SHI 별도 영문 1712 PDF

Samsung Heavy Industries Co., Ltd.
Separate Financial Statements

December 31, 2017 and 2016
Index
Page(s)
Independent Auditor’s Report ....................................................................................................................... 1-6
Separate Financial Statements
Separate Statements of Financial Position....................................................................................................... 7-8
Separate Statements of Profit or Loss .................................................................................................................. 9
Separate Statements of Comprehensive Income ............................................................................................... 10
Separate Statements of Changes in Equity........................................................................................................ 11
Separate Statements of Cash Flows ..................................................................................................................12
Notes to the Separate Financial Statements........................................................................................... 13-71
Report on Independent Accountants' Review of Internal Accounting Control System ............................ 72
Report on the Operations of the Internal Accounting Control System ....................................................... 73

Independent Auditor’s Report
(English Translation of a Report Originally Issued in Korean)
To the Board of Directors and Shareholders of

We have audited the accompanying separate financial statements of Samsung Heavy Industries Co., Ltd. (the
Company), which comprise the separate statements of financial position as at December 31, 2017 and 2016,
and the separate statements of profit or loss, separate statements of comprehensive income, separate
statements of changes in equity and separate statements of cash flows for the years then ended, and notes to
the separate financial statements, including a summary of significant accounting policies and other explanatory
information.
Management’s Responsibilities for the Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in
accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean
IFRS), and for such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibilities
Our responsibility is to express an opinion on the separate financial statements based on our audits. We
conducted our audits in accordance with Korean Standards on Auditing. Those standards require that we
comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether
the separate financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
separate financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the separate financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the separate financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the
separate financial position of Samsung Heavy Industries Co., Ltd. as at December 31, 2017 and 2016, and its
separate financial performance and its separate cash flows for the years then ended in accordance with Korean
IFRS.
Emphasis of Matter1
Without qualifying our opinion, we draw attention to the following area of focus.
1) The auditor’s emphasis on area of focus on construction contracts
Area of focus on construction contracts in accordance with the Practical Guidance of Auditing Standard 2016-1
are those matters that, in the auditor's professional judgment and communication with those charged with
governance, were of most significance in the audit of the separate financial statements of the current period.
These matters were addressed in the context of the audit of the separate financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have addressed the output of the audit process for the area of focus as below in forming an audit opinion
on the separate financial statements of Samsung Heavy Industries Co., Ltd. and its subsidiaries as a whole.
A. General Information
Common information applied to the area of focus on construction contract described in this audit report are as
follows:
As explained in the Note 2 to the separate financial statements (Critical Accounting Policies), the Company
recognizes contract revenue and contract costs associated with the construction contract as revenue and
expense respectively based on the percentage of completion of the contract activity at the end of the reporting
period when the outcome of a construction contract can be estimated reliably. The percentage of completion of
the contract activity is the proportion that costs incurred to date, excluding any contract cost that does not reflect
the work performed, bear to the estimated total costs of the contract. The Company presents the gross amount
due from customer for contract work as an asset for all contracts in progress for which costs incurred plus
recognized profits (less recognized losses) exceed progress billings, and presents the gross amount due to
customers for contract work as a liability for all contracts in progress for which progress billings exceed costs
incurred plus recognized profits (less recognized losses).
B. Revenue recognition based on the input method
As explained in the Note 3 to the separate financial statements (Critical Accounting Estimates and Assumptions),
total contract revenue is measured based on the initial amount of revenue agreed in the contract. However, the
measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future
event; for example, the amount of contract revenue may increase as a result of variations in contract work,
claims and inventive payments, on the other hand, the amount of contract revenue may decrease as a result of
1 This paragraph is being included in accordance with the Practical Guidance of Auditing Standard 2017-1,
Practical Guidance for Special Consideration in Auditing Construction Contracts, prescribed by Korean
Institute of Certified Public Accountants, and should not be considered as a communication of key audit matter
described in the International Standards on Auditing 700 (Revised).
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penalties arising from delays caused by the Company in the completion of the contract. The measurement of
contract revenue is also affected by the percentage of completion measured based on the aggregated amount
costs incurred. Total contract costs are estimated based on future estimates of material costs, labor costs,
construction period and others.
Also, as explained in the Note 6 to the separate financial statements (Construction Contracts), estimated total
contract revenue and cost were changed due to variations in contract work and costs increases.
Estimating total contract revenue with respect to contract changes due to long-term duration of the contract,
changes in designs, the down trend in international oil prices and others of the Company’s major construction
contracts; such as, offshore plant and drilling rig etc., are uncertain. The changes in estimated total contract
revenue and costs may have negative impacts on the profit or loss for the period (or for the succeeding year);
therefore, we identified revenue recognition based on the input method as a significant risk.
In respect of the Company’s revenue recognition based on the input method, we have performed the following
audit procedures.
- We obtained understanding of the accounting policy of revenue recognition, determined if there were
any changes in the accounting policy, and assessed the accounting policy.
- We reviewed significant contents of contracts.
- We inquired about current progress of major contacts and identified any significant changes at the end
of the reporting period, and performed analytical audit procedures on the significant changes.
- We performed analytical review procedures on major financial ratios such as rate of profit.
- We reviewed internal control in relation to reviewing and approval process of a contract by an

appropriate approver when a new contract is engaged.
C. Uncertainty of estimated construction costs
As explained in the Note 3 to the financial statements (Critical Accounting Estimates and Assumptions),
estimated construction costs are estimated based on future estimates of material costs, labor costs, construction
period and others. Estimated construction costs can be changed due to changes in designs, raw-material price
and construction period.
As the Company’s construction contracts related to offshore plant and drilling rig are usually long-term in nature,
the measurement of estimated contract costs is affected by variety of uncertainties such as changes in the
specifications or designs, changes in construction environment, fluctuation of material cost and others.
Considering the impacts of changes in estimated construction costs on the profit or loss for the current period
(or for the succeeding year); we identified uncertainty of estimated construction costs as a significant risk.
As of December 31, 2017, in respect of the Company’s uncertainty of estimated construction costs related to
offshore plant and drilling rig, we have performed the following audit procedures.
- We inquired and performed analytical review procedures on changes in estimated construction cost’s
major components.
- We inquired the causes for differences where the construction contracts contain significant differences
in change of total estimated construction costs compared to prior year.
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- We obtained understanding of calculation method and significant assumption on estimated
construction costs and confirmed its relevant evidences for the calculation.
- We reviewed internal controls in relation to establishing contents of initial estimated construction costs,
and reviewing and approval process of estimated construction costs by an appropriate approver.
- We reviewed internal control in relation to reviewing and approval process of changing estimated
construction costs by an appropriate approver.
D. Measurement of percentage of completion
As explained in the Note 6 to the separate financial statements (Construction Contracts), estimated total contract
cost was changed due to costs increases.
In case of the Company’s major construction contracts; such as, offshore plant and drilling rig, it is highly
probable that the changes in estimated total contract cost and unexpected cost may occur. According to these
uncertainty of estimated total contract costs, we identified measurement of percentage of completion as a
significant risk.
As of December 31, 2017, in respect of the Company’s estimated total contract costs and aggregated cost
incurred that have impacts on the measurement of percentage of completion, we have performed the following
audit procedures.
- We performed analytical review procedures on changes in accumulated cost incurred and estimated
total contract costs.
- We determined if there were any contract costs that did not reflect the work performed and excluded
from the costs incurred and estimated, and reviewed related accounting policies.
- We compared the percentage of completion in the report submitted to ordering company and
percentage of completion based on input method, and inquired about the reason of the difference.
- We obtained understanding of direct cost allocation policy and tested internal control of cost allocation
and transfer for each construction.
- We obtained understanding of indirect expense allocation policy and tested internal control of indirect
expense allocation.
- We independently tested the occurrence and timing of cost recognition, which incurred during the year,
for each construction contract.
E. Collectability of the gross amount due from customer for contract work
As explained in the Note 6 to the separate financial statements (Construction Contracts), the amount of due
from customer is significant in level of overall financial statements as at December 31, 2017.
In case of the Company's major construction contracts; such as, drillship and drilling rig, most of contracts are
based on tail-heavy payment term, and it is probable that the payment may delay due to the customer’s financial
status caused by the prolonged decline in the global oil price, and may results an unavoidable payment term
extension. Therefore, we identified collectability of the gross amount due from customer for contract work as a
significant risk.
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As of December 31, 2017, in respect of the contact that has a significant increase in the gross amount due from
customer for contract work, we have performed the following audit procedures.
- We reviewed changes in contracts regarding to payment term, deferred penalties, time of delivery and
other obligations.
- We reviewed date of maturity in contracts and financial soundness of ordering company.
- We reviewed the management’s estimates for collectability of the gross amounts due from customers
for contract works.
F. Accounting treatment for changes in construction
As explained in the Note 3 to the separate financial statements (Critical accounting estimates and assumptions),
the Company measures total contract revenue at the initial amount of revenue agreed in the contract; however,
the measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of
future events such as increase contract revenue due to variations in contract work, claims and inventive payment;
or decrease contract revenue as a result of penalties arising from delay caused by the Company in the
completion of the contract. A variation is included in contract revenue when it is probable that the customer will
approve the variation and the amount of revenue arising from the variation or the contract is sufficiently
advanced that it is probable that the specified performance standards will be met or exceeded and the amount
of revenue can be reliably measured.
Especially, it is probable that a variation may occur in offshore plant contracts, and there is uncertainty in the
measurement of contract revenue due to frequent change in specification or design, change in construction
environment and others; therefore, we identified accounting treatment regarding variations in offshore plant
contract work as a significant risk.
As of December 31, 2017, in respect of accounting treatment regarding variations in contract work, we have
performed the following audit procedures.
- We inquired about the Company’s accounting policy for accounting treatment regarding variations in
contract work and penalties.
- We tested internal control of the Company in relation to reviewing and approval process of a
construction contract by an appropriate approver when there is a variation in the contract amount.
- We independently tested and confirmed with the ordering company if the variation in the contract
amount has obtained an appropriate approval of the ordering company.
- We compared the construction completion date of the contract and that of construction schedule of the
Company.
- We confirmed appropriate disclosures were disclosed for the variation made in the contract based on
amended contract.
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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 financial statements may differ from those generally accepted and applied
in other countries.
Seoul, Korea
March 14, 2018
This report is effective as of March 14, 2018, 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 separate 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.
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Separate Statements of Financial Position
(In thousands of Korean won) Notes 2017 2016
Assets
Current assets
Cash and cash equivalents 4,7,9 \ 315,008,775 \ 929,561,607
Short-term financial instruments 5,7,9 633,515,521 648,598,224
Trade receivables 7,9,10 249,092,686 297,668,715
Due from customers for contract work 6,7,9,10 3,155,094,850 5,054,636,277
Other receivables 7,9,10 126,629,111 117,545,500
Advance payments 191,869,321 352,290,121
Prepaid expenses 39,094,478 52,581,464
Current portion of derivative financial
7,8,9,11,32
instruments 328,088,495 203,020,422
Current portion of firm commitment assets 11 87,848,572 472,886,625
Inventories 12 1,172,721,384 1,192,482,845
Other current financial assets 7,13 76,704,496 94,591,737
Other current assets 47,725,442 71,994,591
6,423,393,131 9,487,858,128
Non-current assets
Long-term available-for-sale financial
7,8,14
assets 26,805,060 26,288,658
Investments in subsidiaries, associates
15
and joint ventures 486,766,286 487,341,482
Property, plant and equipment 16 5,514,590,374 5,739,412,579
Investment properties 17 16,713,214 16,839,561
Intangible assets 18 89,192,935 93,594,448
Long-term prepaid expenses 31,119,855 15,202,898
Derivative financial instruments 7,8,9,11,32 96,002,441 80,232,164
Firm commitment assets 11 54,554,875 91,793,428
Non-current trade receivables 7,9,10 43,527,216 24,500,208
Deferred tax assets 29 455,464,053 378,452,563
Other financial assets 5,7,13 11,311,375 21,015,649
6,826,047,684 6,974,673,638
Total assets \ 13,249,440,815 \ 16,462,531,766
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Separate Statements of Financial Position
Liabilities
Current liabilities
Trade payables 7,32 \ 613,320,350 \ 1,266,189,731
Short-term borrowings 7,19,32 1,825,357,339 2,570,248,128
Debentures 7,19,32 162,705,311 -
Other payables 7,32 106,074,013 100,872,917
Advance received 73,334,581 287,956,179
Due to customers for contract work 6 1,429,206,043 1,699,720,584
Accrued expenses 7,32 489,486,877 497,006,946
Current portion of derivative financial
7,8,11,32 146,666,498 768,487,498
instruments
Current portion of firm commitment
11 141,798,001 205,373,835
liabilities
Current portion of long-term debts 7,19,32 1,389,053,356 1,099,828,242
Provisions 21 419,064,225 325,215,361
Other current liabilities 30,492,841 32,396,952
6,826,559,435 8,853,296,373
Non-current liabilities
Debentures 7,19,32 91,812,458 499,347,207
Long-term debts 7,19,32 451,529,000 843,825,000
Post-employment benefit obligations 20 40,511,053 101,304,891
Other provisions 21 24,072,508 24,072,508
Non-current derivative financial
7,8,11,32 66,092,796 102,731,807
instruments
Non-current firm commitment liabilities 11 62,066,582 32,109,401
Other financial liabilities 7,13,32 18,942,062 16,176,000
755,026,459 1,619,566,814
Total liabilities 7,581,585,894 10,472,863,187
Equity
Share capital
Ordinary shares 22 1,950,000,000 1,950,000,000
Preferred shares 574,225 574,225
Share premium 22 752,018,096 752,018,096
Accumulated other comprehensive income 23 871,586,238 873,434,438
Other components of equity 23 (963,896,146) (963,896,146)
Retained earnings 24 3,057,572,508 3,377,537,967
Total equity 5,667,854,921 5,989,668,580
Total liabilities and equity \ 13,249,440,815 \ 16,462,531,767
The above separate statements of financial position should be read in conjunction with the accompanying notes.
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Separate Statements of Profit or Loss
Years Ended December 31, 2017 and 2016
(In thousands of Korean won, except

per share amounts) Notes 2017 2016
Revenue 6,33 \ 7,396,888,950 \ 9,883,581,890

Cost of sales 25 7,584,514,959 9,511,766,878
Gross profit (loss) (187,626,009) 371,815,012
Selling and administrative expenses 25,26 304,743,909 553,536,185
Operating loss (492,369,918) (181,721,173)
Other income 27 1,994,045,005 1,551,474,301

Other expenses 27 1,976,843,314 1,435,137,775
Finance income 28 229,246,925 145,681,055
Finance costs 28 183,546,819 192,193,385
Loss before income tax (429,468,121) (111,896,977)

Income tax expense (benefit) 29 (91,861,630) 22,837,561
Loss for the period \ (337,606,491) \ (134,734,538)
Losses per share
Basic losses per share

Ordinary shares 30 \ (927) \ (539)
Preferred shares 30 (927) (370)
Diluted losses per share
Ordinary shares 30 \ (927) \ (539)
Preferred shares 30 (927) (370)
The above separate statements of profit or loss should be read in conjunction with the accompanying notes.
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Separate Statements of Comprehensive Income
Loss for the period \ (337,606,491) \ (134,734,539)
Other comprehensive income 15,792,832 883,986,515

Items that will not be reclassified to
profit or loss
Remeasurements of net defined benefit
20 20,626,628 45,057,854
liabilities
Gain on revaluation of property and
- 1,145,802,515
equipment
Income tax relating to these items (4,991,644) (288,188,209)
Items that may be subsequently
reclassified to profit or loss
Changes in the fair value of available-for-
7,14,23 208,243 (24,651,247)
sale financial assets
Income tax relating to these items 23 (50,395) 5,965,602
Total comprehensive income (loss) for the
\ (321,813,659) \ 749,251,976
period
The above separate statements of comprehensive income should be read in conjunction with the accompanying
notes.
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Separate Statements of Changes in Equity
Accumulated Other
Other Components
(In thousands of Korean won) Share Capital Share Premium Comprehensive Retained Earnings Total
of Equity
Income
Balance at January 1, 2016 ￦ 1,154,951,155 ￦ 417,172,244 ￦ 23,601,777 ￦ (963,896,146) ￦ 3,464,994,404 ￦ 4,096,823,434

Comprehensive income
Loss for the period - - - - (134,734,539) (134,734,539)
Change in the fair value of available-
for-sale financial assets - - (18,685,645) - - (18,685,645)
Reevaluation reserves - - 868,518,307 - 13,124,249 881,642,556
Remeasurement of net defined benefit
liabilities - - - - 34,153,853 34,153,853
Transactions with owners
Issuance of share capital 795,623,070 334,845,851 - - - 1,130,468,921
Balance at December 31, 2016 ￦ 1,950,574,225 ￦ 752,018,095 ￦ 873,434,439 ￦ (963,896,146) ￦ 3,377,537,967 ￦ 5,989,668,580
Balance at January 1, 2017 ￦ 1,950,574,225 ￦ 752,018,096 ￦ 873,434,438 ￦ (963,896,146) ￦ 3,377,537,967 ￦ 5,989,668,580

