

month Business Net asset value Book amount Book amount

Netmarble Corporation (formerly,

Netmarble Games

Corporation)

Korea 22.34 22.02 December Game software

development 994,525,661 1,018,183,461 992,100,927

Shanghai SMG-CJ Home

Shopping Co., Ltd.1

China 15.84 15.84 December Wholesale and

brokerage 62,475,238 62,795,054 52,498,988

MBC Plus Media Co., Ltd. Korea 23.52 23.52 December Broadcasting

service 49,627,292 53,233,366 49,628,826

GENIE MUSIC

CORPORATION1

Korea 15.35 - December Entertainment &

Media 22,521,325 51,145,568 -

CJ INTERNATIONAL ASIA PTE.

LTD. Singapore 29.55 29.55 December Intermediary trade 25,525,439 27,749,727 28,531,273


74


except percentage of

ownership)

Percentage of

ownership (%) 2018 2017

Location 2018 2017

Closing

month Business Net asset value Book amount Book amount

Kumho Industrial Co.,Ltd.1 Korea 3.47 3.39 December Construction 14,312,300 23,629,675 35,929,165

ARKEMA THIOCHEMICALS

MALAYSIA SDN. BHD. 1

Malaysia 14.00 14.00 December

Methionine

manufacturing and

sales

14,023,985 12,978,691 12,756,974

Union Global Contents

Investment Korea 20.22 20.22 December

Investment

association 10,129,585 10,129,585 13,668,315

THUONG TIN - CJ CAU TRE

COMPANY LIMITED Vietnam 50.00 50.00 December

Food and food

service 7,519,200 7,745,000 5,569,600

TWI Agrifood Investment

Association Korea 40.00 40.00 December

Food and food

service 6,881,880 6,881,880 4,400,010

Inchon Inter Terminal CO.,LTD.1 Korea 18.94 - December Logistics 6,743,005 6,836,871 -

Banks foundation for young

entrepreneurs culture

contents investment

Korea 22.64 22.64 December Investment

association 5,179,434 5,631,441 5,115,815

Enprani Co., Ltd. Korea 27.76 27.76 December

Cosmetic

manufacturing and

sales

4,208,065 4,309,002 3,986,658

MYANMAR CINEPLEX CO.,

LTD. Myanmar 50.00 50.00 December

Movie theater

operation 3,622,818 3,622,818 3,684,581

WORLDISTOUR CO., LTD

(formerly, (CJ Worldis Co.,

Ltd. )

Korea 50.00 50.00 December Travel 3,372,557 3,372,557 2,980,664

TW Venture Investment

No. 14 – Culture Contents Korea 25.00 25.00 December

Investment

association 3,195,045 3,195,045 3,151,454

Cable TV VOD Co., Ltd.1 Korea 17.75 17.75 December

Broadcast program

production 3,132,848 3,132,848 3,010,815

IBK Finance Group Union

Contents Investment Fund Korea 25.00 25.00 December

Investment

association 2,922,129 2,922,129 2,577,231

Gwangyang West Container

Terminal Co., Ltd. Korea 30.00 - December Logistics 1,815,145 2,215,516 -

ALS BAC NINH COMPANY

LIMITED Vietnam 30.00 30.00 December Logistics 2,104,105 2,141,407 2,413,092

Gom&Company (formerly,

Gretech Corporation) Korea 24.54 24.54 December

Broadcast program

production 2,088,786 2,088,786 2,631,979

Others2 - - - - - 1,919,959 19,241,213 19,209,097

1,247,845,801 1,333,181,640 1,243,845,464

1 Although the Group owns less than 20% of the equity shares in Shanghai SMG-CJ Home

Shopping Co., Ltd., GENIE MUSIC CORPORATION,

Kumho Industrial Co., Ltd., ARKEMA

THIOCHEMICALS MALAYSIA SDN. BHD., Inchon Inter Terminal CO.,LTD. and Cable TV VOD

Co., Ltd., the Group classified these companies as investments in associates because the Group

exercises significant influence through an agreement with other shareholders.

2 Although the Group owns 51.54% of the shares of Ulsan Port Operating Co., Ltd., which are

more than the majority, the Group excluded these subsidiaries from consolidation because the

Group does not have the control through an agreement with other shareholders.


75

Details of valuation of investments in associates and joint ventures that are accounted for using

the equity method for the years ended December 31, 2018 and 2017, are as follows:

Valuation of equity method in 2018

(In thousands of Korean won) Beginning

balance

Acquisition/ Transfer

Disposal/ Transfer

1

Share of profit(loss)

Share of other

comprehen-sive income

Others

3

Ending balance

Netmarble Corporation (formerly, Netmarble Games Corporation) 992,100,927 - - 40,655,580 23,392,875 (37,965,922) 1,018,183,460

Shanghai SMG-CJ Home Shopping Co., Ltd. 52,498,988 - - 10,816,127 (520,060) - 62,795,055

MBC Plus Media Co., Ltd. 49,628,826 - - 3,608,177 - (3,637) 53,233,366 GENIE MUSIC CORPORATION - 50,948,531 - 549,791 43,322 (396,076) 51,145,568

CJ INTERNATIONAL ASIA PTE. LTD. 28,531,273 - - (414,610) 1,115,689 (1,482,625) 27,749,727

Busan Port Terminal Co ., Ltd. 25,786,169 - - 271,822 - 411,089 26,469,080

Kumho Industrial Co., Ltd.4 35,396,073 - - 2,569,248 179,444 (14,515,091) 23,629,674

ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD. 12,756,974 - - 699,644 567,367 (1,045,294) 12,978,691

BEIJING ERSHANG CJ FOOD CO., LTD. 11,599,038 - - 520,990 (74,477) (34) 12,045,517

LUCKY UNION FOODS CO., LTD. 10,470,229 - - 2,637,500 (240,279) (907,955) 11,959,495

Union Global Contents Investment 13,668,315 - - (38,726) - (3,500,004) 10,129,585

THUONG TIN - CJ CAU TRE COMPANY LIMITED 5,569,600 2,995,200 - - 248,456 (1,068,256) 7,745,000

TIANTIAN CJ HOME SHOPPING CO., LTD. 7,727,229 - - (620,638) (28,448) - 7,078,143

TWI Agrifood Investment Association 4,400,010 2,800,000 - (210,446) (107,683) - 6,881,881

Inchon Inter Terminal CO.,LTD. - 7,140,000 - (303,129) - - 6,836,871 BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD. 5,932,503 - - 817,516 (50,147) 1 6,699,873

SCJ TV SHOPPING CO., LTD. 5,420,698 - - 122,334 115,869 - 5,658,901

Gumbo D.D.F Co., Ltd. 5,371,418 - - 261,132 - 2 5,632,552 Banks foundation for young entrepreneurs culture contents investment 5,115,815 - - 515,285 - 341 5,631,441

THANH PHUOC VRG PORT AND LOGISTICS JOINT STOCK COMPANY 5,444,536 - - 49,973 115,769 - 5,610,278

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD. 4,301,788 - - 428,794 (32,775) (4) 4,697,803

Enprani Co., Ltd. 3,986,520 - - 337,861 (368,633) 353,254 4,309,002 MYANMAR CINEPLEX CO.,LTD. 3,637,293 - - 274,326 (288,801) - 3,622,818

WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. ) 2,980,664 - - 391,893 - - 3,372,557

TW Venture Investment No. 14 – Culture Contents 3,151,454 - - 43,591 - - 3,195,045

SHANGHAI SHANGYING CGV XINZHUANG CO., LTD. 3,182,502 - - 542,452 (29,174) (540,977) 3,154,803

Cable TV VOD Co., Ltd. 3,010,815 - - 122,034 - - 3,132,849 IBK Finance Group Union Contents Investment Fund 2,577,231 - - 344,897 - - 2,922,128

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD. 3,025,923 - - (226,130) (11,510) - 2,788,283


76



balance


Disposal/ Transfer

1


Share of other


Others

3

Ending balance

SHENYANG BATIANCJ ECOLOGY CO., LTD. 3,566,336 - - (827,379) (760) (381,120) 2,357,077

SHANGHAI SHANGYING CGV CINEMA CO., LTD. 2,633,561 - - 395,237 (22,968) (365,296) 2,640,534

CJ XINGXING (SHANGHAI) CINEMA CO., LTD. 2,207,818 - - 395,398 (20,656) - 2,582,560

ACJ O SHOPPING CORPORATION 3,120,881 - - (562,823) (29,718) - 2,528,340

Gwangyang West Container Terminal Co., Ltd. - 2,802,000 - (586,484) - - 2,215,516

DARBY-CJ GENETICS CO., LTD. 2,098,338 - - 60,518 44,962 (224,412) 1,979,406

PT. CJ PIA 1,570,991 - - 610,255 (35,146) (341,220) 1,804,880 ALS BAC NINH COMPANY LIMITED 2,413,092 - - 718,158 62,116 (1,051,959) 2,141,407

Gom&Company (formerly, Gretech Corporation) 2,631,979 - - (542,056) (856) (281) 2,088,786

Others1,4

38,530,149 113,800,679 (90,450,086) (8,053,795) 33,155 (18,069,390) 35,790,712

1,366,045,956 180,486,410 (90,450,086) 56,374,317 24,056,933 (81,094,866) 1,455,418,664



balance


Disposal/ Transfer

1


Share of other


Others

3

Ending balance

Netmarble Corporation (formerly, Netmarble Games Corporation)

2 393,833,878 - - 78,202,199 38,339,691 481,725,159 992,100,927

Shanghai SMG-CJ Home Shopping Co., Ltd. 66,702,150 - - 16,203,255 (4,481,335) (25,925,082) 52,498,988

MBC Plus Media Co., Ltd. 49,757,530 - - 148,640 (73,663) (203,681) 49,628,826

Kumho Industrial Co., Ltd.4 53,637,247 - - (1,810,883) (367,030) (16,063,261) 35,396,073

CJ INTERNATIONAL ASIA PTE. LTD. 31,546,816 - - 327,043 (3,342,586) - 28,531,273

Busan Port Terminal Co ., Ltd. 23,824,681 - - 1,961,488 - - 25,786,169 Union Global Contents Investment 16,177,961 - - (2,509,646) - - 13,668,315

ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD. 13,566,150 - - 770,346 (740,778) (838,744) 12,756,974

BEIJING ERSHANG CJ FOOD CO., LTD. 11,369,134 - - 879,069 (649,165) - 11,599,038

LUCKY UNION FOODS CO., LTD. 10,171,799 - - 1,229,449 (55,634) (875,385) 10,470,229

TIANTIAN CJ HOME SHOPPING CO., LTD. 7,553,924 - - 606,079 (432,774) - 7,727,229

BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD. 5,590,033 - - 1,005,569 (324,581) (338,518) 5,932,503

THUONG TIN - CJ CAU TRE COMPANY LIMITED - 5,569,600 - - - - 5,569,600

THANH PHUOC VRG PORT AND LOGISTICS JOINT STOCK COMPANY 6,090,330 - - 32,617 (678,411) - 5,444,536

SCJ TV SHOPPING CO., LTD. 5,442,519 - - 615,053 (636,874) - 5,420,698

Gumbo D.D.F Co., Ltd. 5,107,718 - - 488,120 - (224,420) 5,371,418 Banks foundation for young entrepreneurs culture contents investment 5,176,355 - - (60,540) - - 5,115,815


77



balance


Disposal/ Transfer

1


Share of other


Others

3

Ending balance

TWI Agrifood Investment Association 2,929,277 1,600,000 - (202,897) 73,630 - 4,400,010

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD. 3,945,583 - - 588,440 (232,235) - 4,301,788

Union picture venture investment 5,464,011 - - (1,303,901) - (46,360) 4,113,750

Enprani Co., Ltd. 4,074,439 - - (76,296) (15,747) 4,262 3,986,658 MYANMAR CINEPLEX CO., LTD. 1,948,279 1,797,549 - 256,901 (365,436) - 3,637,293

SHENYANG BATIANCJ ECOLOGY CO., LTD. 4,069,022 - - (289,038) (213,648) - 3,566,336

SHANGHAI SHANGYING CGV XINZHUANG CO., LTD. 3,520,319 - - 618,443 (169,619) (786,641) 3,182,502

TW Venture Investment No. 14 – Culture Contents 3,170,422 - - (18,968) - - 3,151,454

ACJ O SHOPPING CORPORATION 3,596,247 - - (24,959) (433,416) (16,991) 3,120,881

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD. 3,395,634 - - 19,630 (178,091) (211,250) 3,025,923

Cable TV VOD Co., Ltd. 2,677,166 - - 333,649 - - 3,010,815 WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. ) 2,603,410 - - 377,254 - - 2,980,664

Gom&Company (formerly, Gretech Corporation) 3,161,475 - - (178,457) (55,400) (295,639) 2,631,979

SHANGHAI SHANGYING CGV CINEMA CO., LTD. 2,915,399 - - 417,605 (143,124) (556,319) 2,633,561

IBK Finance Group Union Contents Investment Fund 2,478,438 - - 98,793 - - 2,577,231

SHANGHAI-INCHON INTERNATIONAL FERRY CO., LTD. 4,315,624 - - 770,928 (256,909) (2,350,736) 2,478,907

ALS BAC NINH COMPANY LIMITED 2,228,010 - - 1,577,222 (264,681) (1,127,459) 2,413,092

CJ XINGXING (SHANGHAI) CINEMA CO., LTD. 2,110,241 - - 653,023 (121,189) (434,257) 2,207,818

DARBY-CJ GENETICS CO., LTD. 2,255,042 - - 99,023 (255,727) - 2,098,338

INCHEON SOUTH TERMINAL OPERATION COMPANY 2,704,258 - - 795,251 - (1,520,000) 1,979,509

SHANGHAI BAOZUN-CJ E-COMMERCE CO., LTD. 2,227,721 - - (203,499) (118,932) - 1,905,290

KOREA EXPRESS SAIGON PORT CO., LTD. 2,006,502 - - 118,094 (188,525) (215,724) 1,720,347

MP CJ O SHOPPING SDN. BHD. 3,426,132 - - (2,118,871) (80,397) 177,942 1,404,806

OSHISHANG (SHANGHAI) TRADING CO., LTD. 4,248,612 - (4,439,061) (42,303) 232,752 - -

Others1,4

29,368,901 17,433,147 (4,724,123) (13,755,686) (1,429,667) (394,179) 26,498,393

810,388,389 26,400,296 (9,163,184) 86,597,239 22,340,499 429,482,717 1,366,045,956

1 In 2018, the Group disposed of the shares of Union Global Contents Investment and others,

and recognized the gain and loss on disposal of investment in associates amounting to \ 19,757

million and \ 1,885 million (2017: \ 5,040 million and \ 969 million), respectively.

2 In 2017, the Group recognized a \ 500,878 million gain due to uneven capital increase of

Netmarble Corporation (formerly, Netmarble Games Corporation).


78

3 Others consist of dividends, capital reduction, impairment, gain and loss on foreign currency

translation.

4 In 2018, the Group recognized impairment loss on investments in associates of \ 35,013 million

(2017: \ 17,456 million) relating to Kumho Industrial Co., Ltd. and others as the fair value of its

shares significantly fell below the carrying amount.

The tables below provide summarized financial information for those associates and joint

ventures that are material to the Group and dividends received.

2018

(In thousands of Korean won) Assets

Liabilities

Revenue

Profit (loss) from

continuing operations

Other comprehen-sive income

Total comprehen-sive income

Dividend

Netmarble Corporation (formerly, Netmarble Games Corporation) 5,434,767,688 982,599,311 2,023,093,192 222,490,755 86,291,677 308,782,433 6,739,200

Shanghai SMG-CJ Home Shopping Co., Ltd. 404,183,045 9,868,088 157,116,654 68,266,414 (3,282,382) 64,984,032 -

MBC Plus Media Co., Ltd. 283,439,821 63,124,225 233,099,209 16,018,156 - 16,018,156 248,324 GENIE MUSIC CORPORATION 228,550,974 81,864,560 171,258,775 6,950,878 43,322 6,994,200 -

CJ INTERNATIONAL ASIA PTE. LTD. 369,432,274 283,059,542 4,954,783,999 (1,402,953) 3,775,257 2,372,304 -

Busan Port Terminal Co ., Ltd. 121,065,538 65,990,717 180,843,423 640,950 - 640,950 -

Kumho Industrial Co., Ltd. 1,245,739,522 833,112,321 1,421,344,047 93,293,274 (176,097) 93,117,177 606,605 ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD. 327,903,136 227,731,816 90,652,297 4,997,455 4,052,623 9,050,078 -

BEIJING ERSHANG CJ FOOD CO., LTD. 35,360,159 10,777,400 69,612,510 1,063,249 (151,995) 911,254 -

LUCKY UNION FOODS CO., LTD. 86,179,054 26,381,578 115,487,145 13,187,499 (1,201,394) 11,986,105 907,955

Union Global Contents Investment 50,096,873 - 2,898,625 (191,525) - (191,525) -

THUONG TIN - CJ CAU TRE COMPANY LIMITED 28,920,000 - - - 955,600 955,600 -

TIANTIAN CJ HOME SHOPPING CO., LTD. 39,410,044 23,323,355 85,268,734 (1,410,541) (64,654) (1,475,195) -

TWI Agrifood Investment Association 17,325,677 120,976 797,182 (526,114) (269,209) (795,323) -

Inchon Inter Terminal CO.,LTD. 60,298,287 24,700,511 44,925,835 (1,600,281) - (1,600,281) - BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD. 20,833,515 7,160,307 11,593,711 1,668,401 10,194 1,678,595 -

SCJ TV SHOPPING CO., LTD. 18,859,384 7,541,582 36,047,622 244,669 231,738 476,407 -

Gumbo D.D.F Co., Ltd. 5,717,628 805,748 8,790,183 532,921 - 532,921 - Banks foundation for young entrepreneurs culture contents investment 23,014,647 138,812 2,469,546 279,477 - 279,477 -

THANH PHUOC VRG PORT AND LOGISTICS JOINT STOCK COMPANY 13,853,157 2,403,613 2,894,203 101,985 236,262 338,247 -

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD. 15,487,407 5,900,053 6,738,614 875,083 8,180 883,263 -

Enprani Co., Ltd. 37,995,492 22,838,099 82,653,985 1,216,971 (1,327,810) (110,839) - MYANMAR CINEPLEX CO.,LTD. 8,818,290 1,572,654 9,445,246 548,651 (4,300) 544,351 -

WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., 9,894,155 3,149,040 9,019,089 783,786 - 783,786 -


79

2018


Liabilities

Revenue

Profit (loss) from




Dividend

Ltd. )

TW Venture Investment No. 14 – Culture Contents 12,821,602 41,422 1,453,111 174,365 - 174,365 -

SHANGHI SHANGYING CGV XINZHUANG CO., LTD. 8,170,652 1,732,278 5,292,399 1,107,046 4,499 1,111,545 541,576

Cable TV VOD Co., Ltd. 48,846,858 31,197,009 97,441,815 687,513 - 687,513 - IBK Finance Group Union Contents Investment Fund 11,688,514 - 1,548,614 1,379,589 - 1,379,589 -

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD. 7,988,054 1,791,869 4,737,767 (502,511) 11,985 (490,526) -

SHENYANG BATIANCJ ECOLOGY CO., LTD. 10,168,311 1,919,506 - (2,585,559) (2,376) (2,587,935) -

SHANGHAI SHANGYING CGV CINEMA CO., LTD. 7,280,962 1,999,895 4,474,043 790,474 1,711 792,185 368,056

CJ XINGXING

(SHANGHA)）CINEMA CO.,

LTD. 5,810,136 539,607 3,754,892 806,934 12,670 819,604 - ACJ O SHOPPING CORPORATION 9,963,445 4,906,765 18,360,512 (1,125,646) (59,436) (1,185,082) -

Gwangyang West Container Terminal Co., Ltd. 20,202,632 14,152,151 3,334,367 (1,954,947) - (1,954,947) -

DARBY-CJ GENETICS CO., LTD. 7,680,160 1,056,118 4,905,497 181,901 135,145 317,046 -

PT. CJ PIA 7,469,564 3,177,366 7,643,549 1,220,510 (70,293) 1,150,217 - ALS BAC NINH COMPANY LIMITED 7,911,156 898,591 11,602,840 2,393,478 207,019 2,600,497 1,081,101

