Consolidated Financial Statements of Samsung Electronics Co., Ltd. and Its Subsidiaries Index To Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS OF
SAMSUNG ELECTRONICS CO., LTD. AND ITS SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditor’s Report............................................................................................... 1 - 6
Consolidated Financial Statements
Consolidated Statements of Financial Position......................................................................... 7 - 9
Consolidated Statements of Profit or Loss................................................................................ 10
Consolidated Statements of Comprehensive Income................................................................ 11
Consolidated Statements of Changes in Equity........................................................................ 12 - 15
Consolidated Statements of Cash Flows................................................................................... 16 - 17
Notes to the Consolidated Financial Statements ….................................................................. 18 - 102

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

Samsung Electronics Co., Ltd..
Opinion
We have audited the accompanying consolidated financial statements of Samsung Electronics Co., Ltd.
and its subsidiaries (collectively referred to as the “Company”), which comprise the consolidated
statements of financial position as at December 31, 2018 and 2017, and the consolidated statements of
profit or loss, comprehensive income, consolidated statements of changes in equity and consolidated
statements of cash flows for the years then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its
consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with International Financial Reporting Standards as adopted by the Republic of Korea
(“Korean IFRS”).
Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the
consolidated financial statements and we have fulfilled our other ethical responsibilities in accordance
with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
1
1. Sales promotion activities related to the sales of products
Reasons why the matter was determined to be a key audit matter

The CE (Consumer Electronics) and IM (Information technology & Mobile communications) business
units perform sales promotion activities relating to customers, including retail and telecommunication
companies. These activities include providing price discounts and incentives based on agreements
with customers, or at the discretion of the Company. These activities are recognized as deductions
from revenue at the expected payment amount (refer to note 2.23 and 3). The revenue deduction
amounts are material to the consolidated financial statements, and the accounting involves estimates
with respect to the amount and timing of recognition. For these reasons we determined the sales
promotion activities related to the sales of products a as key audit matter.
How we addressed the Key Audit Matter in our audit procedures

Our audit procedures performed on sales promotion activities related to the sales of products are as
below.
 Review appropriateness of accounting policy for Company’s revenue deduction
 Obtain understanding of, and evaluate, the Company’s internal controls relating to the
approval of sales promotion activities (terms and amount), and the calculation of revenue
deduction amounts
 Compare prior period estimation of revenue deduction and current year payments and
determine whether estimation method is reasonable on a sample basis
 Review whether sales promotion activities are approved appropriately, and the estimates for
revenue deduction are reasonable, by inspect supporting documents on a sample basis
 Compare actual post year-end payments related to sales promotions with the year-end
balance recorded for revenue deductions. Test that revenue deductions are recognized
completely and accurately, on a sample basis
2. Valuation of goodwill and intangible assets with indefinite useful lives

As of December 31, 2018, the Company has goodwill and intangible assets with indefinite useful lives
of KRW 8,734,348 million (refer to note 14). The Company performs impairment testing for the
balance by comparing book values with values in use which are calculated based on the discounted
cash flow method (refer to note 2.12 and 3). As material estimation is involved in determining the
value in use of each item, we determined the impairment review of goodwill and intangible assets with
indefinite useful lives as a key audit matter.

Our audit procedures performed on goodwill and intangible assets with indefinite useful lives are as
below.
 Consider business trends related to each item and whether there are observable indications of
impairment
 Review of the independence and eligibility of the Company‘s experts
 Review of cash generating unit determination and allocated net assets for each item
2
 Review of factors used for calculation of value in use, including expected sales amount and
growth rate by comparing with market information
 Review calculation of value in use and sensitivity analysis
3. Depreciation expense cut off on property, plant and equipment

As at December 31, 2018, the Company has recorded KRW 115,416,724 million of property, plant
and equipment. KRW 29,398,563 million was recorded as additions to property, plant and equipment
in 2018 (refer to note 13). The Company commences recognition of depreciation expense when the
property, plant and equipment is available for use (refer to note 2.9)
We determined depreciation expense cut-off to be a key audit matter given the material nature of the
Company’s property, plant and equipment balance, and related depreciation expense recorded, and
considering the judgement needed to determine the condition of available for use is met.

Our audit procedures performed on depreciation expense cut off on property, plant and equipment are
as below.
 Obtain understanding of, and evaluate, the Company’s internal controls related to
determination of the timing for when property, plant and equipment becomes available for
use
 Observation and inquiry to determine the appropriateness of the Company’s application of
the available for use criteria.
 Inspection of documents which support the timing that available for use criteria were met, on
a sample basis
4. Valuation of investments in associates and joint ventures

The Company applies the equity method for accounting for investments in associates and joint
ventures. As of December 31, 2018 the Company has KRW 7,313,206 million of investments in
associates and joint ventures. KRW 6,557,410 million of investments in associates and joint ventures
have quoted market prices in an active market (refer to note 12).
Investments in associates and joint ventures are initially recognized at acquisition cost and
subsequently accounted for considering changes to the net asset balance of the investees. If there is
any objective evidence that the investment in the associate or joint venture is impaired, the Company
recognizes the difference between the recoverable amount and the book value as an impairment loss
(refer to note 2.3).
The Company reviews whether there are indications of impairment in investments in associates and
joint ventures. For publicly traded investments, the Company compares book value of each investment
with market price and determines whether the investments are impaired. Investments in associates and
joint ventures was determined to be a key audit matter given the material nature of the investments
and the estimation and judgement involved in the accounting for the investments.
3
Our audit procedures performed on valuation of investments in associates and joint ventures are as
below.
 Consider business trends related to each investment and whether there are any observable
indications of impairment
 Compare market prices with book value of investments on a sample basis
 Review the Company’s disclosure of market value and book value of investments
Other Matter
Auditing standards and their application in practice vary among countries. The procedures and
practices used in the Republic of Korea to audit such consolidated financial statements may differ
from those generally accepted and applied in other countries.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with Korean IFRS, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Korean Standards on Auditing will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Korean Standards on Auditing, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
4
· Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
· Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent auditor’s report is Jung Jae-Kook.
Seoul, Korea
February 27, 2019
5
This report is effective as of February 27, 2019, the audit report date. Certain subsequent events or
circumstances, which may occur between the audit report date and the time of reading this report,
could have a material impact on the accompanying consolidated financial statements and notes
thereto. Accordingly, the readers of the audit report should understand that there is a possibility that
the above audit report may have to be revised to reflect the impact of such subsequent events or
circumstances, if any.
6
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In millions of Korean won, in thousands of US dollars (Note 2.28))
December 31, December 31, December 31, December 31,

Notes 2018 2017 2018 2017
KRW KRW USD USD
Assets
Current assets
Cash and cash equivalents 4, 6, 31 30,340,505 30,545,130 27,577,050 27,763,038
Short-term financial instruments 5, 6, 31 65,893,797 49,447,696 59,892,100 44,943,932
Short-term available-for-sale
6, 9, 31 - 3,191,375 - 2,900,700
financial assets
Short-term financial assets at
6, 31 2,703,693 - 2,457,437 -
amortized cost
Short-term financial assets at fair
6, 8, 31 2,001,948 - 1,819,608 -
value through profit or loss
Trade receivables 6, 7, 10, 31 33,867,733 27,695,995 30,783,014 25,173,406
Non-trade receivables 6, 10 3,080,733 4,108,961 2,800,136 3,734,711
Advance payments 1,361,807 1,753,673 1,237,772 1,593,946
Prepaid expenses 4,136,167 3,835,219 3,759,439 3,485,902
Inventories 11 28,984,704 24,983,355 26,344,738 22,707,837
Other current assets 6 2,326,337 1,421,060 2,114,450 1,291,629
Total current assets 174,697,424 146,982,464 158,785,744 133,595,101
Non-current assets
Long-term available-for-sale
6, 9, 31 - 7,752,180 - 7,046,101
financial assets
Held-to-maturity financial assets 6 - 106,751 - 97,028
Long-term financial assets at
6, 31 238,309 - 216,603 -
amortized cost
Financial assets at fair value
through other comprehensive 6, 8, 31 7,301,351 - 6,636,334 -
income
6, 8, 31 775,427 - 704,800 -
through profit or loss
Investment in associates and joint
12 7,313,206 6,802,351 6,647,109 6,182,784
ventures
Property, plant and equipment 13 115,416,724 111,665,648 104,904,411 101,494,988
Intangible assets 14 14,891,598 14,760,483 13,535,251 13,416,078
Long-term prepaid expenses 5,009,679 3,434,375 4,553,391 3,121,567
Net defined benefit assets 17 562,356 825,892 511,136 750,669
Deferred income tax assets 28 5,468,002 5,061,687 4,969,969 4,600,662
Other non-current assets 5, 6 7,683,168 4,360,259 6,983,375 3,963,120
Total assets 339,357,244 301,752,090 308,448,123 274,268,098
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
7

Notes 2018 2017 2018 2017
KRW KRW USD USD
Liabilities and Equity
Current liabilities
Trade payables 6, 31 8,479,916 9,083,907 7,707,554 8,256,532
Short-term borrowings 6, 7, 15, 31 13,586,660 15,767,619 12,349,168 14,331,483
Other payables 6, 31 10,711,536 13,899,633 9,735,915 12,633,635
Advances received 20 820,265 1,249,174 745,554 1,135,398
Withholdings 6 951,254 793,582 864,612 721,301
Accrued expenses 6, 20 20,339,687 13,996,273 18,487,121 12,721,473
Income tax payable 8,720,050 7,408,348 7,925,816 6,733,586
Current portion of long-term
6, 15, 16, 31 33,386 278,619 30,345 253,242
liabilities
Provisions 18 4,384,038 4,294,820 3,984,734 3,903,642
Other current liabilities 6, 20 1,054,718 403,139 958,653 366,421
Total current liabilities 69,081,510 67,175,114 62,789,472 61,056,713
Non-current liabilities
Debentures 6, 16, 31 961,972 953,361 874,354 866,528
Long-term borrowings 6, 15, 31 85,085 1,814,446 77,335 1,649,184
Long-term other payables 6, 31 3,194,043 2,043,729 2,903,125 1,857,583
Net defined benefit liabilities 17 504,064 389,922 458,153 354,407
Deferred income tax liabilities 28 15,162,523 11,710,781 13,781,500 10,644,147
Provisions 18 663,619 464,324 603,176 422,033
Other non-current liabilities 6, 20 1,951,251 2,708,985 1,773,528 2,462,247
Total liabilities 91,604,067 87,260,662 83,260,643 79,312,842
8

Notes 2018 2017 2018 2017
KRW KRW USD USD
Equity attributable to owners of
the parent
Preference shares 21 119,467 119,467 108,586 108,586
Ordinary shares 21 778,047 778,047 707,181 707,181
Share premium 4,403,893 4,403,893 4,002,780 4,002,780
Retained earnings 22 242,698,956 215,811,200 220,593,604 196,154,822
Other components of equity 23 (7,931,370) (13,899,191) (7,208,969) (12,633,234)
240,068,993 207,213,416 218,203,182 188,340,135
Non-controlling interests 7,684,184 7,278,012 6,984,298 6,615,121
Total equity 247,753,177 214,491,428 225,187,480 194,955,256
Total liabilities and equity 339,357,244 301,752,090 308,448,123 274,268,098
9
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
For the year ended December 31,

Notes 2018 2017 2018 2017
KRW KRW USD USD
Revenue 32 243,771,415 239,575,376 221,568,382 217,754,524
Cost of sales 24 132,394,411 129,290,661 120,335,747 117,514,691
Gross profit 111,377,004 110,284,715 101,232,635 100,239,833
Selling and administrative expenses 24, 25 52,490,335 56,639,677 47,709,444 51,480,858
Operating profit 58,886,669 53,645,038 53,523,191 48,758,975
Other non-operating income 26 1,485,037 3,010,657 1,349,778 2,736,442
Other non-operating expense 26 1,142,018 1,419,648 1,038,001 1,290,345
Share of profit of associates and joint
12 539,845 201,442 490,675 183,094
ventures
Financial income 27 9,999,321 9,737,391 9,088,569 8,850,496
Financial expense 27 8,608,896 8,978,913 7,824,786 8,161,100
Profit before income tax 61,159,958 56,195,967 55,589,426 51,077,562
Income tax expense 28 16,815,101 14,009,220 15,283,559 12,733,241
Profit for the period 44,344,857 42,186,747 40,305,867 38,344,321
Profit attributable to owners of the
43,890,877 41,344,569 39,893,236 37,578,849
parent
Profit attributable to non-controlling
453,980 842,178 412,631 765,472
interests
Earnings per share
29
(in Korean Won, in US dollars)
- Basic 6,461 5,997 5.87 5.45
- Diluted 6,461 5,997 5.87 5.45
The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.
10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Notes 2018 2017 2018 2017
KRW KRW USD USD
Other comprehensive income (loss)
Items not to be reclassified to profit or loss
subsequently:
Changes in value of financial assets at fair value
8, 23 (235,865) - (214,382) -
through other comprehensive income, net of tax
Share of other comprehensive income (loss) of
12, 23 (10,631) (6,347) (9,663) (5,769)
associates and joint ventures, net of tax
Remeasurement of net defined benefit liabilities
17, 23 (410,151) 414,247 (372,794) 376,517
(assets), net of tax
Items to be reclassified to profit or loss
subsequently:
Changes in value of available-for-sale financial
9, 23 - 511,207 - 464,646
assets, net of tax
12, 23 6,688 (49,256) 6,079 (44,770)
Foreign currency translation, net of tax 23 590,638 (6,334,987) 536,842 (5,757,988)
Gain (loss) on valuation of derivatives 23 47,079 (37,121) 42,791 (33,740)
Other comprehensive loss for the period, net of
(12,242) (5,502,257) (11,127) (5,001,104)
tax
Total comprehensive income for the period 44,332,615 36,684,490 40,294,740 33,343,217
Comprehensive income attributable to:
Owners of the parent 43,882,473 35,887,505 39,885,598 32,618,822
Non-controlling interests 450,142 796,985 409,142 724,395
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
11
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Korean won)
Accumulated
other
comprehensive
income Equity
Other attributable to attributable Non-
Preference Ordinary Share Retained components assets held-for- to owners of controlling
2017 KRW Notes shares shares premium earnings of equity sale the parent interests Total
Balance as at January 1, 2017 119,467 778,047 4,403,893 193,086,317 (11,934,586) (28,810) 186,424,328 6,538,705 192,963,033
Profit for the period - - - 41,344,569 - - 41,344,569 842,178 42,186,747
Changes in value of available-for-sale
9, 23 - - - - 489,150 - 489,150 22,057 511,207
financial assets, net of tax
Share of other comprehensive income (loss)
12, 23 - - - - (54,300) - (54,300) (1,303) (55,603)
of associates and joint ventures, net of tax
Foreign currency translation, net of tax 23 - - - - (6,289,926) 28,810 (6,261,116) (73,871) (6,334,987)
Remeasurement of net defined benefit
17, 23 - - - - 406,323 - 406,323 7,924 414,247
liabilities (assets), net of tax
Gain (loss) on valuation of derivatives - - - - (37,121) - (37,121) - (37,121)
Total comprehensive income (loss) - - - 41,344,569 (5,485,874) 28,810 35,887,505 796,985 36,684,490
Dividends 22 - - - (6,747,123) - - (6,747,123) (64,277) (6,811,400)
Capital transaction under common control - - - - (2,992) - (2,992) 15,114 12,122
Changes in consolidated entities - - - - (2,699) - (2,699) (9,352) (12,051)
Acquisition of treasury stock 21, 23 - - - - (8,350,424) - (8,350,424) - (8,350,424)
Retirement of treasury stock 21, 23 - - - (11,872,563) 11,872,563 - - - -
Others - - - - 4,821 - 4,821 837 5,658
Total transactions with owners - - - (18,619,686) 3,521,269 - (15,098,417) (57,678) (15,156,095)
Balance as at December 31, 2017 119,467 778,047 4,403,893 215,811,200 (13,899,191) - 207,213,416 7,278,012 214,491,428
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
12

(In thousands of US dollars (Note 2.28))
Accumulated
other
comprehensive
income Equity
2017 USD Notes shares shares premium earnings of equity sale the parent interests Total
Balance as at January 1, 2017 108,586 707,181 4,002,780 175,499,753 (10,847,568) (26,186) 169,444,546 5,943,151 175,387,697
Changes in value of available-for-sale
9, 23 - - - - 444,598 - 444,598 20,048 464,646
financial assets, net of tax
Share of other comprehensive income (loss)
12, 23 - - - - (49,355) - (49,355) (1,184) (50,539)
of associates and joint ventures, net of tax
Foreign currency translation, net of tax 23 - - - - (5,717,031) 26,186 (5,690,845) (67,143) (5,757,988)
17, 23 - - - - 369,315 - 369,315 7,202 376,517
Gain (loss) on valuation of derivatives - - - - (33,740) - (33,740) - (33,740)
Total comprehensive income (loss) - - - 37,578,849 (4,986,213) 26,186 32,618,822 724,395 33,343,217
Dividends 22 - - - (6,132,586) - - (6,132,586) (58,423) (6,191,009)
Capital transaction under common control - - - - (2,720) - (2,720) 13,737 11,017
Changes in consolidated entities - - - - (2,454) - (2,454) (8,500) (10,954)
Acquisition of treasury stock 21, 23 - - - - (7,589,855) - (7,589,855) - (7,589,855)
Others - - - - 4,382 - 4,382 761 5,143
13

Accumulated
other
comprehensive
income Equity
2018 KRW Notes shares shares premium earnings of equity sale the parent interests Total
Balance as at January 1, 2018 119,467 778,047 4,403,893 215,811,200 (13,899,191) - 207,213,416 7,278,012 214,491,428
Cumulative effect of changes in accounting
- - - 246,529 (261,734) - (15,205) - (15,205)
policy
Restated total equity at the beginning of the
119,467 778,047 4,403,893 216,057,729 (14,160,925) - 207,198,211 7,278,012 214,476,223
financial year
Changes in value of financial assets at fair
value through other comprehensive income, 8, 23 - - - (3,007) (236,343) - (239,350) 3,485 (235,865)
net of tax
12, 23 - - - - (4,036) - (4,036) 93 (3,943)
Foreign currency translation, net of tax 23 - - - - 579,260 - 579,260 11,378 590,638
17, 23 - - - - (391,357) - (391,357) (18,794) (410,151)
Gain (loss) on valuation of derivatives 23 - - - - 47,079 - 47,079 - 47,079
Total comprehensive income (loss) - - - 43,887,870 (5,397) - 43,882,473 450,142 44,332,615
Dividends 22 - - - (10,143,345) - - (10,143,345) (50,657) (10,194,002)
Capital transaction under common control - - - - 1,719 - 1,719 7,991 9,710
Changes in consolidated entities - - - - - - - 41 41
Acquisition of treasury stock 21, 23 - - - - (875,111) - (875,111) - (875,111)
Others - - - - 5,046 - 5,046 (1,345) 3,701
14

(In thousands of US dollars (Note 2.28))
Accumulated
other
comprehensive
income Equity
2018 USD Notes shares shares premium earnings of equity sale the parent interests Total
Balance as at January 1, 2018 108,586 707,181 4,002,780 196,154,822 (12,633,234) - 188,340,135 6,615,121 194,955,256
Cumulative effect of changes in accounting
- - - 224,074 (237,894) - (13,820) - (13,820)
policy
Restated total equity at the beginning of the
108,586 707,181 4,002,780 196,378,896 (12,871,128) - 188,326,315 6,615,121 194,941,436
financial year
Changes in value of financial assets at fair
value through other comprehensive income, 8, 23 - - - (2,733) (214,817) - (217,550) 3,168 (214,382)
net of tax
12, 23 - - - - (3,668) - (3,668) 84 (3,584)
Foreign currency translation, net of tax 23 - - - - 526,500 - 526,500 10,342 536,842
17, 23 - - - - (355,711) - (355,711) (17,083) (372,794)
Gain (loss) on valuation of derivatives 23 - - - - 42,791 - 42,791 - 42,791
Total comprehensive income (loss) - - - 39,890,503 (4,905) - 39,885,598 409,142 40,294,740
Dividends 22 - - - (9,219,475) - - (9,219,475) (46,043) (9,265,518)
Capital transaction under common control - - - - 1,563 - 1,563 7,263 8,826
Changes in consolidated entities - - - - - - - 37 37
Acquisition of treasury stock 21, 23 - - - - (795,405) - (795,405) - (795,405)
Others - - - - 4,586 - 4,586 (1,222) 3,364
15
CONSOLIDATED STATEMENTS OF CASH FLOWS

Notes 2018 2017 2018 2017
KRW KRW USD USD
Cash flows from operating activities
Adjustments 30 43,604,573 36,211,232 39,633,009 32,913,064
Changes in assets and liabilities arising from operating
30 (9,924,366) (10,620,547) (9,020,441) (9,653,214)
activities
Cash generated from operations 78,025,064 67,777,432 70,918,435 61,604,171
Interest received 1,788,520 1,581,117 1,625,619 1,437,108
Interest paid (548,272) (542,715) (498,335) (493,284)
Dividends received 215,992 173,305 196,319 157,520
Income tax paid (12,449,441) (6,827,098) (11,315,529) (6,205,277)
Net cash inflow from operating activities 67,031,863 62,162,041 60,926,509 56,500,238
Cash flows from investing activities

Net (increase)decrease in short-term financial instruments (12,368,298) 387,627 (11,241,777) 352,321
Net acquisition of short-term financial assets at amortized
(1,436,844) - (1,305,974) -
cost
Net acquisition of short-term financial assets at fair value
(139,668) - (126,947) -
Disposal of short-term available-for-sale financial assets - 499,856 - 454,328
Disposal of long-term financial instruments 255,850 1,750,221 232,547 1,590,808
Acquisition of long-term financial instruments (7,678,654) (1,079,355) (6,979,272) (981,046)
Disposal of long-term available-for-sale financial assets - 191,826 - 174,354
Acquisition of long-term available-for-sale financial assets - (358,497) - (325,845)
Acquisition of held-to-maturity financial assets - (106,751) - (97,028)
Acquisition of financial assets at amortized cost (158,716) - (144,260) -
Disposal of financial assets at fair value through other
16,211 - 14,734 -
comprehensive income
Acquisition of financial assets at fair value through other
(456,134) - (414,589) -
Disposal of financial assets at fair value through profit or
80,138 - 72,839 -
loss
Acquisition of financial assets at fair value through profit
(193,848) - (176,192) -
or loss
Disposal of investment in associates and joint ventures 148 355,926 135 323,508
Acquisition of investment in associates and joint ventures (51,226) (25,293) (46,560) (22,989)
Disposal of property, plant and equipment 556,973 308,354 506,243 280,269
Acquisition of property, plant and equipment (29,556,406) (42,792,234) (26,864,368) (38,894,659)
Disposal of intangible assets 11,935 733 10,848 666
Acquisition of intangible assets (1,020,517) (983,740) (927,567) (894,140)
Cash outflow from business combinations (99,108) (8,754,268) (90,081) (7,956,917)
Cash inflow from business transfers - 1,248,834 - 1,135,088
Others (2,289) (28,455) (2,080) (25,861)
Net cash outflow from investing activities (52,240,453) (49,385,216) (47,482,321) (44,887,143)
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
16
CONSOLIDATED STATEMENTS OF CASH FLOWS