Comprehensive income
Loss for the period - - - - (337,606,491) (337,606,491)
Change in the fair value of available-
for-sale financial assets - - 157,848 - - 157,848
Reevaluation reserves - - (2,006,048) - 2,006,048 -
Remeasurement of net defined benefit
liabilities - - - - 15,634,984 15,634,984
Balance at December 31, 2017 ￦ 1,950,574,225 ￦ 752,018,096 ￦ 871,586,238 ￦ (963,896,146) ￦ 3,057,572,508 ￦ 5,667,854,921
The above separate statements of changes in equity should be read in conjunction with the accompanying notes.
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Separate Statements of Cash Flows
Cash flows from operating activities

Cash generated from (used in) operations 31 \ 517,889,537 \ (1,562,077,116)
Interest received 23,921,224 50,424,049
Interest paid (140,170,140) (143,702,018)
Dividends received 392,955 307,027
Income tax received 11,613,435 39,209,563
Cash inflow (outflow) from operating activities 413,647,011 (1,615,838,495)
Cash flows from investing activities

Acquisition of short-term financial instruments (814,903,206) (1,812,166,138)
Disposal of short-term financial instruments 827,609,814 2,070,364,215
Acquisition of available-for-sale financial assets 14 (766,222) (803,657)
Acquisition of held-to-maturity instruments - (59,000,000)
Disposal of available-for-sale financial assets 14 203,656 38,040,036
Acquisition of subsidiaries, associates and joint ventures 15 (256,282) (524,845)
Disposal of subsidiaries, associates and joint ventures 15 393,913 1,343,622
Acquisition of property, plant and equipment 16 (68,689,425) (152,338,436)
Disposal of property, plant and equipment 16 15,784,950 89,876,657
Acquisition of investment properties 17 - (737,023)
Disposal of investment properties 17 - 17,305,634
Acquisition of intangible assets 18 - (51,744)
Disposal of intangible assets 18 - 3,060,583
Disposal of other current financial assets 9,650,000 7,641,957
Disposal of other non-current financial assets 13,241,170 8,347,698
Acquisition of other non-current financial assets (3,137,645) (2,494,178)
Net cash inflow (outflow) from investing activities (20,869,277) 207,864,381
Cash flows from financing activities

Proceeds from short-term borrowings 19,31 2,501,789,757 2,084,212,640
Repayments of short-term borrowings 19,31 (3,220,312,873) (1,304,092,909)
Issuance of short-term debentures 19,31 162,590,930 -
Repayments of current portion of long-term debts 19,31 (1,218,813,000) (510,000,000)
Proceeds from long-term borrowings 19,31 759,668,000 -
Repayments of long-term borrowings 19,31 (84,022,500) -
Issuance of debentures 19,31 91,769,120 -
Issuance of share capital 22 - 1,130,468,921
Net cash inflow (outflow) from financing activities (1,007,330,566) 1,400,588,652
Net decrease in cash and cash equivalents (614,552,832) (7,385,462)

Cash and cash equivalents at the beginning of the
929,561,607 929,537,097
year
Effect of exchange rate changes on cash and cash
- 7,409,971
equivalents
Cash and cash equivalents at the end of the year \ 315,008,775 \ 929,561,606
The above separate statements of cash flows should be read in conjunction with the accompanying notes.
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Samsung Heavy Industries Co., Ltd. and Subsidiaries
Notes to the Separate Financial Statements
1. General information
Samsung Heavy Industries Co., Ltd. (the Company) was incorporated in 1974 under the Commercial Code of
the Republic of Korea to build ships and off-shore plants. The Company listed its shares on the Korea Exchange
on January 28, 1994.
2. Significant Accounting Policies
The principal accounting policies applied in the preparation of these separate 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 Company 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 separate 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 Company's financial position, financial performance or cash flows, is not presented in the accompanying
separate financial statements.
The separate financial statements of the Company 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 Company’s accounting policies. The areas involving a higher
degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate
financial statements are disclosed in Note 3.
2.2 Changes in Accounting Policies and Disclosures
(a) New and amended standards adopted by the Company
The Company has applied the following standards and amendments for the first time for their annual reporting
period commencing January 1, 2017. The adoption of these amendments did not have any material impact on
the financial statements.
- Amendments to Korean IFRS 1007 Statement of Cash Flows
Amendments to Korean IFRS 1007 Statement of Cash flows require to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities, including both changes
arising from cash flows and non-cash flows (Note 31).
- Amendments to Korean IFRS 1012 Income Tax
Amendments to Korean IFRS 1012 clarify how to account for deferred tax assets related to debt instruments
measured at fair value. Korean IFRS 1012 provides requirements on the recognition and measurement of
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current or deferred tax liabilities or assets. The amendments issued clarify the requirements on recognition of
deferred tax assets for unrealized losses, to address diversity in practice.
- Amendments to Korean IFRS 1112 Disclosures of Interests in Other Entities
Amendments to Korean IFRS 1112 clarify when an entity’s interest in a subsidiary, a joint venture or an
associate is classified as held for sales in accordance with Korean IFRS 1105, the entity is required to disclose
other information except for summarized financial information in accordance with Korean IFRS 1112.
(b) New standards and interpretations not yet adopted by the Company
Certain new accounting standards and interpretations that have been published that are not mandatory for
annual reporting period commencing January 1, 2017 and have not been early adopted by the Company are
set out below.
- Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures
When an investment in an associate or a joint venture is held by, or it 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 that investment at fair value through profit or loss in accordance
with Korean IFRS 1109. The amendments clarify that an entity shall make this election separately for each
associate of joint venture, at initial recognition of the associate or joint venture. The amendments will be effective
for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not
expect the amendments to have a significant impact on the financial statements because the Company is not a
venture capital organization.
- Amendment to Korean IFRS 1040 Transfers of Investment Property
Paragraph 57 of 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
provides a list of circumstances as examples. The amendment will be effective for annual periods beginning on
or after January 1, 2018, with early adoption permitted. The Company does not expect the amendment to have
a significant impact on the financial statements.
- Amendments 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 amendments will be effective for annual periods
beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect the
amendments to have a significant impact on the financial statements.
- Enactments to Interpretation 2122 Foreign Currency Transaction and Advance Consideration
According to these enactments, 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. If there are multiple payments or receipts in advance, the entity shall determine a date
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of the transaction for each payment or receipt of advance consideration. These enactments will be effective for
annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not
expect the enactments to have a significant impact on the financial statements.
- Enactment of 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, Interpretation 2104
Determining whether an Arrangement contains a Lease, Interpretation 2015 Operating Leases-Incentives, and
Interpretation 2027 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. At inception
of a contract, the entity shall assess whether the contract is, or contains, a lease. Also, at the date of initial
application, the entity shall assess whether the contract is, or contains, a lease in accordance with the standard.
However, the entity will not need to reassess all contracts with applying the practical expedient because the
entity elected to apply the practical expedient only to contracts entered before the date of initial application.
For a contract that is, or contains, a lease, the entity shall account for each lease component within the contract
as a lease separately from non-lease components of the contract. A lessee is required to recognize a right-of-
use asset representing its right to use the underlying leased asset and a lease liability representing its obligation
to make lease payments. The lessee may elect not to apply the requirements to short-term lease (a lease term
of 12 months or less at the commencement date) and low value assets (e.g. underlying assets below $ 5,000).
In addition, as a practical expedient, the lessee may elect, by class of underlying asset, not to separate non-
lease components from lease components, and instead account for each lease component and any associated
non-lease components as a single lease component.
Lessee accounting
A lessee shall apply this standard to its leases either:
· retrospectively to each prior reporting period presented applying Korean IFRS 1008 Accounting Policies,
Changes in Accounting Estimates and Errors (Full retrospective application); or
· retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial
application.
The Company has not yet elected the application method.
The Company is analyzing to identify potential financial effects of applying Korean IFRS 1116; however, it is
difficult to provide reasonable estimates of financial effects until the analyses is complete.
Lessor accounting
The Company expects the effect on the financial statements applying the new standard will not be significant
as accounting for the Company, as a lessor, will not significantly change.
- Korean IFRS 1109 Financial Instruments
The new standard for financial instruments issued on September 25, 2015 is effective for annual periods
beginning on or after January 1, 2018 with early application permitted. This standard will replace Korean IFRS
1039 Financial Instruments: Recognition and Measurement. The Company will apply the standards for annual
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periods beginning on or after January 1, 2018.
The standard requires retrospective application with some exceptions. For example, an entity is not required to
restate prior period in relation to classification and measurement (including impairment) of financial instruments.
The standard requires prospective application of its hedge accounting requirements for all hedging relationships
except the accounting for time value of options and other exceptions.
Korean IFRS 1109 Financial Instruments requires three main areas including: (a) classification and
measurement of financial assets on the basis of the entity’s business model for managing financial assets and
the contractual cash flow characteristics of the financial assets, (b) a new impairment model of financial
instruments based on the expected credit losses, and (c) hedge accounting including expansion of the range of
eligible hedging instruments and hedged items that qualify for hedge accounting or change of a method of hedge
effectiveness assessment.
An effective implementation of Korean IFRS 1109 requires preparation processes including financial impact
assessment, accounting policy establishment, accounting system development and the system stabilization.
The impact on the Company’s financial statements due to the application of the standard is dependent on
judgements made in applying the standard, financial instruments held by the Company and macroeconomic
variables.
With the implementation of Korean IFRS 1109, the Company is preparing for internal management process and
beginning to adjust accounting system for financial instruments reporting. Also, the Company is analyzing the
financial effects of applying the standard. However, the following areas are likely to be affected in general.
(a) Classification and Measurement of Financial Assets
When implementing Korean IFRS 1109, the classification of financial assets will be driven by the Company’s
business model for managing the financial assets and contractual terms of cash flow. The following table shows
the classification of financial assets measured subsequently at amortized cost, at fair value through other
comprehensive income and at fair value through profit or loss. If a hybrid contract contains a host that is a
financial asset, the classification of the hybrid contract shall be determined for the entire contract without
separating the embedded derivative.
Business model for the Solely represent payments of All other

contractual cash flows principal and interest
characteristics
Hold the financial asset for the

collection of the contractual Measured at amortized cost1
cash flows
Recognized at fair value through
Hold the financial asset for the profit or loss2
collection of the contractual
other comprehensive income 1
cash flows and sale
Hold for sale
profit or loss
1A designation at fair value through profit or loss is allowed only if such designation mitigates an accounting
mismatch (irrevocable).
2 Equity investments not held for trading can be recorded in other comprehensive income (irrevocable).
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With the implementation of Korean IFRS 1109, the criteria to classify the financial assets at amortized cost or
at fair value through other comprehensive income are more strictly applied than the criteria applied with Korean
IFRS 1039. Accordingly, the financial assets at fair value through profit or loss may increase by implementing
Korean IFRS 1109 and may result an extended fluctuation in profit or loss.
As at December 31, 2017, the Company owns loans and receivables of \ 4,551,884 million, financial assets
held-to-maturity of \ 59,000 million, financial assets available-for-sales of \ 26,805 million and financial assets
at fair value through profit or loss of \ 18,009 million.
According to Korean IFRS 1109, a debt instrument is measured at amortized cost if: a) the objective of the
business model is to hold the financial asset for the collection of the contractual cash flows, and b) the
contractual cash flows under the instrument solely represent payments of principal and interest. As at December
31, 2017, the Company measured loans and receivables of \ 4,551,884 million and financial assets held-to-
maturity of \ 59,000 million at amortized costs.
According to Korean IFRS 1109, equity instruments that are not held for trading, the Company can make an
irrevocable election at initial recognition to classify the instruments as assets measured at fair value through
other comprehensive income, which all subsequent changes in fair value being recognized in other
comprehensive income and not recycled to profit or loss. As at December 31, 2017, the Company holds equity
instruments of \ 26,805 million classified as financial assets available-for-sale.
According to Korean IFRS 1109, derivative instruments that are not eligible as hedged items or hedging
instruments are measured at fair value through profit or loss. As at December 2017, the Company holds
derivative instruments classified as financial assets at fair value through profit or loss that amount to \ 18,009
million.
(b) Impairment: Financial Assets and Contract Assets
The new impairment model requires the recognition of impairment provisions based on expected credit losses
(ECL) rather than only incurred credit losses as is the case under Korean IFRS 1039. It applies to financial
assets classified at amortized cost, debt instruments measured at fair value through other comprehensive
income, lease receivables, contract assets, loan commitments and certain financial guarantee contracts.
Under Korean IFRS 1109 ‘expected loss’ model, a credit event (or impairment ‘trigger’) no longer has to occur
before credit losses are recognized. The Company will always recognize (at a minimum) 12-month expected
credit losses in profit or loss. Lifetime expected losses will be recognized on assets for which there is a significant
increase in credit risk after initial recognition.
Stage1 Loss allowance

12-month expected credit losses (expected credit losses
No significant increase in credit that result from those default events on the financial
1
risk after initial recognition2 instrument that are possible within 12 months after the
reporting date)
Significant increase in credit risk
2
after initial recognition Lifetime expected credit losses (expected credit losses
that result from all possible default events over the life of
3 Credit-impaired the financial instrument)
1 A loss allowance for lifetime expected credit losses is required for a financial instrument if the credit risk on
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that financial instrument has increased significantly since initial recognition. It is also required for contract assets
or trade receivables that are not, according to Korean IFRS 1115 Revenue from Contracts with Customers,
considered to contain a significant financing component. Additionally, the Company can elect an accounting
policy of recognizing lifetime expected credit losses for all contract assets and/or all trade receivables, including
those that contain a significant financing component.
2 If the financial instrument has low credit risk at the end of the reporting period, the Company may assume that
the credit risk has not increased significantly since initial recognition.
Under Korean IFRS 1109, the asset that is credit-impaired at initial recognition would recognize all changes in
lifetime expected credit losses since the initial recognition as a loss allowance with any changes recognized in
profit or loss.
As at December 31, 2017, the Company owns debt investment carried at amortized cost of \ 4,696,543 million
(loans and receivables of \ 4,637,543 million, financial asset held-to-maturity of \ 59,000 million). And, the
Company recognized loss allowance of \ 85,659 million for these assets.
(c) Hedge Accounting
Hedge accounting mechanics (fair value hedges, cash flow hedges and hedge of net investments in a foreign
operations) required by Korean IFRS 1039 remains unchanged in Korean IFRS 1109, however, the new hedge
accounting rules will align the accounting for hedging instruments more closely with the Company’s risk
management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as
the standard introduces a more principles-based approach. Korean IFRS 1109 allows more hedging instruments
and hedged items to qualify for hedge accounting, and relaxes the hedge accounting requirement by removing
two hedge effectiveness tests that are a prospective test to ensure that the hedging relationship is expected to
be highly effective and a quantitative retrospective test (within range of 80-125%) to ensure that the hedging
relationship has been highly effective throughout the reporting period.
With implementation of Korean IFRS 1109, volatility in profit or loss may be reduced as some items that were
not eligible as hedged items or hedging instruments under Korean IFRS 1039 are now eligible under Korean
IFRS 1109.
As at December 31, 2017, the Company applies the hedge accounting to its liabilities that amount to \ 61,461
million. With applying the hedge accounting, the Company recognized the fair value changes of fair value
hedging instruments for \ 69,360 million in profit or loss.
Furthermore, when the Company first applies Korean IFRS 1109, it may choose as its accounting policy choice
to continue to apply all of the hedge accounting requirements of Korean IFRS 1039 instead of the requirements
of Korean IFRS 1109.
- Enactments to Korean IFRS 1115 Revenue from Contracts with Customers
Korean IFRS 1115 Revenue from Contracts with Customers issued on November 6, 2015 will be effective for
annual reporting periods beginning on or after January 1, 2018 with early adoption permitted. This standard
replaces Korean IFRS 1018 Revenue, Korean IFRS 1011 Construction Contracts, Interpretation 2031 Revenue-
Barter Transactions Involving Advertising Services, Interpretation 2113 Customer Loyalty Programs,
Interpretation 2115 Agreements for the Construction of Real Estate and Interpretation 2118 Transfers of assets
from customers. The Company must apply Korean IFRS 1115 Revenue from Contracts with Customers within
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annual reporting periods beginning on or after January 1, 2018, and will elect the modified retrospective
approach which will recognize 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.
Korean IFRS 1018 and other current revenue standard identify revenue as income that arises in the course of
ordinary activities of an entity and provides guidance on a variety of different types of revenue, such as, sale of
goods, rendering of services, interest, dividends, royalties and construction contracts. However, the new
standard is based on the principle that revenue is recognized when control of a good or service transfers to a
customer so the notion of control replaces the existing notion of risks and rewards. A new five-step process
must be applied before revenue from contract with customers can be recognized:
 Identify contracts with customers
 Identify the separate performance obligation