Gom&Company (formerly, Gretech Corporation) 13,240,193 4,727,817 3,889,967 (2,209,026) (3,489) (2,212,515) -

2017


Liabilities

Revenue

Profit (loss) from




Dividend

Netmarble Corporation (formerly, Netmarble Games Corporation) 5,210,271,201 906,426,865 2,422,023,352 320,289,264 198,404,119 518,693,383 -

Shanghai SMG-CJ Home Shopping Co., Ltd. 503,158,359 172,569,025 197,761,164 67,816,814 (196,372) 67,620,442 26,049,120

MBC Plus Media Co., Ltd. 242,866,371 37,859,172 197,538,868 774,997 (313,170) 461,827 203,174

Kumho Industrial Co., Ltd. 1,257,550,509 924,119,513 1,295,330,864 (53,481,056) (5,797,994) (59,279,050) 363,963 CJ INTERNATIONAL ASIA PTE. LTD. 212,359,483 123,377,122 2,792,186,634 1,104,882 (11,310,609) (10,205,727) -

Busan Port Terminal Co ., Ltd. 113,759,506 66,414,397 162,265,601 4,625,061 - 4,625,061 - Union Global Contents Investment 68,692,403 1,094,405 6,399,143 (12,510,989) - (12,510,989) -

ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD. 270,415,522 179,294,280 88,319,928 5,502,474 (11,282,305) (5,779,831) -

BEIJING ERSHANG CJ FOOD CO., LTD. 34,858,194 11,186,689 55,573,277 1,883,275 (1,324,832) 558,443 -

LUCKY UNION FOODS CO., LTD. 80,675,714 28,324,568 104,683,017 6,147,247 (278,172) 5,869,075 879,912

TIANTIAN CJ HOME SHOPPING CO., LTD. 42,571,968 25,010,084 90,106,647 1,377,451 (983,576) 393,875 -

BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD. 17,714,968 5,607,820 12,497,547 2,052,182 333,296 2,385,478 336,460

THUONG TIN - CJ CAU TRE COMPANY LIMITED 11,139,200 - - - - - -

THANH PHUOC VRG PORT AND LOGISTICS JOINT 12,617,662 1,506,365 3,163,987 66,554 (1,384,502) (1,317,948) -


80

2017


Liabilities

Revenue

Profit (loss) from




Dividend

STOCK COMPANY

SCJ TV SHOPPING CO., LTD. 17,376,486 6,535,090 39,678,474 1,230,023 (1,273,667) (43,644) -

Gumbo D.D.F Co., Ltd. 5,151,571 772,612 8,616,568 996,163 - 996,163 224,000 Banks foundation for young entrepreneurs culture contents investment 22,836,866 240,508 3,064,583 (282,516) - (282,516) -

TWI Agrifood Investment Association 11,128,740 128,716 3,450 (507,242) 184,075 (323,167) -

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD. 12,714,898 3,935,740 8,260,772 1,200,892 99,474 1,300,366 -

Union picture venture investment 12,484,524 142,039 1,323,474 (4,050,782) - (4,050,782) -

Enprani Co., Ltd. 36,146,964 21,785,803 71,877,480 (1,697,947) 25,896 (1,672,051) - MYANMAR CINEPLEX CO., LTD. 9,106,091 1,831,504 7,042,555 513,800 603,593 1,117,393 -

SHENYANG BATIANCJ ECOLOGY CO., LTD. 12,717,034 1,880,294 1,425,763 (903,245) (667,649) (1,570,894) -

SHANGHAI SHANGYING CGV XINZHUANG CO., LTD. 8,667,832 2,172,930 6,403,138 1,262,129 (40,509) 1,221,620 771,214

TW Venture Investment No. 14 – Culture Contents 12,764,422 158,607 2,487,075 (75,874) - (75,874) -

ACJ O SHOPPING CORPORATION 9,429,178 3,187,416 18,854,890 (49,920) (866,832) (916,752) -

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD. 8,905,892 2,181,619 6,720,162 43,623 387,810 431,433 205,301

Cable TV VOD Co., Ltd. 46,271,280 29,308,944 97,060,177 1,866,667 - 1,866,667 - WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. ) 9,566,407 3,605,080 9,763,107 754,508 - 754,508 -

SHANGHAI SHANGYING CGV CINEMA CO., LTD. 7,386,734 2,119,613 4,880,498 835,210 (43,980) 791,230 545,409

Gom&Company (formerly, Gretech Corporation) 15,849,655 5,124,394 9,929,822 (2,167,185) 9,497 (2,157,688) -

IBK Finance Group Union Contents Investment Fund 10,360,589 51,664 1,005,845 395,173 - 395,173 -

SHANGHAI-INCHON INTERNATIONAL FERRY CO., LTD. 26,531,473 16,413,484 3,146,645 3,146,645 (1,048,610) 2,098,035 2,362,946

ALS BAC NINH COMPANY LIMITED 9,609,259 1,565,617 13,512,168 5,256,569 (882,128) 4,374,441 1,132,060

CJ

XINGXING（SHANGHAI）CI

NEMA CO., LTD. 5,394,600 888,850 4,305,979 1,332,698 104,215 1,436,913 432,296 DARBY-CJ GENETICS CO., LTD. 7,375,828 1,068,832 3,721,462 297,643 (768,651) (471,008) -

INCHEON SOUTH TERMINAL OPERATION COMPANY 7,025,386 2,076,614 13,423,392 1,988,127 - 1,988,127 1,520,000

SHANGHAI BAOZUN-CJ E-COMMERCE CO., LTD. 5,017,730 1,129,382 3,966,640 (415,302) (242,719) (658,021) -

KOREA EXPRESS SAIGON PORT CO., LTD. 3,551,651 616,731 3,705,317 236,186 (377,049) (140,863) 215,724

MP CJ O SHOPPING SDN. BHD. 9,012,973 6,146,022 34,072,804 (3,961,080) (164,075) (4,125,155) -


81

The tables below provide a reconciliation of the summarized financial information presented to the

carrying amount of its interest in the joint ventures and associates.

2018


Net assets at the end of the

year

Group’s share

in %

Group’s share in net assets

Goodwill

Others

Book amount


4,452,168,377 22.34 994,525,661 46,618,720 (22,960,921) 1,018,183,461 Shanghai SMG-CJ Home Shopping Co., Ltd.

394,314,957 15.84 62,475,238 3,106 316,710 62,795,054

MBC Plus Media Co., Ltd.

220,315,596 22.53 49,627,292 2,780,125 825,949 53,233,366 GENIE MUSIC CORPORATION

146,686,414 15.35 22,521,325 28,976,997 (352,755) 51,145,568

CJ INTERNATIONAL ASIA PTE. LTD.

86,372,732 29.55 25,525,439 2,236,985 (12,697) 27,749,727

Busan Port Terminal Co ., Ltd.

55,074,821 37.70 20,761,602 5,296,020 411,458 26,469,080

Kumho Industrial Co., Ltd.

412,627,201 3.47 14,312,300 9,317,375 - 23,629,675 ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD.

100,171,320 14.00 14,023,985 - (1,045,294) 12,978,691

BEIJING ERSHANG CJ FOOD CO., LTD.

24,582,759 49.00 12,045,517 - - 12,045,517

LUCKY UNION FOODS CO., LTD.

59,797,477 20.00 11,959,495 - - 11,959,495

Union Global Contents Investment

50,096,873 20.22 10,129,585 - - 10,129,585

THUONG TIN - CJ CAU TRE COMPANY LIMITED

28,920,000 26.00 7,519,200 22,656 203,144 7,745,000

TIANTIAN CJ HOME SHOPPING CO., LTD.

16,086,689 44.00 7,078,143 - - 7,078,143

TWI Agrifood Investment Association

17,204,701 40.00 6,881,880 - - 6,881,880

Inchon Inter Terminal CO.,LTD.

35,597,776 18.94 6,743,005 93,867 - 6,836,871

BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD.

13,673,208 49.00 6,699,872 - - 6,699,872 SCJ TV SHOPPING CO., LTD.

11,317,802 50.00 5,658,901 - - 5,658,901

Gumbo D.D.F Co., Ltd.

4,911,880 49.00 2,406,824 3,225,728 - 5,632,552 Banks foundation for young entrepreneurs culture contents investment

22,875,835 22.64 5,179,434 - 452,007 5,631,441 THANH PHUOC VRG PORT AND LOGISTICS JOINT STOCK COMPANY

11,449,544 49.00 5,610,299 - (22) 5,610,278 CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD.

9,587,354 49.00 4,697,843 - (40) 4,697,803

Enprani Co., Ltd.

15,157,393 27.76 4,208,065 - 100,937 4,309,002 MYANMAR CINEPLEX CO.,LTD.

7,245,636 50.00 3,622,818 - - 3,622,818

WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. )

6,745,115 50.00 3,372,557 - - 3,372,557 TW Venture Investment No. 14 – Culture Contents

12,780,180 25.00 3,195,045 - - 3,195,045

SHANGHAI SHANGYING CGV XINZHUANG CO., LTD.

6,438,374 49.00 3,154,803 - - 3,154,803

Cable TV VOD Co., Ltd.

17,649,849 17.75 3,132,848 - - 3,132,848


82

IBK Finance Group Union Contents Investment Fund

11,688,514 25.00 2,922,129 - - 2,922,129

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD.

6,196,185 45.00 2,788,283 - - 2,788,283

SHENYANG BATIANCJ ECOLOGY CO.,LTD

8,248,805 32.00 2,639,618 98,580 (381,120) 2,357,077

SHANGHAI SHANGYING CGV CINEMA CO., LTD.

5,281,067 50.00 2,640,534 - - 2,640,534

CJ

XINGXING（SHANGHAI）CINEMA CO.,LTD

5,270,529 49.00 2,582,559 - - 2,582,559 ACJ O SHOPPING CORPORATION

5,056,680 50.00 2,528,340 - - 2,528,340

Gwangyang West Container Terminal Co., Ltd.

6,050,481 30.00 1,815,145 400,371 - 2,215,516

DARBY-CJ GENETICS CO., LTD.

6,624,042 33.27 2,203,790 - (224,385) 1,979,405

PT. CJ PIA

4,292,198 50.00 2,146,099 - (341,220) 1,804,879 ALS BAC NINH COMPANY LIMITED

7,012,565 30.00 2,104,105 - 37,302 2,141,407

Gom&Company (formerly, Gretech Corporation)

8,512,376 24.54 2,088,786 - - 2,088,786

2017

(In thousands of Korean won) Net assets at the

end of the year Group’s share

in % Group’s share in

net assets

Goodwill

Book amount


4,159,355,647 22.02 916,030,610 76,070,317 992,100,927

Shanghai SMG-CJ Home Shopping Co., Ltd.

331,349,334 15.84 52,498,988 - 52,498,988

MBC Plus Media Co., Ltd.

205,007,199 23.52 48,217,693 1,411,133 49,628,826

Kumho Industrial Co., Ltd.

333,430,996 3.39 11,303,311 24,092,762 35,396,073 CJ INTERNATIONAL ASIA PTE. LTD.

88,982,361 29.55 26,294,288 2,236,985 28,531,273


47,345,109 42.41 20,079,061 5,707,109 25,786,170 Union Global Contents Investment

67,597,998 20.22 13,668,315 - 13,668,315

ARKEMA THIOCHEMICALS MALAYSIA SDN. BHD.

91,121,242 14.00 12,756,974 - 12,756,974

BEIJING ERSHANG CJ FOOD CO., LTD.

23,671,505 49.00 11,599,038 - 11,599,038

LUCKY UNION FOODS CO., LTD.

52,351,146 20.00 10,470,229 - 10,470,229

TIANTIAN CJ HOME SHOPPING CO., LTD.

17,561,884 44.00 7,727,229 - 7,727,229

BEIJING CJ XINGXING OLYMPIC INTERNATIONAL CINEMA CO., LTD.

12,107,148 49.00 5,932,503 - 5,932,503 THUONG TIN - CJ CAU TRE COMPANY LIMITED

11,139,200 50.00 5,569,600 - 5,569,600

THANH PHUOC VRG PORT AND LOGISTICS JOINT STOCK COMPANY

11,111,297 49.00 5,444,536 - 5,444,536

SCJ TV SHOPPING CO., LTD.

10,841,396 50.00 5,420,698 - 5,420,698

Gumbo D.D.F Co., Ltd.

4,378,959 49.00 2,145,690 3,225,728 5,371,418 Banks foundation for young entrepreneurs culture contents investment

22,596,358 22.64 5,115,815 - 5,115,815 TWI Agrifood Investment Association

11,000,024 40.00 4,400,010 - 4,400,010

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD.

8,779,158 49.00 4,301,788 - 4,301,788 Union picture venture investment

12,342,485 33.33 4,113,750 - 4,113,750

Enprani Co., Ltd.

14,361,161 27.76 3,986,658 - 3,986,658


83

MYANMAR CINEPLEX CO., LTD.

7,274,587 50.00 3,637,293 - 3,637,293

SHENYANG BATIANCJ ECOLOGY CO., LTD.

10,836,740 32.00 3,467,757 98,579 3,566,336

SHANGHAI SHANGYING CGV XINZHUANG CO., LTD.

6,494,902 49.00 3,182,502 - 3,182,502

TW Venture Investment No. 14 – Culture Contents

12,605,815 25.00 3,151,454 - 3,151,454

ACJ O SHOPPING CORPORATION

6,241,762 50.00 3,120,881 - 3,120,881

NINGBO CULTURE PLAZA CJ CINEMA CO., LTD.

6,724,273 45.00 3,025,923 - 3,025,923

Cable TV VOD Co., Ltd.

16,962,336 17.75 3,010,815 - 3,010,815 WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. )

5,961,327 50.00 2,980,664 - 2,980,664

SHANGHAI SHANGYING CGV CINEMA CO., LTD.

5,267,121 50.00 2,633,561 - 2,633,561

Gom&Company (formerly, Gretech Corporation)

10,725,261 24.54 2,631,979 - 2,631,979

IBK Finance Group Union Contents Investment Fund

10,308,925 25.00 2,577,231 - 2,577,231

SHANGHAI-INCHON INTERNATIONAL FERRY CO., LTD.

10,117,989 24.50 2,478,907 - 2,478,907 ALS BAC NINH COMPANY LIMITED

8,043,642 30.00 2,413,092 - 2,413,092

CJ

XINGXING（SHANGHAI）CIN

EMA CO., LTD.

4,505,750 49.00 2,207,818 - 2,207,818 DARBY-CJ GENETICS CO., LTD.

6,306,996 33.27 2,098,338 - 2,098,338

INCHEON SOUTH TERMINAL OPERATION COMPANY

4,948,772 40.00 1,979,509 - 1,979,509

SHANGHAI BAOZUN-CJ E-COMMERCE CO., LTD.

3,888,348 49.00 1,905,290 - 1,905,290

KOREA EXPRESS SAIGON PORT CO., LTD.

2,934,920 50.00 1,467,460 252,887 1,720,347

MP CJ O SHOPPING SDN. BHD.

2,866,951 49.00 1,404,806 - 1,404,806

The Group has suspended the application of the equity method of accounting on seven investees,

including CJ Mediasa Shopping&Retail Corporation, due to their accumulated losses.

Unrecognized loss of these investments amounts to \ 2,477 million in 2018 (2017: \ 4,956

million) and accumulated unrecognized loss of these investments amounts to \ 11,836 million as

at December 31, 2018 (2017: \ 13,568 million).

Fair value of marketable associates as at December 31, 2018 and 2017, is as follows:

(In thousands of 2018 2017

Korean won) Company name Market value Book amount Market value Book amount

Associates Kumho Industrial Co., Ltd. 14,315,866 23,629,675 11,537,618 35,396,073

Netmarble Corporation (formerly,

Netmarble Games Corporation)

2,087,280,000 1,018,183,461 3,528,720,000 992,101,643


84

16. Property, Plant and Equipment

Details of property, plant and equipment as at December 31, 2018 and 2017, are as follows:

2018

(In thousands of Korean won) Cost

Accumulated

depreciation1

Government

grants Book amount

Land 3,396,710,742 - (2,964,512) 3,393,746,230

Buildings 4,053,770,067 (1,077,143,224) (15,812,989) 2,960,813,854

Structures 1,722,060,369 (625,243,891) (1,565,836) 1,095,250,642

Machinery 6,515,441,414 (3,384,038,565) (24,210,929) 3,107,191,920

Vehicles 324,764,418 (204,314,018) (8,318) 120,442,082

Tools, equipment and supplies 2,518,091,327 (1,673,158,090) (916,432) 844,016,805

Courses 80,244,482 (207,981) - 80,036,501

Biotechnology assets 81,677,655 (791,862) - 80,885,793

Heavy equipment 69,814,325 (46,362,165) - 23,452,160

Others 205,510,838 (70,732,009) (1,771,035) 133,007,794

Construction-in-progress 1,132,344,368 - (983,226) 1,131,361,142

20,100,430,005 (7,081,991,805) (48,233,277) 12,970,204,923

2017


Accumulated

depreciation1

Government

grants Book amount

Land 3,105,517,188 - (3,332,479) 3,102,184,709

Buildings 3,459,929,564 (1,014,677,741) (16,077,449) 2,429,174,374

Structures 1,528,727,020 (525,701,179) (1,805,884) 1,001,219,957

Machinery 5,700,130,531 (3,088,833,080) (25,555,221) 2,585,742,230

Vehicles 307,520,913 (192,937,742) (7,026) 114,576,145

Tools, equipment and supplies 2,363,830,469 (1,529,970,452) (1,293,414) 832,566,603

Courses 75,131,394 (207,981) - 74,923,413

Biotechnology assets 63,300,272 (591,665) - 62,708,607

Heavy equipment 80,000,292 (50,636,014) - 29,364,278

Others 234,853,237 (70,314,890) (2,065,511) 162,472,836

Construction-in-progress 1,098,934,235 - (983,226) 1,097,951,009

18,017,875,115 (6,473,870,744) (51,120,210) 11,492,884,161

1 Accumulated impairment loss is included.


85

Changes in property, plant and equipment for the years ended December 31, 2018 and 2017, are

as follows:

2018

(In thousands of Korean won) Land Buildings Structures Machinery Vehicles

Tools,

equipment

and supplies

Opening net book amount 3,102,184,709 2,429,174,374 1,001,219,957 2,585,742,230 114,576,145 832,566,603

Increase due to business

combination 27,326,633 44,193,965 8,520,628 7,332,844 1,554,381 29,208,080

Acquisition 56,599,397 144,624,498 46,929,328 335,644,270 39,294,465 231,913,248

Transfer from (to) investment

properties 15,476,125 13,301,221 (1,960,440) - - 1,718,619

Transfer from (to) intangible

assets - - - - - -

Decrease due to disposal of

subsidiaries (23,662,792) (61,197,287) (10,024,470) (25,134,882) (506,311) (9,426,409)

Transfer from assets held for

sale 167,564,008 - 7,000 772,637 - 3,300

Transfer 56,231,690 535,081,521 132,840,748 582,708,882 9,948,062 93,676,522

Disposal (3,937,182) (7,408,009) (7,693,265) (15,762,259) (9,564,802) (28,384,048)

Depreciation - (120,718,067) (91,545,277) (455,201,152) (32,545,112) (279,009,879)

Impairment loss1

- (818) (5,945,358) (4,301,976) (129,083) (402,765)


translation 735,963 5,794,426 (6,269,325) 29,867,965 (1,230,313) (12,636,545)

Others (4,772,321) (22,031,970) 29,171,116 65,523,361 (955,350) (15,209,921)

Closing net book amount 3,393,746,230 2,960,813,854 1,095,250,642 3,107,191,920 120,442,082 844,016,805

2018

(In thousands of Korean won) Courses

Biotechnology

assets

Heavy

equipment Others

Construction-

in- Progress Total

Opening net book amount 74,923,413 62,708,607 29,364,278 162,472,836 1,097,951,009 11,492,884,161


combination - - - 8,838,971 6,419,962 133,395,464

Acquisition 1,088,006 18,641,344 4,974,225 9,984,956 1,510,794,994 2,400,488,731

Transfer from (to) investment

properties - - - - (4,767,740) 23,767,785

Transfer to intangible assets - - - - (46,924,799) (46,924,799)


subsidiaries - - (707,870) (997,135) (994,413) (132,651,569)

Transfer from assets held for

sale - - - - - 168,346,945

Transfer 4,025,082 - 2,025 7,995,142 (1,422,509,674) -

Disposal - (200,599) (135,469) (2,225,328) (6,476,185) (81,787,146)

Depreciation - (171,388) (6,036,524) (12,736,227) - (997,963,626)

Impairment loss1

- (42,292) - - - (10,822,292)


translation - (41,352) (2,134,477) 817,375 8,312,106 23,215,823

Others - (8,527) (1,874,028) (41,142,796) (10,444,118) (1,744,554)


86

Closing net book amount 80,036,501 80,885,793 23,452,160 133,007,794 1,131,361,142 12,970,204,923

1 In 2018, the Group recognized impairment loss amounting to \ 10,822 million on property, plant

and equipment for those that suffered a significant decrease in their fair values determined based

on expected disposal amounts.