Notes 2018 2017 2018 2017
KRW KRW USD USD
Cash flows from financing activities
Net increase (decrease) in short-term borrowings 30 (2,046,470) 2,730,676 (1,860,075) 2,481,962
Acquisition of treasury stock (875,111) (8,350,424) (795,405) (7,589,856)
Proceeds from long-term borrowings and debentures 30 3,580 998,311 3,254 907,383
Repayment of long-term borrowings and debentures 30 (1,986,597) (1,140,803) (1,805,655) (1,036,897)
Dividends paid (10,193,695) (6,804,297) (9,265,239) (6,184,552)
Net increase in non-controlling interests 8,071 5,670 7,336 5,154
Net cash outflow from financing activities (15,090,222) (12,560,867) (13,715,784) (11,416,806)
Effect of exchange rate changes on cash and cash

94,187 (1,782,270) 85,608 (1,619,939)
equivalents
Net decrease in cash and cash equivalents (204,625) (1,566,312) (185,988) (1,423,650)
Cash and cash equivalents

Beginning of the period 30,545,130 32,111,442 27,763,038 29,186,688
End of the period 30,340,505 30,545,130 27,577,050 27,763,038
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
17
Samsung Electronics Co., Ltd. and its Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General Information
1.1 Company Overview
Samsung Electronics Co., Ltd. (“SEC”) was incorporated under the laws of the Republic of Korea in 1969 and listed
its shares on the Korea Stock Exchange in 1975. SEC and its subsidiaries (collectively referred to as the “Company”)
operate four business divisions: Consumer Electronics (“CE”), Information technology & Mobile communications
(“IM”), Device Solutions (“DS”) and Harman. The CE division includes digital TVs, monitors, air conditioners and
refrigerators and the IM division includes mobile phones, communication systems, and computers. The DS division
includes products such as Memory, Foundry and System LSI in the semiconductor business (“Semiconductor”), and
LCD and OLED panels in the display business (“DP”). The Harman division includes connected car systems, audio
and visual products, enterprise automation solutions and connected services. The Company is domiciled in the
Republic of Korea and the address of its registered office is Suwon, the Republic of Korea.
These consolidated financial statements have been prepared in accordance with Korean International Financial
Reporting Standards (“Korean IFRS”) 1110, Consolidated Financial Statements. SEC, as the controlling company,
consolidates its 252 subsidiaries including Samsung Display and Samsung Electronics America. The Company also
applies the equity method of accounting for its 45 associates and joint ventures, including Samsung Electro-
Mechanics.
1.2 Consolidated Subsidiaries
(A) The consolidated subsidiaries as at December 31, 2018 are as follows:
Percentage of
Area Subsidiaries Industry ownership1
Samsung Display (SDC) Manufacture and sale of display panels 84.8
SU Materials Manufacture of display components 50.0
STECO Manufacture of semiconductor components 70.0
SEMES Manufacture of semiconductor/FPD 91.5
Samsung Electronics Service Repair services for electronic devices 99.3
Samsung Electronics Service Customer Call center of repair services for electronic
100.0
Satisfaction devices
Samsung Electronics Sales Sale of electronic devices 100.0
Samsung Electronics Logitech General logistics agency 100.0
Samsung Medison Medical equipment 68.5
Samsung Venture Capital Union #21 Technology business, Venture capital investments 99.0
Domestic
Development and supply of semiconductor
Mirero System 99.9
process defect and quality control software
Growth type private equity trust specialized in
Investment on semiconductor industry 66.7
semiconductors
Harman International Korea Software development and supply, etc. 100.0
18
Red Bend Software Korea Software development and supply 100.0
1 Ownership represents the Company’s ownership of voting rights in each entity, including subsidiaries’ ownerships.
Percentage of
Samsung Electronics America (SEA) Sale of electronic devices 100.0
NeuroLogica Medical equipment 100.0
Samsung Semiconductor (SSI) Sale of semiconductor/display panels 100.0
Samsung Electronics Canada (SECA) Sale of electronic devices 100.0
Samsung Research America (SRA) R&D 100.0
Samsung Mexicana (SAMEX) Manufacture of electronic devices 100.0
Samsung International (SII) Manufacture of TV/monitors 100.0
Samsung Austin Semiconductor (SAS) Manufacture of semiconductor 100.0
Samsung Electronics Mexico (SEM) Sale of electronic devices 99.9
SEMES America (SEMESA) Semiconductor equipment 100.0
Samsung Electronics Digital Appliance Mexico 100.0
Manufacture of electronic devices
(SEDAM)
Samsung Electronics Latinoamerica Miami 100.0
Sale of electronic devices
(SEMI)
Samsung Electronics Latinoamerica (SELA) Sale of electronic devices 100.0
Samsung Electronics Venezuela (SEVEN) Marketing and services 100.0
Samsung Electronica Colombia (SAMCOL) Sale of electronic devices 100.0
Samsung Electronics Panama (SEPA) Consulting 100.0
Samsung Electronica da Amazonia (SEDA) Manufacture and sale of electronic devices 100.0
Samsung Electronics Argentina (SEASA) Marketing and services 100.0
Samsung Electronics Chile (SECH) Sale of electronic devices 100.0
Samsung Electronics Peru (SEPR) Sale of electronic devices 100.0
America RT SV CO-INVEST (RT-SV) Venture capital investments 99.9
Samsung HVAC Sale of heating and cooling products 100.0
SmartThings Sale of smart home electronics 100.0
Prismview Manufacture and sale of LED displays 100.0
Beijing Integrated Circuit Industry International 61.4
Venture capital investments
Fund (Beijing Fund)
Manufacture and sale of server semiconductor 100.0
Stellus Technologies
storage system
Samsung Oak Holdings (SHI) Holding company 100.0
AdGear Technologies Digital advertising platforms 100.0
Joyent Cloud Services 100.0
Samsung Next Holding Company 100.0
Samsung Next Fund Technology business, Venture capital investments 100.0
Dacor Holdings Holding Company 100.0
Dacor Manufacture and sale of Home appliances 100.0
Dacor Canada Sale of Home appliances 100.0
EverythingDacor.com Sale of Home appliances 100.0
Distinctive Appliances of California Sale of Home appliances 100.0
Viv Labs Research of AI technology 100.0
SigMast Communications RCS (Rich Communication Service) 100.0
Harman Becker Automotive Systems Manufacture and sale of audio products, R&D 100.0
Harman Connected Services Engineering Connected Service Provider 100.0
Harman Connected Services, Inc. Connected Service Provider 100.0
1 Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.
19
Percentage of
Harman Connected Services South America Connected Service Provider 100.0
Harman da Amazonia Industria Electronica e
Manufacture and sale of audio products 100.0
Participacoes
Harman de Mexico S. de R.L. de C.V. Manufacture of audio products 100.0
Harman do Brasil Industria Electronica e
Sale of audio products, R&D 100.0
Participacoes.
Harman Financial Group Management Company 100.0
Harman International Industries Canada Sale of audio products 100.0
Harman International Industries, Inc. Holding Company 100.0
America Harman International Mexico S de RL de CV Sale of audio products 100.0
Harman Investment Group, LLC Financing Company 100.0
Harman KG Holding, LLC Holding Company 100.0
Harman Professional Sale of audio products, R&D 100.0
Red Bend Software Software design 100.0
Samsung Electronics Home Appliances
Manufacture of home appliances 100.0
America(SEHA)
China Materialia Venture capital investments 99.0
Zhilabs Inc Sale of network solutions 100.0
Samsung Electronics (UK) (SEUK) Sale of electronic devices 100.0
Samsung Electronics Holding (SEHG) Holding Company 100.0
Samsung Semiconductor Europe GmbH (SSEG) Sale of semiconductor/display panels 100.0
Samsung Electronics GmbH (SEG) Sale of electronic devices 100.0
Samsung Electronics Iberia (SESA) Sale of electronic devices 100.0
Samsung Electronics France (SEF) Sale of electronic devices 100.0
Samsung Electronics Hungarian (SEH) Manufacture and sale of electronic devices 100.0
Samsung Electronics Czech and Slovak (SECZ) Sale of electronic devices 100.0
Samsung Electronics Italia (SEI) Sale of electronic devices 100.0
Samsung Electronics Europe Logistics (SELS) Logistics 100.0
Samsung Electronics Benelux (SEBN) Sale of electronic devices 100.0
Samsung Display Slovakia (SDSK) Toll processing of display panels 100.0
Samsung Electronics Romania (SEROM) Sale of electronic devices 100.0
Samsung Electronics Overseas (SEO) Sale of electronic devices 100.0
Samsung Electronics Polska (SEPOL) Sale of electronic devices 100.0
Samsung Electronics Portuguesa (SEP) Sale of electronic devices 100.0
Europe/CIS Samsung Electronics Nordic (SENA) Sale of electronic devices 100.0
Samsung Semiconductor Europe (SSEL) Sale of semiconductor/display panels 100.0
Samsung Electronics Austria (SEAG) Sale of electronic devices 100.0
Samsung Electronics Slovakia (SESK) Manufacture of TV/monitors 100.0
Samsung Electronics Europe Holding (SEEH) Holding Company 100.0
Samsung Electronics Poland Manufacturing
Manufacture of home appliances 100.0
(SEPM)
Samsung Electronics Greece (SEGR) Sale of electronic devices 100.0
Samsung Nanoradio Design Center (SNDC) R&D 100.0
Samsung Electronics Air Conditioner Europe
Sale of heating and cooling products 100.0
B.V.(SEACE)
Samsung Electronics Rus Company (SERC) Sale of electronic devices 100.0
Samsung Electronics Baltics (SEB) Sale of electronic devices 100.0
Samsung Electronics Ukraine Company (SEUC) Sale of electronic devices 100.0
Samsung R&D Institute Rus (SRR) R&D 100.0
Samsung Electronics Central Eurasia (SECE) Sale of electronic devices 100.0
Samsung Electronics Rus Kaluga (SERK) Manufacture of TV 100.0
Samsung Electronics (London) Limited (SEL) Holding Company 100.0
20
Percentage of
Samsung Denmark Research Center (SDRC) R&D 100.0
Samsung France Research Center (SFRC) R&D 100.0
Samsung Cambridge Solution Centre (SCSC) R&D 100.0
Samsung Electronics Switzerland GmbH (SESG) Sale of electronic devices 100.0
Samsung Electronics Caucasus (SECC) Marketing 100.0
Harman Connected Services OOO Connected Service Provider 100.0
Harman RUS CIS LLC Sale of audio products 100.0
AKG Acoustics Manufacture and sale of audio products 100.0
AMX UK Sale of audio products 100.0
Duran Audio B.V. Sale of audio products, R&D 100.0
Duran Audio Iberia Espana Sale of audio products 100.0
Harman Automotive UK Manufacture of audio products 100.0
Harman Becker Automotive Systems (Germany) Manufacture and sale of audio products, R&D 100.0
Harman Becker Automotive Systems Italy Sale of audio products 100.0
Harman Becker Automotive Systems
Manufacture of audio products, R&D 100.0
Manufacturing Kft
Harman Belgium Sale of audio products 100.0
Harman Connected Services AB. Connected Service Provider 100.0
Harman Finland OY Connected Service Provider 100.0
Harman Connected Services (Germany) Connected Service Provider 100.0
Harman Connected Services Connected Service Provider 100.0
Harman Connected Services Poland Sp.zoo Connected Service Provider 100.0
Harman Connected Services UK Connected Service Provider 100.0
Harman Consumer Nederland B.V. Sale of audio products 100.0
Europe/CIS
Harman Deutschland Sale of audio products 100.0
Harman Finance International GP S.a.r.l Holding Company 100.0
Harman Finance International SCA Financing Company 100.0
Harman France SNC Sale of audio products 100.0
Harman Holding & Co. KG Management Company 100.0
Harman Hungary Financing Financing Company 100.0
Harman Inc. & Co. KG Holding Company 100.0
Harman International Estonia OU R&D 100.0
Harman International Industries (UK) Sale of audio products, etc. 100.0
Harman International Romania SRL R&D 100.0
Harman International s.r.o Manufacture of audio products 100.0
Harman International SNC Sale of audio products 100.0
Harman Management Holding Company 100.0
Harman Professional Kft Manufacture of audio products, R&D 100.0
Martin Manufacturing (UK) Manufacture of audio products 100.0
Harman Professional Denmark ApS Sale of audio products, R&D 100.0
Harman Professional France SAS Sale of audio products 100.0
Red Bend Software (UK) Software design 100.0
Red Bend Software SAS Software design 100.0
Studer Professional Audio Sale of audio products, R&D 100.0
Innoetics E.P.E. Software development 100.0
ARCAM Holding Company 100.0
A&R Cambridge Sale of audio products 100.0
Zhilabs S.L. Sale and development of network solutions 100.0
21
Percentage of
Samsung Electronics West Africa (SEWA) Marketing 100.0
Samsung Electronics East Africa (SEEA) Marketing 100.0
Samsung Gulf Electronics (SGE) Sale of electronic devices 100.0
Samsung Electronics Egypt (SEEG) Manufacture and sale of electronic devices 100.0
Samsung Electronics Israel (SEIL) Marketing 100.0
Samsung Electronics Tunisia (SETN) Marketing 100.0
Samsung Electronics Pakistan (SEPAK) Marketing 100.0
Samsung Electronics South Africa (SSA) Sale of electronic devices 100.0
Samsung Electronics Turkey (SETK) Sale of electronic devices 100.0
Samsung Semiconductor Israel R&D Center
R&D 100.0
(SIRC)
Middle East
Samsung Electronics Levant (SELV) Sale of electronic devices 100.0
and Africa
Samsung Electronics Maghreb Arab (SEMAG) Sale of electronic devices 100.0
Samsung Electronics South Africa Production
Manufacture of TV/monitors 100.0
(SSAP)
Broadsense Service 100.0
Global Symphony Technology Group Holding Company 100.0
Harman Connected Services Morocco Connected Service Provider 100.0
Harman Industries Holdings Mauritius Holding Company 100.0
iOnRoad R&D 100.0
iOnRoad Technologies R&D 100.0
Red Bend Manufacture of audio products 100.0
Towersec (Israel) R&D 100.0
Samsung Japan (SJC) Sale of electronic devices 100.0
Samsung R&D Institute Japan (SRJ) R&D 100.0
Samsung Electronics Japan (SEJ) Sale of electronic devices 100.0
Samsung Electronics Display (M) (SDMA) Manufacture of electronic devices 100.0
Samsung Electronics (M) (SEMA) Manufacture of home appliances 100.0
Samsung Vina Electronics (SAVINA) Sale of electronic devices 100.0
Samsung Asia Private (SAPL) Sale of electronic devices 100.0
Samsung India Electronics (SIEL) Manufacture and sale of electronic devices 100.0
Samsung R&D Institute India-Bangalore (SRI-B) R&D 100.0
Asia Samsung Nepal Services(SNSL) Service 100.0
(Except Samsung Electronics Australia (SEAU) Sale of electronic devices 100.0
China) Samsung Electronics Indonesia (SEIN) Manufacture and sale of electronic devices 100.0
Samsung Telecommunications Indonesia (STIN) Sale and service of electronic devices 100.0
Thai Samsung Electronics (TSE) Manufacture and sale of electronic devices 91.8
Samsung Electronics Philippines (SEPCO) Sale of electronic devices 100.0
Samsung Malaysia Electronics (SME) Sale of electronic devices 100.0
Samsung R&D Institute Bangladesh (SRBD) R&D 100.0
Samsung Electronics Vietnam (SEV) Manufacture of electronic devices 100.0
Samsung Electronics Vietnam THAINGUYEN Manufacture and sale of communication
100.0
(SEVT) equipment
Samsung Medison India (SMIN) Medical equipment 100.0
Samsung Electronics New Zealand (SENZ) Sale of electronic devices 100.0
22
Percentage of
Samsung Display Vietnam (SDV) Manufacture of display panels 100.0
Samsung Electronics HCMC CE Complex
Manufacture and sale of electronic devices 100.0
(SEHC)
Laos Samsung Electronics Sole (LSE) Marketing 100.0
AMX Products and Solutions Private Sale of audio products 100.0
Harman Connected Services India Connected Service Provider 100.0
Asia Harman International (India) Private Sale of audio products, R&D 100.0
(Except Harman International Industries PTY Holding Company 100.0
China) Harman International Singapore Sale of audio products 100.0
Harman Professional Singapore Pte. Sale of audio products 100.0
Martin Professional Pte. Sale of audio products 100.0
Harman Connected Services Japan Connected Service Provider 100.0
Harman International Japan Sale of audio products, R&D 100.0
Red Bend Software Japan Software design 100.0
Studer Japan Holding Company 100.0
Samsung Display Dongguan (SDD) Manufacture of display panels 100.0
Samsung Display Tianjin (SDT) Manufacture of display panels 95.0
Samsung Electronics Hong Kong (SEHK) Sale of electronic devices 100.0
Suzhou Samsung Electronics (SSEC) Manufacture of home appliances 88.3
Samsung Suzhou Electronics Export (SSEC-E) Manufacture of home appliances 100.0
Samsung (China) Investment (SCIC) Sale of electronic devices 100.0
Samsung Mobile R&D Center China-Guangzhou
R&D 100.0
(SRC-Guangzhou)
Samsung Tianjin Mobile Development Center
R&D 100.0
(STMC)
Samsung R&D Institute China-Shenzhen(SRC-
R&D 100.0
Shenzhen)
Samsung Electronics Suzhou Semiconductor
Toll processing of semiconductor 100.0
(SESS)
Samsung Electronics Huizhou (SEHZ) Manufacture of electronic devices 99.9
Tianjin Samsung Electronics (TSEC) Manufacture of TV/monitors 91.2
Samsung Electronics Taiwan (SET) Sale of electronic devices 100.0
China Beijing Samsung Telecom R&D Center (BST) R&D 100.0
Tianjin Samsung Telecom Technology (TSTC) Manufacture of communication equipment 90.0
Shanghai Samsung Semiconductor (SSS) Sale of semiconductor/display panels 100.0
Samsung Electronics Suzhou Computer (SESC) Manufacture of electronic devices 100.0
Samsung Suzhou Module (SSM) Toll processing of display panels 100.0
Samsung Suzhou LCD (SSL) Manufacture of display panels 60.0
Shenzhen Samsung Electronics
Manufacture of communication equipment 95.0
Telecommunication (SSET)
Samsung Semiconductor (China) R&D (SSCR) R&D 100.0
Samsung Electronics China R&D Center (SCRC) R&D 100.0
Samsung (China) Semiconductor (SCS) Manufacture of semiconductor 100.0
Samsung Electronics (Beijing) Service (SBSC) Services 100.0
Tianjin Samsung LED (TSLED) Manufacture of LED 100.0
SEMES (Xian) Semiconductor equipment 100.0
Samsung Semiconductor Xian (SSCX) Sale of semiconductor/display panels 100.0
Harman (China) Technologies Manufacture of audio products 100.0
Harman (Suzhou) Audio and Infotainment
Sale of audio products 100.0
Systems
23
Percentage of
Harman Automotive Electronic Systems
Manufacture of audio products, R&D 100.0
(Suzhou)
Harman Commercial (Shanghai) Sale of audio products 100.0
Harman Holding Sale of audio products 100.0
China Harman International (China) Holdings Sale of audio products, R&D 100.0
Harman Technology (Shenzhen) Sale of audio products, R&D 100.0
Harman Connected Services Solutions (Beijing) Connected Service Provider 100.0
Harman Connected Services Solutions (Chengdu) Connected Service Provider 100.0
(B) A summary of financial data of major consolidated subsidiaries is as follows:
(1) 2018
(In millions of Korean won) 2018

Profit(loss) for
Major subsidiaries1 Assets Liabilities Sales the period
Samsung Display (SDC) 47,162,963 7,509,766 28,653,512 1,263,050
Samsung Electronics America (SEA) 30,681,097 11,862,223 31,171,751 870,814
Samsung (China) Investment (SCIC) 16,090,629 13,858,532 3,277,050 127,448
Harman and its subsidiaries2 15,059,925 5,550,558 8,817,792 41,359
Samsung Electronics Vietnam (SEV) 11,501,682 1,607,991 21,430,638 1,783,410
Samsung Electronics Vietnam
11,360,811 2,209,962 28,340,939 2,047,014
THAINGUYEN (SEVT)
Samsung (China) Semiconductor (SCS) 10,254,900 1,920,000 4,517,286 1,489,906
Samsung Semiconductor (SSI) 9,306,621 4,288,544 29,592,773 62,872
Samsung Electronics Europe Holding
8,586,022 6,388,302 - 9,439
(SEEH)
Samsung Display Vietnam (SDV) 8,222,472 6,195,635 19,860,892 1,003,889
Samsung Asia Private (SAPL) 7,630,154 592,916 1,665,436 1,111,559
Samsung Electronics Huizhou (SEHZ) 6,539,392 586,349 9,780,357 532,767
Samsung India Electronics (SIEL) 6,410,825 3,438,807 11,045,500 309,632
Samsung Electronica da Amazonia
6,207,458 1,610,607 6,978,086 778,124
(SEDA)
Samsung Austin Semiconductor (SAS) 5,642,117 511,596 3,643,739 434,766
Shanghai Samsung Semiconductor (SSS) 5,400,549 4,227,922 30,379,218 286,956
Thai Samsung Electronics (TSE) 2,465,999 397,248 3,841,441 171,407
Samsung Electronics (UK) (SEUK) 2,203,583 1,588,007 4,718,920 103,488
Samsung Electronics GmbH (SEG) 2,202,610 2,144,728 6,081,200 (3,490)
Samsung Electronics HCMC CE
2,042,669 1,174,936 4,223,111 334,803
Complex (SEHC)
Samsung Electronics Europe Logistics
1,904,358 1,778,710 12,797,660 19,347
(SELS)
Samsung Electronics Hungarian (SEH) 1,894,922 280,245 2,551,008 90,956
Samsung Suzhou LCD (SSL) 1,845,330 679,207 1,601,925 31,743
Samsung Electronics France(SEF) 1,761,117 1,412,971 3,746,624 59,956
Samsung Electronics Benelux(SEBN) 1,673,470 552,994 2,118,897 29,536
1 Above summary of condensed financial information is based on separate financial statements of each subsidiary.
2 Consolidatedfinancial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.
24
(2) 2017