 Determine the transaction price of the contract
 Allocate the transaction price to each of the separate performance obligations, and
 Recognize the revenue as each performance obligation is satisfied.
As at December 31, 2017, the Company is preparing for internal management process and beginning to adjust
accounting system in relation to implementation of Korean IFRS 1115. Also, the Company is analyzing the
financial effects of applying the standard. The Company plans to analyze the financial effects of applying the
standard and disclose the result of the analysis in the notes on the financial statements as at March 31, 2018.
The Company identified the following areas are likely to be affected in general.
(a) A performance obligation is satisfied over time: customized equipment
The shipbuilding and offshore division of the Company builds and sells a large, customized piece of ships and
off-shore plants for a customer, and the customized equipment takes about three-years to build. The Company
recognizes revenue over time based on costs incurred relative to total estimated costs to determine the extent
of progress toward completion. During 2017, revenue from the shipbuilding and offshore division of \ 7,344,449
million is approximately 99% of total revenue recognized.
In accordance with Korean IFRS 1115, the revenue is recognized over time by measuring progress only if the
Company’s performance does not create an asset with an alternative use to the Company and the Company
has an enforceable right to payment for performance completed to date.
(b) Incremental costs of obtaining a contract
The Company pays sales commissions based on shipbuilding & off-shore plants contracts. During 2017, the
Company recognized \ 20,008 million of sales commissions. The sales commission is an incremental cost
because it would not have incurred if the contract has not been obtained.
With implementation of Korean IFRS 1115, the Company recognizes as an asset the incremental costs of
obtaining a contract with a customer of the Company expects to recover those costs, and costs that are
recognized as assets are amortized over the period that the related goods or services transfer to the customer.
19
(c) Significant financing components
With implementation of Korean IFRS 1115, in determining the transaction price, if the timing of payments
agreed to by the parties to the contract provides the customer or the entity with a significant benefit of
financing the transfer of goods or services to the customer, the Company has to recognize revenue at an
amount that reflects the price that a customer would have paid for the promised goods or services if the
customer had paid cash for those goods or services when they transfer to the customer.
According to Korean IFRS 1115, such significant financing components can change the amount of revenue
recognized related to receipt of advance received
2.3 Subsidiaries, Joint Ventures, and Associates
The financial statements of the Company are the separate financial statements prepared in accordance with
Korean IFRS 1027 Separate Financial Statements. Investments in subsidiaries, joint ventures and associates
are recognized at cost under the direct equity method. Management applied the carrying amounts under the
previous K-GAAP at the time of transition to the Korean IFRS as deemed cost of investments. The Group
recognizes dividend income from subsidiaries, joint ventures and associates in profit or loss when its right to
receive the dividend is established.
2.4 Operating Segment
Information of each operating segment is reported in a manner consistent with the internal business segment
reporting provided to the chief operating decision-maker (Note 33). The chief operating decision-maker is
responsible for allocating resources and assessing performance of the operating segments.
2.5 Foreign Currency Translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which each entity operates (the “functional currency"). The separate financial
statements are presented in Korean won, which is the Company’s functional and presentation currency.
(b) Transaction 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.
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 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.
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2.6 Financial Assets
(a) Classification and measurement
The Company classifies its financial assets into the following categories: financial assets at fair value through
profit or loss, available-for-sale financial assets, loans and receivables, and held-to-maturity financial assets.
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the
Company commits to purchase or sell the asset.
At initial recognition, the Company 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. Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. And, loans and receivables and held-to-maturity investments are
subsequently carried at amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are
recognized in profit or loss within other income or other expenses. Gains or losses arising from changes in the
available-for-sale financial assets are recognized in other comprehensive income, and amounts are reclassified
to profit or loss when the associated assets are sold or impaired.
(b) Impairment
The Company assesses at the end of each reporting period whether there is an objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is
impaired and impairment losses are incurred only if there is an objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or a group of financial assets
that can be reliably estimated.
Impairment of loans and receivables is presented as a deduction in an allowance account, and that of other
financial assets is directly deducted from their carrying amount. The Company writes off financial assets when
the assets are determined to be no longer recoverable.
The Company considers that there is an objective evidence of impairment if significant financial difficulties of
the debtor, or long-term delinquency in interest or principal payments is indicated.
(c) Derecognition
If a transfer does not result in derecognition because the Company has retained substantially all the risks and
rewards of ownership of the transferred asset, the Company continues to recognize the transferred asset in its
entirety and recognizes a financial liability for the consideration received.
(d) Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the separate 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
21
event of default, insolvency or bankruptcy of the Company or the counterparty.
2.7 Derivative Instruments
Derivatives are initially recognized at fair value on the date when a derivative contract is entered into and are
subsequently re-measured at their fair value. Changes in the fair value of the derivatives that are not qualified
for hedge accounting are recognized in the statement of income within 'other income (expenses)' or 'finance
income (costs)' according to the nature of transactions.
The Company applies fair value hedge accounting for firm commitments.
The Company 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
transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 8. The full fair
value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is
more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less
than 12 months. The fair value of trading derivatives is classified as a non-current asset or liability when the
remaining maturity is more than 12 months and as a current asset or liability when the remaining maturity is less
than 12 months.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
statement of income, together with any changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk. The Company only applies fair value hedge accounting for hedging exchange
risk of firm commitments. The gain or loss relating to the effective portion of derivative instruments hedging
exchange risk of a firm commitment is recognized in the statement of income within ‘other income (expenses)’.
The gain or loss relating to the ineffective portion is recognized in the statement of income within ‘finance income
(costs)’. Changes in the fair value of the firm commitments attributable to exchange risk are recognized in the
statement of income within ‘other income (expenses)’.
2.8 Inventories
Inventories are stated at the lower of cost and net realizable value. Raw materials for shipbuilding & off-shore
plants business are determined using individual method and moving weighted average method and individual
method is applied for evaluating inventory of construction completed and merchandise in transit.
2.9 Property, Plant and Equipment
Land is shown at fair value based on valuations by external independent valuers. Valuations are performed with
sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying
amount.
All other property, plant and equipment except land are stated at historical cost less accumulated depreciation
and accumulated impairment losses. Historical cost includes expenditures that is directly attributable to the
acquisition of the items.
22
Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown as other reserves in equity. Decreases that offset previous increases of the
same asset are charged to other comprehensive income and debited against other reserves directly in equity;
all other decreases are charged to the statement of profit or loss.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate
the difference between their cost and their residual values over their estimated useful lives, as follows:
Estimated useful lives
Buildings 25 - 50 years
Structures 25 - 50 years
Machinery 10 - 30 years
Vehicles 5 - 30 years
Tools, furniture and fixtures 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. An asset’s carrying amount is adjusted to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
When revalued assets are sold, the amounts included in revaluation reserves are transferred to retained
earnings.
2.10 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.
2.11 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 Company will comply with all attached conditions. 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.
2.12 Intangible Assets
Intangible assets are initially recognized at its historical cost, and carried at cost less accumulated amortization
and accumulated impairment losses.
Other intangible assets such as software which meet the definition of an intangible asset are amortized using
the straight-line method over their estimated useful lives when the asset is available for use. Membership rights
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.
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The Company amortizes intangible assets with a limited useful life using the straight-line method over the
following periods:
Estimated useful lives
Other intangible assets 5 years
2.13 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 Company depreciates investment properties,
except for land, using the straight-line method over their useful lives of 25 ~ 50 years.
2.14 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.
2.15 Financial Liabilities
(a) Classification and measurement
The Company’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 Company 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’,
‘borrowings’, and ‘other financial liabilities’ in the statement of financial position.
(b) 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.
2.16 Provisions
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
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passage of time is recognized as interest expense.
2.17 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 Company recognizes current income tax on the basis of amounts
expected to be paid to the tax authorities.
Deferred 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 separate financial statements. However,
deferred 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 Company 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 Company 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 Company 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.
2.18 Employee Benefits
(a) Post-employment benefits
The Company operates both defined contribution and defined benefit pension plans.
For defined contribution plans, the Company pays contribution to publicly or privately administered pension
insurance plans on mandatory, contractual or voluntary basis. The Company 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
25
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.
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 Company 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 Company issues new shares. The proceeds received, net of any directly
attributable transaction costs, are recognized as share capital (nominal value) and share premium.
2.19 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods or
rendering of services arising from the normal course of the business. Amounts disclosed as revenue are net of
value added taxes, returns, rebates and discounts and after elimination of inter-company transactions.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the Company and when specific criteria have been met for each of the
Company’s activities as described below. The Company bases its estimate on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each arrangement.
(a) Construction contracts
A construction contract is defined by Korean IFRS 1011 Construction Contracts, as a contract specifically
negotiated for the construction of an asset.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract will
be profitable, contract revenue is recognized over the period of the contract by reference to the stage of
completion. Contract costs are recognized as expenses by reference to the stage of completion of the contract
activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract
revenue, the expected loss on the construction contract is immediately recognized as an expense.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only
to the extent of contract costs incurred that are likely to be recoverable. Variations in contract work, claims and
26
incentive payments are included in contract revenue to the extent that may have been agreed with the customer
and are capable of being reliably measured. Contract costs are recognized as an expense in the period in which
they are incurred.
The Company uses the ‘percentage-of-completion method’ to determine the appropriate amount to recognize
in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end
of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in
connection with future activity on a contract are excluded from contract costs in determining the stage of
completion. These amounts are recognized as inventory, prepaid expenses or other assets.
On the statement of financial position, the Company reports the net contract position for each contract as either
an asset or a liability. A contract represents an asset where costs incurred plus recognized profits (less
recognized losses) exceed progress billings (due from customers for contract work); a contract represents a
liability where the opposite is the case (due to customers for contract work).
(b) Sales of goods
Sales are recognized when control of the products has transferred, being when the products are delivered to
the wholesaler.
(c) Interest income
Interest income is recognized using the effective interest method according to the time passed. When a loan
and receivable is impaired, the Company reduces the carrying amount to its recoverable amount and continues
unwinding the discount as interest income. Interest income on impaired loans and receivables is recognized
using the original effective interest rate.
(d) Dividend income
Dividend income is recognized when the right to receive payment is established.
2.20 Approval of Issuance of the Financial Statements
The separate financial statements 2017 were approved for issue by the Board of Directors on January 26, 2018
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 Company to make estimates and assumptions concerning
the future. Estimates and judgements 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.
The resulting accounting estimates will, by definition, seldom equal the related actual results. 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 discussed below.
(a) Uncertainty of the estimated total contract revenue
Total contract revenue is measured based on contractual amount initially agreed. The contract revenue can be
increased by additional contract work, claims and incentive payments in the course of construction, or decreased
by the penalty when the completion of contract is delayed due to the Company’s fault. Therefore, this
27
measurement of contract revenue is affected by the uncertainty of the occurrence of future events. The change
in contract revenue is recognized when it is probable that the customer will approve the increase in revenue
due to the changes in contract work, or when it is probable that the Company will be able to satisfy the
performance requirements and the amount can be estimated reliably.
The contract revenue can be decreased by the claims of liquidated damages when the completion of contract
is delayed due to the Company’s fault. Therefore, the damage claims for the delay are estimated based on
historical experience in case the completion date is expected to be delayed. As at December 31, 2017, the
maximum amount of damage claims from the delay as the Company was not able to meet the contracted
completion date is expected to be \ 65,891 million. The \ 43,070 million of this amount is the best estimate
of the damage claim the Company is likely to bear due to its fault and has been deducted from the contract
revenue for the year ended December 31, 2017. The amount will be periodically revalued until the completion
date. The Company is constantly putting an effort to minimize damage claims by requesting an extension of the
completion date from the customer and to undertake measures in order to comply with the completion date.
(b) Estimated total contract costs
Construction revenue is recognized according to the percentage of completion, which is measured on the basis
of the gross amount incurred to date. Total contract costs are estimated based on future estimates of material
costs, labor costs, construction period and others. When the estimated total contract costs increase by 5%,
profit before income tax and net assets before income tax effects decrease by \ 1,253,144 million.
(c) Income taxes
The Company’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 (Note 29).
If certain portion of the taxable income is not used for investments or increase in wages or dividends in
accordance with the Tax System For Recirculation of Corporate Income, the Company is liable to pay additional
income tax calculated based on the tax laws. The new tax system is effective for three years from 2015.
Accordingly, the measurement of current and deferred tax is affected by the tax effects from the new tax system.
As the Company’s income tax is dependent on the investments, increase in wages and dividends, there is an
uncertainty measuring the final tax effects.
(d) 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 Company 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 (Note 8).
(e) Provision for warranty
The Company has accrued warranty provision for the estimated costs of future repair, based on historical
experience and terms of guarantees. The warranty provision is offset when costs related to repair incurred, and
the remaining balances are reversed upon termination of the terms of guarantees. Repairing costs in excess of
the corresponding provision are recognized in profit of loss in the period in which they are incurred.
28
(f) 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 (Note 20).
(g) Provisions
As at December 31, 2017, the Company recognizes provisions for expectation of incentive based on
management performance and litigations as explained in Note 21. These provisions are estimated based on
past experience.
4. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term highly
liquid investments with original maturities of less than three months. Cash and cash equivalents as at December
31, 2017 and 2016, are as follows:
(In thousands of Korean won) 2017 2016
Cash on hand \ 107,716 \ 112,786