2017

(In thousands of Korean won) Land Buildings Structures Machinery Vehicles

Tools,

equipment

and supplies

Opening net book amount 3,037,578,860 2,291,492,458 953,706,440 2,512,365,981 100,717,409 729,591,070


combination 13,016,767 29,034,005 9,777,948 91,677,972 22,567,958 7,382,912

Acquisition 24,820,431 105,542,790 60,574,045 229,889,531 27,994,192 335,604,643

Transfer from investment

properties 41,262,260 6,700,231 26,965 - - 146,802

Transfer to intangible assets - - - - - 2,808,917

Transfer 1,025,236 176,452,531 118,647,843 355,764,186 4,201,996 61,756,550

Disposal (5,473,613) (14,186,006) (4,791,486) (26,409,069) (5,649,283) (24,178,885)

Depreciation - (111,165,960) (84,138,282) (414,712,312) (30,781,041) (261,983,816)

Impairment loss1

- (2,265,890) - (8,451,298) - (29,704)


translation (8,040,149) (58,862,687) (52,632,044) (140,730,197) (4,662,035) (28,529,837)

Others (2,005,083) 6,432,902 48,528 (13,652,564) 186,949 9,997,951

Closing net book amount 3,102,184,709 2,429,174,374 1,001,219,957 2,585,742,230 114,576,145 832,566,603

2017

(In thousands of Korean won) Courses

Biotechnology

assets

Heavy

equipment Others

Construction-

in- Progress Total

Opening net book amount 70,263,418 49,994,180 17,636,759 161,242,503 448,225,735 10,372,814,813


combination - - 18,902,579 2,542,299 21,772,235 216,674,675

Acquisition 837,897 47,444,216 921,809 17,817,737 1,415,684,012 2,267,131,303

Transfer from investment

properties - - - - - 48,136,258

Transfer to intangible assets - - - - (17,568,859) (14,759,942)

Transfer 4,030,079 - - 3,454,061 (725,332,482) -

Disposal - (28,002,423) (1,582,914) (857,272) (5,981,169) (117,112,120)

Depreciation - (431,905) (5,045,817) (13,899,289) - (922,158,422)

Impairment loss1

(207,981) - - - - (10,954,873)


translation - (6,757,509) (1,135,980) (2,611,491) (27,471,047) (331,432,976)

Others - 462,048 (332,158) (5,215,712) (11,377,416) (15,454,555)


1 In 2017, the Group recognized impairment loss amounting to \ 10,955 million on property, plant

and equipment for those that suffered a significant decrease in their fair values determined based


87

on expected disposal amounts.

Depreciation expense of property, plant and equipment for the years ended December 31, 2018

and 2017, is classified as follows:


2017

Cost of sales 781,048,833 717,867,510

Selling and administrative expenses 216,914,793 204,290,912

997,963,626 922,158,510

Bank borrowings are secured by a portion of property, plant and equipment as at December 31,

2018.

In 2018, the Group has capitalized borrowing costs amounting to \ 13,152 million (2017:

\ 4,554 million) on qualifying assets. The weighted average rate of general borrowings rate used

to measure borrowing costs was 3.08% (2017: 2.75%).

CJ CheilJedang Co., Ltd., a subsidiary, resolved at its board meeting on June 12, 2017 to

construct an integrated food production plant in Jincheon, Chungcheongbuk-do for the purpose of

building a production infrastructure that correspond to growth in the food core business. The

estimated investment amount is ₩ 902.3 billion and the estimated investment period is from 2017

to 2020. Increase in construction in progress during the current year includes the expenditure for

the integrated food production plant.

Machinery, tools, equipment and supplies and vehicles include the following amounts where the

Group is a lessee under a finance lease as at December 31, 2018 and 2017, are as follows:

2018

2017

(In thousands of Korean won) Machinery

Equipment

and vehicles

Machinery

Equipment

and vehicles

Cost (capitalized finance leases) 54,489,665 128,167,400 59,080,669 148,968,876

Accumulated depreciation (15,491,132) (79,747,096) (13,599,834) (77,366,598)

Net book amount 38,998,533 48,420,304 45,480,835 71,602,278

The Group leases various machineries under non-cancellable finance lease agreements. The

lease terms are between two and ten years.

The Group leases certain buildings and vehicles under operating lease agreement. The amount of

lease expense recorded in relation to operating lease agreements is \ 791,900 million (2017:

\ 735,507 million).


88

Commitments for minimum lease payments in relation to non-cancellable operating leases are

payable as follows:


Book amount

2018 2017

Operating lease payments

Within one year 449,383 481,164

Later than one year but not later than five years 895,537 1,117,280

Later than five years

1,441,623 1,183,155

2,786,543 2,781,599

17. Intangible Assets

Details of intangible assets as at December 31, 2018 and 2017, are as follows:

2018


Accumulated

amortization1

Government

grants Book amount

Goodwill 3,721,259,939 (209,445,362) - 3,511,814,577

Development costs 523,345,396 (362,789,184) (1,358,850) 159,197,362

Membership rights 66,180,897 (6,975,671) - 59,205,226

Publication rights and rights to

music contents 2,355,168,122 (2,066,393,060) - 288,775,062

Service concession arrangement 630,737,819 (245,819,485) (22,481,786) 362,436,548

Brand 249,271,211 - - 249,271,211

Licenses 159,134,172 - - 159,134,172

Construction in progress 210,838,593 (1,155,414) (137,475) 209,545,704

Others 2,071,198,393 (899,465,325) (2,334,774) 1,169,398,294

9,987,134,542 (3,792,043,501) (26,312,885) 6,168,778,156

2017


Accumulated

amortization1

Government

grants Book amount

Goodwill 3,615,209,956 (60,134,103) - 3,555,075,853

Development costs 468,106,825 (287,821,784) (1,433,474) 178,851,567

Membership rights 61,281,282 (6,705,075) - 54,576,207

Publication rights and rights to

music contents 1,970,877,292 (1,736,049,637) - 234,827,655

Service concession arrangement 631,746,541 (219,471,561) (23,571,657) 388,703,323

Brand 249,271,211 - - 249,271,211

Licenses 159,134,172 - - 159,134,172

Construction in progress 148,529,362 (1,090,945) (89,200) 147,349,217

Others 1,787,498,500 (713,683,040) (2,571,459) 1,071,244,001


89

9,091,655,141 (3,024,956,145) (27,665,790) 6,039,033,206


Changes in intangible assets for the years ended December 31, 2018 and 2017, are as follows:

2018

(In thousands of Korean won) Goodwill

Development

costs

Membership

rights

Publication

rights and rights

to music

contents

Opening net book amount 3,555,075,853 178,851,567 54,576,207 234,827,655

Effects of changes in accounting

policies - - - -


combination 335,284,527 - 70,052 -


subsidiaries (128,743,333) - (1,009,201) -

Acquisition - 40,655,919 9,995,084 124,399,491

Transfer - 9,230,663 - 311,642,948

Transfer from property, plant and

equipment - 5,144,886 - 314,046

Transfer to investment properties - - - -

Disposal - - (2,545,878) (548,464)

Amortization - (52,768,108) - (389,901,936)

Impairment loss1

(149,311,260) (22,070,698) (511,339) (1,744,018)


translation (100,489,762) - 58,282 2,888,846

Others (1,448) 153,133 (1,427,981) 6,896,494

Closing net book amount 3,511,814,577 159,197,362 59,205,226 288,775,062

2018


Service

concession

arrangement Brand

Licenses

Construction-

in-progress Others Total


Effects of changes in

accounting policies - - - - 45,990,201 45,990,201


combination - - - - 137,674,716 473,029,295


subsidiaries - - - (1,180,070) (8,698,050) (139,630,654)

Acquisition - - - 372,662,103 142,999,104 690,711,701

Transfer - - - (362,243,237) 41,369,626 -

Transfer from property, - - - 139,100 41,326,767 46,924,799


90

plant and equipment

Transfer to investment

properties - - - - (14,246,013) (14,246,013)

Disposal (890,696) - - (1,033,976) (3,160,560) (8,179,574)

Amortization (18,575,983) - - - (232,599,492) (693,845,519)

Impairment loss1

- - - (64,469) (6,988,265) (180,690,049)


translation - - - (530,480) (37,368,633) (135,441,747)

Others (6,800,096) - - 54,447,516 (8,145,108) 45,122,510


1

In 2018, the Group recognized impairment loss amounting to \ 180,690 million on intangible

assets including goodwill for those that suffered a significant decrease in their fair value or value-

in-use.

2017

(In thousands of Korean won) Goodwill

Development

costs

Membership

rights

Publication

rights and rights

to music

contents

Opening net book amount 3,254,223,226 188,908,191 52,700,450 240,968,131


combination 502,380,231 - - 3,767,430

Acquisition - 47,940,092 5,224,004 126,573,823

Transfer - 6,474,484 - 225,603,557

Transfer from property, plant and

equipment - 3,217,148 - 5,715,256

Disposal (5,675) (24,104) (340,912) (256,596)

Amortization - (55,332,482) - (338,013,749)

Impairment loss1

(4,510,605) (12,111,297) (716,405) (2,187,169)


translation (200,284,149) (292) (170,924) (2,789,186)

Others 3,272,825 (220,173) (2,120,006) (24,553,842)

Closing net book amount 3,555,075,853 178,851,567 54,576,207 234,827,655

2017


Service

concession

arrangement Brand

Licenses

Construction-

in-progress Others Total



combination - - - - 78,684,310 584,831,971

Acquisition 54,071 - - 323,500,731 100,505,582 603,798,303

Transfer - - - (274,665,558) 42,587,517 -

Transfer from property, - - - 3,149,715 2,677,823 14,759,942


91

plant and equipment

Disposal - - - (240,891) (20,356,329) (21,224,507)

Amortization (11,213,565) - - - (182,183,806) (586,743,602)

Impairment loss1

- - - - (1,327,090) (20,852,566)


translation - - - (79,463) (12,218,998) (215,543,012)

Others (7,666,034) - - (873,721) (23,933,019) (56,093,970)


1

In 2017, the Group recognized impairment loss amounting to \ 20,853 million on intangible

assets including goodwill for those that suffered a significant decrease in their fair value or value-

in-use.

Amortization expense of intangible assets for the years ended December 31, 2018 and 2017, are

classified as follows:


2018

2017

Cost of sales

516,931,079 418,060,508

Selling and administrative costs

176,914,440 168,683,094

693,845,519 586,743,602

Impairment Tests for Goodwill

Goodwill allocated according to cash-generating units for the years ended December 31, 2018

and 2017, is as follows:


Cash-Generating Units

CJ Corporation’s portion of goodwill relating to CJ Logistics Corporation 1,189,320 949,382

CJ Corporation’s portion of goodwill relating to CJ CGV Co., Ltd. 337,567 544,693

CJ Corporation’s portion of goodwill relating to CJ Hello Co., Ltd. 650,813 633,822

CJ Corporation’s portion of goodwill relating to CJ CheilJedang

Corporation 836,044 898,572

CJ Corporation’s portion of goodwill relating to CJ ENM CO., LTD.

(formerly, CJ O Shopping Co., Ltd.) 427,592 121,772

CJ Corporation’s portion of goodwill relating to CJ E&M Corporation - 331,828

CJ Corporation’s portion of goodwill relating to CJ Freshway


CJ Corporation’s portion of goodwill relating to CJ OliveNetworks


Others 4,191 10,447

3,511,815 3,555,076

Goodwill is allocated by the management at the operating segment level (cash-generating units or

group of cash-generating units). The Group used the same goodwill allocation method for both

periods ended December 31, 2018 and 2017.

Goodwill impairment reviews are undertaken annually. Impairment test suggests that the


92

recoverable amount of cash generating units does not exceed the book amount, and \ 149,311

million (2017: \ 4,511 million) are recognized as impairment loss on intangible assets. Some of

the recoverable amount of cash generation units used estimated cash flow amounts based on the

next five years of approved financial budget of the management and the cash flows beyond the

five-year period are extrapolated using the permanent growth rates. The key assumptions used

for value-in-use calculations in 2018 are as follows:

(In percentage, %) 2018

Average gross

margin rate Average sales

growth rate Discount rate

CJ Corporation’s portion of goodwill relating to CJ Logistics Corporation

3.46%~6.34% 4.08%~10.94% 7.16%

CJ Corporation’s portion of goodwill relating to CJ CGV Co., Ltd.

10.87%~11.21% 12.12%~19.28% 14.2%~16.10%

CJ Hello Co., Ltd. 10.76% 3.86% 7.50%

CJ Corporation’s portion of goodwill relating to CJ CheilJedang Corporation

0.20%~22.91% 0.22%~47.67% 5.81%~15.15%

CJ Corporation’s portion of goodwill relating to CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.)

20.29%~34.31% 3.79%~19.38% 9.4%~12.8%

CJ Corporation’s portion of goodwill relating to CJ Freshway Corporation

8.23%~25.22% 2.83%~7.62% 8.3%~11%

CJ Corporation’s portion of goodwill relating to CJ OliveNetworks Corporation

5.73% 2.27% 10.50%

(In percentage, %) 2017

Average gross

margin rate Average sales

growth rate Discount rate

CJ Corporation’s portion of goodwill relating to CJ Logistics Corporation

1.63%~6.37% 3.71%~13.95% 6.80%

CJ Corporation’s portion of goodwill relating to CJ CGV Co., Ltd.

11.19% 22.15% 13.30%

CJ Hello Co., Ltd. 10.34% 2.94% 6.60%

CJ Corporation’s portion of goodwill relating to CJ CheilJedang Corporation

(0.47%)~25.07% (0.12%)~63.51% 4.91%~10.95%

CJ Corporation’s portion of goodwill relating to CJ E&M Corporation

5.54%~28.18% 10.64%~18.26% 5.4%~15.4%

CJ Corporation’s portion of goodwill relating to CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.)

6.64%~6.69% 8.18%~13.43% 12.65%~14.41%

CJ Corporation’s portion of goodwill relating to CJ Freshway Corporation

7.08%~29.01% 2.64%~22.26% 9.06%~14%

CJ Corporation’s portion of goodwill relating to CJ OliveNetworks Corporation

8.30% 2.03% 10.30%

The Group determined budgeted gross margin growth rate based on past performance and its

expectations of market development. The discount rates used reflect specific risks relating to the

relevant operating segments.


93

Impairment Tests for Brand


2018

2017

Brand of CJ Logistics Corporation

220,560,000 220,560,000

Brand impairment reviews are undertaken annually. Impairment test suggests that the

recoverable amount of cash generating units exceeds the book amount, and no impairment loss

is recognized. The recoverable amount of all CGUs has been determined based on value-in-use

calculations. These calculations use cash flow projections based on financial budgets approved

by management covering a five-year period. Perpetual growth rate for CJ Logistics Corporation is

assumed as 1.5% according to the related assets and region. For CGUs other than CJ Logistics

Corporation, cash flows beyond the five-year period are extrapolated using the zero percent rate.

The key assumptions used for value-in-use calculations in 2018 are as follows:

(in thousands of Korean won) 2018

Gross margin Sales growth rate

Pre-tax discount

rate

Brand of CJ Logistics Corporation 3.46%~6.34% 4.08%~10.94% 7.16%

(in thousands of Korean won) 2017

Gross margin Sales growth rate

Pre-tax discount

rate

Brand of CJ Logistics Corporation 0.3%~9.3% 3.74%~12.57% 5.31%~10.87%

The Group determines the sales growth rate based on its past performances and expectations on

future market development.

Service Concession Arrangements

Service concession arrangements as at December 31, 2018, are as follows:

Gunpo Yangsan

Contents of agreement On the real estate owned by

Korea Rail Network Authority,

the Group built a cargo terminal

with its own fund. The Group

owns and operates the cargo

terminal for a certain period and

then contributes operation to the

government.

On the real estate owned by

the Ministry of Land, Transport

and Maritime Affairs, the Group

built a cargo terminal with its

own fund. The Group owns and

operates the cargo terminal for

a certain period and then

contributes operation to the

government.

Classification of Private

investment business

BOT BOT

Transfer period of ownership Under discussion with the

Ministry of Land, Transport and

Maritime Affairs

Under discussion with the

Ministry of Land, Transport and

Maritime Affairs

Application standards for Application of 2112 Service Application of 2112 Service


94

accounting treatment concession arrangement concession arrangement

Related account Intangible assets Intangible assets

18. Investment Properties

Details of investment properties as at December 31, 2018 and 2017, are as follows:


2017

Acquisition cost 294,456,715 307,768,691

Accumulated depreciation1

(34,365,520) (35,852,160)

Book amount 260,091,195 271,916,531


Changes in investment properties for the years ended December 31, 2018 and 2017, are as

follows:


2017

Opening net book amount 271,916,531 277,969,305

Acquisition 5,885,177 56,375,247

Transfer to property, plant and

equipment (23,767,785) (48,136,258)

Transfer from intangible assets 14,246,013 -

Disposal (8,052,179) (895,498)

Depreciation (4,377,917) (5,083,417)

Effect of foreign currency translation 3,592,940 (8,312,848)

Others 648,415 -

Closing net book amount 260,091,195 271,916,531

Investment properties above consist of land amounting to \ 170,131 million (2017: \ 152,699

million), buildings amounting to \ 88,779 million (2017: \ 97,424 million) and other property,

plant and equipment.

In 2018, rental income from investment properties is \ 11,946 million (2017: \ 16,467 million),

and operating expenses (including repairs and maintenance) directly related to those investment

properties amount to \ 5,520 million (2017: \ 7,061 million).

Fair value of investment properties as at December 31, 2018, is \ 300,951 million (2017:

\ 318,905 million) and classified to Level 3 in fair value hierarchy (Note 5.2).

Certain investments properties are pledged as security for borrowings as at December 31, 2018.


95

19. Borrowings

Short-term borrowings as at December 31, 2018 and 2017, are as follows:

(In thousands of Korean

won)

Financial Institution

Annual

interest rate

(%)

Amount

December 31,

2018

2018

2017

General loans

Woori Bank and others 0.04-13.50 2,191,715,057 1,323,496,608

Commercial papers

NH INVESTMENT &

SECURITIES CO.,LTD. and

others

2.19-2.93 625,000,000 313,000,000

Working Fund

Woori Bank and others 0.03-9.14 680,442,559 849,792,425

Loans for facilities

Kookmin Bank and others 1.39-28.80 118,352,183 121,969,923

Usance

Korea Development Bank

and others

0.24-4.21 491,198,624 311,830,064

4,106,708,423 2,920,089,020

Long-term borrowings as at December 31, 2018 and 2017, are as follows:


Financial Institution

Annual interest

rate (%)

Amount

December 31,

2018

2018

2017

General borrowings

General loans


and others

0.10-11.00

1,248,197,649 1,193,202,003

Working fund

The Bank of Yokohama

and others 0.80-4.68

334,465 3,564,153

Policy fund

The Export-Import Bank of

Korea and others

2.43-4.50

176,318,625 253,408,370

Loans for facilities


and others 1.00-8.90

701,960,125 522,021,795

Middle/Long-term CP Shinhan Bank and others 1.79-1.89 200,000,000 330,000,000

GSM fund Korea Development Bank 1.30-3.09 72,396,839 57,107,498

Less : Present value discount (22,330,603) (20,591,570)

Current maturities (654,959,224) (800,007,249)

1,721,917,876 1,538,705,000

Financial lease liabilities

Machinery and others

INDUSTRIAL BANK OF

KOREA and others 2.25-15.00

54,980,702 62,120,602

Less : Current maturities (8,997,798) (8,115,057)

45,982,904 54,005,545

1,767,900,780 1,592,710,545


96

Certain portions of short-term financial instruments, long-term financial instruments, financial

assets measured at fair value, property, plant and equipment, intangible assets and investment

property are pledged as collateral in relation to the Group‘s borrowings above (Note 37).