Profit(loss) for
Major subsidiaries1 Assets Liabilities Sales the period
Samsung Display (SDC) 50,723,199 12,243,688 30,111,427 3,352,802
Samsung Electronics America (SEA) 26,266,636 8,980,828 33,329,340 (70,198)
Harman and its subsidiaries2 14,676,715 5,391,669 7,103,437 209,015
Samsung (China) Investment (SCIC) 13,409,281 11,297,307 5,133,676 268,481
Samsung Display Vietnam (SDV) 10,460,755 9,495,803 18,193,257 1,257,300
Samsung Semiconductor (SSI) 10,125,193 5,376,696 28,870,987 83,113
Samsung Electronics Vietnam
10,044,337 2,325,221 28,323,302 3,043,210
THAINGUYEN (SEVT)
Samsung Electronics Vietnam (SEV) 9,592,074 1,875,105 19,344,045 2,007,876
Samsung Electronics Europe Holding
9,474,960 7,241,753 - 18,294
(SEEH)
Samsung (China) Semiconductor (SCS) 8,076,107 1,499,220 4,513,291 1,359,007
Samsung Electronics Huizhou (SEHZ) 6,440,564 980,064 13,521,077 689,594
Samsung India Electronics (SIEL) 6,200,351 3,406,484 10,393,877 654,408
Samsung Asia Private (SAPL) 6,138,652 481,546 1,848,905 1,293,924
Samsung Electronica da Amazonia
5,838,533 1,514,891 7,108,691 1,449,426
(SEDA)
Shanghai Samsung Semiconductor (SSS) 5,169,438 4,182,832 24,198,255 236,410
Samsung Austin Semiconductor (SAS) 4,943,576 448,772 3,473,545 197,729
Thai Samsung Electronics (TSE) 2,191,519 371,379 4,594,861 164,627
Samsung Electronics Slovakia (SESK) 2,019,572 1,051,361 3,237,384 100,617
Samsung Suzhou LCD (SSL) 2,019,262 852,618 1,802,543 107,677
Samsung Electronics Europe Logistics
1,927,321 1,810,014 14,060,511 6,718
(SELS)
Samsung Electronics Hungarian (SEH) 1,823,278 238,383 2,768,150 459,848
Samsung Electronics HCMC CE
1,784,883 1,282,489 3,940,762 302,674
Complex (SEHC)
Samsung Electronics GmbH (SEG) 1,743,138 1,685,252 6,536,684 530
Samsung Electronics (UK) (SEUK) 1,615,723 1,094,995 4,843,150 99,024
Samsung Electronics Indonesia (SEIN) 1,562,037 1,002,213 3,025,611 77,149
1 Above summary of condensed financial information is based on separate financial statements of each subsidiary.
2 Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.
25
(C) Changes in scope for consolidation
(1) Subsidiaries excluded from the consolidation for the year ended December 31, 2018:
Area Subsidiary Description

Domestic Samsung Venture Capital Union #23 Liquidation
NexusDX (Nexus) Sale of business
S1NN USA Merger1
Samsung Pay Merger2
Harman Connected Services Holding Merger3
America
AMX LLC Merger4
AMX Holding Corporation Merger5
Southern Vision Systems Merger6
Triple Play Integration Merger7
Joyent (UK) Liquidation
Aditi Technologies Europe Liquidation
AMX (Germany) Merger8
Harman Professional Germany GmbH Merger9
Endeleo Liquidation
Europe/CIS
Harman Consumer Finland OY Merger10
Harman Consumer Division Nordic ApS Liquidation
Inspiration Matters Liquidation
Knight Image Liquidation
R&D International Liquidation
Harman Malaysia Sdn. Bhd. Liquidation
Asia Harman Connected Services Technologies Merger11
INSP India Software Development Pvt. Merger12
Harman Connected Services Taiwan Liquidation
China
Harman Automotive InfoTech (Dalian) Liquidation
1 SINN USA merged into Harman International Industries, Inc., a subsidiary of the Company, in April 2018.
2 Samsung Pay merged into Samsung Electronics America (SEA), a subsidiary of the Company, in June 2018.
3 Harnman Connected Services Holding merged into Harman Connected Services, Inc., a subsidiary of the Company, in June
2018.
4
AMX LLC merged into Harman Professional., a subsidiary of the Company, in July 2018.
5
AMX Holding Corporation merged into Harman Professional., a subsidiary of the Company, in July 2018.
6
Southern Vision Systems merged into Harman Professional., a subsidiary of the Company, in July 2018.
7
Triple Play Integration merged into Harman Connected Services, Inc., a subsidiary of the Company, in July 2018.
8
AMX (Germany) merged into Harman Deutschland., a subsidiary of the Company, in September 2018.
9
Harman Professional Germany GmbH merged into Harman Deutschland., a subsidiary of the Company, in September 2018.
10
Harman Consumer Finland OY merged into Harman Finland OY, a subsidiary of the Company, in December 2018.
11
Harman Connected Services Technologies merged into Harman Connected Services India, a subsidiary of the Company, in
November 2018.
12
INSP India Software Development Pvt. merged into Harman Connected Services India, a subsidiary of the Company, in
November 2018.
26
(2) Subsidiaries newly included in the consolidation for the year ended December 31, 2018:
Area Subsidiary Description

Samsung Venture Capital Union #40 Incorporation
Domestic
Samsung Electronics Service Customer Satisfaction Incorporation
America Zhilabs Inc Acquisition of shares
Europe/CIS Zhilabs S.L. Acquisition of shares
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of Presentation
The Company maintains its accounting records in Korean won and prepares statutory financial statements in the
Korean language (Hangul) in accordance with Korean IFRS. The accompanying consolidated financial statements
have been condensed, restructured and translated into English from the Korean language financial statements.
Certain information attached to the Korean language financial statements, but not required for a fair presentation of
the Company’s financial position, financial performance or cash flows, is not presented in the accompanying
consolidated financial statements.
The consolidated financial statements of the Company presented have been prepared in accordance with Korean IFRS.
International Financial Reporting Standards (“IFRS”) have been adopted by the Korean Accounting Standards Board
as Korean IFRS based on standards and interpretations published by the International Accounting Standards Board.
Korean IFRS permits the use of critical accounting estimates in the preparation of the financial statements and
requires management judgments in applying accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are
disclosed in Note 3.
2.2 Changes in Accounting Policy and Disclosures
(A) New and amended standards adopted by the Company
The Company applied the following amended and enacted standards for the annual period beginning on January 1,
2018:
Korean IFRS 1109, Financial Instruments
The Company has applied Korean IFRS 1109, Financial Instruments, for the first time for their annual reporting
period commencing January 1, 2018. In accordance with the transitional provisions in Korean IFRS 1109,
comparative figures have not been restated. The application of Korean IFRS 1109 has the following impacts on the
consolidated financial statements.
27
(1) Classification and measurement of financial instruments
a) On the date of initial application, January 1, 2018, the financial instruments of the Company subject to
reclassifications were as follows:
Category Carrying amount

Korean IFRS Korean IFRS Korean IFRS Korean IFRS
(In millions of Korean won) 1039 1109 1039 1109
Financial Assets
Cash and cash equivalents Loans and receivables Amortized cost ￦30,545,130 ￦30,545,130
Short-term financial
Loans and receivables Amortized cost 49,447,696 49,447,696
instruments
Short-term available-for- Available-for-sale financial
Amortized cost 3,191,375 3,191,375
sale financial assets assets
Trade receivable Loans and receivables Amortized cost 27,695,995 27,695,995
Fair value through other
7,151,434
Long-term available-for- Available-for-sale financial comprehensive income
7,752,180
sale financial assets assets Fair value through profit or
600,746
loss
Held-to-maturity financial Held-to-maturity financial
Amortized cost 106,751 106,751
assets assets
Assets at fair value through Fair value through profit or
67,702 67,702
profit or loss loss
Other
Loans and receivables Amortized cost 6,212,727 6,212,727
Other financial assets Other financial assets 45,396 45,396
Total ￦125,064,952 ￦125,064,952
For financial liabilities, the Company has reclassified financial liabilities at fair value through profit or loss into fair
value through profit or loss, and financial liabilities at amortized cost into amortized cost.
28
b) The impact of the reclassification of financial instruments on the Company's equity as at January 1, 2018,
is as follows:
Other components of equity

Gains or losses on
Unrealized gains or financial assets at fair Share of other
losses on available- value through other comprehensive
Retained for-sale financial comprehensive income of associates
(In millions of Korean won) earnings assets income and joint ventures
Balance as at January 1 –
￦ 215,811,200 ￦ 1,879,774 ￦ - ￦ 40,394
Korean IFRS 1039
Adjustments :
From available-for-sale
financial assets to financial
75,547 (75,547) - -
assets at fair value through
profit or loss
From available-for-sale
financial assets to financial
assets at fair value through 105,618 (1,804,227) 1,698,609 -
other comprehensive
income
Investments in associates
80,225 - - (80,569)
and joint ventures
Total ￦ 261,390 ￦ (1,879,774) ￦ 1,698,609 ￦ (80,569)
Balance as at January 1 –
￦ 216,072,590 ￦ - ￦ 1,698,609 ￦ (40,175)
Korean IFRS 1109
(2) Impairments of Financial Assets
The Company has three types of financial assets subject to Korean IFRS 1109’s new expected credit loss model:
- Trade receivables arising from sales of inventories,

- Debt instruments measured at fair value through other comprehensive income, and
- Debt instruments measured at amortized cost
Upon adoption of Korean IFRS 1109, accounting policies for recognition of impairment have changed. For trade
receivables, the Company applies the practical expedient to provide for expected credit losses prescribed by Korean
IFRS 1109, which requires the use of the lifetime expected loss provision for all trade receivables. The impact of the
change in impairment methodology on the Company’s consolidated financial statements is not material.
(3) Hedge Accounting
The Company held foreign currency forward contract hedges as of January 1, 2018, which qualified as cash flow
hedges under Korean IFRS 1109. The Company’s risk management strategies and hedge documentation are aligned
with the requirements of Korean IFRS 1109 and are thus treated as continuing hedges.
29
Korean IFRS 1115, Revenue from Contracts with Customers
The Company has applied Korean IFRS 1115, Revenue from Contracts with Customers, for the first time for their
annual reporting period commencing January 1, 2018. In accordance with the transitional provisions in Korean IFRS
1115, comparative figures have not been restated. The application of Korean IFRS 1115 has the following impact on
the consolidated financial statements.
(1) The following adjustments were made to the amounts recognized in the consolidated statements of financial
position at the date of initial application (January 1, 2018):
Amount before application Amount after application

(In millions of Korean won) of Korean IFRS 1115 Adjustments of Korean IFRS 1115
Trade receivables ￦ 27,695,995 ￦ 6,983,845 ￦ 34,679,840
Prepaid expenses 3,835,219 188 3,835,407
Inventories 24,983,355 (139,546) 24,843,809
Other current assets 1,421,060 143,866 1,564,926
Investments in associates
6,802,351 (14,861) 6,787,490
and joint ventures
Total assets ￦ 301,752,090 ￦ 6,973,492 ￦ 308,725,582
Accrued expenses ￦ 13,996,273 ￦ 6,462,176 ￦ 20,458,449

Other current liabilities 403,139 526,177 929,316
Total liabilities ￦ 87,260,662 ￦ 6,988,353 ￦ 94,249,015
Retained earnings ￦ 215,811,200 ￦ (14,861) ￦ 215,796,339

Total equity ￦ 214,491,428 ￦ (14,861) ￦ 214,476,567
(2) Consolidated financial statement line items affected by the adoption of Korean IFRS 1115 in the current period
are as follows:
a) Consolidated statements of financial position
Amount before application Amount after application

(In millions of Korean won) of Korean IFRS 1115 Adjustments of Korean IFRS 1115
Trade receivables ￦ 25,521,652 ￦ 8,346,081 ￦ 33,867,733
Prepaid expenses 4,135,795 372 4,136,167
Inventories 29,254,163 (269,459) 28,984,704
Other current assets 2,041,779 284,558 2,326,337
Investments in associates and 7,332,843 (19,637) 7,313,206
joint ventures
Total assets ￦ 331,015,330 ￦ 8,341,914 ￦ 339,357,244
Accrued expenses ￦ 12,614,405 ￦ 7,725,282 ￦ 20,339,687

Other current liabilities 15,582,284 634,957 16,217,241
Total liabilities ￦ 83,243,829 ￦ 8,360,238 ￦ 91,604,067
Retained earnings ￦ 242,717,280 ￦ (18,324) ￦ 242,698,956

Total equity ￦ 247,771,501 ￦ (18,324) ￦ 247,753,177
30
b) Consolidated statements of comprehensive income
Amount before application Amount after application of

(In millions of Korean won) of Korean IFRS 1115 Adjustments Korean IFRS 1115
Revenue ￦ 243,760,820 ￦ 10,595 ￦ 243,771,415
Cost of sales 132,383,816 10,595 132,394,411
Gross profit 111,377,004 - 111,377,004
Operating profit 58,886,669 - 58,886,669
Gain on valuation of equity
544,621 (4,776) 539,845
method
Income tax expense 16,816,414 (1,313) 16,815,101
Profit for the period 44,348,320 (3,463) 44,344,857
Total comprehensive income
44,336,078 (3,463) 44,332,615
for the period
Applying Korean IFRS 1115, Revenue from Contracts with Customers, did not impact the cash flows from operating
activities, cash flows from investing activities, cash flows from financing activities, and total cash flows for the year
ended December 31, 2018.
Interpretation 2122 Foreign Currency Transaction and Advance Consideration
According to the enactment, the date of the transaction for the purpose of determining the exchange rate to use on
initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially
recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance
consideration. The enactment does not have a significant impact on the financial statements.
(B) New and amended standards not adopted by the Company
New standards and amendments issued but not effective for the annual period beginning on January 1, 2018, and not
early adopted by the Company, are as follows:
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, and at the date of initial application, the Company shall assess whether the contract is, or
contains, a lease in accordance with the new standard. However, the Company may not need to reassess all contracts
at initial application because the Company can elect to apply the practical expedient to contracts entered into before
the date of initial application.
For a contract that is, or contains, a lease, the Company 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 leases (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.
31
The accounting standard as a lessor did not change significantly from Korean IFRS 1017 Leases.
(1) Lessee accounting
A lessee shall apply this standard to its leases either: a) retrospectively to each prior reporting period presented
applying Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors (Full retrospective
application) or b) retrospectively with the cumulative effect of initially applying the standard recognized at the date
of initial application.
The Company plans to apply Korean IFRS 1116 retrospectively with the cumulative effect of initially applying the
standard as at January 1, 2019. The Company will not restate any comparative information.
The Company performed an impact assessment to identify potential financial effects of applying Korean IFRS 1116.
The assessment was performed based on available information as at December 31, 2018 to identify effects on 2019
financial statements.
The total minimum lease payment expected to be paid by the Company in relation to operating leases before discount
to present value is \2,647,205 million as at January 1, 2019. When the payment is discounted at the incremental
borrowing rate of the lessee, the total minimum lease payment amounts to \2,386,958 million.
For contracts that are, or contain, a lease, the Company plans to apply the practical expedient to account for each
lease component and any associated non-lease components as a single lease component.
As a result of applying the standard, the Company expects the underlying lease assets and lease liabilities as at January
1, 2019 to increase by \2,833,434 million and \2,386,958 million, respectively.
Compared to 2019, operating lease expenses are expected to decrease by \712,294 million while depreciation
expense relating to the underlying leased assets and interest expense related to the lease liability are expected to
increase by \671,910 million and \72,567 million, respectively. The results of the assessment may change due to
additional information that the Company may obtain subsequent to performing the assessment.
(2) Lessor accounting
When applying Korean IFRS 1116, the Company does not expect the enactments to have a significant impact on the
consolidated financial statements as the accounting standard as a lessor did not change significantly from IFRS 1017.
Amendments to Korean IFRS 1019, Employee Benefits
The amendments require that an entity shall calculate current service cost and net interest for the remainder of the
reporting period after a plan amendment, curtailment or settlement based on updated actuarial assumptions from the
date of the change.
The amendments also require that a reduction in a surplus must be recognized in profit or loss even if that surplus
was not previously recognized because of the impact of the asset ceiling. The amendments are effective for plan
amendments, curtailments and settlements occurring in reporting periods that begin on or after January 1, 2019.
Amendments to Korean IFRS 1028, Investments in Associates and Joint Ventures
The amendments clarify that an entity shall apply Korean IFRS 1109 to financial instruments in an associate or joint
32
venture to which the equity method is not applied. These include long-term interests that, in substance, form part of
the entity’s net investment in an associate or joint venture. These amendments will be applied for annual periods
beginning on or after January 1, 2019, with early adoption permitted. In accordance with the transitional provisions
in Korean IFRS 1109, the restatement of the comparative information is not required and the cumulative effects of
initially applying the amendments retrospectively should be recognized in the beginning balance of retained earnings
(or other components of equity, as appropriate) at the date of initial application.
Enactment to Interpretation of Korean IFRS 2123, Uncertainty over Income Tax Treatments
The Interpretation explains how to recognize and measure deferred and current income tax assets and liabilities where
there is uncertainty over a tax treatment, and includes guidance on how to determine whether each uncertain tax
treatment is considered separately or together. It also presents examples of circumstances where a judgement or
estimate is required to be reassessed. This Interpretation will be applied for annual periods beginning on or after
January 1, 2019, and an entity can either restate the comparative financial statements retrospectively or recognize the
cumulative effect of initially applying the Interpretation as an adjustment in the beginning balance at the date of initial
application.
2.3 Consolidation
The Company prepares the consolidated financial statements in accordance with Korean IFRS 1110, Consolidated
Financial Statements.
(A) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Company has control. The Company
controls the corresponding investee when it is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Consolidation of a
subsidiary begins from the date the Company obtains control of a subsidiary and ceases when the Company loses
control of the subsidiary.
The Company applies the acquisition method to account for business combinations. The consideration transferred is
measured at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at their fair values at the acquisition date. The
Company recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis in the event
of liquidation at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable
net assets. Acquisition-related costs are expensed as incurred.
Goodwill is recognized as the excess of (1) the aggregate of i) the consideration transferred, ii) the amount of any
non-controlling interest in the acquiree and iii) the acquisition-date fair value of the Company’s previously held equity
interest in the acquiree over (2) the net identifiable assets acquired. If this consideration (1) is lower than the fair
value of the acquiree’s net assets in (2), the difference is recognized in profit or loss.
Balances of receivables and payables, income and expenses and unrealized gains or losses on transactions between
the Company subsidiaries are eliminated. Accounting policies of subsidiaries are changed where necessary to ensure
consistency with the policies adopted by the Company.
(B) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions
– that is, as transactions with the owners in their capacity as owners. The difference between fair value of any
33
consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals of non-controlling interests are also recorded in equity.
(C) Disposal of subsidiaries
If the Company loses control of a subsidiary, any investment continuously retained in the subsidiary is re-measured
at its fair value at the date when control is lost and any resulting differences are recognized in profit or loss. Such fair
value becomes the initial carrying amount for the subsequent measurement of the retained interest accounted for as
an associate, joint venture, or financial asset. In addition, any amounts previously recognized in other comprehensive
income in respect of such entity are accounted for as if the Company had directly disposed of the related assets or
liabilities. As a result, the previously recognized other comprehensive income are reclassified into profit or loss or
equity.
(D) Non-controlling interests
Each component of profit or loss and other comprehensive income is attributed to owners of the parent and to non-
controlling interests. Total comprehensive income is attributed to owners of the parent and to non-controlling interests
even if this results in a negative balance of non-controlling interests.
(E) Associates
Associates are all entities over which the Company has significant influence but does not have control, generally
investees of which from 20% to 50% of voting stock is owned by the Company . Investments in associates are initially
recognized at acquisition cost using the equity method. Unrealized gains on transactions between the Company and
its associates are eliminated to the extent of the Company’s interest in the associates. If there is any objective evidence
that the investment in the associate is impaired, the Company recognizes the difference between the recoverable
amount of the associate and its book value as impairment loss.
(F) Joint arrangements
A joint arrangement of which two or more parties have joint control is classified as either a joint operation or a joint
venture. A joint operator has rights to the assets, and obligations for the liabilities, relating to the joint operation and
recognizes the assets, liabilities, revenues and expenses relating to its interest in a joint operation. A joint venturer
has rights to the net assets relating to the joint venture and accounts for that investment using the equity method.
2.4 Foreign Currency Translation
(A) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the
primary economic environment in which each entity operates (the “functional currency”). The consolidated financial
statements are presented in Korean won, which is the parent company’s functional and presentation currency.
(B) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in profit or loss.
34
Exchange differences arising on non-monetary financial assets and liabilities such as equity instruments at fair value
through profit or loss and equity instruments at fair value through other comprehensive income are recognized in
profit or loss and other comprehensive income, respectively, as part of the fair value gain or loss.
(C) Translation into the presentation currency
The results and financial position of all the foreign entities that have a functional currency different from the
presentation currency of the Company are translated into the presentation currency as follows:
 Assets and liabilities for each statement of financial position presented are translated at the closing rate at the
end of the reporting date.
 Income and expenses for each statement of income are translated at average exchange rates, unless this average
is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of the transactions.
 All resulting exchange differences are recognized in other comprehensive income.
2.5 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 that are readily convertible to a known amount of cash and are subject to an insignificant risk of change
in value.
2.6 Financial Assets
(A) Classification
From January 1, 2018, the Company classifies its financial assets in the following measurement categories:
- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss)
- Those to be measured at amortized cost
The classification depends on the Company’s business model for managing the financial assets and the contractual
terms of the cash flows.
For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model in which the
investment is held. The Company reclassifies debt investments only when its business model for managing those
assets changes.
For investments in equity instruments that are not held for trading, classification will depend on whether the Company
has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value
through other comprehensive income. Changes in fair value of the investments in equity instruments that are not
accounted for as other comprehensive income are recognized in profit or loss.
(B) Measurement
At initial recognition, the Company measures a financial asset, in the case of a financial asset not at fair value through
profit or loss, at its fair value plus transaction costs that are directly attributable to the acquisition of the financial
35
asset or the issuance of the financial liabilities. Transaction costs of financial assets carried at fair value through profit
or loss are expensed in profit or loss.
Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
a) Debt Instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and
the cash flow characteristics of the asset. The Company classifies its debt instruments into one of the following three
measurement categories:
① Financial assets measured at amortized cost.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently
measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is
derecognized or impaired. Interest income from these financial assets is included in ‘Financial income’ using the
effective interest rate method.
② Financial assets measured at fair value through other comprehensive income
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at fair value through other comprehensive
income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition
of impairment loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are
recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously
recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these
financial assets is included in ‘Financial income’ using the effective interest rate method. Foreign exchange gains and
losses are presented in ‘Financial income and expenses’ and impairment losses are presented in ‘Other non-operating
expenses’.
③ Financial assets measured at fair value through profit or loss
Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured
at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value
through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented in the
statement of profit or loss within ‘Other non-operating income and expenses’ in the year in which it arises.
b) Equity Instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s management has
elected to present fair value gains and losses on equity investments in other comprehensive income, there is no
subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive
income is reclassified from equity to retained earnings. Dividend income from such investments continue to be
recognized in profit or loss as ‘Other non-operating income’ when the right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘Other non-operating
income and expenses’ in the statement of profit or loss as applicable.
36
(C) Impairment
The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied
depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies
the simplified approach, which requires expected lifetime losses to be recognized from initial recognition of the
receivables.
(D) Recognition and Derecognition
Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which
the Company commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash
flows from the financial assets have expired or have been transferred and the Company has transferred substantially
all the risks and rewards of ownership. 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. The Company
classified the financial liability as “borrowings” in the statement of financial position.
(E) Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statements of financial position where
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis
or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.
2.7 Trade Receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course
of business. If collection is expected in one year or less, they are classified as current assets. If collection is expected
beyond one year, they are presented as non-current assets. Trade receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method, less loss allowance.
2.8 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the average cost method,
except for materials in transit. The cost of finished goods and work in progress comprises raw materials, direct labor,
other direct costs and related production overheads (based on normal operating capacity). It excludes costs of idle
plant and abnormal waste. Net realizable value is the estimated selling price in the ordinary course of business, less
applicable variable selling expenses.
Inventories are reduced for the estimated losses arising from excess, obsolescence, and decline in value. This
reduction is determined by estimating market value based on future customer demand. The losses on inventory
obsolescence are recorded as a part of cost of sales.
2.9 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs
are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the item can be
37
measured reliably. The carrying amount of those parts that are replaced is derecognized and repairs and maintenance
expenses are recognized in profit or loss in the period they are incurred.
Depreciation on tangible assets is calculated using the straight-line method to allocate the difference between their
cost and their residual values over their estimated useful lives. Land is not depreciated. Costs that are directly
attributable to the acquisition, construction or production of a qualifying asset, including capitalized interest costs,
form part of the cost of that asset and are amortized over the estimated useful lives.
The Company’s policy is that property, plant and equipment should be depreciated over the following estimated
useful lives:
Estimated useful lives