Ordinary deposits 2,169,227 3,897,498
Checking account 971 91
Other deposits 312,730,861 925,551,232
\ 315,008,775 \ 929,561,607
5. Restricted Financial instruments
As at December 31, 2017, \ 25 million of long-term financial instruments are restricted to maintain checking
accounts (Note 13). Short-term financial instruments of \ 328,556 million are subject to withdrawal restrictions
as collateral and others (Note 19).
29
6. Construction Contracts
A. Changes in contract balances and recognized construction revenue for the periods ended December 31,
2017 and 2016, are as follows:
2017
Recognized
(In thousands of Opening
Changes construction Ending Balance
Korean won) balance
revenue
Shipbuilding & offshore
\ 8,955,169,655 \ 8,726,604,468 \ 7,344,449,472 \ 10,337,324,651
contracts
Construction contracts 105,579,528 5,988,208 52,439,478 59,128,258
\ 9,060,749,183 \ 8,732,592,676 \ 7,396,888,950 \ 10,396,452,909
2016
Recognized
(In thousands of Opening
Changes construction Ending Balance
Korean won) balance
revenue
\ 22,351,669,919 \ (3,583,426,684) \ 9,813,073,580 \ 8,955,169,655
contracts
Construction contracts 143,177,396 32,910,442 70,508,310 105,579,528
\ 22,494,847,315 \ (3,550,516,242) \ 9,883,581,890 \ 9,060,749,183
B. At the end of the reporting period, the Company is provided with performance guarantees and warranties of
\ 2,210,112 million for the shipbuilding & offshore contracts from several financial institutions including Korea
EXIM Bank. The Company is provided with performance guarantees and warranties of \ 231,684 million in
relation to the construction contracts from several financial institutions including Construction Guarantee.
C. The following table presents the breakdown of in-progress construction contracts such as recognized
construction profit or loss as at December 31, 2017 and 2016:
2017
Accumulative
(In thousands of Korean Accumulative Unbilled Overbilled
construction
won) construction cost amount amount
revenue
\ 28,586,127,428 \ (349,463,409) \ 3,151,519,457 \ 1,419,308,290
contracts
Construction contracts 500,656,920 (60,070,294) 3,575,393 9,897,753
\ 29,086,784,348 \ (409,533,703) \ 3,155,094,850 \ 1,429,206,043
2016
Accumulative
(In thousands of Korean Accumulative Unbilled Overbilled
construction
won) construction cost amount amount
revenue
\ 25,552,840,723 \ (333,115,833) \ 5,039,385,121 \ 1,674,418,793
contracts
Construction contracts 545,773,117 (74,170,935) 15,251,156 25,301,791
\ 26,098,613,840 \ (407,286,768) \ 5,054,636,277 \ 1,699,720,584
30
D. Due to the factors causing the rise in shipbuilding & offshore costs in 2017, the estimated total revenue and
estimated total costs for contracts in progress have changed. Details of changes in estimated total contract
revenue, estimated total contract costs, profits or loss for the year and the succeeding year, and the impact on
due from customers for contract work are as follows:
2017
Changes in Changes in Impact on profit Impact on profit Changes in due
estimated total estimated total or loss for the or loss for the from customers
(In thousands of Korean contract revenue contract costs period succeeding for contract work1
won) period
Shipbuilding
\ 1,191,096,957 \ 1,292,340,591 \ (162,367,294) \ 61,123,660 \ (162,367,294)
& offshore contracts
Construction contracts 6,433,620 19,027,462 (12,604,217) 10,374 (12,604,217)
\ 1,197,530,577 \ 1,311,368,053 \ (174,971,511) \ 61,134,034 \ (174,971,511)
2016
Changes in Changes in Impact on profit Impact on profit Changes in due
estimated total estimated total or loss for the or loss for the from customers
(In thousands of Korean contract revenue contract costs period succeeding for contract work1
won) period
Shipbuilding
\ 1,096,893,252 \ 765,199,269 \ 364,544,356 \ (32,850,373) \ 364,544,356
& offshore contracts
Construction contracts 32,248,824 30,362,974 (1,874,712) 3,760,562 (1,874,712)
\ 1,129,142,076 \ 795,562,243 \ 362,669,644 \ (29,089,811) \ 362,669,644
1 Changes in due to customers for contract work are included.
The impact on profit or loss for the period and the succeeding period is determined based on total contract costs,
which are estimated based on the circumstances present from the start of the contract to the end of current
year, and the estimated contract revenue as at December 31, 2017. Contract costs and contract revenue may
change in the future.
31
E. Contractual information that contract revenue for the periods ended December 31, 2017 and 2016 is more
than 5% of previous revenues, are as follows:
2017
(in thousands of Due from customers for
Trade and other receivables
Korean won) contract work
Percentage
Ordering Construction
Contract date of Accumulated Provision
location due date
completion Amount impairment Amount for
loss impairment
Shipbuilding &
offshore contracts
Drillship(SN2096) Europe Jun. 7, 2013 Sep. 25, 2017 100% \ - \ - \ - \ -
1
Semi-Rig(SN2097) - - - - - - - -
2
Drillship(SN2100) America Jul. 12, 2013 Mar. 31, 2017 100% 380,408,915 - - -
2
Drillship(SN2109) Oceania Aug. 30, 2013 Jun. 30, 2018 98% 397,542,856 - - -
Drillship(SN2119) Oceania Apr. 8, 2014 Jan. 31, 2019 79% 428,655,483 - - -
3
Drillship(SN2120) Oceania Apr. 8, 2014 Jan. 31, 2019 8% - - - -
CPF(SN7108) Australia Feb. 10, 2012 Aug. 26, 2018 98% 144,034,722 - 29,953,492 -
Jackup Rig(SN7117) Europe Jun. 11, 2013 Dec. 31, 2016 99% - - - -
Jackup Rig(SN7118) Europe Jun. 11, 2013 Apr. 30, 2017 99% - - - -
FLNG(SN2030) Oceania May. 30, 2011 Apr. 4, 2018 99% - - - -
FPSO(SN2089) Africa Jun. 12, 2013 Jun. 26, 2017 97% 196,754,498 - - -
FLNG(SN2126) Asia Feb. 14, 2014 Jul. 15, 2020 68% - - - -
Platform(SN2190) Europe Jun. 29, 2015 Feb. 13, 2018 89% 23,988,011 - - -
Platform(SN2191) Europe Jun. 29, 2015 Dec. 12, 2018 64% - - - -
FPU(SN2217) America Jan. 4, 2017 Sep. 30, 2020 8% - - 50,001,580 -
FLNG(SN2235) Africa Jun. 1, 2017 Jun. 1, 2022 1% - - - -
Platform(SN7115) Europe Dec. 20, 2012 Jul. 15, 2017 95% 74,419,019 - 62,796,479 -
\2,017,863,496 \ - \142,751,551 \ -
1
During 2017, the Company’s customers sent a notice of the cancellation of shipbuilding contract and requested
for refund of advance receipts. And, the Company filed for an arbitration with London Maritime Arbitrators
Association (LMAA) related to the breach of the contract by the customers and compensation for damages on
June 13, 2017. The Company recognized expected loss from the arbitration as provisions. The expected loss
can be changed depending on the outcome of the arbitration (Note 21). In addition, related due from customers
for contract work was reclassified to inventories due to the notice of the cancellation of the contracts and the
Company entered into sales contract with a new customer on January 27, 2018.
2During 2017, the Company sent a notice of completion of shipbuilding and request of delivery to customers
and filed for an arbitration with London Maritime Arbitrators Association (LMAA) related to the completion of
shipbuilding on September 7, 2017. The amount of liquidated damage for delay that the Group may be charged
with high possibility is \ 22,982 million, which is deducted from contract revenue.
3 As the notice of resumption was not received due to customer’s situation, the shipbuilding contract was
terminated on February 11, 2018 in accordance with the contract. (Note 35).
32
2016
(in thousands of Due from customers for contract
Trade and other receivables
Korean won) work
Percentage
Ordering Construction
Contract date of Accumulated Provision
location due date
completion Amount impairment Amount for
loss impairment
contracts
Drillship(SN2096) Europe Jun. 7, 2013 Mar. 31, 2019 98% \ 355,735,085 \ - \ - \ -
Semi-Rig(SN2097) Europe Jun. 28, 2013 Apr. 19, 2016 86% 450,964,334 (174,823,239) - -
Drillship(SN2109) Oceania Aug. 30, 2013 Jun. 30, 2018 93% 402,383,286 - - -
Drillship(SN2119) Oceania Apr. 8, 2014 Jan. 31, 2019 48% 221,426,074 - - -
Drillship(SN2120) Oceania Apr. 8, 2014 Jan. 31, 2019 8% - - - -
CPF(SN7108) Australia Feb. 10, 2012 Jun. 12, 2018 93% 52,402,472 - 68,055,213 -
Jackup Rig(SN7117) Europe Jun. 11, 2013 Dec. 31, 2016 94% 556,440,531 - - -
Jackup Rig(SN7118) Europe Jun. 11, 2013 Apr. 30, 2017 86% 499,490,259 - - -
FLNG(SN2030) Oceania May. 30, 2011 Apr. 1, 2017 95% 138,165,871 - 36,730,617 -
FPSO(SN2089) Africa Jun. 12, 2013 Jun. 26, 2017 74% - - - -
FLNG(SN2126) Asia Feb. 14, 2014 Jul. 15, 2020 41% - - - -
Platform(SN2190) Europe Jun. 29, 2015 Feb. 13, 2018 23% - - 26,221,918 -
Platform(SN2191) Europe Jun. 29, 2015 Dec. 12, 2018 12% - - 49,814,108 -
Platform(SN7115) Europe Dec. 20, 2012 May. 18, 2017 86% 62,913,477 - - -
\3,582,849,844 \ (174,823,239) \180,821,856 \ -
F. Changes in provision for construction loss for the periods ended December 31, 2017 and 2016, are as follows:
(In thousands of Korean won) 2017

Beginning Ending
Changes
balance balance
Shipbuilding & offshore contracts \ 277,313,651 \ (7,337,431) \ 269,976,220
Construction contracts 9,097,135 2,233,074 11,330,209
\ 286,410,786 \ (5,104,357) \ 281,306,429

Beginning Ending
Changes
balance balance
Shipbuilding & offshore contracts \ 724,612,999 \ (447,299,348) \ 277,313,651
Construction contracts 14,578,217 (5,481,082) 9,097,135
\ 739,191,216 \ (452,780,430) \ 286,410,786
33
G. Changes in warranty provision for the periods ended December 31, 2017 and 2016, are as follows:

Beginning Ending
Changes
balance balance
Shipbuilding & offshore contracts \ 286,780,436 \ 16,639,967 \ 303,420,403
\ 295,590,892 \ 14,799,082 \ 310,389,974

Beginning Ending
Changes
balance balance
Shipbuilding & offshore contracts \ 263,760,278 \ 23,020,158 \ 286,780,436
\ 277,708,212 \ 17,882,680 \ 295,590,892
7. Financial Instruments by Category
A. Categorizations of financial instruments as at December 31, 2017 and 2016, are as follows:
(In thousands of Financial

Financial assets Derivative Financial assets
Korean won) assets
at fair value Loans and instruments for classified as
classified as Total
through profit receivables hedging available-for-
held-to-
and loss purpose sale1
2017 maturity1
Cash and cash
equivalents \ - \ 315,008,775 \ - \ - \ - \ 315,008,775
Short-term financial
instruments - 633,515,521 - - - 633,515,521
Trade receivables - 249,092,686 - - - 249,092,686
Due from
customers for - 3,155,094,850 - - - 3,155,094,850
contract work
Derivative financial
Instruments 18,009,422 - 406,081,514 - - 424,090,936
Non-current trade
receivables - 43,527,216 - - - 43,527,216
Available-for-sale
financial assets - - - 26,805,060 - 26,805,060
Other financial
assets and - 155,644,982 - - 59,000,000 214,644,982
others
\ 18,009,422 \4,551,884,030 \ 406,081,514 \ 26,805,060 \59,000,000 \ 5,061,780,026
1 Available-for-sale
financial assets of \ 8,021 million and held-to-maturity financial assets of \ 59,000 million
are pledged as collateral for borrowings from Construction Guarantee and Industrial Bank of Korea (Notes 13
and 14).
34
Financial liabilities
Derivative
(In thousands of Korean won) at fair value Financial liabilities
instruments for Total
through profit and at amortized cost
hedging purpose
2017 loss
Trade payables \ - \ 613,320,350 \ - \ 613,320,350
Borrowings - 2,276,886,339 - 2,276,886,339
Current portion of long-term debts 1,389,053,356 - 1,389,053,356
Debentures - 254,517,768 - 254,517,768
Derivative financial Instruments 36,256,052 - 176,503,242 212,759,294
Other financial liabilities and others - 614,502,954 - 614,502,954
\ 36,256,052 \ 5,148,280,767 \ 176,503,242 \ 5,361,040,061
(In thousands of Financial

Financial assets Derivative Financial assets
Korean won) assets
at fair value Loans and instruments for classified as
classified as Total
through profit receivables hedging available-for-
held-to-
and loss purpose sale1
2016 maturity1
Cash and cash
equivalents \ - \ 929,561,607 \ - \ - \ - \ 929,561,607
Short-term financial
instruments - 648,598,224 - - - 648,598,224
Trade receivables - 297,668,715 - - - 297,668,715
Due from customers
for contract work - 5,054,636,276 - - - 5,054,636,276
Derivative financial
Instruments 87,672,638 - 195,579,948 - - 283,252,586
Non-current trade
receivables - 24,500,208 - - - 24,500,208
Available-for-sale
financial assets - - - 26,288,658 - 26,288,658
Other financial
assets and others - 174,152,885 - - 59,000,000 233,152,885
\ 87,672,638 \ 7,129,117,915 \ 195,579,948 \ 26,288,658 \59,000,000 \ 7,497,659,159
1 Available-for-sale
financial assets of \ 8,021 million and held-to-maturity financial assets of \ 59,000 million
are pledged as collateral for borrowings from Construction Guarantee and Industrial Bank of Korea (Notes 13
and 14).
Derivative
(In thousands of Korean won) at fair value Financial liabilities
instruments for Total
through profit and at amortized cost
hedging purpose
2016 loss
Trade payables \ - \ 1,266,189,731 \ - \ 1,266,189,731
Borrowings - 3,414,073,128 - 3,414,073,128
Current portion of long-term debts - 1,099,828,242 - 1,099,828,242
Debentures - 499,347,207 - 499,347,207
Derivative financial Instruments 42,858,185 - 828,361,120 871,219,305
Other financial liabilities and others - 614,055,863 - 614,055,863
\ 42,858,185 \ 6,893,494,171 \ 828,361,120 \ 7,764,713,476
35
B. Net gains or net losses on each category of financial instruments for the periods ended December 31, 2017
and 2016, are as follows:

Available-for-sale financial assets
Gain(loss) on valuation (other comprehensive income) \ 208,243 \ (5,527,793)
Gain on disposal (reclassify to profit or loss)1 392,955 307,027
Dividend income - 19,123,454
Gain(loss) on disposal (profit or loss) (254,407) 5,622,435
Loans and receivables
Gain(loss) on foreign currency translation \ (220,152,774) \ 94,886,582
Interest income 17,880,026 46,676,999
Impairment loss or reversal of loss 12,578,486 (183,808,686)
Held-to-maturity financial assets
Interest income \ 11,903 \ 4,707
Assets at fair value through the profit and loss
Gain on valuation \ 42,400,813 \ 49,567,854
Gain on transaction 17,701,143 19,649,895
Derivative assets for hedging purpose
Gain on valuation \ 482,670,251 \ 131,770,489
Gain on transaction 460,763,128 279,483,504
Liabilities at fair value through the profit and loss
Loss on valuation \ (44,656,654) \ (40,339,090)
Loss on transaction (42,036,624) (39,711,972)
Derivatives liabilities for hedging purpose
Loss on valuation \ (201,506,394) \ (453,032,546)
Gain(loss) on transaction 97,140,111 (138,502,415)
Financial liabilities measured at amortized cost
Interest expenses \ (132,260,631) \ (154,578,226)
Gain(loss) on foreign currency translation 102,178,060 (39,041,399)
1 The gain on disposal was reclassified from other comprehensive income to profit or loss.
36
8. Fair Value
A. Fair Value of Financial Instruments by Category
Carrying amount and fair value of financial instruments by category as at December 31, 2017 and 2016, are as
follows:

Carrying amount Fair value Carrying amount Fair value
Financial assets1
Available-for-sale financial assets2 \ 13,491,322 \ 13,491,322 \ 13,283,079 \ 13,283,079
Derivative instruments 424,090,936 424,090,936 283,252,586 283,252,586
Financial liabilities1
Derivative instruments \ 212,759,294 \ 212,759,294 \ 871,219,305 \ 871,219,305
1 Financial instruments including trade receivables and payables whose carrying amount is a reasonable
approximation of fair value are excluded from fair value disclosures.
2 Equity instruments that do not have a quoted price in an active market are measured at cost because their fair
value cannot be measured reliably and excluded from the fair value disclosures.
B. Available-for-sale financial assets Measured at Cost
Details of available-for-sale financial assets measured at cost as at December 31, 2017 and 2016, are as follows:
Unlisted share \ 4,583,477 \ 4,273,658

Other equity investments 8,730,261 8,731,921
\ 13,313,738 \ 13,005,579
The above unlisted shares and equity instruments are measured at cost because the variability of estimated
cash flows is significant and the probabilities of the various estimates cannot be reasonably assessed.
C. Fair Value Hierarchy
Assets measured at fair value or for which the fair value is disclosed are categorized as the fair value hierarchy,
and the defined levels are as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (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).
37
Fair value hierarchy classifications of the financial instruments that are measured at recurring fair value as at
December 31, 2017 and 2016, are as follows:
2017
(In thousands of Korean won) Level 1 Level 2 Level 3 Total
Financial assets
Derivative financial assets \ - \ 424,090,936 \ - \ 424,090,936
Available-for-sale financial assets 4,341,142 - 9,150,180 13,491,322
Derivative financial liabilities \ - \ 212,759,294 \ - \ 212,759,294
2016
(In thousands of Korean won) Level 1 Level 2 Level 3 Total
Financial assets
Derivative financial assets \ - \ 283,252,586 \ - \ 283,252,586
Available-for-sale financial assets 4,946,559 - 8,336,520 13,283,079
Derivative financial liabilities \ - \ 871,219,305 \ - \ 871,219,305
D. Valuation Technique and the Inputs
Valuation techniques and inputs used in the fair value of financial instruments categorized as Level 2 and Level
3 of the fair value hierarchy as at December 31, 2017, are as follows:
2017
(In thousands of Korean won) Fair value level Valuation techniques Inputs
Perpetual earning growth
Discounted cash flow
Available-for-sale financial assets \ 9,150,180 3 rate
model
Pre-tax operation margin
Derivative financial assets 424,090,936 2 Present value technique Discount rate
Derivative financial liabilities 212,759,294 2 Present value technique Discount rate
E. Valuation Processes for Fair Value Measurements Categorized as Level 3
The Company assesses fair value by obtaining a valuation report from Korean Asset Pricing Co., Ltd. The
finance team of the Company reports directly to the chief financial officer (CFO) and the audit committee (AC),
and discusses valuation processes and results with the CFO and AC at least once every quarter in line with the
Company’s quarterly reporting dates.
38
9. Credit Quality of Financial Assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to
external credit ratings or to historical information about counterparty default rates as at December 31, 2017 and
2016, follows:

Due from customers for contract work
Group 11 \ 2,783,090,804 \ 5,169,819,079
Group 22 16,716,663 18,095,263
\ 2,799,807,467 \ 5,187,914,342
1 Customers of shipbuilding & offshore segment with no defaults in the past

2 Customers of E&I segment with no defaults in the past

Cash at bank and short-term bank deposits1
AAA \ 16,703,924 \ 641,565,535
AA 298,197,136 287,883,286
\ 314,901,060 \ 929,448,821
1 The rest of ‘cash and cash equivalents’ in the separate statement of financial position represents cash on
hand.