Minimum lease payments to the lessor as at December 31, 2018 and 2017, are as follows:


2017

Total minimum lease payments

No later than 1 year 10,941,334 10,768,994

Between 1 and 5 years 34,046,431 42,181,176

Over 5 years 20,634,090 22,353,983

65,621,855 75,304,153

Unearned financial income (10,641,153) (13,183,551)

Net minimum lease payment

No later than 1 year 8,997,798 8,115,057

Between 1 and 5 years 30,185,961 37,189,918

Over 5 years 15,796,943 16,815,627

54,980,702 62,120,602

20. Debentures

Details of debentures as at December 31, 2018 and 2017, are as follows:

Annual interest

rate (%) Amount

(In thousands of Korean won) December 31,

2018 2018 2017

Non-guarantee public bonds 0.85-4.21 4,445,982,000 4,130,000,000

Non-guarantee private bonds 1.08-4.25 1,068,870,158 1,155,236,288

Less : Present value discount (8,534,290) (8,383,950)

Current maturities (989,618,619) (594,787,334)

4,516,699,249 4,682,065,004


97

21. Post-employment Benefits

21.1 Defined Benefit Plan

The Group operates defined benefit pension plans. The level of benefits provided depends on

employees’ length of service and their salary in the final years leading up to retirement. The

majority of benefit payments are from trustee administered funds. Plan assets held in trusts are

governed by local regulations and practice in each country.

The amounts of net defined benefit liabilities recognized in the consolidated statements of

financial position as at December 31, 2018 and 2017, are as follows:


2017

Present value of funded defined benefit liabilities 1,173,926,633 1,056,546,547

Present value of unfunded defined benefit liabilities 29,121,220 26,411,251

1,203,047,853 1,082,957,798

Fair value of plan assets 1

(891,997,336) (847,511,272)

Net defined benefit liabilities 311,050,517 235,446,526

1 The fair value of plan assets includes contributions to the National Pension Fund of \ 211

million as at December 31, 2018 (2017: \ 234 million).

Changes in the defined benefit obligation for the years ended December 31, 2018 and 2017, are

as follows:


2017

Beginning balance 1,082,957,798 952,141,442

Increase due to business combination 942,544 3,935,981

Current service cost 196,292,398 181,581,341

Past service cost 263,235 20,271,517

Interest expense 34,816,506 27,737,742

Remeasurements: Actuarial loss from change in demographic assumptions 34,170 18,457,015

Actuarial loss (gain) from change in financial assumptions 33,198,314 (37,717,169)

Actuarial loss from experience adjustments 36,474,455 26,913,864

Payments from plans:

Benefit payments (129,879,351) (107,929,153)

Decrease due to disposal of subsidiaries (52,129,879) (73,980)

Effect of foreign currency translation 77,663 (2,360,802)

Ending balance 1,203,047,853 1,082,957,798


98

Movements in the fair value of plan assets for the years ended December 31, 2018 and 2017, are

as follows:


2017

Beginning balance 847,511,272 693,782,856

Increase due to business combination 63,734 161,813

Interest income 26,082,020 19,746,762

Remeasurements:

Return on plan assets (15,105,840) (10,969,415)

Contributions:

Employers 162,713,598 199,818,998

Payments from plans:

Benefit payments (73,436,139) (54,966,515)

Decrease due to disposal of subsidiaries (55,831,309) (63,227)

Ending balance 891,997,336 847,511,272

Details of plan assets as at December 31, 2018 and 2017, are as follows:

2018 2017

(In thousands of Korean won) Amount Composition(%) Amount Composition(%)

Deposits 728,865,217 81.71 611,963,400 72.21

Beneficiary certificate 150,503,062 16.87 218,760,936 25.81

Others 12,629,057 1.42 16,786,936 1.98

891,997,336 100.00 847,511,272 100.00

The significant actuarial assumptions as at December 31, 2018 and 2017, are as follows:

(in percentage) 2018

2017

Discount rate 3.10% 3.53%

Future salary growth rate 4.97% 4.85%

The sensitivity of the defined benefit obligation to changes in the principal assumptions is as

follows:

(in percentage) Impact on defined benefit obligation

Changes in assumption

Increase in assumption

Decrease in assumption

Discount rate 1% increase/

decrease

5.29% decrease 6.48% increase

Salary growth rate

1% increase/ decrease

6.45% increase 5.38% decrease

The above sensitivity analysis are based on the assumption that all other variable are held

constant. The sensitivity of the defined benefit obligation to changes in principal actuarial

assumptions is calculated using the projected unit credit method, which is the same method


99

applied when calculating the defined benefit obligations recognized on the consolidated statement

of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change

compared to the previous period.

Expected maturity analysis of undiscounted pension benefits as at December 31, 2018, is as

follows:

(in thousands of Korean

won)

Less than 1

year

Between 1 and

2 years

Between 2 and

5 years Over 5 years Total

Pension benefits 202,369,431 128,366,276 399,412,699 764,134,793 1,494,283,199

The weighted average duration of the defined benefit obligations is 7.1 years.

21.2 Defined Contribution Plan

Recognized expense related to the defined contribution plan for the year ended December 31,

2018, is \ 5,640 million (2017: \ 3,086 million).

22. Income Tax and Deferred Tax

Income tax expense for the years ended December 31, 2018 and 2017, consists of:


2017

Current tax:

Current tax on profits for the year 452,896,156 327,778,588

Adjustments in respect of prior years (9,802,951) 166,441

443,093,205 327,945,029

Deferred tax:

Origination and reversal of temporary differences (3,455,798) 109,507,883

Income tax expense 439,637,407 437,452,912

Reconciliation between profit before income tax and income tax expense for the years ended

December 31, 2018 and 2017, are as follows:


2017

Profit before income tax 1,319,664,684 1,575,181,329

Tax at domestic tax rates applicable to profits in the

respective countries 373,950,091 321,945,464

Tax effects of:

Profit of subsidiaries and associates 63,999,820 46,900,428

Adjustments in respect of prior years (9,802,951) 166,441

Income (expense) not subject to tax 1,757,614 (8,454,618)


100

Tax credit (37,912,164) (28,695,967)

Unrecognized deferred income tax 50,789,592 96,350,855

Others (3,144,595) 9,240,309

Income tax expense 439,637,407 437,452,912

The tax effect relating to components of other comprehensive income and equity for the years

ended December 31, 2018 and 2017, is as follows:

2018 2017


Before

tax

Tax

effect

After

tax

Before

tax

Tax

effect

After

tax

Tax (charge) / credit relating to

components of other

comprehensive income:

Changes in the fair value of

available-for-sale financial assets

- - - (325,368,964) 91,236,891 (234,132,073)

Gain (loss) on valuation of equity

instruments at fair value through

other comprehensive income

(44,568,747) 8,484,317 (36,084,430) - - -

Cumulative effect of foreign

currency translation (143,412,081) 11,031,888 (132,380,193) (469,613,178) 22,711,046 (446,902,132)

Share of other comprehensive

income of joint venture and

associates

24,852,395 - 24,852,395 22,888,549 - 22,888,549

Gains (losses) on valuation of

derivatives (1,508,174) 360,604 (1,147,570) 284,469 (68,016) 216,453

Remeasurements of net defined

benefit liabilities (84,812,779) 18,464,612 (66,348,167) (18,623,125) 3,382,274 (15,240,851)

(249,449,386) 38,341,421 (211,107,965) (790,432,249) 117,262,195 (673,170,054)

The income tax (charged) / credited

directly to equity:

Share of movement in other

components of equity of joint

venture and associates

(28,358,100) - (28,358,100) (19,689,354) - (19,689,354)

Other components of equity

(16,478,648) 3,940,045 (12,538,603) 388,168 (93,937) 294,231

(44,836,748) 3,940,045 (40,896,703) (19,301,186) (93,937) (19,395,123)

(294,286,134) 42,281,466 (252,004,668) (809,733,435) 117,168,258 (692,565,177)

The analysis of deferred tax assets and deferred tax liabilities as at December 31, 2018 and 2017,

are as follows:


Deferred tax assets

Deferred tax asset to be recovered after more than 12 months 885,195,531 753,603,174

Deferred tax asset to be recovered within 12 months 134,416,441 97,000,962

1,019,611,972 850,604,136

Deferred tax liabilities

Deferred tax liability to be recovered after more than 12 months (1,515,537,093) (1,421,186,156)

Deferred tax liability to be recovered within 12 months (10,021,476) -


101

(1,525,558,569) (1,421,186,156)

Deferred tax liabilities, net (505,946,597) (570,582,020)

Changes in deferred tax assets and liabilities without taking into consideration the offsetting of

balances within the same tax jurisdiction, for the years ended December 31, 2018 and 2017, are

as follows:

2018


Beginning

balance

Statement of

profit or loss

Other

Comprehen-

sive

income

Acquisition

of

subsidiaries

Disposal of

subsidiaries

Effect of

foreign

currency

translation

Ending

balance

Deferred tax assets

Provision for impairment 52,231,352 6,223,976 - 1,638 - (8,143) 58,448,823

Net defined benefit liabilities 68,331,424 (5,798,245) - 161,191 (328,151) 76,867 62,443,086

Loss on valuation of

inventories 5,394,409 2,960,771 - - (367,837) 1,856 7,989,199

Amortization 9,661,609 (9,661,609) - - - - -

Impairment loss on

investment property 42,646,051 (35,096,776) - - - (6,044) 7,543,231

Impairment loss on property,

plant and equipment 8,290,865 457,053 - - - 14,762 8,762,680

Impairment loss on intangible

assets 1,918,980 (475,785) - - (6,710) 13,832 1,450,317

Accrued expenses 38,742,881 18,900,874 - 263,747 (1,633,047) (22,522) 56,251,933

Currency translation 387,167 (183,365) - - - (25) 203,777

Government subsidy 3,034,892 (1,494,712) - 78,395 (308,757) - 1,309,818

Tax loss 405,732,209 90,105,795 - - (3,186,317) (553,498) 492,098,189

Tax credit 10,080,089 5,894,060 - - - 6,341 15,980,490

Remeasurement 68,475,991 - 18,464,612 - - - 86,940,603

Gain (loss) on foreign

currency translation 16,220,727 - 11,031,888 - - - 27,252,615

Gain on valuation of hedging

derivative - - 86,548 - - - 86,548

Others 18,862,304 44,312,436 - - 1,612,563 - 64,787,303

750,010,950 116,144,473 29,583,048 504,971 (4,218,256) (476,574) 891,548,612


Legal reserve under Special

Tax Treatment Control Law (4,252,641) 4,252,641 - - - - -

Depreciation (53,458,470) (9,565,805) - (4,411,083) 1,480,016 (2,531,795) (68,487,137)

Amortization - (23,955,376) - - (161,908) 150 (24,117,134)

Borrowing costs (2,180,391) 260,738 - - - 16 (1,919,637)

Gain on revaluation of

property, plant and

equipment (316,853,357) (5,082,871) - (261,694) (4,079,838) - (326,277,760)

Gain (loss) on valuation of

equity instruments at fair

value through other

comprehensive income (18,986,172) - 8,484,317 - - - (10,501,855)

Gain of subsidiaries and

associates (419,085,084) (113,902,673) - (119,848) 280,866 51,147,391 (481,679,348)


102

2018


Beginning

balance

Statement of

profit or loss

Other

Comprehen-

sive

income

Acquisition

of

subsidiaries

Disposal of

subsidiaries

Effect of

foreign

currency

translation

Ending

balance

Appraisal by fair value (120,311,046) 14,417,651 - (27,212,730) - 5,823,878 (127,282,247)

Inventories, property, plant

and equipment, intangible

assets and others (12,504,359) (9,173,367) - - - 15,356 (21,662,370)


derivative (274,056) - 274,056 - - - -

Others (96,089,126) 80,849,979 3,940,045 (84,813) (711,232) 184,975 (11,910,172)

(1,043,994,702) (61,899,083) 12,698,418 (32,090,168) (3,192,096) 54,639,971 (1,073,837,660)

Tax deficit and others (276,598,268) (50,789,592) - (1,694) 3,186,317 545,688 (323,657,549)

(570,582,020) 3,455,798 42,281,466 (31,586,891) (4,224,035) 54,709,085 (505,946,597)

2017


Beginning

balance

Statement of

profit or loss

Other

Comprehen-

sive

income

Acquisition

of

subsidiaries

Disposal of

subsidiaries

Effect of

foreign

currency

translation

Ending

balance

Deferred tax assets

Provision for impairment 47,509,571 4,828,607 - - - (106,826) 52,231,352

Net defined benefit liabilities 54,047,564 14,727,823 - - - (443,963) 68,331,424

Loss on valuation of

inventories 4,068,009 1,329,086 - - - (2,686) 5,394,409

Amortization 8,706,236 974,780 - - - (19,407) 9,661,609

Impairment loss on

investment property 17,078,458 25,579,444 - - - (11,851) 42,646,051

Impairment loss on property,

plant and equipment 5,535,029 2,787,329 - - - (31,493) 8,290,865

Impairment loss on intangible

assets 1,747,456 171,524 - - - - 1,918,980

Accrued expenses 35,430,254 3,435,841 - - - (123,214) 38,742,881

Currency translation - 387,167 - - 387,167

Government subsidy 3,802,853 (767,961) - - - - 3,034,892

Tax loss 330,101,808 78,278,172 - - - (2,647,771) 405,732,209

Tax credit 14,305,950 (4,225,861) - - - - 10,080,089

Remeasurement 65,093,717 - 3,382,274 - - - 68,475,991

Gain on foreign currency

translation - - 16,220,727 - - - 16,220,727

Others 51,298 18,955,884 - - - (144,878) 18,862,304

587,478,203 146,461,835 19,603,001 - - (3,532,089) 750,010,950


Legal reserve under Special

Tax Treatment Control Law (13,962,919) 9,710,278 - - - - (4,252,641)

Depreciation (56,727,144) (4,620,385) - - - 7,889,059 (53,458,470)

Borrowing costs (2,291,657) 111,302 - - - (36) (2,180,391)

Foreign currency translation (41,176) 41,176 - - - - -

Gain on revaluation of (309,405,906) (7,447,451) - - - - (316,853,357)


103

2017


Beginning

balance

Statement of

profit or loss

Other

Comprehen-

sive

income

Acquisition

of

subsidiaries

Disposal of

subsidiaries

Effect of

foreign

currency

translation

Ending

balance

property, plant and

equipment

Changes in the fair value of

available-for-sale financial

assets (110,223,063) - 91,236,891 - - - (18,986,172)

Translation of foreign

currency financial

statements (6,490,319) - 6,490,319 - - - -

Gain (loss) of subsidiaries

and associates (232,190,167) (161,492,317) - - - (25,402,600) (419,085,084)

Appraisal by fair value (107,612,073) 9,572,381 - (29,065,511) (2,626) 6,796,783 (120,311,046)

Inventories, property, plant

and equipment, intangible

assets and others (21,964,321) 9,459,962 - - - - (12,504,359)


derivative (206,040) - (68,016) - - - (274,056)

Others (81,877,593) (14,953,810) - 24 - 742,253 (96,089,126)

(942,992,378) (159,618,864) 97,659,194 (29,065,487) (2,626) (9,974,541) (1,043,994,702)

Tax deficit and others (182,211,457) (96,350,854) - - - 1,964,043 (276,598,268)

(537,725,632) (109,507,883) 117,262,195 (29,065,487) (2,626) (11,542,587) (570,582,020)

23. Provisions for Liabilities and Charges

Changes in provisions for liabilities and charges for the years ended December 31, 2018 and


2018

(In thousands of Korean won) Mileage

Sales returns

Restoration

Construction

warranties

Other

liabilities

and charges

Total

Beginning balance 7,876,478 7,092,962 3,704,599 4,698,014 6,963,406 30,335,459


combination - - - - 11,649 11,649

Additional provisions - 6,402,344 8,011,808 1,120,608 8,082,369 23,617,129

Unused amounts reversed - (4,276,913) (1,718) - (170,225) (4,448,856)

Used during year - (4,288,668) (4,552,850) (611,615) (6,234,560) (15,687,693)


translation - - 59,261 517 (559,881) (500,103)

Effects of changes in

accounting policies (7,876,478) (4,929,725) - - - (12,806,203)

Ending balance - - 7,221,100 5,207,524 8,092,758 20,521,382

Current - - - - 2,000,479 2,000,479

Non-current - - 7,221,100 5,207,524 6,092,279 18,520,903


104

2017

(In thousands of Korean won) Mileage

Sales returns

Restoration

Construction

warranties

Other

liabilities

and charges

Total

Beginning balance 9,604,946 5,539,914 279,000 3,545,969 8,577,750 27,547,579


combination - 65,460 - - 2,208,278 2,273,738

Additional provisions 57,207,887 7,932,854 3,878,575 1,720,547 6,111,511 76,851,374

Unused amounts reversed (220,801) (148,010) (76,037) - (6,004,789) (6,449,637)

Used during year (58,711,581) (6,296,123) (202,963) (567,157) (3,548,702) (69,326,526)


translation (3,973) (1,133) (173,976) (1,345) (380,642) (561,069)

Ending balance 7,876,478 7,092,962 3,704,599 4,698,014 6,963,406 30,335,459

Current 13,688 7,041,806 150,000 - 1,343,031 8,548,525

Non-current 7,862,790 51,156 3,554,599 4,698,014 5,620,375 21,786,934

24. Share Capital and Share Premium

Under its Articles of Incorporation, the Company is authorized to issue 100 million shares with a

par value of \5,000 per share. As at December 31, 2018, the Company has issued 29,176,998

common shares and 2,260,223 preferred shares. The Company may also authorize the issuance

of 20 million shares of non-voting, cumulative and participating preferred share (maturity date

between three to ten years depending on the decision of the Board of Directors) which can

receive more dividends than common shareholders (non-voting, non-cumulative and non-

participating preferred share issued before February 27, 1997, has 1% more dividend rate than

ordinary share dividend). If the shares are to be issued at a dividend rate of more than 9% of the

par value, the preferred share dividend rate shall be decided by the Board of Directors.

The preferred share the Company has issued as at December 31, 2018, is as follows:

Preferred share

Numbers of shares 2,260,223

Voting rights No voting rights

Maturity date No maturity

Dividends Non-cumulative, and paying annually 1% more dividend than

ordinary share

Minimum dividend rate None

The Company may grant options to purchase ordinary share to key employees or directors who

have contributed or are expected to contribute to the management and technological innovation of

the Company with the approval of shareholders at their special meetings of shareholders. The

grant limit of the option is 15% of outstanding shares. However, within 10% of outstanding shares,

the options may be granted with the Board of Directors’ approval.

In 2009, the Company retired 145,741 shares of treasury share; therefore, the amount of ordinary

share capital and the total face value of outstanding ordinary shares are not equivalent.


