##### Table of Contents

As filed with the Securities and Exchange Commission on April 27, 2012 

 

 

 

**UNITED STATES SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

**Form 20-F**

 

**OR**

 

**        For the fiscal year ended December 31, 2011**

**OR**

 

**OR**

 

        Date of event requiring this shell company report                                        

**        For the transition periodfrom                      to                    **

**Commission file number 1-14926**

**KT Corporation**

*(Exact nameof Registrant as specified in its charter)*

 

**206 Jungja-dong**

**Bundang-gu, Sungnam-si, Gyeonggi-do**

**463-711 Korea**

*(Address of principal executive offices)*

**Thomas Bum Joon Kim**

**206 Jungja-dong**

**Bundang-gu, Sungnam-si, Gyeonggi-do**

**463-711 Korea**

**Telephone: +82-31-727-0150; E-mail: thomaskim@kt.com**

*(Name, telephone, e-mail and/or facsimile number and address of company contact person)*

Securities registered or to be registered pursuant to Section 12(b) of the Act. 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act. 

**None**

Securities for whichthere is a reporting obligation pursuant to Section 15(d) of the Act. 

**None**

**As of December 31, 2011, there were 261,111,808 shares of common stock, par value**(Won)******5,000 per share, outstanding (not including 17,897,147 shares of common stock held by the company as treasury shares)**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.    **Yes  **x******    No  ** ̈********

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934.    **Yes**   ̈    **No**  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    **Yes**   x    **No**   ̈

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files).    **Yes  ** ̈******    No  ** ̈****** **

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule12b-2 of the Exchange Act. (Check one): ****

**Large accelerated filer**  x    **Acceleratedfiler**   ̈    **Non-accelerated filer**   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing. 

**U.S. GAAP**   ̈    **IFRS**  x**    Other**   ̈

If“Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    **Item 17**   ̈    **Item 18**   ̈

Ifthis is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    **Yes**   ̈    **No**  x

 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
        **Page** 
PART I
   1  
ITEM 1.
 
IDENTITY OF DIRECTORS, SENIOR MANAGERS AND ADVISERS
   1   
Item 1.A.
  
Directors and Senior Management
   1   
Item 1.B.
  
Advisers
   1   
Item 1.C.
  
Auditors
   1  
ITEM 2.
 
OFFER STATISTICS AND EXPECTED TIMETABLE
   1   Item 2.A.  Offer Statistics   1   Item 2.B.  
Method and Expected Timetable
   1  
ITEM 3.
 
KEY INFORMATION
   2   
Item 3.A.
  
Selected Financial Data
   2   
Item 3.B.
  
Capitalization and Indebtedness
   5   
Item 3.C.
  
Reasons for the Offer and Use of Proceeds
   5   
Item 3.D.
  
Risk Factors
   5  
ITEM 4.
 
INFORMATION ON THE COMPANY
   16   
Item 4.A.
  
History and Development of the Company
   16   
Item 4.B.
  
Business Overview
   17   
Item 4.C.
  
Organizational Structure
   42   
Item 4.D.
  
Property, Plants and Equipment
   42  
ITEM 4A.
 
UNRESOLVED STAFF COMMENTS
   46  
ITEM 5.
 
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
   46   
Item 5.A.
  
Operating Results
   46   
Item 5.B.
  
Liquidity and Capital Resources
   61   
Item 5.C.
  
Research and Development, Patents and Licenses, Etc.
   64   
Item 5.D.
  
Trend Information
   65   
Item 5.E.
  
Off-balance Sheet Arrangements
   65   
Item 5.F.
  
Tabular Disclosure of Contractual Obligations
   65   
Item 5.G.
  
Safe Harbor
   65  
ITEM 6.
 
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
   65   
Item 6.A.
  
Directors and Senior Management
   65   
Item 6.B.
  
Compensation
   72   
Item 6.C.
  
Board Practices
   73   
Item 6.D.
  
Employees
   74   
Item 6.E.
  