Short-term financial instruments
AAA \ 613,929,959 \ 648,598,224
AA 19,585,562 -
\ 633,515,521 \ 648,598,224

Derivative financial instruments
AAA \ 271,062,726 \ 283,252,586
AA 153,028,210 -
\ 424,090,936 \ 283,252,586
39
10. Trade (due from customers for contract work) and Other Receivables
Trade and other receivables, and their provisions for impairment of receivables as at December 31, 2017 and
2016, consist of the following:
(In thousands of
2017 2016
Korean won)
Due from Due from
Trade Other Trade Other
customers for customers for
receivables receivables receivables receivables
contract work contract work
Regular receivables \375,573,771 \3,155,094,850 \129,333,828 \416,200,062 \5,229,459,515 \120,604,851

Less: Provision for
impairment (82,953,868) - (2,704,717) (94,031,139) (174,823,239) (2,643,365)
Trade and other
receivables, net 292,619,903 3,155,094,850 126,629,111 322,168,923 5,054,636,276 117,961,486
Less: Non-current
receivables (43,527,217) - - (24,500,208) - (415,987)
\249,092,686 \3,155,094,850 \126,629,111 \297,668,715 \5,054,636,276 \117,545,499
The aging analysis of trade (due from customers for contract work) and other receivables as at December 31,
2017 and 2016, are as follows:
Receivables not past due \ 2,799,807,467 \ 5,187,914,342

Past due but not impaired1
Less than six months 763,167,681 1,969,264
Over six months - 4,375,110
763,167,681 6,344,374
Impaired2 97,027,301 572,005,712
\ 3,660,002,449 \ 5,766,264,428
1 Trade receivables past due but not impaired relate to a number of independent customers who have no recent
history of default.
2 Provision for impaired receivables amount to \ 85,659 million as at December 31, 2017 (2016: \ 271,498
million). The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult
economic situations. It was assessed that a portion of the trade and other receivables is expected to be
recovered.
40
Movements in provisions for impairment of trade receivables for the periods ended December 31, 2017 and
2016, are as follows:

Due from Due from
Trade customers for Other Trade customers for Other
receivables contract work receivables receivables contract work receivables
Beginning \ 94,031,139 \ 174,823,239 \ 2,643,365 \128,893,987 \ - \ 2,142,843

Provision for receivables
11,030 - 211,281 12,048,074 174,823,239 876,701
impairment during the year
Receivables written-off during
the year as uncollectible and (8,217,572) (165,250,144) - (41,405,726) - (262,240)
others
Unused amounts reversed (2,870,729) (9,573,095) (149,929) (5,505,196) - (113,939)
Ending \ 82,953,868 \ - \ 2,704,717 \ 94,031,139 \ 174,823,239 \ 2,643,365
The creation and release of provision for impaired receivables (reversal) have been included in selling and
administrative expenses (in case of other receivables, other expenses) in the separate statement of profit or
loss.
41
11. Derivatives
As at December 31, 2017, the Company have forward exchange contracts with KEB Hana Bank and 14 other
banks to hedge foreign exchange fluctuation risk associated with the foreign advance receipts and foreign
payables. Details of derivative valuations are as follows:
(In thousands of Korean won and other currencies) Hedging purpose

Gain (loss) on Derivative
Gain (loss) on Firm
derivative Gain (loss) on financial
firm commitment
valuation for derivative instrument
commitment assets
Short position Long position trading valuation assets
valuation (liabilities)
purpose (liabilities)
USD 38,928 KRW 41,574,935 \ (5,053) \ (77,471) \ 395,088 \ (2,639,723) \ (82,524)

USD 9,739,316 KRW 10,813,192,820 40,609,039 479,388,222 (267,479,287) (194,131,774) 418,805,555
NOK 114,274 USD 13,837 - (19,033) (647,071) - (19,033)
NOK 124,447 USD 15,607 - 442,703 (451,388) - 442,703
NOK 430,308 KRW 55,643,127 - (236,971) 236,971 - (236,971)
NOK 208,937 KRW 28,017,707 - 865,904 (613,587) - 865,904
KRW 4,279,829,184 USD 3,823,634 (43,138,420) (189,931,786) 189,931,786 115,338,150 (198,775,150)
KRW 14,392,162 USD 13,490 - 31,660 (31,660) 1,518,847 31,660
USD - SGD - - 1 (1) 22 1
KRW 137,339 SEK 999 - (7,536) 7,536 9,135 (7,536)
USD 5,007 NOK 39,968 - (152,436) 152,436 1,653,291 (152,436)
USD 444 NOK 3,668 - 3,646 (3,646) 1,963 3,646
KRW 25,441,646 NOK 184,499 - (1,281,413) 1,281,413 1,277,338 (1,281,413)
USD 83 JPY 9,207 - (1,573) 1,573 389 (1,573)
USD 1 JPY 142 - 10 (10) 28 10
KRW 14,188,825 JPY 1,365,570 (107,179) (824,927) 824,927 959,400 (1,087,638)
KRW 85,076 GBP 58 - (1,259) 1,259 714 (1,259)
USD 14,907 EUR 12,437 (1,250) (24,592) 24,592 2,541,497 (25,841)
USD 137,044 EUR 115,652 1,031,146 905,979 (905,979) 3,955,050 1,937,125
KRW 358,248,850 EUR 266,171 (1,404,752) (8,259,245) 8,259,245 8,615,201 (10,399,769)
KRW 112,393,566 EUR 88,394 760,628 1,010,499 (1,010,499) (1,218,223) 1,982,705
USD 6 DKK 39 - 89 (89) (390) 89
USD 1,122 CNY 7,520 - 19,274 (19,274) (64,931) 19,274
KRW 23,294,646 CNY 139,208 - (688,151) 688,151 691,110 (688,151)
KRW 503,132 CNY 3,094 - 2,264 (2,264) 31,769 2,264
\ (2,255,841) \ 281,163,858 \ (69,359,778) \ (61,461,137) \ 211,331,642
The Company applies the fair value hedge accounting and is exposed to fluctuations in fair value until May 27,
2022. The realized gain and loss on derivative transactions recognized upon the expiration of contracts during
the year ended December 31, 2017, amounted to \ 822,656 million and \ 264,752 million (during the year
ended December 31, 2016: \ 432,366 million and \ 291,385 million), respectively. The realized gain and loss
on firm commitments recognized during the year ended December 31, 2017 amounts to \ 263,652 million and
\ 624,825 million (during the year ended December 31, 2016: \ 273,506 million and \ 384,483 million),
respectively.
42
12. Inventories
Inventories as at December 31, 2017 and 2016, are as follows:

Work-in-process \ 22,703,895 \ 26,545,537
Raw materials 304,787,854 597,436,959
Materials in-transit 23,488,046 145,525,349
Inventory of construction completed 821,741,589 422,975,000
\ 1,172,721,384 \ 1,192,482,845
The cost of inventories recognized as expense and included in ‘cost of sales’ amounts to \ 3,307,442 million
(2016: \ 4,825,708 million).
13. Other Financial Assets and Liabilities
Details of other financial assets and liabilities as at December 31, 2017 and 2016, are as follows:

Current Non-current Current Non-current
Other financial assets
Loans \ 1,493,308 \ 7,492,870 \ 11,751,503 \ 13,226,680
Accrued income 3,123,317 - 9,837,313 -
Guarantee deposits provided 13,087,871 3,793,905 14,002,921 7,348,382
Held-to-maturity instruments 59,000,000 - 59,000,000 -
Long-term financial instruments - 24,600 - 24,600
Other receivables - - - 415,987
\ 76,704,496 \ 11,311,375 \ 94,591,737 \ 21,015,649
Other financial liabilities

Guarantee deposits received \ - \ 18,942,062 \ - \ 16,176,000
As at December 31, 2017, \ 59,000 million of held-to-maturity instruments are pledged as securities for
borrowings of Industrial Bank of Korea (Note 19). \ 25 million of long-term financial instruments are restricted
to maintain checking accounts (Note 5).
14. Available-for-sale Financial Assets
Changes in available-for-sale financial assets for the periods ended December 31, 2017 and 2016, are as
follows:
Beginning balance \ 26,288,658 \ 61,143,040

Additions 766,222 3,091,013
Gain (loss) on valuation of available for sale securities 208,243 (5,527,793)
Disposal (458,063) (32,417,602)
43
Ending balance \ 26,805,060 \ 26,288,658
Details of available-for-sale financial assets as at December 31, 2017 and 2016, are as follows:
Marketable equity \ 3,990,556 \ 4,606,191

Non-marketable equity 1,2 22,463,918 21,342,099
Beneficiary certificates 350,586 340,368
\ 26,805,060 \ 26,288,658
1
Among the non-marketable equities, investments in Samsung Venture Investment Corporation and Samsung
Economics Research Institute were assessed at \ 9,150 million (2016: \ 8,337 million) by an independent
external valuer using reasonable valuation models and appropriate measurements based on professional
judgments (Note 8).
2 The fair value of non-marketable equity securities, other than the investments mentioned above are presented
at their acquisition cost of \ 13,314 million (2016: \ 13,006 million). In addition, among these securities,
\ 8,021 million is pledged as collaterals for borrowings (Note 19).
Changes in unrealized gain (loss) for the periods ended December 31, 2017 and 2016, are as follows:

Unrealized gain (loss) on valuation of available for sale
securities 208,243 (5,527,793)
Realized loss on disposal of available for sale securities - (19,123,454)
Tax effects (50,395) 5,965,601
Ending balance \ 5,073,979 \ 4,916,131
15. Investments in Subsidiaries, Associates and Joint Ventures
Details of investments in subsidiaries, associates and joint ventures as at December 31, 2017 and 2016, are as follows:
Percentage
Investee Location of ownership 2017 2016
interest (%)
Samsung Heavy Industries (Ningbo) Co., Ltd. China 100 \ 167,810,098 \ 167,810,098
Samsung Heavy Industries (Rongcheng) Co., Ltd. China 100 163,647,755 163,647,755
Rongcheng Gaya Heavy Industries Co., Ltd. China 100 47,690,483 47,690,483
Samsung Heavy Industries Brazil Brazil 100 392,570 392,570
Samsung Heavy Industries India Pvt.Ltd. India 100 3,537,966 3,537,966
Camellia Consulting Corporation USA 100 2,473,656 2,473,656
SVIC 13 New Technology Business Investment Korea 99 7,383 7,383
Samsung Heavy Industries (M) Sdn.Bhd Malaysia 100 184,531 184,531
SHI Brazil Construction Brazil 100 24,711 24,711
Samsung Heavy Industries Nigeria Co. Ltd. Nigeria 100 95,730,850 95,730,850
SHI Mozambique LDA 3 Mozambique 100 55,883 -
44
Daejung Offshore Wind Power Co., Ltd.1 Korea 50.1 5,210,400 5,010,000
3
Offshore 1 Consulting Corporation USA 51 - 831,479
\ 486,766,286 \ 487,341,482
1
All joint arrangements, an arrangement where in the Company has joint control, are structured through a separate
entity and classified as joint ventures as parties with joint control on the joint arrangements have rights on the net
assets of the arrangements.
2
The Company disposed of Offshore 1 Consulting Corporation during 2017.
3
The Company acquired SHI Mozambique LDA during 2017.
Changes in ownership interests in subsidiaries, associates and joint ventures as at December 31, 2017 and 2016,
are as follows:

Acquisition of subsidiaries, associates and joint ventures 256,283 524,845
Disposal and transfer of subsidiaries, associates and joint ventures (831,479) (3,626,620)
Impairment of subsidiaries, associates and joint ventures - (7,566,624)
Ending Balance \ 486,766,286 \ 487,341,482
16. Property, Plant and Equipment
Changes in property, plant and equipment for the periods ended December 31, 2017 and 2016, are as follows:
2017
Tools,
Construction- Machinery
(In thousands of Land Building Structures Machinery Vehicles furniture and Total
in- progress in-transit
Korean won) fixtures
Beginning net
book amount \1,922,577,617 \1,054,524,477 \1,359,875,315 \ 776,661,142 \318,320,468 \198,784,365 \108,669,195 \ - \ 5,739,412,579
Acquisition - - - - - 82,560 66,557,086 - 66,639,646
Disposal (7,140,436) (4,993,250) (6,597) (3,901,931) (189,649) (1,435,463) - - (17,667,326)
Depreciation - (28,792,210) (38,614,547) (73,488,923) (21,173,550) (80,284,797) - - (242,354,027)
Transfer1 7,037,751 6,041,912 60,902,798 15,626,495 7,025,721 17,873,245 (145,948,421) - (31,440,499)
Ending net book
amount \1,922,474,932 \1,026,780,929 \1,382,156,969 \ 714,896,783 \ 303,982,990 \ 135,019,910 \ 29,277,860 \ - \ 5,514,590,373
Acquisition cost \1,922,474,932 \1,344,472,839 \1,833,757,301 \1,653,532,654 \507,191,853 \ 640,783,184 \ 29,277,860 \ - \ 7,931,490,623
Accumulated
depreciation - (317,691,910) (451,600,332) (937,326,832) (203,181,176) (505,749,767) - - (2,415,550,017)
Accumulated
impairment loss - - - (1,309,039) (27,687) (13,507) - - (1,350,233)
Net book
amount \1,922,474,932 \1,026,780,929 \1,382,156,969 \ 714,896,783 \303,982,990 \135,019,910 \29,277,860 \ - \ 5,514,590,373
45
2016
Tools,
Construction- Machinery
(In thousands of Land Building Structures Machinery Vehicles furniture and Total
in- progress in-transit
Korean won) fixtures
Beginning net
book amount \ 825,033,143 \ 979,450,032 \ 1,238,757,640 \ 801,102,757 \337,923,063 \228,994,014 \395,614,891 \ 324,113 \ 4,807,199,653
Acquisition - - - - - - 148,100,378 - 148,100,378
Disposal (35,206,399) (35,924,351) (1,002,308) (9,475,857) (267,168) (3,000,082) - - (84,876,165)
Depreciation - (28,683,315) (36,455,821) (75,791,656) (22,940,342) (87,813,561) - - (251,684,695)
Reversal of
impairment loss - - - 714,829 - - - - 714,829
Transfer1 (18,032,045) 139,682,111 158,575,804 60,111,069 3,604,915 60,603,994 (435,046,074) (324,113) (30,824,339)
Gain on
reevaluation 1,158,926,764 - - - - - - - 1,158,926,764
Loss on
reevaluation (8,143,846) - - - - - - - (8,143,846)
Ending net book
amount \1,922,577,617 \1,054,524,477 \1,359,875,315 \ 776,661,142 \ 318,320,468 \ 198,784,365 \108,669,195 \ - \ 5,739,412,579
Acquisition cost \1,922,577,617 \1,344,702,413 \1,772,861,340 \1,655,086,226 \ 502,406,575 \638,363,243 \108,669,195 \ - \ 7,944,666,609
Accumulated
depreciation - (290,177,936) (412,986,025) (877,116,045) (184,058,420) (439,565,371) - - (2,203,903,797)
Accumulated
impairment loss - - - (1,309,039) (27,687) (13,507) - - (1,350,233)
Net book amount \1,922,577,617 \1,054,524,477 \1,359,875,315 \ 776,661,142 \318,320,468 \198,784,365 \108,669,195 \ - \ 5,739,412,579
1\ 31,440 million (2016: \ 30,824 million) was transferred to intangible assets (Notes 18).
Depreciation expense of \ 205,618 million (2016: \ 212,873 million), \ 3,440 million (2016: \ 4,376 million)
and \ 33,296 million (2016: \ 34,435 million) has been charged to ‘cost of sales’, ‘research and development’
and ‘selling and administrative expenses’, respectively.
For the year ended December 31, 2017, increase in construction-in-progress includes capitalized borrowing
costs amounting to \ 1,332 million (2016: \ 1,012 million) on construction-in-progress. The capitalization rate
of borrowings used to determine the amount of borrowing costs eligible for capitalization is 3.49% (2016: 3.09%).
Details of property, plant and equipment provided as collaterals in relation to borrowings and advance receipt
refund guarantee as at December 31, 2017, are as follows
(In millions of Korean won)

Book Secured Related
Collaterals Related item Secured party
amount amount amount
Land \485,008
Building 177,403
1,214,600 335,351 Korea Exim Bank
Structures 510,014
Machinery 184,669
Vehicles 132,638 Borrowings
and others
Land 1,013,138
(Note 19 and
Building 28,689 21) Korea Development
900,000 651,676
Structures 61,406 Bank
Machinery 29,435
Land 38,519
Korea Investment
110,500 85,000
Building 85,102 Capital
46
17. Investment Properties
Details of investment properties as at December 31, 2017 and 2016, are as follows:
(In thousands of 2017 2016

Korean won)
Accumulated Accumulated
Cost Book amount Cost Book amount
depreciation depreciation
Land \ 10,613,124 \ - \ 10,613,124 \ 10,613,124 \ - \ 10,613,124

Buildings 6,323,113 (223,022) 6,100,091 6,323,113 (96,676) 6,226,437
\ 16,936,237 \ (223,022) \ 16,713,215 \ 16,936,237 \ (96,676) \ 16,839,561
Changes in investment properties for the periods ended December 31, 2017 and 2016, are as follows:
(In thousands of
Korean won) 2017 2016
Land Building Total Land Building Total
Beginning
balance \ 10,613,124 \ 6,226,437 \ 16,839,561 \ 3,840,791 \ 3,140,995 \ 6,981,786
Acquisition - - - 10,470,933 6,109,826 16,580,759
Disposal - - - (3,698,600) (2,883,107) (6,581,707)
Depreciation - (126,346) (126,346) - (141,277) (141,277)
Ending balance \ 10,613,124 \ 6,100,091 \ 16,713,215 \ 10,613,124 \ 6,226,437 \ 16,839,561
There is no rental income from investment properties during the year ended December 31, 2017, and operating
expenses (including repairs and maintenance) of \ 73 million (2016: \ 43 million) were incurred on properties
of which no rental income was generated.
The fair value cannot be reasonably assessed, because the above investment property has low probability of
occurrence of comparable market transactions, and there is no alternative measuring method.
18. Intangible Assets
Changes in intangible assets for the periods ended December 31, 2017 and 2016, are as follows:
2017
(In thousands of Korean won) Other
Memberships intangible assets Total
Beginning net book amount \ 23,833,517 \ 69,760,931 \ 93,594,448
Acquisition1 - 31,440,499 31,440,499
Amortization - (34,492,012) (34,492,012)
Disposal (1,350,000) - (1,350,000)
Ending net book amount \ 22,483,517 \ 66,709,418 \ 89,192,935
Acquisition cost \ 25,570,887 \ 267,218,272 \ 292,789,159
Accumulated depreciation and
impairment loss (3,087,370) (200,508,854) (203,596,224)
Net book amount \ 22,483,517 \ 66,709,418 \ 89,192,935
47
2016
(In thousands of Korean won) Other
Memberships intangible assets Total
Beginning net book amount \ 26,932,160 \ 67,847,356 \ 94,779,516
Acquisition1 - 30,876,084 30,876,084
Amortization - (28,910,765) (28,910,765)
Disposal (3,098,643) (51,744) (3,150,387)
Ending net book amount \ 23,833,517 \ 69,760,931 \ 93,594,448
Acquisition cost \ 26,920,887 \ 235,777,773 \ 262,698,660
Accumulated depreciation and
impairment loss (3,087,370) (166,016,842) (169,104,212)
Net book amount \ 23,833,517 \ 69,760,931 \ 93,594,448
1
The amount includes \ 31,440 million (2016: \ 30,824 million) transferred from construction-in-progress (Note
16).
Amortization of \ 34,492 million (2016: \ 28,911 million) is included in the ‘selling and administrative expenses’.
The Company recognized research and development expenses totaling of \ 60,361 million (2016: \ 71,459
million) for the year ended December 31, 2017.
19. Borrowings and Debentures
Details of book amount of borrowings as at December 31, 2017 and 2016, are as follows:
Annual interest
(In thousands of Korean won) rate (%)
December 31, 2017 2017 2016
Debentures
Unsecured debenture 2.5-4.6 \ 591,744,814 \ 1,099,175,449
Less : current portion (499,932,356) (599,828,242)
91,812,458 499,347,207
Long-term borrowings denominated Korean
won
Facility loans2 2.3-4.2 385,000,000 300,000,000
General loans 4.5 100,000,000 -
Production finance 3.6-3.9 453,875,000 500,000,000
Exchange equalization fund 2.5-2.7 401,775,000 543,825,000
451,529,000 843,825,000
Short-term debentures
Unsecured debenture 3.9-4.1 162,705,311 -
162,705,311 -
Short-term borrowings
General loans1,2,3 3.2-4.5 607,000,000 1,507,000,000
Operation loans of housing construction 4 1.4 8,593,000 8,593,000
Banker’s usance2 0.3-2.2 175,863,267 411,157,120
48
Shared growth loan 3.5-3.8 474,444,698 -