105

Changes in paid-in capital for the years ended December 31, 2018 and 2017, are as follows:

Number of outstanding shares Share capital


except number of shares)

Ordinary

share

Preferred

share Total

Ordinary

share

Preferred

share Total

Share

premium

January 1, 2017 26,205,428 2,259,103 28,464,531 146,613,695 11,301,115 157,914,810 992,993,627

Acquisition of treasury

shares (2) - (2) - - - -

December 31, 2017 26,205,426 2,259,103 28,464,529 146,613,695 11,301,115 157,914,810 992,993,627

Acquisition of treasury

shares (287,773) - (287,773) - - - -

December 31, 2018 25,917,653 2,259,103 28,176,756 146,613,695 11,301,115 157,914,810 992,993,627

25. Share-based Payment

Stock options which were granted to its directors and employees are as follows:

Shares issued through stock option: registered ordinary share

Grant method: New shares of ordinary share, distributing treasury shares and payment of

valuation differences in shares or cash

Number of shares to be issued by stock options and the exercise price per share

(Excluding the options forfeited due to the event such as retirement)

(in number of shares) Date of the grant

2018 February 29, 2008 (7th

)

Options granted 230,000

Exercised quantity prior to 2017 165,800

Exercised quantity during 2018 64,200

Options outstanding as at December 31, 2018 -

Exercise price per share1 (in Korean won) \ 70,000

Options exercised in 2018 resulted in 64,200 shares being issued at a weighted average price of

\ 70,000 each. The related weighted average share price at the time of exercise was \ 166,513

per share.


2017 February 29, 2008 (7th

)

Options granted 230,000

Exercised quantity prior to 2015 137,250

Exercised quantity during 2017 28,550

Options outstanding as at December 31, 2017 64,200

Exercise price per share1

\ 70,000


106

Options exercised in 2017 resulted in 28,550 shares being issued at a weighted average price of

\ 70,000 each. The related weighted average share price at the time of exercise was \ 198,508

per share.

1

The exercise price per share can be adjusted in case of the issuance of new shares, share

dividends, share split, or share merger.

Vesting period: The options are exercisable within six years from four years after the grant

date.

7th: Options are conditional on the employee completing two years’ service after the grant

date.

The weighted average fair value of options granted during the period using the Black-Scholes

valuation model is determined as follows:


2018 February 29, 2008 (7th

)

Fair value of stock options 29,768

Weighted average share price at the grant date 78,115

Price volatility 1 66.64%

Dividend yield 1.43%

Expected option life 5 years

Expected forfeiture rate 6.00%

Annual risk-free interest rate 5.09%

1 The volatility measured at the standard deviation of continuously compounded share returns is

based on statistical analysis of daily share prices over the past five months.

26. Other Components of Equity

Other components of equity as at December 31, 2018 and 2017, are as follows:


2017

Share-based payments - 1,911,127

Treasury shares (226,868,323) (186,310,252)

Gains on valuation of equity instruments at fair value

through other comprehensive income 65,321,394 81,116,601


and associates (57,018,738) (46,551,055)

Losses on valuation of derivatives (187,306) 421,698

Cumulative effect of foreign currency translation (176,560,261) (147,820,889)

Others (33,368,669) (39,241,886)


107

(428,681,903) (336,474,656)

The Company acquired treasury shares in odd lots through split-off, merger of subsidiaries and

for stabilization of the share price. As at December 31, 2018, the Company will dispose of

treasury shares, including 3,259,345 common shares and 1,120 preferred shares, depending on

market conditions.

27. Retained Earnings

Retained earnings as at December 31, 2018 and 2017, consist of:


2017

Legal reserves1

79,869,424 79,869,424

Discretionary reserves2

1,603,297,049 1,584,851,334

Unappropriated retained earnings 1,653,349,085 1,450,609,168

3,336,515,558 3,115,329,926

1 The Commercial Code of the Republic of Korea requires the Company to appropriate for each

financial period, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid

until such reserve equals 50% of its issued share capital. The reserve is not available for cash

dividends payment, but may be transferred to share capital or used to reduce accumulated deficit.

When the accumulated legal reserves (the sum of capital reserves and earned profit reserves) are

greater than 1.5 times the paid-in capital amount, the excess legal reserves may be distributed.

2 The Company appropriates a certain portion of its retained earnings as reserves for research

and development which are provided in order to obtain tax benefits under the Special Tax

Treatment Control Law. Among these reserves, the reversed amount according to the terms of

related tax laws may be distributed.

28. Issuance of Hybrid Securities

Details of hybrid securities as at December 31, 2018 and 2017, are as follows:

(In millions of Korean won) Par Value

Issuer and borrower Types

December

31, 2018

December

31, 2017

Annual

interest rate Maturity

Claim for early

repayment

CJ Foodville Corp. Hybrid security

50,000 50,000 3.89% December 23,

2045 Hold

CJ Logistics Corporation1

Hybrid security

200,000 50,000 4.50% December 28,

2048 Hold

CJ CGV Co., Ltd. Hybrid security

150,000 - 4.20% November 8,

2048 Hold PT CHEILJEDANG

SUPERFEED Hybrid security

200,000 200,000 3.70% September 18,

2045 Hold

CJ Freshway Corporation2

Hybrid security 26,000 26,000 3.30% May 9, 2048 Hold PT CHEIL JEDANG

INDONESIA3

Hybrid security

200,000 200,000 3.97% April 19, 2047 Hold


108

K Valley Co., Ltd. Hybrid security 33,000 33,000 12.45% June 10, 2026 Hold

F&D infra Co., Ltd. Hybrid security

50,000 50,000 4.20%-4.46% December 27,

2046 Hold MARS CINEMA, TOURISM

AND SPORTS FACILITIES MANAGEMENT INC. Hybrid security

80,000 80,000 4.70%

October 27, 2046 Hold

CJ 4DPLEX Co.,Ltd1 Hybrid security - 15,000 - - -

1 In 2018, CJ Logistics Corporation, a subsidiary of the Group, redeemed the existing hybrid

securities and issued hybrid bonds with a total face amount of \ 200,000 million.

2 In 2018, CJ Freshway Corporation, a subsidiary of the Group, redeemed the existing hybrid

securities and issued hybrid bonds with a total face amount of \ 26,000 million.

3 In 2018, PT CHEIL JEDANG INDONESIA, a subsidiary of the Group, redeemed the existing

hybrid securities and issued hybrid bonds with a total face amount of \ 200,000 million.

The Group has no contractual obligation to make payment of the principal and interest of the

above bond, and accordingly, the hybrid securities are classified as equity. The Group provided a

guarantee for subsidiaries relating to above hybrid securities. Also, dividends to issuer will be

restricted if the payment of the principal and interest for its hybrid securities is postponed.

29. Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities

29.1 Revenue from Contracts with Customers

The Group has recognized the following amounts relating to revenue in the statement of profit or

loss:


Revenue from contracts with customers 29,511,489,583

Revenue from other sources: rental and sub-lease rental

income 11,945,894

Total revenue 29,523,435,477

29.2 Assets and Liabilities related to Contracts with Customers

The Group has recognized the following assets and liabilities related to contracts with customers:


2017

Contract assets – transferred goods and services 19,499,775 20,383,861

Contract assets – allocating the transaction price 237,957,687 90,145,858

Contract assets – due from customers for contract work 43,453,223 59,818,501

300,910,685 170,348,220

Contract liabilities – customer loyalty program 49,663,478 43,844,079


109

Contract liabilities – deferred revenue 103,984,699 138,972,070

Contract liabilities – variable consideration 1,895,772 7,763,740

Contract liabilities – due to customers for contract work 15,491,134 17,003,040

Contract liabilities – guarantees 2,255,467 1,977,836

173,290,550 209,560,765

As at December 31, 2018, in addition to above contract assets and liabilities, the Group

recognized intangible assets of \ 40,157 million, other current assets of \ 9,654 million,

provision of \ 14,718 million and other liabilities of \ 53,632 million, in accordance with adoption

of Korean IFRS 1115 (Note 42).

30. Expenses by Nature

Expenses by nature for the years ended December 31, 2018 and 2017, are as follows:


2017

Raw materials, sub-materials, biological assets and cost of

merchandise purchased

8,654,465,016 8,388,764,459

Changes in inventories and biological assets (301,052,170) 84,798,484

Salaries 3,093,521,783 2,743,518,223

Post-employment benefits 210,930,119 210,633,838

Employee benefits 447,339,462 377,536,241

Transportation expenses 6,948,008,862 5,417,400,591

Travel expenses 123,425,250 119,758,370

Taxes and dues 176,776,565 145,607,388

Advertising expenses 495,769,688 386,371,436

Rental expenses 1,030,039,248 874,116,259

Service Fees 1,155,470,826 1,437,261,001

Sales commission 227,669,181 239,479,758

Sales promotional expenses 240,111,505 197,109,998

Screening premium 461,508,884 442,217,783

Utility expenses 336,595,741 246,982,831

Power expenses 164,534,679 164,355,363

Packing material charge 350,816,786 313,010,397

Program production cost 416,670,309 456,396,901

Program usage fee 200,146,379 188,959,473

Network expenses 205,274,070 210,014,711

Repairs and maintenance expenses 145,830,819 79,059,946

Depreciation 997,963,626 922,158,422

Amortization 693,845,519 586,743,602

Outsourcing expenses 538,446,842 507,373,136

Building management fee 108,015,169 94,211,179

Others 1,068,836,111 738,804,860

Total cost of sales and selling and administrative expenses

28,190,960,269 25,572,644,650


110

31. Selling and Administrative Expenses

Selling and administrative expenses for the years ended December 31, 2018 and 2017, are as

follows:


Salaries 1,792,387,410 1,684,484,815

Post- employment benefits 151,417,438 150,095,410

Employee welfare benefits 286,221,652 258,867,454

Conference expenses 27,262,313 26,634,849

Entertainment expenses 29,177,514 46,254,313

Travel expenses 104,739,912 105,512,281

Communication expenses 43,494,393 40,717,267

Taxes and dues 111,269,432 95,666,894

Utility expenses 82,118,315 81,619,060

Research expenses 49,770,826 57,743,357

Repair expenses 34,127,470 28,520,993

Rental expenses 776,767,805 703,118,479

Foreign business expenses 28,456,867 30,178,571

Supplies expenses 58,012,758 56,264,483

Depreciation 216,914,793 204,290,912

Amortization 176,914,440 168,683,094

Insurance premium 34,846,230 31,316,357

Service fees 1,301,577,447 1,363,827,093

Sales commission 102,133,180 162,048,459

Training expenses 53,194,581 45,985,803

Freight expenses 608,888,175 637,105,329

Advertising expenses 564,177,426 520,515,907

Vehicles maintenance expenses 21,320,336 20,588,559

Sales promotional expenses 243,028,936 337,477,541

Impairment loss 43,380,252 27,043,668

Miscellaneous expenses 32,856,228 32,327,786

Others 46,287,403 47,170,235

7,020,743,532 6,964,058,969


111

32. Finance Income and Costs

Finance income and costs for the years ended December 31, 2018 and 2017, are as follows:


2017

Finance income

Interest income 56,662,943 41,750,775

Gain on foreign currency transaction 164,323,463 248,791,914

Gain on derivative instruments 106,410,653 77,235,794

Gain on disposal of available-for-sale financial assets - 355,501,524

Gain on disposal of financial assets at fair value 19,088,350 -

Gain on evaluation of financial assets at fair value 12,442,604 -

Others 3,253,800 8,521,529

358,181,813 731,801,536

Finance costs

Interest expenses 368,553,636 317,622,467

Other impairment loss 2,294,739 29,104,545

Loss on foreign currency transaction 225,526,005 178,544,526

Loss on derivative instruments 231,466,549 179,452,812

Impairment loss on available-for-sale financial assets - 20,696,409

Others 13,329,683 9,771,354

841,170,612 735,192,113

33. Other Non-operating Income and Expenses

Other non-operating income and expenses for the years ended December 31, 2018 and 2017,

are as follows:


Other operating income

Gain on disposal of investment in subsidiaries 940,261,188 2,076,525

Gain on disposal of investment in associates 19,756,998 505,917,889

Gain on derivative instruments 13,509,685 44,146,682

Gain on disposal of assets held for sale 14,814,570 221,000

Miscellaneous gain 97,272,722 70,613,445

Others 16,922,903 8,559,167

1,102,538,066 631,534,708


112


Other operating expenses

Impairment loss on investment in

joint ventures and associates 35,103,720 17,455,566

Loss on disposal of property, plant and equipment 50,922,584 44,317,197

Impairment loss on property, plant and equipment 10,822,292 10,954,874

Impairment loss on intangible assets 180,690,049 20,852,566

Loss on derivative instruments 12,661,856 70,441,963

Donations 162,671,673 118,945,429

Others 235,951,933 182,547,785

688,734,107 465,515,379

34. Earnings per Share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the

Parent Company by the weighted average number of ordinary shares in issue during the year

excluding ordinary shares purchased by the Company and held as treasury shares. The preferred

shares have the right to participate in the Company’s income distribution as a participating

preferred share. Therefore, earnings per share for preferred shares is also calculated.

Basic earnings per ordinary share for the years ended December 31, 2018 and 2017, is as

follows:

(In thousands of Korean won, except number of shares

and earnings per share) 2018

2017

Profit for the year 276,055,458 463,698,379

Less: Dividends for preferred shares 22,104,815 36,905,665

Profit attributable to ordinary shares 253,950,643 426,792,714

Weighted average number of ordinary shares outstanding 26,086,955 26,205,428

Basic earnings per share (in Korean won) 9,735 16,286

Since the Group did not issued the potential ordinary shares for the year ended December 31,

2018, basic earnings per share are equal to diluted earnings per share (2017: \ 16,264).

Basic earnings per preferred share for the years ended December 31, 2018 and 2017, is as

follows:

(In thousands of Korean won, except number of shares

and earnings per share) 2018

2016

Profit attributable to preferred shares 22,104,815 36,905,665

Weighted average number of preferred shares outstanding 2,259,103 2,259,103

Basic earnings per preferred share (in Korean won) 9,785 16,336

Since the Group did not issued the potential ordinary shares for the year ended December 31,

2018, basic earnings per share are equal to diluted earnings per share (2017: \ 16,314).


113

35. Dividends

The dividends paid in 2018 and 2017 were \ 41,387 million (\ 1,450 per ordinary share,

\ 1,500 per preferred share) and \ 38,540 million (\ 1,350 per ordinary share, \ 1,400 per

preferred share), respectively.

A dividend in respect of the year ended December 31, 2018, of \ 1,450 per ordinary share and

\ 1,500 per preferred share, amounting to a total dividend of \ 37,581 million and \ 3,389

million, respectively, and total dividends of share dividends of ordinary shares (3,887,647 shares)

and preferred shares (338,865 shares), amounting to \ 19,438 million and \ 1,694 million,

respectively, are to be proposed to shareholders at the annual general meeting on March 27,

2019. These consolidated financial statements do not reflect this dividend payable.

36. Cash Generated from Operations

Cash generated from operations for the years ended December 31, 2018 and 2017, is as follows:


2018

2017

Profit before income tax

1,319,664,685 1,575,181,329

Adjustments for:

Depreciation

997,963,626 922,158,422

Amortization

693,845,519 586,743,602

Impairment loss

43,380,252 27,043,668

Interest income

(52,662,943) (41,750,775)

Gain on foreign currency transactions (83,121,648) (54,730,033)

Gain on foreign currency translation (70,875,026) (96,849,496)

Gain on derivative instruments

(119,920,338) (121,382,477)

Interest expenses

368,553,636 317,622,467

Loss on foreign currency transactions 131,151,876 32,323,557

Loss on foreign currency translation 81,298,866 77,084,796

Loss on derivative instruments

244,128,405 249,894,774

Gain on disposal of investments in subsidiaries (940,261,188) (2,076,525)

Gain on disposal of assets held for sale (14,814,570) (221,000)

Other impairment loss 3,982,788 33,387,498

Impairment loss on intangible assets 180,690,049 20,852,566

Loss on disposal of property, plant and equipment 50,922,584 44,317,197

Impairment loss on other investments 4,946,648 8,253,499

Share of profit of joint ventures and associates (56,374,317) (86,597,239)

Gain on disposal of investment in associates (19,756,998) (505,917,889)

Impairment loss on investment in associates 35,013,720 17,455,566

Impairment loss on property, plant and equipment 10,822,292 10,954,874

Gain on disposal of available-for-sale financial assets - (355,501,524)

Gain on disposal of financial assets at fair value (19,088,350) -

Impairment loss on available-for-sale financial assets - 20,696,409

Loss on disposal of intangible assets 3,283,128 8,647,366


114


2018

2017

Impairment loss on assets held-for-sale 799,158 12,168,592

Others

23,281,656 30,619,494

Changes in assets and liabilities from operating activities

Increase in trade receivables

(342,664,581) (467,291,045)

Decrease (increase) in other current financial assets

34,751,485 (57,512,608)

Decrease (increase) in advance payments

(76,515,743) 9,266,102

Decrease (increase) in inventories

(418,516,438) 71,667,895

Increase in biological assets

(30,815,305) (10,404,825)

Increase in contract assets (30,249,917) -

Increase in other current assets

(69,245,164) (169,254,631)

Decrease (increase) in other non-current financial assets

(7,457,872) 14,489,917

Increase in other non-current assets (36,327,587) (50,094,573)

Increase in trade payables

19,468,408 297,442,458

Increase (decrease) in non-trade payables

(255,166,411) 265,297,487

Decrease in contract liabilities (5,947,338) -

Increase (decrease) in other current financial liabilities

149,166,562 (55,990,653)

Increase (decrease) in other current liabilities

50,701,681 (110,209,659)

Increase (decrease) in deposits received

3,669,092 (3,081,477)

Increase (decrease) in other non-current financial

liabilities

(22,599,216) 9,718,331

Increase (decrease) in net defined benefit liabilities 30,274,321 (18,006,656)

Increase (decrease) in provisions

993,978 (5,261,359)

Increase in other non-current liabilities

7,823,203 9,578,915

Cash generated from operations

1,818,196,667 2,460,732,336

Significant transactions not affecting cash flows for the years ended December 31, 2018 and



2018

2017

Reclassification of construction in-progress to property,

plant and equipment 1,422,509,674 725,332,482

Non-trade payables related to acquisition of property,

plant and equipment (57,806,742) (5,818,189)

Non-trade payables related to acquisition of intangible

assets 45,366,006 37,866,011

Reclassification of long-term borrowings and debentures

to short-term borrowings 1,598,211,638 1,748,250,107


115

Changes in liabilities arising from financial activities for the year ended December 31, 2018, are

as follows:

Liabilities from financing activities

Total (In thousands of Korean won)

Short-term

borrowings

Current

portion of

long-term

borrowings

and debenture

Long-term

borrowings

and debenture

Deposits

received

At January 1, 2017 (2,882,199,670) (1,350,853,978) (5,563,210,522) (308,884,083) (10,105,148,253)

Cash flows (123,045,999) 1,325,378,267 (2,142,898,195) (12,084,302) (952,650,229)

Changes in foreign currency

translation 132,836,289 46,894,211 192,183,960 1,914,614 373,829,074

Increase from business

combination (55,888,473) (170,000) (117,199,826) - (173,258,299)

Other non-financial changes 8,208,833 (1,424,158,140) 1,356,349,034 (553,336) (60,153,609)

At December 31, 2017 (2,920,089,020) (1,402,909,640) (6,274,775,549) (319,607,107) (10,917,381,316)

Cash flows (846,806,688) 1,275,202,586 (1,765,900,892) 4,790,300 (1,332,714,695)

Changes in foreign currency

translation (27,392,928) (20,162,859) (75,161,807) - (122,717,594)

Increase from business

combination (21,366,925) - (9,745,456) - (31,112,382)

Other non-financial changes (291,052,862) (1,505,705,727) 1,840,983,676 190,037,967 234,263,053

Ending balance (4,106,708,423) (1,653,575,641) (6,284,600,029) (124,778,840) (12,169,662,933)


116

37. Commitments and Contingencies

Payment guarantees provided by the Group as at December 31, 2018 and 2017, are as follows:

(In thousands of Korean won) Financial institution Loan amounts Guarantee amounts

Guarantor Guarantee 2018 2018 2017 2018 2017

Guarantee

period Remark

CJ CheilJedang Corporation Ebara CJ Fresh Foods Inc. The Bank of Yokohama 2,026,360 1,898,220 2,026,360 1,898,220

2018/03/25~ 2019/03/25 Borrowings

CJ Logistics

Corporation Nonghyup Feed Inc. and others

KEB Hana Bank

386,000 586,000 2,000,000 2,000,000 2017/04/18~ 2019/08/02

Performance

guarantee

and others

UTE TSGI KEB Hana Bank 78,676 75,390 78,676 75,390 2018/04/20~ 2019/01/15

Performance guarantee

SINGAPORE AIRLINES KEB Hana Bank 189,023 144,113 189,023 144,113 2018/09/18~ 2019/07/31


FINNAIR CARGO KEB Hana Bank 145,353 139,282 145,353 139,282 2018/03/31~ 2019/03/31


HONG KONG POST KEB Hana Bank 420,380 46,467 420,380 46,467 2017/04/12~ 2021/01/31


DAEWOOENGINEERING&CON

STRUCTION CO., LTD.