Share Ownership
   76  
 
i 

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**TABLE OF CONTENTS**

(continued) 

         **Page** 
ITEM 7.
 
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
   77   
Item 7.A.
  
Major Shareholders
   77   
Item 7.B.
  
Related Party Transactions
   77   
Item 7.C.
  
Interests of Experts and Counsel
   77  
ITEM 8.
 
FINANCIAL INFORMATION
   77   
Item 8.A.
  
Consolidated Statements and Other Financial Information
   77   Item 8.B.  Significant Changes   79  
ITEM 9.
 
THE OFFER AND LISTING
   79   
Item 9.A.
  
Offer and Listing Details
   79   
Item 9.B.
  
Plan of Distribution
   80   
Item 9.C.
  
Markets
   80   
Item 9.D.
  
Selling Shareholders
   84   
Item 9.E.
  
Dilution
   85   
Item 9.F.
  
Expenses of the Issuer
   85  
ITEM 10.
 
ADDITIONAL INFORMATION
   85   
Item 10.A.
  
Share Capital
   85   
Item 10.B.
  
Memorandum and Articles of Association
   85   
Item 10.C.
  
Material Contracts
   91   
Item 10.D.
  
Exchange Controls
   91   
Item 10.E.
  
Taxation
   96   
Item 10.F.
  
Dividends and Paying Agents
   100   
Item 10.G.
  
Statements by Experts
   100   
Item 10.H.
  
Documents on Display
   101   
Item 10.I.
  
Subsidiary Information
   101  
ITEM 11.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   101  
ITEM 12.
 
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
   104   
Item 12.A.
  
Debt Securities
   104   
Item 12.B.
  
Warrants and Rights
   104   
Item 12.C.
  
Other Securities
   104   
Item 12.D.
  
American Depositary Shares
   104  
PART II
   105  
ITEM 13.
 
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
   105  
 
ii 

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**TABLE OF CONTENTS**

(continued) 

          **Page** 
ITEM 14.
  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS   105  
ITEM 15.
  
CONTROLS AND PROCEDURES
   105  
ITEM 16.
  
[Reserved]
   107  
ITEM 16A.
  
AUDIT COMMITTEE FINANCIAL EXPERT
   107  
ITEM 16B.
  
CODE OF ETHICS
   107  
ITEM 16C.
  
PRINCIPAL ACCOUNTANT FEES AND SERVICES
   107  
ITEM 16D.
  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES   108  
ITEM 16E.
  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS   108  
ITEM 16F.
  CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT   108  
ITEM 16G.
  CORPORATE GOVERNANCE   108  
ITEM 16H.
  MINE SAFETY DISCLOSURE    109  
PART III
   110  
ITEM 17.
  FINANCIAL STATEMENTS   110  
ITEM 18.
  FINANCIAL STATEMENTS   110  
ITEM 19.
  EXHIBITS   110  
 
iii 

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**PRESENTATION**

All references to “Korea” or the “Republic” contained in this annual report mean the Republic of Korea. All references to the “Government” are to the government of the Republic ofKorea. All references to “we,” “us” or the “Company” are to KT Corporation and, as the context may require, its subsidiaries. 

All references to “Won” or “(Won)” in this annual report are to the currency of theRepublic and all references to “Dollars,” “$,” “US$” or “U.S. dollars” are to the currency of the United States of America. Our monetary assets and liabilities denominated in foreign currency are translatedinto Won at the market average exchange rate announced by Seoul Money Brokerage Services, Ltd. (the “Market Average Exchange Rate”) on the balance sheet dates, which were, for U.S. dollars,(Won)1,138.9 to US$1.00 and(Won)1,153.3 to US$1.00 at December 31, 2010 and 2011, respectively. Our consolidated financial statements are expressed in Won and,solely for the convenience of the reader, the consolidated financial statements as of and for the year ended December 31, 2011 have been translated into United States dollars at the rate of(Won)1,153.3 to US$1.00, the Market Average Exchange Rate in effect on December 31, 2011. 

Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding. 

All market share data contained in this annual report, unless otherwise specified, are based on the number of subscribers announced by the KoreaCommunications Commission or the Korea Telecommunications Operators Association. 