Buildings and structures 15, 30 years
Machinery and equipment 5 years
Other 5 years
The depreciation method, residual values and useful lives of property, plant and equipment are reviewed, and adjusted
if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses
on disposals are determined by comparing the proceeds with the carrying amount and are recognized within the
statement of profit or loss as part of ‘Other non-operating income and expenses’.
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 Intangible Assets
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net
identifiable assets of the acquired subsidiary, associates, joint ventures and businesses at the date of acquisition.
Goodwill on acquisitions of subsidiaries and businesses is included in intangible assets and goodwill on acquisition
of associates and joint ventures is included in the investments in associates and joint ventures.
Intangible assets, except for goodwill, are initially recognized at their historical cost and carried at cost less
accumulated amortization and accumulated impairment losses.
Internally generated development costs are the aggregate costs recognized after meeting the asset recognition criteria,
including technical feasibility, and determined to have future economic benefits. Membership rights and certain
trademarks are regarded as intangible assets with an indefinite useful life and not amortized because there is no
foreseeable limit to the period over which the assets are expected to be utilized. However, the Company records
impairment based on its reasonable estimation of the benefits associated with the membership rights and assessment
of impairment indicators, such as a decline in the market value. Intangible assets with definite useful lives such as
trademarks and licenses, are amortized using the straight-line method over their estimated useful lives.
38
The Company’s policy is that intangible assets should be amortized over the following estimated useful lives:
Estimated useful lives

Development costs 2 years
Trademarks, licenses and other intangible assets 3 - 25 years
2.12 Impairment of Non-Financial Assets
Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for
impairment. Assets that are subject to amortization are reviewed 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 to sell and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets
other than goodwill for which an impairment charge was previously recorded are reviewed for possible reversal of
the impairment at each reporting date.
2.13 Financial Liabilities
(A) Classification and Measurement
The Company shall classify all financial liabilities as financial liabilities measured subsequently at amortized cost,
except for
- Financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities,
shall be subsequently measured at fair value.
- Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the
continuing involvement approach applies. Such financial liabilities are measured based on the methodology
described in Note 2.6 Financial Assets.
- Financial guarantee contracts. After initial recognition, an issuer of such a contract shall subsequently measure
it at the higher of:
(a) The amount of the loss allowance determined on lifetime expected credit losses.
(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in
accordance with the principles of Korean IFRS 1115.
- Commitments to provide a loan at a below-market interest rate. An issuer of such a commitment shall
subsequently measure it at the higher of:
(a) The amount of the loss allowance determined on lifetime expected credit losses.
(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in
accordance with the principles of Korean IFRS 1115.
- Contingent consideration recognized by an acquirer in a business combination to which Korean IFRS 1103
applies. Such contingent consideration shall subsequently be measured at fair value with changes recognized in
profit or loss.
(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. The difference between the carrying amount of a financial liability extinguished
39
or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities
assumed) is recognized in profit or loss.
2.14 Trade Payables
Trade payables are amounts due to suppliers for merchandise purchased or services received in the ordinary course
of business. If payment is expected in one year or less, they are classified as current liabilities. If payment is expected
beyond one year, they are presented as non-current liabilities. Non-current trade payables are recognized initially at
fair value and subsequently measured at amortized cost using the effective interest method.
2.15 Borrowings
Borrowings are recognized initially at fair value, net of transaction costs, and are subsequently measured at amortized
cost. Any difference between cost and the redemption value is recognized in the statement of income over the period
of the borrowings using the effective interest method. If the Company has an indefinite right to defer payment for a
period longer than 12 months after the end of the reporting date, such liabilities are recorded as non-current liabilities,
otherwise, they are recorded as current liabilities.
2.16 Provisions and Contingent Liabilities
A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and
a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating
losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognized as interest expense.
When it is probable that an outflow of economic benefits will occur due to a present obligation resulting from a past
event, and the amount is reasonably estimable, a corresponding provision is recognized in the financial statements.
However, when such outflow is dependent upon a future event that is not certain to occur, or cannot be reliably
estimated, a disclosure regarding the contingent liability is made in the notes to the financial statements.
2.17 Employee Benefits
The Company has a variety of retirement pension plans including defined benefit and defined contribution plans. A
defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity.
The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined
contribution plans, the Company pays contributions to annuity plans that are managed either publicly or privately on
a mandatory, contractual or voluntary basis. The Company has no further future payment obligations once the
contributions have been paid. The contributions are recognized as employee benefit expense when they are due.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments
is available.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define
an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors
such as age, years of service and compensation. The liability recognized in the statement of financial position in
respect to 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
40
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 to maturity approximating to the
terms of the related pension obligation.
Actuarial gains and losses resulting from the changes in actuarial assumptions, and the differences between the
previous actuarial assumptions and what has actually occurred, are recognized in other comprehensive income in the
period in which they were incurred. Past service costs are immediately recognized in profit or loss.
2.18 Financial Guarantee Contract
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due. The liability is initially measured at
fair value, and then subsequently at the higher of the following:
- the amount determined in accordance with the expected credit loss model under Korean IFRS 1109, Financial
Instruments and
- the amount initially recognized less, where appropriate, the cumulative amount of income recognized in
accordance with Korean IFRS 1115, Revenue from Contracts with Customers
The liability is recognized in the statement of financial position within ‘other financial liabilities’.
2.19 Current and Deferred Tax
The tax expense for the period comprises current and deferred tax. Tax is recognized on the profit for the period in
the statement of income, except to the extent that it relates to items recognized in other comprehensive income or
directly in equity, in which case the tax is also recognized in other comprehensive income or directly in equity,
respectively. The tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period.
Deferred tax is recognized for temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts as expected tax consequences at the recovery or settlement of the carrying amounts of the assets
and liabilities. However, deferred tax assets and liabilities are not recognized if they arise 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 to the extent that it is probable that
future taxable profit will be available against which the temporary differences can be utilized.
A deferred tax liability is recognized for taxable temporary differences associated with investments in subsidiaries,
associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the
reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable
future. In addition, a deferred tax asset is recognized for 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 against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention to
settle the balances on a net basis.
41
2.20 Derivative Instruments
Derivatives are initially recognized at fair value on the date when a derivative contract is entered into and are
subsequently remeasured at their fair value at the end of each reporting period. Changes in the fair value of any
derivative instrument that does not qualify for hedge accounting are recognized immediately in profit or loss.
The Company applies cash flow hedge accounting to hedge the foreign currency risk of forecasted transactions
including hedging the price risk associated with forecast inventory purchase. The effective portion of changes in fair
value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income,
and the ineffective portion is recognized in financial income or cost.
2.21 Dividend
Dividend distribution to the Company’s shareholders is recognized as a liability when the dividends are approved.
2.22 Share Capital
Ordinary shares and preference shares with no repayment obligations are classified as equity. When the Company
purchases its ordinary shares, the acquisition costs, including direct transaction costs, are deducted from equity until
the redemption or reissuance as treasury shares. Consideration received on the subsequent sale or issuance of treasury
shares is credited to equity.
2.23 Revenue Recognition
Revenue mainly comprises the fair value of the consideration received or receivable for the sale of goods in the
ordinary course of the Company’s activities. Revenue is shown net of value-added tax, returns, sales incentives and
discounts and after eliminating intercompany transactions.
The Company applied Korean IFRS 1115 to the annual period beginning January 1, 2018. The Company shall
recognize revenue in accordance with Korean IFRS 1115 by applying the following 5 steps: ① Identify the contracts
with the customers, ② Identify the separate performance obligations, ③ Determine the transaction price of the
contract, ④ Allocate the transaction price to each of the separate performance obligations, and ⑤ Recognize the
revenue as each performance obligation is satisfied.
(A) Identification of performance obligations
The Company exports various products and merchandise in accordance with Incoterms Group C trading conditions
(Incoterms CIF, etc.). According to Korean IFRS 1115, since the seller provides the shipping service after control of
the product or merchandise has been transferred to the customer, the shipping service (including insurance) is
recognized as a separate performance obligation.
(B) A performance obligation is satisfied over time
The Company delivers products to customers and installs them in accordance with the system air conditioner contracts
awarded by the Public Procurement Service. According to Korean IFRS 1115, the Company can recognize revenue
over time if the Company creates or enhances an asset (for example, work in progress) that the customer controls as
the asset is created or enhanced. The Company recognizes the revenue from system air conditioner installation over
time as the customer controls the outcome of the service.
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(C) Variable consideration
The Company estimates an amount of variable consideration by using the expected value which the Company expects
to better predict the amount of consideration. The Company recognizes variable consideration only to the extent that
it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when
the refund period has lapsed. The refund liability is measured at the amount of consideration received for which the
Company does not expect to be entitled. The Company has a right to recover the product from the customer where
the customer exercises his right of return and recognizes an asset and a corresponding adjustment to cost of sales.
The asset is measured by reference to the former carrying amount of the product less the costs to recover the products.
(D) Allocation of the transaction price
The transaction price in an arrangement must be allocated to each separate performance obligation based on the
relative standalone selling prices of the goods or services being provided to a customer. The Company determines
the standalone selling price for each separate performance obligation by using methods such as the ‘adjusted market
assessment approach’.
2.24 Leases
A lease is an agreement, whereby the lessor conveys to the lessee, in return for a payment or series of payments, the
right to use an asset for an agreed period of time. Leases in which a significant portion of the risks and rewards of
ownership are not transferred to the Company are classified as operating leases. Payments made under operating
leases are charge to profit or loss on a straight-line basis over the period of lease.
Leases where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalized at the lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are
included in other short-term and long-term payables. Each lease payment is allocated between the liability and
financial expense.
If the Company is a lessor, a lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership at the inception of the lease. A lease other than a finance lease is classified as an operating
lease. Lease income from operating leases is recognized in income on a straight-line basis over the lease term.
Initial direct costs incurred by the lessor in negotiating and arranging an operating lease is added to the carrying
amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income.
2.25 Government Grants
Government grants are recognized at their fair values when there is reasonable assurance that the grant will be
received and the Company will comply with the conditions attached to it. Government grants relating to costs are
deferred and recognized in the statement of profit or loss over the period necessary to match them with the costs that
they are intended to compensate. Government grants relating to assets are recognized in liabilities as deferred income
government grants and are credited to the statement of profit or loss on a straight– line basis over the expected lives
of the related assets.
2.26 Earnings per Share
Basic earnings per share is calculated by dividing net profit for the period available to ordinary shareholders by the
weighted-average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated
using the weighted-average number of ordinary shares outstanding adjusted to include the potentially dilutive effect
of common equivalent shares outstanding.
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2.27 Operating Segments
Operating segments are disclosed in the manner reported to the chief operating decision-maker. The chief operating
decision-maker is responsible for making strategic decisions on resource allocation and performance assessment of
the operating segments. The Management Committee, which makes strategic decisions, is regarded as the chief
operating decision-maker.
2.28 Convenience Translation into United States Dollar Amounts
The Company operates primarily in Korean won and its official accounting records are maintained in Korean won.
The US dollar amounts provided in the financial statements represent supplementary information solely for the
convenience of the reader. All Korean won amounts are expressed in U.S. dollars at the rate of ￦1,100.2 to US $1,
the average exchange rate for the year ended December 31, 2018. Such presentation is not in accordance with
generally accepted accounting principles, and should not be construed as a representation that the Korean won
amounts shown could be readily converted, realized or settled in US dollars at this or at any other rate.
2.29 Approval of the Consolidated Financial Statements
These consolidated financial statements were approved by the Board of Directors on January 31, 2019.
3. Critical Accounting Estimates and Assumptions
The Company makes estimates and assumptions concerning the future. The estimates and assumptions are
continuously assessed, considering 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 addressed below.
(A) Revenue recognition
A refund liability and a right to the returned goods are recognized for the products expected to be returned at the time
of sale. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value
method), and the Company’s revenue is affected by changes in expected return rate.
Sales of goods are recognized based on considerations specified in the contract, net of sales incentives, when control
of the products has transferred. The sales deduction, which affects the Company’s revenue, is reasonably estimated
based on historical experience and past contracts.
(B) Provision for warranty
The Company recognizes provision for warranty on products sold. The Company accrues provision for warranty
based on the best estimate of amounts necessary to settle future and existing claims. The amounts are estimated based
on past experience.
(C) Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using a variety of
methods and assumptions that are mainly based on market conditions existing at the end of each reporting period.
44
(D) Impairment of financial assets
The loss allowance for financial assets under Korean IFRS 1109, Financial Instruments, are based on assumptions
about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting
the inputs to the impairment calculation based on the Company’s past history, existing market conditions as well as
forward looking estimates at the end of each reporting period.
(E) Net defined benefit liabilities (assets)
The net defined benefit liabilities (assets) depend on a number of factors that are determined on an actuarial basis
using a number of assumptions including the discount rate. Any changes in these assumptions will impact the carrying
amount of the net defined benefit liability. The Company, in consideration of the interest rates of high-quality
corporate bonds, determines the appropriate discount rate at the end of each year. This is the interest rate that is used
to determine the present value of estimated future cash outflows expected to be required to settle the net defined
benefit liabilities (assets). The principal actuarial assumptions associated with the net defined benefit liabilities (assets)
are based on the current market expectations.
(F) Impairment of goodwill and intangible assets that have an indefinite useful life
At the end of each reporting period, the Company tests whether goodwill and intangible assets that have an indefinite
useful life have become impaired by comparing the carrying amounts of assets or cash-generating units to the
recoverable amounts. The recoverable amounts of assets or cash-generating units have been determined based on
value-in-use calculations, and these calculations are based on estimates.
(G) Income taxes
Income taxes on the Company’s taxable income from operating activities are subject to various tax laws and
determinations of each tax authority across various countries throughout the world. There is uncertainty in
determining the eventual tax effects on the taxable income from operating activities. The Company has recognized
current tax and deferred tax at the end of the fiscal year based on the best estimation of future taxes payable as a result
of operating activities. However, the resulting deferred income tax assets and liabilities may not equal the actual
future taxes payable and such difference may impact the current tax and deferred income tax assets and liabilities
upon the determination of eventual tax effects.
Regarding taxes payable in Korea, if a certain portion of taxable income is not used for investments or for increases
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 Korean tax law. The current and deferred tax at the end of the
yiscal year and are based on the best estimation of future taxes payable, which can differ from actual future taxes
payable as a result of changes in investments, wages and dividends, and thus results in additional uncertainty in
measuring the final tax effects.
45
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 that are readily convertible to a known amount of cash and are subject to an insignificant risk of change
in value.
Cash and cash equivalents as at December 31, 2018 and 2017 consist of the following:
(In millions of Korean won) December 31, 2018 December 31, 2017
Cash on hand ￦ 46,929 ￦ 37,521

Bank deposits and others 30,293,576 30,507,609
Total ￦ 30,340,505 ￦ 30,545,130
5. Financial Assets Subject to Withdrawal Restrictions
Financial instruments subject to withdrawal restrictions as at December 31, 2018 and 2017 consist of the following:
Short-term financial instruments ￦ 63,064 ￦ 30,377

Other non-current assets 6,325 3,507
Total ￦ 69,389 ￦ 33,884
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6. Financial Instruments by Category
(A) Categorizations of financial assets and liabilities as at December 31, 2018 and 2017 are as follows:
(1) As at December 31, 2018
Financial assets
measured at fair
value through Financial assets
Financial assets other measured at fair Other
measured at comprehensive value through financial
(In millions of Korean won) amortized cost income profit or loss assets1 Total
Financial Assets
Cash and cash equivalents ￦ 30,340,505 ￦ - ￦ - ￦ - ￦ 30,340,505
65,893,797 - - - 65,893,797
instruments
Trade receivables 33,867,733 - - - 33,867,733
Financial assets at
2,942,002 - - - 2,942,002
amortized cost
Financial assets at fair
value through other - 7,301,351 - - 7,301,351
Financial assets at fair
value through profit or - - 2,777,375 - 2,777,375
loss
Other 9,229,044 - 58,127 25,962 9,313,133
Total ￦ 142,273,081 ￦ 7,301,351 ￦ 2,835,502 ￦ 25,962 ￦ 152,435,896
1 Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.
Financial Financial liabilities

liabilities at fair value
measured at through profit or Other financial
(In millions of Korean won) amortized cost loss liabilities1 Total
Financial Liabilities
Trade payables ￦ 8,479,916 ￦ - ￦ - ￦ 8,479,916
Short-term borrowings 1,456,201 - 12,130,459 13,586,660
Other payables 9,779,287 - - 9,779,287
Current portion of long-term liabilities 33,386 - - 33,386
Debentures 961,972 - - 961,972
Long-term borrowings 85,085 - - 85,085
Long-term other payables 2,846,585 13,417 - 2,860,002
Others 8,789,800 32,284 10,439 8,832,523
Total ￦ 32,432,232 ￦ 45,701 ￦ 12,140,898 ￦ 44,618,831
1 Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not
subject to categorizations.
47
(2) As at December 31, 2017
Financial Held-to-
assets at fair Available-for- maturity Other
value through Loans and sale financial financial financial
(In millions of Korean won) profit or loss receivables assets assets assets1 Total
Financial Assets
Cash and cash equivalents ￦ - ￦ 30,545,130 ￦ - ￦ - ￦ - ￦ 30,545,130
- 49,447,696 - - - 49,447,696
instruments
Short-term available-for-
- - 3,191,375 - - 3,191,375
sale financial assets
Trade receivables - 27,695,995 - - - 27,695,995
Long-term available-for-
- - 7,752,180 - - 7,752,180
sale financial assets
Held-to-maturity financial
- - - 106,751 - 106,751
assets
Others 67,702 6,212,727 - - 45,396 6,325,825
Total ￦ 67,702 ￦113,901,548 ￦ 10,943,555 ￦ 106,751 ￦ 45,396 ￦125,064,952
1 Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.
Financial
liabilities at fair Financial liabilities
value through measured at Other financial
(In millions of Korean won) profit or loss amortized cost liabilities1 Total
Trade payables ￦ - ￦ 9,083,907 ￦ - ￦ 9,083,907
Short-term borrowings - 1,497,417 14,270,202 15,767,619
Other payables 316,928 11,789,681 - 12,106,609
Current portion of long-term liabilities - 278,619 - 278,619
Debentures - 953,361 - 953,361
Long-term borrowings - 1,814,446 - 1,814,446
Long-term other payables 28,285 1,717,899 - 1,746,184
Others 180,366 10,732,501 41,646 10,954,513
Total ￦ 525,579 ￦ 37,867,831 ￦ 14,311,848 ￦ 52,705,258
1Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not
48
(B) Net gains or net losses on each category of financial assets and liabilities for the years ended December 31, 2018
and 2017 are as follows:
(1) For the year ended December 31, 2018
Financial assets
measured at fair
value through Financial assets
Financial assets other measured at fair Other
measured at comprehensive value through financial
(In millions of Korean won) amortized cost income profit or loss assets Total
Financial Assets
Gain (loss) on valuation
(other comprehensive ￦ - ￦ (235,865) ￦ - ￦ 39,622 ￦ (196,243)
income)
Gain (loss) on
valuation/disposal (14,768) - 211,151 13,260 209,643
(profit or loss)
Reclassification from other
comprehensive income - - - (21,585) (21,585)
to profit or loss
Interest income 2,296,841 - 298 - 2,297,139
Foreign exchange
differences (406,081) - - - (406,081)
(profit or loss)
Dividend income - 130,056 1,323 - 131,379
Impairment/reversal
48,581 - - - 48,581
(profit or loss)
Financial liabilities Financial liabilities

measured at at through profit Other financial
(In millions of Korean won) amortized cost or loss liabilities1 Total
Loss on valuation
￦ - ￦ - ￦ 14,608 ￦ 14,608
(other comprehensive loss)
Gain (loss) on valuation/disposal
- 80,389 (8,200) 72,189
(profit or loss)
comprehensive income to profit or - - 7,958 7,958
loss
Interest expense (289,993) - (384,624) (674,617)
Foreign exchange differences
(101,394) - 79,390 (22,004)
(profit or loss)
1 Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not
49
Financial Held-to-
assets at fair Available-for- maturity Other
value through Loans and sale financial financial financial
(In millions of Korean won) profit or loss receivables assets assets assets Total
Financial Assets
Gain (loss) on valuation
(other comprehensive ￦ - ￦ - ￦ 513,434 ￦ - (47,048) ￦ 466,386
income)
Gain (loss) on
valuation/disposal (40,218) (20,163) 161,848 - (3,022) 98,445
(profit or loss)
comprehensive income - - (2,227) - 15,612 13,385
to profit or loss
Interest income - 1,613,010 1,157 56 - 1,614,223
Foreign exchange
differences - (913,989) - - - (913,989)
(profit or loss)
Dividend income - - 128,946 - - 128,946
Impairment/reversal
- (215,349) (13,538) - - (228,887)
(profit or loss)
Financial
liabilities at fair Financial liabilities
value through measured at Other financial
(In millions of Korean won) profit or loss amortized cost liabilities Total
Loss on valuation
￦ - ￦ - ￦ (16,751) ￦ (16,751)
(other comprehensive loss)
Loss on valuation/disposal
(130,684) - (1,918) (132,602)
(profit or loss)
comprehensive income to profit or - - 5,559 5,559
loss
Interest expense - (358,911) (296,491) (655,402)
Foreign exchange differences
- 772,975 137,168 910,143
(profit or loss)
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7. Transfer of Financial Assets
Trade receivables of the Company have been discounted through factoring agreements with banks in 2018 and 2017.
Collateral (trade receivables and other) provided in such factoring transactions do not meet the requirements for asset
derecognition as risks and rewards are not substantially transferred in the event the debtor defaults. Financial
liabilities recognized in relation to these transactions are included as short-term borrowings on the statement of
financial position (refer to Note 15).
The following table presents a breakdown of discounted trade receivables as at December 31, 2018 and 2017:
Carrying amount of the discounted trade receivables1 ￦ 12,130,459 ￦ 14,270,202

Carrying amount of the related borrowings 12,130,459 14,270,202
1 The discounted trade receivables include intercompany balances.
8. Financial Assets at Fair Value
(A) Details of financial assets at fair value as at and December 31, 2018 and 2017 are as follows:
(1) Financial assets at fair value through other comprehensive income
Non-current portion
Equity instruments ￦ 7,301,351 ￦ -
(2) Financial assets at fair value through profit or loss
Current portion
Debt instruments ￦ 2,001,948 ￦ -
Non-current portion
Equity instruments 453,642 -
Debt instruments 321,785 -
Subtotal 775,427 -
Total ￦ 2,777,375 ￦ -
Financial assets above were previously classified as available-for-sale financial assets.
51
(B) Changes in non-current portion of financial assets at fair value for the years ended December 31, 2018 and
2017 are as follows:
(1) Financial assets at fair value through other comprehensive income
(In millions of Korean won) 2018 2017
Balance at January 1 ￦ 7,151,434 ￦ -