KEB Hana Bank

628,450 602,202 628,450 602,202

2017/06/08~ 2019/12/31


CJ SMART CARGO

HONGKONG LTD.

Kookmin Bank

- 1,071,400 - 1,071,400 - Borrowings

MUGUNGHWA TRUST

CO.,LTD.

Seoul Guarantee Insurance

- - 96,695 -

2014/11/21~ 2019/11/19

Joint surety

KKLP Bear PFV Nonghyup Bank and others

93,000,000 - 93,000,000 -

2017/10/31~ 2019/07/30

Conditioned-level debt acquisition

HYUNDAE ENGINEERING CO.,

LTD.


190,629,028 78,239,894 190,629,028 78,239,894

2010/03/01~ 2032/12/31

Performance guarantee and others


117



Guarantee

period Remark

GUNJANG NEW PORT

TERMINAL CO., LTD.

Meritz Investment Bank

75,200,000 - 75,200,000 -

2018/05/31~ 2038/08/31

Performance and payment

guarantee

LeadTree 1st Co.,Ltd. Meritz Investment Bank

20,025,000 - 20,025,000 -

2018/05/31~ 2038/08/31

Capital supplement agreement

BEAR IN THE ZOO PFV CO.,

LTD.

Construction Guarantee

- - 119,020,380 -

2008/12/16~ 2028/11/29

Contract guarantee and others

CJ KOREA

EXPRESS

MALAYSIA SDN.

BHD

IATA and others

United Overseas Bank

- - 60,853 114,315 2017/04/01~ 2019/03/31

Performance guarantee and others

CJ LOGISTICS

CONPAC PTE.

LTD.

PSA Corporation Ltd

United Overseas Bank

- - 116,835 1,344,013 2016/01/01~ 2021/09/30

Performance

guarantee

and others

CJ LOGISTICS ASIA

PTE. LTD. IATA and others

UOB Singapore

- - 1,556,936 59,544 2017/07/01~ 2019/09/02

Performance

guarantee

and others

CJ ENM CO., LTD.

(formerly CJ O

Shopping Co.,

Ltd.)

SHOP CJ NETWORK PRIVATE

LIMITED

Shinhan Bank and one other

- 7,273,200 - 7,273,200 - Borrowings

CJ CGV Co., Ltd. PT. LAYER PERSADA KEB Hana Bank 16,324,260 32,142,000 16,324,260 32,142,000 2018/07/25~ 2019/07/25

Borrowings

CJ Engineering &

Construction Corp Real Property Buyers

Nonghyup Bank

- 5,045,602 - 69,676,430 -

Second payment

loan guarantee


118



Guarantee

period Remark

Mugunghwa Trust Co., Ltd. Seoul Guarantee Insurance - - - 96,695 - Joint

guarantee

Sehan metro co.,Ltd and others

KEB Hana Bank and others

- 174,000,000 - 174,000,000 -

Conditional debt

acquisition

399,052,530 301,263,770 521,518,229 368,923,165

Other than above guarantee types, CJ Logistics Corporation, a consolidated subsidiary, provides joint guarantee with IPOC for Korea Feed

Association and Nonghyup Feed Inc. in relation to the loading and unloading contract with Korea Feed Association and Nonghyup Feed Inc.


119

The Group provided guarantees amounting to \ 52,140 million (2017: \ 72,834 million) in

relation to the loans of employees and directors from financial institutions.

The payment guarantees provided to the Group are as follows:

(in thousands of Korean won)

Guaranteed by

Guarantee amounts Remark

CJ CheilJedang Corporation Seoul Guarantee Insurance

3,174,699 Performance guarantees

Korea Trade Insurance Corporation

56,987,390

Export insurance

CJ Freshway Corporation Woori Bank

1,500,000 Performance guarantees

Seoul Guarantee Insurance 30,500,790 Performance guarantees

KB Kookmin Bank 5,590,500 Payment gurantees

CJ Foodville Corp. Seoul Guarantee Insurance 6,025,000 Payment gurantees

KEB Hana Bank 3,523,000 Payment gurantees

CJ Hello Co., Ltd. Seoul Guarantee Insurance 39,936,238 Performance guarantees

CJ Logistics Corporation Seoul Guarantee Insurance 313,839,603 Performance guarantees

Korea Integrated Freight Terminal Co., Ltd.


19,011,030

Performance guarantees

KB Kookmin Bank 389,976 Performance guarantees

CJ Powercast Inc.

Seoul Guarantee Insurance and others

38,788,202


MARS CINEMA, TOURISM AND SPORTS FACILITIES MANAGEMENT INC.

IS BANK and others

13,351,948


CJ E&M Corporation (formerly, CJ O Shopping Co., Ltd.)

KB Kookmin Bank

3,000,000


Seoul Guarantee Insurance 29,493,320 Performance guarantees

Woori Bank 13,500,000 Performance guarantees

Mezzomedia Inc. Seoul Guarantee Insurance 16,120,330 Payment gurantees

Woori Bank 9,696,900 Payment gurantees

KEB Hana Bank 2,690,000 Payment gurantees

CJ OliveNeworks Co., Ltd. Seoul Guarantee Insurance 66,727,000 Performance guarantees

Other

Seoul Guarantee Insurance and others

4,110,796

Performance guarantees and others

677,956,722


120

Details of collateral provided by the Group as at December 31, 2018 and 2017, are as follows:


Secured assets Book

amount Secured amount

Related line item

Related amount Provided by

CJ Freshway Corporation Property, plant and equipment and others

28,243 25,950 Borrowings and others

6,450

Kookmin Bank and

others

CJ Seafood Corporation Property, plant and equipment and others

39,903 4,355

Borrowings

4,000

National Federation of Fisheries Cooperatives

Wonji Co., Ltd. Property, plant and 31,303 22,000 Borrowings 15,138 Kookmin Bank

CJ Hello Co., Ltd. equipment and others 6,907 4,726

Trade payables

4,726

SAMSUNG ELECTRONICS CO,.LTD

CJ Telenix Co., Ltd. Property, plant and 6,147 19,500 Borrowings 6,500 Woori Bank

CJ Logistics Corporation Property, plant and equipment and others

621,068 269,486 Borrowing

212,187 Korea Development Bank and others

Financial assets 18,478 19,352

Borrowing

12,754

Construction Guarantee Cooperative and others

Treasury shares 9,530 13,063 Borrowing

12,209 Seoul Regional Postal

Administration

Investment property 5,664 3,814 Borrowing

3,563 Construction Guarantee Cooperative

Korea Integrated Freight Terminal Co., Ltd

Intangible assets 171,556 253,200 Borrowing

168,013 Korea Development Bank

CJ Korea Express Busan Newport Distripark Co., Ltd.

Property, plant and equipment and others

19,069 20,901

Borrowing

5,687

Woori Bank


13,518 6,360 Borrowing

2,918 NongHyup Bank

CJ JAPAN CORP. Property, plant and equipment and others

9,840 7,376 Borrowing

4,541 Shinhan Bank Japan and others

CJ JAPAN CORP. Investment property 51,659 38,724 Borrowing

23,843 Shinhan Bank Japan

and others CJ LOGISTICS ASIA PTE.

LTD. Property, plant and equipment and others

17,166 32,731 Borrowing

24,046 OVERSEA

SAM HAE COMMERCIAL CO., LTD.


10,381 14,260 Borrowing

8,005 Woori Bank and others

CJ FOODVILLE (ZHEJIANG) CO., LTD.


21,585 16,964 Borrowing

7,161 BANK OF CHINA

Others Financial assets 2,823 2,609 Borrowing and

others

83 KEB Hana Bank and others


28,707 14,885 Borrowing and

others

8,387 INDUSTRIAL BANK OF

KOREA and others

1,113,547 790,256 530,211


Secured assets Book

amount Secured amount

Related line item

Related amount Provided by

CJ Logistics Corporation Property, plant and equipment and others

136,152 198,000 Borrowings



Borrowings

14,432


Korea Integrated Freight Terminal Co., Ltd


179,435 253,200 Borrowings


CJ Freshway Corporation Property, plant and 16,087 19,500 Borrowings - Kookmin Bank


121

equipment and others

Financial assets 200 200

-

-

Agriculture Cooperative Livestock Marketing Inc.

CJ Engineering & Construction Corp.

Inventories - 255,060

Non-trade payables

76

Daewoo Engineering and Construction Co., Ltd


Borrowings

10,220

Construction Guarantee Cooperative and others

Investment property 11,416 8,332 Borrowings

6,502 Construction Guarantee Cooperative


190,273 33,348 Borrowings

18,498 KEB Hana Bank and

others

CJ Seafood Corporation Property, plant and equipment and others

40,445 4,355

Borrowings

4,000


Youngwoo Frozen Foods Co., Ltd.



9,800 Kookmin Bank

CJ Korea Express Busan Newport Distripark Co., Ltd.


19,690 20,901

Borrowings

6,487 Woori Bank

CJ LOGISTICS ASIA PTE. LTD.



23,127 United Overseas Bank

Wonji Co., Ltd. Property, plant and equipment and others


11,688 Kookmin Bank

CJ Japan Corp. Investment property 46,835 69,796 Borrowings 54,986 KEB Hana Bank



11,262 KEB Hana Bank

Korea Express SB Co., Ltd.



3,532 Woori Bank


Financial assets 18,329 18,329 Borrowings

13,707 KEB Hana Bank

CJ Telenix Co., Ltd. Property, plant and equipment and others


6,500 Woori Bank

Others Financial assets 13,363 13,266 Borrowings and others

13,951

Korea Development Bank and others


12,800 9,102

Borrowings and others

6,342

National Federation of Fisheries

Cooperatives and others

797,778 1,028,561 542,586

As at December 31, 2017, CJ Engineering & Construction Corp., a consolidated subsidiary,

entered into land management trust contract with Korea Trust Co., Ltd. in relation to the new

apartment housing construction, and is providing the land and building as collateral to Daewoo

Engineering and Construction Co., Ltd. for the construction fund.


122

Loan agreements with financial institutions as at December 31, 2018 and 2017, are as follows:

Maximum loan limit


Bank overdraft 438,806 443,786

Discount note agreement 615,000 397,000

General loans 7,359,465 6,904,886

Import letter of credit 1,694,631 1,478,607

Other loans for facilities 1,066,660 636,968

DA negotiation agreements 17,890 52,499

As at December 31, 2018, the Group has entered into corporate purchase card agreements of up

to \ 529,893 million (2017: \ 670,854 million) with Woori Bank and nine other financial

institutions.

As at December 31, 2018, the Group is involved in 210 legal claims as the plaintiff and 199 legal

claims as the defendant, and proceedings amount to \ 116,767 million (2017: \ 164,520 million)

and \ 113,801 million (2017: \ 73,048 million), respectively. The Group's management believes

that, although the outcome of these cases is uncertain, the ultimate resolution of these cases will

not have a material adverse effect on the operations or financial position of the Group.

CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.), a consolidated subsidiary, determined to

provide cash investments in equal installments to GMM CJ O Shopping Company Ltd., a joint

venture, with the approval of the Board of Directors.

CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.), a consolidated subsidiary, has a call

option to purchase all residual shares of Artworks Korea from its former major shareholder after

July 3, 2022. Also, the former major shareholder of Artworks Korea has a put option to sell all

residual shares to the Company. The exercise price of the option is the fair value of shares at the

exercise date.

CJ ENM CO., LTD. (formerly, CJ O Shopping Co., Ltd.), a consolidated subsidiary, entered into a

total return swap contract with Bangsawan Capital Limited, the underwriting company of

convertible notes issued by K Valley Co., Ltd. (par value: JPY 3,055 million). This contract

includes settling the difference arising from the changes in fair value if the convertible notes are

sold to third parties five years after the issue date of convertible notes.

CJ CGV Co., Ltd., a consolidated subsidiary, entered into a total return swap contract with non-

controlling shareholders of Bosphorus Investment Co., Ltd. This contract includes settling the

difference arising from the changes in fair value if the shares of Bosphorus Investment Co., Ltd.

owned by its non-controlling shareholders are sold to third parties. Losses on valuation of

derivatives amounting to \ 177,577 million were recognized during the year ended December 31,

2018, in relation to changes in fair value.

The Group entered into a total return swap contract with Hana Financial Investment Co., Ltd., the

underwriting company of convertible notes issued by CJ Foodville Corp., a consolidated

subsidiary (par value: \ 50 billion). This contract includes settling the difference arising from the


123

changes in fair value if the convertible notes are sold to third parties five years after the issue date

of convertible notes.

The Group entered into total return swap with NH INVESTMENT & SECURITIES CO.,LTD., the

underwriting company of shares of which Logistics Corporation (529,104 shares) acquired in the

course of merger between CJ Logistics Corporation and CJ Engineering & Construction Corp.

This contract includes settling the difference arising from the changes in fair value if the shares

are sold to third parties three years after the trade date of shares. Gains on valuation of

derivatives amounting to \18,783 million were recognized during the year ended December 31,

2018, in relation to changes in fair value.

CJ CGV Co., Ltd., a consolidated subsidiary, has entered into agreements to purchase

transferred a leasehold deposit amounting to \ 198,600 million at fair value in August 30, 2021 in

accordance with a leasehold deposit transfer agreement with JB CULTUREPLEX Private Special

Asset Fund No. 2. In order to hedge the risk of changes in the fair value of the leasehold deposit

upon repurchase, the rate forward transaction was concluded. As at December 31, 2018, gain on

valuation related to unsettled rate forward amounting to \5,253 million is recognized as finance

income in the financial statements of other comprehensive income.

CJ Freshway Corporation, a consolidated subsidiary, has entered into a trust agreement with NH

Investment & Securities Co., Ltd. for the sale of real estate held by CJ Freshway Corporation with

F&D Infra Co., Ltd. as a beneficiary. At the same time, CJ Freshway Corporation entered into a

lease agreement with NH Investment & Securities Co., Ltd. for trust assets. The trust agreement

will be automatically extended for a three-year term, and CJ Freshway Corporation has entered

into a contract with a pre-emption right to purchase the beneficiary's rights at the fair value at the

maturity of trust agreement or when a reason of disposal occurs.

As at December 31, 2018, CJ Freshway Corporation, a consolidated subsidiary, has entered into

an agreement with Securitization Specialty Company to transfer the right to collect held trade

receivables for up to \ 40 billion.

K Valley Co., Ltd., a consolidated subsidiary, transferred right of the registration of ownership

transfer to Korea Trust Co., Ltd. and KOREA ASSET IN TRUST Co., Ltd, respectively, to

securitize land held. And then, the trust company issued Type 1 certificates of beneficiary right

with right of the registration of ownership transfer as underlying assets. Kiwoom Partners 2nd Co.,

Ltd. and Kiwoom Partners 3rd Co., Ltd. issued asset-backed securities with the certificates of

beneficiary right as underlying assists by acquiring the Type 1 certificates of beneficiary right.


124

38. Business Combinations

In 2018, CJ CheilJedang Corporation, a consolidated subsidiary, acquired SAM HAE

COMMERCIAL CO., LTD.

In 2018, CJ Logistics Corporation, a consolidated subsidiary, acquired CJ GEMADEPT

LOGISTICS HOLDINGS COMPANY LIMITED and its subsidiaries, CJ GEMADEPT SHIPPING

HOLDINGS COMPANY LIMITED and its subsidiaries, and DSC LOGISTICS, LLC.

In 2018, CJ AMERICA INC., a consolidated subsidiary, acquired KAHIKI FOODS, INC.

The following table summarizes the consideration paid for business combinations, the fair value of

assets acquired and liabilities assumed at the acquisition date:


SAM HAE

COMMERCIAL

CO., LTD.

CJ GEMADEPT

LOGISTICS

HOLDINGS

COMPANY

LIMITED and its

subsidiaries

CJ GEMADEPT

SHIPPING

HOLDINGS

COMPANY

LIMITED and its

subsidiaries

KAHIKI FOODS,

INC.

DSC

LOGISTICS,

LLC

Purchase consideration 73,096,156 59,698,547 30,114,497 67,791,582 269,745,033

Cash 62,164,898 59,698,547 30,114,497 67,791,582 239,974,169

Purchase consideration

payables

10,931,258 - - - 29,770,864

Recognized amounts of

identifiable assets

acquired and liabilities

assumed

Cash and cash

equivalents

28,001 6,986,468 2,638,439 1,441,158 12,812,561

Trade and other

receivables

10,566,241 11,965,883 6,292,183 6,005,323 94,498,454

Inventories 30,396,395 31,215 - 6,307,124 -

Property, plant and

equipment

18,380,569 20,304,140 7,633,887 13,624,073 56,982,340

Intangible assets 16,828,797 21,867,280 3,163,046 26,159,158 64,318,305

Other current assets 802,158 3,589,797 1,034,464 294,849 10,143,697

Other non-current

assets

5,062,317 4,541,843 1,101,006 147,535 2,199,520

Trade and other

payables

5,950,958 11,425,864 3,659,528 3,784,472 68,846,240

Borrowings 30,390,000 23,598,306 - - -

Post employment

benefit obligations

52,237 - - - -

Deferred tax liabilities 4,246,278 2,764,254 635,090 - 26,689,089

Other current liabilities 1,216,357 6,225,067 4,435,983 500,129 15,200,827

Other non-current

liabilities

- 158,325 - - 10,892,225

Net identifiable assets

acquired

40,208,648 25,114,810 13,132,424 49,694,619 119,326,496

Non-controlling interests1 - (12,331,372) (6,697,536) - -


125

Goodwill 32,887,508 46,915,109 23,679,609 18,096,963 150,418,537

73,096,156 59,698,547 30,114,497 67,791,582 269,745,033

1

Non-controlling interests were measured by applying proportionate interest to the acquiree’s

identifiable net assets.

In 2017, CJ CheilJedang Corporation, a consolidated subsidiary, acquired CJ SELECTA S.A..

In 2017, CJ Logistics Corporation, a consolidated subsidiary, acquired CJ DARCL LOGISTICS

LIMITED and its subsidiaries and CJ LOGISTICS MIDDLE EAST FZE, a consolidated subsidiary,

acquired CJ ICM FZCO and its subsidiaries.

The following table summarizes the consideration paid for business combinations, the fair value of

assets acquired and liabilities assumed at the acquisition date:


CJ SELECTA S.A.

CJ ICM FZCO and its subsidiaries

CJ DARCL LOGISTICS LIMITED and its subsidiaries

Purchase consideration 268,489,916 78,548,267 57,778,364

Cash 268,489,916 78,548,267 57,778,364

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents 18,780,219 8,111,510 21,190,037

Trade and other receivables 31,027,591 50,106,015 63,050,200

Inventories 128,395,427 4,866,501 137,345

Property, plant and equipment 127,794,281 19,397,116 27,699,765

Intangible assets 54,306,899 10,581,102 14,648,841

Other current assets 26,436,355 1,109,707 15,054,162

Other non-current assets 25,177,817 182,920 8,684,815

Trade and other payables 38,262,374 47,712,038 9,875,890

Borrowings 166,153,504 5,959,730 59,531,545

Post employment benefit obligations 939,047 2,038,015 -

Deferred tax liabilities 20,921,705 1,321,639 6,174,927

Other current liabilities 94,035,556 1,266,377 8,737,918

Other non-current liabilities 1,333,751 - 815,343

Net identifiable assets acquired 90,272,652 36,057,072 65,329,542

Non-controlling interests1 (141,025,564) (15,986,350) (31,796,202)

Goodwill 319,242,827 58,477,545 24,245,024

268,489,916 78,548,267 57,778,364

1 In the business combination with CJ SELECTA S.A., non-controlling interests were measured at

fair value and non-controlling interests in other business combination were measured by applying

proportionate interest to the acquiree’s identifiable net assets.