**PART I**

**Item 1.  Identity of Directors, Senior Managers and Advisers**

********Item 1.A.*****  Directors and Senior Management***

Not applicable. 

********Item 1.B.*****  Advisers***

Not applicable. 

********Item 1.C.*****  Auditors***

Not applicable. 

**Item 2.  Offer Statistics and Expected Timetable**

********Item 2.A.*****  Offer Statistics***

Not applicable. 

********Item 2.B.*****  Method and Expected Timetable***

Not applicable. 

 
1 

Table of Contents
**Item 3.  Key Information**

**Item 3.A.  *******Selected Financial Data*********

You should read the selected consolidated financial data below in conjunction with the Consolidated Financial Statements as of December 31,2010 and 2011 and for each of the years in the two-year period ended December 31, 2011, and the report of the independent registered public accounting firm on these statements included herein. These audited financial statements and the relatednotes have been prepared under IFRS as issued by the IASB. The selected consolidated financial data for the two years ended December 31, 2011 have been derived from our audited consolidated financial statements. 

In accordance with rule amendments adopted by the U.S. Securities and Exchange Commission which became effective on March 4, 2008, we are notrequired to provide a reconciliation to U.S. GAAP. Furthermore, pursuant to the transitional relief granted by the U.S. Securities and Exchange Commission in respect of the first-time application of IFRS, no audited financial statements andfinancial information prepared under IFRS for the year ended December 31, 2009 have been included in this annual report. 

Theinformation set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements andrelated notes included in this annual report. 

**Consolidated statement of income data**

 
   **Year Ended December 31,**    **        2010        **  **        2011        **  **        2011 (1)        **    **  (In billions of Won and millions of Dollars, except per share data)  ** 
**Continuing Operations:**
    
**Operating revenue**
  (Won)20,326   (Won)21,990   US$19,067  
**Operating expenses**
   18,318    20,016    17,356  
**Operating profit**
   2,008    1,974    1,711  
Finance income
   239    267    232  
Finance expenses
   (599)   (640)   (555) 
Income (loss) from jointly controlled entities and associates
   33    (3)   (3) 
**Profit from continuing operations before income tax**
   1,681    1,598    1,385  
Income tax expense
   (397)   (317)   (275) 
**Profit for the period from the continuing operations**
   1,285    1,281    1,111  
**Discontinued operations:**
    
**Profit from discontinued operations**
   30    171    148  
**Profit for the period**
  (Won)1,315   (Won)1,452   US$1,259  
**Profit for the period attributable to:**
    
Equity holders of the parent company
  (Won)1,296   (Won)1,447   US$1,254  
Profit from continuing operations
   1,273    1,277    1,107  
Profit from discontinued operations
   23    170    147  
Non-controlling interest
  (Won)19   (Won)5   US$5  
Profit from continuing operations
   12    5    5  
Profit from discontinued operations
   7    1    1  
**Earnings per share attributable to the equity holders of the Parent Company during the period (in won):**
    
Basic earnings per share
  (Won)5,328   (Won)5,946   US$5  
From continuing operations
   5,235    5,247    5  
From discontinued operations
   93    699    1  
Diluted earnings per share
  (Won)5,328   (Won)5,946   US$5  
From continuing operations
   5,235    5,247    5  
From discontinued operations
   93    699    1  
 
2 

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**Consolidated statement of financial position data**

 
   **                        As of December 31,                        **    **    2010    **  **    2011    **  **    2011(1)    **    **(In billions of Won and millions of Dollars)** 
**Assets:**
  
**Current assets:**
    
Cash and cash equivalents
  (Won)1,162   (Won)1,445   US$ 1,253  
Trade and other receivables, net
   4,193    6,159    5,340  
Short-term loans, net
   725    698    605  
Current finance lease receivables, net
   195    249    216  
Other financial assets
   270    254    220  
Current income tax assets
   0    1    1  
Inventories, net
   711    675    585  
Other current assets
   264    311    269  
**Total current assets**
   7,519    9,791    8,489  
**Non-current assets:**
    