Acquisition 424,471 -
Disposal (7,050) -
Fair value gain(loss) (312,601) -
Others 45,097 -
Balance at December 31 ￦ 7,301,351 ￦ -
(2) Financial assets at fair value through profit or loss
Balance at January 1 ￦ 600,746 ￦ -

Acquisition 178,048 -
Disposal (64,576) -
Fair value gain(loss) 65,361 -
Others (4,152) -
Balance at December 31 ￦ 775,427 ￦ -
(C) Changes in gain (loss) on valuation of financial assets at fair value through other comprehensive income for
the years ended December 31, 2018 and 2017 are as follows:
Balance at January 1 ￦ 2,475,749 ￦ -

Fair value gain(loss) (312,601) -
Reclassification to retained earnings 1,983 -
Balance at December 31 2,165,131 -
Deferred income tax and non-controlling interests (702,865) -
Total ￦ 1,462,266 ￦ -
52
(D) Details of listed equity securities of financial assets at fair value as at December 31, 2018 are as follows:
December 30, 2018

(In millions of Korean won, Number of Shares Percentage of Carrying amount
number of shares and percentage) owned ownership1 (%) Acquisition cost (Market value)
Samsung Heavy Industries 100,693,398 16.0 ￦ 735,488 ￦ 746,138

Hotel Shilla 2,004,717 5.1 13,957 153,361
iMarket Korea 647,320 1.8 324 4,479
SFA 3,644,000 10.2 38,262 126,082
Wonik Holdings 3,518,342 4.6 30,821 12,349
Wonik IPS 3,701,872 9.0 32,428 74,408
ASML 6,297,787 1.4 363,012 1,104,944
Wacom 8,398,400 5.0 62,013 38,795
BYD 52,264,808 1.9 528,665 433,838
Other 270,991 200,363
Total ￦ 2,075,961 ￦ 2,894,757
1
Ownership represents the Company’s ownership of ordinary shares issued in each entity.
9. Available-for-Sale Financial Assets
Changes in available-for-sale financial assets for the years ended December 31, 2018 and 2017 are as follows:
Balance as at January 1 ￦ - ￦ 10,442,736

Acquisitions - 15,529,275
Disposals - (15,562,233)
Valuation of available-for-sale financial assets - 721,730
Impairment - (8,083)
Foreign exchange differences - (254,693)
Other - 74,823
Balance as at December 31 ￦ - ￦ 10,943,555
(A) Current portion ￦ - ￦ 3,191,375
(B) Non-current portion - 7,752,180
53
As at the end of the reporting period, the above available-for-sale financial assets are measured at fair value, and
changes in valuation gains (losses) recognized in equity (other comprehensive income) on available-for-sale financial
assets for the years ended December 31, 2018 and 2017 are as follows:
Balance as at January 1 ￦ - ￦ 1,969,833

Fair value gains - 721,730
Net gains transferred from equity - (3,199)
Balance as at December 31 - 2,688,364
Deferred income tax and non-controlling interests - (808,590)
Total ￦ - ￦ 1,879,774
(A) Short-term available-for-sale financial assets
Details of short-term available-for-sale financial assets as at December 31, 2018 and 2017 are as follows:
Beneficiary certificates1 ￦ - ￦ 3,191,375
1 Beneficiary certificates are comprised of time deposits and others.
(B) Long-term available-for-sale financial assets
Details of long-term available-for-sale financial assets as at December 31, 2018 and 2017 are as follows:
Equity securities - Listed ￦ - ￦ 2,908,581

Equity securities - Non-listed - 4,729,124
Debt securities1 - 114,475
Total ￦ - ￦ 7,752,180
1 The maximum exposure to credit risk of available-for-sale debt securities is the carrying amount at the reporting date.
54
(1) Equity securities - Listed
Details of listed equity securities as at December 31, 2017 are as follows:
December 31, 2017

(In millions of Korean won, Number of Percentage of Acquisition Book value
number of shares and percentage) shares owned ownership (%)1 cost (Market value)
Samsung Heavy Industries 65,930,982 16.9 ￦ 473,727 ￦ 483,274

Hotel Shilla 2,004,717 5.1 13,957 170,200
iMarket Korea 647,320 1.8 324 5,832
SFA2 3,644,000 10.2 38,262 141,205
Wonik Holdings 3,518,342 4.6 30,821 27,760
Wonik IPS 3,701,872 9.0 32,428 123,643
ASML 6,297,787 1.4 363,012 1,169,393
Wacom 8,398,400 5.0 62,013 48,631
BYD 52,264,808 1.9 528,665 556,381
Other 158,688 182,262
Total ￦ 1,701,897 ￦ 2,908,581
1
Ownership represents the Company’s ownership of ordinary shares issued in each entity.
2
As SFA executed a capital increase without consideration, the Company’s number of SFA shares owned increased.
Acquisition cost includes impairment loss on available-for-sale financial assets recognized due to the decline in
realizable value below acquisition cost. The difference between the acquisition cost, net of impairment loss and
the current fair value is recorded within other components of equity, net of tax effects (unrealized gains or losses
on available-for-sale financial assets).
(2) Equity securities – Non-listed
Details of non-listed equity securities as at December 31, 2017 are as follows:
December 31, 2017

(In millions of Korean won, Number of Percentage of Acquisition
number of shares and percentage) shares owned ownership (%) cost Book value1
Kihyup Technology 1,000,000 17.2 ￦ 5,000 ￦ 5,000

Samsung Venture Investment 980,000 16.3 4,900 7,784
Maltani 45,000 15.0 16,544 15,137
Corning Inc. 2,300 7.4 2,434,320 3,629,653
CSOSDT - 9.8 357,315 357,315
Nanosys 22,500,681 17.5 35,814 37,475
Other 721,252 676,760
Total ￦ 3,575,145 ￦ 4,729,124
1 Non-marketable shares are measured at cost as the variability of estimated cash flow is significant and the probability of
various estimates, including discount rate, cannot be reasonably assessed.
Acquisition cost includes impairment loss on available-for-sale financial assets recognized due to the decline in
realizable value below acquisition cost. The difference between the acquisition cost, net of impairment loss and
55
the current fair value is recorded within other components of equity, net of tax effects (unrealized gains or losses
on available-for-sale financial assets).
(3) Debt securities
Details of debt securities as at December 31, 2017 are as follows:
(In millions of Korean won) December 31, 2017
Corporate bonds \ 114,475
10. Trade and Other Receivables
(A) Trade and other receivables as at December 31, 2018 and 2017 are as follows:
December 31, 2018 December 31, 2017

(In millions of Korean won) Trade Non-trade Trade Non-trade
Receivables \ 35,480,128 \ 3,335,428 \ 30,316,958 \ 4,275,407

Less: Loss allowance (571,564) (31,045) (639,223) (27,305)
Receivables, net 34,908,564 3,304,383 29,677,735 4,248,102
Less: Non-current portion (1,040,831) (223,650) (1,981,740) (139,141)
Current portion \ 33,867,733 \ 3,080,733 \ 27,695,995 \ 4,108,961
(B) Movements in the loss allowance for receivables for the years ended December 31, 2018 and 2017 are as follows:
2018 2017
Balance as at January 1 \ 639,223 \ 27,305 \ 420,889 \ 25,503

Provisions for impaired receivables
(48,320) (233) 206,561 8,277
/ (reversals of unused amounts)
Receivables written off during the
(11,401) (885) (14,367) (1,133)
year as uncollectible
Other (7,938) 4,858 26,140 (5,342)
Balance as at December 31 \ 571,564 \ 31,045 \ 639,223 \ 27,305
56
(C) The details of trade and other receivables classified by past due date to measure expected credit losses as at
December 31, 2018 and 2017 are as follows:

Receivables not past due \ 32,311,659 \ 2,993,313 \ 27,198,637 \ 3,915,246

Past due 1:
Less than 31 days overdue 2,390,409 148,309 2,245,116 190,017
31 days to 90 days overdue 278,705 33,714 451,991 21,018
Over 90 days overdue 499,355 160,092 421,214 149,126
Total \ 35,480,128 \ 3,335,428 \ 30,316,958 \ 4,275,407
1 The Company does not consider receivables that are overdue for less than or equal to 31 days as impaired.
(D) The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as at December
31, 2018. The Company has in place insurance contracts covering the Company’s major receivables.
11. Inventories
Inventories as at December 31, 2018 and 2017 are as follows:

(In millions of Gross Valuation Carrying Gross Valuation Carrying
Korean won) amount allowance1 amount amount allowance1 amount
Finished goods \ 9,206,754 \ (370,656) \ 8,836,098 \ 8,201,526 \ (897,089) \7,304,437

Work in process 11,862,033 (795,522) 11,066,511 7,331,394 (217,493) 7,113,901
Raw materials and
8,658,212 (610,073) 8,048,139 10,196,123 (782,906) 9,413,217
supplies
Materials in transit 1,033,956 - 1,033,956 1,151,800 - 1,151,800
Total \30,760,955 \(1,776,251) \28,984,704 \26,880,843 \(1,897,488) \24,983,355
1 Inventories for which the Company has suspended sales or production, are evaluated based on net realizable value. Valuation
allowance is recorded if the net realizable value is less than the carrying amount.
The cost of inventories recognized as expense and included in ‘cost of sales’ for the year ended December 31, 2018,
amounts to ￦131,502,320 million (2017: ￦128,823,788 million). The amount includes inventory valuation losses.
57
12. Investments in Associates and Joint Ventures
(A) Changes in investments in associates and joint ventures for the years ended December 31, 2018 and 2017 are as
follows:
Balance as at January 1 \ 6,802,351 \ 5,837,884

Acquisition 51,226 25,293
Disposal (148) (53,187)
Share of profit 539,845 201,442
Others1 (80,068) 790,919
Balance as at December 31 \ 7,313,206 \ 6,802,351
1 Others consist of dividends, impairment, reversal of impairment, reclassification and the cumulative effect of changes in
accounting principles.
(B) Major investments in associates and joint ventures as at December 31, 2018 are as follows:
(1) Investments in associates
Percentage of Principal The end of

ownership1 business reporting
Investee Nature of relationship with associate (%) location period
Manufacture and supply electronic components
Samsung Electro-
including passive components, circuit boards, and 23.7 Korea December
Mechanics
modules
Provide IT services including computer
Samsung SDS programming, system integration and management 22.6 Korea December
and logistical services
Samsung Biologics New business investment 31.5 Korea December
Manufacture and supply electronics including
Samsung SDI2 19.6 Korea December
secondary cell batteries
Cheil Worldwide Advertising agency 25.2 Korea December
1 Ownership represents the Company’s ownership of ordinary shares issued by each entity.
2 The Company’s ownership of ordinary shares outstanding is 20.6%.
(2) Investments in joint ventures
Percentage of Principal The end of

ownership1 business reporting
Investee Nature of relationship with associate (%) location period
Samsung Corning
Manufacture and supply industrial glass devices 50.0 Korea December
Advanced Glass
1 Ownership represents the Company’s ownership of ordinary shares issued by each entity.
58
(C) Details of investments in associates and joint ventures as at December 31, 2018 and 2017 are as follows:
(1) Investments in associates

Net asset value of equity
Investee Acquisition cost shares1 Carrying amount
Samsung Electro-Mechanics ￦ 359,237 ￦ 1,127,805 ￦ 1,126,043

Samsung SDS 147,963 1,350,838 1,376,321
Samsung Biologics 443,193 1,308,650 1,308,546
Samsung SDI 1,242,605 2,402,697 2,197,335
Cheil Worldwide 506,162 253,062 549,165
Other 625,922 310,909 525,259
Total ￦ 3,325,082 ￦ 6,753,961 ￦ 7,082,669
1 The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.

Net asset value of equity
Investee Acquisition cost shares 1 Carrying amount
Samsung Electro-Mechanics ￦ 359,237 ￦ 989,924 ￦ 991,579

Samsung SDS 147,963 1,256,881 1,282,205
Samsung Biologics 443,193 1,251,292 1,254,937
Samsung SDI 1,242,605 2,266,451 2,126,244
Cheil Worldwide 506,162 241,335 540,114
Other 593,080 215,025 376,349
Total ￦ 3,292,240 ￦ 6,220,908 ￦ 6,571,428
1 The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.
(2) Investments in joint ventures

Net asset value of
Investee Acquisition cost equity shares 1 Carrying amount
Samsung Corning Advanced Glass ￦ 215,000 ￦ 173,503 ￦ 173,499

Others 259,994 65,443 57,038
Total ￦ 474,994 ￦ 238,946 ￦ 230,537
1 The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.
59
Net asset value of
Investee Acquisition cost equity shares 1 Carrying amount
Samsung Corning Advanced Glass ￦ 215,000 ￦ 170,440 ￦ 170,425

Others 259,994 65,106 60,498
Total ￦ 474,994 ￦ 235,546 ￦ 230,923
1 The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.
(D) Details of the valuation of investments in associates and joint ventures under the equity method are as follows:
Other
Balance as at Gain/loss on comprehensive Balance as at
(In millions of Korean won) January 1 valuation income/loss Others1 December 31
Samsung Electro-Mechanics ￦ 991,579 ￦ 150,099 ￦ (1,648) ￦ (13,987) ￦ 1,126,043

Samsung SDS 1,282,205 142,290 (13,229) (34,945) 1,376,321
Samsung Biologics 1,254,937 72,059 (964) (17,486) 1,308,546
Samsung SDI 2,126,244 74,029 10,526 (13,464) 2,197,335
Cheil Worldwide 540,114 34,948 (3,828) (22,069) 549,165
Samsung Corning Advanced Glass 170,425 2,811 262 1 173,499
Others 436,847 63,609 8,060 73,781 582,297
Total ￦ 6,802,351 ￦ 539,845 ￦ (821) ￦ (28,169) ￦ 7,313,206
1 Others consist of acquisitions, disposals, dividends, impairment, reclassification and the cumulative effect of changes in
accounting principles.
Other
Balance as at Gain/loss on comprehensive Balance as at
(In millions of Korean won) January 1 valuation income/loss Others1 December 31
Samsung Electro-Mechanics ￦ 997,022 ￦ 34,353 ￦ (30,949) ￦ (8,847) ￦ 991,579

Samsung SDS 1,185,703 121,968 (12,363) (13,103) 1,282,205
Samsung Biologics 1,289,351 (31,546) (2,868) - 1,254,937
Samsung SDI 1,232,986 (50) 8,038 885,270 2,126,244
Cheil Worldwide 517,885 36,083 (5,142) (8,712) 540,114
Samsung Corning Advanced Glass 169,485 1,039 (97) (2) 170,425
Others 445,452 39,595 (11,043) (37,157) 436,847
Total ￦ 5,837,884 ￦ 201,442 ￦ (54,424) ￦ 817,449 ￦ 6,802,351
1 Others consist of acquisitions, disposals, dividends, impairment, reversal of impairment, and reclassification.
60
(E) Summary of condensed financial information of major associates and joint ventures
(1) A summary of condensed financial information of major associates and dividends received from associates as
at December 31, 2018 and 2017, and for the years ended December 31, 2018 and 2017 is as follows:
2018
Samsung
Electro- Samsung Samsung Samsung Cheil
(In millions of Korean won) Mechanics SDS Biologics SDI Worldwide
1. Condensed financial information

Condensed statements of financial position:
Current assets ￦ 3,525,293 ￦ 5,881,776 ￦ 1,577,684 ￦ 5,519,342 ￦ 1,889,015
Non-current assets 5,119,621 2,132,073 4,402,725 13,830,379 378,586
Current liabilities 2,509,584 1,574,797 710,530 4,012,822 1,251,332
Non-current liabilities 1,188,833 290,501 1,114,410 3,111,680 123,476
Non-controlling interests 125,450 166,097 - 291,196 10,164
Condensed statements of comprehensive income:
Revenue ￦ 8,193,023 ￦ 10,034,219 ￦ 535,806 ￦ 9,158,272 ￦ 3,468,786
Profit or loss from continuing
656,242 629,340 224,109 701,166 129,625
operations1
Other comprehensive income(loss)1 (26,415) (49,834) (2,967) 47,261 (11,256)
Total comprehensive income(loss)1 629,827 579,506 221,142 748,427 118,369
2. Details of adjustments from the book value of investments in associates

Net assets (a) ￦ 4,821,047 ￦ 5,982,454 ￦ 4,155,469 ￦11,934,023 ￦ 882,629
Ownership percentage (b) 2 23.4% 22.6% 31.5% 20.1% 28.7%
Net assets of equity shares (a x b) 1,127,805 1,350,838 1,308,650 2,402,697 253,062
Goodwill 7,081 26,801 3,645 - 298,779
Intercompany transactions and
(8,843) (1,318) (3,749) (205,362) (2,676)
others3
Book value of associates 1,126,043 1,376,321 1,308,546 2,197,335 549,165
3. Dividends from associates

Dividends ￦ 13,270 ￦ 34,944 ￦ - ￦ 13,463 ￦ 22,069
1 Income (loss) attributable to owners of the parent company.

2 Ownership percentage includes ordinary and preference shares.
3 Consists of unrealized gains and losses and other differences.
61
2017
Samsung
Electro- Samsung Samsung Samsung Cheil
(In millions of Korean won) Mechanics SDS Biologics SDI Worldwide

Current assets ￦ 2,478,798 ￦ 5,117,499 ￦ 620,995 ￦ 3,605,076 ￦ 1,889,096
Non-current assets 5,288,605 2,160,262 6,562,096 12,146,401 349,197
Current liabilities 2,454,110 1,324,862 2,287,442 2,670,360 1,281,293
Non-current liabilities 981,802 233,469 919,198 1,629,117 101,012
Non-controlling interests 99,848 161,151 - 194,698 9,927
Revenue ￦ 6,838,474 ￦ 9,299,206 ￦ 464,629 ￦ 6,321,561 ￦ 3,374,987
Profit or loss from continuing
161,739 530,348 (96,972) 657,236 127,153
operations1
Other comprehensive income(loss)1 (132,298) (63,585) (8,957) 27,870 (25,115)
Total comprehensive income(loss)1 29,441 466,763 (105,929) 685,106 102,038
2. Details of adjustments from the book value of investments in associates

Net assets (a) ￦ 4,231,643 ￦ 5,558,279 ￦ 3,976,451 ￦11,257,302 ￦ 846,061
Ownership percentage (b) 2 23.4% 22.6% 31.5% 20.1% 28.7%
Net assets of equity shares (a x b) 989,924 1,256,881 1,251,292 2,266,451 241,335
Goodwill 7,081 26,801 3,645 - 298,779
Intercompany transactions and
(5,426) (1,477) - (140,207) -
others3
Book value of associates 991,579 1,282,205 1,254,937 2,126,244 540,114
3. Dividends from associates

Dividends ￦ 8,847 ￦ 13,104 ￦ - ￦ 13,463 ￦ 8,711
1 Income (loss) attributable to owners of the parent company.

2 Ownership percentage includes ordinary and preference shares.
62
(2) A summary of the condensed financial information of major joint ventures and dividends received from joint
ventures as at December 31, 2018 and 2017, and for the years ended December 31, 2018 and 2017 is as follows:
Samsung Corning Advanced Glass


Current assets ￦ 145,733 ￦ 128,499
- Cash and cash equivalent 19,047 11,035
Non-current assets 234,666 253,840
Current liabilities 33,393 41,325
- Financial liabilities1 17,710 18,900
Non-current liabilities - 134
Revenue ￦ 233,025 ￦ 242,452
Depreciation and amortization 2,388 1,356
Interest income 428 738
Income tax expense 296 129
Profit or loss from continuing operations2 5,601 2,034
Other comprehensive income(loss)2 - -
Total comprehensive income2 5,601 2,034
1 Trade payables, other payables, and provisions are excluded.

2 Income(loss) attributable to owners of the parent company.
Samsung Corning Advanced Glass

2. Details of adjustments from the book value of investments in joint ventures

Net assets(a) ￦ 347,006 ￦ 340,880
Ownership percentage(b) 50.0% 50.0%
Net assets of equity shares(a x b) 173,503 170,440
Intercompany transactions and others1 (4) (15)
Book value of joint ventures 173,499 170,425
3. Dividends from joint ventures
Dividends ￦ - ￦ -
63
(3) Income (loss) amounts attributable to owners of the parent company from associates and joint ventures which
are not individually material for the years ended December 31, 2018 and 2017 are as follows:
2018 2017
(In millions of Korean won) Associates Joint ventures Associates Joint ventures
Profit or loss from continuing operations ￦ 63,340 ￦ 1,379 ￦ 33,544 ￦ 6,219

Other comprehensive income (loss) 5,851 2,110 (9,386) (1,661)
Total comprehensive income ￦ 69,191 ￦ 3,489 ￦ 24,158 ￦ 4,558
(F) Details of marketable investments in associates as at December 31, 2018 and 2017 is as follows:

(In millions of Korean won and
number of shares) Number of shares held Market value Market value
Samsung Electro-Mechanics 17,693,084 ￦ 1,831,234 ￦ 1,769,308

Samsung SDS 17,472,110 3,564,310 3,494,422
Samsung Biologics 20,836,832 8,053,436 7,730,465
Samsung SDI 13,462,673 2,948,325 2,753,117
Cheil Worldwide 29,038,075 653,357 615,607
13. Property, Plant and Equipment
(A) Changes in property, plant and equipment for the years ended December 31, 2018 and 2017 are as follows:
2018
Machinery
(In millions of Korean Buildings and and Construction
won) Land Structures Equipment In Progress Other Total
Balance as at January 1 ￦ 9,409,276 ￦ 28,058,156 ￦ 57,915,798 ￦ 13,910,749 ￦ 2,371,669 ￦111,665,648

Acquisition cost 9,409,276 41,639,045 184,392,999 13,910,749 7,176,535 256,528,604
Accumulated
depreciation and - (13,580,889) (126,477,201) - (4,804,866) (144,862,956)
impairment
Acquisitions and
14,294 3,372,033 27,998,043 (3,920,447) 1,934,640 29,398,563
capital expenditures1
Depreciation - (2,049,753) (22,067,122) - (1,050,237) (25,167,112)
Disposals/Scrap (87,895) (213,324) (106,860) (365) (39,059) (447,503)
Impairment - - (18,458) - (61) (18,519)
2
Other 10,610 178,798 94,830 (284,881) (13,710) (14,353)
Balance as at
￦ 9,346,285 ￦ 29,345,910 ￦ 63,816,231 ￦ 9,705,056 ￦ 3,203,242 ￦115,416,724
December 31
Acquisition cost ￦ 9,346,285 ￦ 45,033,843 ￦206,407,913 ￦ 9,705,056 ￦ 8,665,069 ￦279,158,166
Accumulated
impairment
1 The capitalized borrowing costs are ￦22,104 million and the interest rate used to calculate the borrowing costs eligible for
capitalization is 0.88%.
2 Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government assistance.
64
2017
Machinery
(In millions of Korean Buildings and and Construction
won) Land Structures Equipment In Progress Other Total
Balance as at January 1 ￦ 7,869,679 ￦ 24,375,826 ￦ 38,302,055 ￦ 18,773,986 ￦ 2,151,495 ￦ 91,473,041