126

39. Related Party Transactions

Significant transactions with related parties for the years ended December 31, 2018 and 2017,

and the related receivables and payables as at December 31, 2018 and 2017, are as follows:

2018 2017 2018 2017

(In thousands of Korean won) Sales Purchases

1 Sales Purchases

1 Receivables Payables Receivables Payables

Joint ventures and associates

Gumbo D.D.F Co., Ltd. 1,838,345 2,224,998 1,724,877 1,518,991 - 190,190 - 142,671

Bukil & FreshOne Co., Ltd. 1,584,232 178 3,152,511 498 3,499,340 - 3,493,180 -

WORLDISTOUR CO., LTD (formerly, (CJ Worldis Co., Ltd. ) 2,401,054 184,532 2,926,253 217,490 141,436 3,271,861 100,710 2,785,684

Incheon North Port Bulk Terminal Co., Ltd. 4,584,401 4,610,297 6,664,898 5,996,405 40,663,133 1,538,280 36,220,291 2,010,880

Dong Seok Logistics 460 3,486,462 1,703,615 2,909,501 506 810,387 1,873,977 818,463 Terminal Operating

Co., Ltd. Of Gunsan Port-Pier 7 1,960,198 4,424,177 1,996,770 4,494,592 869,334 242,342 1,228,036 403,286

Ulsan Port Operating Co., Ltd. 876,660 3,648,750 1,107,604 3,826,279 366,104 208,467 416,598 405,987

Terminal Operating Co., Ltd. of Pohang Port-Pier 8 - 4,835,496 - 4,550,319 1,656 261,175 1,146 389,885

Terminal Operating Co., Ltd. of Pohang Yeongilman Port 423,685 2,223,952 451,976 3,221,454 2,595,418 118,069 3,044,872 501,235

DAESAN PORT OPERATING CO.,LTD 300,268 3,123,835 158,397 3,519,501 1,190,851 253,052 1,345,425 322,418

Mokpo International Ro-Ro Terminal Co., Ltd. 89,670 2,584,932 47,745 1,523,799 7,355 183,280 6,390 91,464

Kumho Industrial Co., Ltd. 699,775 6,000 726,180 51,192 12,151,902 - 11,749,896 3,300


3 13,913,262 1,120,141 11,517,979 1,797,551 2,888,505 207,998 3,831,815 424,782

Art Service Co., Ltd. 1,341,076 1,881,922 1,875,736 2,850,383 470,947 - 1,150,145 - Cinema Service Co.,

Ltd. - - - - 2,604,598 - 4,048,378 - Cable TV VOD Co.,

Ltd. 3,219,710 25,417,258 1,016,841 26,691,229 765,931 2,696,363 338,869 3,107,074 Netmarble

Corporation (formerly, Netmarble Games Corporation) 2,350,869 - 3,667,049 1,981 592,223 - 9,778 228,963

PHIL-KOR HOLDINGS CO., INC. - 36,389 - 3,278 2,241,080 - 2,291,344 -

PT. CJ PIA 1,521,713 3,677,699 1,782,895 3,221,668 2,775,167 71,959 3,500,665 - DARBY-CJ

GENETICS CO., LTD. 1,256,014 3,140,966 1,471,859 3,631,803 - 294,704 193,671 395,354

EBARA CJ FRESH FOODS INC. 8,568,653 4,059,567 7,892,258 - 1,466,078 225,685 1,397,762 -

Shanghai SMG-CJ Home Shopping Co., Ltd. - 17,059 4,357,815 - 194,442 - 978,592 -

SHANGHAI INCHON INTERNATIONAL FERRY CO., LTD. - - - - 2,606,904 - - -

ACJ O SHOPPING CORPORATION 8,729,302 39,804 10,444,119 53,256 2,494,561 18,594 2,476,583 10,458

CJ INTERNATIONAL ASIA PTE. LTD. 281,495,992 726,619,072 102,189,986 824,351,631 5,077,843 19,582,047 2,396,754 13,271,674

CJ XINGXING(TJ) INTERNATIONAL CINEMA CO., LTD. 71,597 38,724 142,445 133,437 39,373 3,618,060 59,849 2,735,809


127

2018 2017 2018 2017

(In thousands of Korean won) Sales Purchases

1 Sales Purchases

1 Receivables Payables Receivables Payables

BEIJING CJ XINGXING INTERNATIONAL CINEMA 157,173 65,188 187,191 359,127 17,860 4,056,628 32,808 2,985,515

MP CJ O SHOPPING SDN. BHD. 4,246,356 70,781 2,878,043 - 2,081,017 - 1,584,528 -

SAMHAE-YAMAKO CO., LTD - - - - 3,230,101 - - -

HyeongjeFood Co.Ltd

2 2,955,398 3,466 5,373,461 37,081 - - 2,147,057 4,703

Inchon Inter Terminal CO.,LTD. 6,008,129 4,303,910 - - 3,646,462 1,717,547 - -

Gwangyang West Container Terminal Co., Ltd. 4,190,887 5,639,419 - - 4,670,522 3,247,873 - -

Others 5,210,644 4,832,521 5,346,005 4,745,917 2,732,390 4,745,959 2,851,699 4,229,992

359,995,523 812,317,495 180,804,508 899,708,363 102,083,039 47,560,520 88,770,818 35,269,597

Other related parties

JOY Rent a Car Co., Ltd. 82,133 4,939,934 83,490 8,926,169 - - 3,609 706,143

SG Safety Corporation

4 1,581,858 14,130,328 2,024,204 20,790,218 329,558 147,611 197,361 2,422,020

Others 1,607,880 - 955,603 36 10,276 - 24,057 -

3,271,871 19,070,262 3,063,297 29,716,423 339,834 147,611 225,027 3,128,163

363,267,394 831,387,757 183,867,805 929,424,786 102,422,873 47,708,132 88,995,845 38,397,760

1 Acquisition of property, plant and equipment, and intangible assets amounting to \ 402 million

(2017: \ 927million) are included under purchases.

2 It was reclassified to a consolidated subsidiary due to the Group’s acquisition of additional

equity shares in 2018.

3 Although the entity is not a related party of the Group in accordance with Korean IFRS 1024, the

Group as well as the entity belongs to the Large Enterprise Group in accordance with the

Monopoly Regulation and Fair Trade Act.

4

Purchase price of manpower security guard business acquired from SG Safety Corporation is

included in purchase and others in 2018.


128

Fund transactions with related parties for the years ended December 31, 2018 and 2017 are as

follows:


Loan transactions Borrowing transactions

Equity

contributions

in cash

Dividend

income /

capital

reduction

Dividend

payment

Loans and

others Collection Borrowings Repayments


TWI Agrifood Investment Association - - - - 2,800,000 - -

Inchon Inter Terminal CO.,LTD. - - - - 7,140,000 - - SHOP CJ NETWORK PRIVATE LIMITED - - - - 9,358,883 - -

THUONG TIN - CJ CAU TRE COMPANY LIMITED - - - - 1,723,800 - -

Netmarble Corporation (formerly, Netmarble Games Corporation) - - - - - 6,739,200 -

UNION PICTURE VENTURE INVESTMENT - - - - - 3,333,000 -

UNION GLOBAL CONTENTS INVESTMENT - - - - - 3,500,000 -

ALS BAC NINH COMPANY LIMITED - - - - - 1,081,101 -

SHANGHAI INCHON INTERNATIONAL FERRY CO., LTD. - - - - - 2,606,904 -

BEIJING CJ XINGXING INTERNATIONAL CINEMA - - 1,020,057 - - - -

Others 415,554 764,987 1,272,982 - 298,410 3,231,121

Other related parties -

Executives and others - - - - - - 22,433,624


Loan transactions Borrowing transactions

Equity

contributions

in cash

Dividend

income /

capital

reduction

Dividend

payment

Loans and

others Collection Borrowings Repayments


Shop CJ Network Private Limited - - - - 6,081,277 - - TELEVISA CJ GRAND, S.A. DE C.V. 4,222,883 - - - 1,074,400 - -

Incheon South Terminal Operation Company - - - - - 1,520,000 -

TWI Agrifood Investment Association - - - - 1,600,000 - -

PT CJ FOODVILLE INDONESIA - - - - 3,780,700 - -

Jellyfish Entertainment Co., Ltd.1 - 1,800,000 - - 1,929,395 - -

ALS BAC NINH COMPANY LIMITED - - - - - 1,132,060 -

Shanghai SMG-CJ Home Shopping Co., Ltd. - - - - - 26,049,120 - SHANGHAI-INCHON INTERNATIONAL FERRY CO., LTD. - - - - - 2,362,946

MYANMAR CINEPLEX CO., LTD. - - - - 1,797,549 - -

Others - - - - 634,799 6,027,007 -

Other related parties

Executives and others - - - - - - 21,074,544

1In 2017, it was transferred to a consolidated subsidiary.


129

Payment guarantees provided by the Group as at December 31, 2018 and 2017, are as follows:


Financial

institution Loan amounts Guarantee amounts


Guarantee

period Remark

CJ CheilJedang

Corporation

EBARA CJ FRESH

FOODS INC.

The Bank of

Yokohama 2,026,360 1,898,220 2,026,360 1,898,220

2018/03/25~

2019/03/25 Borrowings

CJ Logistics

Corporation Gun Jang new port

Meritz Investment

Bank 75,200,000 - 75,200,000 -

2018/05/31~

2038/08/31 Borrowings

CJ ENM CO.,

LTD. (formerly,

CJ O Shopping

Co., Ltd.)

SHOP CJ NETWORK

PRIVATE LIMITED

Shinhan Bank one

other

- 7,273,200 - 7,273,200 - Borrowings

77,226,360 9,171,420 77,226,360 9,171,420

Key management includes directors (executive and non-executive). The compensation paid or

payable to key management for employee services for the years ended December 31, 2018 and

2017, consists of:


2018

2017

Short-term employee benefits

19,089,082 17,984,125

Long-term employee benefits1

3,221,133 295,080

Post-employment benefits

6,483,138 7,231,112

28,793,353 25,510,317

1 Long-term employee benefits include long-term incentive plans. Long-term incentive is paid

based on the performance of executives.


130

40. Operating Segment Information

The Group’s reportable segments and details are as follows:

The Group has segregated the operating segments based on characters of services and products

generating profits. The main operating segments include food & food services, bio & pharma,

homeshopping & logistics, entertainment & media and infrastructure.

The chief operating decision maker has been identified as the Management Committee. The

Management Committee is responsible for making strategic decisions based on review of the

Group’s internal reporting. The Management Committee has determined the operating segments

based on these reports.

Operating segment information for the years ended December 31, 2018 and 2017, are as follows:

2018

(In millions of Korean won) Revenue

Inter-segment

revenue

Revenue from

external

customers

Depreciation

and

amortization

Operating

profit

Food & food service 10,644,678 (2,050,153) 8,594,525 277,217 379,416

Bio & pharma 7,355,954 (2,356,663) 4,999,291 239,872 258,881

Homeshopping & logistics 13,486,858 (2,469,579) 11,017,279 461,465 425,288

Entertainment & media 5,632,278 (733,409) 4,898,869 681,377 278,317

Infrastructure 138,409 (124,938) 13,471 3,945 43,470

Consolidation adjustments (7,734,742) 7,734,742 - 32,311 (52,897)

29,523,435 - 29,523,435 1,696,187 1,332,475

20171


Inter-segment

revenue

Revenue from

external

customers

Depreciation

and

amortization

Operating

profit

Food & food service 10,030,961 (1,836,512) 8,194,449 282,125 334,742

Bio & pharma 6,489,667 (1,743,473) 4,746,193 214,493 243,097

Homeshopping & logistics 11,560,387 (2,123,076) 9,437,311 234,115 491,149

Entertainment & media 5,125,039 (616,240) 4,508,799 748,612 251,282

Infrastructure 131,668 (119,821) 11,848 3,714 38,000

Consolidation adjustments (6,439,122) 6,439,122 - 30,927 (32,315)

26,898,600 - 26,898,600 1,513,986 1,325,955

1In 2018, the Group changed business from infrastructure to homeshopping & logistics due to

merger between CJ Logistics Corporation (homeshopping & logistics) and CJ Engineering &

Construction Corp (infrastructure), and restated comparative operating segment for the prior year.


131

Regional segment information as at and for the years ended December 31, 2018 and 2017, are

as follows:

2018


Inter-segment

revenue

Revenue from

external

customers

Non-current

assets

Domestic 25,609,184 (4,637,113) 20,972,071 12,706,059

Asia 8,522,110 (2,535,727) 5,986,383 3,652,542

America 2,459,797 (499,236) 1,960,561 968,759

Others 667,086 (62,666) 604,420 193,589

Consolidation adjustments (7,734,742) 7,734,742 - 2,397,345

29,523,435 - 29,523,435 19,918,294

2017


Inter-segment

revenue

Revenue from

external

customers

Non-current

assets

Domestic 23,742,544 (4,005,523) 19,737,021 12,065,218

Asia 7,336,530 (1,952,819) 5,383,711 3,558,045

America 1,590,113 (420,345) 1,169,768 720,021

Others 668,535 (60,435) 608,100 242,342

Consolidation adjustments (6,439,122) 6,439,122 - 1,703,546

26,898,600 - 26,898,600 18,289,172

There is no customer who contributes at least 10% of the total sales of the Group for the years

ended December 31, 2018 and 2017.


132

41. Information About Non-controlling Interests

41.1 Changes in Accumulated Non-controlling Interests

The profit or loss allocated to non-controlling interests and accumulated non-controlling interests

of subsidiaries that are material to the Group for the years ended December 31, 2018 and 2017,

are as follows:

(in thousands of 2018

Korean won)

Percentage of

non-

controlling

interests (%)

Accumulated

non-

controlling

interests at

the beginning

of the year

Profit or loss

allocated to

non-

controlling

interests

Dividends paid to non-controlling interests

Increase due to

business

combination

Others

Accumulated

non-controlling

interests at the

end of the year

CJ CheilJedang

Corporation and CJ

Logistics Corporation

54.36 4,584,133,169 538,952,098 (51,092,417) 52,601,663 362,910,438 5,487,504,951

CJ Freshway Corporation 52.89 147,011,077 9,616,344 (4,128,675) 3,066 (2,281,182) 150,220,630

CJ ENM CO., LTD.

(formerly, CJ O

Shopping Co., Ltd.)

55.24 2,411,556,430 160,953,434 (19,136,413) 3,751,521 (441,926,625) 2,115,198,347

CJ CGV Co., Ltd. 60.98 584,457,123 (152,709,328) (9,720,993) 57,564 18,926,925 441,011,291

(in thousands of 2017

Korean won)

Percentage of

non-

controlling

interests (%)

Accumulated

non-

controlling

interests at

the beginning

of the year

Profit or loss

allocated to

non-

controlling

interests

Dividends paid to non-controlling interests

Increase due to

business

combination

Others

Accumulated

non-controlling

interests at the

end of the year

CJ CheilJedang

Corporation and CJ

Logistics Corporation

62.28 4,454,357,068 285,270,015 (40,869,133) 91,162,038 (205,786,819) 4,584,133,169

CJ Freshway Corporation 52.89 151,167,120 207,363 (3,659,009) - (704,397) 147,011,077

CJ ENM CO., LTD.

(formerly, CJ O

Shopping Co., Ltd.)

58.76 910,387,341 84,704,854 (11,533,456) 1,780,921 (9,956,065) 975,383,595

CJ CGV Co., Ltd. 60.98 684,608,722 9,485,816 (9,440,184) 13,200,160 (113,397,391) 584,457,123

CJ E&M Corporation 60.48 1,002,024,931 264,418,559 (4,665,231) 7,562,635 166,831,941 1,436,172,835

41.2 Summarized Financial Information of Subsidiaries

Set out below is summarized financial information for each subsidiary that has non-controlling

interests that are material to the Group. The amounts disclosed for each subsidiary are before

inter-company eliminations.


133

Summarized consolidated statements of financial position as at December 31, 2018 and 2017,

are as follows:

2018


won)

Current

assets

Non-current

assets

Current

liabilities

Non-current

liabilities Equity

CJ CheilJedang

Corporation 5,522,437,502 13,974,585,382 6,680,407,860 5,508,402,934 7,308,212,090

CJ Freshway Corporation 467,895,070 449,449,464 567,260,322 97,215,937 252,868,275

CJ ENM CO., LTD.

(formerly, CJ O Shopping

Co., Ltd.) 1,806,584,959 4,948,363,305 2,021,789,391 1,307,510,563 3,425,648,310

CJ CGV Co., Ltd. 497,032,022 1,737,153,970 862,838,174 821,067,138 550,280,680

2017


won)

Current

assets

Non-current

assets

Current

liabilities

Non-current

liabilities Equity

CJ CheilJedang

Corporation 4,963,468,349 11,904,655,546 5,496,914,149 5,227,356,411 6,143,853,335

CJ Freshway Corporation 506,604,901 396,036,911 512,847,862 154,317,132 235,476,818

CJ ENM CO., LTD.

(formerly, CJ O Shopping

Co., Ltd.) 663,963,697 2,137,854,757 731,532,024 586,182,330 1,484,104,100

CJ CGV Co., Ltd. 457,608,512 2,002,492,334 868,351,549 814,086,736 777,662,561

CJ E&M Corporation 1,279,699,295 2,479,220,690 823,683,931 686,535,285 2,248,700,769

Summarized consolidated statements of comprehensive income for the years ended December

31, 2018 and 2017, are as follows:

2018

(In thousands of Korean won) Sales

Profit (loss)

Other

comprehensive

income

Total

comprehensive

income

CJ CheilJedang Corporation 18,670,059,989 925,388,625 (36,329,758) 889,058,867

CJ Freshway Corporation 2,828,072,307 16,703,749 10,268,583 26,972,332

CJ ENM CO., LTD. (formerly,

CJ O Shopping Co., Ltd.) 3,426,817,049 184,218,974 (50,563,402) 133,655,572

CJ CGV Co., Ltd. 1,769,356,467 (188,541,087) (171,594,262) (360,135,349)


134

2017

(In thousands of Korean won) Sales

Profit

Other

comprehensive

income

Total

comprehensive

income

CJ CheilJedang Corporation 16,477,174,023 412,797,743 (465,141,292) (52,343,549)

CJ Freshway Corporation 2,504,409,846 1,210,149 (1,107,107) 103,042

CJ ENM CO., LTD. (formerly,

CJ O Shopping Co., Ltd.) 2,260,006,796 143,441,966 (1,494,052) 141,947,914

CJ CGV Co., Ltd. 1,714,387,173 10,036,369 (154,231,623) (144,195,254)

CJ E&M Corporation 1,750,120,615 421,948,666 2,345,004 424,293,670

Summarized consolidated statements of cash flows for the years ended December 31, 2018 and


2018


CJ CheilJedang

Corporation

CJ Freshway

Corporation

CJ ENM CO., LTD.

(formerly, CJ O

Shopping Co., Ltd.)

CJ CGV Co., Ltd.

Cash flows from operating

activities 471,425,123 57,682,209 662,328,447 108,733,820

Cash flows from investing

activities (1,034,629,208) (51,893,514) (234,016,699) (43,419,704)

Cash flows from financing

activities 520,965,345 (34,647,637) (88,904,581) (5,798,170)

Net increase (decrease) in cash

and cash equivalents (42,238,740) (28,858,942) 339,407,167 59,515,946

Cash and cash equivalents at the

beginning of the year 590,855,644 54,719,432 114,276,457 132,572,271

Effects of exchange rate changes

on cash and cash equivalents (1,042,637) 108,252 (282,316) (6,755,504)

Cash and cash equivalents at the

end of the year 547,574,267 25,968,742 453,401,308 185,332,713

2017


CJ CheilJedang

Corporation

CJ Freshway

Corporation

CJ ENM CO.,

LTD. (formerly,

CJ O Shopping

Co., Ltd.)

CJ CGV

Co., Ltd.