Term loan - - 120,850,000
CP 4.0 40,000,000 -
Electronic short-term debenture 3.3-3.5 400,000,000 -
Invoice loan 1.0-2.1 108,422,374 153,400,008
Production Finance2 2.6 11,034,000 369,248,000
1,825,357,339 2,570,248,128
Current maturities of long-term debts
Current portion of debentures 499,932,356 599,828,242
Current portion of long-term borrowings 889,121,000 500,000,000
1,389,053,356 1,099,828,242
Total Borrowings \ 3,920,457,464 \ 5,013,248,577
1Short-term financial instruments are provided as collateral for borrowings from

Industrial and Commercial Bank
of China (Note 5).
2 Certain property, plant and equipment are provided as collaterals for borrowings from Korea Exim Bank and
Korea Development Bank (Note 16).

3 Held-to-maturity instruments are provided as collaterals for borrowings from Industrial Bank of Korea (Note
13).
4 Available-for-sale financial assets are provided as collaterals for borrowings from Construction Guarantee
(Note 14).
Details of debentures as at December 31, 2017 and 2016, are as follows:
Annual interest rate (%)

December 31, 2017
The 89-2nd unsecured debenture 4.4 \ - \ 399,933,507
The 90-2nd unsecured debenture 3.3 - 199,894,735
The 91st unsecured debenture 2.5 499,932,356 499,347,207
The 92nd unsecured debenture 3.9 59,912,413 -
The 93-1st unsecured debenture 4.2 61,879,123 -
The 93-2nd unsecured debenture 4.4 9,979,025 -
The 93-3rd unsecured debenture 4.6 9,978,152 -
The 94th unsecured debenture 3.9 53,899,334 -
The 95th unsecured debenture 3.9 19,958,782 -
The 96-1st unsecured debenture 4.1 28,934,781 -
The 96-2nd unsecured debenture 4.6 9,976,158 -
754,450,124 1,099,175,449
Less: short-term debentures (162,705,311) -
\ 91,812,457 \ 499,347,207
49
Details of issue of debentures as at December 31, 2017, are as follows:
The 89-2nd unsecured debenture The 90-2nd unsecured debenture The 91st unsecured debenture
Face amount \400,000 million \200,000 million \500,000 million
Issuing cost \1,543 million \670 million \1,716 million
Interest rate 4.4% 3.3% 2.5%
Payment of credit every three Payment of credit every three Payment of credit every three
Interest payment
months after issued date months after issued date months after issued date
Issued date February 14, 2012 September 26, 2012 February 12, 2015
Maturity date February 14, 2017 September 26, 2017 February 12, 2018
The 92nd unsecured debenture The 93-1st unsecured debenture The 93-2nd unsecured debenture
Issuing cost \151 million \156 million \25 million
Interest payment
Issued date July 28, 2017 August 28, 2017 August 28, 2017
Maturity date July 28, 2018 February 28, 2019 August 28, 2019
The 93-3rd unsecured debenture The 94th unsecured debenture The 95th unsecured debenture
Issuing cost \25 million \136 million \50 million
Interest payment
Issued date August 28, 2017 September 28, 2017 October 26, 2017
Maturity date February 28, 2020 September 28, 2018 October 26, 2018
The 96-1st unsecured debenture The 96-2nd unsecured debenture

Face amount \29,000 million \10,000 million
Issuing cost \73 million \25 million
Interest rate 4.1% 4.6%
Payment of credit every three months after issued Payment of credit every three months after
Interest payment
date issued date
Issued date November 23, 2017 November 23, 2017
Maturity date November 23, 2018 November 23, 2019
50
20. Net Defined Benefit Liabilities
The defined benefit pension plan that the Company operates is final salary pension plan, which provide benefits
to employees in the form of a guaranteed level of pension payable for life. The level of benefits provided depends
on employees’ length of service and their salaries in the final years leading up to retirement. The majority of
benefit payments are from trustee administered funds; however, there are also a number of unfunded plans.
Details of net defined benefit liabilities recognized in the separate statements of financial position as at

Present value of funded defined benefit obligations \ 458,902,757 \ 472,024,532
Present value of unfunded defined benefit obligations 14,388,040 27,652,105
473,290,797 499,676,637
Fair value of plan assets1 (432,779,744) (398,371,746)
Liability in the separate statement of financial position \ 40,511,053 \ 101,304,891
1 The contributions to the National Pension Fund of \ 586 million are included in the fair value of plan assets as
at December 31, 2017 (2016: \ 605 million).
Changes in the defined benefit obligations for the periods ended December 31, 2017 and 2016, are as follows:

Current service cost 68,817,688 78,867,372
Interest expense 14,923,330 15,972,880
Past service costs and gains and losses on settlement - (10,372,284)
Remeasurements:
Actuarial gain and loss from change in financial
assumptions (16,796,565) -
Others (11,148,612) (52,080,617)
Payments from plans:
Benefit payments (83,077,973) (110,888,843)
Transfer from and to related companies 896,292 -
Ending balance \ 473,290,797 \ 499,676,637
Changes in the fair value of plan assets for the periods ended December 31, 2017 and 2016, are as follows:

Interest income 11,773,665 11,653,227
Remeasurements:
Return on plan assets (excluding amounts included in
interest income) (7,318,549) (7,022,763)
Contributions:
Employers 93,555,249 96,542,650
Payments from plans:
Benefit payments (63,602,367) (105,055,120)
51
Ending balance \ 432,779,744 \ 398,371,746
Plan assets as at December 31, 2017 and 2016, consist of as follows:
2017 2016
(In thousands of Korean won) Composition Composition
Quoted price Quoted price
(%) (%)
Cash and cash equivalents \ 432,193,539 99.9 \ 397,766,831 99.8
Others (National Pension Fund) 586,205 0.1 604,915 0.2
\ 432,779,744 100 \ 398,371,746 100.0
The significant actuarial assumptions as at December 31, 2017 and 2016, are as follows:

Discount rate 3.5% 3.2%
Salary growth rate 3.7% 4.0%
The sensitivity of the defined benefit obligations as at December 31, 2017, to changes in the weighted significant
assumptions is:
(In percentage, %) Effect on defined benefit obligation

Decrease in
Changes in assumption Increase in assumption
assumption
Discount rate 1.0% 6.4% decrease 7.3% increase

Salary growth rate 1.0% 7.3% increase 6.6% decrease
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is
calculated using the projected unit credit method, the same method applied when calculating the defined benefit
obligations recognized on the separate statement of financial position. The methods and types of assumptions
used in preparing the sensitivity analysis did not change compared to the previous period.
The Company reviews the funding level on an annual basis and has a policy of preserving deficit from the fund.
Expected contributions to post-employment benefit plans for the year ending December 31, 2018, are \ 73,324
million and the weighted average duration of the defined benefit obligations is 6.95 years.
Expected maturity analysis of undiscounted pension benefits as at December 31, 2017, is as follows:
(In thousands of Korean Between 1 and 2 Between 2 and 5
won) Less than 1 year years years Over 5 years Total
Pension benefits. \ 64,353,974 \ 70,687,928 \ 168,526,460 \ 288,889,704 \ 592,458,066
52
21. Provisions, Contingent Liabilities and Commitments
A. Provisions
Details and changes in provisions for liabilities for the periods ended December 31, 2017 and 2016, are as
follows:
(In thousands of Korean

Reference January 1, 2017 Increase (decrease) December 31, 2017
won)
Long-term Incentives (A) \ 8,438,508 \ - \ 8,438,508
Litigations (B) 340,849,361 93,848,864 434,698,225
\ 349,287,869 \ 93,848,864 \ 443,136,733

Reference January 1, 2016 Increase (decrease) December 31, 2016
won)
Long-term Incentives (A) \ 8,438,508 \ - \ 8,438,508
Litigations (B) 391,327,088 (50,477,727) 340,849,361
\ 399,765,596 \ (50,477,727) \ 349,287,869
(A) The Company has a long-term incentive plans for its executives based on three-year management
performance criteria and recognized estimated amounts payable within and after one year from December 31,
2017, as ‘provisions’ and ‘other provisions’, respectively.
(B) As at December 31, 2017, the Company has a pending lawsuit amounting to \ 82,836 million against the
Company for claiming additional payments of wages related to general wages. The Company recognizes the
best estimate which is expected to be paid as provisions. The final liability of the Company is subject to change
from the estimated amount depending on the outcome of this case. In addition, the Company has accrued
warranty provision for the estimated costs of future repair, based on the historical data and others, and the
corresponding amount is recognized as warranty expenses.
B. Contingent liabilities
(A) As at December 31, 2017, the Company is named as a defendant in 32 legal cases, excluding the case and
the arbitration on which the Company recognized provision. The aggregate amounts of claims as a defendant
amounted to approximately \ 103,144 million. The said case is still pending in court and as at December 31,
2017, the outcome of these cases is uncertain. Accordingly, the ultimate effect of these matters on the financial
position of the Company cannot be determined.
(B) As at December 31, 2017, the Company provides guarantees to the ship-owners vessels finance amounting
to USD 58 million.
(C) The Company provides performance guarantees of USD 351 million to the ship-owners in relation to the
shipbuilding & offshore contracts (Note 34).
(D) The Company provides payment guarantees for subsidiary’s refund guarantee of USD 288 million and
borrowings up to CNY 1,253 million (Executed amount: CNY 1,067 million) and USD 144 million (Executed
amount: USD 140 million). And the Company provides guarantees of USD 54 million for a subsidiary’s currency
forward contracts. (Note 34).
53
C. Commitments
(A) As at December 31, 2017, the Company has technical assistance agreements with three foreign companies
for manufacturing machines, shipbuilding and others.
(B) As at December 31, 2017, the Company is provided with refund guarantee of USD 3,456 million from Korea
Exim bank and others. The ships under construction are pledged as collaterals for the guarantees provided by
the financial institutions.
(C) Commitment limits made with financial institutions are as follows:
(In millions of Korean won) Financial institution Contract limit

Overdrawn account Woori Bank and others \ 36,000
Trade finance KEB Hana Bank and others 686,497
General loan, others Korea Exim Bank and others 2,634,574
Purchase card Nonghyup and others 132,000
22. Share Capital and Share Premium
The Company’s total number of authorized shares is 500 million shares and the par value per share is \ 5,000.
As at December 31, 2017, total number of shares issued is 390,114,845 shares, including 114,845 shares of
preferred share, and share capital is \1,950,574 million.
Number of shares outstanding Share capital and premium

(In millions of Korean (in shares) (in thousands of Korean won)
won) Ordinary Preferred Share Share
Total1 Total
shares shares capital premium
January 1, 2016 204,910,957 114,845 205,025,802 \1,154,951,155 \ 417,172,244 \ 1,572,123,399
Capital increase 159,124,614 - 159,124,614 795,623,070 334,845,851 1,130,468,921
December 31, 2016 364,035,571 114,845 364,150,416 \ 1,950,574,225 \ 752,018,095 \ 2,702,592,320
December 31, 2017 364,035,571 114,845 364,150,416 \ 1,950,574,225 \ 752,018,095 \ 2,702,592,320
1
The Company holds 25,964,429 shares of its ordinary shares (Note 23).
23. Accumulated Other Comprehensive Income and Other Components of Equity
Changes in accumulated other comprehensive income for the periods ended December 31, 2017 and 2016,
are as follows:

Increase
Beginning Ending
(decrease)
Change in the fair value of available-for-sale
financial assets \ 4,916,131 \ 157,849 \ 5,073,980
Reevaluation reserves 868,518,307 (2,006,049) 866,512,258
\ 873,434,438 \ (1,848,200) \ 871,586,238
54

Increase
Beginning Ending
(decrease)
Change in the fair value of available-for-sale
financial assets \ 23,601,777 \ (18,685,646) \ 4,916,131
Reevaluation reserves - 868,518,307 868,518,307
\ 23,601,777 \ 849,832,661 \ 873,434,438
Changes in accumulated other comprehensive income represent net of tax effect amounts.
Other components of equity as at December 31, 2017 and 2016, are as follows:

Treasury share \ (970,268,048) \ (970,268,048)
Gain on disposal of treasury share 6,360,652 6,360,652
Stock options 11,250 11,250
\ (963,896,146) \ (963,896,146)
As at December 31, 2017, the Company holds 25,964 thousand shares of its ordinary shares amounting to
\ 970,268 million. The treasury share is presented as the deduction from equity.
24. Retained Earnings
Retained earnings as at December 31, 2017 and 2016, consist of:

Legal reserves1 \ 103,100,000 \ 103,100,000
Discretionary reserves2 3,274,437,967 3,361,894,404
Unappropriated retained earnings (319,965,459) (87,456,437)
\ 3,057,572,508 \ 3,377,537,967
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 share premium, the excess legal reserves
may be distributed (in accordance with a resolution of the shareholders’ meeting).
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.
The appropriation of retained earnings for the year ended December 31, 2017, is expected to be appropriated
at the shareholders’ meeting on March 22, 2018. The appropriation date for the year ended December 31,
2016, was March 24, 2017.
The appropriation of retained earnings for the periods ended December 31, 2017 and 2016, is as follows:
55
(In Korean won) 2017 2016
Unappropriated retained earnings carried over from prior year \ - \ -

Loss for the period (337,606,491,056) (134,734,538,838)
Remeasurements of net defined benefit liabilities 15,634,984,119 34,153,853,319
Revaluation reserve 2,006,048,088 13,124,248,736
Research and development reserves 40,000,000,000 65,000,000,000
Reserve for facilities 279,965,458,849 22,456,436,783
- -
Appropriation of retained earnings - -

Unappropriated retained earnings to be carried forward \ - \ -
25. Breakdown of Expenses by Nature
Breakdown of expenses by nature for the periods ended December 31, 2017 and 2016, are as follows:

Changes in inventories \ 135,700,033 \ (75,859)
Raw-materials and supplies used 3,171,741,732 4,825,783,969
Employee benefit expense 1,016,826,008 1,311,085,193
Depreciation and amortization 276,846,038 280,595,460
Service fees 206,388,978 288,799,758
Outsource expenses 2,235,346,706 2,645,159,320
Others 846,409,373 713,955,222
\ 7,889,258,868 \ 10,065,303,063
26. Selling, General and Administrative Expenses
Details of selling, general and administrative expenses for the periods ended December 31, 2017 and 2016, are
as follows:

Employee benefit expense \ 92,175,801 \ 118,943,442
Service fees 59,661,286 83,324,359
Warranty expense (4,119,359) (20,242,999)
Impairment loss (12,259,425) 181,366,117
Depreciation and amortization 67,787,888 63,346,215
Research and development 60,117,424 71,194,964
Taxes and dues 6,735,197 10,443,463
Others 34,645,097 45,160,624
\ 304,743,909 \ 553,536,185
56
27. Other Income and Expenses
Details of other income and expenses for the periods ended December 31, 2017 and 2016, are as follows:

Other income
Gain on foreign currency transaction \ 56,789,560 \ 62,538,260
Gain on foreign currency translation 48,916,069 96,424,226
Gain on valuation of derivatives 507,350,525 131,929,894
Gain on derivative transactions 822,655,684 432,366,268
Gain on firm commitment valuation 225,511,878 379,257,019
Gain on firm commitment transactions 263,652,069 273,506,260
Others 69,169,220 175,452,374
\ 1,994,045,005 \ 1,551,474,301
Other expenses
Loss on foreign currency transaction \ 253,672,073 \ 76,660,093
Loss on foreign currency translation 250,889,861 21,003,083
Loss on valuation of derivatives 226,186,667 453,191,951
Loss on derivative transactions 264,752,445 291,385,180
Loss on firm commitment valuation 294,871,656 131,909,764
Loss on firm commitment transactions 624,825,500 384,482,751
Others 61,645,112 76,504,953
\ 1,976,843,314 \ 1,435,137,775
28. Finance Income and Costs
Details of finance income and costs for the periods ended December 31, 2017 and 2016, are as follows:
Finance income
Interest income \ 14,160,749 \ 18,555,101
Currency transaction differences 24,081,168 13,394,054
Currency translation differences 93,785,144 12,394,351
Gain from derivative valuation 17,782,252 49,590,608
Gain from derivative transactions 79,437,612 51,746,941
\ 229,246,925 \ 145,681,055
Finance costs
Interest expense \ 36,593,189 \ 44,314,400
Currency transaction differences 13,356,378 3,737,811
Currency translation differences 9,786,067 31,970,311
Loss from derivative valuation 20,038,094 40,361,845
Loss from derivative transactions 103,773,092 71,809,018
\ 183,546,820 \ 192,193,385
57
29. Income Tax Expense (Benefit)
Income tax expense (benefit) for the periods ended December 31, 2017 and 2016, consists of:

Current tax on profits for the year \ (10,448,555) \ (41,086,900)
Origination and reversal of temporary differences (90,192,334) 64,681,795
Deferred tax due to tax loss carryforwards 8,779,259 (757,334)
Total tax effect \ (91,861,630) \ 22,837,561
Income tax expense (benefit) \ (91,861,630) \ 22,837,561
Reconciliation between profit (loss) before tax and income tax expense (benefit) for the periods ended
December 31, 2017 and 2016, is as follows:

Loss before tax \ (429,468,121) \ (111,896,978)
Income tax based on statutory tax rate \ (103,931,285) \ (27,079,069)
Adjustments 12,069,655 49,916,630
Tax deduction (1,014,127) (10,550,720)
Permanent differences and others (1,554,566) (21,284,553)
Unrecognized deferred tax assets 14,638,348 81,751,903
Income tax expense (benefit) \ (91,861,630) \ 22,837,561
Effective tax rate1,2 - -
1 Income tax expense / profit or loss before income tax
2 As income tax benefit is occurred, the Company did not calculate effective tax rate.
Changes in the temporary differences and related deferred tax assets and liabilities are as follows:
2017
Temporary differences Deferred tax assets (liabilities)
(In thousands of Korean won)
Increase
Beginning Ending Beginning Ending
(decrease)
Post-employment benefit obligation \ 64,378,446 \ (42,214,524) \ 22,163,922 \ 15,579,584 \ 5,363,669

Accrued interest (3,850,522) 1,489,991 (2,360,531) (931,826) (571,248)
Inventories 4,537,407 (144,293) 4,393,114 1,098,052 1,063,133
Property, plant and equipment (244,638,862) 19,140,976 (225,497,886) (59,202,605) (54,570,488)
Subsidiaries, associates and joint
ventures (117,865,908) - (117,865,908) (3,462,406) (3,462,406)
Impairment loss on investment 1,016,610 4,150 1,020,760 246,020 247,024
Provision for impairment of
receivables 301,401,068 (163,931,094) 137,469,974 71,160,541 31,484,254
Gain (loss) on foreign currency
translation (63,517,340) 170,271,302 106,753,962 (15,371,196) 25,834,459
Accrued expenses 421,168,572 5,634,009 426,802,581 31,742,794 28,266,225
Due to customers for contract work
and others 582,001,679 9,694,725 591,696,404 140,844,406 143,190,530
Provisions 349,287,869 93,848,864 443,136,733 84,527,664 107,239,089
Derivatives 180,018,979 (335,175,944) (155,156,965) 43,564,593 (37,547,985)
58
Reserve for research and human
resource development (60,000,000) 40,000,000 (20,000,000) (14,520,000) (4,840,000)
Unused tax losses 1,581,779,496 465,936,248 2,047,715,744 382,790,638 495,547,210
Others (76,668,009) 128,161,692 51,493,683 (26,358,980) 4,656,147
\ 2,919,049,485 \ 392,716,102 \ 3,311,765,587 \ 651,707,279 \ 741,899,613
Deferred tax charged directly to

(deducted from) shareholders'
equity \ (1,181,389,232) \ (18,188,369) \ (1,199,577,601) \ (285,896,194) \ (290,297,779)
Tax deduction 22,434,864 (8,779,259) 13,655,605 12,641,478 3,862,219
\ 378,452,563 \ 455,464,053
2016
Temporary differences Deferred tax assets (liabilities)
(In thousands of Korean won)
Increase
Beginning Ending Beginning Ending
(decrease)
Post-employment benefit obligation \ 117,208,178 \ (52,829,732) \ 64,378,446 \ 28,364,379 \ 15,579,584

Accrued interest (11,133,041) 7,282,519 (3,850,522) (2,694,196) (931,826)
Inventories 19,400,712 (14,863,305) 4,537,407 4,694,972 1,098,052
Property, plant and equipment (245,033,110) 394,248 (244,638,862) (59,298,013) (59,202,605)
Subsidiaries, associates and joint
ventures (125,432,532) 7,566,624 (117,865,908) (5,293,529) (3,462,406)
Impairment loss on investment 1,512,460 (495,850) 1,016,610 366,015 246,020
Provision for impairment of
receivables 241,509,245 59,891,823 301,401,068 58,445,237 71,160,541
Gain (loss) on foreign currency
translation (41,111,809) (22,405,531) (63,517,340) (9,949,058) (15,371,196)
Accrued expenses 423,010,206 (1,841,634) 421,168,572 102,368,470 31,742,794
Due to customers for contract work
and others 1,016,899,427 (434,897,748) 582,001,679 246,089,661 140,844,406
Provisions 399,765,596 (50,477,727) 349,287,869 96,743,274 84,527,664
Derivatives 14,869,680 165,149,299 180,018,979 3,598,463 43,564,593
Reserve for research and human
resource development (125,000,000) 65,000,000 (60,000,000) (30,250,000) (14,520,000)
Unused tax losses 1,282,470,371 299,309,125 1,581,779,496 310,357,830 382,790,638
Others (67,893,112) (8,774,897) (76,668,009) (27,154,430) (26,358,980)
\ 2,901,042,271 \ 18,007,214 \ 2,919,049,485 \ 716,389,075 \ 651,707,279
Deferred tax charged directly to

(deducted from) shareholders'
equity \ (15,180,110) \ (1,166,209,122) \ (1,181,389,232) \ (3,673,587) \ (285,896,194)
Tax deduction 11,884,144 10,550,720 22,434,864 11,884,144 12,641,478
\ 724,599,632 \ 378,452,563
Income tax related to components of other comprehensive income for the periods ended December 31, 2017
and 2016, are as follows:

Loss on valuation of available-for-sale financial assets \ (1,619,925) \ (1,569,530)
Remeasurements (12,034,099) (7,042,455)
Revaluation of land (276,643,755) (277,284,209)
\ (290,297,779) \ (285,896,194)
59
Details of unrecognized deductible (taxable) temporary differences as deferred tax assets (liabilities) as at

won) 2017 2016 Remark
Interests in subsidiary \ (19,561,949) \ (19,561,949) No plan for disposal

Donation and others 76,803,479 71,958,517 Uncertainty of future taxable profit
Tax credit carry forwards 1 9,793,386 9,793,386 Uncertainty of future taxable profit
1 The maturity of tax credit carryforwards is as follows:

2020 \ 9,793,386
Since it is probable that future taxable profit will be available against which the unused tax losses can be utilized,
the Company recognized the related deferred tax assets.
The analysis of deferred tax assets and liabilities as at December 31, 2017 and 2016, is as follows:
2017 2016
(In thousands of Korean won) Within 1 year After 1 year Within 1 year After 1 year
Deferred tax assets \ 77,205,263 \ 926,524,903 \ 51,874,764 \ 855,056,113
Deferred tax liabilities (5,411,248) (542,854,865) (21,143,023) (507,335,291)
\ 71,794,015 \ 383,670,038 \ 30,731,741 \ 347,720,822
30. Loss per Share
Loss per ordinary share
A. Basic loss per ordinary share
Basic loss per ordinary share is calculated by dividing the loss attributable to equity holders of the 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.
Basic loss per ordinary share for the periods ended December 31, 2017 and 2016, is as follows:
(In millions of Korean won except per share amount) 2017 2016
Loss attributable to ordinary equity holders of the Company1 \ (337,500) \ (134,692)
Weighted average number of ordinary shares in issue
(in thousands of shares)2 364,036 249,792
Basic loss per share (in Korean won) \ (927) \ (539)
60
B. Diluted loss per ordinary share
Diluted loss per ordinary share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. There is no dilutive potential ordinary
shares the Company is holding at December 31, 2017.
Diluted loss per ordinary share for the periods ended December 31, 2017 and 2016, is as follows:
Loss used to determine diluted loss per ordinary share1 \ (337,500) \ (134,692)
Weighted average number of ordinary shares
for diluted loss per share (in thousands of shares)2 364,036 249,792
Diluted loss per share (in Korean won) \ (927) \ (539)
Loss per preferred share
A. Basic loss per preferred share
Basic loss per preferred share is calculated by dividing the loss attributable to equity holders of the Company
by the weighted average number of preferred shares in issue during the year excluding preferred shares
purchased by the Company and held as treasury shares.
Basic loss per preferred share for the periods ended December 31, 2017 and 2016, is as follows:
Loss attributable to preferred equity holders of the Company1 \ (106) \ (43)
Weighted average number of preferred shares in issue
(in thousands of shares)2 115 115
Basic loss per preferred share (in Korean won) \ (927) \ (370)
B. Diluted loss per preferred share
Diluted loss per preferred share is calculated by adjusting the weighted average number of preferred shares
outstanding to assume conversion of all dilutive potential preferred shares. There is no dilutive potential
preferred shares the Company is holding at December 31, 2017.
Diluted loss per preferred share for the periods ended December 31, 2017 and 2016, is as follows:
Loss used to determine diluted loss per preferred share1 \ (106) \ (43)
Weighted average number of preferred shares
for diluted loss per share (in thousands of shares)2 115 115
Diluted loss per preferred share (in Korean won) \ (927) \ (370)
1
Profit (loss) attributable to ordinary equity holders of the Company and profit (loss) attributable to preferred
equity holders of the Company for the periods ended December 31, 2017 and 2016, are as follows:
61
(In millions of Korean won) 2017 2016

Loss attributable to equity holders of the Company \ (337,606) \ (134,735)
Adjustments 106 43
Loss attributable to ordinary equity holders of the Company \ (337,500) \ (134,692)
Loss attributable to preferred equity holders of the Company \ (106) \ (43)
2
Weighted average number of ordinary shares and preferred shares in issue and those for diluted earnings
(loss) for the periods ended December 31, 2017 and 2016, are as follows:
Ordinary shares
Beginning \ 364,036 \ 204,911
Issue of share capital - 44,881
Weighted average number of ordinary shares in issue \ 364,036 \ 249,792
Preferred shares
Beginning \ 115 \ 115
Weighted average number of preferred shares in issue \ 115 \ 115
31. Cash Generated from Operations
Details of cash generated from operations for the periods ended December 31, 2017 and 2016, consist of the
following:

Loss before income tax \ (429,468,121) \ (111,896,978)
Adjustments for:
Post-employment benefit obligations 71,967,353 72,814,740
Provisions for impairment of receivables (reversal) (12,578,487) 183,808,684
Loss on disposal of subsidiaries, associates, and joint ventures 437,565 8,434,406
Impairment loss on subsidiaries, associates, and joint ventures - (580,166)
Loss on disposal of available-for-sale financial assets 254,407 91,846
Gain on disposal of available-for-sale financial assets - (24,837,735)
Gain on foreign currency translation (142,701,214) (108,818,576)
Loss on foreign currency translation 260,675,928 52,973,394
Depreciation 242,354,026 251,684,695
Gain on disposal of property, plant and equipment (4,411,444) (23,813,117)
Loss on disposal of property, plant and equipment 4,357,035 18,812,625
Loss on revaluation of property, plant and equipment - 8,143,846
Reversal of impairment loss on property, plant and equipment - (714,829)
Amortization 34,492,012 28,910,765
Gain on disposal of intangible assets - (1,757,134)
Loss on disposal of intangible assets - 89,330
Gain on disposal of investment property - (11,440,161)
Loss on disposal of investment property - 716,234
Loss (gain) from derivative transaction and valuation (812,475,775) 191,114,282
Loss (gain) from firm commitment transaction and valuation 430,533,209 (136,370,763)
62
Interest income (17,891,929) (46,681,706)

Interest expense 132,260,631 153,566,563
Dividend income (392,955) (307,027)
Donation 3,286,786 -
Other expense 126,346 141,278
190,293,494 615,981,474
Changes in assets and liabilities:
Trade receivables 75,115,996 (32,301,873)
Due from customers for contract work 1,399,028,736 (937,944,701)
Due to customers for contract work (271,088,389) (968,674,618)
Other receivables (9,774,348) (91,616,967)
Advance payments 160,420,802 534,842,916
Prepaid expenses 63,917,314 60,654,529
Inventories 464,103,912 228,634,558
Other current financial assets 257,417 (8,992,394)
Other current assets 22,463,817 (28,695,434)
Long-term prepaid expenses (64,527,200) (36,593,955)
Trade payables (641,242,230) (123,083,665)
Other payables 5,453,562 7,052,319
Advance receipts (214,621,598) (624,368,266)
Accrued expenses 4,925,832 (4,783,572)
Other current liabilities (1,372,912) (2,235,867)
Net defined benefit liabilities (112,134,562) (102,376,372)
Provisions (97,930,205) (54,681,378)
Derivative financial instruments 13,177,414 (129,617,248)
Firm commitment (41,875,256) 252,655,402
Other non-current financial liabilities 2,766,062 (4,035,026)
757,064,164 (2,066,161,612)
Cash generated from (used in) operations \ 517,889,537 \ (1,562,077,116)
The Company’s separate statements of cash flows are prepared using the indirect method. The significant non-
cash transactions for the periods ended December 31, 2017 and 2016, are as follows:
Transfer of current portion of long-term borrowings \ 1,007,934,000 \ 500,000,000

Transfer of current portion of debentures 499,347,207 599,828,242
Transfer of construction in-progress to other property, plant
and equipment 145,948,421 335,259,187
63
Changes in liabilities arising from financial activities for the year ended December 31, 2017, are as follows:
Net cash inflow

(outflow) from
(in thousands of Korean At January 1, financing Non-cash inflow At December 31,
won) 2017 activities (outflow) 2017
Short-term borrowings \ 2,570,248,128 \ (718,523,116) \ (26,367,673) \ 1,825,357,339

Short-term debentures - 162,590,930 114,381 162,705,311
Current-portion of long-
term debts 1,099,828,242 (1,218,813,000) 1,508,038,113 1,389,053,355
Debentures 499,347,207 91,769,120 (499,303,869) 91,812,458
Long-term borrowings 843,825,000 675,645,500 (1,067,941,500) 451,529,000
\ 5,013,248,577 \ (1,007,330,566) \ (85,460,548) \ 3,920,457,463
32. Financial Risk Management
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value
interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall
risk management program focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Company’s financial performance. The Company uses derivative financial instruments
to hedge certain risk exposures.
Risk management is carried out by a central treasury department under policies approved by the board of
directors. The Company treasury identifies, evaluates and hedges financial risks in close co-operation with the
Company’s operating units. The board provides written principles for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative
financial instruments and non-derivative financial instruments, and investment of excess liquidity.
32.1 Market risk
(a) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar and Euro. Foreign exchange risk arises from firm commitment
and future commercial transactions, recognized assets and liabilities.
Management has set up a policy to require Group companies to manage their foreign exchange risk against
their functional currency.
The Company’s risk management policy is to hedge of anticipated cash flows and it qualify as firm commitment
for hedge accounting purposes.
The Company uses forward contracts and currency swaps to hedge its foreign exchange risk arising from all
anticipated cash flows in foreign currencies. Therefore, the fluctuation in value of major foreign currencies has
almost no impact on profit and loss.
64
(b) Price risk
The Company is exposed to equity securities price risk because of investments held by the Company and
classified on the separate statement of financial position as available-for-sale. The market values for the
Company’s listed equity investments as at December 31, 2017 and 2016, are \ 3,991 million and \ 4,606
million, respectively.
If there is change in price of equity investment by 30%, the amount of other comprehensive income changes for
the periods ended December 31, 2017 and 2016, would be \ 907 million and \ 1,047 million, respectively.
(c) Interest rate risk
The Company’s cash flow interest rate risk arises from borrowings. Borrowings issued at variable rates expose
the Company to cash flow interest rate risk which is partially offset by cash equivalents held at variable rates.
Also, borrowings and debentures issued at fixed rates expose the Company to fair value interest rate risk.
The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking
into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these
scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each
simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that
represent the major interest-bearing positions.
Based on the simulations performed, 0.1% of interest rate fluctuation will have \ 3,920 million (2016: \ 5,013
million) of increase or decrease impact on the profit or loss.
32.2 Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well as credit exposures to customers,
including outstanding receivables and committed transactions. For banks and financial institutions, only
independently rated parties with a minimum rating of ‘A’ are accepted.
If customers are independently rated, these ratings are used. If there is no independent rating, the credit quality
of the customer is evaluated taking into account its financial position, past experience and other factors.
Accordingly, credit exposure to the Company is expected to be restricted. The maximum exposure to credit risk
at the end of the reporting date is the carrying value of the financial assets and includes guaranteed amounts
of \ 420,993 million \ 742,455 million relating to the financial guarantee contract and performance guarantees
provided, respectively.
32.3 Liquidity risk
The Company monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash
to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities
at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its
borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant
compliance, compliance with internal financial ratio targets and, if applicable external regulatory or legal
requirements – for example, currency restrictions.
65
The analysis of the Company’s liquidity risk as at December 31, 2017 and 2016, are as follows:

Less than More than
1-2 years
1 year 2 years
Derivative financial assets \ 328,088,495 \ 73,569,001 \ 22,433,440
Borrowings 1,865,754,181 376,699,477 87,631,041
Current portion of long-term debts 1,399,594,365 - -
Debentures 171,277,007 83,416,651 10,052,509
Trade payables and other financial liabilities 1,208,881,241 18,942,062 -
Derivative financial liabilities 146,666,498 52,662,638 13,430,158
Payment guarantee contracts and others1 1,111,323,299 30,346,277 21,778,511
1
Payment guarantee contracts present maximum amount to be paid upon principal debtor’s claim (Note 21).

Less than More than
1-2 years
1 year 2 years
Derivative financial assets \ 203,020,422 \ 77,154,070 \ 3,078,094
Borrowings 2,618,129,365 849,652,091 -
Current portion of long-term debts 1,115,263,699 - -
Debentures 12,565,000 501,480,260 -
Trade payables and other financial liabilities 1,864,069,594 16,176,000 -
Derivative financial liabilities 768,487,498 87,307,536 15,424,271
Payment guarantee contracts and others1 1,270,617,751 285,232,818 47,720,574
1
Payment guarantee contracts present maximum amount to be paid upon principal debtor’s claim (Note 21).
Details of the Company’s recognized financial assets and liabilities subject to enforceable master netting
arrangements as at December 31, 2017, are as follows:
(In thousands of Korean won) Presented in the separate

Amounts not
statement of financial Net amount
offset
position
Derivative financial assets \ 345,201,414 \ - \ 345,201,414
Derivative financial liabilities 197,255,649 - 197,255,649
32.4 Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by
total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown
66
in the separate statements of financial position) less cash and cash equivalents. Total capital is calculated as
‘equity’ as shown in the separate statement of financial position plus net debt.
The gearing ratios as at December 31, 2017 and 2016, are as follows:

Total borrowings (Note 19) \ 3,920,457,463 \ 5,013,248,577
Less: cash and cash equivalents (Note 4) 315,008,775 929,561,607
Net debts 3,605,448,688 4,083,686,970
Total equity 5,667,854,921 5,989,668,580
Total capital \ 9,273,303,609 \ 10,073,355,550
Gearing ratio 38.88% 40.54%
33. Operating Segment Information
The strategic steering management has determined the operating segments, and reviewed the operating
information of segments for the purposes of allocating resources and assessing performance.
General information by business segments
Sales Sales
Segment Product and Services Main Customer
Type ratio (%)
Shipbuilding Foreign ship-owners,
Product Drillship, LNG, off-shore platform, others 99.3
& offshore others
Construction business
E&I Product Engineering works, construction, others 0.7
owners, others
100.0
Financial information by business segments

Shipbuilding & offshore E&I Total
Sales
Gross sales \ 7,344,449,472 \ 63,334,832 \ 7,407,784,304
Inter-segment sales - (10,895,354) (10,895,354)
Net sales \ 7,344,449,472 \ 52,439,478 \ 7,396,888,950
Operating loss \ (444,610,096) \ (7,002,276) \ (451,612,373)

Property, plant and equipment & intangible assets 5,585,699,117 18,084,191 5,603,783,308
Depreciation & amortization 276,790,870 55,168 276,846,038

Shipbuilding & offshore E&I Total
Sales
Gross sales \ 9,813,073,580 \ 108,627,626 \ 9,921,701,206
Inter-segment sales - (38,119,316) (38,119,316)
Net sales \ 9,813,073,580 \ 70,508,310 \ 9,883,581,890
67
Operating loss \ (117,387,917) \ (15,300,705) \ (132,688,622)

Property, plant and equipment & intangible assets 5,814,870,056 18,136,971 5,833,007,027
Depreciation & amortization 280,490,643 104,817 280,595,460
Since most of the debts are jointly utilized debt, the Company's management does not separately report with
segment liabilities.
Reconciliation between segment operating loss and operating loss
Total segment operating loss \ (451,612,372) \ (132,688,622)

Internal income/expense and other operating
income/expense between segments - -
Undistributed selling and administrative income/expenses (40,757,546) (49,032,552)
Operating loss per statement of profit or loss \ (492,369,918) \ (181,721,174)
Undistributed selling and administrative expenses are not distributed to segments since they are centrally
incurred costs.
34. Related Party Transactions
The subsidiaries as at December 31, 2017 and 2016, are as follows:
Percentage of ownership (%)

2017 2016
Samsung Heavy Industries (Ningbo) Co., Ltd. 100 100
Samsung Heavy Industries (Rongcheng) Co., Ltd. 100 100
Rongcheng Gaya Heavy Industries Co., Ltd. 100 100
Samsung Heavy Industries India Pvt. Ltd. 100 100
Camellia Consulting Corporation 100 100
Samsung Heavy Industries(M) SDN.BHD 100 100
SVIC 13 New Technology Business investment 99 99
Samsung Heavy Industries Brazil 100 100
SHI Brazil Construction 100 100
Samsung Heavy Industries Nigeria Co. Ltd. 100 100
SHI-MCI FZE 70 70
SHI Mozambique LDA1 100 -
1Established during 2017.
Details of associates and other related parties that have sales and other transactions with the Company or have
receivables and payables balances as at December 31, 2017 and 2016, are as follows:
68
2017
(In thousands of Korean won) Sales Purchase Receivables Payables
Subsidiaries
Samsung Heavy Industries (Ningbo) Co.,
Ltd. \ 10,154,122 \ 52,018,601 \ 1,664,676 \ 4,000,019
Samsung Heavy Industries (Rongcheng)
Co., Ltd. 1,299,989 113,595,648 14,931,276 1,099,528
Rongcheng Gaya Heavy Industries Co., Ltd. 27,596 12,448,177 28,214 50,140
Samsung Heavy Industries India Pvt. Ltd. - 3,356,186 - -
Camellia Consulting Corporation - 2,347,097 - -
Samsung Heavy Industries Nigeria Co. Ltd. 571,478,115 - 251,661,082 -
SHI-MCI FZE 289,796 - 3,521,353 -
Others 1
Samsung C&T Corporation and others 123,644,144 218,889,669 437,158,738 29,580,487

\ 706,893,762 \ 402,655,378 \ 708,965,339 \ 34,730,174
1
Although the entity is not the related party of the Company in accordance with Korean IFRS 1024, the entity
belongs to a large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act. The effect
of due to customers for contract work amount to \ 2,592 is deducted due to applying proceeds sales. Related
to defined benefit plan, trade receivables and others are included defined benefit pension asset which is paid in
Samsung Life Insurance Co., Ltd. and etc.
2016
(In thousands of Korean won) Sales Purchase Receivables Payables
Subsidiaries
Samsung Heavy Industries (Ningbo) Co.,
Ltd. \ 7,704,569 \ 110,819,182 \ 18,107,614 \ 7,085,481
Samsung Heavy Industries (Rongcheng)
Co., Ltd. 2,648,736 155,136,855 16,437,249 18,406,169
Rongcheng Gaya Heavy Industries Co., Ltd. 144,185 12,982,385 654,785 1,274,577
Samsung Heavy Industries India Pvt. Ltd. - 5,224,478 - -
Samsung Heavy Industries(M) SDN.BHD - 28,646 - -
Samsung Heavy Industries Nigeria Co. Ltd. 874,281,895 - - -
SHI-MCI FZE 1,813,598 - 3,701,560 -
Others 1
Samsung C&T Corporation and others 82,299,853 307,997,266 417,529,994 45,497,770

\ 968,892,836 \ 592,188,812 \ 456,431,202 \ 72,263,997
1
Although the entity is not the related party of the Company in accordance with Korean IFRS 1024, the entity
belongs to a large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act. The effect
of due to customers for contract work amount to \ 12,126 is deducted due to applying proceeds sales. Related
to defined benefit plan, trade receivables and others are included defined benefit pension asset which is paid in
Samsung Life Insurance Co., Ltd. and etc.
69
The Company newly invested \ 56 million in SHI Mozambique LDA during 2017. The Company invested
additional \ 200 million in Daejung Offshore Wind Power Co., Ltd.. in 2017 and \ 275 million in Samsung
Heavy Industries India Pvt.Ltd. in 2016.
Details of payment guarantees and collateral provided by the Company for the funding sources of the related
parties as at December 31, 2017, are as follows, and no collateral and payment guarantees are provided by the
related parties:
Payment guaranteed provided by the Company
(in thousands of US dollars,

Chinese yuan) Guaranteed by Guaranteed amount Remark
Subsidiary SHI-MCI FZE ING USD 67,500 CNY - Borrowings

Subsidiary Samsung Heavy
SC 3,519 88,907
Industries
(Ningbo) Co., Ltd. DGB Daegu bank1 24,000 240,000
Borrowings
Woori Bank
- 249,600
(shanghai)1
Subsidiary Samsung Heavy SC 49,000 -
Industries
(Rongcheng) Co., SC - 337,375
Ltd.
KEB Hana bank - 80,000
Borrowings
DGB Daegu bank1 - 132,000
Korea Development
- 125,000
Bank
1Short-termfinancial instruments are pledges as collateral for subsidiary borrowings from DGB Daegu bank and
Woori Bank (Note 5).
Other than the payment guarantees above, the Company provides performance guarantees of USD 351 million
to the ship-owners and payment guarantee for subsidiary’s refund guarantee of USD 288 million to the financial
institutions in relation to shipbuilding & offshore contracts and provides guarantees to the financial institutions
up to USD 54 million in relation to currency forward contracts.
Associate
A major associate of the Company as at December 31, 2017, is Daejung Offshore Wind Power Co., Ltd.
Key Management Compensation
For the year ended December 31, 2017, key management compensation consists of \ 926 million (2016:
\ 1,678 million) in short-term benefits and \ 515 million (2016: \ 684 million) in long-term, severance and
other benefits which are highly probable to be paid in the future. Key management consists of registered
executive officers who have authorities and responsibilities for planning, directing and controlling of operations
of the Company.
70
35. Events After the Reporting Period
The Company determined to increase its capital for operating funds through the Board of Directors after the
reporting period, on January 26, 2018. The estimated amount of capital increase is \ 1,408,800 million
(240,000,000 shares of ordinary shares) and the date of payment of shares is April 20, 2018.
After the reporting period, on February 11, 2018, as the notice of resumption was not received due to customer’s
situation, the shipbuilding contract of a drillship was terminated in accordance with the contract on April 8, 2014
(Note 6).
71
Report on Independent Accountants'
Review of Internal Accounting Control System
To the President of
We have reviewed the accompanying management’s report on the operations of the Internal Accounting Control
System (IACS) of Samsung Heavy Industries Co., Ltd. (the Company) as at December 31, 2017. The
Company’s management is responsible for designing and operating IACS and for its assessment of the
effectiveness of IACS. Our responsibility is to review the management’s report on the operations of the IACS
and issue a report based on our review. The management’s report on the operations of the IACS of the Company
states that “based on its assessment of the operations of the IACS as at December 31, 2017, the Company’s
IACS has been effectively designed and is operating as at December 31, 2017, in all material respects, in
accordance with the IACS standards.
Our review was conducted in accordance with the IACS review standards established by the Korean Institute
of Certified Public Accountants. Those standards require that we plan and perform, in all material respects,
the review of management’s report on the operations of the IACS to obtain a lower level of assurance than an
audit. A review is to obtain an understanding of a company’s IACS and consists principally of inquiries of
management and, when deemed necessary, a limited inspection of underlying documents, which is
substantially less in scope than an audit.
A company’s IACS is a system to monitor and operate those policies and procedures designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally accepted in the Republic of Korea.
Because of its inherent limitations, IACS may not prevent or detect a material misstatement of the financial
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Based on our review, nothing has come to our attention that causes us to believe that management’s report
on the operations of the IACS, referred to above, is not presented fairly, in all material respects, in accordance
with the IACS standards established by IACSOC.
Our review is based on the Company’s IACS as at December 31, 2017, and we did not review management’s
assessment of its IACS subsequent to December 31, 2017. This report has been prepared pursuant to the
Acts on External Audit for Stock Companies in Korea and may not be appropriate for other purposes or for
other users.
Samil PricewaterhouseCoopers
March 14, 2018
72
Report on the Operations of the Internal Accounting Control System
To the Board of Directors and Audit Committee of

I, as the Internal Accounting Control Officer (IACO) of Samsung Heavy Industries Co., Ltd. (the Company),
assessed the status of the design and operations of the Company’s internal accounting control system (IACS)
for the year ended December 31, 2017.
The Company’s management including IACO is responsible for designing and operating IACS. I, as the IACO,
assessed whether the IACS has been effectively designed and is operating to prevent and detect any error or
fraud which may cause any misstatement of the financial statements, for the purpose of establishing the
reliability of financial reporting and the preparation of financial statements for external purposes. I, as the IACO,
applied the IACS standard for the assessment of design and operations of the IACS.
Based on the assessment on the operations of the IACS, the Company’s IACS has been effectively designed
and is operating as at December 31, 2017, in all material respects, in accordance with the IACS standards.
January 26, 2018
Hae Kyu Jeong, Internal Accounting Control System Officer
Joon Ou Nam, Chief Executive Officer and President
73

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Samsung Heavy Industries Co., Ltd.

Separate Financial Statements

Separate Financial Statements

Separate Statements of Financial Position....................................................................................................... 7-8

Separate Statements of Profit or Loss .................................................................................................................. 9

Separate Statements of Comprehensive Income ............................................................................................... 10

Separate Statements of Changes in Equity........................................................................................................ 11

Separate Statements of Cash Flows ..................................................................................................................12

Notes to the Separate Financial Statements........................................................................................... 13-71

Report on Independent Accountants' Review of Internal Accounting Control System ............................ 72

Report on the Operations of the Internal Accounting Control System ....................................................... 73

(English Translation of a Report Originally Issued in Korean)

To the Board of Directors and Shareholders of

Management’s Responsibilities for the Financial Statements

1) The auditor’s emphasis on area of focus on construction contracts

B. Revenue recognition based on the input method

- We reviewed significant contents of contracts.

- We reviewed internal control in relation to reviewing and approval process of a contract by an

C. Uncertainty of estimated construction costs

D. Measurement of percentage of completion

- We reviewed date of maturity in contracts and financial soundness of ordering company.

F. Accounting treatment for changes in construction

(In thousands of Korean won) Notes 2017 2016

(In thousands of Korean won) Notes 2017 2016

(In thousands of Korean won, except

Revenue 6,33 \ 7,396,888,950 \ 9,883,581,890

Other income 27 1,994,045,005 1,551,474,301

Loss before income tax (429,468,121) (111,896,977)

Losses per share

Basic losses per share

(In thousands of Korean won) Notes 2017 2016

Loss for the period \ (337,606,491) \ (134,734,539)

Other comprehensive income 15,792,832 883,986,515

Balance at January 1, 2016 ￦ 1,154,951,155 ￦ 417,172,244 ￦ 23,601,777 ￦ (963,896,146) ￦ 3,464,994,404 ￦ 4,096,823,434

Balance at January 1, 2017 ￦ 1,950,574,225 ￦ 752,018,096 ￦ 873,434,438 ￦ (963,896,146) ￦ 3,377,537,967 ￦ 5,989,668,580

(In thousands of Korean won) Notes 2017 2016

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Net decrease in cash and cash equivalents (614,552,832) (7,385,462)

2. Significant Accounting Policies

2.1 Basis of Preparation

2.2 Changes in Accounting Policies and Disclosures

(a) New and amended standards adopted by the Company

- Amendments to Korean IFRS 1007 Statement of Cash Flows

- Amendments to Korean IFRS 1012 Income Tax

- Amendments to Korean IFRS 1112 Disclosures of Interests in Other Entities

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

- Amendment to Korean IFRS 1040 Transfers of Investment Property

- Amendments to Korean IFRS 1102 Share-based Payment

- Enactments to Interpretation 2122 Foreign Currency Transaction and Advance Consideration

- Enactment of Korean IFRS 1116 Leases

A lessee shall apply this standard to its leases either:

The Company has not yet elected the application method.

- Korean IFRS 1109 Financial Instruments

periods beginning on or after January 1, 2018.

(a) Classification and Measurement of Financial Assets

Business model for the Solely represent payments of All other

Hold the financial asset for the

(b) Impairment: Financial Assets and Contract Assets

Stage1 Loss allowance

(c) Hedge Accounting

- Enactments to Korean IFRS 1115 Revenue from Contracts with Customers