Acquisition cost 7,869,679 36,474,462 155,285,378 18,773,986 6,769,149 225,172,654
Accumulated
impairment
Acquisitions and
1,589,162 6,424,994 38,547,588 (4,396,126) 1,251,342 43,416,960
capital expenditures1
Business combinations 13,643 184,845 419,927 90,958 149,425 858,798
Depreciation - (1,836,073) (17,846,905) - (910,638) (20,593,616)
Disposals/Scrap (33,850) (37,007) (150,722) (261) (89,786) (311,626)
Impairment - - (146,930) - (461) (147,391)
Other2 (29,358) (1,054,429) (1,209,215) (557,808) (179,708) (3,030,518)
Balance as at
￦ 9,409,276 ￦ 28,058,156 ￦ 57,915,798 ￦ 13,910,749 ￦ 2,371,669 ￦111,665,648
December 31
Acquisition cost ￦ 9,409,276 ￦ 41,639,045 ￦184,392,999 ￦ 13,910,749 ￦ 7,176,535 ￦256,528,604
Accumulated
impairment
1 The capitalized borrowing costs are ￦19,711 million and the interest rate used to calculate the borrowing costs eligible for
capitalization is 0.71%.
2 Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government assistance.
(B) Details of depreciation of property, plant and equipment for the years ended December 31, 2018 and 2017 are as
follows:
Cost of sales ￦ 22,956,102 ￦ 18,440,750

Selling and administrative expenses and others 2,211,010 2,152,866
Total ￦ 25,167,112 ￦ 20,593,616
65
14. Intangible Assets
(A) Changes in intangible assets for the years ended December 31, 2018 and 2017 are as follows:
2018
Intellectual Development
(In millions of Korean won) property rights cost Membership Goodwill Other Total
Balance as at January 1 ￦ 4,134,455 ￦ 830,384 ￦ 222,969 ￦ 5,703,138 ￦ 3,869,537 ￦ 14,760,483

Internally generated
- 296,304 - - - 296,304
(development costs)
External acquisitions 321,557 - - - 402,656 724,213
Business combinations 14,289 - - 45,997 7,725 68,011
Amortization (280,284) (421,954) - - (612,687) (1,314,925)
Disposals/scrap (47,013) - (1,050) - (9,051) (57,114)
Impairment - - (1,575) - - (1,575)
Other1 44,752 - 1,284 84,543 285,622 416,201
Balance as at December 31 ￦ 4,187,756 ￦ 704,734 ￦ 221,628 ￦ 5,833,678 ￦ 3,943,802 ￦ 14,891,598
1 Other includes effects of changes in foreign currency exchange rates and others.
2017
Intellectual Development
(In millions of Korean won) property rights cost Membership Goodwill Other Total
Balance as at January 1 ￦ 1,349,764 ￦ 1,180,618 ￦ 184,399 ￦ 1,343,580 ￦ 1,285,659 ￦ 5,344,020

Internally generated
- 447,541 - - - 447,541
(development costs)
External acquisitions 236,918 - 57,751 - 241,530 536,199
Business combinations 3,011,641 - - 4,453,214 2,552,673 10,017,528
Amortization (252,191) (687,366) - - (584,219) (1,523,776)
Disposals/scrap (27,123) - (1,162) - (587) (28,872)
Impairment - (110,409) (23,617) - (9,085) (143,111)
Other1 (184,554) - 5,598 (93,656) 383,567 110,955
Balance as at December 31 ￦ 4,134,455 ￦ 830,384 ￦ 222,969 ￦ 5,703,138 ￦ 3,869,537 ￦ 14,760,483
1 Other includes effects of changes in foreign currency exchange rates and others.
66
(B) Goodwill
Goodwill is allocated to cash-generating units at the end of the reporting period. Details of goodwill as at December
31, 2018 and 2017 are as follows:
CE ￦ 511,531 ￦ 500,611
IM 662,443 600,633
Semiconductor 81,892 81,142
DP 80,299 80,299
Harman 4,493,787 4,436,715
Other 3,726 3,738
Total ￦ 5,833,678 ￦ 5,703,138
Goodwill impairment reviews are undertaken annually, and the recoverable amounts of cash-generating units have
been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on
financial budgets approved by management covering a five-year period. Perpetual cash flows beyond the five-year
period are extrapolated using a constant growth rate assumption. The growth rate does not exceed the long-term
average growth rate for the industry.
(C) Details of amortization of intangible assets for the years ended December 31, 2018 and 2017 are as follows:
Cost of sales ￦ 643,047 ￦ 894,529

Selling and administrative expenses and others 671,878 629,247
Total ￦ 1,314,925 ￦ 1,523,776
67
15. Borrowings
(A) Details of the carrying amounts of borrowings as at December 31, 2018 and 2017 are as follows:
Financial Annual Interest Rates (%) December 31, December 31,

(In millions of Korean won) Institutions as at December 31, 2018 2018 2017
Short-term borrowings
Woori Bank and
Collateralized borrowings1 0.1 ~ 10.3 ￦ 12,130,459 ￦ 14,270,202
others
Non-collateralized borrowings Citibank and others 0.1 ~ 34.5 1,456,201 1,497,417
Total ￦ 13,586,660 ￦ 15,767,619
Current portion of long-term

borrowings
Bank borrowings KEB Hana Bank 3.3 ￦ 16,880 ￦ 262,493
Financial lease liabilities2 CSSD and others 1.1 ~ 15.7 11,067 10,925
Total ￦ 27,947 ￦ 273,418
Long-term borrowings
Shinhan Bank and
Bank borrowings 3.2 ~ 3.5 ￦ 34,963 ￦ 1,756,908
others
Financial lease liabilities2 CSSD and others 1.1 ~ 15.7 50,122 57,538
Total ￦ 85,085 ￦ 1,814,446
1 Collateralized borrowings are secured by trade receivables (refer to Note 7).

2 Leased property, plant and equipment were pledged as collateral (refer to Note 19).
(B) Maturities of long-term borrowings outstanding as at December 31, 2018 are as follows:
(In millions of Korean won) Long-term borrowings

Repayment terms
2019 ￦ 27,947
2020 45,283
2021 6,991
2022 4,013
2023 and thereafter 28,798
Total ￦ 113,032
68
16. Debentures
(A) Details of foreign currency denominated debentures as at December 31, 2018 and 2017 are as follows:
(In millions of Annual Interest Rates (%)

Korean Won) Issue Date Due Date as at December 31, 2018 2018 2017
US dollar denominated ￦ 50,315 ￦ 53,570

1997.10.2 2027.10.1 7.7
straight bonds1 (US$45 million) (US$50 million)
US dollar denominated 447,240 428,560
2015.5.6 2025.5.15 4.2
debenture bonds2 (US$400 million) (US$400 million)
EURO denominated 447,352 447,739
2015.5.20 2022.5.27 2.0
debenture bonds3 (EUR€350 million) (EUR€350 million)
Less: Current portion (5,591) (5,357)
Less: Discounts (1,208) (1,405)
More: Premium 23,864 30,254
Total ￦ 961,972 ￦ 953,361
1 US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of issuance.
Interest is paid semi-annually.
2 Harman International Industries issued dollar denominated debenture bonds. Repayment of these debentures is due on the date
of maturity and interest is paid semi-annually.

3 Harman Finance International SCA issued euro denominated debenture bonds. Repayment of these debentures is due on the date
of maturity and interest is paid annually.
(B) Maturities of debentures outstanding as at December 31, 2018 are as follows:
(In millions of Korean won) Debentures

Repayment Term
2019 ￦ 5,591
2020 5,591
2021 5,591
2022 452,943
2023 and thereafter 475,191
Total ￦ 944,907
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17. Net Defined Benefit Liabilities (Assets)
(A) Details of net defined benefit liabilities(assets) recognized on the statements of financial position as at December
Present value of funded defined benefit obligations ￦ 8,443,465 ￦ 7,302,621

Present value of unfunded defined benefit obligations 250,577 234,315
Subtotal 8,694,042 7,536,936
Fair value of plan assets (8,752,334) (7,972,906)
Net defined benefit liabilities (assets) ￦ (58,292) ￦ (435,970)
(B) The amounts recognized in the statements of profit or loss for the years ended December 31, 2018 and 2017
related to defined benefit plans are as follows:
Current service cost ￦ 824,572 ￦ 885,101

Net interest income (22,781) (13,381)
Past service cost 14,367 -
Others (2,077) (2,206)
Total ￦ 814,081 ￦ 869,514
(C) The amounts recognized as expense of defined contribution plans for the years ended December 31, 2018 and
2017 are ￦144,712 million and ￦106,814 million, respectively.
(D) The pension expenses related to defined benefit plans recognized on the statements of profit or loss for the years
ended December 31, 2018 and 2017 are as follows:
Cost of sales ￦ 349,709 ￦ 353,539

Selling and administrative expenses and others 464,372 515,975
Total ￦ 814,081 ￦ 869,514
70
(E) Changes in the defined benefit obligations for the years ended December 31, 2018 and 2017 are as follows:
Balance as at January 1 ￦ 7,536,936 ￦ 7,278,814

Current service cost 824,572 885,101
Interest cost 281,795 278,029
Past service cost 14,367 -
Remeasurement:
Actuarial gains or losses arising from changes in
(569) (16,602)
demographic assumptions
Actuarial gains or losses arising from changes in
191,185 (494,523)
financial assumptions
Other 226,438 (131,126)
Benefits paid (361,488) (505,689)
Foreign exchange differences (6,370) 6,243
Other1 (12,824) 236,689
Balance as at December 31 ￦ 8,694,042 ￦ 7,536,936
1 Other includes effects of business combinations.
(F) Changes in the fair value of plan assets for the years ended December 31, 2018 and 2017 are as follows:
Balance as at January 1 ￦ 7,972,906 ￦ 7,662,249

Expected return on plan assets 304,576 291,410
Remeasurement factor of plan assets (159,077) (152,821)
Contributions by employer 894,169 422,680
Benefits paid (267,382) (250,341)
Other1 7,142 (271)
Balance as at December 31 ￦ 8,752,334 ￦ 7,972,906
1 Other includes effects of changes in foreign currency exchange rates and business combinations.
Expected contributions to post-employment benefit plans for the year ending December 31, 2018 are ￦905,037
million.
(G) Plan assets as at December 31, 2018 and 2017 consist of the following:
Debt instruments ￦ 8,720,784 ￦ 7,945,391

Other 31,550 27,515
Total ￦ 8,752,334 ￦ 7,972,906
Plan assets are mostly invested in instruments which have a quoted price in active markets.
71
(H) The principal actuarial assumptions as at December 31, 2018 and 2017 are as follows:
Discount rate 0.8 ~ 9.3 % 0.4 ~ 8.2 %

Salary growth rate (including the effects of inflation) 1.5 ~ 10.0 % 1.5 ~ 10.0 %
(I) The sensitivity of the defined benefit obligations as at December 31, 2018 and 2017 to changes in the weighted
principal assumptions is as follows:
Discount rate
1% increase 92% 92%
1% decrease 110% 110%
Salary growth rate
1% increase 109% 110%
1% decrease 92% 92%
(J) The weighted average maturity of the defined benefit obligations is 9.01 years.
18. Provisions
Changes in provisions for the year ended December 31, 2018 are as follows:
Royalty Long-term Others

(In millions of Korean won) Warranty (A) expenses (B) incentives (C) (D, E) Total
Balance as at January 1 ￦ 2,011,578 ￦ 1,759,068 ￦ 672,653 ￦ 315,845 ￦ 4,759,144

Charged (credited) to
1,725,330 (128,038) 349,706 570,770 2,517,768
the statement of profit or loss
Payment (1,841,705) (601,283) (248,591) (340,796) (3,032,375)
Others1 (21,334) 104,632 3,305 716,517 803,120
Balance as at December 31 ￦ 1,873,869 ￦ 1,134,379 ￦ 777,073 ￦ 1,262,336 ￦ 5,047,657
1 Others include effects of changes in foreign currency exchange rates.
(A) The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on
historical experience and terms of warranty programs.
(B) The Company recognizes provisions for the estimated royalty expenses that are under negotiation with
counterparties. The timing of payment depends on the settlement of the negotiation.
(C) The Company has a long-term incentive plan for its executives based on a three-year management performance
criteria and recognizes provisions for the estimated incentive cost for the accrued period.
(D) The Company records provisions for the estimated expenses occurring from discontinuing production and sale
of products.
(E) The Company makes provisions for the carrying amounts of emission rights held by the Company and the
72
emission in excess of the emission rights for the applicable years. Details of emission rights and liabilities as at
December 31, 2018 are as follows:
(1) Allocated amount of emission permits and estimated amount of emission as at December 31, 2018 are as
follows:
(in ten thousands metric tons) December 31, 2018
Allocated emission permits 1,362

Estimated volume of emission 1,642
(2) Changes in the emission permits rights for the year ended December 31, 2018 are as follows:
Balance as at January 1 ￦ 25,059

Acquisition 6,588
Balance as at December 31 ￦ 31,647
(3) Changes in the provisions for emissions liabilities for the year ended December 31, 2018 are as follows:
Balance as at January 1 ￦ 13,116

Charged to the statement of profit or loss 99,960
Submission (13,116)
Balance as at December 31 ￦ 99,960
19. Commitments and Contingencies
(A) Guarantees
Details of guarantees of debt provided by the Company as at December 31, 2018 and 2017 are as follows:
Guarantees of debt for housing rental1 ￦ 32,511 ￦ 49,937
1 The maximum amount of debt guarantee provided by the Company for employees seeking a first home mortgage from
financial institutions is ￦106,044 million.
(B) Leases
(1) Finance leases
The Company leases certain property, plant and equipment under various finance lease arrangements and
recognizes the related amounts as lease assets or liabilities. Assets with a net book value of ￦44,613 million (2017:
￦51,663 million) are treated as finance lease agreements and are included in property, plant and equipment.
Depreciation expense for the finance lease assets amounted to ￦10,194 million for the year ended December 31,
73
2018 (2017: ￦13,506 million). Leased property, plant and equipment were pledged as collateral (refer to Note
15).
The minimum lease payments under finance lease agreements and their present value as at December 31, 2018 and
2017 are as follows:
2018 2017
Minimum lease Minimum lease
(In millions of Korean won) payments Present values payments Present values
Within one year ￦ 17,970 ￦ 11,067 ￦ 18,348 ￦ 10,925

Later than one year but not later
47,100 24,462 51,861 28,801
than five years
More than five years 37,848 25,660 45,303 28,737
Total ￦ 102,918 ￦ 61,189 ￦ 115,512 ￦ 68,463
Present value adjustment ￦ (41,729) ￦ (47,049)
Finance lease payable ￦ 61,189 ￦ 68,463
(2) Operating leases as lessee
As at December 31, 2018, the Company is engaged in non-cancellable lease agreements of which future minimum
lease payments amount to ￦822,722 million within one year, ￦1,486,411 million later than one year but not later
than five years, and ￦522,047 million more than five years. The aggregate of future minimum lease payments
under non-cancellable leases amounts to ￦2,831,180 million. For the year ended December 31, 2018, the lease
payments recognized as expense resulting from operating leases amount to ￦737,440 million. If the Company
elects not to apply the requirements to short-term leases and low value assets in accordance with IFRS 1116, the
Company’s future minimum lease payments as at December 31, 2018 amount to ￦2,647,205 million (refer to Note
2)
(3) Operating leases as lessor
As at December 31, 2018, the Company is engaged in non-cancellable lease agreements related to rentals of
properties for which future minimum lease receipts amount to ￦112,505 million within one year, ￦77,597 million
later than one year but not later than five years and ￦9,516 million more than five years. The aggregate of future
minimum lease receipts under non-cancellable leases amounts to ￦199,618 million. For the year ended December
31, 2018, the lease receipts recognized as income resulting from operating leases amount to ￦108,817 million.
(C) Litigation
(1) The Company and Apple have agreed to settle Apple’s design and utility patent litigation in the United States
as at the reporting date.
(2) The Company is involved in claims, disputes, and investigations conducted by regulatory bodies at the
reporting date, including civil claims from some overseas buyers for price-fixing related to the sale of TFT-
LCD. Although the outflow of resources and timing of these matters are uncertain, the Company believes the
outcome will not have a material impact on the financial condition of the Company.
(3) As at December 31, 2018, in addition during the normal course of business with numerous companies, the
Company has been involved in various claims, disputes, and investigations conducted by regulatory bodies.
Although the outflow of resources and timing of these matters are uncertain, the Company believes the
outcome will not have a material impact on the financial condition of the Company.
74
(D) Other commitments
(1) As at December 31, 2018, the Company has trade financing agreements, trade notes receivable discounting
facilities, and loan facilities with accounts receivable pledged as collateral with Woori Bank and 21 other
financial institutions, with a combined limit of up to ￦20,309,490 million. In addition, the Company has a
trade financing agreement (up to ￦13,899,047 million) with Shinhan Bank and 20 other financial
institutions and loan facilities with accounts receivable pledged as collateral and other financial agreements
(up to ￦4,310,289 million).
(2) As at December 31, 2018, unfulfilled agreements relating to the acquisition of property, plant and
equipment amounts to ￦2,843,191 million.
20. Contract liabilities
The Company has recognized the following contract liabilities related to contracts with customers:
Contract liabilities1 ￦ 9,021,400 ￦ 7,140,266
1 Contract liabilities are included in advances received, accrued expenses, other current liabilities and others.
The revenue recognized in the current reporting period in relation to carried-forward contract liabilities amounts to
\156,421 million.
75
21. Share Capital
As at December 31, 2018, the Company’s total number of authorized shares has been changed from 500,000,000
shares (￦5,000 per share) to 25,000,000,000 shares (￦100 per share). The Company has issued 5,969,782,550 shares
of ordinary shares and 822,886,700 shares of preference shares as at December 31, 2018, excluding retired shares.
Due to the retirement of shares, the total par value of the shares issued is ￦679,267 million (ordinary shares
￦596,978 million and preference shares ￦82,289 million), which does not agree with paid-in capital of ￦897,514
million.
Changes in the number of shares outstanding for the years ended December 31, 2018 and 2017 are as follows:
(number of shares) Ordinary shares Preference shares
Balance as at January 1, 2017 122,697,651 17,283,734

Acquisition of treasury stock (3,009,282) (753,325)
Balance as at December 31, 2017 119,688,369 16,530,409
Acquisition of treasury stock (292,718) (72,675)
Stock split1 5,850,386,899 806,428,966
Balance as at December 31, 2018 5,969,782,550 822,886,700
1 For the year ended December 31, 2018, the Company’s number of shares has been changed by the stock split.
For the year ended December 31, 2018, the Company retired 485,142,150 shares of ordinary shares and 89,642,300
shares of preference shares(the number of shares after stock split) of which acquisition cost is ￦7,103,298 million
in total on the basis of the Board of Directors’ approval on October 31, 2017 and November 30, 2018.
76
22. Retained Earnings
(A) Retained earnings as at December 31, 2018 and 2017 consist of the following:
Appropriated ￦ 151,519,651 ￦ 139,629,195

Unappropriated 91,179,305 76,182,005
Total ￦ 242,698,956 ￦ 215,811,200
(B) Details of interim and year-end dividends are as follows:
(1) Interim dividends (Record date: March 31, 2018, June 30, 2018, September 30, 2018 and March 31, 2017, June
30, 2017, September 30, 2017)
(In millions of Korean won and number of shares) 2018 2017

Ordinary shares 119,395,651 121,840,851
Number of shares eligible for dividends
Preference shares 16,457,734 17,069,534
1st Dividend rate (based on par value) 354% 140%
quarter Ordinary shares ￦ 2,113,303 ￦ 852,886
Dividend amount Preference shares 291,302 119,487
Total ￦ 2,404,605 ￦ 972,373
Ordinary shares 5,969,782,550 121,038,051
Number of shares eligible for dividends1
2nd Dividend rate (based on par value) 354% 140%
Total ￦ 2,404,605 ￦ 965,348
Ordinary shares 5,969,782,550 120,316,189
3rd Dividend rate (based on par value) 354% 140%
Total ￦ 2,404,605 ￦ 959,051
1For the year ended December 31, 2018, the Company’s number of shares has been changed by the stock split (refer to Note
21).
77
(2) Year-end dividends (Record date: December 31, 2018 and 2017)
(In millions of Korean won and number of shares) 2018 2017

Ordinary shares 5,969,782,550 119,688,369
Ordinary shares 354% 430%
Dividend rate(based on par value)
Preference shares 355% 431%
Ordinary shares ￦ 2,113,303 ￦ 2,573,300
Total ￦ 2,405,428 ￦ 2,929,530
1For the year ended December 31, 2018, the Company’s number of shares has been changed by the stock split (refer to Note
21).
23. Other Components of Equity
(A) Other components of equity as at December 31, 2018 and 2017 consist of the following:
Treasury stock ￦ - ￦ (6,228,187)

Unrealized gains on available-for-sale financial assets - 1,879,774
Changes in value of financial assets at fair value through other
1,462,266 -
Share of other comprehensive income (loss) of associates and joint ventures (44,212) 40,394
Foreign currency translation (8,612,742) (9,192,002)
Remeasurement of net defined benefit liabilities (796,563) (405,206)
Others 59,881 6,036
Total ￦ (7,931,370) ￦ (13,899,191)
(B) The Company repurchases registered ordinary shares and non-voting preference shares for the purpose of stock
price stability and increase in shareholder value. The Company recognizes the repurchase amount in other
components of equity. Treasury stock as at December 31, 2018 and 2017 consists of the following:

(Number of shares and in millions of
Korean won) Ordinary shares Preference shares Ordinary shares Preference shares
Number of shares - - 9,410,125 1,720,171

Acquisition cost ￦ - ￦ - ￦ 5,560,506 ￦ 667,681
78
24. Expenses by Nature
Expenses by nature for the years ended December 31, 2018 and 2017 are as follows:
Changes in finished goods and work in process ￦ (5,484,269) ￦ (3,495,615)

Raw materials used and merchandise purchased 79,808,215 79,647,552
Wages and salaries 22,727,468 22,380,595
Post-employment benefit 958,793 976,328
Depreciation 25,167,112 20,593,616
Amortization 1,314,925 1,523,776
Welfare 4,095,722 3,812,521
Utilities 4,335,464 3,971,106
Outsourcing 4,921,791 5,566,456
Advertising 3,998,491 5,350,839
Sales promotion expenses 7,113,183 7,262,078
Other 35,927,851 38,341,086
Total1 ￦ 184,884,746 ￦ 185,930,338
1 Equal to the sum of cost of sales and selling and administrative expenses on the consolidated statements of profit or loss.
25. Selling and Administrative Expenses
Selling and administrative expenses for the years ended December 31, 2018 and 2017 are as follows:
1) Selling and Administrative Expenses

Wages and salaries ￦ 6,188,748 ￦ 6,540,715
Post-employment benefit 262,647 256,448
Commissions and service charges 5,754,750 7,703,111
Depreciation 1,008,805 948,393
Amortization 438,885 388,227
Advertising 3,998,491 5,350,839
Sales promotion expenses 7,113,183 7,262,078
Transportation 2,451,968 3,602,838
Warranty 2,776,508 3,051,538
Other 4,142,270 5,179,878
2) Research and development expenses
Total expenses 18,650,384 16,803,153
Capitalized expenses (296,304) (447,541)
Total ￦ 52,490,335 ￦ 56,639,677
79
26. Other Non-Operating Income and Expense
Details of other non-operating income for the years ended December 31, 2018 and 2017 are as follows:
Dividend income ￦ 131,379 ￦ 128,946