Trade and other receivables, net
   1,125    1,723    1,494  
Long-term loans, net
   408    491    426  
Non-current finance lease receivables, net
   403    488    423  
Other financial assets
   269    622    539  
Property and equipment, net
   13,398    14,023    12,159  
Investment property, net
   1,146    1,159    1,005  
Intangible assets, net
   1,419    2,643    2,292  
Investments in jointly controlled entities and associates
   638    529    459  
Deferred income tax assets
   565    530    459  
Other non-current assets
   50    86    75  
**Total non-current assets**
   19,422    22,295    19,331  
**Total assets**
  (Won)26,942   (Won)32,085   US$ 27,821  
**Liabilities and Equity:**
    
**Current liabilities:**
    
Trade and other payables
  (Won)4,424   (Won)5,890   US$ 5,107  
Current finance lease liabilities, net
   33    46    40  
Borrowings
   2,722    2,112    1,832  
Other financial liabilities
   1    8    7  
Current income tax liabilities
   284    187    162  
Provisions
   58    123    106  
Deferred income
   177    168    146  
Other current liabilities
   185    210    182  
**Total current liabilities**
   7,885    8,745    7,583  
**Non-current liabilities:**
    
Trade and other payables
   382    652    565  
Non-current finance lease liabilities, net
   61    90    78  
Borrowings
   6,660    8,886    7,705  
Other financial liabilities
   38    288    250  
Retirement benefit liabilities
   264    426    369  
Provisions
   110    143    124  
Deferred income
   157    161    140  
Deferred income tax liabilities
   4    124    108  
Other non-current liabilities
   27    32    28  
**Total non-current liabilities**
   7,703    10,802    9,367  
**Total liabilities**
  (Won)15,588   (Won)19,548   US$ 16,949  
**Equity attributable to owners of the Parent Company**
    
Paid-in capital
    
Capital stock
  (Won)1,564   (Won)1,564   US$ 1,357  
Share premium
   1,440    1,440    1,249  
Retained earnings
   9,466    10,220    8,861  
Accumulated other comprehensive income (expense)
   (79)   (23)   (20) 
Other components of equity
   (1,258)   (1,497)   (1,298)    11,133    11,704    10,148  
**Non-controlling interest**
   221    834    723  
**Total equity**
   11,354    12,538    10,871  
**Total liabilities and shareholders’ equity**
  (Won)26,942   (Won)32,085   US$ 27,821  
 
3 

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**Consolidated statement of cash flow data**

 
   **                Year Ended December 31,                **    **    2010    **  **    2011    **  **    2011 (1)    **    **(In billions of Won and millions of Dollars)** 
Net cash generated from operating activities
  (Won)2,973   (Won)2,150   US$ 1,864  
Net cash (used in) investing activities
   (2,949)   (2,648)   (2,296) 
Net cash provided by (used in) financing activities
   (398)   768    666  
**Operating Data**

 
   **As of December 31,**    **2007**   **2008**   **2009**   **2010**   **2011** 
Lines installed (thousands) (2)
   26,671     26,008     25,907     25,524     23,925  
Lines in service (thousands) (2)
   19,980     18,883     17,069     16,620     15,900  
Lines in service per 100 inhabitants (2)
   41.2     38.8     35.0     34.0     30.8  
Mobile subscribers (thousands)
   13,721     14,365     15,016     16,041     16,563  
Broadband Internet subscribers (thousands)
   6,516     6,712     6,953     7,424     7,823  
 

 
(1)For convenience, the Won amounts are expressed in U.S. dollars at the rate of (Won)1,153.3 to US$1.00, the Market Average Exchange Rate in effect on December 31, 2011. This translation should not be construed as a representation that the Won amounts represent, have been or could beconverted into U.S. dollars at that rate or any other rate. 
 
(2)Including public telephones. 
**Exchange Rate Information**

The following table sets out information concerning the Market Average Exchange Rate for the periods and dates indicated.

 

**Period**
  **At End of**