CJ E&M

Corporation

Cash flows from operating activities 1,180,837,049 23,395,608 330,007,005 194,342,877 239,177,535

Cash flows from investing activities (1,463,909,010) (33,519,084) (256,435,876) (285,906,362) (551,038,162)

Cash flows from financing activities 265,353,628 53,294,547 (61,847,644) 36,044,805 358,333,349

Net increase (decrease) in cash and cash equivalents (17,718,333) 43,171,071 11,723,485 (55,518,680) 46,472,722

Cash and cash equivalents at 644,362,506 12,415,609 103,226,351 199,522,589 81,265,028


135

the beginning of the year Effects of exchange rate

changes on cash and cash equivalents (35,788,529) (867,248) (673,379) (11,431,638) (3,121,650)

Cash and cash equivalents at the end of the year 590,855,644 54,719,432 114,276,457 132,572,271 124,616,100

41.3 Transactions with Non-controlling Interests

Although the effective ratio of shareholdings for certain subsidiaries has changed after additional

acquisition, disposal, and sale and purchase among subsidiaries during the year ended

December 31, 2018, they are still in control by the Parent Company. Accordingly, differences

between considerations of acquisition and disposal and carrying amount of non-controlling

interests amounting to \ 21,406 million (2017: \ 37,429 million increase) are treated as a

increase in equity attributable to owners of the Parent Company.

42. Changes in Accounting Policies

As explained in Note 2, Group has applied Korean IFRS 1109 Financial Instruments and Korean

IFRS 1115 Revenue from Contracts with Customers on January 1, 2018, the date of initial

application. In accordance with the transitional provisions in Korean IFRS 1109 and Korean IFRS

1115, comparative figures for prior reporting period have not been restated. The effect of

retrospective application of the amendments that were not restated are reflected in the beginning

balance of retained earnings and other components of equity as at January 1, 2018.

Certain accounts in the consolidated financial statements as at and for the year ended December

31, 2017, presented herein for comparative purpose, were reclassified to conform to the

December 31, 2018 financial statements presentation. These reclassification have no impact on

the net profit or net assets amount for the prior year.

42.1 Impacts of the changes in accounting policies on the financial statements

The impact on the major line items in statement of financial position at the date of initial

application is as follows:


December 31,

2017 Korean IFRS 1115

Korean IFRS 1109

January 1,

2018

Financial assets at fair value

through profit or loss 53,311 - 104,856 158,167


through other

comprehensive income 284,348 - (69,258) 215,090

Short-term loan receivable 62,483 - (62) 62,421

Trade receivables 3,627,109 (109,564) (36,329) 3,481,216

Contract assets - 170,348 - 170,348

Inventories 1,733,006 947 - 1,733,953

Other current financial 408,190 - (154) 408,036


136

assets

Other current assets 292,950 6,537 - 299,487


assets 632,804 - (21,143) 611,661

Intangible assets 6,039,033 45,990 - 6,085,023

Deferred tax assets 310,655 (17,151) - 293,504

Total assets 29,325,383 97,107 (22,089) 29,400,401

Trade payables 2,034,999 4,859 - 2,039,858

Contract liabilities - 209,561 - 209,561

Other liabilities 1,013,095 (149,810) - 863,285

Provisions 30,335 (12,806) - 17,529

Deferred income tax

liabilities 881,237 140 (671) 880,706

Total liabilities 17,333,214 51,944 (671) 17,384,487

Net assets 11,992,169 45,163 (21,418) 12,015,914

Share capital 157,915 - - 157,915

Share premium 992,994 - - 992,994

Other components of equity (336,475) - (12,793) (349,268)

Retained earnings 3,115,330 10,787 4,508 3,130,625

Non-controlling interest 8,062,405 34,376 (13,134) 8,083,647

Total equity 11,992,169 45,163 (21,418) 12,015,914

42.2 Adoption of Korean IFRS 1109 Financial Instruments

(a) The total impact on the Group’s retained earnings due to classification and measurement of

financial instruments as at January 1, 2018, is as follows:


Notes

Amount

Beginning balance - Korean IFRS 1039 3,115,330

Reclassification of available-for-sale securities to

financial assets at fair value through profit or

loss

(b)(i) 2,615

Reclassification of available-for-sale securities to

financial assets at fair value through other

comprehensive income

(b)(iI) 8,511

Increase in provision for impairment of trade

receivables

(c)(i) (6,533)

Increase in provision for impairment of debt

instruments measured at amortized cost

(c)(ii) (85)

Adjustments to retained earnings from adoption

of Korean IFRS 1109

4,508

Beginning balance of retained earnings -

Korean IFRS 1109

3,119,838

Adjustment to retained earnings from adoption of

Korean IFRS 1115

42.3 10,786

Beginning balance of retained earnings after 3,130,624


137

restatement

(b) Classification and Measurement of Financial Instruments

On the date of initial application of Korean IFRS 1109, January 1, 2018, the Group’s management

has assessed which business models apply to the financial assets held by the Group and has

classified its financial instruments into the appropriate Korean IFRS 1109 categories. The main

effects resulting from this reclassification are as follows:


Fair value

through profit or

loss

Fair value

through other

comprehensive

income Amortized cost Total

Financial assets

– January 1, 2018

Beginning balance – Korean

IFRS 10391 53,311 284,348 6,383,842 6,721,501

Reclassification from

available-for-sale financial

assets to financial assets at

fair value through profit or

loss 90,395 (90,395) - -

Reclassification from loans

and receivables to financial

assets at fair value through

profit or loss 18,187 - (18,187) -

Reclassification from loans

and receivables to financial

assets at fair value through

other comprehensive

income - 21,137 (21,137) -

Beginning balance - Korean

IFRS 11091 161,893 215,090 6,344,518 6,721,501

1 The beginning balance as at January 1, 2018, presented available-for-sale financial assets at

fair value through other comprehensive income, and loans and receivables at amortized cost,

respectively, see the table in (vi) below for details. These reclassifications have no impact on the

measurement categories.


138

The impact on these changes on the Group’s equity is as follows:

(in millions of Korean won) Notes

Effect on

accumulated other

comprehensive

income

Effect on retained

earnings

Beginning balance – Korean IFRS 1039

(i) 81,117 3,115,330

Reclassification from available-for-sale financial assets to financial assets at fair value through profit or loss

(ii) (4,282) 2,615 Reclassification of equity investments that are not held for trading from available-for-sale financial assets to financial assets at fair value through other comprehensive income

(8,511) 8,511

(12,793) 11,126

Beginning balance - Korean IFRS

1109

68,324 3,126,456

(i) Reclassification from available-for-sale to fair value through profit or loss

As at January 1, 2018, financial assets were reclassified from available-for-sale to financial assets

at fair value through profit or loss. They do not meet the criteria to be classified as at amortized

cost in accordance with Korean IFRS 1109, because their cash flows do not represent solely

payments of principal and interest. Related accumulated other comprehensive income of \ 4,282

million were transferred from the available-for-sale financial assets to retained earnings on

January 1, 2018.

(ii) Reclassification of equity investments from available-for-sale to fair value through other


The Group elected to present changes in the fair value of all its equity investments previously

classified as available-for-sale, because these investments are not held for trading, in other

comprehensive income. As a result, assets with a fair value of \193,593 million were reclassified

from available-for-sale financial assets to financial assets at fair value through other

comprehensive income. As at January 1, 2018, as related accumulated other comprehensive

income of \ 69,188 million were not reclassified to profit or loss even though these assets are

disposed of.

(iii) Available-for-sale financial assets classified as fair value through other comprehensive income

Listed and unlisted bonds were reclassified from available for sale to fair value through other

comprehensive income, as the Group’s business model is achieved both by collecting contractual

cash flows and selling of these assets. The contractual cash flows of these investments are solely

principal and interest. As a result, listed and unlisted bonds with a fair value of \ 454 million were

reclassified from available-for-sale financial assets to financial assets at fair value through other


139

comprehensive income on January 1, 2018.

(iv) Reclassification from loans and receivables to financial assets at fair value through profit or

loss

A certain financial assets that were classified as loans and receivables as at December 31, 2017

are reclassified to financial assets at fair value through profit or loss, as the Group’s business

model is achieved by collecting contractual cash flows. As a result, loans and receivables

amounting to \ 18,187 million were reclassified to financial assets at fair value through profit or

loss on January 1, 2018.

(v) Reclassification from loans and receivables to financial assets at fair value through other


A certain financial assets that were classified as loans and receivables as at December 31, 2017

are reclassified to financial assets at fair value through other comprehensive income, as the

Group’s business model is both achieved by collecting contractual cash flows and selling of these

assets. As a result, loans and receivables amounting to \ 21,137 million were reclassified to

financial assets at fair value through other comprehensive income on January 1, 2018.

(vi) Reclassifications of financial instruments on adoption of Korean IFRS 1109

On the date of initial application, January 1, 2018, the financial instruments of the Group with any

reclassifications noted, were as follows:

(in millions of Korean Measurement category Carrying amount

won)

Korean IFRS

1039

Korean IFRS

1109

Korean IFRS

1039 Korean IFRS

1109 Difference

Current financial

assets

Cash and cash

equivalents Loans and

receivables Amortized costs

1,219,548 1,219,548 -

Short-term financial

instruments Loans and


433,707 433,707 -

Short-term loan

receivable Loans and


62,483 62,421 (62)

Current derivative

assets


through profit or loss

Fair value

through profit or

loss

19,092 19,092 -

Trade receivables


Amortized costs 3,551,769 3,515,440 (36,329)

Fair value

through profit or

loss

- 18,187 18,187

Current financial assets

measured at fair value


assets

Fair value

through other

comprehensive

income

454 454 -

Other current financial

assets Loans and


408,190 408,036 (154)

Non-current financial

assets


140


assets


through profit or loss

Fair value

through profit or

loss

34,219 34,219 -

Long-term trade

receivables Loans and


75,340 75,340 -

Financial assets

measured at fair value


assets

Fair value

through profit or

loss

- 86,669 86,669

Fair value

through other

comprehensive

income

283,894 193,499 (90,395)

Other non-current

financial assets


Amortized costs 632,804 611,661 (21,143)

Fair value

through other

comprehensive

income

- 21,137 21,137

Current financial

liabilities

Current derivative

liabilities

Financial liabilities at fair value through profit or loss

Fair value

through profit or

loss

50,441 50,441 -

Trade payables Amortized costs Amortized costs 2,034,999 2,034,999 -

Short-term borrowings Amortized costs Amortized costs 2,920,089 2,920,089 -

Current portion of long-

term debentures and

borrowings

Amortized costs Amortized costs

1,402,910 1,402,910 -

Non-trade payables Amortized costs Amortized costs 1,339,142 1,339,142 -

Other current financial

liabilities


675,375 675,375 -

Non-current financial

liabilities


liabilities

Financial liabilities at fair value through profit or loss

Fair value

through profit or

loss

65,272 65,272 -

Long-term borrowings Amortized costs Amortized costs 1,592,711 1,592,711 -

Debentures Amortized costs Amortized costs 4,682,065 4,682,065 -

Guarantee deposits

received


212,068 212,068 -

Other non-current

financial liabilities


29,895 29,895 -

(c) Impairment of Financial Assets

Upon adoption of Korean IFRS 1109, accounting policies for recognition of impairment have

changed. The impact of the change in impairment methodology on the Group’s beginning balance

of retained earnings is disclosed in the table on (a) above.

(i) Trade receivables

The Group applies the simplified approach to measure the loss allowance at an amount equal to

lifetime expected credit losses for trade receivables.


141

(ii) Debt instruments

Debt investments at amortized cost and those at fair value through other comprehensive income

are considered to be low risk, and thus the provision for impairment is determined as 12 months

expected credit losses.

(d) Hedge accounting

Consistent with prior periods, the Group has elected to designate only the spot component of the

change in fair value of foreign exchange future contracts in cash flow hedge relationships. In prior

periods, the change in fair value related to future points was recognized in the statement of profit

or loss.

Upon adoption of Korean IFRS 1109, the Group now recognizes changes in the fair value of

future contracts attributable to the spot points in ‘future points of hedging instruments’ within

equity. The deferred costs of hedging are included within the initial cost of the related hedged item

(inventory) when it is recognized.

The foreign future contract hedges in place as at December 31, 2018 qualified as cash flow

hedges under Korean IFRS 1109. The Group’s risk management strategies and hedge

documentation are aligned with the requirements of Korean IFRS 1109 and are thus treated as

continuing hedges.

42.3 Adoption of Korean IFRS 1115 Revenue from Contracts with Customers

As explained in Note 2, the Group has applied Korean IFRS 1115 Revenue from contracts with

customers from January 1, 2018. In accordance with the transitional provisions in Korean IFRS

1115, comparative figures have not been restated. The application of Korean IFRS 1115 has

impact on the financial statements as follows.

In summary, the following adjustments were made to the amounts recognized in the statements of

financial position at the date of initial application (January 1, 2018):

(in millions of Korean won)

December 31, 2017

(before

adjustments) Adjustments

January 1, 2018

(after

adjustments)

Trade receivables 3,627,109 (109,564) 3,517,545

Contract assets - 170,348 170,348

Inventories 1,733,006 947 1,733,953

Other current assets 292,950 6,537 299,487

Intangible assets 6,039,033 45,990 6,085,023

Deferred tax assets 310,655 (17,151) 293,504

Total assets 29,325,383 97,107 29,422,490

Trade payables 2,034,999 4,859 2,039,858

Contract liabilities - 209,561 209,561

Other liabilities 1,013,095 (149,810) 863,285

Provisions 30,335 (12,806) 17,529


142

Deferred income tax liabilities 881,237 140 881,377

Total liabilities 17,333,214 51,944 17,385,158

Total equity 11,992,169 45,163 12,037,332

(i) Accounting for incremental costs of obtaining a contract

In 2017, incremental costs of obtaining a contract were expensed as they did not qualify for

recognition as an asset.

Under Korean IFRS 1115, the costs relate directly to the contract, generate resources used in

satisfying the contract and are expected to be recovered.

Due to this change in policy, incremental costs of obtaining a contract amounting to \ 52,650

million were capitalized as assets and recognized as intangible assets in the statements of

financial position as at January 1, 2018. Consequently, the retained earnings increased by

\ 8,876 million.

(ii) Accounting for customer loyalty program

In previous reporting periods, the consideration received from the sale of goods was allocated to

the points and the goods sold using the residual method. Under this method, a part of the

consideration equaling the fair value of the points was allocated to the points. The residual part of

the consideration was allocated to the goods sold.

Under Korean IFRS 1115, the total consideration must be allocated to the points and goods

based on the relative stand-alone selling prices. Using this new method, the amounts allocated to

the goods sold are, on average, higher than the amounts allocated under the residual value

method.

Due to this change in policy and recognition of contract liabilities from VIP system, the contract

liability recognized in relation to the customer loyalty programme on January 1, 2018 was \6,708

million more than the amount recognized as deferred revenue under the previous policy.

Consequently, the retained earnings decreased by \2,097 million.

(iii) Accounting for MVNO communication service contract

The Group changed its accounting treatment for MVNO communication service contract by

allocating the total transaction price of the performance obligations identified in the contracts in

proportion to the initial sales price before discount, the contract assets and contract liabilities

increased by \ 20,383 million and \19,346 million, respectively. Consequently, the retained

earnings increased by \ 175 million.

(iv) Accounting for equipment sales discounted

The Group changed its accounting treatment for sales discounts of equipment by allocating the

sales discounts to sales of equipment and sales of contents, and to recognize such amounts as a


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deduction from revenue over the service period. Consequently, contract assets increased by

\ 26,867 million, intangible assets decreased by \ 6,659 million and retained earnings

increased by \ 4,780 million

(v) Accounting for product warranties

The Group changed its accounting treatment for product warranties provided for the period

exceeding the general period by identifying it as a separate performance obligation. Consequently,

contract liabilities increased by \1,978 million and retained earnings decreased by \ 510 million.

Financial statement major line items affected by the adoption of the new rules in the current

period are as follows:

Statement of financial position

(in millions of Korean won) Reported amount Adjustments

Amount before

application of

Korean IFRS 1115

Trade receivables 3,647,590 223,620 3,871,210

Contract assets 300,911 (300,911) -

Inventories 2,023,661 - 2,023,661

Other current assets 397,970 (9,654) 388,316

Intangible assets 6,168,778 (40,157) 6,128,621

Deferred tax assets 288,901 17,784 306,685

31,729,549 (109,318) 31,620,231

Trade payables 2,088,317 (15,807) 2,072,510

Contract liabilities 173,291 (173,291) -

Other liabilities 931,380 125,967 1,057,347

Provisions 20,521 14,718 35,239

Deferred income tax liabilities 794,847 (140) 794,707

Total liabilities 19,207,738 (48,553) 19,159,185

Total equity 12,521,810 (60,765) 12,461,045

Statements of comprehensive income

(in millions of Korean won) Reported amount Adjustments

Amount before

application of

Korean IFRS 1115

Sales 29,523,435 199,904 29,723,339

Cost of sales (21,170,217) 60,929 (21,109,288) Selling and administrative expenses

(7,020,744) (277,030) (7,297,774)

Operating profit 1,332,475 (16,197) 1,316,278

Finance income 358,182 - 358,182

Finance costs (841,171) - (841,171) Share of profit of joint ventures and associates

56,374 - 56,374

Other non-operating income 1,102,538 - 1,102,538


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Other non-operating expenses (688,734) - (688,734)

Income tax expense (439,637) 633 (439,004)

Profit for the year 880,027 (15,564) 864,463

Total comprehensive income for the year

668,919 (15,564) 653,355

Statements of cash flows

From the application of Korean IFRS 1115, cash flows have adjusted to increase the contract

assets by \ 30,250 million and decrease the contract liabilities by \ 5,947 million, in comparison

to cash flows based on the previous standard; however, cash generated from operating activities

with application of Korean IFRS 1115 is identical to that of the previous standard.

43. Events After the Reporting Period

(a) Acquisition of subsidiaries

The Group decided to acquire SCHWAN'S COMPANY, a food company in the United States of

America, by resolution of the Board of Directors on November 15, 2018, in order to accelerate its

expansion of the global food industry through an entry into the U.S market.

The Group acquired 100% of shares of SCHWAN'S COMPANY from IRREVOCABLE TRUST

FOR GRANDCHILDREN and MARVIN M.SCHWAN 1992 GREAT GREAT GRANDCHILDREN'S

TRUST (the “Sellers”), the shareholders of SCHWAN'S COMPANY, through sales of equity

shares and contributions in kind.

For this purpose, the Group established CJ FOODS AMERICA HOLDINGS CORP., a Special

Purpose Compnay, CJ FOODS AMERICA COPR. (the ‘Investment SPC’), CJ FOODS CORP (the

‘Parent Company of the Buyer’) and CJ FOODS DE CORP. (the ‘Buyer’), in such order, in the

United States. Through contributions in kind and sales of equity shares, the Buyer became 100%

shareholders of SCHWAN'S COMPNAY and; the Investment SPC and the Seller became 70%

and 30% shareholders of the Parent Company of the Buyer, respectively. The acquisition date is

February 25, 2019. The acquisition cost equals to the orginal sales price (USD 2,180,000

thousand), less the value of shares of Rollover (USD 504,000 thousand) over which the Seller will

make the contribution in kind. The acquisition cost consists of self-financed amount and the

Buyer’s acquisition financing.

(b) Disposal of subsidiaries

the Group decided to dispose 38,723,433 shares out of 41,756,284 shares of CJ Hello Co., Ltd., a

consolidated subsidiary, for \ 800,000,000 thousand by resolution of the Board of Directors on

February 14, 2019. The expected disposal date will be the date agreed by both parties within

three months from the date of approval by government organizations for such transaction

(approval on Fair Trade Commission's review of business combinations and approval on the

changes in the largest investor of Multiple CATV System Operator & Program Provider in Ministry

of Science and ICT / approval on the changes in the largest shareholders in communication

provider , etc).


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(c) The Group issued the 8th non-guaranteed debentures of \ 100,000 million for the purpose of

financing working capital and a repayment of public bonds that are expected to mature on

February 12, 2019, by resolution of the Board of Directors on December 18, 2018.

CJ Corporation and Subsidiaries

Documents