Rental income 140,875 143,482
Gain on disposal of investments 36,388 199,311
Gain on disposal of property, plant and equipment 387,070 115,001
Other 789,325 2,423,917
Total ￦ 1,485,037 ￦ 3,010,657
Details of other non-operating expense for the years ended December 31, 2018 and 2017 are as follows:
Loss on disposal of property, plant and equipment ￦ 90,714 ￦ 122,548

Donations 310,321 309,763
Impairment losses on intangible assets 1,575 143,401
Other 739,408 843,936
Total ￦ 1,142,018 ￦ 1,419,648
27. Financial Income and Expenses
(A) Details of financial income and expenses for the years ended December 31, 2018 and 2017 are as follows:
Financial income
Interest income:
Interest income from loans and receivables ￦ - ￦ 1,613,010
Interest income from available-for-sale financial assets - 1,157
Interest income from held-to-maturity financial assets - 56
Interest income from financial assets at amortized cost 2,296,841 -
Interest income from financial assets at fair value through profit or
298 -
loss
Foreign exchange differences 6,695,690 7,278,888
Gains from derivatives 1,006,492 844,280
Total ￦ 9,999,321 ￦ 9,737,391
Financial expenses
Interest expenses:
Interest expense from financial liabilities measured at amortized cost ￦ 289,993 ￦ 358,911
Other financial liabilities 384,624 296,491
Foreign exchange differences 7,149,831 7,269,465
Losses from derivatives 784,448 1,054,046
Total ￦ 8,608,896 ￦ 8,978,913
80
(B) The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and
translation as financial income and expenses.
28. Income Tax Expense
(A) Income tax expense for the years ended December 31, 2018 and 2017 consists of the following:
Current taxes:
Current tax on profits for the year ￦ 13,698,765 ￦ 10,642,009
Adjustments in respect to prior years (178,430) 301,924
Deferred taxes:
Changes in carryforward of unused tax credits (209,733) (50,413)
Changes in temporary differences 3,346,409 3,417,698
Changes in carryforward of unused tax losses 152,492 (309,604)
Other 5,598 7,606
Items charged directly to equity - -

Income tax expense ￦ 16,815,101 ￦ 14,009,220
(B) The tax on the Company’s profit before tax differs from the amount that would arise using the weighted average
statutory tax rate applicable to profits of the Company as follows:
Income before tax ￦ 61,159,958 ￦ 56,195,967

Tax calculated at weighted average of applicable tax rates1 16,232,873 14,425,196
Tax effects of:
Permanent differences (307,185) (239,050)
Temporary differences for which no deferred income tax was recognized (1,964) (24,156)
Tax credits (2,450,768) (3,194,533)
Results of interest in subsidiaries, associates and joint ventures 3,051,284 3,281,740
Impact of changes in tax rates 2,551 (532,165)
Other 288,310 292,188
1 The weighted average of statutory tax rates are applied to the respective profits of the Company applicable to each tax
authority as at December 31, 2018 and 2017.
81
(C) Changes in deferred income tax assets and liabilities resulting from the tax effect of temporary differences for
the years ended December 31, 2018 and 2017 are as follows:
(1) 2018
Temporary differences Deferred income tax assets (liabilities)

Balance as at Increase Balance as at Balance as at Increase Balance as at
(In millions of Korean won) January 1 (Decrease) December 31 January 1 (Decrease) December 31
Deferred tax arising from temporary differences

Special reserves appropriated for tax
￦ (368) ￦ 368 ￦ - ￦ (101) ￦ 101 ￦ -
purposes
Revaluation of land (3,425,233) 2,953 (3,422,280) (941,939) 812 (941,127)
Investments in subsidiaries, associates (71,904,411) (13,186,723) (85,091,134) (11,158,371) (3,156,855) (14,315,226)
and joint ventures1
Depreciation (3,554,202) (445,562) (3,999,764) (775,128) (128,056) (903,184)
Accrued income (192,154) (86,624) (278,778) (46,785) (26,263) (73,048)
Provisions and accrued expenses 12,712,144 (978,952) 11,733,192 3,401,425 (162,386) 3,239,039
Foreign currency translation (236,087) 154,611 (81,476) (62,883) 40,725 (22,158)
Asset impairment losses 1,632,105 (103,398) 1,528,707 461,264 (39,656) 421,608
Other 3,477,577 397,428 3,875,005 765,633 125,169 890,802
Subtotal (61,490,629) (14,245,899) (75,736,528) (8,356,885) (3,346,409) (11,703,294)
Deferred tax arising from carryforwards

Unused tax losses ￦ 5,274,212 ￦ (581,246) ￦ 4,692,966 ￦ 1,408,251 ￦ (152,492) ￦ 1,255,759
Unused tax credits 900,637 210,504 1,111,141 771,660 209,733 981,393
Deferred tax recognized in other comprehensive income

Changes in value of financial assets at
fair value through other ￦ (2,475,749) ￦ 310,618 ￦ (2,165,131) ￦ (628,183) ￦ 77,761 ￦ (550,422)
534,129 576,131 1,110,260 156,063 165,980 322,043
Actuarial valuation
Subtotal ￦ (1,941,620) ￦ 886,749 ￦ (1,054,871) ￦ (472,120) ￦ 243,741 ￦ (228,379)
Deferred tax assets ￦ 5,468,002
Deferred tax liabilities (15,162,523)
Total ￦ (9,694,521)
1 Deferred tax assets were not recognized if it is probable that the temporary differences will not reverse in the foreseeable
future for investments in subsidiaries, associates and joint ventures.
82
(2) 2017
Temporary differences Deferred income tax assets (liabilities)

Balance as at Increase Balance as at Balance as at Increase Balance as at
(In millions of Korean won) January 1 (Decrease) December 31 January 1 (Decrease) December 31
Deferred tax arising from temporary differences

Special reserves appropriated for tax
purposes
￦ (368) ￦ - ￦ (368) ￦ (89) ￦ (12) ￦ (101)
Revaluation of land (3,444,254) 19,021 (3,425,233) (833,510) (108,429) (941,939)
Investments in subsidiaries, associates
(59,270,306) (12,634,105) (71,904,411) (7,536,737) (3,621,634) (11,158,371)
and joint ventures1
Depreciation 2,908,546 (6,462,748) (3,554,202) 644,126 (1,419,254) (775,128)
Accrued income (258,310) 66,156 (192,154) (78,971) 32,186 (46,785)
Provisions and accrued expenses 13,458,781 (746,637) 12,712,144 3,232,788 168,637 3,401,425
Foreign currency translation 165,558 (401,645) (236,087) 44,607 (107,490) (62,883)
Asset impairment losses 1,227,353 537,407 1,764,760 301,206 185,953 487,159
Other 1,479,671 2,077,446 3,557,117 650,132 115,501 765,633
Subtotal (43,733,329) (17,545,105) (61,278,434) (3,576,448) (4,754,542) (8,330,990)
Deferred tax arising from carryforwards

Unused tax losses ￦ 4,691,360 ￦ 582,852 ￦ 5,274,212 ￦ 1,098,647 ￦ 309,604 ￦ 1,408,251
Unused tax credits 873,455 27,182 900,637 721,247 50,413 771,660
Deferred tax recognized in other comprehensive income

Valuation of available-for-sale financial
￦ (1,969,833) ￦ (718,531) ￦ (2,688,364) ￦ (446,756) ￦ (207,322) ￦ (654,078)
instruments
Actuarial valuation 1,023,559 (489,430) 534,129 231,246 (75,183) 156,063
Subtotal ￦ (946,274) ￦ (1,207,961) ￦ (2,154,235) ￦ (215,510) ￦ (282,505) ￦ (498,015)
Deferred tax assets ￦ 5,061,687
Deferred tax liabilities (11,710,781)
Total ￦(6,649,094)
1 Deferred tax assets were not recognized if it is probable that the temporary differences will not reverse in the foreseeable future
for investments in subsidiaries, associates and joint ventures.
83
The Company periodically assesses its ability to recover deferred tax assets. In the event of a significant uncertainty
regarding the Company’s ultimate ability to recover such assets, deferred tax assets are recognized only to the extent
that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Temporary differences whose deferred tax effects were not recognized due to uncertainty regarding the ultimate
realizability of such assets as at December 31, 2018 and 2017 are as follows:
Unused tax losses1 ￦ 357,466 ￦ 364,236

Unused tax credits1 56,382 69,800
1
Expiry dates of unused tax losses and unused tax credits for which no deferred tax asset is recognized in the balance sheet are
as follows:
(In millions of Korean won) 2019 2020 2021 2022 and after
Tax lossess carryforward ￦ - ￦ - ￦ - ￦ 357,466

Tax credits carryforward ￦ 23,308 ￦ 4,845 ￦ 15,394 ￦ 12,835
(D) The liquidity analysis of deferred tax assets and deferred tax liabilities for the years ended December 31, 2018
and 2017 is as follows:
(In millions of Korean won) December 31, 2018 Decemeber 31, 2017
Deferred tax assets

Deferred tax assets to be recovered within 12 months ￦ 2,770,216 ￦ 2,279,651
Deferred tax assets to be recovered after more than 12 months 2,697,786 2,782,036
Subtotal ￦ 5,468,002 ￦ 5,061,687
Deferred tax liabilities
Deferred tax liabilities to be recovered after more than 12 months ￦ (15,162,523) ￦ (11,710,781)
Subtotal ￦ (15,162,523) ￦ (11,710,781)
Total ￦ (9,694,521) ￦ (6,649,094)
29. Earnings per Share
(A) Basic earnings per share
Basic earnings per share for the years ended December 31, 2018 and 2017 are calculated as follows:
(1) Ordinary shares
(In millions of Korean won, thousands of number of shares) 2018 2017
Profit or loss attributable to owners of the parent company ￦ 43,890,877 ￦ 41,344,569

Profit or loss available for ordinary shares 38,573,066 36,323,723
Weighted-average number of ordinary shares outstanding 5,970,448 6,056,616
Basic earnings per ordinary share (Korean won) ￦ 6,461 ￦ 5,997
84
(2) Preference shares
(In millions of Korean won, thousands of number of shares) 2018 2017
Profit or loss attributable to owners of the parent company ￦ 43,890,877 ￦ 41,344,569

Profit or loss available for preference shares 5,317,811 5,020,846
Weighted-average number of preference shares outstanding 823,042 844,643
Basic earnings per preference share(Korean won) ￦ 6,461 ￦ 5,944
(B) Diluted earnings per share
The Company does not have potential ordinary shares and as a result, basic earnings per share and diluted earnings
per share are the same for the years ended December 31, 2018 and 2017.
30. Cash Flows
(A) Adjustments and changes in assets and liabilities arising from operating activities for the years ended December
- Adjustments
Adjustments for:
Financial income (3,688,038) (3,447,029)
Financial expenses 2,092,633 2,590,683
Post-employment benefits 958,793 976,328
Depreciation 25,167,112 20,593,616
Amortization 1,314,925 1,523,776
Bad debt expenses (reversal) (48,320) 206,561
Dividend income (131,379) (128,946)
Gain on valuation of equity method (539,845) (201,442)
Gain on disposal of property, plant and equipment (387,070) (115,001)
Loss on disposal of property, plant and equipment 90,714 122,548
Obsolescence and scrapping of inventories 1,948,360 1,296,366
Gain on disposal of investments (36,388) (199,311)
Others 47,975 (1,016,137)
Total ￦ 43,604,573 ￦ 36,211,232
85
- Changes in assets and liabilities arising from operating activities
Changes in assets and liabilities :

Decrease (increase) in trade receivables ￦ 3,605,893 ￦ (6,597,339)
Decrease (increase) in non-trade receivables 907,711 (1,078,836)
Decrease (increase) in advance payments 155,417 (244,027)
(Increase) decrease in prepaid expenses (1,701,983) 580,977
Increase in inventories (5,979,475) (8,444,506)
(Decrease) Increase in trade payables (533,609) 4,006,410
(Decrease) Increase in other payables (1,881,303) 1,096,019
Decrease in advances received (249,008) (73,214)
Increase in withholdings 131,931 651,350
Increase in accrued expenses 501,536 1,292,420
Decrease in provisions (539,842) (106,064)
Payment of post-employment benefits (522,849) (582,711)
Increase in plan assets (626,787) (172,339)
Others (3,191,998) (948,687)
Total ￦ (9,924,366) ￦ (10,620,547)
(B) The Company’s statements of cash flows are prepared using the indirect method. Significant transactions not
affecting cash flows for the years ended December 31, 2018 and 2017 are as follows:
Valuation of available-for-sale financial assets ￦ - ￦ 721,730

Valuation of financial assets at fair value through other comprehensive income (312,601) -
Valuation of investments in associates, joint ventures (821) (54,424)
Reclassification of construction in progress and machinery in transit to
32,770,393 47,499,881
property, plant and equipment
Reclassification of current maturities of long-term borrowings 27,947 273,418
Reclassification of current maturities of debenture 5,591 5,357
(C) The Company reported cash receipts and payments arising from transactions occurring frequently and short-
term financial instruments and borrowings on a net basis.
(D) Changes in liabilities arising from financial activities for the years ended December 31, 2018 and 2017 are as
follows:
(1) 2018
Non-cash changes
As at As at
(In millions of Korean won) January 1 Cash flows Amortization Others1 December 31
Short-term borrowings ￦ 15,767,619 ￦ (2,046,470) ￦ - ￦ (134,489) ￦ 13,586,660

Debentures & Long-term
3,046,426 (1,983,017) 824 16,210 1,080,443
borrowings
Total ￦ 18,814,045 ￦ (4,029,487) ￦ 824 ￦ (118,279) ￦ 14,667,103
86
(2) 2017
Non-cash changes
(In millions of As at Business As at
Korean won) January 1 Cash flows combination Amortization Others1 December 31
Short-term
￦ 12,746,789 ￦ 2,730,676 ￦ 558,396 ￦ - ￦ (268,242) ￦ 15,767,619
borrowings
Debentures &
Long-term 2,535,596 (142,492) 1,001,537 332 (348,547) 3,046,426
borrowings
Total ￦ 15,282,385 ￦ 2,588,184 1,559,933 ￦ 332 ￦ (616,789) ￦ 18,814,045
1 Others include effects of changes in foreign currency exchange rates.
31. Financial Risk Management
The Company’s financial risk management focuses on minimizing market risk, credit risk, and liquidity risk arising
from operating activities. To mitigate these risks, the Company implements and operates a financial risk policy and
program that closely monitors and manages such risks. In addition, the Company uses derivatives to hedge certain
risk exposure.
The finance team mainly carries out the Company’s financial risk management. With the cooperation of the
Company’s divisions, domestic and foreign subsidiaries, the finance team periodically measures, evaluates and
hedges financial risk and also establishes and implements the global financial risk management policy.
The Company also operates local finance centers in accordance with global financial risk management across major
regions including the United States, United Kingdom, Singapore, China, Brazil and Russia.
The Company’s financial assets that are under financial risk management are comprised of cash and cash equivalents,
short-term financial instruments, financial assets at amortized cost, financial assets at fair value through other
comprehensive income, financial assets at fair value through profit or loss, trade and other receivables and other
financial assets. The Company’s financial liabilities under financial risk management are comprised of trade and
other payables, borrowings, debentures, and other financial liabilities.
(A) Market risk
(1) Foreign exchange risk
Revenues and expenses arise from foreign currency transactions and exchange positions, and the most widely used
currencies are the US Dollar, EU’s Euro, Japanese Yen and Indian Rupee.
To minimize foreign exchange risk arising from operating activities, the Company’s foreign exchange management
policy requires normal business transactions to be in local currency or for the cash-in currency to be matched up
with the cash-out currency. In addition, the Company makes use of derivatives to minimize uncertainty of cash
flows and fluctuation of profit or loss occurring from foreign exchange risk. The Company’s foreign exchange risk
management policy also defines foreign exchange risk, measuring period, controlling responsibilities, management
procedures, hedging period and hedge ratio.
The Company limits all speculative foreign exchange transactions and operates a system to manage receivables
and payables denominated in foreign currency. It evaluates, manages and reports foreign currency exposures to
87
receivables and payables.
As at December 31, 2018 and 2017, the foreign currency exposure to financial assets and liabilities of a 5%
currency rate change against the Korean won are presented below:

(In millions of Korean won) Increase Decrease Increase Decrease
USD \ 344,488 \ (344,488) \ 278,140 \ (278,140)

EUR (4,381) 4,381 79,760 (79,760)
JPY (13,001) 13,001 (100,127) 100,127
INR 92,176 (92,176) 77,963 (77,963)
(2) Price risk
The Company’s investment portfolio consists of direct and indirect investments in equity securities classified as
financial assets at fair value through other comprehensive income and financial assets at fair value through profit
or loss, which is in line with the Company’s strategy.
As at December 31, 2018 and 2017, a price fluctuation in relation to marketable equity securities by 1% would
result in changes in other comprehensive income (before income tax) of ￦28,947 million and ￦29,086 million,
respectively.
(3) Interest rate risk
Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair
value of components of the statement of financial position, and future cash flows of interest income (expenses) of
a financial instrument, will fluctuate because of changes in market interest rates. The Company’s position with
regard to interest rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-
bearing deposits. The Company implemented policies and operates to minimize uncertainty arising from changes
in interest rates and financial expenses.
In order to avoid interest rate risk, the Company maintains minimum external borrowings by facilitating cash
pooling systems on a regional and global basis. The Company manages exposed interest rate risk via periodic
monitoring and handling risk factors on a timely basis.
The sensitivity risk of the Company is determined based on the following assumption:
 Changes in market interest rates that could impact the interest income and expenses of floating interest rate
financial instruments
Based on the above assumption, changes to profit and net equity as a result of a 1% change in interest rates on
borrowings are presented below:

(In millions of Korean won) Increase Decrease Increase Decrease
Financial assets \ 64,704 \ (64,704) \ 49,117 \ (49,117)

Financial liabilities (91) 91 (22,643) 22,643
Net effect \ 64,613 \ (64,613) \ 26,474 \ (26,474)
88
(B) Credit risk
Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail
to discharge an obligation. The Company monitors and sets the client’s and counterparty’s credit limit on a periodic
basis based on the client’s and counterparty’s financial conditions, default history and other important factors.
Adequate insurance coverage is maintained for accounts receivables related to trading partners situated in higher risk
countries.
Credit risk can arise from transactions with financial institutions which include financial instrument transactions such
as cash and cash equivalents, savings, and derivative instruments. To minimize such risk, the Company transacts only
with banks which have strong international credit rating (S&P A and above), and all new transactions with financial
institutions with no prior transaction history are approved, managed and monitored by the Company’s finance team
and the local finance center. The Company requires separate approval for contracts with restrictions.
As at December 31, 2018 and 2017, the Company estimates that its maximum exposure to credit risk is the carrying
amount of its financial assets, net of impairment losses.
(C) Liquidity risk
Due to large investments made by the Company, maintaining adequate levels of liquidity risk is critical. The Company
strives to achieve this goal by periodically forecasting its capital balance, estimating required cash levels, and
managing income and expenses.
The Company manages its liquidity risk by periodically forecasting projected cash flows. If abnormal signs are
identified, the Company works with the local finance center and provides liquidity support by utilizing a globally
integrated finance structure, such as Cash Pooling. In addition, the Company maintains a liquidity management
process which provides additional financial support by the local finance center and the Company. The Cash Pooling
program allows sharing of surplus funds among entities and contributes to minimizing liquidity risk and strengthening
the Company’s competitive position by reducing capital operation expenses and financial expenses.
In addition, the Company mitigates liquidity risk by contracting with financial institutions with respect to bank
overdrafts and foreign trade finance, and by providing payment guarantees to subsidiaries. For large scale facility
investments, liquidity risk is minimized by utilizing internal reserves and long term borrowings according to the
capital injection schedule.
As at December 31, 2018 and 2017, the following table is an undiscounted cash flow analysis for financial liabilities
that are presented on the statements of financial position according to their remaining contractual maturity.
December 31, 2018

Less than 4-6 7-12 1-5 More than
(In millions of Korean won) 3 months months months years 5 years
Financial liabilities ￦39,445,090 ￦ 628,582 ￦ 742,744 ￦ 3,547,498 ￦ 663,594
December 31, 2017

Less than 4-6 7-12 1-5 More than
(In millions of Korean won) 3 months months months years 5 years
Financial liabilities ￦45,323,281 ￦ 927,746 ￦ 1,144,922 ￦ 4,633,210 ￦ 875,283
The table above shows the Company’s financial liabilities based on the remaining period at the statement of financial
89
position date until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows.
The Company’s trading portfolio of derivative instruments has been included at its fair value of ￦28,543 million
(December 31, 2017: ￦47,478 million). These contracts are managed on a net-fair value basis rather than by maturity
date. Net settled derivatives consist of forwards on currency rates used by the Company to manage the exchange rate
profile.
Derivatives that are settled on a gross basis by delivery of the underlying item, including derivatives for hedging, will
be settled within the next 41 months from the end of the reporting period. These derivative are not included in the
table above.
The maximum liquidity risk exposure from those other than the above financial liabilities (e.g., payment guarantees
for affiliated companies and performance bonds) as at December 31, 2018 is ￦32,511 million (December 31, 2017:
￦49,937 million).
(D) Derivative Financial Instruments
The Company applies cash flow hedge accounting to hedge the foreign currency risk of forecasted transaction
including hedging the price risk associated with forecast inventory purchases. Details of derivative financial
instruments that qualify as cash flow hedges as at December 31, 2018 are as follows:

(In millions of Korean won) Assets Liabilities Assets Liabilities
Currency forward exchange contracts

Current items ￦ 18,343 ￦ 6,344 ￦ 31,915 ￦ 25,806
Non-current items 7,619 4,095 13,481 15,840
Total ￦ 25,962 ￦ 10,439 ￦ 45,396 ￦ 41,646
During the year ended for December 31, 2018, the Company recognizes the losses relating to the effective portion of
changes in fair value of derivatives that are designated and qualify as cash flow hedges in other comprehensive
income, which amount to ￦47,079 million (after tax), and recognizes the losses relating to the ineffective portion in
profit or loss, which amount to ￦5,060 million (before tax). Gains reclassified directly from other comprehensive
income to profit or loss amount to ￦553 million (after tax), and losses reclassified from other comprehensive income
to the carrying amount of inventory amount to ￦28,116 million (after tax).
(E) Capital risk management
The purpose of capital management is to maintain a sound capital structure. The Company monitors capital on the
basis of the ratio of total liabilities to total equity. This ratio is calculated by dividing total liabilities by total equity
in the financial statements.
The Company’s capital risk management policy has not changed since the previous financial year. The Company has
maintained an AA- and Aa3 credit rating from S&P and Moody’s, respectively.
90
The total liabilities to equity ratios as at December 31, 2018 and 2017 are as follows:
Total liabilities ￦ 91,604,067 ￦ 87,260,662

Total equity 247,753,177 214,491,428
Total liabilities to equity ratio 37.00% 40.70%
(F) Fair value estimation
(1) Carrying amounts and fair values of financial instruments by category as at December 31, 2018 and 2017 are
as follows:

(In millions of Korean won) Carrying amount Fair value Carrying amount Fair value
Financial assets
Cash and cash equivalents ￦ 30,340,505 1
￦ 30,545,130 1
Short-term financial instruments 65,893,797 1 49,447,696 1
Short-term available-for-sale
- - 3,191,375 3,191,375
financial assets
Short-term financial assets at 1
2,703,693 - -
amortized cost
Short-term financial assets at fair
2,001,948 2,001,948 - -
value through profit or loss
Trade receivables 33,867,733 1 27,695,995 1
Long-term available-for-sale
- - 7,752,180 6,561,155
financial assets2
Held-to-maturity financial assets - - 106,751 1
Financial assets at amortized cost 238,309 1 - -

through other comprehensive 7,301,351 7,301,351 - -
income
775,427 775,427 - -
Others3 9,313,133 84,089 6,325,825 113,098
Total financial assets ￦ 152,435,896 ￦ 125,064,952
Financial liabilities
Trade payables ￦ 8,479,916 1
￦ 9,083,907 1
Short-term borrowings 13,586,660 1 15,767,619 1
Other payables3 9,779,287 1 12,106,609 316,928

Current portion of long-term 1 1
33,386 278,619
liabilities
Debentures 961,972 964,182 953,361 978,643
Long-term borrowings 85,085 1 1,814,446 1
Long-term other payables3 2,860,002 13,417 1,746,184 28,285

Others3 8,832,523 42,723 10,954,513 222,012
Total financial liabilities ￦ 44,618,831 ￦ 52,705,258
1 Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value
disclosures.
2 Amounts measured at cost of ￦1,191,025 million as at December 31, 2017 are excluded as the range of reasonable fair value
91
estimates is significant and the probabilities of the various estimates cannot be reasonably assessed.
3 Assetsmeasured at cost of ￦9,229,044 million (December 31, 2017: ￦6,212,727 million) and liabilities measured at cost of
￦11,636,385 million (December 31, 2017: ￦24,240,081 million) are excluded as the carrying amount is a reasonable
approximation of fair value.
(2) Fair value hierarchy classifications of the financial instruments that are measured at fair value or its fair value
is disclosed as at December 31, 2018 and 2017 are as follows :
December 31, 2018

(In millions of Korean won) Level 1 Level 2 Level 3 Total
1) Assets
Financial assets at fair value through other
￦ 2,884,633 ￦ - ￦ 4,416,718 ￦ 7,301,351
Financial assets at fair value through profit or
10,124 18,503 2,748,747 2,777,375
loss
Others - 84,089 - 84,089
2) Liabilities
Debentures ￦ - ￦ 964,182 ￦ - ￦ 964,182
Long-term other payables - - 13,417 13,417
Others - 41,639 1,085 42,723
December 31, 2017

(In millions of Korean won) Level 1 Level 2 Level 3 Total
1) Assets
Short-term available-for-sale financial assets ￦ - ￦ 3,191,375 ￦ - ￦ 3,191,375
Long-term available-for-sale financial assets 2,908,581 - 3,652,574 6,561,155
Others - 113,098 - 113,098
2) Liabilities
Other payables ￦ - ￦ - ￦ 316,928 ￦ 316,928
Debentures - 978,643 - 978,643
Long-term other payables - - 28,285 28,285
Others - 215,307 6,705 222,012
The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.
ㆍ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
ㆍ Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
ㆍ Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of
financial position date. A market is regarded as active if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are included in Level 1. The instruments included
in Level 1 are listed equity investments most of which are classified as financial assets at fair value through other
comprehensive income.
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. These valuation techniques maximize the use of observable market data where it is available and rely as
little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in Level 2.
92
If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.
The Company performs the fair value measurements required for financial reporting purposes, including Level 3 fair
values and discusses valuation processes and results at least once every quarter in line with the Company’s quarterly
reporting dates. The Company’s policy is to recognize transfers between levels at the end of the reporting period, if
corresponding events or changes in circumstances have occurred.
Specific valuation techniques used to value financial instruments include:
ㆍ Quoted market prices or dealer quotes for similar instruments

ㆍ The fair value of derivatives is determined using forward exchange rates at the statement of financial position
date, with the resulting value discounted back to present value
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial
instruments. For trade and other receivables, the carrying amount approximates a reasonable estimate of fair value.
(3) Valuation technique and the inputs
The Company utilizes a present value technique to discount future cash flows using a proper interest rate for corporate
bonds, government and public bonds, and bank debentures that are classified as Level 2 in the fair value hierarchy.
The following table presents the valuation technique and the inputs used for major financial instruments classified as
Level 3.

Fair Valuation Input range
Classification value technique Level 3 inputs (Weighted average)
Financial assets at fair value through other comprehensive income

Discounted cash Permanent growth rate -1.00% ~ 1.00% (0%)
Maltani \ 12,358
flow Weighted average cost of capital 7.75%~9.75% (8.75%)
Samsung Venture Discounted cash Permanent growth rate -1.00% ~ 1.00% (0%)
7,313
Investment flow Weighted average cost of capital 20.78%~22.78% (21.78%)
Corning Incorporated Risk adjusted discount rate 6.12%~8.12% (7.12%)
convertible 3,702,119 Trinomial model
preference shares Price volatility 24.1%~30.1% (27.1%)
Long-term other payables
Probability-
Contingent financial weighted
13,417 Applicable probability rate 100.00%
liability discounted cash
flow
Others
Discount rate 8.23%
Contingent financial Monte Carlo 33.00%
1,085 Asset volatility
liability simulation
Credit spread 0.79%
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(4) Changes in Level 3 instruments:
Financial Assets
Balance as at January 1 \ 3,652,574 \ 3,464,272
Acquisitions 5,257,894 -
Disposals (4,750,207) -
Amount recognized in profit or loss 88,284 -
Amount recognized in other comprehensive income 56,683 188,302
Others1 2,860,238 -
Balance as at December 31 \ 7,165,466 \ 3,652,574
1 Others include the effect of changes in accounting policy.
Balance as at January 1 \ 351,918 \ 342,702
Settled (322,920) (2,693)
Amount recognized in profit or loss (15,188) (24,372)
Acquisition in the business combination - 39,083
Others 692 (2,802)
Balance as at December 31 \ 14,502 \ 351,918
(5) Sensitivity analysis for recurring fair value measurements categorized within Level 3
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair
value of financial instruments which are affected by unobservable parameters, using a statistical technique. When the
fair value is affected by more than two input parameters, the amounts represent the most favorable or most
unfavorable.
The results of the sensitivity analysis for the effect on profit or loss (before tax amount for other comprehensive
income or loss) from changes in inputs for major financial instruments which are categorized within Level 3 and
subject to sensitivity analysis, are as follows:
(In millions of Korean won) Favorable changes Unfavorable changes

Classification Profit or loss Equity Profit or loss Equity
Financial assets at fair value through other

\ - \ 115,977 \ - \ (125,291)
comprehensive income1
1 For equity securities, changes in fair value are calculated with the correlation among growth rate (-1%~1%), volatility
(24.1%~30.1%) and discount rate, which are significant unobservable inputs.
94
32. Segment Information
(A) Operating segment information
The chief operating decision maker has been identified as the Management Committee. The Company determines
operating segments based on the units reported to the Management Committee. The Management Committee reviews
operating profits of each operating segment in order to assess performance and to make strategic decisions regarding
allocation of resources to the segment.
The operating segments are product-based and are identified based on the internal organization and revenue streams.
As at the reporting date, the operating segments are comprised of CE, IM, Semiconductor, DP, Harman and others.
The segment information for each reporting period such as depreciation, amortization of intangible assets, and
operating profit is prepared after the allocation of internal transaction adjustments. Total assets and liabilities of each
operating segment are excluded from the disclosure as these have not been provided regularly to the Management
Committee.
Intercompany
DS
elimination
(In millions of Semi- within the
Korean won) CE IM Total1 conductor DP Harman Total1 Company Consolidated
Total segment
\ 95,187,648 \214,884,364 \239,564,995 \165,762,494 \69,349,454 \ 10,971,146 \563,005,328 \ (319,233,913) \243,771,415
revenue
Intercompany
(53,080,243) (114,206,687) (120,999,436) (79,471,532) (36,884,435) (2,127,407) (319,233,913) 319,233,913 -
revenue
Net revenue2 42,107,405 100,677,677 118,565,559 86,290,962 32,465,019 8,843,739 243,771,415 - 243,771,415
Depreciation 537,903 1,168,036 22,863,124 16,304,757 6,445,672 235,149 25,167,112 - 25,167,112
Amortization 37,448 127,973 722,338 593,744 114,796 222,841 1,314,925 - 1,314,925
Operating profit 2,023,234 10,172,005 46,516,389 44,573,890 2,619,802 161,714 58,886,669 - 58,886,669
1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenue.
Intercompany
DS
elimination
(In millions of Semi- within the
Korean won) CE IM Total1 conductor DP Harman Total1 Company Consolidated
Total segment
\102,042,984 \226,004,156 \218,781,719 \141,819,969 \ 72,108,721 \ 9,171,835 \561,861,438 \ (322,286,062) \239,575,376
revenue
Intercompany
(57,441,637) (119,335,838) (110,614,239) (67,564,374) (37,643,358) (2,069,206) (322,286,062) 322,286,062 -
revenue
Net revenue2 44,601,347 106,668,318 108,167,480 74,255,595 34,465,363 7,102,629 239,575,376 - 239,575,376
Depreciation 582,788 1,264,596 18,175,388 12,920,501 5,080,610 184,458 20,593,616 - 20,593,616
Amortization 38,523 152,939 935,022 797,630 122,300 172,324 1,523,776 - 1,523,776
Operating profit 1,802,033 11,827,324 40,327,933 35,204,143 5,398,401 57,421 53,645,038 - 53,645,038
1 Includes other amounts not included in specific operating segments.

2 Segment net revenue includes intersegment revenue.
3 CE is restated due to the reclassification of the Medical Instrument business segment, which has been changed from CE to
Others.
95
(B) Regional information
The regional segment information provided to the Management Committee for the reportable segments as at and for
the years ended December 31, 2018 and 2017 is as follows:
Intercompany
elimination
(In millions of Korean Asia and within the
won) Korea America Europe Africa China Company Consolidated
Net segment revenue \33,923,275 \81,688,726 \42,959,049 \41,993,417 \43,206,948 \ - \ 243,771,415

Non-current assets1 94,001,678 9,914,464 5,954,399 11,611,679 9,294,129 (468,027) 130,308,322
1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint
ventures.
Intercompany
elimination
(In millions of Korean Asia and within the
won) Korea America Europe Africa China Company Consolidated
Net segment revenue \31,545,181 \81,019,556 \44,418,914 \44,247,994 \38,343,731 \ - \ 239,575,376

Non-current assets1 89,156,726 10,545,297 6,081,926 11,980,235 9,361,317 (699,370) 126,426,131
1 Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint
ventures.
96
33. Related Party Transactions
(A) Sale and purchase transactions
Sale and purchase transactions with related parties for the years ended December 31, 2018 and 2017 are as follows:
2018
(In millions of Disposal of Purchases of
Korean won) Name of Company1 Sales fixed assets Purchases fixed assets
Samsung SDS \ 68,418 \ - \ 2,103,561 \ 425,415

Samsung Electro-Mechanics 57,716 - 2,073,803 -
Associates and Samsung SDI 62,821 - 778,550 88,211
joint ventures Cheil Worldwide 25,533 - 906,348 3,258
Other 966,793 - 10,015,075 218,667
Total (Associates and joint ventures) \ 1,181,281 \ - \ 15,877,337 \ 735,551
Samsung C&T \ 94,153 \ 183 319,206 4,211,883
Other related
Other 165,329 - 1,016,536 966,846
parties
Total (Other related parties) \ 259,482 \ 183 \ 1,335,742 \ 5,178,729
Samsung Engineering \ 3,772 \ - \ 40,844 \ 1,701,154
S-1 34,612 258 396,011 35,360
Others2
Other 140,968 - 343,065 385,086
Total (Others) \ 179,352 \ 258 \ 779,920 \ 2,121,600
1 Transactions with separate entities that are related parties of the Company.
2 Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same
large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.
2017
(In millions of Disposal of Purchases of
Korean won) Name of Company1 Sales fixed assets Purchases fixed assets
Samsung SDS \ 57,662 \ - \ 1,971,449 \ 308,297

Samsung Electro-Mechanics 49,308 - 2,085,917 302
Associates and Samsung SDI 62,122 1,600 974,496 63,655
joint ventures Cheil Worldwide 12,570 - 782,530 1,079
Other 612,726 - 9,069,864 174,199
Total (Associates and joint ventures) \ 794,388 \ 1,600 \ 14,884,256 \ 547,532
Samsung C&T \ 164,913 68 379,500 \ 4,131,961
Other related
Other 163,023 35 934,452 329,063
parties
Total (Other related parties) \ 327,936 \ 103 \ 1,313,952 \ 4,461,024
Samsung Engineering \ 8,980 \ - \ 41,495 \ 2,301,886
S-1 42,355 - 362,748 84,281
Others2
Other 73,878 3 205,680 406
Total (Others) \ 125,213 \ 3 \ 609,923 \ 2,386,573
1 Transactions with separate entities that are related parties of the Company.
97
(B) Balances of receivables and payables
Balances of receivables and payables arising from sales and purchases of goods and services as at December 31, 2018
and December 31, 2017 are as follows:
December 31, 2018

(In millions of Korean won) Name of Company1 Receivables Payables
Samsung SDS \ 5,294 \ 490,611

Samsung Electro-Mechanics 3,518 163,668
Associates and Samsung SDI 102,641 73,398
joint ventures Cheil Worldwide 241 465,517
Other 282,849 1,067,439
Total (Associates and joint ventures) \ 394,543 \ 2,260,633
Samsung C&T \ 225,606 \ 1,725,547
Other related parties Other2 19,676 183,395
Total (Other related parties) \ 245,282 \ 1,908,942
Samsung Engineering \ 1,078 \ 581,153
S-1 3,149 37,785
Others3
Other 4,696 47,502
Total (Others) \ 8,923 \ 666,440
1 Balances due from and to separate entities that are related parties of the Company.
2 As at December 31, 2018, there are no payables to Samsung Card relating to unsettled amounts from purchasing cards. The
Company has a purchasing card agreement with Samsung Card with a limit of \2,543,000 million as at December 31, 2018.
For the year ended December 31, 2018, the amounts used and reimbursed were \3,724,851 million and \4,846,182 million,
respectively.
December 31, 2017

(In millions of Korean won) Name of Company1 Receivables Payables
Samsung SDS \ 14,182 \ 406,760

Samsung Electro-Mechanics 7,052 197,364
Associates and Samsung SDI 90,370 97,193
joint ventures Cheil Worldwide 369 500,706
Other 250,059 954,537
Total (Associates and joint ventures) \ 362,032 \ 2,156,560
Samsung C&T \ 242,506 \ 731,995
Other related parties Other2 29,457 1,313,314
Total (Other related parties) \ 271,963 \ 2,045,309
Samsung Engineering \ 2,518 \ 652,519
S-1 2,589 58,309
Others3
Other 3,369 35,774
Total (Others) \ 8,476 \ 746,602
1 Balances due from and to separate entities that are related parties of the Company.
2 Payables include the unsettled amount from purchasing cards with Samsung Card of \1,121,331 million. The Company has
98
a purchasing card agreement with a limit of \2,343,000 million as at December 31, 2017. For the year ended December 31,
2017, the amounts used and reimbursed are \5,091,576 million and \5,279,430 million, respectively.
(C) For the year ended December 31, 2018, the Company invested \51,226 million (for the year ended December
31, 2017, \25,293 million) in associates and joint ventures. And for the year ended December 31, 2018, the
Company recovered \148 million (for the year ended December 31, 2017, \53,085 million) from associates
and joint ventures. Also, for the year ended December 31, 2017, the Company invested \204,055 million to the
entities that are not related parties of the Company in accordance with Korean IFRS 1024, but belong to the same
conglomerate according to the Monopoly Regulation and Fair Trade Act.
(D) For the year ended December 31, 2018, the Company declared \1,774,050 million of dividends (for the year
ended December 31, 2017, \1,165,659 million) to related parties. As at December 31, 2018 and 2017, there are
no unpaid dividends to related parties. Also, for the year ended December 31, 2018, the Company declared
\135,642 million of dividends (for the year ended December 31, 2017, \90,034 million) to the entities that are
not related parties of the Company in accordance with Korean IFRS 1024, but belong to the same conglomerate
according to the Monopoly Regulation and Fair Trade Act. As at December 31, 2018 and 2017, there are no
unpaid dividends to these entities.
(E) Key management compensation
Key management includes directors (executive and non-executive) and members of the Executive Committee. The
compensation recognized as expenses for employee services for the years ended December 31, 2018 and 2017
consists of:
Short-term employee benefits \ 13,190 \ 28,025

Post-employment benefits 1,406 792
Other long-term employee benefits 7,851 8,617
99
34. Information about Non-Controlling Interests
(A) Changes in accumulated non-controlling interests
The profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that
are material to the Company for the years ended December 31, 2018 and 2017 are as follows:
2018 Percentage of
non-controlling Balance as at Profit for Balance as at
(In millions of Korean won) interests January 1 the period Dividends Other December 31
Samsung Display and its

15.2% \6,776,468 \ 431,966 \ (17,304) \ (10,081) \7,181,049
subsidiaries
2017 Percentage of
non-controlling Balance as at Profit for Balance as at
(In millions of Korean won) interests January 1 the period Dividends Other December 31
Samsung Display and its

15.2% \5,981,454 \ 790,480 \ (1,582) \ 6,116 \6,776,468
subsidiaries
(B) The summarized financial information for each subsidiary with non-controlling interests that are material to the
Company before intercompany eliminations for the years December 31, 2018 and 2017 are as follows:
(1) Summarized consolidated statements of financial position
Samsung Display and its subsidiaries

Current assets \ 20,137,873 \ 21,316,244

Non-current assets 34,344,308 37,884,399
Current liabilities 5,960,611 12,279,301
Non-current liabilities 5,265,108 5,828,551
Equity attributable to: 43,256,462 41,092,791
Owners of the parent 42,736,122 40,573,072
Non-controlling interests 520,340 519,719
(2) Summarized consolidated statements of comprehensive income

Sales \ 32,316,001 \ 34,293,155

Profit for the period 2,238,291 4,645,695
Other comprehensive income(loss) (57,236) (25,171)
Total comprehensive income attributable to: 2,181,055 4,620,524
Owners of the parent 2,163,050 4,597,147
Non-controlling interests 18,005 23,377
100
(3) Summarized consolidated statements of cash flows

Cash flows from operating activities \ 9,648,365 \ 8,697,292

Cash flows from investing activities (4,718,475) (14,793,775)
Cash flows from financing activities (5,082,106) 6,336,379
Effect of exchange rate changes on cash and cash equivalents 10,472 (18,642)
Increase (decrease) in cash and cash equivalents (141,744) 221,254
Cash and cash equivalents at beginning of period 818,115 596,861
Cash and cash equivalents at end of period 676,371 818,115
35. Business Combinations
Significant business combinations for the year ended December 31, 2017 are as follows:
To strengthen the Company’s automotive electronics and audio businesses, Samsung Electronics America, the
Company’s subsidiary, acquired 100% of the equity shares of Harman and its subsidiaries on March 10, 2017.
(1) Overview of the acquired company
Name of the acquired company Harman International Industries, Inc. and 109 subsidiaries
Headquarters location Stamford, CT, USA
Representative director Dinesh Paliwal
Industry Design, development, manufacture and sale of audio and video system components
(2) Purchase price allocation
(In millions of Korean won) Amount

I. Consideration transferred ￦ 9,272,702
II. Identifiable assets and liabilities
Cash and cash equivalents 647,729
Trade and other receivables 1,533,437
Inventory 1,068,865
Property, plant and equipment 858,790
Intangible assets 5,564,309
Other assets 902,824
Trade and other payables 3,436,020
Deferred tax liabilities 1,442,527
Other liabilities 873,637
Total net identifiable assets 4,823,770
III. Goodwill (I – II) ￦ 4,448,932
Had Harman and its subsidiaries been consolidated from January 1, 2017, the revenue and profit for the year ended
December 31, 2017, would be ￦8,581,461 million and ￦213,287 million, respectively. The revenue and profit for
the period contributed by Harman and its subsidiaries since the acquisition amount to ￦7,103,437 million and
￦209,015 million, respectively.
101
36. Events after the Reporting Period
On July 12, 2018, the Korea Securities and Futures Commission determined a first measure following an investigation
relating to Samsung Biologics Co., Ltd., an associate of the Company, and its accounting for its investment in
Samsung Bioepis Co., Ltd, a joint venture between Biogen Therapeutics Inc. and Samsung Biologics Co., Ltd. The
first measure included a recommendation to dismiss the director in charge, prosecution charges, and external auditor
designation by the regulator, on the basis that the Joint Venture Agreement was not disclosed in the notes to the
financial statements. On November 14, 2018, the Korea Securities and Futures Commission determined a second
measure, which included a penalty of KRW 8 billion, a recommendation to dismiss the CEO, a requirement to restate
its financial statements, and further prosecution charges.
Consequently, Samsung Biologics Co., Ltd. filed a suit for cancellation of the aforementioned measures to the Seoul
Administrative Court to suspend the execution of these measures, and the respective court has pronounced a decision
to suspend these measures until the final rulings on January 22, 2019 and February 19, 2019, relating to the second
and first measures, respectively. The Korea Securities and Futures Commission immediately appealed against the
decision to suspend execution.
Although the future outcome of the administrative litigation cannot be estimated, should Samsung Biologics Co., Ltd.
be required to restate its financial statements to amend its historical accounting treatment relating to its investment in
Samsung Bioepis Co., Ltd., the Company’s profit or loss relating to its equity method investment, and retained
earnings, for the years ended December 31, 2015 to 2018, and the profit on disposal of investment for the year ended
December 31, 2016, may be impacted. Given the timing of completion and the final result of the administrative
litigation between Samsung Biologics Co., Ltd. and the Seoul Administrative Court is uncertain and cannot currently
be estimated, it is not possible for the Company to recognize the effects of these proceedings in the current year
financial statements.
102

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CONSOLIDATED FINANCIAL STATEMENTS OF

SAMSUNG ELECTRONICS CO., LTD. AND ITS SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

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

Consolidated Financial Statements

Consolidated Statements of Financial Position......................................................................... 7 - 9

Consolidated Statements of Profit or Loss................................................................................ 10

Consolidated Statements of Comprehensive Income................................................................ 11

Consolidated Statements of Changes in Equity........................................................................ 12 - 15

Consolidated Statements of Cash Flows................................................................................... 16 - 17

Notes to the Consolidated Financial Statements ….................................................................. 18 - 102

To the Board of Directors and Shareholders of

Basis for Opinion

Key Audit Matters

Reasons why the matter was determined to be a key audit matter

How we addressed the Key Audit Matter in our audit procedures

2. Valuation of goodwill and intangible assets with indefinite useful lives

Reasons why the matter was determined to be a key audit matter

How we addressed the Key Audit Matter in our audit procedures

3. Depreciation expense cut off on property, plant and equipment

Reasons why the matter was determined to be a key audit matter

How we addressed the Key Audit Matter in our audit procedures

4. Valuation of investments in associates and joint ventures

Reasons why the matter was determined to be a key audit matter

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

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

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31, December 31, December 31, December 31,

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31, December 31, December 31, December 31,

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31, December 31, December 31, December 31,

Total liabilities and equity 339,357,244 301,752,090 308,448,123 274,268,098

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Cash flows from investing activities

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Effect of exchange rate changes on cash and cash

Cash and cash equivalents

1.1 Company Overview

1.2 Consolidated Subsidiaries

(A) The consolidated subsidiaries as at December 31, 2018 are as follows:

(B) A summary of financial data of major consolidated subsidiaries is as follows: