# EDGAR Filing Document

**Accession Number:** 0000892450
**File Stem:** 0001193125-23-065204
**Filing Date:** 2023-3
**Character Count:** 708377
**Document Hash:** 9a52a06f9e77ff37ae19547e5e1bb913
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-065204.hdr.sgml**: 20230309

**ACCESSION NUMBER**: 0001193125-23-065204

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 9

**CONFORMED PERIOD OF REPORT**: 20230308

**FILED AS OF DATE**: 20230309

**DATE AS OF CHANGE**: 20230309

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** KT CORP
- **CENTRAL INDEX KEY:** 0000892450
- **STANDARD INDUSTRIAL CLASSIFICATION:** TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
- **IRS NUMBER:** 000000000
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14926
- **FILM NUMBER:** 23718086

**BUSINESS ADDRESS:**
- **STREET 1:** 206 JUNGJA DONG, BUNDANG GU,
- **STREET 2:** SUNGNAM, KYUNGGI DO, 463-711,
- **CITY:** KOREA M5
- **STATE:** M5
- **ZIP:** 463-711
- **BUSINESS PHONE:** 82-31-727-0114

**MAIL ADDRESS:**
- **STREET 1:** KT GWANGHWAMUN BUILDING EAST,
- **STREET 2:** 33 JONGNO-3-GIL, JONGNO-GU,
- **CITY:** SEOUL, 110-130, KOREA M5
- **STATE:** M5
- **ZIP:** 110-130

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** KOREA TELECOM CORP
- **DATE OF NAME CHANGE:** 19971006

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** KOREA TELECOM
- **DATE OF NAME CHANGE:** 19950130

##### [**Table of Contents**](#toc)

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**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**Form 6-K** 

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**REPORT OF FOREIGN PRIVATE ISSUER** 

**PURSUANT TO RULE 13a-16 OR 15d-16 OF** 

**THE SECURITIES EXCHANGE ACT OF 1934** 

**For the month of March 2023** 

**Commission File Number 1-14926** 

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## KT Corporation
**(Translation of registrant's name into English)** 

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**90, Buljeong-ro,** 

**Bundang-gu, Seongnam-si,** 

**Gyeonggi-do,** 

**Korea** 

**(Address of principal executive offices)** 

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-<u> </u>

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##### [**Table of Contents**](#toc)
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| Dated: March 8, 2023 | Dated: March 8, 2023 |
| KT Corporation | KT Corporation |
| By: | <u>/s/ Seunghoon Chi</u> |

---

Name: Seunghoon Chi <br> Title: Vice President

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| | |
|:---|:---|
| By: | <u>/s/ Sanghyun Cho</u> |

---

Name: Sanghyun Cho <br> Title: Director

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Index** 

**December 31, 2022 and 2021** 

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---

| | |
|:---|:---|
|  | **Page(s)** |
|  **[Independent Auditor's Report](#tx1479793_1)** | 1 – 5 |
|  **Consolidated Financial Statements** |  |
|  [Consolidated Statements of Financial Position](#tx1479793_3) | 6 – 7 |
|  [Consolidated Statements of Profit or Loss](#tx1479793_4) | 8 |
|  [Consolidated Statements of Comprehensive Income](#tx1479793_5) | 9 |
|  [Consolidated Statements of Changes in Equity](#tx1479793_6) | 10 –11 |
|  [Consolidated Statements of Cash Flows](#tx1479793_7) | 12 –13 |
|  [Notes to the Consolidated Financial Statements](#tx1479793_8) | 14 –131 |

---

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##### [**Table of Contents**](#toc)
![LOGO](g479793dsp003-1.jpg)

**Independent Auditor's Report** 

(English Translation of a Report Originally Issued in Korean)

To the Board of Directors and Shareholders of

KT Corporation

**Opinion** 

We have audited the accompanying consolidated financial statements of KT Corporation and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, 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.

*Samil PricewaterhouseCoopers, 100 Hangang-daero, Yongsan-gu, Seoul 04386, Korea, www.samil.com*

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##### [**Table of Contents**](#toc)
Cash-Generating Unit Impairment Assessment of the Controlling Company (KT Corporation) and HCN Co., Ltd.

*1)* *Why the matter was determined to be a key audit matter* 

As described in Note 2.16 and Note 13 in the consolidated financial statements, the Group assesses whether indicators of impairment on assets exist at the end of every reporting period. When an impairment indicator exists, then management performs an impairment test. This assessment is completed in accordance with Korean IFRS 1036 *Impairment of Assets*.

A. Cash-Generating Unit Impairment Assessment of the Controlling Company

Given that there is a significant difference between the market value and the total net assets of KT Corporation (the "Controlling Company") as of December 31, 2022, the Group determined that indicators of impairment on the cash-generating units (the "CGUs") in wire, wireless and corporate business CGUs in the Controlling Company existed as at December 31, 2022. Management completed an impairment assessment, and no impairment loss was recognized as the recoverable amount of each of the CGUs exceeds their respective carrying amounts.

To determine the recoverable amounts of the CGUs, the Group estimated future cash flows which reflected forecast information such as the number of users for communication services, average profit per user ("ARPU"), and other assumptions. Another critical assumption was the determination of a discount rate to apply to these forecasted future cash flows. Significant judgment is used by management in determining these key assumptions.

The carrying amounts of assets allocated to each of the CGUs are material in the consolidated financial statements. Management's assumptions have a significant impact on determining the recoverable amounts. This results in a high degree of judgement, effort and specialized knowledge being used by management. Therefore, we determined that the Group's impairment assessment of assets allocated to each of the aforementioned CGUs as a key audit matter.

B. Cash-Generating Unit Impairment Assessment of HCN Co., Ltd.

The Group performed impairment assessment as of December 31, 2022 as the amount of goodwill allocated to HCN Co., Ltd.'s cash-generating unit in the prior year was KRW 252,679 million. As a result of the assessment, the Group recognized KRW 24,005 million of impairment loss.

To determine the recoverable amounts of the CGUs, the Group estimated future cash flows which reflected forecast information such as the number of users for communication services, average profit per user ("ARPU"), and other assumptions. Another critical assumption was the determination of a discount rate to apply to these forecasted future cash flows. Significant judgment is used by management in determining these key assumptions.

The carrying amounts of assets allocated to each of the CGUs are material in the consolidated financial statements. Management's assumptions have a significant impact on determining the recoverable amounts. This results in a high degree of judgement, effort and specialized knowledge being used by management. Therefore, we determined that the Group's impairment assessment of assets allocated to each of the aforementioned CGUs as a key audit matter.

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##### [**Table of Contents**](#toc)
*2)* *How the matter was addressed in the audit:*

We have performed the following audit procedures to address the above key audit matter:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We obtained an understanding of the Group's procedures for asset impairment assessment and evaluated
relevant internal controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We obtained an understanding of the Group's procedures to identify the CGUs and evaluated relevant internal
controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the appropriateness of valuation models used by management to estimate the recoverable amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the appropriateness of internal and external information used by management to estimate the
recoverable amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We assessed the consistency of key assumptions used by management to estimate the recoverable amounts, by
comparing the historical results, current market conditions and future business plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We evaluated the qualifications and independence of management's external experts.

**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.

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##### [**Table of Contents**](#toc)
As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances.

• 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.

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##### [**Table of Contents**](#toc)
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 Ho-Sung Han, Certified Public Accountant.

![LOGO](g479793dsp007-1.jpg)

Seoul, Korea

March 8, 2023

This report is effective as of March 8, 2023, 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.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries**

**Consolidated Statements of Financial Position**

**Years Ended December 31, 2022 and 2021**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Assets** |  |  |  |  |  |
|  **Current assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 4538 | W | 2449062 | W | 3019592 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables, net | 4638 |  | 6098072 |  | 5087490 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 4738 |  | 1322452 |  | 1185659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current income tax assets |  |  | 1543 |  | 5954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | 8 |  | 709191 |  | 514145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current assets held-for-sale | 10 |  |  |  | 1187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 9 |  | 2101212 |  | 2044323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets |  |  | 12681532 |  | 11858350 |
|  **Non-current assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables, net | 4638 |  | 1491046 |  | 1091326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 4738 |  | 2501484 |  | 822379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net | 11 |  | 14772179 |  | 14464886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 21 |  | 1280334 |  | 1248308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties, net | 1238 |  | 1933358 |  | 1720654 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | 13 |  | 3129833 |  | 3447333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in associates and joint ventures | 14 |  | 1480722 |  | 1288429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax assets | 30 |  | 578443 |  | 423728 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net defined benefit assets | 18 |  | 311142 |  | 17585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 9 |  | 820608 |  | 776363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-current assets |  |  | 28299149 |  | 25300991 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total assets** |  | W | &nbsp;&nbsp;&nbsp;&nbsp;40980681 | W | &nbsp;&nbsp;&nbsp;&nbsp;37159341 |

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Financial Position** 

**Years Ended December 31, 2022 and 2021** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Liabilities** |  |  |  |  |  |
|  **Current liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables | 41538 | W | 7333165 | W | 6641422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 41638 |  | 1827042 |  | 1731422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 4738 |  | 8791 |  | 72807 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current income tax liabilities |  |  | 232382 |  | 266430 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other provisions | 17 |  | 109133 |  | 171316 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income | 26 |  | 55737 |  | 64742 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | 9 |  | 1133018 |  | 1124293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities |  |  | 10699268 |  | 10072432 |
|  **Non-current liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables | 41538 |  | 1064099 |  | 1338781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 41638 |  | 8179643 |  | 6706281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 4738 |  | 412650 |  | 424859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net defined benefit liabilities | 18 |  | 51654 |  | 197883 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other provisions | 17 |  | 91233 |  | 86081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income | 26 |  | 165186 |  | 194309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax liabilities | 30 |  | 967650 |  | 643958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities | 9 |  | 934575 |  | 927596 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-current liabilities |  |  | 11866690 |  | 10519748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total liabilities** |  |  | 22565958 |  | 20592180 |
|  **Equity attribute to owners of the Controlling Company** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share capital | 22 |  | 1564499 |  | 1564499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium |  |  | 1440258 |  | 1440258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 23 |  | 14257343 |  | 13287390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 24 |  | (77776) |  | 117469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other components of equity | 24 |  | (572152) |  | (1433080) |
|  |  |  | 16612172 |  | 14976536 |
|  **Non-controlling interest** |  |  | 1802551 |  | 1590625 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total equity** |  |  | 18414723 |  | 16567161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total liabilities and equity** |  | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;40980681 | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;37159341 |

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Profit or Loss** 

**Years Ended December 31, 2022 and 2021** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won, except per share amounts)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Operating revenue** | 26 | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25650011 | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24898005 |
|  **Operating expenses** | 27 |  | 23959923 |  | 23226181 |
|  **Operating profit** |  |  | 1690088 |  | 1671824 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income | 28 |  | 595351 |  | 307654 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other expenses | 28 |  | 314607 |  | 280081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance income | 29 |  | 690428 |  | 726283 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance costs | 29 |  | 749908 |  | 563330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net losses of associates and joint ventures | 14 |  | (17285) |  | 116061 |
|  **Profit before income tax expense** |  |  | 1894067 |  | 1978411 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 30 |  | 506404 |  | 519016 |
|  **Profit for the year** |  | W | 1387663 | W | 1459395 |
|  **Profit for the year attributable to:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Owners of the Controlling Company: |  | W | 1262498 | W | 1356878 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interest: |  |  | 125165 |  | 102517 |
|  **Earnings per share attributable to the equity holders of the Controlling Company during the year (in Korean won):** | 31 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic earnings per share |  | W | 5209 | W | 5759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted earnings per share |  |  | 5205 |  | 5747 |

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Comprehensive Income** 

**Years Ended December 31, 2022 and 2021** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Profit for the year** |  | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1387663 | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1459395 |
|  **Other comprehensive income** |  |  |  |  |  |
|  **Items that will not be reclassified to profit or loss:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 18 |  | 181429 |  | 55822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of remeasurement loss of associates and joint ventures |  |  | (332) |  | (1596) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on valuation of equity instruments at fair value through other comprehensive income |  |  | (141944) |  | 144890 |
|  **Items that may be subsequently reclassified to profit or loss:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation of debt instruments at fair value through other comprehensive income |  |  | (16630) |  | (15110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation gain on cash flow hedge |  |  | 64091 |  | 141855 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss from cash flow hedges reclassified to profit or loss |  |  | (95421) |  | (136583) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of other comprehensive loss from associates and joint ventures |  |  | (10851) |  | (24216) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations |  |  | 17464 |  | 505 |
|  **Total comprehensive income for the year** |  | W | 1385469 | W | 1624962 |
|  **Total comprehensive income for the year attributable to:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Owners of the Controlling Company |  | W | 1236679 | W | 1510373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-controlling interest |  |  | 148790 |  | 114589 |

---

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

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Changes in Equity** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | | | | |
| *(in millions of Korean won)* | **Notes** | **Share<br>capital** | **Share<br>capital** | **Share<br>premium** | **Share<br>premium** | **Retained<br>earnings** | **Retained<br>earnings** | **Accumulated<br>other<br>comprehensive<br>income** | **Accumulated<br>other<br>comprehensive<br>income** | **Other<br>components<br>of equity** | **Other<br>components<br>of equity** | **Total** | **Total** | **Non-controlling<br>interest** | **Non-controlling<br>interest** | **Total equity** | **Total equity** |
|  **Balance as at January 1, 2021** |  | W | 1564499 | W | 1440258 | W | 12155420 | W | 86051 | W | (1234784) | W | 14011444 | W | 1539989 | W | 15551433 |
|  **Comprehensive income** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the year |  |  |  |  |  |  | 1356878 |  |  |  |  |  | 1356878 |  | 102517 |  | 1459395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 18 |  |  |  |  |  | 47348 |  |  |  |  |  | 47348 |  | 8474 |  | 55822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of gain on remeasurements of associates and joint ventures |  |  |  |  |  |  | (1559) |  |  |  |  |  | (1559) |  | (37) |  | (1596) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of other comprehensive loss of associates and joint ventures |  |  |  |  |  |  |  |  | (19718) |  |  |  | (19718) |  | (4498) |  | (24216) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation gain on cash flow hedge | 47 |  |  |  |  |  |  |  | 5222 |  |  |  | 5222 |  | 50 |  | 5272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation of financial instruments at fair value through other comprehensive income | 47 |  |  |  |  |  | 76288 |  | 47247 |  |  |  | 123535 |  | 6245 |  | 129780 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations |  |  |  |  |  |  |  |  | (1333) |  |  |  | (1333) |  | 1838 |  | 505 |
|  **Total comprehensive income for the year** |  |  |  |  |  |  | 1478955 |  | 31418 |  |  |  | 1510373 |  | 114589 |  | 1624962 |
|  **Transactions with owners** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid by the Controlling Company |  |  |  |  |  |  | (326487) |  |  |  |  |  | (326487) |  |  |  | (326487) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interest of subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (23762) |  | (23762) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of change in connection range |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (17566) |  | (17566) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in ownership interest in subsidiaries |  |  |  |  |  |  |  |  |  |  | 15797 |  | 15797 |  | (22620) |  | (6823) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appropriations of loss on disposal of treasury stock |  |  |  |  |  |  | (20498) |  |  |  | 20498 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of treasury stock |  |  |  |  |  |  |  |  |  |  | (190105) |  | (190105) |  |  |  | (190105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of treasury stock |  |  |  |  |  |  |  |  |  |  | 50954 |  | 50954 |  |  |  | 50954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recognition of the obligation to purchase its own equity |  |  |  |  |  |  |  |  |  |  | (101829) |  | (101829) |  |  |  | (101829) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  |  | 6389 |  | 6389 |  | (5) |  | 6384 |
|  **Subtotal** |  |  |  |  |  |  | (346985) |  |  |  | (198296) |  | (545281) |  | (63953) |  | (609234) |
|  **Balance as at December 31, 2021** |  | W | 1564499 | W | 1440258 | W | 13287390 | W | 117469 | W | (1433080) | W | 14976536 | W | 1590625 | W | 16567161 |

---

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

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Changes in Equity** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | **Attributable to owners of the Controlling Company** | | | | |
| *(in millions of Korean won)* | **Notes** | **Share**<br> **capital** | **Share**<br> **capital** | **Share**<br> **premium** | **Share**<br> **premium** | **Retained**<br> **earnings** | **Retained**<br> **earnings** | **Accumulated**<br> **other**<br> **comprehensive**<br> **income** | **Accumulated**<br> **other**<br> **comprehensive**<br> **income** | **Other**<br> **components**<br> **of equity** | **Other**<br> **components**<br> **of equity** | **Total** | **Total** | **Non-controlling**<br> **interest** | **Non-controlling**<br> **interest** | **Total equity** | **Total equity** |
|  **Balance as at January 1, 2022** |  | W | 1564499 | W | 1440258 | W | 13287390 | W | 117469 | W | (1433080) | W | 14976536 | W | 1590625 | W | 16567161 |
|  **Comprehensive income** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the year |  |  |  |  |  |  | 1262498 |  |  |  |  |  | 1262498 |  | 125165 |  | 1387663 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 18 |  |  |  |  |  | 165524 |  |  |  |  |  | 165524 |  | 15905 |  | 181429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of gain on remeasurements of associates and joint ventures |  |  |  |  |  |  | (189) |  |  |  |  |  | (189) |  | (143) |  | (332) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of other comprehensive loss of associates and joint ventures |  |  |  |  |  |  |  |  | (8291) |  |  |  | (8291) |  | (2560) |  | (10851) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation loss on cash flow hedge | 47 |  |  |  |  |  |  |  | (32140) |  |  |  | (32140) |  | 810 |  | (31330) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation of financial instruments at fair value through other comprehensive income | 47 |  |  |  |  |  | 4091 |  | (160785) |  |  |  | (156694) |  | (1880) |  | (158574) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange differences on translation of foreign operations |  |  |  |  |  |  |  |  | 5971 |  |  |  | 5971 |  | 11493 |  | 17464 |
|  **Total comprehensive income for the year** |  |  |  |  |  |  | 1431924 |  | (195245) |  |  |  | 1236679 |  | 148790 |  | 1385469 |
|  **Transactions with owners** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid by the Controlling Company |  |  |  |  |  |  | (450394) |  |  |  |  |  | (450394) |  |  |  | (450394) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid to non-controlling interest of subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (26407) |  | (26407) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of change in connection range |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3152 |  | 3152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in ownership interest in subsidiaries |  |  |  |  |  |  |  |  |  |  | 88924 |  | 88924 |  | 32695 |  | 121619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appropriations of loss on disposal of treasury stock |  |  |  |  |  |  | (11577) |  |  |  | 11577 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of treasury stock |  |  |  |  |  |  |  |  |  |  | 763081 |  | 763081 |  |  |  | 763081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Conversion of redeemable convertible preferred shares of subsidiaries to common shares |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 51476 |  | 51476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  |  | (2654) |  | (2654) |  | 2220 |  | (434) |
|  **Subtotal** |  |  |  |  |  |  | (461971) |  |  |  | 860928 |  | 398957 |  | 63136 |  | 462093 |
|  **Balance as at December 31, 2022** |  | W | 1564499 | W | 1440258 | W | 14257343 | W | (77776) | W | (572152) | W | 16612172 | W | 1802551 | W | 18414723 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Cash Flows** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Cash flows from operating activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash generated from operations | 33 | W | 3835879 | W | 5829607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest paid |  |  | (263520) |  | (257809) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest received |  |  | 307091 |  | 272061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends received |  |  | 68827 |  | 74441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax paid |  |  | (351212) |  | (356466) |
|  **Net cash inflow from operating activities** |  |  | 3597065 |  | 5561834 |
|  **Cash flows from investing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collection of loans |  |  | 44287 |  | 54934 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of financial assets at fair value through profit or loss |  |  | 1298621 |  | 609849 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of financial assets at amortized cost |  |  | 1046115 |  | 690457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of financial assets at fair value through other comprehensive income |  |  | 97932 |  | 244994 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of investments in associates and joint ventures |  |  | 34828 |  | 10880 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of assets held-for-sale |  |  | 4600 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of property and equipment and investment properties |  |  | 178063 |  | 174413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of intangible assets |  |  | 20088 |  | 11624 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of right-of-use assets |  |  | 97 |  | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in cash due to changes in scope of consolidation and others |  |  | 6754 |  | 39340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans granted |  |  | (43694) |  | (54128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of financial assets at fair value through profit or loss |  |  | (1317175) |  | (753907) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of financial assets at amortized cost |  |  | (1450442) |  | (623924) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of financial assets at fair value through other comprehensive income |  |  | (449504) |  | (131674) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of investments in associates and joint ventures |  |  | (280988) |  | (487828) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of property and equipment and investment properties |  |  | (3439857) |  | (3495021) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of intangible assets |  |  | (545190) |  | (752181) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of right-of-use assets |  |  | (2090) |  | (4261) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in cash due to changes in scope of consolidation and others |  |  | (41088) |  | (671359) |
|  **Net cash outflow from investing activities** |  |  | (4838643) |  | (5137474) |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Consolidated Statements of Cash Flows** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Cash flows from financing activities** | 34 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from borrowings |  |  | 4234570 |  | 2899567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash inflows under derivatives contracts |  |  | 76280 |  | 216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash intflow from consolidated equity transaction |  |  | 125066 |  | 67693 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash inflow from other financing activities |  |  | 2193 |  | 2556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of borrowings |  |  | (2843249) |  | (1999173) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid |  |  | (476800) |  | (350334) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in lease liabilities |  |  | (378684) |  | (394567) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash outflow under derivatives contracts |  |  | (41197) |  | (1712) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of treasury stock |  |  |  |  | (193626) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash outflow from consolidated equity transaction |  |  | (28848) |  | (11001) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash outflow from other financing activities |  |  |  |  | (60901) |
|  **Net cash inflow (outflow) from financing activities** |  |  | 669331 |  | (41282) |
|  **Effect of exchange rate change on cash and cash equivalents** | **Effect of exchange rate change on cash and cash equivalents** |  | 1717 |  | 1890 |
|  **Net increase (decrease) in cash and cash equivalents** |  |  | (570530) |  | 384968 |
|  **Cash and cash equivalents** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning of the year | 5 |  | 3019592 |  | 2634624 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; End of the year | 5 | W | 2449062 | W | 3019592 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**1.** **General Information** 

The consolidated financial statements include the accounts of KT Corporation, which is the controlling company as defined under Korean IFRS 1110 *Consolidated Financial Statements*, and its 85 controlled subsidiaries as described in Note 1.2 (collectively referred to as the "Group").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1** **The Controlling Company** 

KT Corporation (the "Controlling Company") commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telecommunication services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The headquarters are located in Seongnam City, Gyeonggi Province, Republic of Korea, and the address of its registered head office is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province.

On October 1, 1997, upon the announcement of the Government-Investment Enterprises Management Basic Act and the Privatization Law, the Controlling Company became a government-funded institution under the Commercial Code of Korea.

On December 23, 1998, the Controlling Company's shares were listed on the Korea Exchange.

On May 29, 1999, the Controlling Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), which represents new shares and 20,813,311 government-owned shares, on the New York Stock Exchange. On July 2, 2001, additional ADS representing 55,502,161 government-owned shares were issued on the New York Stock Exchange.

In 2002, the Controlling Company acquired the entire government-owned shares in accordance with the Korean government's privatization plan. As at December 31, 2022, the Korean government does not own any shares in the Controlling Company.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2** **Consolidated Subsidiaries** 

The consolidated subsidiaries as at December 31, 2022 and 2021, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Controlling percentage<br>ownership<sup>1</sup> (%)** | **Controlling percentage<br>ownership<sup>1</sup> (%)** |  |
| **Subsidiary** | **Type of business** | **Location** | **December 31,<br>2022** | **December 31,<br>2021** | **Closing month** |
|  KT Linkus Co., Ltd. | Public telephone maintenance | Korea | 92.4% | 92.4% | December |
|  KT Submarine Co., Ltd. <sup>2,4</sup> | Submarine cable construction and maintenance | Korea | 32.9% | 39.3% | December |
|  KT Telecop Co., Ltd. | Security service | Korea | 86.8% | 86.8% | December |
|  KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) <sup>4</sup> | Data communication | Korea | 73.0% | 73.0% | December |
|  KT Service Bukbu Co., Ltd. | Opening services of fixed line | Korea | 67.3% | 67.3% | December |
|  KT Service Nambu Co., Ltd. | Opening services of fixed line | Korea | 77.3% | 77.3% | December |
|  KT Commerce Inc. | B2C, B2B service | Korea | 100.0% | 100.0% | December |
|  KT Strategic Investment Fund No.2 | Investment fund | Korea | 100.0% | 100.0% | December |
|  KT Strategic Investment Fund No.3 | Investment fund | Korea | 100.0% | 100.0% | December |
|  KT Strategic Investment Fund No.4 | Investment fund | Korea | 100.0% | 100.0% | December |
|  KT Strategic Investment Fund No.5 | Investment fund | Korea | 100.0% | 100.0% | December |
|  BC-VP Strategic Investment Fund No.1 | Investment fund | Korea | 100.0% | 100.0% | December |
|  BC Card Co., Ltd. | Credit card business | Korea | 69.5% | 69.5% | December |
|  VP Inc.<sup>4</sup> | Payment security service for credit card, others | Korea | 69.7% | 50.9% | December |
|  H&C Network | Call center for financial sectors | Korea | 100.0% | 100.0% | December |
|  BC Card China Co., Ltd. | Software development and data processing | China | 100.0% | 100.0% | December |
|  INITECH Co., Ltd. <sup>4</sup> | Internet banking ASP and security solutions | Korea | 61.3% | 58.2% | December |
|  Smartro Co., Ltd. | VAN (Value Added Network) business | Korea | 64.5% | 64.5% | December |
|  KTDS Co., Ltd. <sup>4</sup> | System integration and maintenance | Korea | 95.6% | 95.5% | December |
|  KT M&S Co., Ltd. | PCS distribution | Korea | 100.0% | 100.0% | December |
|  GENIE Music Corporation <sup>3,4</sup> | Online music production and distribution | Korea | 36.0% | 36.2% | December |
|  KT MOS Bukbu Co., Ltd. <sup>4</sup> | Telecommunication facility maintenance | Korea | 100.0% | 100.0% | December |
|  KT MOS Nambu Co., Ltd. <sup>4</sup> | Telecommunication facility maintenance | Korea | 98.4% | 98.4% | December |
|  KT Skylife <sup>4</sup> | Satellite TV | Korea | 50.2% | 50.3% | December |
|  Skylife TV Co., Ltd. | TV contents provider | Korea | 100.0% | 100.0% | December |
|  KT Estate Inc. | Residential building development and supply | Korea | 100.0% | 100.0% | December |
|  KT Investment Management Inc.<br> (KT AMC Co., Ltd.) | Asset management, real estate and consulting services | Korea | 100.0% | 100.0% | December |
|  NEXR Co., Ltd. | Cloud system implementation | Korea | 100.0% | 100.0% | December |
|  KTGDH Co., Ltd. | Data center development and related service | Korea | 100.0% | 100.0% | December |
|  KT Sat Co., Ltd. | Satellite communication business | Korea | 100.0% | 100.0% | December |
|  Nasmedia, Co., Ltd.<sup>3,4</sup> | Solution provider and IPTV advertisement sales business | Korea | 44.0% | 44.0% | December |
|  KT Sports Co., Ltd. | Management of sports teams | Korea | 100.0% | 100.0% | December |
|  KT Music Contents Fund No.2 | Music and contents investment business | Korea | 100.0% | 100.0% | December |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Controlling percentage<br>ownership<sup>1</sup> (%)** | **Controlling percentage<br>ownership<sup>1</sup> (%)** |  |
| **Subsidiary** | **Type of business** | **Location** | **December 31,<br>2022** | **December 31,<br>2021** | **Closing month** |
|  KT-Michigan Global Content Fund | Content investment business | Korea | 88.6% | 88.6% | December |
|  KTCS Corporation <sup>2,4</sup> | Database and online information provider | Korea | 34.1% | 32.2% | December |
|  KTIS Corporation <sup>2,4</sup> | Database and online information provider | Korea | 33.3% | 31.4% | December |
|  KT M Mobile Co., Ltd. | Special category telecommunications operator and sales of communication device | Korea | 100.0% | 100.0% | December |
|  KT Investment Co., Ltd. | Financing business for new technology | Korea | 100.0% | 100.0% | December |
|  PlayD Co., Ltd. | Advertising agency | Korea | 70.4% | 70.4% | December |
|  Next Connect PFV | Residential building development and supply | Korea | 100.0% | 100.0% | December |
|  KT Rwanda Networks Ltd. | Network installation and management | Rwanda | 51.0% | 51.0% | December |
|  AOS Ltd. | System integration and maintenance | Rwanda | 51.0% | 51.0% | December |
|  KT Japan Co., Ltd. | Foreign investment business and local counter work | Japan | 100.0% | 100.0% | December |
|  East Telecom LLC | Wireless/fixed line internet business | Uzbekistan | 91.6% | 91.6% | December |
|  KT America, Inc. | Foreign investment business and local counter work | USA | 100.0% | 100.0% | December |
|  PT. BC Card Asia Pacific | Software development and supply | Indonesia | 99.9% | 99.9% | December |
|  KT Hongkong Telecommunications Co., Ltd. | Fixed line telecommunication business | Hong Kong | 100.0% | 100.0% | December |
|  Korea Telecom Singapore Pte. Ltd. | Foreign investment business and local counter work | Singapore | 100.0% | 100.0% | December |
|  Texnoprosistem LLC | Fixed line internet business | Uzbekistan | 100.0% | 100.0% | December |
|  Nasmedia Thailand Co., Ltd. | Internet advertising solution | Thailand | 99.9% | 99.9% | December |
|  KT Huimangjieum | Manufacturing | Korea | 100.0% | 100.0% | December |
|  K-REALTY RENTAL HOUSING REIT 3 | Residential building | Korea | 88.6% | 88.6% | December |
|  Storywiz Co., Ltd. | Contents and software development and supply | Korea | 100.0% | 100.0% | December |
|  KT Engineering Co., Ltd. | Telecommunication facility construction and maintenance | Korea | 100.0% | 100.0% | December |
|  KT Studio Genie Co., Ltd. | Data communication service and data communication construction business | Korea | 90.9% | 100.0% | December |
|  KHS Corporation | Operation and maintenance of facilities | Korea | 100.0% | 100.0% | December |
|  Lolab Co., Ltd. | Truck transportation and trucking arrangement business | Korea | 79.8% | 80.0% | December |
|  HCN Co., Ltd. | Cable television service | Korea | 100.0% | 100.0% | December |
|  Millie Seojae <sup>3</sup> | Book contents service | Korea | 38.6% | 38.6% | December |
|  KT ES Pte. Ltd. | Foreign investment business | Singapore | 57.6% | 57.6% | December |
|  Epsilon Global Communications PTE. Ltd. | Network service industry | Singapore | 100.0% | 100.0% | December |
|  Epsilon Telecommunications (SP) PTE. Ltd. | Fixed line telecommunication business | Singapore | 100.0% | 100.0% | December |
|  Epsilon Telecommunications (US) PTE. Ltd. | Fixed line telecommunication business | Singapore | 100.0% | 100.0% | December |
|  Epsilon Telecommunications Limited | Fixed line telecommunication business | UK | 100.0% | 100.0% | December |
|  Epsilon Telecommunications (HK) Limited | Fixed line telecommunication business | Hong Kong | 100.0% | 100.0% | December |
|  Epsilon US Inc. | Fixed line telecommunication business | USA | 100.0% | 100.0% | December |
|  Epsilon Telecommunications (BG) EOOD | Employee support service | Bulgaria | 100.0% | 100.0% | December |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Controlling percentage<br>ownership<sup>1</sup> (%)** | **Controlling percentage<br>ownership<sup>1</sup> (%)** |  |
| **Subsidiary** | **Type of business** | **Location** | **December 31,<br>2022** | **December 31,<br>2021** | **Closing month** |
|  Epsilon M E A General Trading LLC <sup>3</sup> | Local counter work | United Arab Emirates | 49.0% | 49.0% | December |
|  Nasmedia-KT Alpha Future Growth Strategic Investment Fund | Investment fund | Korea | 100.0% | 100.0% | December |
|  KT Strategic Investment Fund 6 | Investment fund | Korea | 100.0% | 100.0% | December |
|  Altimedia Corporation | Software development and delivery | Korea | 100.0% | 100.0% | December |
|  Alticast B.V. | Software development and delivery | Netherlands | 100.0% | 100.0% | December |
|  Alticast Company Limited | Software development and delivery | Vietnam | 100.0% | 100.0% | December |
|  BCCARD VIETNAM LTD. | Software sales business | Vietnam | 100.0% | 100.0% | December |
|  KTP SERVICES INC. | Fixed line telecommunication business | Philippines | 100.0% | 100.0% | December |
|  KT RUS LLC | Foreign investment business | Russia | 100.0% |  | December |
|  Hangang Real Estate Investment Trust No. 24 | Investment fund | Korea | 75.0% |  | December |
|  KT DX Vietnam Company Limited | Software development | Vietnam | 100.0% |  | December |
|  kt cloud Co., Ltd. | Information telecommunication business | Korea | 100.0% |  | December |
|  Pocheon Jeonggyori Development Co., Ltd. | Residential building development | Korea | 80.9% |  | December |
|  Alpha DX Solution Co., Ltd. | Data communication service | Korea | 100.0% |  | December |
|  PT CRANIUM ROYAL ADITAMA | Software development | Indonesia | 67.0% |  | December |
|  KT Primorye IDC LLC | Data processing and associated service delivery | Russia | 99.0% |  | December |
|  Juice Inc. <sup>3</sup> | Online information provider/Software development and delivery | Korea | 41.2% |  | December |
|  SPARK AND ASSOCIATES INC. | Network service industry | Korea | 100.0% |  | December |

---

<sup>1</sup> Sum of the ownership interests owned by the Controlling Company and subsidiaries. 

<sup>2</sup> Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company can exercise the majority voting rights in its decision-making process at all times considering the historical voting pattern at the shareholders' meetings. 

<sup>3</sup> Although the Controlling Company owns less than 50% ownership in this entity, this entity is consolidated as the Controlling Company holds the majority of voting right based on an agreement with other investors. 

<sup>4</sup> The number of subsidiaries' treasury stock is deducted from the total number of shares when calculating the controlling percentage ownership. 

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| **KT Corporation** | **and Subsidiaries**  |

---

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.3** **Changes in Scope of Consolidation** 

Subsidiaries newly included and excluded in the consolidation during the year ended December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
| **Changes** | **Location** | **Name of subsidiary** | **Reason** |
| Included | Russia | KT RUS LLC | Newly established |
| Included | Korea | Hangang Real Estate Investment Trust No. 24 | Newly established |
| Included | Vietnam | KT DX Vietnam Company Limited | Newly established |
| Included | Korea | kt cloud Co., Ltd. | Newly established |
| Included | Korea | Pocheon Jeonggyori Development Co., Ltd. | Newly established |
| Included | Korea | Alpha DX Solution Co., Ltd. | Split-off |
| Included | Indonesia | PT CRANIUM ROYAL ADITAMA | Transferred |
| Included | Russia | KT Primorye IDC LLC | Newly established |
| Included | Korea | SPARK AND ASSOCIATES INC. | Transferred |
| Included | Korea | Juice Inc. | Transferred |
| Excluded | Korea | MEDIA GENIE Co., Ltd. | Merged |
| Excluded | Korea | kt seezn Co., Ltd. | Merged |
| Excluded | UK | 7D Digital Limited | Liquidated |
| Excluded | Korea | Whowho&Company Co., Ltd. | Merged |

---

Summarized information for consolidated subsidiaries as at and for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Total assets** | **Total assets** | **Total liabilities** | **Total liabilities** | **Operating<br>revenues<sup>3</sup>** | **Operating<br>revenues<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** |
|  KT Linkus Co., Ltd. | W | 47734 | W | 47498 | W | 75907 | W | (614) |
|  KT Submarine Co., Ltd. |  | 120255 |  | 7884 |  | 42787 |  | (12126) |
|  KT Telecop Co., Ltd. |  | 370004 |  | 230965 |  | 516434 |  | 4267 |
|  KT Alpha Co., Ltd. <sup>1</sup> (KT Hitel Co., Ltd.) |  | 406236 |  | 172211 |  | 515372 |  | 13115 |
|  KT Service Bukbu Co., Ltd. |  | 74673 |  | 65820 |  | 251852 |  | 3227 |
|  KT Service Nambu Co., Ltd. |  | 80450 |  | 66479 |  | 301431 |  | 3067 |
|  BC Card Co., Ltd. <sup>1</sup> |  | 5666075 |  | 4109200 |  | 3895764 |  | 148341 |
|  H&C Network |  | 82737 |  | 6640 |  | 27392 |  | 992 |
|  Nasmedia Co., Ltd. <sup>1</sup> |  | 516945 |  | 275730 |  | 152394 |  | 27691 |
|  KTDS Co., Ltd. <sup>1</sup> |  | 401932 |  | 228474 |  | 715527 |  | 30941 |
|  KT M&S Co., Ltd. |  | 255310 |  | 204336 |  | 728531 |  | 8105 |
|  KT MOS Bukbu Co., Ltd. |  | 38684 |  | 22553 |  | 82984 |  | 4607 |
|  KT MOS Nambu Co., Ltd. |  | 42011 |  | 25416 |  | 83034 |  | 5035 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Total assets** | **Total liabilities** | **Operating<br>revenues<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** |
|  KT Skylife Co., Ltd. <sup>1</sup> | 1359166 | 503679 | 1034236 | 20941 |
|  KT Estate Inc. <sup>1</sup> | 2480489 | 836672 | 488290 | 61454 |
|  KT GDH Co., Ltd. | 12059 | 1596 | 4318 | 451 |
|  KT Sat Co., Ltd. | 677980 | 89644 | 180075 | 28073 |
|  KT Sports Co., Ltd. | 28220 | 15461 | 65283 | (7302) |
|  KT Music Contents Fund No.2 | 15718 | 277 | 1040 | 735 |
|  KT-Michigan Global Content Fund | 2371 | 27 | 33 | (1095) |
|  KT M Mobile Co., Ltd. | 152114 | 49816 | 262407 | 4731 |
|  KT Investment Co., Ltd. <sup>1</sup> | 103354 | 79182 | 15136 | 2840 |
|  KTCS Corporation <sup>1</sup> | 419726 | 228618 | 1030158 | 17634 |
|  KTIS Corporation | 396208 | 199204 | 535783 | 15917 |
|  Next Connect PFV | 624734 | 277967 |  | (3712) |
|  KT Japan Co., Ltd. <sup>1</sup>  | 1888 | 3141 | 1734 | 226 |
|  KT America, Inc. | 5945 | 843 | 8070 | 37 |
|  KT Rwanda Networks Ltd. <sup>2</sup> | 126721 | 267369 | 30823 | (27467) |
|  AOS Ltd. <sup>2</sup> | 10972 | 905 | 7966 | 1274 |
|  KT Hong Kong Telecommunications Co., Ltd. | 10505 | 4768 | 20384 | 51 |
|  KT Huimangjieum <sup>1</sup> | 6984 | 2582 | 21644 | 494 |
|  KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.) | 141463 | 89853 | 258103 | 10302 |
|  KT Studio Genie Co., Ltd. <sup>1</sup> | 987270 | 268911 | 497998 | 189498 |
|  Lolab Co., Ltd. | 35091 | 17247 | 74176 | (7985) |
|  East Telecom LLC <sup>1</sup> | 42691 | 21645 | 26910 | 6419 |
|  KT ES Pte. Ltd. <sup>1</sup> | 240721 | 88640 | 78815 | (23957) |
|  KTP SERVICES INC. | 3832 | 2044 | 776 | (255) |
|  Altimedia Corporation <sup>1</sup> | 44861 | 15777 | 47062 | 6035 |
|  KT RUS LLC <sup>1</sup> | 967 | 16 |  | (871) |
|  KT DX Vietnam Company Limited | 1815 | 6 |  | 26 |
|  kt cloud Co., Ltd.<sup>1</sup> | 1348684 | 245872 | 432074 | 14712 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Total assets** | **Total assets** | **Total liabilities** | **Total liabilities** | **Operating<br>revenues<sup>3</sup>** | **Operating<br>revenues<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** |
|  KT Linkus Co., Ltd. | W | 54219 | W | 53316 | W | 79975 | W | (3095) |
|  KT Submarine Co., Ltd. |  | 110390 |  | 10736 |  | 29877 |  | (3183) |
|  KT Telecop Co., Ltd. |  | 363224 |  | 233797 |  | 511001 |  | 3985 |
|  KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) |  | 390671 |  | 172767 |  | 471579 |  | (8692) |
|  KT Service Bukbu Co., Ltd. |  | 59341 |  | 54070 |  | 231250 |  | 1128 |
|  KT Service Nambu Co., Ltd. |  | 62513 |  | 52695 |  | 271053 |  | 1430 |
|  BC Card Co., Ltd. <sup>1</sup> |  | 3933427 |  | 2481004 |  | 3579438 |  | 120308 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Total assets** | **Total liabilities** | **Operating<br>revenues<sup>3</sup>** | **Profit (loss)<br>for the period<sup>3</sup>** |
|  H&C Network <sup>1</sup> | 88616 | 4993 | 217488 | 11995 |
|  Nasmedia Co., Ltd. <sup>1</sup> | 490394 | 268618 | 124161 | 27120 |
|  KTDS Co., Ltd. <sup>1</sup> | 341358 | 199831 | 629736 | 21464 |
|  KT M&S Co., Ltd. | 241377 | 203051 | 710173 | 3496 |
|  KT MOS Bukbu Co., Ltd. | 32511 | 25402 | 70136 | 1637 |
|  KT MOS Nambu Co., Ltd. | 36741 | 26053 | 71516 | 2016 |
|  KT Skylife Co., Ltd. <sup>1</sup> | 1275645 | 469694 | 763223 | 62309 |
|  KT Estate Inc. <sup>1</sup> | 2370940 | 791884 | 576721 | 213203 |
|  KTGDH Co., Ltd. | 11464 | 1560 | 4423 | 553 |
|  KT Sat Co., Ltd. | 593616 | 34169 | 174655 | 20830 |
|  KT Sports Co., Ltd. | 29524 | 19740 | 67493 | (2039) |
|  KT Music Contents Fund No.2 | 14985 | 278 | 253 | (30) |
|  KT-Michigan Global Content Fund | 3552 | 112 | 13592 | 10032 |
|  KT M Mobile Co., Ltd. | 144175 | 40749 | 204144 | 5918 |
|  KT Investment Co., Ltd. <sup>1</sup> | 87366 | 66108 | 21040 | (697) |
|  KTCS Corporation <sup>1</sup> | 416750 | 234172 | 965721 | 19034 |
|  KTIS Corporation | 369361 | 177619 | 468004 | 24944 |
|  Next Connect PFV | 518441 | 167963 |  | (6519) |
|  KT Japan Co., Ltd. <sup>1</sup>  | 1474 | 2633 | 1135 | (142) |
|  KT America, Inc. | 4884 | 101 | 6508 | 201 |
|  KT Rwanda Networks Ltd. <sup>2</sup> | 125860 | 236389 | 23307 | (28770) |
|  AOS Ltd. <sup>2</sup> | 11539 | 2812 | 6908 | 823 |
|  KT Hongkong Telecommunications Co., Ltd. | 6613 | 1346 | 18825 | 1313 |
|  KT Huimangjieum <sup>1</sup> | 6311 | 2978 | 11472 | 116 |
|  KT Engineering Co., Ltd. (KT ENGCORE Co., Ltd.) | 185850 | 144832 | 283701 | 366 |
|  KT Studio Genie Co., Ltd. <sup>1</sup> | 648534 | 276933 | 90006 | (16443) |
|  Lolab Co., Ltd. | 26726 | 897 | 2081 | (134) |
|  East Telecom LLC <sup>1</sup> | 35904 | 22088 | 11436 | 2487 |
|  KT ES Pte. Ltd. <sup>1</sup> | 240331 | 80597 | 14709 | (6355) |
|  KT Philippines | 3641 | 1243 |  |  |
|  Altimedia Corporation <sup>1</sup> | 32338 | 9742 | 6885 | 1037 |

---

<sup>1</sup> These companies are the intermediate controlling companies of other subsidiaries and the above financial information is from their consolidated financial statements.

<sup>2</sup> At the end of the reporting period, convertible preferred stock issued by subsidiaries is included in liabilities.

<sup>3</sup> Profit or loss is included from the date of acquisition of control to the end of the reporting period.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**2.** **Significant Accounting Policies** 

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1** **Basis of Preparation** 

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The consolidated financial statements of the Group have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.

The financial statements have been prepared on a historical cost basis, except for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain financial assets and liabilities (including derivative instruments)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Assets held-for-sale –
measured at fair value less costs to sell

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Defined benefit pension plans – plan assets measured at fair value

The preparation of the consolidated financial statements requires the use of critical accounting estimates. Management also needs to exercise judgement in applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2** **Changes in Accounting Policy and Disclosures** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *New and amended standards adopted by the Group* 

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1116 *Leases – Concession on COVID-19 – Related Rent Concessions Beyond June 30, 2021* 

The application of the practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before June 30, 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendments do not have a significant impact on the consolidated financial statements.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1103 *Business Combination – Reference to the Conceptual Framework* 

The amendments update a reference of definition of assets and liabilities to be recognized in a business combination in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS 1037 *Provisions, Contingent Liabilities and Contingent Assets*, and Korean IFRS 2121 *Levies*. The amendments also clarify that contingent assets should not be recognized at the acquisition date. The amendments do not have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1016 *Property, Plant and Equipment – Proceeds Before Intended Use* 

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments do not have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS *1037 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts: Cost of Fulfilling a Contract* 

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments do not have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual improvements to Korean IFRS 2018-2020

Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The amendments do not have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1101 *First Time Adoption of Korean International Financial Reporting Standards* –
Subsidiaries that are first-time adopters

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1109 *Financial Instruments* – Fees related to the 10% test for derecognition of financial
liabilities **  

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1041 *Agriculture* – Measuring fair value

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *New standards and interpretations not yet adopted by the Group* 

The following new accounting standards and interpretations that have been published are not mandatory for December 31, 2022 reporting periods and have not been early adopted by the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1001 *Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current* 

The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability include the transfer of the entity's own equity instruments, however, it would be excluded if an option to settle them by the entity's own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2024, and earlier application is permitted. The Group is in review for the impact of these amendments on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1001 *Presentation of Financial Statements – Disclosure of Accounting Policies* 

The amendments to Korean IFRS 1001 define and require entities to disclose their material accounting policies. The IASB amended IFRS Practice Statement 2 Disclosure of Accounting Policies to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group is in review for the impact of these amendments on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1008 *Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates* 

The amendments define accounting estimates and clarify how to distinguish them from changes in accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1012 *Income Taxes – Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction* 

The amendments include an additional condition to the exemption to initial recognition of an asset or liability that a transaction does not give rise to equal taxable and deductible temporary differences at the time of the transaction. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group is in review for the impact of these amendments on the consolidated financial statements.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Korean IFRS 1001 Presentation of Financial Statements–Disclosure of Gain or Loss on Valuation of Financial Liabilities Subject to Adjustment of Exercise Price* 

If the entire or a part of financial instrument, whose exercise price is subject to change due to the issuer's share price, is classified as a financial liability, the carrying amount of the financial liability and related gains and losses shall be disclosed. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3** **Consolidation** 

The Group has prepared the consolidated financial statements in accordance with Korean IFRS 1110 *Consolidated Financial Statements*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Subsidiaries* 

Subsidiaries are all entities (including special purpose entities ("SPEs")) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred is measured at the fair values of the assets transferred, and identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets. All other non-controlling interests are measured at fair values, unless otherwise required by other standards. Acquisition-related costs are expensed as incurred.

The excess of consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recoded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in the profit or loss as a bargain purchase.

Intercompany transactions, balances and unrealized gains on transactions among group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Changes in ownership interests in subsidiaries without loss of control* 

Any differences between the amount of the adjustment to non-controlling interest that do not result in loss of control and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Controlling Company.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Disposal of subsidiaries* 

When the Group ceases to have control over a subsidiary, any retained interest in the subsidiary is remeasured to its fair value with the change in carrying amount recognized in profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Associates* 

Associates are entities over which the Group has significant influence but does not possess control or joint control. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. If the Group's share of losses of an associate equals or exceeds its interest in the associate (including long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognizing its share of further losses. After the Group's interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If there is an objective evidence of impairment for the investment in the associate, the Group recognizes the difference between the recoverable amount of the associate and its book amount as impairment loss. If an associate uses accounting policies other than those of the Group for transactions and events in similar circumstances, if necessary, adjustments shall be made to make the associate's accounting policies conform to those of the Group when the associate's financial statements are used by the Group in applying the equity method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(e)* *Joint arrangements* 

A joint arrangement, wherein two or more parties have joint control, is classified as either a joint operation or a joint venture. A joint operator recognizes its direct right to the assets, liabilities, revenues, and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues, and expenses. A joint venture has rights to the net assets relating to the joint venture and accounts for that investment using the equity method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4** **Segment Reporting** 

Information of each operating segment is reported in a manner consistent with the business segment reporting provided to the chief operating decision-maker (Note 35). The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.5** **Foreign Currency Translation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Functional and presentation currency* 

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which each entity operates (the "functional currency"). The consolidated financial statements are presented in Korean won, which is the Controlling Company's functional and presentation currency.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Transactions and balances* 

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of net investment hedges, or are attributable to monetary part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to financial instruments are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss within 'other income' or 'other expense'.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities, such as equities held at fair value through profit or loss, are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets, such as equities classified as available-for-sale financial assets, are recognized in other comprehensive income*.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.6** **Financial Assets** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Classification* 

The Group classifies its financial assets in the following measurement categories:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• those to be measured at fair value through profit or loss

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• those to be measured at fair value through other comprehensive income

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• those to be measured at amortized cost

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. The Group reclassifies debt investments when, and only when, its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. Changes in fair value of the investments in equity instruments that are not accounted for as other comprehensive income are recognized in profit or loss.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Measurement* 

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*A.* *Debt instruments* 

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its debt instruments into one of the following three measurement categories:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is
derecognized or impaired. Interest income from these financial assets is included in 'finance income' using the effective interest rate method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 (and reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the
cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in 'finance income' using the effective interest rate
method. Foreign exchange gains and losses are presented in 'finance income' or 'finance costs' and impairment loss in 'finance costs' or 'operating expenses'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair value through
other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or
loss and presented net in the statement of profit or loss within 'finance income' or 'finance costs' in the period in which it arises.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*B.* *Equity instruments* 

The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividend income from such investments continue to be recognized in profit or loss as 'finance income' when the Group's right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in 'finance income' or 'finance costs' in the statement of profit or loss as applicable. Impairment loss (reversal of impairment loss) on equity investments, measured at fair value through other comprehensive income, are not reported separately from other changes in fair value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Impairment* 

The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables and lease receivables, the Group applies the simplified approach, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Recognition and derecognition* 

Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

If a transfer does not result in derecognition because the Group has retained substantially all the risks and rewards of ownership of the transferred asset, the Group continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(e)* *Offsetting of financial instruments* 

Financial assets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.7** **Derivative Instruments** 

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting treatment for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group has hedge relationships and designates certain derivatives as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly
probable forecast transactions (cash flow hedges)

At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.

The fair values of derivative financial instruments designated in hedge relationships are disclosed in Note 38.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. A non-derivative financial asset and a non-derivative financial liability is classified as a current or non-current based on its expected maturity and its settlement, respectively.

The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity to the limit of the cumulative change in fair value (present value) of the hedge item (the present value of the cumulative change in the future expected cash flows of the hedged item) from the inception of the hedge. The ineffective portion is recognized in 'finance income (costs)'.

Amounts of changes in fair value of effective hedging instruments accumulated in equity are recognized as 'finance income (costs)' for the periods when the corresponding transactions affect profit or loss.

When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge no longer meets the criteria for hedge accounting, any accumulated cash flow hedge reserve at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cash flow hedge reserve and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.8** **Trade Receivables** 

Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. Trade receivables are subsequently measured at amortized cost using the effective interest method, less loss allowance. See Note 6 for further information about the Group's accounting treatment for trade receivables and Note 2.6 (c) for a description of the Group's accounting policy on impairment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.9** **Inventories** 

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method, except for inventories in-transit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.10** **Non-Current Assets Held-for-Sale** 

Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount will be recovered principally through a sale transaction rather than through continued use and when a sale is considered highly probable. The assets are measured at the lower amount between their carrying amount and the fair value less selling costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.11** **Property and Equipment** 

Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items.

Depreciation of all property and equipment, except for land, is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:

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| | | |
|:---|:---|:---|
|  | **Useful Life** | **Useful Life** |
|  Buildings |  | 5 – 40 years |
|  Structures |  | 5 – 40 years |
|  Machinery and equipment<br> (Telecommunications equipment and others) |  | 2 – 40 years |
|  Vehicles |  | 4 – 10 years |
|  Tools |  | 2 – 6 years |
|  Office equipment |  | 2 – 6 years |

---

The depreciation method, residual values, and useful lives of property and equipment are reviewed at the end of each reporting period and, if appropriate, accounted for as changes in accounting estimates.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.12** **Investment Property** 

Real estate held for rental income or investment gains is classified as investment property and right-of-use asset. An investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives from 5 to 40 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.13** **Intangible Assets** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Goodwill* 

Goodwill is measured as explained in Note 2.3 (a) and goodwill arising from acquisition of subsidiaries and businesses is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of subsidiaries and business include the carrying amount of goodwill relating to the subsidiaries and businesses sold.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Intangible assets excluding goodwill* 

Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at cost less accumulated amortization and accumulated impairment losses. Membership rights (condominium membership and golf membership), subscription rights, broadcast license, facility-use rights, and transportation rights that have indefinite useful life are not subject to amortization because there is no foreseeable limit to the period over which the assets are expected to be utilized. The Group amortizes intangible assets with a limited useful life using the straight-line method over the following periods:

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| | |
|:---|:---|
|  | **Useful Life** |
| Development costs | 3 – 7 years |
| Software | 3 – 7 years |
| Frequency usage rights | 5 –10 years |
| Others<sup>1</sup> | 1 – 50 years |

---

<sup>1</sup> Membership rights (condominium membership and golf membership), subscription rights, broadcast license, facility usage rights and transportation license included in others are classified as intangible assets with indefinite useful life.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.14** **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 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.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.15** **Government Grants** 

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants related to assets are presented in the statement of financial position by setting up the grant as deferred income that is recognized in profit or loss on a systematic basis over the useful life of the asset. Grants related to income are deferred and are presented as a credit in the statement of profit or loss within 'other income'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.16** **Impairment of Non-Financial Assets** 

Goodwill and intangible assets with indefinite useful life are tested annually for impairment at the end of each reporting period. If certain assets are deemed to be impaired, their recoverable amount is estimated in order to determine the impairment loss. The Group estimates the recoverable amount for each asset, and, in cases when the recoverable amount cannot be estimated for an asset, the recoverable amount of the cash generating unit to which the asset belongs is estimated. Corporate assets are allocated to individual cash generating units on a reasonable and consistent basis and if they cannot be allocated to individual cash generating units, they are allocated to the smallest group of cash generating units on a reasonable and consistent basis. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount (higher of its fair value less costs of disposal and value in use). Impairment loss on non-financial assets other than goodwill are evaluated for reversal at the end of each reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.17** **Trade and Other Payables** 

These amounts represent liabilities for goods and services provided to the Group prior to the end of reporting period which are unpaid. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.18** **Financial Liabilities** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Classification and measurement* 

The Group's financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. Derivatives that are not designated as hedging instruments or derivatives separated from financial instruments containing embedded derivatives are also categorized as held for trading.

The Group classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortized cost and present as 'trade payables and other payables', 'borrowings' and 'other financial liabilities' in the statement of financial position.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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Borrowings are initially recognized as the amount obtained by subtracting the transaction cost incurred from the fair value and is then measured as amortized cost. The difference between the consideration received (net of transaction cost) and the redemption amount is recognized as profit or loss over the period using the effective interest rate method. Fees paid to receive the borrowing limit are recognized as transaction costs for loans to the extent that they are likely to be borrowed as part or all of the borrowing limit. In this case, the fee will be deferred until the draw-down occurs. There is a high possibility that borrowings will be executed as part or all of the borrowing limit agreement (relevant fees to the extent that there is no evidence) are recognized as assets as advance payments for liquidity services and amortized over the relevant borrowing limit period.

Preferred shares that require mandatory redemption at a particular date are classified as liabilities. Interest expenses on these preferred shares using the effective interest method are recognized in the statement of profit or loss as 'finance costs', together with interest expenses recognized from other financial liabilities.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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 or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

The Group's financial liabilities at fair value through profit or loss are financial instruments held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designed as at fair value through profit or loss are structured financial liabilities containing embedded derivatives issued by the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.19** **Financial Guarantee Contracts** 

Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value, subsequently at the higher of the following amount, and the related liability is recognized as 'other financial liabilities' in the consolidated statement of financial position:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount determined in accordance with the expected credit loss model under Korean IFRS 1109 *Financial Instruments* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance
with Korean IFRS 1115 *Revenue from Contracts with Customers* 

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.20** **Compound Financial Instruments** 

Compound financial instruments are convertible notes that can be converted into equity instruments at the option of the holder.

The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option, and subsequently measured at amortized cost until extinguished on conversion or maturity of the bonds. The equity component is recognized initially on the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.21** **Employee Benefits** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Post-employment benefits* 

The Group operates both defined contribution and defined benefit pension plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service.

A defined benefit plan is a pension plan that is not a defined contribution plan. Generally, post-employment benefits are payable after the completion of employment, and the benefit amount depended on the employee's age, periods of service or salary levels. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Termination benefits* 

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits at the earlier of the following dates: when the entity can no longer withdraw the offer of those benefits or when the entity recognizes costs for a restructuring.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Long-term employee benefits* 

Certain entities within the Group provide long-term employee benefits that are entitled to employees with service period for ten years and above. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. The Group recognizes service cost, net interest on other long-term employee benefits and remeasurements as profit or loss for the year. These liabilities are valued annually by an independent qualified actuary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.22** **Share-Based Payments** 

Equity-settled share-based payment is recognized at fair value of equity instruments granted, and employee benefit expense is recognized over the vesting period. At the end of each period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

The acquiree may have outstanding share-based payment transactions that the acquirer does not exchange for its share-based payment transactions. If vested, those acquiree share-based payment transactions are part of the non-controlling interest in the acquiree and are measured at their market-based measure. If unvested, the market-based measure of unvested share-based payment transactions is allocated to the non-controlling interest on the basis of the ratio of the portion of the vesting period completed to the greater of the total vesting period and the original vesting period of the share-based payment transaction. The balance is allocated to post-combination service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.23** **Provisions** 

Provisions for service warranties, recoveries, litigations and claims, and others are recognized when the Group presently hold legal or constructive obligation as a result of past events, and when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period, and the increase in the provision due to the passage of time is recognized as interest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.24** **Leases** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Lessee* 

The Group leases various repeater server racks, offices, communication line facilities, machinery, cars, and others.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

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**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fixed payments (including in-substance fixed payments), less any lease
incentives receivable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amounts expected to be payable by the Group (the lessee) under residual value guarantees

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The exercise price of a purchase option if the Group (the lessee) is reasonably certain to exercise that option,
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payments of penalties for terminating the lease, if the lease term reflects the Group (the lessee) exercising
that option

Measurement of lease liability also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease.

The Group determines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. When the lessee and the lessor each has the right to terminate the lease without permission from the other party, the Group should consider a termination penalty in determining the period for which the contract is enforceable.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the initial measurement of lease liability

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any lease payments made at or before the commencement date less any lease incentives received

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any initial direct costs (leasehold deposits)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restoration costs

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, such as vehicles, machinery, and others. Low-value assets are comprised of tools, office equipment, and others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Lessor* 

Lease income from operating leases where the Group is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Extension and termination option* 

Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Information on critical accounting estimates and assumptions related to the determination of the lease term is presented in Note 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.25** **Share Capital** 

The Controlling Company classifies ordinary shares as equity.

Where the Controlling Company purchases its own shares, the consideration paid, including any directly attributable incremental costs, is deducted from equity until the share are cancelled or reissued. When these treasury shares are reissued, any consideration received is included in equity attributable to the equity holders of the Controlling Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.26** **Revenue Recognition** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Identifying performance obligations* 

The Group mainly provides telecommunication services and sells handsets. The Group identifies performance obligations with a customer such as providing telecommunication services, selling handsets, and others. Revenue from handsets is recognized when a performance obligation is satisfied by transferring promised goods to customers, and the revenue from telecommunication services is recognized over the estimated contract periods of each services by transferring promised services to customers.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Allocation the transaction price and revenue recognition* 

The Group allocates the transaction price to each performance obligation identified in the contract based on a relative stand-alone selling prices of the goods or services being provided to the customer. To allocate the transaction price to each performance obligation on a relative stand-alone price basis, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocate the transaction price in proportion to those stand-alone selling price. The stand-alone selling price is the price at which the Group would sell a promised good or service separately to the customer. The best evidence of a stand-alone selling price is the observable price of a good or service when the Group sells that good or service separately in similar circumstances and to similar customers. The Group recognizes the allocated amount as contract assets or contract liabilities, and amortizes it through the remaining period which is adjusted in operating income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Incremental contract acquisition costs* 

The Group pays commission fees when new customers subscribe to telecommunication services. The incremental contract acquisition costs are those commission fees that the Group incurs to acquire a contract with a customer that would not have been incurred if the contract had not been acquired. The Group recognizes the incremental contract acquisition costs as an asset and amortizes it over the expected period of benefit. However, as a practical expedient, the Group may recognize the incremental contract acquisition costs as an expense when it is incurred if the amortization period of the asset is one year or less.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Commission fees* 

Commission fees are recognized when it is probable that future economic benefits will flow to the entity and these benefits can be reliably measured. Revenues are measured at the fair value of the consideration received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.27** **Current and Deferred Income Tax** 

The tax expense for the period consists of current and deferred tax. Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax expense is measured at the amount expected to be paid to taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognized only if it is probable that future taxable amount will be available to utilize those temporary differences and losses.

The Group recognizes a deferred tax liability all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, except to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, the Group recognizes a deferred tax asset for all deductible temporary differences arising from such investments to the extent that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when the Group has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.28** **Dividend** 

Dividend distribution to the Group's shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Group's shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.29** **Approval on Issuance of the Consolidated Financial Statements** 

The consolidated financial statements of 2022 were approved for issuance by the Board of Directors on February 9, 2023 and are subject to change with the approval of shareholders at their Annual General Meeting.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**3.** **Critical Accounting Estimates and Assumptions** 

The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Group's accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the actual results, it poses significant risk of resulting in a material adjustment.

Estimates and assumptions that have significant risks of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Additional information of significant judgement and assumptions of certain items are included in relevant notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1** **Impairment of Non-Financial Assets (including Goodwill)** 

The Group determines the recoverable amount of a cash generating unit (CGU) based on fair value or value-in-use calculations to assess non-financial assets (including goodwill) for impairment (Note 13).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2** **Income Taxes** 

The Group's taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain (Note 30).

If certain portion of the taxable income is not used for investments or increase in wages or dividends in accordance with the *Tax System for Recirculation of Corporate Income,* the Group is liable to pay additional income tax calculated based on the tax laws. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new tax system. As the Group's income tax is dependent on the investments as well as wage increase, there is uncertainty in measuring the final tax effects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3** **Fair Value of Financial Instruments** 

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period (Note 38).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4** **Net Defined Benefit Liability** 

The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions including the discount rate (Note 18).

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5** **Amortization of Contract Assets, Contract Liabilities and Contract Cost Assets** 

Contract assets, contract liabilities and contract cost assets recognized under the application of Korean IFRS 1115 are amortized over the expected periods of customer relationships. The estimate of the expected terms of customer relationship is based on the historical data. If management's estimate changes, it may cause significant differences in the timing of revenue recognition and amounts recognized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6** **Critical Judgments in Determining the Lease Term** 

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of property, machinery, and communication line facilities, the following factors are normally the most relevant:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to
extend (or not terminate).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If any leasehold improvements are expected to have a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Otherwise, the Group considers other factors including historical lease durations and the costs and business
disruption required to replace the leased asset.

Most extension options in offices, retail stores and vehicles leases have not been included in the lease liability, because the Group can replace the assets without significant cost or business disruption.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**4.** **Financial Instruments by Category** 

Financial instruments by category as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Financial assets** | **Financial assets<br>at amortized<br>cost** | **Financial assets<br>at amortized<br>cost** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Total** | **Total** |
|  Cash and cash equivalents | W | 2449062 | W |  | W |  | W |  | W | 2449062 |
|  Trade and other receivables |  | 7459994 |  |  |  | 129124 |  |  |  | 7589118 |
|  Other financial assets |  | 1060058 |  | 1064856 |  | 1508192 |  | 190830 |  | 3823936 |

---

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Financial liabilities** | **Financial liabilities<br>at amortized<br>cost** | **Financial liabilities<br>at amortized<br>cost** | **Financial liabilities at<br>fair value through**<br> **profit and loss** | **Financial liabilities at<br>fair value through**<br> **profit and loss** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Others** | **Others** | **Total** | **Total** |
|  Trade and other payables | W | 8397264 | W |  | W |  | W |  | W | 8397264 |
|  Borrowings |  | 10006685 |  |  |  |  |  |  |  | 10006685 |
|  Other financial liabilities |  | 246606 |  | 141280 |  | 33555 |  |  |  | 421441 |
|  Lease liabilities |  |  |  |  |  |  |  | 1172038 |  | 1172038 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Financial assets** | **Financial assets<br>at amortized<br>cost** | **Financial assets<br>at amortized<br>cost** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Total** | **Total** |
|  Cash and cash equivalents | W | 3019592 | W |  | W |  | W |  | W | 3019592 |
|  Trade and other receivables |  | 5687103 |  |  |  | 491713 |  |  |  | 6178816 |
|  Other financial assets |  | 608389 |  | 952319 |  | 347877 |  | 99453 |  | 2008038 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Financial liabilities** | **Financial liabilities<br>at amortized<br>cost** | **Financial liabilities<br>at amortized<br>cost** | **Financial liabilities at**<br> **fair value through**<br> **profit and loss** | **Financial liabilities at**<br> **fair value through**<br> **profit and loss** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Others** | **Others** | **Total** | **Total** |
|  Trade and other payables | W | 7980203 | W |  | W |  | W |  | W | 7980203 |
|  Borrowings |  | 8437703 |  |  |  |  |  |  |  | 8437703 |
|  Other financial liabilities |  | 263500 |  | 216040 |  | 18126 |  |  |  | 497666 |
|  Lease liabilities |  |  |  |  |  |  |  | 1159369 |  | 1159369 |

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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Gains or losses arising from financial instruments by category for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  **Financial assets at amortized cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>1</sup> | W | 144505 | W | 74937 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency transactions <sup>4</sup> |  | 23824 |  | 12826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on foreign currency translation |  | (2151) |  | 2911 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on disposal |  | (81) |  | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation |  | (132102) |  | (110286) |
|  **Financial assets at fair value through profit or loss** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>1</sup> |  | 6008 |  | 3673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income <sup>5</sup> |  | 4600 |  | 21499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on valuation <sup>6</sup> |  | (29282) |  | 64659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal |  | 2347 |  | 29974 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency transactions <sup>4</sup> |  | 1100 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency translation |  | 13711 |  | 17794 |
|  **Financial assets at fair value through other comprehensive income** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>1</sup> |  | 190281 |  | 222290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income <sup>5</sup> |  | 9522 |  | 1365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation |  | (61) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal |  | (62183) |  | (22712) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss) for the year <sup>2</sup> |  | (158574) |  | 129780 |
|  **Derivative used for hedging** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on transactions |  | 27628 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation <sup>7</sup> |  | 150699 |  | 203961 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income for the year <sup>2</sup> |  | 88048 |  | 144967 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassified to profit or loss from other<br> comprehensive income for the year <sup>2,3</sup> |  | (110616) |  | (143305) |
|  **Financial liabilities at fair value through profit or loss** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation |  | 30031 |  | 42447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal |  |  |  | 2136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense <sup>1</sup> |  | (4046) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on foreign currency transactions <sup>4</sup> |  | 24 |  | (2) |
|  **Derivatives used for hedging** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on transactions |  | (1291) |  | (6208) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation |  | (17237) |  | (7206) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss for the year <sup>2</sup> |  | (23957) |  | (3112) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassified to profit or loss from other comprehensive income for the year <sup>2,3</sup> |  | 15195 |  | 6722 |
|  **Financial liabilities at amortized cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense <sup>1</sup> |  | (275302) |  | (232197) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on foreign currency transactions <sup>4</sup> |  | (34574) |  | (3580) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on foreign currency translation |  | (168577) |  | (201623) |
|  **Lease liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense <sup>1</sup> |  | (41469) |  | (36650) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 353980 | W | 215095 |

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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<sup>1</sup> BC Card Co., Ltd., etc., subsidiaries of the Group, recognized interest income and expenses as operating revenue and expenses, respectively. Related interest income recognized as operating revenue is W 68,869 million (2021: W 27,440 million) and related interest expense recognized as operating expense is W 27,060 million (2021: W 5,458 million) for the year ended December 31, 2022. 

<sup>2</sup> The amounts directly reflected in equity after adjustments of deferred income tax. 

<sup>3</sup> During the years ended December 31, 2022 and 2021, certain derivatives of the Group were settled and the related gain or loss on valuation of cash flow hedge in other comprehensive income was reclassified to profit or loss for the year.

<sup>4</sup> BC Card Co., Ltd., a subsidiary of the Group, recognized foreign currency transaction gain and loss and as operating revenue and expense. In relation to this, foreign currency transaction gain and loss recognized as operating revenue and expense amount to foreign exchange gain W 3,569 million (2021 foreign exchange gain and loss: W 2,373 million), respectively, for the year ended December 31, 2022. 

<sup>5</sup> BC Card Co., Ltd., a subsidiary of the Group, recognized dividend income as operating revenue. Related dividend income recognized as operating revenue is W 2,299 million (2021: W 1,340 million) for the year ended December 31, 2022.

<sup>6</sup> KT Investment Co., Ltd., etc., subsidiaries of the Group, recognized gain and loss on valuation of financial instruments measured at fair value through profit or loss as operating income and expenses. In relation to this, valuation gain and loss recognized as operating revenue and expense amount to valuation loss W 7,860 million (2021 valuation loss: W 15,459 million), for the year ended December 31, 2022. 

<sup>7</sup> BC Card Co., Ltd., a subsidiary of the Group, recognized gain and loss on valuation of derivatives as operating income and expenses. Related valuation gain and loss recognized as operating revenue and expense is W 418 million for the year ended December 31, 2022.

**5.** **Cash and Cash Equivalents** 

Restricted cash and cash equivalents as at December 31, 2022 and 2021, are as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **Description** |
|  Bank deposits | W | 29874 | W | 28219 | Deposit restricted for<br>government project and others |

---

Cash and cash equivalents in the consolidated statement of financial position equal to cash and cash equivalents in the consolidated statement of cash flows.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**6.** **Trade and Other Receivables** 

Trade and other receivables as at December 31, 2022 and 2021, are as follows:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Total amounts** | **Total amounts** | **Provision for<br>impairment** | **Provision for<br>impairment** | **Present value<br>discount** | **Present value<br>discount** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
|  Current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 3439542 | W | (342539) | W | (6926) | W | 3090077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 3092261 |  | (82243) |  | (2023) |  | 3007995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 6531803 | W | (424782) | W | (8949) | W | 6098072 |
|  Non-current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 408098 | W | (1199) | W | (11540) | W | 395359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 1249096 |  | (136300) |  | (17109) |  | 1095687 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1657194 | W | (137499) | W | (28649) | W | 1491046 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Total amounts** | **Total amounts** | **Provision for<br>impairment** | **Provision for<br>impairment** | **Present value<br>discount** | **Present value<br>discount** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
|  Current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 3337398 | W | (346869) | W | (7662) | W | 2982867 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 2201781 |  | (93256) |  | (3902) |  | 2104623 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 5539179 | W | (440125) | W | (11564) | W | 5087490 |
|  Non-current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 612654 | W | (2856) | W | <br>(17351) | W | 592447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 621195 |  | (108131) |  | (14185) |  | 498879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1233849 | W | (110987) | W | (31536) | W | 1091326 |

---

The fair values of trade and other receivables with original maturities less than one year are equal to their carrying amounts because the discounting effect is immaterial. The fair value of trade and other receivables with original maturities longer than one year, which are mainly from sales of goods, is determined by discounting the expected future cash flow at the weighted average interest rate.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of changes in provisions for impairment the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
|  | **Trade<br>receivables** | **Trade<br>receivables** | **Other<br>receivables** | **Other<br>receivables** | **Trade<br>receivables** | **Trade<br>receivables** | **Other<br>receivables** | **Other<br>receivables** |
|  Beginning balance  | W | 349725 | W | 201387 | W | 327315 | W | 204604 |
|  Provision |  | 64522 |  | 65941 |  | 82329 |  | 23015 |
|  Reversal |  |  |  | (850) |  |  |  | (508) |
|  Write-off/transfer |  | (69430) |  | (49904) |  | (62564) |  | (25900) |
|  Changes in consolidation scope |  | (43) |  |  |  | 416 |  | (300) |
|  Others |  | (1036) |  | 1969 |  | 2229 |  | 476 |
|  Ending balance  | W | 343738 | W | 218543 | W | 349725 | W | 201387 |

---

Provisions for impairment on trade and other receivables are recognized as operating expenses, other expenses and finance costs.

Details of other receivables as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Loans | W | 98953 | W | 101718 |
|  Receivables <sup>1</sup>  |  | 2668545 |  | 1872467 |
|  Accrued income |  | 32218 |  | 5933 |
|  Refundable deposits |  | 339450 |  | 349360 |
|  Loans receivable |  | 1013428 |  | 328753 |
|  Finance lease receivables |  | 105690 |  | 85370 |
|  Others |  | 63941 |  | 61288 |
|  Less: Provision for impairment |  | (218543) |  | (201387) |
|  | W | 4103682 | W | 2603502 |

---

<sup>1</sup> The settlement receivables of BC Card Co., Ltd. amounting to W 1,960,579 million (December 31, 2021: W 1,108,936 million) are included. 

The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of receivables mentioned above as at December 31, 2022.

A portion of the trade receivables is classified as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**7.** **Other Financial Assets and Liabilities** 

Details of other financial assets and liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at amortized cost <sup>1</sup>  | W | 1060058 | W | 608389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss <sup>1,2</sup>  |  | 1064856 |  | 952319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income <sup>1</sup>  |  | 1508192 |  | 347877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives used for hedging |  | 190830 |  | 99453 |
|  Less: Non-current |  | (2501484) |  | (822379) |
|  Current | W | 1322452 | W | 1185659 |
|  Other financial liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at amortized cost <sup>3</sup> | W | 246606 | W | 263500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  | 141280 |  | 216040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives used for hedging |  | 33555 |  | 18126 |
|  Less: Non-current |  | (412650) |  | (424859) |
|  Current | W | 8791 | W | 72807 |

---

<sup>1</sup> As at December 31, 2022, the Group's other financial assets amounting to W 102,215 million (December 31, 2021: W 115,033 million), which consist of checking account deposits, time deposits and others, are subject to withdrawal restrictions. 

<sup>2</sup> As at December 31, 2022, the Group provided investments in Korea Software Financial Cooperative amounting to W 5,626 million as a collateral for the payment guarantee provided by the Cooperative. 

<sup>3</sup> The amount includes liabilities related to the obligation to acquire additional shares in Epsilon Global Communications Pte. Ltd. and MILLIE Co., Ltd. (Note 20). 

Details of financial assets at fair value through profit or loss as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Equity instruments (Listed) | W | 26647 | W | 24285 |
|  Equity instruments (Unlisted) |  | 72517 |  | 64835 |
|  Debt securities |  | 942274 |  | 862481 |
|  Derivatives held for trading <sup>1</sup>  |  | 23418 |  | 718 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | 1064856 |  | 952319 |
|  Less: Non-current |  | (609887) |  | (488040) |
|  Current | W | 454969 | W | 464279 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative assets amount to W 18,996 million, which is recognized by an agreement with LS Cable & System Ltd. In connection with KT Submarine Co., Ltd. (Note 20). 

The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to credit risk is the carrying amount as at December 31, 2022.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of financial assets at fair value through other comprehensive income as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Equity instruments (Listed) <sup>1</sup>  | W | 1006476 | W | 19079 |
|  Equity instruments (Unlisted) |  | 496284 |  | 234048 |
|  Debt securities |  | 5432 |  | 94750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | 1508192 |  | 347877 |
|  Less: Non-current |  | (1508192) |  | (259435) |
|  Current | W |  | W | 88442 |

---

<sup>1</sup> As at December 31, 2022, financial assets at fair value through other comprehensive income include shares of Shinhan Financial Group Co., Ltd., HYUNDAI MOBIS, and HYUNDAI MOTOR COMPANY.

Upon disposal of these equity investments, any balance within the accumulated other comprehensive income is not reclassified to profit or loss, but to retained earnings. Upon disposal of these debt investments, the remaining balance of the accumulated other comprehensive income is reclassified to profit or loss.

During the year ended December 31, 2021, the Group sold all Mastercard Inc. shares. The fair value of the shares sold is W 206,840 million, and the cumulative amount recognized in comprehensive income after tax is W 76,296 million. Of these, W 53,052 million is reclassified as retained earnings attributable to owners of the Controlling Company.

Details of valuation of derivatives used for hedging as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Assets** | **Assets** | **Liabilities** | **Liabilities** |
|  Interest rate swap <sup>1,3</sup>  | W | 4236 | W |  | W |  | W | 77 |
|  Currency swap <sup>2,3</sup>  |  | 186594 |  | 33555 |  | 99453 |  | 18049 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | 190830 |  | 33555 |  | 99453 |  | 18126 |
|  Less: Non-current |  | (147141) |  | (33555) |  | (67889) |  | (242) |
|  Current | W | 43689 | W |  | W | 31564 | W | 17884 |

---

<sup>1</sup> The interest rate swap contract is to hedge the risk of variability in future fair value of the borrowings.

<sup>2</sup> The currency swap contract is to hedge the risk of variability in cash flow from the borrowings. In applying the cash flow hedge accounting, the Group hedges its exposures to cash flow fluctuation until September 7, 2034.

<sup>3</sup> The amount of derivatives subject to the second phase of interest rate indicator reform is assets W 100,537 million, liabilities W 500 million and the Group is assessing the impact of switching to an alternative interest rate indicator. 

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The valuation gains and losses on the derivative contracts for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* |
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| **Type of transaction** | **Valuation<br>gain** | **Valuation<br>gain** | **Valuation<br>loss** | **Valuation<br>loss** | **Other**<br> **comprehensive<br>income<sup>1</sup>** | **Other**<br> **comprehensive<br>income<sup>1</sup>** | **Valuation<br>gain** | **Valuation<br>gain** | **Valuation<br>loss** | **Valuation<br>loss** | **Other**<br> **comprehensive<br>income<sup>1</sup>** | **Other**<br> **comprehensive<br>income<sup>1</sup>** |
|  Interest rate swap | W | 63 | W | 490 | W | 4666 | W |  | W |  | W | 1 |
|  Currency swap |  | 154611 |  | 20723 |  | 79781 |  | 203961 |  | 7206 |  | 191569 |
|  Currency forwards |  |  |  |  |  | 754 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 154674 | W | 21213 | W | 85201 | W | 203961 | W | 7206 | W | 191570 |

---

<sup>1</sup> The amounts directly reflected in equity are before adjustments of deferred income tax and allocation to the non-controlling interest. 

The ineffective portion recognized in profit or loss on the cash flow hedges are valuation gains of W 2,707 million for the year ended December 31, 2022 (2021: valuation gains of W 11,825 million).

The unsettled amount of derivative instruments for the years ended December 31, 2022 and 2021, are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i) Hedging instruments* 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and thousands of foreign currencies)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  |  |  |  | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
| **Currency** | **Foreign<br>currency** | **Contract<br>amount** | **Contract<br>amount** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
|  USD | 2111509 | W | 2527626 | W | 160243 | W | 32936 | W | 170856 |
|  JPY | 400000 |  | 4357 |  |  |  | 409 |  | (308) |
|  SGD | 284000 |  | 245208 |  | 26351 |  |  |  | 20511 |
|  EUR | 7700 |  | 10283 |  |  |  | 210 |  | 129 |
|  KRW |  |  | 170000 |  | 4236 |  |  |  | 4717 |
|  Total |  | W | 2957474 | W | 190830 | W | 33555 | W | 195905 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and thousands of foreign currencies)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  |  |  | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
| **Currency** | **Foreign<br>currency** | **Contract<br>amount** | **Contract<br>amount** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
|  USD | 2016350 | W | 2322085 | W | 93948 | W | 77 | W | 186130 |
|  JPY | 30000000 |  | 326751 |  |  |  | 18049 |  | (7199) |
|  SGD | 284000 |  | 245208 |  | 5431 |  |  |  | 18387 |
|  EUR | 7700 |  | 10283 |  | 74 |  |  |  | 51 |
|  Total |  | W | 2904327 | W | 99453 | W | 18126 | W | 197369 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii) Hedged item* 

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | | | | | | | | | | | | |
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| **Currency** | **Book value<br>of hedged<br>items** | **Book value<br>of hedged<br>items** | **Changes in fair<br>value to<br>calculate the<br>ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to<br>calculate the<br>ineffective<br>portion of<br>hedges** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Book value<br>of hedged<br>items** | **Book value<br>of hedged<br>items** | **Changes in fair<br>value to<br>calculate the<br>ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to<br>calculate the<br>ineffective<br>portion of<br>hedges** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** |
|  USD | W | 2675885 | W | (170010) | W | (13947) | W | 2401943 | W | (177120) | W | 21826 |
|  JPY |  | 3813 |  | 308 |  | 116 |  | 309072 |  | 7199 |  | 269 |
|  SGD |  | 267843 |  | (18720) |  | 3406 |  | 249108 |  | (15570) |  | 3071 |
|  EUR |  | 10404 |  | (121) |  | 582 |  | 10336 |  | (53) |  | 18 |
|  KRW |  | 101035 |  | (4655) |  | 4385 |  |  |  |  |  |  |
|  Total | W | 3058980 | W | (193198) | W | (5458) | W | 2970459 | W | (185544) | W | 25184 |

---

<sup>1</sup> The amount is after the deferred tax directly added or subtracted to the capital is reflected. 

Details of financial liabilities at fair value through profit or loss as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives held for trading <sup>1,2,3</sup>  | W | 141280 | W | 216040 |

---

<sup>1</sup> The Group signed a shareholder-to-share agreement with financial investors participating in the paid-in capital increase of K Bank Inc. for the year ended December 31, 2021. According to the Drag-Along Right, if K Back inc. fails to be listed on the terms agreed upon for the date of completion of the acquisition, financial investors may exercise the Drag-Along right to the Group, and the Group may comply or exercise the right to claim for sale. If financial investors exercise the Drag-Along Right, the Group must exercise the right to claim for sale or guarantee the return on the terms agreed upon by financial investors. 

<sup>2</sup> The amount includes derivatives for convertible bonds issued by the Group (Note 16). 

<sup>3</sup> During the year ended December 31, 2022, derivative liabilities recognized amount to W 930 million, which is recognized by an agreement with LS Cable & System Ltd. in connection with KT Submarine Co., Ltd. (Note 20). 

The valuation gain and loss on financial liabilities at fair value through profit or loss for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
|  | **Valuation**<br> **gain** | **Valuation**<br> **gain** | **Valuation**<br> **loss** | **Valuation**<br> **loss** | **Valuation**<br> **gain** | **Valuation**<br> **gain** | **Valuation**<br> **loss** | **Valuation**<br> **loss** |
|  Derivatives held for trading | W | 24683 | W | 1800 | W | 51187 | W | 8741 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**8.** **Inventories** 

Inventories as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Acquisition<br>cost** | **Acquisition<br>cost** | **Valuation<br>allowance** | **Valuation<br>allowance** | **Carrying**<br> **amount** | **Carrying**<br> **amount** | **Acquisition<br>cost** | **Acquisition<br>cost** | **Valuation<br>allowance** | **Valuation<br>allowance** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
|  Merchandise | W | 768748 | W | (96010) | W | 672738 | W | 601360 | W | (120304) | W | 481056 |
|  Others |  | 36453 |  |  |  | 36453 |  | 33089 |  |  |  | 33089 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 805201 | W | (96010) | W | 709191 | W | 634449 | W | (120304) | W | 514145 |

---

Cost of inventories recognized as expenses for the year ended December 31, 2022 amounts to W 3,485,288 million (December 31, 2021:W 3,787,203 million) and reversal of loss on valuation inventories amounts to W 24,294 million for the year ended December 31, 2022 (December 31, 2021: W 12,920 million).

**9.** **Other Assets and Liabilities** 

Other assets and liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  **Other assets** |  |  |  |  |
|  Advance payments | W | 181150 | W | 151266 |
|  Prepaid expenses |  | 107775 |  | 100697 |
|  Contract cost |  | 1817678 |  | 1801244 |
|  Contract assets |  | 802253 |  | 745085 |
|  Others |  | 12964 |  | 39979 |
|  Less: Non-current |  | (820608) |  | (793948) |
|  Current | W | 2101212 | W | 2044323 |
|  **Other liabilities** |  |  |  |  |
|  Advances received <sup>1</sup>  | W | 376830 | W | 372375 |
|  Withholdings |  | 155017 |  | 135160 |
|  Unearned revenue <sup>1</sup>  |  | 46493 |  | 35577 |
|  Lease liabilities |  | 1172038 |  | 1159369 |
|  Contract liabilities |  | 284107 |  | 323651 |
|  Others |  | 33108 |  | 25757 |
|  Less: Non-current |  | (934575) |  | (927596) |
|  Current | W | 1133018 | W | 1124293 |

---

<sup>1</sup> The amounts include adjustments arising from adoption of Korean IFRS 1115 *Revenue from Contracts with Customers* (Note 26). 

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**10.** **Assets Held-for-Sale** 

With the decision to sell certain properties and other assets during the year ended December 31, 2021, the Group has classified W 1,187 million as assets held for sale. During the year ended December 31, 2021, the Group recognized impairment loss of W 11 million for assets held, and classified them as other expenses (impairment loss on assets held for sale). The assets were disposed during the period ended December 31, 2022, and the Group recognized gain on disposal of W 3,305 million for assets held. There are no assets held for sale as of the end of reporting period.

**11.** **Property and Equipment** 

Changes in property and equipment for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Land** | **Land** | **Buildings and<br>structures** | **Buildings and<br>structures** | **Machinery and<br>equipment** | **Machinery and<br>equipment** | **Others** | **Others** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 1315929 | W | 4707250 | W | 40270005 | W | 1607853 | W | 1094479 | W | 48995516 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  | (132) |  | (2189828) |  | (30953434) |  | (1386615) |  | (621) |  | (34530630) |
|  Beginning, net |  | 1315797 |  | 2517422 |  | 9316571 |  | 221238 |  | 1093858 |  | 14464886 |
|  Acquisition and capital expenditure |  | 11392 |  | 32030 |  | 129754 |  | 67921 |  | 3105283 |  | 3346380 |
|  Disposal and termination |  | (2556) |  | (4338) |  | (76608) |  | (4695) |  | (3926) |  | (92123) |
|  Depreciation |  |  |  | (147620) |  | (2413191) |  | (79376) |  |  |  | (2640187) |
|  Impairment (recovery of impairment) |  |  |  |  |  | (6084) |  | (7825) |  | (2247) |  | (16156) |
|  Transfer in (out) |  | 24647 |  | 230955 |  | 2660753 |  | 31036 |  | (3010193) |  | (62802) |
|  Transfer from (to) investment properties |  | (63278) |  | (140229) |  |  |  |  |  | (2676) |  | (206183) |
|  Changes in consolidation scope |  |  |  |  |  | (4386) |  | (481) |  | (3720) |  | (8587) |
|  Others |  | (13194) |  | 66341 |  | 7020 |  | (4382) |  | (68834) |  | (13049) |
|  Ending, net | W | 1272808 | W | 2554561 | W | 9613829 | W | 223436 | W | 1107545 | W | 14772179 |
|  Acquisition cost | W | 1272940 | W | 4830853 | W | 42091573 | W | 1276779 | W | 1108043 | W | 50580188 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  | (132) |  | (2276292) |  | (32477744) |  | (1053343) |  | (498) |  | (35808009) |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Land** | **Land** | **Buildings and<br>structures** | **Buildings and<br>structures** | **Machinery and<br>equipment** | **Machinery and<br>equipment** | **Others** | **Others** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 1334759 | W | 4402691 | W | 39182265 | W | 1619822 | W | 1046795 | W | 47586332 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  | (132) |  | (2094669) |  | (29867282) |  | (1414170) |  | (3960) |  | (33380213) |
|  Beginning, net |  | 1334627 |  | 2308022 |  | 9314983 |  | 205652 |  | 1042835 |  | 14206119 |
|  Acquisition and capital expenditure |  | 60817 |  | 36446 |  | 28159 |  | 55336 |  | 2947335 |  | 3128093 |
|  Disposal and termination |  | (45318) |  | (11827) |  | (76676) |  | (6868) |  | (64) |  | (140753) |
|  Depreciation |  |  |  | (145954) |  | (2368679) |  | (81507) |  |  |  | (2596140) |
|  Impairment (recovery of impairment) |  |  |  |  |  | (2075) |  | (40) |  |  |  | (2115) |
|  Transfer in (out) |  | 4608 |  | 415771 |  | 2340948 |  | 27051 |  | (2872257) |  | (83879) |
|  Transfer from (to) investment properties |  | (59848) |  | (73096) |  |  |  |  |  |  |  | (132944) |
|  Changes in consolidation scope |  | 20911 |  | 6355 |  | 67925 |  | 15583 |  | 497 |  | 111271 |
|  Others |  |  |  | (18295) |  | 11986 |  | 6031 |  | (24488) |  | (24766) |
|  Ending, net | W | 1315797 | W | 2517422 | W | 9316571 | W | 221238 | W | 1093858 | W | 14464886 |
|  Acquisition cost | W | 1315929 | W | 4707250 | W | 40270005 | W | 1607853 | W | 1094479 | W | 48995516 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  | (132) |  | (2189828) |  | (30953434) |  | (1386615) |  | (621) |  | (34530630) |

---

Details of property and equipment provided as collateral as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related line<br>item** | **Related line<br>item** | **Related<br>amount** | **Related<br>amount** | **Secured party** |
|  Land and Buildings | W | 11353 | W | 15774 |  | Borrowings | W | 3228 | Industrial Bank of Korea,<br> Korea Development Bank |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related line<br>item** | **Related line<br>item** | **Related<br>amount** | **Related<br>amount** | **Secured party** |
|  Land and Buildings | W | 11320 | W | 15412 |  | Borrowings | W | 3272 | Industrial Bank of Korea,<br> Korea Development Bank |

---

The borrowing costs capitalized for qualifying assets amount to W 9,954 million (2021: W 5,360 million) for the year ended December 31, 2022. The interest rate applied to calculate the capitalized borrowing costs, for the year ended December 31, 2022, is 3.10% (2021: 2.04%).

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**12.** **Investment Properties** 

Changes in investment properties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Land** | **Land** | **Buildings** | **Buildings** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 815331 | W | 1424066 | W | 66801 | W | 2306198 |
|  Less: Accumulated depreciation |  | (1568) |  | (583976) |  |  |  | (585544) |
|  Beginning, net |  | 813763 |  | 840090 |  | 66801 |  | 1720654 |
|  Acquisition |  | 14569 |  | 17351 |  | 55478 |  | 87398 |
|  Disposal |  | (14725) |  | (5858) |  | (17) |  | (20600) |
|  Depreciation |  |  |  | (47004) |  |  |  | (47004) |
|  Transfer from property and equipment |  | 63278 |  | 140229 |  | 2676 |  | 206183 |
|  Transfer and others |  | 2907 |  | (28350) |  | 12170 |  | (13273) |
|  Ending, net | W | 879792 | W | 916458 | W | 137108 | W | 1933358 |
|  Acquisition cost | W | 881360 | W | 1577736 | W | 137108 | W | 2596204 |
|  Less: Accumulated depreciation |  | (1568) |  | (661278) |  |  |  | (662846) |
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Land** | **Land** | **Buildings** | **Buildings** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 539903 | W | 1341326 | W | 46547 | W | 1927776 |
|  Less: Accumulated depreciation |  | (1568) |  | (557755) |  |  |  | (559323) |
|  Beginning, net |  | 538335 |  | 783571 |  | 46547 |  | 1368453 |
|  Acquisition |  | 171872 |  | 42151 |  | 56351 |  | 270374 |
|  Disposal |  | (17133) |  | (4862) |  |  |  | (21995) |
|  Depreciation |  |  |  | (47754) |  |  |  | (47754) |
|  Transfer from property and equipment |  | 59848 |  | 73096 |  |  |  | 132944 |
|  Changes in consolidation scope |  | 5262 |  | 1779 |  |  |  | 7041 |
|  Transfer and others |  | 55579 |  | (7891) |  | (36097) |  | 11591 |
|  Ending, net | W | 813763 | W | 840090 | W | 66801 | W | 1720654 |
|  Acquisition cost | W | 815331 | W | 1424066 | W | 66801 | W | 2306198 |
|  Less: Accumulated depreciation |  | (1568) |  | (583976) |  |  |  | (585544) |

---

The fair value of the Group's investment properties is W 5,370,047 million as at December 31, 2022 (December 31, 2021: W 4,263,381 million). The fair value of investment properties is estimated based on the expected cash flow.

Rental income from investment properties is W 206,127 million in 2022 (2021: W 185,877 million) and direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the period are recognized as operating expenses.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022, the Group (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease fee under this contract is W 57,981 million for one year or less, W 107,386 million for more than one year and less than five years, W 26,491 million for over five years, and W 191,858 million in total.

Details of investment properties provided as collateral as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related<br>account** | **Related<br>account** | **Related<br>amount** | **Related<br>amount** |
|  Land and buildings | W | 460166 | W | 61733 |  | Deposits | W | 52662 |
|  Land and buildings |  | 2546 |  | 3326 |  | Borrowings |  | 2772 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related<br>account** | **Related<br>account** | **Related<br>amount** | **Related<br>amount** |
|  Land and buildings | W | 828103 | W | 72910 |  | Deposits | W | 63012 |
|  Land and buildings |  | 2883 |  | 3688 |  | Borrowings |  | 2728 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**13.** **Intangible Assets** 

Changes in intangible assets for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Goodwill** | **Goodwill** | **Development<br>costs** | **Development<br>costs** | **Software** | **Software** | **Frequency**<br> **usage rights** | **Frequency**<br> **usage rights** | **Others** | **Others** | **Total** | **Total** |
|  Acquisition cost | W | 1002530 | W | 1812377 | W | 1083426 | W | 2617647 | W | 1426576 | W | 7942556 |
|  Less: Accumulated amortization (including accumulated impairment loss and others) |  | (305658) |  | (1584004) |  | (944001) |  | (778516) |  | (883044) |  | (4495223) |
|  Beginning, net |  | 696872 |  | 228373 |  | 139425 |  | 1839131 |  | 543532 |  | 3447333 |
|  Acquisition and capital expenditure |  | 19455 |  | 45997 |  | 55651 |  |  |  | 225886 |  | 346989 |
|  Disposal and termination |  |  |  | (5503) |  | (48) |  |  |  | (20117) |  | (25668) |
|  Amortization |  |  |  | (93374) |  | (54748) |  | (350265) |  | (128874) |  | (627261) |
|  Impairment |  | (24006) |  | (744) |  | (508) |  |  |  | (5416) |  | (30674) |
|  Changes in consolidation scope |  |  |  | (2320) |  | (802) |  |  |  | (7144) |  | (10266) |
|  Others |  | 15902 |  | (573) |  | 16106 |  | (610) |  | (1445) |  | 29380 |
|  Ending, net | W | 708223 | W | 171856 | W | 155076 | W | 1488256 | W | 606422 | W | 3129833 |
|  Acquisition cost | W | 1037887 | W | 1803687 | W | 1156951 | W | 2617707 | W | 1532061 | W | 8148293 |
|  Less: Accumulated amortization (including accumulated impairment loss and others) |  | (329664) |  | (1631831) |  | (1001875) |  | (1129451) |  | (925639) |  | (5018460) |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Goodwill** | **Goodwill** | **Development<br>costs** | **Development<br>costs** | **Software** | **Software** | **Frequency**<br> **usage rights** | **Frequency**<br> **usage rights** | **Others** | **Others** | **Total** | **Total** |
|  Acquisition cost | W | 536093 | W | 1767422 | W | 1053980 | W | 3373095 | W | 1167735 | W | 7898325 |
|  Less: Accumulated amortization (including accumulated impairment loss and others) |  | (306008) |  | (1486423) |  | (907980) |  | (2212432) |  | (824224) |  | (5737067) |
|  Beginning, net |  | 230085 |  | 280999 |  | 146000 |  | 1160663 |  | 343511 |  | 2161258 |
|  Acquisition and capital expenditure |  | 467394 |  | 38113 |  | 36437 |  | 1065096 |  | 113579 |  | 1720619 |
|  Disposal and termination |  |  |  | (7893) |  | (506) |  | (276) |  | (5108) |  | (13783) |
|  Amortization |  |  |  | (92230) |  | (52547) |  | (386741) |  | (73226) |  | (604744) |
|  Impairment |  |  |  | (216) |  | (316) |  |  |  | (3216) |  | (3748) |
|  Changes in consolidation scope |  | (607) |  | 8640 |  | (4548) |  |  |  | 152768 |  | 156253 |
|  Others |  |  |  | 960 |  | 14905 |  | 389 |  | 15224 |  | 31478 |
|  Ending, net | W | 696872 | W | 228373 | W | 139425 | W | 1839131 | W | 543532 | W | 3447333 |
|  Acquisition cost | W | 1002530 | W | 1812377 | W | 1083426 | W | 2617647 | W | 1426576 | W | 7942556 |
|  Less: Accumulated amortization (including accumulated impairment loss and others) |  | (305658) |  | (1584004) |  | (944001) |  | (778516) |  | (883044) |  | (4495223) |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The carrying amount of membership rights with an indefinite useful life not subject to amortization, except for goodwill, is W 210,114 million as at December 31, 2022 (December 31, 2021: W 219,204 million).

Goodwill is allocated to the Group's cash-generating unit, which is identified by operating segments. As at December 31, 2022, goodwill allocated to each cash-generation unit is as follows:

---

| | | |
|:---|:---|:---|
| *(In millions of Korean won)* |  |  |
| **Cash-Generating Unit** | **Amount** | **Amount** |
|  Mobile services | W | 65057 |
|  BC Card Co., Ltd.  |  | 41234 |
|  HCN Co., Ltd. |  | 228674 |
|  GENIE Music Corporation |  | 50214 |
|  MILLIE Co., Ltd. |  | 54725 |
|  PlayD Co., Ltd. |  | 42745 |
|  KT Telecop Co., Ltd. |  | 15418 |
|  Epsilon Global Communications Pte. Ltd. |  | 160033 |
|  KT MOS Bukbu Co., Ltd. and others |  | 50124 |
|  | W | 708224 |

---

The recoverable amount of goodwill has been determined based on the fair value obtained by calculating the value in use or deducting the cost of disposal. The pre-tax cash flow estimate was used to calculate the value of use based on the financial budget, such as the budget for the next five years. Cash flows after the estimated period were estimated using the expected growth rate, and the growth rate does not exceed the long-term average growth rate of the industry to which the cash-generating unit belongs. The Group determines the growth margin rate based on past performance and expectations of future market changes. The Group has determined pre-tax cash flow estimates based on past earnings and market growth forecasts, and the discount rate used reflects the specific risks of related operations.

The pre-tax discount rates applied to the calculation of the value in use of major goodwill related to HCN Co., Ltd., Epsilon Global Communications Pte. Ltd., ICT, etc. are 10.14%, 9.74%, 8.48%, etc., and the permanent growth rates are 0.00%, 1.00%, 0.00%, etc., respectively.

As a result of the impairment evaluation of goodwill, the recoverable amount of HCN Co., Ltd. is W 228,674 million, less than the carrying amount, and the impairment loss of W 24,006 million is allocated in full to goodwill and recognized as other expenses.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**14.** **Investments in Associates and Joint Ventures** 

Details of associates as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Percentage of ownership (%)** | **Percentage of ownership (%)** | **Location** | **Closing month** |
| | **December 31,**<br> **2022** | **December 31,**<br> **2021** | | |
|  KIF Investment Fund | 33.3% | 33.3% | Korea | December |
|  K Bank Inc. | 33.7% | 33.7% | Korea | December |
|  Hyundai Robotics Co., Ltd. <sup>1</sup> | 10.0% | 10.0% | Korea | December |
|  Megazone Cloud Corporation <sup>1</sup> | 6.8% |  | Korea | December |
|  IGIS No. 468-1 General Private Real Estate Investment Company | 44.6% |  | Korea | December |
|  KT-DSC Creative Economy Youth Start-up Investment Fund | 28.6% | 28.6% | Korea | December |
|  IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 | 35.3% | 35.3% | Korea | December |

---

<sup>1</sup> As at December 31, 2022, although the Group has less than 20% ownership in ordinary share, this entity is included in investments in associates as the Group has significant influence in determining the operational and financial policies. 

Changes in investments in associates and joint ventures for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Beginning** | **Beginning** | **Acquisition**<br> **(Disposal)** | **Acquisition**<br> **(Disposal)** | **Share of net profit<br>(loss) from<br>associates and joint<br>ventures <sup>1</sup>** | **Share of net profit<br>(loss) from<br>associates and joint<br>ventures <sup>1</sup>** | **Others** | **Others** | **Ending** | **Ending** |
|  KIF Investment Fund | W | 178935 | W |  | W | 2502 | W | (10458) | W | 170979 |
|  K Bank Inc. |  | 831737 |  |  |  | 29010 |  | (7991) |  | 852756 |
|  Hyundai Robotics Co., Ltd. |  | 48725 |  |  |  | 798 |  | (151) |  | 49372 |
|  Megazone Cloud Corporation |  |  |  | 130001 |  | (22555) |  | 28753 |  | 136199 |
|  IGIS No. 468-1 General Private Real Estate Investment Company |  |  |  | 25000 |  | (1411) |  |  |  | 23589 |
|  KT-DSC Creative Economy Youth Start-up Investment Fund |  | 22138 |  |  |  | (13) |  | (2) |  | 22123 |
|  IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 |  | 17084 |  |  |  | (464) |  |  |  | 16620 |
|  Others <sup>1</sup> |  | 189810 |  | 100040 |  | (24688) |  | (56078) |  | 209084 |
|  | W | 1288429 | W | 255041 | W | (16821) | W | (45927) | W | 1480722 |

---

<sup>11</sup> KT Investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit from associates and joint ventures as operating revenue and expense. Net gain from associates and joint ventures of W 464 million recognized as operating expense during the current period.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Beginning** | **Beginning** | **Acquisition**<br> **(Disposal)** | **Acquisition**<br> **(Disposal)** | **Share of net profit<br>(loss) from<br>associates and joint<br>ventures <sup>1</sup>** | **Share of net profit<br>(loss) from<br>associates and joint<br>ventures <sup>1</sup>** | **Others** | **Others** | **Ending** | **Ending** |
|  KIF Investment Fund | W | 170155 | W |  | W | 16702 | W | (7922) | W | 178935 |
|  KT-IBKC Future Investment Fund 1 |  | 16190 |  | (5700) |  | 1591 |  |  |  | 12081 |
|  K Bank Inc.<sup>2</sup> |  | 208272 |  | 424957 |  | 5809 |  | 192699 |  | 831737 |
|  Hyundai Robotics Co., Ltd. |  | 50936 |  |  |  | (2373) |  | 162 |  | 48725 |
|  K-REALTY CR REITs No.1 |  | 31088 |  |  |  | 75676 |  | (39106) |  | 67658 |
|  Others <sup>1</sup> |  | 81240 |  | 57691 |  | 18769 |  | (8407) |  | 149293 |
|  | W | 557881 | W | 476948 | W | 116174 | W | 137426 | W | 1288429 |

---

<sup>1</sup> KT Investment Co., Ltd., a subsidiary of the Group, recognized its share in net profit from associates and joint ventures as operating revenue and expense. Net gain from associates and joint ventures of W 113 million recognized as operating expense during the year ended December 31, 2021. 

<sup>2</sup> During the year ended December 31, 2021, the amount increased due to the settlement of derivative liabilities, resulting from a shareholder agreement among financial investors participating in the paid-in capital increase of K-Bank Inc. 

Summarized financial information of associates and joint ventures as at and for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Current assets** | **Current assets** | **Non-current**<br> **assets** | **Non-current**<br> **assets** | **Current<br>liabilities** | **Current<br>liabilities** | **Non-current**<br> **liabilities** | **Non-current**<br> **liabilities** |
|  KIF Investment Fund | W | 98132 | W | 414804 | W |  | W |  |
|  K Bank Inc. |  | 16562742 |  | 71265 |  | 14830983 |  | 2168 |
|  Hyundai Robotics Co., Ltd. |  | 278413 |  | 135380 |  | 63009 |  | 64335 |
|  Megazone Cloud Corporation |  | 857089 |  | 202767 |  | 330619 |  | 94202 |
|  IGIS No. 468-1 General Private Real Estate Investment Company |  | 52851 |  |  |  | 12 |  |  |
|  KT-DSC Creative Economy Youth Start-up Investment Fund |  | 908 |  | 76884 |  | 362 |  |  |
|  IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 |  | 9344 |  | 127321 |  | 90545 |  |  |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Current assets** | **Current assets** | **Non-current**<br> **assets** | **Non-current**<br> **assets** | **Current<br>liabilities** | **Current<br>liabilities** | **Non-current**<br> **liabilities** | **Non-current**<br> **liabilities** |
|  KIF Investment Fund | W | 117172 | W | 419632 | W |  | W |  |
|  KT-IBKC Future Investment Fund 1 |  | 24163 |  |  |  |  |  |  |
|  K Bank Inc. |  | 13263658 |  | 70362 |  | 11594316 |  | 2467 |
|  Hyundai Robotics Co., Ltd. |  | 308776 |  | 120221 |  | 91637 |  | 57899 |
|  K-REALTY CR REITs No.1 |  | 208825 |  |  |  |  |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(In millions of Korean won)* | **Operating<br>revenue** | **Operating<br>revenue** | **Profit (loss) for<br>the year** | **Profit (loss) for<br>the year** | **Other<br>comprehensive<br>income (loss)** | **Other<br>comprehensive<br>income (loss)** | **Total<br>comprehensive<br>income (loss)** | **Total<br>comprehensive<br>income (loss)** | **Dividends<br>received from<br>associates** | **Dividends<br>received from<br>associates** |
|  KIF Investment Fund | W | 19916 | W | 7505 | W | (11779) | W | (4274) | W | 6531 |
|  K Bank Inc. |  | 558656 |  | 86498 |  | (24888) |  | 61610 |  |  |
|  Hyundai Robotics Co., Ltd. |  | 180724 |  | 9332 |  | (49) |  | 9283 |  |  |
|  Megazone Cloud Corporation |  | 1256208 |  | (293186) |  | (6609) |  | (299795) |  |  |
|  IGIS No. 468-1 General Private Real Estate Investment Company |  | 9 |  | (3161) |  |  |  | (3161) |  |  |
|  KT-DSC Creative Economy Youth Start-up Investment Fund |  | 19931 |  | (53) |  |  |  | (53) |  |  |
|  IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 |  |  |  | (474) |  |  |  | (474) |  |  |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(In millions of Korean won)* | **Operating<br>revenue** | **Operating<br>revenue** | **Profit (loss) for<br>the year** | **Profit (loss) for<br>the year** | **Other<br>comprehensive<br>income (loss)** | **Other<br>comprehensive<br>income (loss)** | **Total<br>comprehensive<br>income (loss)** | **Total<br>comprehensive<br>income (loss)** | **Dividends<br>received from<br>associates** | **Dividends<br>received from<br>associates** |
|  KIF Investment Fund | W | 58741 | W | 50107 | W | (6847) | W | 43260 | W | 5640 |
|  KT-IBKC Future Investment Fund 1 |  | 5912 |  | 3184 |  |  |  | 3184 |  |  |
|  K Bank Inc. |  | 287775 |  | 21728 |  | (28211) |  | (6483) |  |  |
|  Hyundai Robotics Co., Ltd. |  | 189255 |  | (23730) |  | 1977 |  | (21753) |  |  |
|  K-REALTY CR REITs No.1 |  | 425204 |  | 180437 |  |  |  | 180437 |  | 40142 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of a reconciliation of the summarized financial information to the carrying amount of interests in the associates and joint ventures as at and for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Net assets<br>(a)** | **Net assets<br>(a)** | **Percentage of<br>ownership**<br> **(b)** | **Share in net<br>assets<br>(c)=(a)x(b)** | **Share in net<br>assets<br>(c)=(a)x(b)** | **Intercompany<br>transaction<br>and others**<br>**(d)** | **Intercompany<br>transaction<br>and others**<br>**(d)** | **Book<br>amount**<br> **(c)+(d)** | **Book<br>amount**<br> **(c)+(d)** |
|  KIF Investment Fund | W | 512936 | 33.33% | W | 170979 | W |  | W | 170979 |
|  K Bank Inc. |  | 1800856 | 33.72% |  | 607276 |  | 245480 |  | 852756 |
|  Hyundai Robotics Co., Ltd. |  | 286449 | 10.00% |  | 28645 |  | 20727 |  | 49372 |
|  Megazone Cloud Corporation |  | 635035 | 6.83% |  | 43360 |  | 92839 |  | 136199 |
|  IGIS No. 468-1 General Private Real Estate Investment Company |  | 52839 | 44.64% |  | 23589 |  |  |  | 23589 |
|  KT-DSC Creative Economy Youth Start-up Investment Fund |  | 77430 | 28.57% |  | 22123 |  |  |  | 22123 |
|  IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 |  | 46120 | 35.29% |  | 16278 |  | 342 |  | 16620 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Net assets**<br> **(a)** | **Net assets**<br> **(a)** | **Percentage of<br>ownership**<br> **(b)** | **Share in net<br>assets**<br> **(c)=(a)x(b)** | **Share in net<br>assets**<br> **(c)=(a)x(b)** | **Intercompany<br>transaction<br>and others<br>(d)** | **Intercompany<br>transaction<br>and others<br>(d)** | **Book<br>amount**<br> **(c)+(d)** | **Book<br>amount**<br> **(c)+(d)** |
|  KIF Investment Fund | W | 536804 | 33.33% | W | 178935 | W |  | W | 178935 |
|  KT-IBKC Future Investment Fund 1 |  | 24163 | 50.00% |  | 12081 |  |  |  | 12081 |
|  K Bank Inc. |  | 1737237 | 33.72% |  | 585837 |  | 245900 |  | 831737 |
|  Hyundai Robotics Co., Ltd. |  | 279461 | 10.00% |  | 27946 |  | 20779 |  | 48725 |
|  K-REALTY CR REITs No.1 |  | 208825 | 30.05% |  | 62752 |  | 4906 |  | 67658 |

---

Due to discontinuance of equity method of accounting, the Group has not recognized loss from associates and joint ventures of W 909 million for the year ended December 31, 2022 (2021: W 717 million). The accumulated comprehensive loss of associates and joint ventures as at December 31, 2022, which was not recognized by the Group is W 9,915 million (December 31, 2021: W 9,006 million).

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**15.** **Trade and Other Payables** 

Details of trade and other payables as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Current liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade payables | W | 1150515 | W | 1537148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables |  | 6182650 |  | 5104274 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 7333165 | W | 6641422 |
|  **Non-current liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables | W | 1064099 | W | 1338781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1064099 | W | 1338781 |

---

Details of other payables as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Non-trade payables <sup>1</sup>  | W | 4981300 | W | 4378445 |
|  Accrued expenses |  | 1234023 |  | 1037616 |
|  Operating deposits |  | 818603 |  | 814613 |
|  Others |  | 212823 |  | 212381 |
|  Less: non-current |  | (1064099) |  | (1338781) |
|  Current | W | 6182650 | W | 5104274 |

---

<sup>1</sup> Settlement payables of BC Card Co., Ltd., a subsidiary of the Group, of W 1,754,075 million related to credit card transactions are included as at December 31, 2022 (2021: W 1,086,996 million).

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**16.** **Borrowings** 

Details of borrowings as at December 31, 2022 and 2021, are as follows:

**Bonds** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Maturity** | **Annual interest rates** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** |
|  MTNP notes <sup>1</sup> | Sep. 7, 2034 | 6.500% | USD 100,000 | W | 126730 | USD 100,000 | W | 118550 |
|  MTNP notes | Jul. 18, 2026 | 2.500% | USD 400,000 |  | 506920 | USD 400,000 |  | 474200 |
|  MTNP notes | Aug. 7, 2022 |  |  |  |  | USD 400,000 |  | 474200 |
|  FR notes <sup>2</sup> | Aug. 23, 2023 | LIBOR(3M)+0.900% | USD 100,000 |  | 126730 | USD 100,000 |  | 118550 |
|  MTNP notes | Jul. 19, 2022 |  |  |  |  | JPY 29,600,000 |  | 304951 |
|  MTNP notes | Jul. 19, 2024 | 0.330% | JPY 400,000 |  | 3813 | JPY 400,000 |  | 4121 |
|  MTNP notes | Sep. 1, 2025 | 1.000% | USD 400,000 |  | 506920 | USD 400,000 |  | 474200 |
|  FR notes <sup>2</sup> | Nov. 1, 2024 | LIBOR(3M)+0.980% | USD 350,000 |  | 443555 | USD 350,000 |  | 414925 |
|  FR notes <sup>2</sup> | Jun. 19, 2023 | SOR(6M)+0.500% | SGD 284,000 |  | 267843 | SGD 284,000 |  | 249108 |
|  MTNP notes | Jan. 21, 2027 | 1.375% | USD 300,000 |  | 380190 | USD 300,000 |  | 355650 |
|  MTNP notes | Aug. 08, 2025 | 4.000% | USD 500,000 |  | 633650 |  |  |  |
|  The 183-3rd Public bond | Dec. 22, 2031 | 4.270% |  |  | 160000 |  |  | 160000 |
|  The 184-2nd Public bond | Apr. 10, 2023 | 2.950% |  |  | 190000 |  |  | 190000 |
|  The 184-3rd Public bond | Apr. 10, 2033 | 3.170% |  |  | 100000 |  |  | 100000 |
|  The 186-3rd Public bond | Jun. 26, 2024 | 3.418% |  |  | 110000 |  |  | 110000 |
|  The 186-4th Public bond | Jun. 26, 2034 | 3.695% |  |  | 100000 |  |  | 100000 |
|  The 187-3rd Public bond | Sep. 2, 2024 | 3.314% |  |  | 170000 |  |  | 170000 |
|  The 187-4th Public bond | Sep. 2, 2034 | 3.546% |  |  | 100000 |  |  | 100000 |
|  The 188-2nd Public bond | Jan. 29, 2025 | 2.454% |  |  | 240000 |  |  | 240000 |
|  The 188-3rd Public bond | Jan. 29, 2035 | 2.706% |  |  | 50000 |  |  | 50000 |
|  The 189-3rd Public bond | Jan. 28, 2026 | 2.203% |  |  | 100000 |  |  | 100000 |
|  The 189-4th Public bond | Jan. 28, 2036 | 2.351% |  |  | 70000 |  |  | 70000 |
|  The 190-2nd Public bond | Jan. 30, 2023 | 2.749% |  |  | 150000 |  |  | 150000 |
|  The 190-3rd Public bond | Jan. 30, 2028 | 2.947% |  |  | 170000 |  |  | 170000 |
|  The 190-4th Public bond | Jan. 30, 2038 | 2.931% |  |  | 70000 |  |  | 70000 |
|  The 191-1st Public bond | Jan. 14, 2022 |  |  |  |  |  |  | 220000 |
|  The 191-2nd Public bond | Jan. 15, 2024 | 2.088% |  |  | 80000 |  |  | 80000 |
|  The 191-3rd Public bond | Jan. 15, 2029 | 2.160% |  |  | 110000 |  |  | 110000 |
|  The 191-4th Public bond | Jan. 14, 2039 | 2.213% |  |  | 90000 |  |  | 90000 |
|  The 192-1st Public bond | Oct. 11, 2022 |  |  |  |  |  |  | 340000 |
|  The 192-2nd Public bond | Oct. 11, 2024 | 1.578% |  |  | 100000 |  |  | 100000 |
|  The 192-3rd Public bond | Oct. 11, 2029 | 1.622% |  |  | 50000 |  |  | 50000 |
|  The 192-4th Public bond | Oct. 11, 2039 | 1.674% |  |  | 110000 |  |  | 110000 |
|  The 193-1st Public bond | Jun. 16, 2023 | 1.174% |  |  | 150000 |  |  | 150000 |
|  The 193-2nd Public bond | Jun. 17, 2025 | 1.434% |  |  | 70000 |  |  | 70000 |
|  The 193-3rd Public bond | Jun. 17, 2030 | 1.608% |  |  | 20000 |  |  | 20000 |
|  The 193-4th Public bond | Jun. 15, 2040 | 1.713% |  |  | 60000 |  |  | 60000 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Maturity** | **Annual interest rates** | **Foreign<br>currency** | **Korean<br>won** | **Foreign<br>currency** | **Korean<br>won** |
|  The 194-1st Public bond | Jan. 26, 2024 | 1.127% |  | 130000 |  | 130000 |
|  The 194-2nd Public bond | Jan. 27, 2026 | 1.452% |  | 140000 |  | 140000 |
|  The 194-3rd Public bond | Jan. 27, 2031 | 1.849% |  | 50000 |  | 50000 |
|  The 194-4th Public bond | Jan. 25, 2041 | 1.976% |  | 80000 |  | 80000 |
|  The 195-1st Public bond | Jun. 10, 2024 | 1.387% |  | 180000 |  | 180000 |
|  The 195-2nd Public bond | Jun. 10, 2026 | 1.806% |  | 80000 |  | 80000 |
|  The 195-3rd Public bond | Jun. 10, 2031 | 2.168% |  | 40000 |  | 40000 |
|  The 196-1st Public bond | Jan. 27, 2025 | 2.596% |  | 270000 |  |  |
|  The 196-2nd Public bond | Jan. 27, 2027 | 2.637% |  | 100000 |  |  |
|  The 196-3rd Public bond | Jan. 27, 2032 | 2.741% |  | 30000 |  |  |
|  The 197-1st Public bond | Jun. 27, 2025 | 4.191% |  | 280000 |  |  |
|  The 197-2nd Public bond | Jun. 29, 2027 | 4.188% |  | 120000 |  |  |
|  The 18-1st Won-denominated unsecured bond | Jul. 2, 2024 | 1.844% |  | 100000 |  | 100000 |
|  The 18-2nd Won-denominated unsecured bond | Jul. 2, 2026 | 2.224% |  | 50000 |  | 50000 |
|  The 148th Won-denominated unsecured bond | Jun. 23, 2023 | 1.513% |  | 100000 |  | 100000 |
|  The 149-1st Won-denominated unsecured bond | Mar. 8, 2024 | 1.440% |  | 70000 |  | 70000 |
|  The 149-2nd Won-denominated unsecured bond | Mar. 10, 2026 | 1.756% |  | 30000 |  | 30000 |
|  The 150-1st Won-denominated unsecured bond | Apr. 7, 2023 | 1.154% |  | 20000 |  | 20000 |
|  The 150-2nd Won-denominated unsecured bond | Apr. 8, 2024 | 1.462% |  | 30000 |  | 30000 |
|  The 151-1st Won-denominated unsecured bond | May 12, 2023 | 1.191% |  | 10000 |  | 10000 |
|  The 151-2nd Won-denominated unsecured bond | May 14, 2024 | 1.432% |  | 40000 |  | 40000 |
|  The 152-1st Won-denominated unsecured bond | Aug. 30, 2024 | 1.813% |  | 80000 |  | 80000 |
|  The 152-2nd Won-denominated unsecured bond | Aug. 28, 2026 | 1.982% |  | 20000 |  | 20000 |
|  The 153-1st Won denominated unsecured bond | Nov. 10, 2023 | 2.310% |  | 30000 |  | 30000 |
|  The 153-2nd Won-denominated unsecured bond | Nov. 11, 2024 | 2.425% |  | 70000 |  | 70000 |
|  The 154th Won-denominated unsecured bond | Jan. 23, 2025 | 2.511% |  | 40000 |  | 40000 |
|  The 155-1st Won-denominated unsecured bond | Feb. 29, 2024 | 2.615% |  | 50000 |  |  |
|  The 155-2nd Won-denominated unsecured bond | Sep. 2, 2024 | 2.745% |  | 20000 |  |  |
|  The 155-3rd Won-denominated unsecured bond | Feb. 28, 2025 | 2.880% |  | 20000 |  |  |
|  The 156-1st Won-denominated unsecured bond <sup>3</sup> | Mar. 25, 2025 | 5Y CMS+0.404% |  | 60000 |  |  |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Maturity** | **Annual interest rates** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** |
|  The 156-2nd Won-denominated unsecured bond <sup>3</sup> | Mar. 25, 2032 | 10Y CMS+0.965% |  |  | 40000 |  |  |  |
|  The 157-1st Won-denominated unsecured bond | Apr. 28, 2023 | 2.588% |  |  | 30000 |  |  |  |
|  The 157-2nd Won-denominated unsecured bond | Oct. 27, 2023 | 3.024% |  |  | 30000 |  |  |  |
|  The 158th Won-denominated unsecured bond | Jan. 27, 2025 | 4.421% |  |  | 50000 |  |  |  |
|  The 159-1st Won-denominated unsecured bond | Aug. 09, 2024 | 4.267% |  |  | 30000 |  |  |  |
|  The 159-2nd Won-denominated unsecured bond | Aug. 11, 2027 | 4.505% |  |  | 30000 |  |  |  |
|  The 160-1st Won-denominated unsecured bond | Jun. 14, 2024 | 5.615% |  |  | 20000 |  |  |  |
|  The 160-2nd Won-denominated unsecured bond | Dec. 13, 2024 | 5.667% |  |  | 20000 |  |  |  |
|  The 160-3rd Won-denominated unsecured bond | Dec. 12, 2025 | 5.769% |  |  | 30000 |  |  |  |
|  The 161-1st Won-denominated unsecured bond | Jun. 21, 2024 | 5.527% |  |  | 10000 |  |  |  |
|  The 161-2nd Won-denominated unsecured bond | Dec. 20, 2024 | 5.557% |  |  | 20000 |  |  |  |
|  The 161-3rd Won-denominated unsecured bond | Jun. 20, 2025 | 5.594% |  |  | 30000 |  |  |  |
|  The 161-4th Won-denominated unsecured bond | Dec. 22, 2025 | 5.615% |  |  | 10000 |  |  |  |
|  The 162-1st Won-denominated unsecured bond | Dec. 27, 2023 | 5.066% |  |  | 50000 |  |  |  |
|  The 162-2nd Won-denominated unsecured bond | Jan. 26, 2024 | 5.069% |  |  | 40000 |  |  |  |
|  The 162-3rd Won-denominated unsecured bond | Apr. 26, 2024 | 5.080% |  |  | 10000 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal |  |  | 8406351 |  |  | 7558455 |
|  Less: Current portion | Less: Current portion | Less: Current portion |  |  | (1154101) |  |  | (1337714) |
|  Discount on bonds | Discount on bonds | Discount on bonds |  |  | (23728) |  |  | (22093) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | W | 7228522 |  | W | 6198648 |

---

<sup>1</sup> As at December 31, 2022, the Group has outstanding notes in the amount of USD 2,000 million with fixed interest rates under Medium Term Note Program ("MTNP") registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 100 million. However, the MTNP has been terminated since 2007. 

<sup>2</sup> The Libor (3M) and SOR (6M) is approximately 4.767% and 4.429%, respectively as at December 31, 2022. The loan has not been converted to an alternative indicator interest rate, and the Group is assessing the impact of switching to an alternative indicator interest rate as of December 31, 2022. 

<sup>2</sup> The CMS (5Y) and CMS (10Y) is approximately 3.588% and 3.490%, respectively as at December 31, 2022. The loan has not been converted to an alternative indicator interest rate. 

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**Convertible bonds** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | | | | | | | |
| **Type** | **Issuance Date** | **Maturity** | **Annual interest Rate** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  The 1st CB (Private) <sup>1</sup> | Jun. 5, 2020 | Jun. 5, 2025&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>2</sup> |  | W | 8000 | W | 8000 |
|  The 1st unsecured CB <sup>3</sup> | Jul. 25, 2022 | Jan. 25, 2025&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>4</sup> |  |  | 30000 |  |  |
|  Redemption premium |  |  |  |  | 4565 |  | 2267 |
|  Bond discount issuance |  |  |  |  | (7206) |  | (3825) |
|  | Subtotal |  |  |  | 35359 |  | 6442 |
|  Current portion |  |  |  |  |  |  |  |
|  | Total |  |  | W | 35359 | W | 6442 |

---

<sup>1</sup> Common shares of Storywiz are subject to conversion (appraisal period: June 5, 2021~May 4, 2025).

<sup>2</sup> Nominal interest rate and maturity yield is approximately 0% and 5%, respectively, and will be settled on maturity. 

<sup>3</sup> Common shares of KT cloud are subject to conversion (appraisal period: July 27, 2022~December 25, 2024).

<sup>4</sup> Nominal interest rate and maturity yield is approximately 0% and 3%, respectively, and the sum of principal and interest will be settled on maturity. 

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**Short-term borrowings** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* |  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Financial institution** | **Annual interest rates** | **Foreign currency** | **Korean won** | **Korean won** | **Foreign currency** | **Korean won** | **Korean won** |
|  Operational | Shinhan Bank <sup>1</sup> | 3.840%~6.440% |  | W | 105000 |  | W | 4500 |
|  |  | CD(91D)+1.750% |  |  | 30000 |  |  |  |
|  | Woori Bank <sup>1,2</sup> | KORIBOR(3M)+1.960% |  |  | 20000 |  |  | 20000 |
|  |  | CD(91D)+1.430% |  |  | 30000 |  |  |  |
|  | Korea Development Bank | 4.630%~6.200% |  |  | 27201 |  |  | 16000 |
|  | Industrial Bank of Korea | 4.880% |  |  | 6000 |  |  | 6000 |
|  | Hana Bank <sup>1</sup> | CD(91D)-0.020% |  |  | 5000 |  |  | 5000 |
|  | KB SECURITIES | 5.904% |  |  | 94822 |  |  | 71000 |
|  | Shinhan Investment |  |  |  |  |  |  | 73000 |
|  | KIWOOM Securities |  |  |  |  |  |  | 63000 |
|  | NH INVESTMENT & SECURITIES | 5.070% |  |  | 20000 |  |  | 53000 |
|  | Korea Investment & Securities |  |  |  |  |  |  | 10000 |
|  | HSBC | 5.090% | USD 18,500 |  | 23451 | USD 14,700 |  | 17427 |
|  | NongHyup Bank <sup>2</sup> | 4.690%~4.940% |  |  | 9000 |  |  |  |
|  |  | COFIX(6M)+1.780% |  |  | 15000 |  |  |  |
|  | IBK Securities | 5.070% |  |  | 20000 |  |  |  |
|  | Hi Investment & Securities and others | 3.710% |  |  | 99524 |  |  |  |
|  Total | Total | Total |  | W | 504998 |  | W | 338927 |

---

<sup>1</sup> CD (91D) is approximately 3.980% as at December 31, 2022. 

<sup>2</sup> KORIBOR (3M) and COFIX (6M) are approximately 4.040% and 4.340%, respectively, as at December 31, 2022. 

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**Long-term borrowings** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and thousands of foreign currencies)* | *(in millions of Korean won and thousands of foreign currencies)* | *(in millions of Korean won and thousands of foreign currencies)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Financial institution** | **Type** | **Annual interest**<br> **rates** | **Foreign**<br> **currency** | **Korean**<br> **won** | **Korean**<br> **won** | **Foreign**<br> **currency** | **Korean**<br> **won** | **Korean**<br> **won** |
|  Export-Import Bank of Korea | Inter-Korean<br>Cooperation Fund <sup>1</sup> | 1.000% |  | W | 1974 |  | W | 2467 |
|  CA-CIB | Long-term CP | 1.260%~3.380% |  |  | 200000 |  |  | 100000 |
|  JPM | Long-term CP | 2.700% |  |  | 100000 |  |  |  |
|  DBS | Long-term CP | 4.109% |  |  | 100000 |  |  |  |
|  Shinhan Bank | General loans |  |  |  |  | USD 25,918 |  | 30726 |
|  | General loans <sup>2</sup> | LIBOR(3M)+1.650% | USD 8,910 |  | 11292 | USD 8,910 |  | 10563 |
|  | General loans <sup>2</sup> | LIBOR(3M)+1.847% | USD 13,000 |  | 16475 | USD 13,000 |  | 15412 |
|  | General loans <sup>2</sup> | LIBOR(3M)+2.130% | USD 25,000 |  | 31683 | USD 25,000 |  | 29638 |
|  | General loans | 1.900%~3.230% | USD 31,472 |  | 39855 | USD 31,472 |  | 37345 |
|  | General loans <sup>3</sup> | 4.490% |  |  | 62398 |  |  |  |
|  | General loans <sup>2</sup> | Term SOFR(3M)+1.300% | USD 21,127 |  | 26774 |  |  |  |
|  Woori Bank | General loans <sup>2</sup> | EURIBOR(3M)+0.900% | EUR 7,700 |  | 10404 | EUR 7,700 |  | 10336 |
|  | General loans | 3.320% |  |  | 15000 |  |  | 15000 |
|  | PF loans | 2.000%~3.470% |  |  | 40682 |  |  | 23614 |
|  Hi Investment & Securities and others | CP | 2.302%~3.622% |  |  | 182569 |  |  | 88510 |
|  Korea Development Bank | General loans | 3.000%~3.610% |  |  | 38000 |  |  | 39000 |
|  NH Jayang | PF loans <sup>2</sup> | CD(91D)+1.150% |  |  | 59066 |  |  | 46267 |
|  Kyobo Life Insurance | PF loans <sup>2</sup> | CD(91D)+1.150%~3.450% |  |  | 66390 |  |  | 41640 |
|  Standard Chartered Bank Korea | PF loans <sup>2</sup> | CD(91D)+1.150%~3.450% |  |  | 44260 |  |  | 27760 |
|  Samsung Life Insurance | PF loans | 1.860%~4.160% |  |  | 36883 |  |  | 23133 |
|  Kookmin Bank and others | Facility loans |  |  |  |  | USD 9,771 |  | 11584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal |  |  |  |  | 1083705 |  |  | 552995 |
|  Less: Current portion |  |  |  |  | (167943) |  |  | (51803) |
|  |  |  |  | W | 915762 |  | W | 501192 |

---

<sup>1</sup> The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a seven-year grace period.

<sup>2</sup> LIBOR (3M), EURIBOR (3M), Term SOFR (3M) and CD (91D) are approximately 4.767%, 2.132%, 4.587% and 3.980%, respectively, as at December 31, 2022. 

<sup>3</sup> The general loans are repayable in installments over 4 years after a three-year grace period.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Repayment schedule of the Group's debentures and borrowings including the portion of current liabilities as at December 31, 2022, is as follows:

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* |
|  | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Borrowings** | **Borrowings** | **Borrowings** | **Borrowings** | **Borrowings** | **Borrowings** | **Total** | **Total** |
|  | **In local<br>currency** | **In local<br>currency** | **In foreign<br>currency** | **In foreign<br>currency** | **Sub-**<br> **total** | **Sub-**<br> **total** | **In local<br>currency** | **In local<br>currency** | **In foreign<br>currency** | **In foreign<br>currency** | **Sub-**<br> **total** | **Sub-**<br> **total** |  |  |
|  Jan. 1, 2023~Dec. 31, 2023 | W | 760000 | W | 394573 | W | 1154573 | W | 590040 | W | 82900 | W | 672940 | W | 1827513 |
|  Jan. 1, 2024~Dec. 31, 2024 |  | 1380000 |  | 447368 |  | 1827368 |  | 455899 |  | 51687 |  | 507586 |  | 2334954 |
|  Jan. 1, 2025~Dec. 31, 2025 |  | 1138000 |  | 1140570 |  | 2278570 |  | 182432 |  |  |  | 182432 |  | 2461002 |
|  Jan. 1, 2026~Dec. 31, 2026 |  | 420000 |  | 506920 |  | 926920 |  | 111817 |  |  |  | 111817 |  | 1038737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; After Jan. 1, 2027 |  | 1750000 |  | 506920 |  | 2256920 |  | 88581 |  | 25346 |  | 113927 |  | 2370847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 5448000 | W | 2996351 | W | 8444351 | W | 1428769 | W | 159933 | W | 1588702 | W | 10033053 |

---

**17.** **Provisions** 

Changes in provisions for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Litigation** | **Litigation** | **Restoration cost** | **Restoration cost** | **Others** | **Others** | **Total** | **Total** |
|  **Beginning balance** | W | 80165 | W | 107358 | W | 69874 | W | 257397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (transfer) |  | 6005 |  | 13027 |  | 5847 |  | 24879 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Usage |  | (6155) |  | (8143) |  | (15783) |  | (30081) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  | (43686) |  | (3685) |  | (4418) |  | (51789) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  | 405 |  | (445) |  | (40) |
|  **Ending balance** | W | 36329 | W | 108962 | W | 55075 | W | 200366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 34730 | W | 19918 | W | 54485 | W | 109133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current |  | 1599 |  | 89044 |  | 590 |  | 91233 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Litigation** | **Litigation** | **Restoration cost** | **Restoration cost** | **Others** | **Others** | **Total** | **Total** |
|  **Beginning balance** | W | 76500 | W | 105767 | W | 69925 | W | 252192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (transfer) |  | 6288 |  | 6772 |  | 19835 |  | 32895 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Usage |  | (2599) |  | (2776) |  | (1926) |  | (7301) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  | (24) |  | (3685) |  | (19188) |  | (22897) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Scope change |  |  |  | 1086 |  | 1228 |  | 2314 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  | 194 |  |  |  | 194 |
|  **Ending balance** | W | 80165 | W | 107358 | W | 69874 | W | 257397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 79947 | W | 26026 | W | 65343 | W | 171316 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current |  | 218 |  | 81332 |  | 4531 |  | 86081 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**18.** **Net Defined Benefit Liabilities (Assets)** 

The amounts recognized in the statements of financial position as at December 31, 2022 and 2021, are determined as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Present value of defined benefit obligations | W | 2218655 | W | 2494930 |
|  Fair value of plan assets |  | (2478143) |  | (2314632) |
|  Liabilities | W | 51654 | W | 197883 |
|  Assets | W | 311142 | W | 17585 |

---

Changes in the defined benefit obligations for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning | W | 2494930 | W | 2556712 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current service cost |  | 238068 |  | 249125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | 59041 |  | 44905 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefit paid |  | (316047) |  | (310766) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes due to settlements of plan |  | (701) |  | (681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial gains and losses arising from changes in demographic assumptions |  | (13048) |  | (8375) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial gains and losses arising from changes in financial assumptions |  | (323501) |  | (61002) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial gains and losses arising from experience adjustments |  | 80845 |  | (5271) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in scope of consolidation, etc. |  | (932) |  | 30283 |
|  Ending | W | 2218655 | W | 2494930 |

---

Changes in the fair value of plan assets for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning | W | 2314632 | W | 2189375 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 55902 |  | 39858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on plan assets (excluding amounts included in interest income) |  | (8542) |  | (130) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefits paid |  | (287419) |  | (271506) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employer contributions |  | 401358 |  | 325818 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in scope of consolidation, etc. |  | 2212 |  | 31217 |
|  Ending | W | 2478143 | W | 2314632 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Amounts recognized in the consolidated statement of profit or loss for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Current service cost | W | 238068 | W | 249125 |
|  Net interest cost |  | 3139 |  | 5047 |
|  Changes due to settlements of plan |  | (701) |  | (681) |
|  Transfer out |  | (15102) |  | (16660) |
|  Total expenses | W | 225404 | W | 236831 |

---

Principal actuarial assumptions used are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
|  Discount rate | 5.05% | 2.55% |
|  Salary growth rate | 5.15% | 5.10% |

---

The sensitivity of the defined benefit obligations as at December 31, 2022, to changes in the principal assumptions is:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in percentage, in millions of Korean won)* | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** |
|  | **Changes in<br>assumption** | **Increase in<br>assumption** | **Decrease in<br>assumption** | **Decrease in<br>assumption** |
|  Discount rate | 0.5% point | W (108725) | W | 117362 |
|  Salary growth rate | 0.5% point | 113037 |  | (105541) |

---

A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings.

The above sensitivity analysis is based on changes in assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.

The Group actively monitors how the duration and the expected yield of the investments match the expected cash outflows arising from the pension obligations. Expected contributions to post-employment benefit plans, for the year ending December 31, 2023, are W281,118 million.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The expected maturity analysis of undiscounted pension benefits as at December 31, 2022, is as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **Between 1-2<br>years** | **Between 1-2<br>years** | **Between 2-5<br>years** | **Between 2-5<br>years** | **Over 5 years** | **Over 5 years** | **Total** | **Total** |
|  Pension benefits | W | 231594 | W | 336926 | W | 855642 | W | 1922089 | W | 3346251 |

---

The weighted average duration of the defined benefit obligations is 6.0 years.

**19.** **Defined Contribution Plan** 

Recognized expense related to the defined contribution plan for the year ended December 31, 2022, is W 72,576 million (2021: W 71,068 million).

**20.** **Commitments and Contingencies** 

As at December 31, 2022, major commitments with local financial institutions are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and*<br>*foreign currencies in thousands)* | **Financial institution** |  | **Limit** |  | **Used amount** |
|  Bank overdraft | Kookmin Bank and others |  | 372000 |  |  |
|  Inter-Korean Cooperation Fund | Export-Import Bank of Korea |  | 37700 |  | 1974 |
|  Economic Cooperation Business Insurance | Export-Import Bank of Korea |  | 3240 |  | 1732 |
|  Collateralized loan on electronic accounts receivable-trade | Kookmin Bank and others |  | 567150 |  | 28298 |
|  Plus electronic notes payable | Industrial Bank of Korea |  | 50000 |  | 1663 |
|  Working capital loan | Korea Development Bank<br> and others |  | 1415600 |  | 165100 |
|  | Shinhan Bank | USD | 72507 | USD | 72507 |
|  | Woori Bank | EUR | 7700 | EUR | 7700 |
|  Facility loans | Shinhan Bank and others |  | 824000 |  | 309680 |
|  Derivatives transaction limit | Shinhan Bank |  | 8000 |  | 8000 |
|  | Korea Development Bank<br> and others | USD | 2510510 | USD | 1970000 |
|  | DBS Bank | SGD | 284000 | SGD | 284000 |
|  | Citi Bank | USD | 400000 | JPY | 400000 |
|  |  |  |  | USD | 100000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | KRW |  | 3277690 |  | 516447 |
|  | USD |  | 2983017 |  | 2142507 |
|  | EUR |  | 7700 |  | 7700 |
|  | SGD |  | 284000 |  | 284000 |
|  | JPY |  |  |  | 400000 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022, guarantees received from financial institutions are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  *(in millions of Korean won and* <br> *foreign currencies in thousands)* | **Financial institution** |  | **Limit** |
| Hana Bank | Guarantee for payment in Korean currency |  | 4000 |
| Hana Bank | Comprehensive credit line and others |  | 3100 |
|  | Guarantee for payment in foreign currency | USD | 273 |
|  | Comprehensive credit line and others | USD | 10300 |
| Kookmin Bank | Guarantee for payment in foreign currency | USD | 6484 |
| Shinhan Bank | Guarantee for payment in Korean currency<br> and others |  | 36298 |
|  | Guarantee for payment in foreign currency<br> and others | USD | 77837 |
| Woori Bank | Guarantee for payment in Korean currency |  | 5200 |
|  | Guarantee for payment in foreign currency | USD | 7000 |
| Korea Development Bank | Refund guarantee for advances received | USD | 6880 |
| HSBC | Guarantees for depositions | USD | 871 |
| Seoul Guarantee Insurance<br> Company | Performance guarantee and others |  | 783247 |
| Korea Software Financial<br> Cooperative | Performance guarantee and others |  | 1445072 |
| Korea Specialty Contractor Financial Cooperative | Performance guarantee and others |  | 531 |
| Korea Housing Finance Corporation | Performance guarantee and others |  | 14464 |
| Information & Communication Financial Cooperative | Performance guarantee and others |  | 28027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | KRW |  | 2319939 |
|  | USD |  | 109645 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022, guarantees provided by the Group to third parties are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | | | |
|  | **Subject to payment guarantees** | **Creditor** | **Limit** | **Used<br>amount** | **Period** |
|  |  |  |  |  | Jan. 7, 2010 ~ |
|  KT Engineering Co., Ltd.<sup>1</sup> | Gasan Solar Power Plant Inc. | Shinhan Bank | 4700 | 672 |  |
|  |  |  |  |  | Jan. 8, 2025 |
|  |  |  |  |  | Feb. 17, 2014 ~ |
|  KT Engineering Co., Ltd.<sup>1</sup> | SPP Inc. | Suhyup Bank | 3250 | 345 |  |
|  |  |  |  |  | Feb. 16, 2024 |
|  |  |  |  |  | Feb. 17, 2014 ~ |
|  KT Engineering Co., Ltd.<sup>1</sup> | Korea Cell Inc. | Suhyup Bank | 3250 | 338 |  |
|  |  |  |  |  | Feb. 16, 2024 |
|  | San-Ya Agricultural |  |  |  | Feb. 17, 2014 ~ |
|  KT Engineering Co., Ltd.<sup>1</sup> |  | Suhyup Bank | 3250 | 345 |  |
|  | Association Corporation |  |  |  | Feb. 16, 2024 |
|  KT Alpha Co., Ltd. |  | T-commerce |  |  | Apr. 14, 2022 ~ |
|  | Cash payers |  | 860 |  |  |
|  (KT Hitel Co., Ltd.) |  | cash payers |  |  | Apr. 14, 2023 |
|  | Stockholders Association | Korea Securities |  |  |  |
|  Nasmedia Co., Ltd. |  |  | 5654 | 986 |  |
|  | Members | Finance Corp |  |  |  |

---

<sup>1</sup> According to the above payment guarantee, KT Engineering, a subsidiary of the Group, will have an obligation for repayment if the principal borrower does not repay the borrowing.

As at December 31, 2022, the details of the issuance of real estate collateral trust and beneficiary certificates of the Group are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | |  | | | | |
| **Collateral assets** | **Placing** | **Trust collateral beneficiary** | **Commitment (limit) amount** | **Commitment (limit) amount** | **Amount provided as<br>collateral for beneficiary<br>rights** | **Amount provided as<br>collateral for beneficiary<br>rights** |
|  Real Estate Collateral Trust <sup>1</sup> | 1st place | NongHyup Bank | W | 100000 | W | 120000 |
|  |  | Kyobo Life Insurance |  | 180000 |  | 216000 |
|  |  | Standard Chartered Bank Korea Limited |  | 120000 |  | 144000 |
|  |  | Samsung Life Insurance |  | 100000 |  | 120000 |
|  | 2nd place | Industrial Bank of Korea |  | 40000 |  | 48000 |
|  |  | Korea Investment Capital |  | 40000 |  | 48000 |
|  |  | BNK Capital |  | 30000 |  | 36000 |
|  |  | Standard Chartered Bank Korea Limited |  | 20000 |  | 24000 |
|  |  | NH Capital |  | 20000 |  | 24000 |
|  | 3rd place<sup>2</sup> | LOTTE Engineering & Construction |  |  |  | 736921 |

---

<sup>1</sup> The Group provides a certificate of beneficiary rights for land classified as investment properties and inventory assets as collateral in connection with the above real estate collateral trust.

<sup>2</sup> The Group provides LOTTE Engineering & Construction with a certificate of third-priority beneficiary rights as collateral in relation to the construction contract amount of W 614,101 million. 

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.'s liabilities incurred prior to spin-off. As at December 31, 2022, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of W 653 million.

For the year ended December 31, 2022, the Group made agreements with the Securitization Specialty Companies (2022: First 5G 61<sup>th</sup> to 66<sup>th</sup> Securitization Specialty Co., Ltd., 2021: First 5G 55<sup>th</sup> to 60<sup>th</sup> Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreement, the Group will receive asset management fees upon liquidation of securitization specialty company.

As at December 31, 2022, the Group is a defendant in 189 lawsuits with the total claimed amount of W 80,279 million (2021: W 101,597 million). As at December 31, 2022, litigation provisions of W 36,329 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated as at December 31, 2022.

According to the financial and other covenants included in certain debentures and borrowings, the Group is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restriction on provision of additional collateral and disposal of certain assets.

As at December 31, 2022, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at December 31, 2022, contract amount of property and equipment acquisition agreement made but not yet recognized amounts to W 1,294,823 million (2021: W 1,336,758 million).

As at December 31, 2022, there are derivatives generated by the Group granting Drag-Along Right to financial investors participating in paid-in capital increase of K Bank Inc. (Note 7).

For the year ended December 31, 2022, the Group entered into an agreement with the seller, who participated in the acquisition of shares in MILLE Co., Ltd. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, the seller may exercise Tag-Along Right, Drag-Along Right and Put Option for the ordinary and redeemable convertible preferred shares it owns (Note 7).

For the year ended December 31, 2022, the Group entered into an agreement with financial investors, who participated in the acquisition of shares in Epsilon Global Communications Pte. Ltd. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, financial investors may exercise Tag-Along Right, Drag-Along Right and the right to sell shares for the convertible preferred shares it owns (Note 7).

The Group has an additional investment obligation under the agreement to Future Innovation Private Equity Fund No.3. For the year ended December 31, 2022, the remaining amount of W 5,473 million and USD 34,050 thousand will be invested in the Capital Call method later.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The Group has an obligation to provide financial support as a construction investor during the construction period with respect to K Defense Co., Ltd. established in accordance with the Private Investment Act on Social Infrastructure, and there is a joint responsibility obligation. During the operating period, as an operating investor, the group has an obligation to provide financial support.

As at December 31, 2022, the Group entered into a shareholders' agreement with CJ ENM Co., Ltd., which signed a business cooperation contract with KT Studio Genie Co., Std. If certain conditions under the agreement are not satisfied, CJ ENM Co., Ltd. may exercise its stock purchase right of the Group.

As at December 31, 2022, the Group entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY. If a certain period of time has elapsed from the date of the contract and the acquired stocks are to be disposed to a third party, HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY may exercise a preferential purchase right to designate a buyer with priority.

As at December 31, 2022, the Group entered into an agreement with LS Cable & System Ltd., which participated in the stock acquisition contract of KT Submarine Co., Ltd. Under the agreement, LS Cable & System Ltd. may exercise a call-option to the Group in the future and the Group may exercise a put-option to LS Cable & System Ltd. (Note 7).

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**21.** **Leases** 

Set out below is information for leases when the Group is a lessee. Information on leases when the Group is a lessor is provided in Note 12.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Amounts recognized in the consolidated statement of financial position

The consolidated statements of financial position shows the following amounts relating to leases:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Right-of-use assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and building | W | 1081067 | W | 1086133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Machinery and communication line facilities |  | 50794 |  | 64443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 148473 |  | 97732 |
|  | W | 1280334 | W | 1248308 |
|  Investment property (buildings) | W |  | W | 1 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Lease liabilities<sup>1</sup> |  |  |  |  |
|  Current | W | 315892 | W | 332702 |
|  Non-current |  | 856146 |  | 826667 |
|  | W | 1172038 | W | 1159369 |

---

<sup>1</sup> Included in the line item 'other current liabilities and other non-current liabilities' in the consolidated statements of financial position (Note 9).

For the years ended December 31, 2022 and 2021, right-of-use assets increased to W 405,453 million and W 426,854 million, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Amounts recognized in the consolidated statement of profit or loss

The consolidated statements of profit or loss shows the following amounts relating to leases:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Depreciation of right-of-use assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and building | W | 305120 | W | 303984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Machinery and communication line facilities |  | 31140 |  | 41794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 59954 |  | 52938 |
|  | W | 396214 | W | 398716 |
|  Depreciation of investment properties | W | 15 | W | 1794 |
|  Interest expense relating to lease liabilities |  | 41469 |  | 36651 |
|  Expense relating to short-term leases |  | 12876 |  | 7984 |
|  Expense relating to leases of low-value assets that are not short-term leases |  | 26813 |  | 26033 |
|  Expense relating to variable lease payments not included in lease liabilities |  | 4827 |  | 8400 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The total cash outflow for leases for the year ended December 31, 2022 is W 464,337 million (2021: W 468,360 million).

**22.** **Share Capital** 

As at December 31, 2022 and 2021, the Group has 1,000,000,000 shares authorized to issue and details are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Number of**<br> **issued**<br> **shares** | **Par value**<br> **per share**<br> **(Korean won)** | **Par value**<br> **per share**<br> **(Korean won)** | **Ordinary Shares**<br> **(in millions of**<br> **Korean won)** | **Ordinary Shares**<br> **(in millions of**<br> **Korean won)** | **Number of**<br> **issued**<br> **shares** | **Par value**<br> **per share**<br> **(Korean won)** | **Par value**<br> **per share**<br> **(Korean won)** | **Ordinary shares**<br> **(in millions of**<br> **Korean won)** | **Ordinary shares**<br> **(in millions of**<br> **Korean won)** |
|  Ordinary shares <sup>1</sup> | 261111808 | W | 5000 | W | 1564499 | 261111808 | W | 5000 | W | 1564499 |

---

<sup>1</sup> The Group retired 51,787,959 treasury shares against retained earnings. Therefore, the ordinary shares amount differs from the amount resulting from multiplying the number of shares issued. 

**23.** **Retained Earnings** 

Details of retained earnings as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Legal reserve <sup>1</sup> | W | 782249 | W | 782249 |
|  Voluntary reserves <sup>2</sup> |  | 4651362 |  | 4651362 |
|  Unappropriated retained earnings |  | 8823732 |  | 7853779 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 14257343 | W | 13287390 |

---

<sup>1</sup> The Commercial Code of the Republic of Korea requires the Controlling Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital with the approval of the Controlling Company's Board of Directors or used to reduce accumulated deficit, if any, with the ratification of the Controlling Company's majority shareholders. 

<sup>2</sup> In accordance with the Restrictions on Special Taxation Act, R&D and HR related reserves under the voluntary reserves are separately accumulated when retained earnings from tax reserve funds are disposed, when income tax is recalculated from tax return adjustments. Reversal of these provisions can be paid out as dividends according to the related tax law. 

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**24.** **Accumulated Other Comprehensive Income and Other Components of Equity** 

As at December 31, 2022 and 2021, the details of the Controlling Company's accumulated other comprehensive income, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Changes in investments in associates and joint ventures | W | (11752) | W | (3461) |
|  Gain (loss) on derivatives valuation |  | (7109) |  | 25031 |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income |  | (52100) |  | 108685 |
|  Exchange differences on translation for foreign operations |  | (6815) |  | (12786) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (77776) | W | 117469 |

---

Changes in accumulated other comprehensive income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Increase<br>(decrease)** | **Increase<br>(decrease)** | **Reclassification<br>to**<br> **gain or loss** | **Reclassification<br>to**<br> **gain or loss** | **Ending** | **Ending** |
|  Changes in investments in associates and joint ventures | W | (3461) | W | (8291) | W |  | W | (11752) |
|  Gain (loss) on derivatives valuation |  | 25031 |  | 63281 |  | (95421) |  | (7109) |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income |  | 108685 |  | (160785) |  |  |  | (52100) |
|  Exchange differences on translation for foreign operations |  | (12786) |  | 5971 |  |  |  | (6815) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 117469 | W | (99824) | W | (95421) | W | (77776) |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Increase<br>(decrease)** | **Increase<br>(decrease)** | **Reclassification<br>to**<br> **gain or loss** | **Reclassification<br>to**<br> **gain or loss** | **Ending** | **Ending** |
|  Changes in investments in associates and joint ventures | W | 16257 | W | (19718) | W |  | W | (3461) |
|  Gain (loss) on derivatives valuation |  | 19809 |  | 141805 |  | (136583) |  | 25031 |
|  Gain on valuation of financial assets at fair value through other comprehensive income |  | 61438 |  | 47247 |  |  |  | 108685 |
|  Exchange differences on translation for foreign operations |  | (11453) |  | (1333) |  |  |  | (12786) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 86051 | W | 168001 | W | (136583) | W | 117469 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The Group's other components of equity, as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Treasury stock <sup>1</sup> | W | (202295) | W | (1009798) |
|  Gain or loss on disposal of treasury stock <sup>2</sup> |  | (41503) |  | (8658) |
|  Share-based compensation |  | 6222 |  | 4068 |
|  Others <sup>3</sup> |  | (334576) |  | (418692) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (572152) | W | (1433080) |

---

1 During the year ended December 31, 2022, the Group granted 20,105,609 treasury shares as exchange of shares with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY and granted 128,923 treasury shares as share-based payment (Notes 7 and 20).

---

| | |
|:---|:---|
| 2 | The amount directly reflected in equity is W 14,886 million for the year ended December 31, 2022 (2021: W 4,080 million).  |

---

3 Profit or loss incurred from transactions with non-controlling interest and investment difference incurred from change in proportion of subsidiaries are included.

As at December 31, 2022 and 2021, the details of treasury stock, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Number of shares *(in shares)* |  | 5069130 |  | 25303662 |
|  Amount *(in millions of Korean won)* | W | 202295 | W | 1009798 |

---

Treasury stocks held as at December 31, 2022, are expected to be used for stock compensation for the Group's directors, employees, and other purposes.

**25.** **Share-Based Compensation** 

Details of share-based compensation granted by the Controlling to executives and employees, including the CEO, by the resolution of the Board of Directors for the years ended December 31, 2022 and 2021, are as follows:

---

| | |
|:---|:---|
|  | **2022** |
|  *(in share)* | **16th grant** |
| Grant date | June 9, 2022 |
| Grantee | CEO, internal directors, external directors, executives |
|  | Service condition: 1 year |
| Vesting conditions | Non-market performance condition: achievement of performance |
| Fair value per option *(in Korean won)* | W 36,941 |
| Total compensation costs *(in Korean won)* | W 6,222 million |
| Estimated exercise date (exercise date) | During 2023 |
| Valuation method | Fair value method |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | |
|:---|:---|
|  | **2021** |
| *(in share)* | **15th grant** |
| Grant date | June 17, 2021 |
| Grantee | CEO, internal directors, external directors, executives |
|  | Service condition: 1 year |
| Vesting conditions | Non-market performance condition: achievement of performance |
| Fair value per option *(in Korean won)* | W 32,397 |
| Total compensation costs *(in Korean won)* | W 5,005 million |
| Estimated exercise date | May 11, 2022 |
| Valuation method | Fair value method |
| *(in share)* | **Employee wage negotiation** |
| Grant date | September 6, 2021 |
| Grantee | All employees |
| Vesting conditions | Current employees as of September 6, 2021 |
| Fair value per option *(in Korean won)* | W 30,950 |
| Total compensation costs *(in Korean won)* | W 40,083 million |
| Estimated exercise date | December 10, 2021 |
| Valuation method | Fair value method |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Changes in the number of stock options for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in share)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Granted** | **Expired** | **Exercised<sup>1</sup>** | **Ending** | **Number of<br>shares<br>exercisable** |
|  15th grant | 284209 |  | (155286) | (128923) |  |  |
|  16th grant |  | 258509 |  |  | 258509 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 284209 | 258509 | (155286) | (128923) | 258509 |  |
| *(in share)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Granted** | **Expired** | **Exercised<sup>1</sup>** | **Ending** | **Number of<br>shares<br>exercisable** |
|  14th grant | 398856 |  | (264286) | (134570) |  |  |
|  15th grant |  | 284209 |  |  | 284209 |  |
|  Employee wage negotiation |  | 1432332 |  | (1432332) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 398856 | 1716541 | (264286) | (1566902) | 284209 |  |

---

<sup>1</sup> The weighted average price of ordinary shares at the time of exercise, during the year ended December 31, 2022, is W 35,450 (2021: W 31,122).

**26.** **Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities** 

The Group has recognized the following amounts relating to revenue in the statement of profit or loss:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Revenue from contracts with customers | W | 25443883 | W | 24712128 |
|  Revenue from other sources |  | 206128 |  | 185877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 25650011 | W | 24898005 |

---

Operating revenues for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Services | W | 22245209 | W | 21365032 |
|  Sales of goods |  | 3404802 |  | 3532973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 25650011 | W | 24898005 |

---

Revenue from providing services are recognized over time, revenue from sales of goods are recognized at a point, and revenue from agreements for the construction of real estate are recognized over time.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Contract assets and liabilities recognized in relation to the revenues from contracts with customers, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Contract assets <sup>1</sup> | W | 963133 | W | 821901 |
|  Contract liabilities <sup>1</sup>  |  | 344869 |  | 360098 |
|  Deferred revenue <sup>2</sup> |  | 81653 |  | 81136 |

---

<sup>1</sup> The Group recognized contract assets of W 160,880 million and contract liabilities of W 60,762 million for long-term construction contract as at December 31, 2022 (2021: contract assets of W 76,816 million and contract liabilities of W 36,447 million). The Group recognizes contract assets as trade receivables and other receivables, and contract liabilities as other current liabilities. 

<sup>2</sup> Deferred revenue recognized relating to government grant is excluded.

The contract costs recognized as assets are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Incremental costs of obtaining a contract | W | 1744096 | W | 1726401 |
|  Cost of contract performance |  | 73582 |  | 74843 |

---

As at December 31, 2022, the Group recognized contract assets in the amount of W 1,793,013 million as operating expenses (2021: W 1,842,621 million).

For the years ended December 31, 2022 and 2021, revenue recognized from carried-forward contract liabilities and deferred revenue from prior year, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Revenue recognized that was included in the contract liabilities balance at the beginning of the year Allocation of the transaction price | W | 246843 | W | 275965 |
|  Deferred revenue of joining/installment fee |  | 44204 |  | 42100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 291047 | W | 318065 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**27.** **Operating Expenses** 

Operating expenses for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Salaries and wages | W | 4495885 | W | 4215810 |
|  Depreciation |  | 2637463 |  | 2605594 |
|  Depreciation of right-of-use assets |  | 396214 |  | 398716 |
|  Amortization |  | 622202 |  | 603327 |
|  Commissions |  | 1295434 |  | 1125944 |
|  Interconnection charges |  | 479500 |  | 507567 |
|  International interconnection fees |  | 186253 |  | 192008 |
|  Purchase of inventories |  | 3656040 |  | 3753792 |
|  Changes of inventories |  | (195046) |  | 20491 |
|  Sales promotion and sales commission |  | 2353909 |  | 2343375 |
|  Service costs |  | 2334386 |  | 2296324 |
|  Utilities |  | 368348 |  | 364373 |
|  Taxes and dues |  | 276962 |  | 268651 |
|  Rent |  | 160848 |  | 123246 |
|  Insurance premiums |  | 68245 |  | 66717 |
|  Installation fees |  | 150140 |  | 154542 |
|  Advertising expenses |  | 195519 |  | 171400 |
|  Research and development expenses |  | 174936 |  | 168969 |
|  Card service costs |  | 3127673 |  | 3114047 |
|  Others |  | 1175012 |  | 731288 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 23959923 | W | 23226181 |

---

Details of employee benefits for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Short-term employee benefits | W | 4161874 | W | 3837359 |
|  Post-employment benefits (defined benefits) |  | 225404 |  | 236831 |
|  Post-employment benefits (defined contributions) |  | 72576 |  | 71068 |
|  Share-based compensation |  | 16799 |  | 47415 |
|  Others |  | 19232 |  | 23137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 4495885 | W | 4215810 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**28.** **Other Income and Other Expenses** 

Other income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Gains on disposal of property and equipment and investment properties | W | 52603 | W | 54007 |
|  Gains on disposal of intangible assets |  | 622 |  | 1726 |
|  Gain on disposal of right-of-use assets |  | 3326 |  | 3138 |
|  Compensation on property and equipment |  | 159849 |  | 148927 |
|  Gains on government subsidies |  | 44473 |  | 43822 |
|  Gain on disposal of investments in associates and joint ventures |  | 38319 |  | 7 |
|  Gain on disposal of investments in subsidiaries |  | 216591 |  | 244 |
|  Reversal of other allowance for bad debts |  | 850 |  | 508 |
|  Others |  | 78718 |  | 55275 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 595351 | W | 307654 |

---

Other expenses for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Loss on disposal of property and equipment | W | 81415 | W | 71417 |
|  Loss on disposal of intangible assets |  | 7015 |  | 3885 |
|  Loss on disposal of right-of-use assets |  | 2348 |  | 11457 |
|  Loss on disposal of investments in associates and joint ventures |  | 295 |  | 6 |
|  Loss on disposal of investments in subsidiaries |  |  |  | 13727 |
|  Impairment loss on property and equipment |  | 16094 |  | 2115 |
|  Impairment loss on intangible assets |  | 30965 |  | 3747 |
|  Donations |  | 15642 |  | 10981 |
|  Other allowance for bad debts |  | 17551 |  | 28066 |
|  Others |  | 143282 |  | 134680 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 314607 | W | 280081 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**29.** **Finance Income and Costs** 

Details of finance income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Interest income | W | 271925 | W | 273460 |
|  Gain on foreign currency transactions |  | 67976 |  | 19976 |
|  Gain on foreign currency translation |  | 43092 |  | 32768 |
|  Gain on derivative transactions |  | 50668 |  | 2215 |
|  Gain on valuation of derivatives |  | 182998 |  | 255149 |
|  Gain on valuation of financial instruments |  | 31032 |  | 90653 |
|  Others |  | 42737 |  | 52062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 690428 | W | 726283 |

---

Details of finance costs for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Interest expenses | W | 293854 | W | 263389 |
|  Loss on foreign currency transactions |  | 81171 |  | 13105 |
|  Loss on foreign currency translation |  | 200109 |  | 213689 |
|  Loss on derivative transactions |  | 24331 |  | 6287 |
|  Loss on valuation of derivatives |  | 21601 |  | 15947 |
|  Loss on disposal of trade receivables |  | 62697 |  | 22712 |
|  Loss on valuation of financial instruments |  | 65660 |  | 25994 |
|  Others |  | 485 |  | 2207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 749908 | W | 563330 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**30.** **Deferred Income Tax and Income Tax Expense** 

Deferred tax assets and deferred tax liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Deferred tax assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets to be recovered within 12 months | W | 398710 | W | 398329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets to be recovered after more than 12 months |  | 1907043 |  | 1754113 |
|  Deferred tax assets before offsetting |  | 2305753 |  | 2152442 |
|  Deferred tax liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities to be recovered within 12 months | W | (586522) | W | (642954) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities to be recovered after more than 12 months |  | (2108438) |  | (1729718) |
|  Deferred tax liabilities before offsetting |  | (2694960) |  | (2372672) |
|  Deferred tax assets after offsetting | W | 578443 | W | 423728 |
|  Deferred tax liabilities after offsetting | W | 967650 | W | 643958 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The movement in deferred income tax assets and liabilities as at December 31, 2022 and 2021, before taking into consideration the offsetting of balances, is as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in subsidiaries, associates and joint ventures |  | (240633) |  | (18299) |  | 3748 |  | (255184) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and impairment loss |  | (88588) |  | (62845) |  |  |  | (151433) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Plan assets |  | (538928) |  | (5294) |  | 1322 |  | (542900) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advanced depreciation provision |  | (339005) |  | (182934) |  |  |  | (521939) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract assets |  | (493917) |  | 69615 |  |  |  | (424302) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | (336) |  | (73) |  | (11) |  | (420) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | (47521) |  | (71396) |  | 58288 |  | (60629) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (623744) |  | (111135) |  | (3274) |  | (738153) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (2372672) | W | (382361) | W | 60073 | W | (2694960) |
|  **Deferred tax assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and impairment loss |  | 225821 |  | (36989) |  |  |  | 188832 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 148454 |  | (27165) |  |  |  | 121289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defined benefit liabilities |  | 571336 |  | (22423) |  | (67055) |  | 481858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | 172871 |  | (20894) |  | (22) |  | 151955 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 899543 |  | 350670 |  | 8635 |  | 1258848 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 2018025 | W | 243199 | W | (58442) | W | 2202782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Temporary difference, net |  | (354647) |  | (139162) |  | 1631 |  | (492178) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit carryforwards |  | 134417 |  | (31446) |  |  |  | 102971 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net balance | W | (220230) | W | (170608) | W | 1631 | W | (389207) |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in associates and joint ventures |  | (181564) |  | (68166) |  | 9097 |  | (240633) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and impairment loss |  | (4175) |  | (84413) |  |  |  | (88588) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Plan assets |  | (521257) |  | (17340) |  | (331) |  | (538928) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advanced depreciation provision |  | (311918) |  | (27087) |  |  |  | (339005) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract assets |  | (509509) |  | 15592 |  |  |  | (493917) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | (627) |  | 291 |  |  |  | (336) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | (30623) |  | (33267) |  | 16369 |  | (47521) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (472153) |  | (150013) |  | (1578) |  | (623744) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (2031826) | W | (364403) | W | 23557 | W | (2372672) |
|  **Deferred tax assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and impairment loss |  | 226960 |  | (1139) |  |  |  | 225821 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 140494 |  | 7960 |  |  |  | 148454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defined benefit liabilities |  | 598364 |  | (8663) |  | (18365) |  | 571336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | 167384 |  | 5487 |  |  |  | 172871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 758060 |  | 141727 |  | (244) |  | 899543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1891262 | W | 145372 | W | (18609) | W | 2018025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Temporary difference, net |  | (140564) |  | (219031) |  | 4948 |  | (354647) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit carryforwards |  | 144931 |  | (10514) |  |  |  | 134417 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net balance | W | 4367 | W | (229545) | W | 4948 | W | (220230) |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The tax impacts recognized directly to equity as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Before<br>recognition** | **Before<br>recognition** | **Tax effect** | **Tax effect** | **After recognition** | **After recognition** | **Before<br>recognition** | **Before<br>recognition** | **Tax effect** | **Tax effect** | **After<br>recognition** | **After<br>recognition** |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income | W | (216862) | W | 58288 |  | W(158574) | W | 163892 |  | W(34112) | W | 129780 |
|  Gain (loss) on valuation of hedge instruments |  | (42510) |  | 11180 |  | (31330) |  | 6916 |  | (1644) |  | 5272 |
|  Remeasurements of net defined benefit liabilities |  | 247162 |  | (65733) |  | 181429 |  | 74518 |  | (18696) |  | 55822 |
|  Share of gain of associates and joint ventures, and others |  | (14931) |  | 3748 |  | (11183) |  | (34909) |  | 9097 |  | (25812) |
|  Exchange differences on translation for foreign operations |  | 23316 |  | (5852) |  | 17464 |  | 683 |  | (178) |  | 505 |
|  Gain or loss on disposal of treasury stock |  | (59308) |  | 14886 |  | (44422) |  | (15657) |  | 4080 |  | (11577) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (63133) | W | 16517 | W | (46616) | W | 195443 | W | (41453) | W | 153990 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of income tax expense for the years ended December 31, 2022 and 2021, are calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Current income tax expenses | W | 335796 | W | 289471 |
|  Impact of change in temporary difference |  | 170608 |  | 229545 |
|  Income tax expense | W | 506404 | W | 519016 |

---

The relationship between the Group's profit before tax and income tax expense for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Profit before income tax | W | 1894066 | W | 1978411 |
|  Expected tax expense at statutory tax rate | W | 510506 | W | 533701 |
|  Tax effect: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income not taxable for tax purposes |  | (47550) |  | (4307) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expenses not deductible for tax purposes |  | 53398 |  | 20570 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit and deductions |  | (54895) |  | (31517) |
|  Others |  | 44945 |  | 569 |
|  Income tax expense | W | 506404 | W | 519016 |

---

Details of deferred tax assets and liabilities that are not recognized as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Deductible temporary differences |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiaries, associates, and joint ventures | W | 3384295 | W | 2355539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unused tax loss |  | 103326 |  | 106853 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unused Tax credit |  | 1988 |  | 1376 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 387084 |  | 119265 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 3876693 | W | 2583033 |
|  Taxable temporary differences |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiaries, associates, and joint ventures | W | 857076 | W | 568540 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 216660 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1073736 | W | 568540 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The expected period of expiry for unused tax losses not recognized in deferred tax assets as at December 31, 2022 and 2021, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Less than 1 year |  | 72512 |  | 4249 |
|  1~5 years |  | 13358 |  | 85843 |
|  5~10 years |  | 12021 |  | 13041 |
|  More than 10 years |  | 5435 |  | 3720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 103326 | W | 106853 |

---

**31.** **Earnings per Share** 

Basic earnings per share is calculated by dividing the profit from operations attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares purchased by the Group and held as treasury stock.

Basic earnings per share from operations for the years ended December 31, 2022 and 2021, is calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  Profit attributable to ordinary shares of owners of the Controlling Company *(in millions of Korean won)* | W | 1261714 | W | 1354537 |
|  Weighted average number of ordinary shares outstanding *(in number of shares)* |  | 242235332 |  | 235201782 |
|  Basic earnings per share *(in Korean won)* | W | 5209 | W | 5759 |

---

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares from convertible bond and other share-based compensation.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Diluted earnings per share from operations for the years ended December 31, 2022 and 2021, is calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  Profit attributable to ordinary shares of owners of the Controlling Company *(in millions of Korean won)* | W | 1261714 | W | 1354537 |
|  Diluted profit attributable to ordinary shares *(in millions of Korean won)* | W | 1261218 | W | 1354537 |
|  Number of dilutive potential ordinary shares outstanding *(in number of shares)* |  | 91931 |  | 483760 |
|  Weighted average number of ordinary shares outstanding *(in number of shares)* |  | 242327263 |  | 235685542 |
|  Diluted earnings per share *(in Korean won)* | W | 5205 | W | 5747 |

---

Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the year by the sum of the number of ordinary shares and dilutive potential ordinary shares.

**32.** **Dividend** 

The dividends paid by the Group in 2022 are W 450,394 million (W 1,910 per share). The dividends paid by the Group in 2021 were W 326,487 million (W 1,350 per share). A dividend in respect of the year ended December 31, 2022, of W 1,960 per share, amounting to a total dividend of W 501,844 million, is to be proposed at the shareholders' meeting on March 31, 2023.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**33.** **Cash Generated from Operations** 

Cash flows from operating activities for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
| 1. Profit for the year | W | 1387663 | W | 1459395 |
| 2. Adjustments for: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense |  | 506404 |  | 519016 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income <sup>1</sup> |  | (340794) |  | (300900) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense <sup>1</sup> |  | 320914 |  | 268847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends income <sup>2</sup> |  | (14121) |  | (21525) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation |  | 2687191 |  | 2643894 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangible assets |  | 627261 |  | 604744 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation of right-of-use assets |  | 396214 |  | 398716 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions for post-employment benefits (defined benefits) |  | 240506 |  | 253491 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for bad debts |  | 132102 |  | 105344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net profit or loss of associates and joint Ventures |  | 16821 |  | (116061) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profits and loss on disposal of associates and joint ventures |  | (38024) |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profits and loss on the disposal of subsidiaries |  | (216591) |  | 13483 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of property and equipment, and investment in properties <sup>3</sup> |  | (66317) |  | 17410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on current assets held for sale |  |  |  | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on property and equipment, and investment in properties |  | 16094 |  | 2115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of right-of-use assets |  | (978) |  | 8319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of intangible assets |  | 6393 |  | 2159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on intangible assets |  | 30674 |  | 3747 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on foreign currency translation |  | 157017 |  | 180921 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on valuation of derivatives, net |  | (205381) |  | (235130) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of financial assets at amortized cost |  | 3 |  | (35) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of financial assets at fair value through profit or loss |  | (2347) |  | (29974) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on valuation of financial assets at fair value through profit or loss <sup>4</sup> |  | 44833 |  | (64660) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (49891) |  | 84625 |
| 3. Changes in operating assets and liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease (increase) in trade receivables |  | (43787) |  | 327031 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other receivables |  | (1598216) |  | (328610) |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other current assets |  | (101947) |  | (89230) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other non-current Assets |  | (120055) |  | (143087) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease (increase) in inventories |  | (170773) |  | 32798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in trade payables |  | (368355) |  | 289044 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other payables |  | 1103113 |  | 207583 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in other current liabilities |  | (30375) |  | 107993 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in other non-current liabilities |  | (12171) |  | (14915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in provisions |  | (22115) |  | (4668) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in deferred revenue |  | (384) |  | 3696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in plan assets |  | (90771) |  | (114631) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment of post-employment benefits |  | (343931) |  | (241350) |
| 4. Cash generated from operations (1+2+3) | W | 3835879 | W | 5829607 |

---

<sup>1</sup> BC Card Co., Ltd. and other subsidiaries of the Group recognize interest income and expense as operating revenue and expense, respectively, including interest income of W 68,869 million (2021: W 27,440 million) and interest expense of W 27,060 million that are recognized as operating revenue and expense, respectively, for the year ended December 31, 2022 (2021: W 5,458 million). 

<sup>2</sup> BC Card Co., Ltd. recognized dividend income as operating revenue, including dividend income of W 2,299 million that is recognized as operating revenue for the year ended December 31, 2022 (2021: W 1,340 million).

<sup>3</sup> KT Estate Inc. recognized gain and loss on disposal of investment properties as operating revenue and expense, respectively, including gain on disposal of investment properties of W 95,129 million that is recognized as operating revenue for the year ended December 31, 2022.

<sup>4</sup> KT Investment Co., Ltd. and other subsidiaries of the Group recognized gain and loss on valuation of financial assets at fair value through profit or loss as operating revenue and expense, respectively, including loss on valuation of financial assets at fair value through profit or loss of W 7,859 million that is recognized as operating expense for the year ended December 31, 2022. 

Significant transactions not affecting cash flows for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Reclassification of current portion of borrowings | W | 1004818 | W | 1303543 |
|  Reclassification of construction-in-progress to property and equipment |  | 3167965 |  | 2916888 |
|  Reclassification of accounts payable from property and equipment |  | (7055) |  | (149512) |
|  Reclassification of accounts payable from intangible assets |  | (197389) |  | 524040 |
|  Reclassification of payable from defined benefit liabilities |  | (32417) |  | 69415 |
|  Reclassification of payable from plan assets |  | 28532 |  | (60320) |
|  Disposal of treasury stock related to acquisition of financial assets |  | 747161 |  |  |
|  Acquisition of financial assets related to disposal of a subsidiary |  | 250000 |  |  |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**34.** **Changes in Liabilities Arising from Financing Activities** 

Changes in liabilities arising from financing activities, liabilities related to cashflow to be classified as future financing activities, for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Financing<br>activities cash<br>flows** | **Financing<br>activities cash<br>flows** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |
|  | **Beginning** | **Beginning** | **Financing<br>activities cash<br>flows** | **Financing<br>activities cash<br>flows** | **Newly<br>acquired** | **Newly<br>acquired** | **Exchange<br>difference** | **Exchange<br>difference** | **Fair value<br>change** | **Fair value<br>change** | **Changes in<br>consolidation<br>scope** | **Changes in<br>consolidation<br>scope** | **Others** | **Others** | **Ending** | **Ending** |
|  Borrowing | W | 8437703 | W | 1391321 | W |  | W | 146108 | W | 939 | W |  | W | 30614 | W | 10006685 |
|  Lease liabilities |  | 1159369 |  | (378684) |  | 427398 |  |  |  |  |  |  |  | (36045) |  | 1172038 |
|  Derivative liabilities |  | 75176 |  | (41197) |  |  |  | 19858 |  | 12941 |  |  |  | (33223) |  | 33555 |
|  Derivative assets |  | (99453) |  | 76280 |  | (754) |  | (147161) |  | 30341 |  |  |  | (50083) |  | (190830) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 9572795 | W | 1047720 | W | 426644 | W | 18805 | W | 44221 | W |  | W | (88737) | W | 11021448 |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Financing<br>activities cash<br>flows** | **Financing<br>activities cash<br>flows** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |
|  | **Beginning** | **Beginning** | **Financing<br>activities cash<br>flows** | **Financing<br>activities cash<br>flows** | **Newly<br>acquired** | **Newly<br>acquired** | **Exchange<br>difference** | **Exchange<br>difference** | **Fair value<br>change** | **Fair value<br>change** | **Changes in<br>consolidation<br>scope** | **Changes in<br>consolidation<br>scope** | **Others** | **Others** | **Ending** | **Ending** |
|  Borrowing | W | 7316298 | W | 900394 | W | 52782 | W | 196890 | W |  | W | 15994 | W | (44655) | W | 8437703 |
|  Lease liabilities |  | 1143640 |  | (394567) |  | 403451 |  | 3 |  | 90 |  | 36840 |  | (30088) |  | 1159369 |
|  Derivative liabilities |  | 130573 |  | (1712) |  | 2637 |  | (4311) |  | (4892) |  |  |  | (47119) |  | 75176 |
|  Derivative assets |  | (7606) |  | 216 |  |  |  | (189700) |  | (17251) |  |  |  | 114888 |  | (99453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 8582905 | W | 504331 | W | 458870 | W | 2882 | W | (22053) | W | 52834 | W | (6974) | W | 9572795 |

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**35.** **Segment Information** 

The Group's operating segments are as follows:

---

| | |
|:---|:---|
| **Details** | **Business service** |
|  ICT | Mobile/fixed line telecommunication service and convergence business, B2B business and others |
|  Finance | Credit card business |
|  Satellite TV | Satellite TV business |
|  Real estate | Residential building development and supply |
|  Others | IT, facility security, global business, and others |

---

Details of each segment for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Operating**<br> **revenues** | **Operating**<br> **revenues** | **Operating**<br> **income** | **Operating**<br> **income** | **Depreciation**<br> **and amortization <sup>1</sup>** | **Depreciation**<br> **and amortization <sup>1</sup>** |
|  ICT | W | 18289243 | W | 1168103 | W | 3105807 |
|  Finance |  | 3613981 |  | 121461 |  | 47638 |
|  Satellite TV |  | 704928 |  | 50600 |  | 58413 |
|  Real estate |  | 485056 |  | 118953 |  | 65457 |
|  Others |  | 7708737 |  | 259082 |  | 575035 |
|  |  | 30801945 |  | 1718199 |  | 3852350 |
|  Elimination |  | (5151934) |  | (28111) |  | (196471) |
|  Consolidated amount | W | 25650011 | W | 1690088 | W | 3655879 |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Operating**<br> **revenues** | **Operating**<br> **revenues** | **Operating**<br> **income** | **Operating**<br> **income** | **Depreciation**<br> **and amortization <sup>1</sup>** | **Depreciation**<br> **and amortization <sup>1</sup>** |
|  ICT | W | 18387434 | W | 1068273 | W | 3217643 |
|  Finance |  | 3525211 |  | 104574 |  | 46223 |
|  Satellite TV |  | 655354 |  | 57422 |  | 60980 |
|  Real estate |  | 335373 |  | 41345 |  | 60459 |
|  Others |  | 6283023 |  | 415468 |  | 327202 |
|  |  | 29186395 |  | 1687082 |  | 3712507 |
|  Elimination |  | (4288390) |  | (15258) |  | (104869) |
|  Consolidated amount | W | 24898005 | W | 1671824 | W | 3607638 |

---

<sup>1</sup> Sum of the amortization of tangible assets, intangible assets, investment properties and right-of-use assets.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

For the year ended December 31, 2022, the Group changed certain operating segments for efficient business operation, and comparative information on the relevant segments was restated as the changed operating segments.

Operating revenues for the years ended December 31, 2022 and 2021, and non-current assets as at December 31, 2022 and 2021, by geographical regions, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Operating revenues** | **Operating revenues** | **Operating revenues** | **Operating revenues** | **Non-current assets <sup>1</sup>** | **Non-current assets <sup>1</sup>** | **Non-current assets <sup>1</sup>** | **Non-current assets <sup>1</sup>** |
| **Location** | **2022** | **2022** | **2021** | **2021** | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Domestic | W | 25490154 | W | 24807065 | W | 20845214 | W | 20627543 |
|  Overseas |  | 159857 |  | 90940 |  | 270490 |  | 253638 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 25650011 | W | 24898005 | W | 21115704 | W | 20881181 |

---

<sup>1</sup> Sum of property and equipment, intangible assets, investment properties and right-of-use assets.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**36.** **Related Party Transactions** 

The list of related party of the Group as at December 31, 2022, is as follows:

---

| | |
|:---|:---|
| **Relationship** | **Name of Entity** |
|  Associates and<br> joint ventures | KIF Investment Fund, QTT Global (Group) Company Limited, CU Industrial Development Co., Ltd., KD Living, Inc., LoginD Co., Ltd., K Bank Inc., Daiwon Broadcasting Co., Ltd., KT-DSC creative economy youth start-up investment fund, Korea Electronic Vehicle Charging Service, K-REALTY RENTAL HOUSING REIT 2, AI RESEARCH INSTITUTE, KT-IBKC Future Investment Fund 1, Gyeonggi-KT Yoojin Superman Fund, FUNDA Co., Ltd., CHAMP IT Co., Ltd., Alliance Internet Corp., Little Big Pictures, Virtua Realm Sendirian Berhad, KT-Smart Factory Investment Fund, Studio Discovery Co., Ltd., KT Young Entrepreneurs DNA Investment Fund, Hyundai Robotics Co., Ltd., IGIS Professional Investors Private Investment Real Estate Investment LLC No. 395, Maruee Limited Company Specializing in the Cultural Industry, Trustay Co., Ltd., The skyk Co., Ltd., Mastern No.127 Logispoint Daegu Co., Ltd., SMART KOREA KT NEXT VENTURE FUND, kt Early Stage Investment Fund, Pacific Professional Investors Private Investment Real Estate Investment LLC No. 55, Mastern KT Multi-Family Real Estate Private Equity Investment Fund I, Home Choice Corp., K-REALTY RENTAL HOUSING REIT V, K-Realty 11th Real Estate Investment Trust Company, IBK-KT Emerging Digital Industry Investment Fund, SG-IBKC K-Contents Investment Fund No.1, Daemuga Limited Company Specializing in the Cultural Industry, Megazone Cloud Corporation, SuseoyeokwhanseungcenterbokhapDevelopment, TeamFresh Corp., KORAMKO No. 143 General Private Real Estate Investment Company, Jumbo Film, KB Three Telecommunications Companies ESG Fund, IGIS No. 468-1 General Private Real Estate Investment Company, Pacific No. 68 General Private Real Estate Investment Company, Kiamco Data Center Blind Fund, Mastern No.172 Seongsu Office PFV Co. Ltd., OASISALPHA Corporation, Shinhan EZ General Insurance, Ltd, New Media Tech Fund, SH-KT Logistics Investment Type Private Real Estate Investment Trust No.1, K-Realty Qualified Private Real Estate Investment Trust No. 1, GRANDWEST PFV Co., Ltd. |
|  Others <sup>1</sup> | Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd. |

---

<sup>1</sup> Although it is evaluated by applying Korean IFRS 1109, it is included in the scope of related parties under Korean IFRS 1024, as it has a significant influence.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Outstanding balances of receivables and payables in relations to transactions with related parties as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  |  | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** |
|  |  | **Trade**<br> **receivables** | **Trade**<br> **receivables** | **Other**<br> **receivables** | **Other**<br> **receivables** | **Trade**<br> **payables** | **Trade**<br> **payables** | **Other**<br> **payables** | **Other**<br> **payables** | **Lease**<br> **liabilities** | **Lease**<br> **liabilities** |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates and<br> joint ventures | K Bank, Inc. | W | 682 | W | 258999 | W |  | W | 299 | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates and<br> joint ventures | Little Big Pictures |  | 1454 |  | 7645 |  |  |  | 9 |  |  |
|  | K-Realty 11th Real Estate Investment Trust Company |  | 151 |  | 1283 |  |  |  |  |  | 8824 |
|  | Others |  | 2285 |  | 2 |  | 3235 |  | 2932 |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | W | 4572 | W | 267929 | W | 3235 | W | 3240 | W | 8824 |
| *(in millions of Korean won)* | *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** |
|  |  | **Trade**<br> **receivables** | **Trade**<br> **receivables** | **Other**<br> **receivables** | **Other**<br> **receivables** | **Trade**<br> **payables** | **Trade**<br> **payables** | **Other**<br> **payables** | **Other**<br> **payables** | **Lease**<br> **liabilities** | **Lease**<br> **liabilities** |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates and<br> joint ventures | K Bank, Inc. | W | 821 | W | 51422 | W |  | W | 513 | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates and<br> joint ventures | IGIS Professional Investors Private Investment Real Estate Investment LLC No.395 |  | 4614 |  |  |  |  |  |  |  |  |
|  | Others |  | 565 |  | 1853 |  | 343 |  | 4829 |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | W | 6000 | W | 53275 | W | 343 | W | 5342 | W |  |

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Significant transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  |  | **Sales** | **Sales** | **Sales** | **Sales** | **Purchases** | **Purchases** | **Purchases** | **Purchases** | **Acquisition<br>of<br>right-of-use<br>assets** | **Acquisition<br>of<br>right-of-use<br>assets** |
|  |  | **Operating<br>revenue** | **Operating<br>revenue** | **Other**<br> **income** | **Other**<br> **income** | **Operating<br>expenses** | **Operating<br>expenses** | **Others<sup>1</sup>** | **Others<sup>1</sup>** | **Acquisition<br>of<br>right-of-use<br>assets** | **Acquisition<br>of<br>right-of-use<br>assets** |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates<br> and<br> joint ventures | K- Realty CR-REITs No.1 <sup>2</sup> | W |  | W |  | W |  | W |  | W |  |
|  | K Bank, Inc. |  | 29536 |  |  |  | 11007 |  |  |  |  |
|  | Hyundai Robotics Co., Ltd. <sup>1</sup> |  | 94 |  |  |  | 629 |  | 3170 |  |  |
|  | K-Realty 11th Real Estate Investment Trust Company |  | 141 |  | 189 |  | 1674 |  |  |  | 1966 |
|  | Others <sup>3</sup> |  | 10226 |  | 1738 |  | 35435 |  | 2307 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Others | Digital Pharm Co., Ltd. |  | 1 |  |  |  |  |  |  |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp; Total | W | 39998 | W | 1927 | W | 48745 | W | 5477 | W | 1966 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  | **Sales** | **Sales** | **Sales** | **Sales** | **Purchases** | **Purchases** | **Purchases** | **Purchases** |
|  |  | **Operating<br>revenue** | **Operating<br>revenue** | **Other**<br> **income** | **Other**<br> **income** | **Operating<br>expenses** | **Operating<br>expenses** | **Others<sup>1</sup>** | **Others<sup>1</sup>** |
|  Associates<br> and<br> joint ventures | K-REALTY CR REIT No.1 | W | 238847 | W |  | W | 1308 | W |  |
|  Associates<br> and<br> joint ventures | K Bank, Inc. |  | 24214 |  | 33 |  | 15164 |  |  |
|  Associates<br> and<br> joint ventures | IGIS Professional Investors Private Investment Real Estate Investment LLC No.395 |  | 5000 |  |  |  |  |  |  |
|  Associates<br> and<br> joint ventures | Others <sup>1,4</sup> |  | 8952 |  | 19140 |  | 18782 |  | 2520 |
| &nbsp;&nbsp;&nbsp;&nbsp; Others | KHS Co., Ltd. <sup>5</sup> |  | 14 |  |  |  | 1744 |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp; Total | W | 277027 | W | 19173 | W | 36998 | W | 2520 |

---

<sup>1</sup> Amounts include acquisition of property and equipment, and others. 

<sup>2</sup> Includes transactions of the entity before it was excluded as an associate and joint venture of the Group.

<sup>3</sup> Includes transactions of StorySoop Inc. before it was excluded as associates and joint ventures of the Group.

<sup>4</sup> Includes transactions of Oscar Ent. before it was excluded as associates and joint ventures of the Group.

<sup>5</sup> Transactions before reclassification as subsidiary of the Group.

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  | **Finance<br>income** | **Finance<br>income** | **Finance<br>costs** | **Finance<br>costs** | **Dividend**<br> **Income** | **Dividend**<br> **Income** | **Finance<br>income** | **Finance<br>income** | **Finance<br>costs** | **Finance<br>costs** | **Dividend**<br> **income** | **Dividend**<br> **income** |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates<br> and<br> joint ventures | K- Realty CR-REITs No.1 <sup>1</sup> | W |  | W |  | W | 45549 | W |  | W | 205 | W | 40142 |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates<br> and<br> joint ventures | K Bank, Inc. |  | 3052 |  |  |  |  |  | 223 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Associates<br> and<br> joint ventures | K-Realty 11th Real Estate Investment Trust Company |  |  |  | 260 |  | 162 |  |  |  |  |  |  |
|  | Others <sup>2, 3</sup> |  |  |  |  |  | 9158 |  |  |  |  |  | 8637 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; Total | W | 3052 | W | 260 | W | 54869 | W | 223 | W | 205 | W | 48779 |

---

<sup>1</sup> Includes transactions of the entity before it was excluded as an associate and joint venture of the Group.

<sup>2</sup> Includes transactions of StorySoop Inc. before it was excluded as associates and joint ventures of the Group.

<sup>3</sup> Includes transactions of Oscar Ent. before it was excluded as associates and joint ventures of the Group.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Key management compensation for the years ended December 31, 2022 and 2021, consists of:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Salaries and other short-term benefits | W | 1855 | W | 2189 |
|  Post-employment benefits |  | 294 |  | 412 |
|  Share-based compensation |  | 976 |  | 669 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | W | 3125 | W | 3270 |

---

Fund transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Equity**<br>**contributions**<br>**in cash** | **Equity**<br>**contributions**<br>**in cash** |
|  | **Borrowings** | **Borrowings** | **Repayments** | **Repayments** | **Equity**<br>**contributions**<br>**in cash** | **Equity**<br>**contributions**<br>**in cash** |
|  **Associates and joint ventures** |  |  |  |  |  |  |
|  Megazone Cloud Corporation | W | 30000 | W |  | W | 130001 |
|  IBK-KT Emerging Digital Industry Investment Fund |  |  |  |  |  | 10800 |
|  Mastern KT Multi-Family Real Estate Private Equity Investment Fund I |  |  |  |  |  | 18859 |
|  IGIS No. 468-1 General Private Real Estate Investment Company |  |  |  |  |  | 25000 |
|  K-Realty 11th Real Estate Investment Trust Company |  | 1916 |  | 771 |  |  |
|  Others |  |  |  |  |  | 93478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 31916 | W | 771 | W | 278138 |

---

<sup>1</sup> Borrowing transactions include lease transactions.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Equity**<br>**contributions**<br>**in cash** | **Equity**<br>**contributions**<br>**in cash** |
|  | **Borrowings** | **Repayments** | **Repayments** | **Equity**<br>**contributions**<br>**in cash** | **Equity**<br>**contributions**<br>**in cash** |
|  **Associates and joint ventures** |  |  |  |  |  |
|  K- REALTY CR REIT 1 | W | W | 15964 | W |  |
|  K Bank, Inc. |  |  |  |  | 424957 |
|  Pacific Professional Investors Private Investment Real Estate Investment LLC No. 55 |  |  |  |  | 11000 |
|  KT Young Entrepreneurs DNA Investment Fund |  |  |  |  | 8400 |
|  Mastern KT Multi-Family Real Estate Private Equity Investment Fund 1 |  |  |  |  | 6055 |
|  KT-IBKC Future Investment Fund 1 |  |  |  |  | (5700) |
|  Others<sup>2</sup> |  |  |  |  | 18176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | W | 15964 | W | 462888 |

---

<sup>1</sup> Borrowing transactions include lease transactions.

<sup>2</sup> Others include transactions before exclusion as associates and joint ventures of the Group.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The Group has an obligation to invest in Real Estate Investment Company No.167, a related party, and others according to the agreement. As at December 31, 2022, the Group is planning to make an additional investment of W 53,120 million.

As at December 31, 2022, the limit of the credit card contract provided by the Group to K Bank, Inc. is W 1,000 million (December 31, 2021: W 1,000 million).

**37.** **Financial Risk Management** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Financial Risk Factors** 

The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures such as cash flow risk.

The Group's financial policy is set up in the long-term perspective and annually reported to the Board of Directors. The financial risk management is carried out by the Value Management Office, which identifies, evaluates and hedges financial risks. The treasury department in the Value Management Office considers various finance market conditions to estimate the effect from the market changes.

*1)* *Market risk* 

The Group's market risk management focuses on controlling the extent of exposure to the risk in order to minimize revenue volatility. Market risk is a risk that decreases value or profit of the Group's portfolio due to changes in market interest rate, foreign exchange rate and other factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i)* *Sensitivity analysis* 

Sensitivity analysis is performed for each type of market risk to which the Group is exposed. Reasonably possible changes in the relevant risk variable such as prevailing market interest rates, currency rates, equity prices or commodity prices are estimated and if the rate of change in the underlying risk variable is stable, the Group does not alter the chosen reasonably possible change in the risk variable. The reasonably possible change does not include remote or 'worst case' scenarios or 'stress tests'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii)* *Foreign exchange risk* 

The Group is exposed to foreign exchange risk arising from operating, investing and financing activities. Foreign exchange risk is managed within the range of the possible effect on the Group's cash flows. Foreign exchange risk (i.e. foreign currency translation of overseas operating assets and liabilities) unaffecting the Group's cash flows is not hedged but can be hedged at a particular situation.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022 and 2021, if the foreign exchange rate had strengthened of weakened by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Fluctuation of**<br> **foreign exchange rate** | **Impact on profit<br>before income tax<sup>1</sup>** | **Impact on profit<br>before income tax<sup>1</sup>** | **Impact on equity** | **Impact on equity** |
| 2022.12.31 | + 10% | W | (5841) | W | (15836) |
| 2022.12.31 | - 10% |  | 5841 |  | 15836 |
| 2021.12.31 | + 10% | W | (3433) | W | 8692 |
| 2021.12.31 | - 10% |  | 3433 |  | (8692) |

---

<sup>1</sup> Computed with considering derivatives hedging effect applied by the Group to hedge foreign exchange risk of liabilities in foreign currencies

The analysis above is a simple sensitivity analysis, which assumes that all the variables other than foreign exchange rates are held constant. Therefore, the analysis does not reflect any correlation between foreign exchange rates and other variables, nor management's decision to decrease the risk.

Details of significant financial assets and liabilities in foreign currencies as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in thousands of foreign currencies)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  | **Financial assets** | **Financial<br>liabilities** | **Financial assets** | **Financial<br>liabilities** |
|  USD | 106426 | 2336607 | 245759 | 2302642 |
|  SDR | 255 | 722 | 255 | 722 |
|  JPY | 32801 | 400002 | 29227 | 30000763 |
|  GBP | 30 | 83 |  | 1005 |
|  EUR | 185 | 7832 | 3943 | 10801 |
|  RWF | 15521 | 13025 | 586 |  |
|  THB | 265 |  | 2160 |  |
|  TZS | 1464 |  | 1644 |  |
|  BWP | 183 |  | 93 |  |
|  HKD | 37 |  |  | 105 |
|  VND | 280226 |  | 257895 |  |
|  SGD | 448 | 284000 | 13 | 284000 |
|  TWD |  |  |  | 226 |
|  MYR | 1 |  |  |  |
|  CHF |  |  |  | 161 |
|  BGN | 62 |  |  |  |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iii)* *Price risk* 

As at December 31, 2022 and 2021, the Group is exposed to equity securities price risk because the securities held by the Group are traded in active markets. If the stock index increased or decreased by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(in millions of Korean won)*<br>| **Fluctuation of stock index** | **Impact on profit<br>before income tax** | **Impact on equity** |
| 2022.12.31 | + 10% | W111,288 | W113,948 |
| 2022.12.31 | - 10% | (111288) | (113948) |
| 2021.12.31 | + 10% | W2,000 | W4,588 |
| 2021.12.31 | - 10% | (2000) | (4588) |

---

The analysis above is based on the assumption that the equity index increased or decreased by 10% with all other variables held constant and all the Group's marketable equity instruments moved according to the historical correlation with the index. Equity would increase or decrease as a result of gain or loss on equity securities classified as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iv)* *Cash flow and fair value interest rate risk* 

The Group's interest rate risk arises from liabilities in foreign currency such as foreign currency debentures. Debentures in foreign currency issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by swap transactions. Debentures and borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group sets the policy and operates to minimize the uncertainty of changes in interest rates and financial costs.

As at December 31, 2022 and 2021, if the market interest rate had increased or decreased by 100bp with other variables held constant, the effects on profit before income tax and equity would be as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Fluctuation of**<br> **interest rate** | **Impact on profit<br>before income tax** | **Impact on equity** |
| 2022.12.31 | + 100 bp | W635 | W(2045) |
| 2022.12.31 | - 100 bp | (669) | 2100 |
| 2021.12.31 | + 100 bp | W753 | W5,549 |
| 2021.12.31 | - 100 bp | (731) | (5675) |

---

The analysis above is a simple sensitivity analysis which assumes that all the variables other than market interest rates are held constant. Therefore, the analysis does not reflect any correlation between market interest rates and other variables, nor management's decision to decrease the risk.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

*2)* *Credit risk*

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's trade receivables from customers, debt securities and others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Risk management* 

Credit risk is managed on the Group basis with the purpose of minimizing financial loss. Credit risk arises from the normal transactions and investing activities, where clients or other party fails to discharge an obligation on contract conditions. To manage credit risk, the Group considers the counterparty's credit based on the counterparty's financial conditions, default history and other important factors.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as outstanding receivables. To minimize such risk, only financial institutions with strong credit ratings are accepted.

The Group's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Security* 

For some trade receivables, the Group may obtain security in the form of guarantees or letters of credit, etc. which can be called upon if the counterparty defaults under the terms of the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Impairment of financial assets* 

The Group has four types of financial assets that are subject to the expected credit loss model:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• trade receivables for sales of goods and provision of services,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• contract assets relating to provision of services,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• debt investments carried at fair value through other comprehensive income, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other financial assets carried at amortized cost.

While cash equivalents are also subject to the impairment requirement, the identified expected credit loss is immaterial.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The maximum exposure to credit risk of the Group's financial instruments without considering the value of collaterals as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(in millions of Korean won)** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Cash and cash equivalents (except for cash on hand) | W | 2437629 | W | 2989713 |
|  Trade and other receivables |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at amortized costs |  | 7459994 |  | 5687103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 129124 |  | 491713 |
|  Contract assets |  | 802253 |  | 745085 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives financial assets for hedging |  | 190830 |  | 99453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 942274 |  | 862481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 5432 |  | 94750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at amortized costs |  | 1060058 |  | 608389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 13027594 | W | 11578687 |

---

The Group is exposed to credit risk for financial guarantee contracts. As at December 31, 2022, the Group's maximum exposure amount is W 26,206 million (2021: W 71,697 million).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i)* *Trade receivables at amortized costs* 

The Group applies a simplified method of recognizing the expected credit loss allowance, which uses lifetime expected credit loss for all trade receivables and contact assets.

The Group measures the expected credit loss by considering the future irrecoverability rate of the remaining balance of trade receivables and other receivables at the end of the reporting period. Each trade receivables and other receivables are classified considering the credit risk characteristics and overdue periods in order to measure expected credit loss. The expected credit loss rate calculation is based on historical payment and credit loss information in relation to revenue for 36 months period up to December 31, 2022. Meanwhile, the credit sales assets of BC Card Co., Ltd., a subsidiary, were judged to have low credit risk, so the expected 12-month credit loss was applied.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

The expected credit losses reflect forward-looking information. Provision for impairment as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Less than**<br> **6 months** | **Less than**<br> **6 months** | **7-12 months** | **7-12 months** | **More than**<br> **1 years** | **More than**<br> **1 years** | **Total** | **Total** |
|  Expected credit loss rate |  | 6% |  | 26% |  | 67% |  |  |
|  Total carrying amounts | W | 3443163 | W | 49491 | W | 207396 | W | 3700050 |
|  Provision for impairment | W | (191668) | W | (12789) | W | (139281) | W | (343738) |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Less than**<br> **6 months** | **Less than**<br> **6 months** | **7-12 months** | **7-12 months** | **More than**<br> **1 years** | **More than**<br> **1 years** | **Total** | **Total** |
|  Expected credit loss rate |  | 7% |  | 25% |  | 45% |  |  |
|  Total carrying amounts | W | 3120763 | W | 55679 | W | 256884 | W | 3433326 |
|  Provision for impairment | W | (219810) | W | (13974) | W | (115941) | W | (349725) |

---

Details of changes in provisions for impairment of trade receivables the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning balance  | W | 349725 | W | 327315 |
|  Provision |  | 64522 |  | 82329 |
|  Written-off |  | (68298) |  | (46067) |
|  Others |  | (2211) |  | (13852) |
|  Ending balance  | W | 343738 | W | 349725 |

---

As at December 31, 2022, the maximum exposure of the trade receivables carrying amount to credit risk is W 3,356,312 million (2021: W 3,083,601 million).

Impairment of trade receivable for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Impairment loss |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bad debt expenses | W | 64522 | W | 82239 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii)* *Cash equivalents (except for cash on hand)* 

The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as at December 31, 2022, is the carrying amount of these investments.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iii)* *Other financial assets at amortized costs* 

Other financial assets at amortized cost include time deposits, other long-term financial instruments, and others. All of the financial assets at amortized costs are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Management considers 'low credit risk' for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.

Details of changes in provisions for impairment of other financial assets at amortized costs for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning balance  | W | 201387 | W | 204604 |
|  Provision |  | 65941 |  | 23015 |
|  Written-off |  | (51383) |  | (41274) |
|  Reversal |  | (850) |  | (508) |
|  Others |  | 3448 |  | 15550 |
|  Ending balance  | W | 218543 | W | 201387 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iv)* *Financial assets at fair value through other comprehensive income* 

Financial assets at fair value through other comprehensive income include available-for-sale recognized in the prior financial year.

All of the debt investments at fair value through other comprehensive income are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Management consider 'low credit risk' for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.

The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through other comprehensive income. The maximum exposure at the end of the reporting period is the carrying amount of these investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(v)* *Financial assets at fair value through profit or loss* 

The Group is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as at December 31, 2022, is the carrying amount of these investments.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

*3)* *Liquidity risk*

The Group manages its liquidity risk by liquidity strategy and plans. The Group considers the maturity of financial assets and financial liabilities and the estimated cash flows from operations.

The table below analyzes the Group's liabilities (including interest expenses) into relevant maturity groups based on the remaining period at the date of the end of each reporting period to the contractual maturity date. These amounts are contractual undiscounted cash flows and can differ from the amount in the consolidated financial statements.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Trade and other payables | W | 7386703 | W | 1009559 | W | 86848 | W | 8483110 |
|  Borrowings (including debentures) |  | 2028207 |  | 6972077 |  | 2016472 |  | 11016756 |
|  Lease liabilities |  | 313162 |  | 615766 |  | 407833 |  | 1336761 |
|  Other non-derivative financial liabilities |  | 33279 |  | 209155 |  | 93744 |  | 336178 |
|  Financial guarantee contracts <sup>1</sup> |  | 21618 |  |  |  | 4588 |  | 26206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 9782969 | W | 8806557 | W | 2609485 | W | 21199011 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Trade and other payables | W | 6698783 | W | 1232468 | W | 159647 | W | 8090898 |
|  Borrowings (including debentures) |  | 1927456 |  | 5635558 |  | 2275557 |  | 9838571 |
|  Lease liabilities |  | 388226 |  | 484476 |  | 427860 |  | 1300562 |
|  Other non-derivative financial liabilities |  | 1473 |  | 206749 |  | 100900 |  | 309122 |
|  Financial guarantee contracts <sup>1</sup> |  | 71697 |  |  |  |  |  | 71697 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 9087635 | W | 7559251 | W | 2963964 | W | 19610850 |

---

<sup>1</sup> Total amount guaranteed by the Group according to guarantee contracts. Cash flow from financial guarantee contracts is classified as the maturity group in the earliest period when the financial guarantee contracts can be executed. 

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022, the cash outflows and inflows by maturity of the Group's derivatives held for trading and gross-settled derivatives, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  **Derivatives held for trading** <sup>1</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W |  | W | 101994 | W | 930 | W | 102924 |
|  **Derivatives settled gross** <sup>2</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W | 472005 | W | 2493858 | W | 28786 | W | 2994649 |
|  Inflows |  | 550478 |  | 2670002 |  | 37873 |  | 3258353 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative liabilities held-for-trading are classified under the 'more than one year to less than five years' category as they are relevant to the fair value of derivatives liabilities related to shareholder-to-share contracts (Note 20).

As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taking into consideration to understand the timing of cash flows.

<sup>2</sup> Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the consolidated statement of financial position. 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  **Derivatives held for trading** <sup>1</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W |  | W | 158284 | W |  | W | 158284 |
|  **Derivatives settled gross** <sup>2</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W | 843489 | W | 1857942 | W | 377302 | W | 3078733 |
|  Inflows |  | 856508 |  | 1917236 |  | 394134 |  | 3167878 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative liabilities held-for-trading are classified under the 'more than one year to less than five years' category as they are relevant to the fair value of derivatives liabilities related to shareholder-to-share contracts (Note 20).

As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taken into consideration to understand the timing of cash flows.

<sup>2</sup> Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the consolidated statement of financial position. 

Meanwhile, as at December 31, 2022, the Group is obligated to invest W 53,120 million in Real Estate Investment Company No.167, a related party, and others, and W 5,473 million and USD 34,050 thousand to make payment using the future Capital Call method to Future Innovation Private Equity Fund No.3 (Notes 20 and 36).

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Capital Risk Management** 

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other shareholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group's capital structure consists of liabilities including borrowings, cash and cash equivalents, and shareholders' equity. The treasury department monitors the Group's capital structure and considers cost of capital and risks related each to capital component.

The debt-to-equity ratios as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Total liabilities | W | 22565958 | W | 20592180 |
|  Total equity |  | 18414723 |  | 16567161 |
|  Debt-to-equity ratio |  | 123% |  | 124% |

---

The Group manages capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as 'equity' in the consolidated statement of financial position plus net debt.

The gearing ratios as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Total borrowings | W | 10006685 | W | 8437703 |
|  Less: cash and cash equivalents |  | (2449062) |  | (3019592) |
|  Net debt |  | 7557623 |  | 5418111 |
|  Total equity |  | 18414723 |  | 16567161 |
|  Total capital |  | 25972346 |  | 21985272 |
|  Gearing ratio |  | 29% |  | 25% |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)** **Offsetting Financial Assets and Financial Liabilities** 

Details of the Group's financial assets recognized, subject to enforceable master netting arrangements or similar agreements, as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Gross**<br> **assets** | **Gross**<br> **assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement** | **Net amounts<br>presented in<br>the statement** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net**<br> **amount** | **Net**<br> **amount** |
|  | **Gross**<br> **assets** | **Gross**<br> **assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **of financial<br>position** | **of financial<br>position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net**<br> **amount** | **Net**<br> **amount** |
|  Trade receivables  | W | 60512 | W |  | W | 60512 | W | (44518) | W | W | 15994 |
|  Other financial assets |  | 764 |  | (764) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 61276 | W | (764) | W | 65012 | W | (44518) | W | W | 15994 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross**<br> **assets** | **Gross**<br> **assets** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement** | **Net amounts<br>presented in<br>the statement** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross**<br> **assets** | **Gross**<br> **assets** | **Gross<br>liabilities<br>offset** | **of financial<br>position** | **of financial<br>position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade receivables  | W | 79102 | W | W | 79102 | W | (65592) | W | W | 13510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 79102 | W | W | 79102 | W | (65592) | W | W | 13510 |

---

These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of the Group's financial liabilities recognized, subject to enforceable master netting arrangements or similar agreements, as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Gross<br>liabilities** | **Gross<br>liabilities** | **Gross<br>assets**<br> **offset** | **Gross<br>assets**<br> **offset** | **Net amounts<br>presented in<br>the statement** | **Net amounts<br>presented in<br>the statement** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross<br>liabilities** | **Gross<br>liabilities** | **Gross<br>assets**<br> **offset** | **Gross<br>assets**<br> **offset** | **of financial**<br> **position** | **of financial**<br> **position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade payables | W | 47271 | W | (764) | W | 46507 | W | (44518) | W | W | 1989 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 47271 | W | (764) | W | 46507 | W | (44518) | W | W | 1989 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross<br>liabilities** | **Gross<br>liabilities** | **Gross<br>assets**<br> **offset** | **Net amounts<br>presented in<br>the statement** | **Net amounts<br>presented in<br>the statement** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross<br>liabilities** | **Gross<br>liabilities** | **Gross<br>assets**<br> **offset** | **of financial**<br> **position** | **of financial**<br> **position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade payables | W | 69944 | W | W | 69944 | W | (65592) | W | W | 4352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade payables | W | 69944 | W | W | 69944 | W | (65592) | W | W | 4352 |

---

These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**38.** **Fair Value** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Fair Value of Financial Instruments by Category** 

Carrying amount and fair value of financial instruments by category as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Carrying<br>amount** | **Carrying<br>amount** | **Fair value** | **Carrying<br>amount** | **Carrying<br>amount** | **Fair value** |
|  **Financial assets** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | W | 2449062 | <sup>1</sup> | W | 3019592 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at amortized cost <sup>2</sup> |  | 7364516 | <sup>1</sup> |  | 5610377 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 129124 | 129124 |  | 491713 | 491713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at amortized cost |  | 1060058 | <sup>1</sup> |  | 608389 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 1064856 | 1064856 |  | 952319 | 952319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 1508192 | 1508192 |  | 347877 | 347877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 190830 | 190830 |  | 99453 | 99453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 13766638 |  | W | 11129720 |  |
|  **Financial liabilities** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables  | W | 8397264 | <sup>1</sup> | W | 7980203 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  | 10006685 | 9405992 |  | 8437703 | 8578827 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at amortized cost |  | 246606 | <sup>1</sup> |  | 263500 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  | 141280 | 141280 |  | 216040 | 216040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 33555 | 33555 |  | 18126 | 18126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 18825390 |  | W | 16915572 |  |

---

<sup>1</sup> The Group did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value. 

<sup>2</sup> With the application of Korean IFRS 1107, lease receivables are excluded from the fair value disclosure.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Fair Value Hierarchy** 

To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. Financial instruments that are measured at fair value are categorized by the fair value hierarchy, and the defined levels are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices
at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximize the use of observable market data 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Level 1** | **Level 1** | **Level 2** | **Level 2** | **Level 3** | **Level 3** | **Total** | **Total** |
|  **Assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W |  | W | 129124 | W |  | W | 129124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 26647 |  | 426140 |  | 612069 |  | 1064856 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 1005900 |  | 5163 |  | 497129 |  | 1508192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  |  |  | 189717 |  | 1113 |  | 190830 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  |  |  |  |  | 5370047 |  | 5370047 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1032547 | W | 750144 | W | 6480358 | W | 8263049 |
|  **Liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W |  | W | 9405992 | W |  | W | 9405992 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  |  |  |  |  | 141280 |  | 141280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  |  |  | 33555 |  |  |  | 33555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W |  | W | 9439547 | W | 141280 | W | 9580827 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Level 1** | **Level 1** | **Level 2** | **Level 2** | **Level 3** | **Level 3** | **Total** | **Total** |
|  **Assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W |  | W | 491713 | W |  | W | 491713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 24285 |  | 350949 |  | 577085 |  | 952319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 17328 |  | 7176 |  | 323373 |  | 347877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  |  |  | 67888 |  | 31565 |  | 99453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  |  |  |  |  | 4263381 |  | 4263381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 41613 | W | 917726 | W | 5195404 | W | 6154743 |
|  **Liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W |  | W | 8578827 | W |  | W | 8578827 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  |  |  | 708 |  | 215332 |  | 216040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  |  |  | 18126 |  |  |  | 18126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W |  | W | 8597661 | W | 215332 | W | 8812993 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)** **Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements** 

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements.

Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial liabilities** | **Financial liabilities** | **Financial liabilities** | **Financial liabilities** |
| *(in millions of Korean won)* | **Financial assets<br>at fair value<br>through profit or<br>loss** | **Financial assets<br>at fair value<br>through profit or<br>loss** | **Financial assets<br>at fair value<br>through other<br>comprehensive<br>income** | **Financial assets<br>at fair value<br>through other<br>comprehensive<br>income** | **Derivative<br> financial assets for <br>hedging** | **Derivative<br> financial assets for <br>hedging** | **Financial<br>liabilities at fair<br>value through<br>profit or loss** | **Financial<br>liabilities at fair<br>value through<br>profit or loss** |
|  Beginning balance | W | 577085 | W | 323373 | W | 31565 | W | 215332 |
|  Acquisition |  | 226310 |  | 262408 |  |  |  | 3046 |
|  Reclassification |  | (8962) |  | 8122 |  |  |  | (54921) |
|  Changes in consolidation scope |  |  |  | (40) |  |  |  |  |
|  Disposal |  | (179740) |  | (97426) |  | (31565) |  |  |
|  Amount recognized in profit or loss <sup>1,</sup> |  | (2624) |  | 18 |  |  |  | (22177) |
|  Amount recognized in other comprehensive income <sup>2</sup> |  |  |  | 674 |  | 1113 |  |  |
|  Ending balance | W | 612069 | W | &nbsp;&nbsp;&nbsp;&nbsp;497129 | W | 1113 | W | 141280 |

---

<sup>1</sup> The recognition of gains and losses on financial liabilities measured at fair value through profit or loss consists of derivative valuation gains and losses.

<sup>2</sup> The recognition of gains and losses on derivatives financial liabilities for hedging purposes consists entirely of derivatives valuation gains.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial liabilities** | **Financial liabilities** | **Financial liabilities** | **Financial liabilities** |
| *(in millions of Korean won)* | **Financial assets<br>at fair value<br>through profit or<br>loss** | **Financial assets<br>at fair value<br>through profit or<br>loss** | **Financial assets<br>at fair value<br>through other<br>comprehensive<br>income** | **Financial assets<br>at fair value<br>through other<br>comprehensive<br>income** | **Derivative<br> financial assets <br>(liabilities) for<br>hedging** | **Derivative<br> financial assets <br>(liabilities) for<br>hedging** | **Financial<br>liabilities at fair<br>value through<br>profit or loss** | **Financial<br>liabilities at fair<br>value through<br>profit or loss** |
|  Beginning balance | W | 432509 | W | 50789 | W | (4194) | W | 2637 |
|  Acquisition |  | 492842 |  | 118648 |  |  |  | 205323 |
|  Reclassification |  | (25757) |  | 14633 |  |  |  |  |
|  Changes in consolidation scope |  | 353 |  | (3051) |  |  |  | 46208 |
|  Disposal |  | (418029) |  | (5325) |  |  |  |  |
|  Amount recognized in profit or loss <sup>1,2</sup> |  | 95167 |  | 71 |  | 43150 |  | (38836) |
|  Amount recognized in other comprehensive income <sup>1</sup> |  |  |  | 147608 |  | (7391) |  |  |
|  Ending balance | W | 577085 | W | 323373 | W | 31565 | W | 215332 |

---

<sup>1</sup> The recognition of gains and losses on derivatives financial liabilities (assets) for hedging purposes consists entirely of derivatives valuation losses.

<sup>2</sup> The recognition of gains and losses on financial liabilities measured at fair value through profit or loss consists of derivative valuation losses.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(4)** **Valuation Technique and the Inputs** 

Valuation techniques and inputs used in the recurring, non-recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as at December 31, 2022 and 2021, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Fair value** | **Fair value** | **Level** | **Valuation techniques** | **Inputs** |
|  **Assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W | 129214 | 2 | DCF Model | Guaranteed bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 1038209 | 23 | DCF Model,<br> Adjusted Net Asset Model,<br> Monte-Carlo Simulation | Market Interest rate,<br> Underlying asset price |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 502292 | 23 | DCF Model,<br> Market Approach Model | Discount rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 190830 | 23 | DCF Model | Market observation<br>discount rate,<br> Swap interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  | 5370047 | 3 | DCF Model |  |
|  **Liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W | 9405992 | 2 | DCF Model | Bond interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  | 141280 | 3 | DCF Model,<br> Binomial Option Pricing<br>Model,<br> Monte-Carlo Simulation |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 33555 | 2 | DCF Model | Market observation<br>discount rate |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Fair value** | **Fair value** | **Level** | **Valuation techniques** | **Inputs** |
|  **Assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W | 491713 | 2 | DCF Model | Guaranteed bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 928034 | 23 | DCF Model,<br> Adjusted Net Asset Model | Bond interest rate,<br> Underlying asset price |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 330549 | 23 | DCF Model,<br> Market approach Model | Discount rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 99453 | 23 | Hull-White Model,<br> DCF Model | Market observation<br>discount rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  | 4263381 | 3 | DCF Model |  |
|  **Liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W | 8578827 | 2 | DCF Model | Bond interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss |  | 216040 | 23 | DCF Model,<br> Binomial Option Pricing<br>Model | Forward rate,<br> Market interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 18126 | 2 | DCF Model | Market observation<br>discount rate |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(5)** **Valuation Processes for Fair Value Measurements Categorized Within Level 3** 

The Group uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the chief financial officer (CFO), and discusses valuation processes and results with the CFO in line with the Group's closing dates.

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(6)** **Gains and Losses on Valuation at the Transaction Date** 

In the case that the Group values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by the said valuation technique differs from the transaction price, then the fair value of the financial instruments is recognized as the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case that inputs of the valuation techniques become observable in markets, the remaining deferred difference is immediately recognized in full in profit for the year.

In relation to this, details and changes of the total deferred difference for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
| *(in millions of Korean won)* | **Derivatives<br>used for<br>hedging** | **Derivatives<br>used for<br>hedging** | **Derivatives<br>used for<br>hedging** | **Derivatives<br>used for<br>hedging** |
| I. Beginning balance | W | 832 | W | 2257 |
| II. New transactions |  |  |  |  |
| III. Recognized at fair value through profit or loss |  | (832) |  | (1425) |
| IV. Ending balance (I+II+III) | W |  | W | 832 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**39.** **Interests in Unconsolidated Structured Entities** 

Details of information about its interests in unconsolidated structured entities, which the Group does not have control over, including the nature, purpose and activities of the structured entity and how the structured entity is financed, are as follows:

---

| | |
|:---|:---|
| **Classes of<br>entities** | **Nature, purpose, activities and others** |
| Real estate<br>finance | A structured entity incorporated for the purpose of real estate development is provided with funds by investors' investments in equity and borrowings from financial institutions (including long-term and short-term loans and issuance of ABCP due in three months), and based on these, the structured entity implements activities such as real estate acquisition, development and mortgage loans. The structured entity repays loan principals with funds incurred from instalment house sales after the completion of real estate development or with collection of the principal of mortgage loan. The remaining shares are distributed to investors. As at December 31, 2022, this entity is engaged in real estate finance structured entity, and generates revenues by receiving dividends from direct investments in or receiving interests on loans to the structured entity. Financial institutions, including the Entity, are provided with guarantees including joint guarantees or real estate collateral from investors and others. Consequently, the entity is a priority over other parties in the preservation of claim. However, when the credit rating of investors and others decreases or when the value of real estate decreases, the entity may be obliged to cover losses. |
| PEF and<br>investment<br>funds | Minority investors including managing members contribute to PEF and investment funds incorporated for the purpose of providing funds to the small, medium, or venture entities, and the managing member implements activities such as investments in equity or loans based on the contributions. As at December 31, 2022, the entity is engaged in PEF and investment funds structured entity, and after contributing to PEF and investment funds, the entity receives dividends for operating revenues from these contributions. The entity is provided with underlying assets of PEF and investment funds as collateral. However, when the value of the underlying assets decreases, the entity may be obliged to cover losses. |
| Asset<br>securitization | The Group transfers accounts receivable for handset sales to its Special Purpose Company ("SPC") for asset securitization. SPC issues the asset-backed securities with accounts receivable for handset sales as an underlying asset, and makes payment for the underlying asset acquired. |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of scale of unconsolidated structured entities and nature of the risks associated with an entity's interests in unconsolidated structured entities as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Real Estate<br>Finance** | **Real Estate<br>Finance** | **PEF and<br>Investment<br>Funds** | **PEF and<br>Investment<br>Funds** | **Asset<br>Securitization** | **Asset<br>Securitization** | **Total** | **Total** |
|  Total assets of unconsolidated structured entities | W | 3539827 | W | 5580445 | W | 2044989 | W | 11165261 |
|  Assets recognized in statement of financial position |  |  |  |  |  |  |  |  |
|  Other financial assets | W | 77819 | W | 237907 | W |  | W | 315726 |
|  Joint ventures and associates |  | 123138 |  | 268275 |  |  |  | 391413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 200957 | W | 506182 | W |  | W | 707139 |
|  Maximum loss exposure <sup>1</sup> |  |  |  |  |  |  |  |  |
|  Investment assets | W | 200957 | W | 506182 | W |  | W | 707139 |
|  Investment agreement, etc |  | 40914 |  | 91224 |  |  |  | 132138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 241871 | W | 597406 | W |  | W | 839277 |

---

<sup>1</sup> Includes the investments recognized in the Group's financial statements and the amounts which are probable to be determined when certain conditions are met by agreements including purchase agreements, credit granting and others. 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Real Estate<br>Finance** | **Real Estate<br>Finance** | **PEF and<br>Investment<br>Funds** | **PEF and<br>Investment<br>Funds** | **Asset<br>Securitization** | **Asset<br>Securitization** | **Total** | **Total** |
|  Total assets of unconsolidated structured entities | W | 2343487 | W | 5202439 | W | 2256256 | W | 9802182 |
|  Assets recognized in statement of financial position |  |  |  |  |  |  |  |  |
|  Other financial assets | W | 40587 | W | 237841 | W |  | W | 278428 |
|  Joint ventures and associates |  | 125009 |  | 246440 |  |  |  | 371449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 165596 | W | 484281 | W |  | W | 649877 |
|  Maximum loss exposure <sup>1</sup> |  |  |  |  |  |  |  |  |
|  Investment assets | W | 165596 | W | 484281 | W |  | W | 649877 |
|  Investment agreement, etc. |  |  |  | 63489 |  |  |  | 63489 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 165596 | W | 547770 | W |  | W | 713366 |

---

<sup>1</sup> Includes the investments recognized in the Group's financial statements and the amounts which are probable to be determined when certain conditions are met by agreements including purchase agreements, credit granting and others. 

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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**40.** **Information About Non-Controlling Interests** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Changes in Accumulated Non-Controlling Interests** 

Profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are material to the Group for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Non-controlling<br>interests' rate<br>(%)** | **Accumulated<br> non-controlling<br>interests at the<br>beginning of the<br>year** | **Accumulated<br> non-controlling<br>interests at the<br>beginning of the<br>year** | **Profit or loss<br>allocated to<br> non-controlling <br>interests** | **Profit or loss<br>allocated to<br> non-controlling <br>interests** | **Dividends paid**<br> **to<br> non-controlling <br>interests** | **Dividends paid**<br> **to<br> non-controlling <br>interests** | **Others** | **Others** | **Accumulated<br> non-controlling <br>interests at the<br>end of the year** | **Accumulated<br> non-controlling <br>interests at the<br>end of the year** |
|  KT Skylife Co., Ltd. | 49.8% | W | 410695 | W | 7127 | W | (8284) | W | 13651 | W | 423189 |
|  BC Card Co., Ltd. | 30.5% |  | 498928 |  | 47909 |  | (7641) |  | (14539) |  | 524657 |
|  KTIS Corporation | 66.7% |  | 135240 |  | 14965 |  | &nbsp;&nbsp;&nbsp;&nbsp;(2226) |  | (6577) |  | 141402 |
|  KTCS Corporation | 78.3% |  | 145111 |  | 18888 |  | (2721) |  | (7397) |  | 153881 |
|  Nasmedia, Co., Ltd. | 56.0% |  | 124181 |  | 15610 |  | (4187) |  | (179) |  | 135425 |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Non-controlling<br>interests' rate<br>(%)** | **Accumulated<br> non-controlling <br>interests at the<br>beginning of the<br>year** | **Accumulated<br> non-controlling <br>interests at the<br>beginning of the<br>year** | **Profit or loss<br>allocated to<br> non-controlling <br>interests** | **Profit or loss<br>allocated to<br> non-controlling <br>interests** | **Dividends paid**<br> **to<br> non-controlling <br>interests** | **Dividends paid**<br> **to<br> non-controlling <br>interests** | **Others** | **Others** | **Accumulated<br> non-controlling <br>interests at the<br>end of the year** | **Accumulated<br> non-controlling <br>interests at the<br>end of the year** |
|  KT Skylife Co., Ltd. | 49.7% | W | 388900 | W | 24795 | W | (8279) | W | 5279 | W | 410695 |
|  BC Card Co., Ltd. | 30.5% |  | 411826 |  | 34496 |  | (6434) |  | 59040 |  | 498928 |
|  KTIS Corporation | 68.6% |  | 120071 |  | 17715 |  | (1837) |  | (709) |  | 135240 |
|  KTCS Corporation | 79.7% |  | 129502 |  | 21394 |  | (2211) |  | (3574) |  | 145111 |
|  Nasmedia, Co., Ltd. | 56.0% |  | 112549 |  | 15185 |  | (3808) |  | 255 |  | 124181 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Summarized Financial Information on Subsidiaries** 

The summarized financial information for each subsidiary with non-controlling interests that are material to the Group, before inter-group eliminations, is as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card Co., <br>Ltd.** | **BC Card Co., <br>Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Current assets | W | 420701 | W | 3152622 | W | 102121 | W | 296209 | W | 435359 |
|  Non-current assets |  | 938465 |  | 2513453 |  | 294087 |  | 123517 |  | 81586 |
|  Current liabilities |  | 274637 |  | 2879551 |  | 103698 |  | 188379 |  | 261381 |
|  Non-current liabilities |  | 229042 |  | 1229649 |  | 95506 |  | 40240 |  | 14349 |
|  Equity |  | 855487 |  | 1556875 |  | 197004 |  | 191107 |  | 241215 |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card Co., <br>Ltd.** | **BC Card Co., <br>Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Current assets | W | 408484 | W | 1991152 | W | 124420 | W | 302953 | W | 409345 |
|  Non-current assets |  | 867161 |  | 1942275 |  | 244941 |  | 113797 |  | 81049 |
|  Current liabilities |  | 249676 |  | 1658476 |  | 103927 |  | 189641 |  | 248648 |
|  Non-current liabilities |  | 220018 |  | 822528 |  | 73691 |  | 44530 |  | 19970 |
|  Equity |  | 805951 |  | 1452423 |  | 191743 |  | 182579 |  | 221776 |

---

Summarized consolidated statements of comprehensive income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card Co., <br>Ltd.** | **BC Card Co., <br>Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Sales | W | 1034236 | W | 3895764 | W | 535783 | W | 1030158 | W | 152394 |
|  Profit for the year |  | 20941 |  | 148341 |  | 15917 |  | 17634 |  | 27691 |
|  Other comprehensive income (loss) |  | 13544 |  | (5286) |  | (2415) |  | (134) |  | (695) |
|  Total comprehensive income |  | 34485 |  | 143055 |  | 13502 |  | 17500 |  | 26996 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card Co., <br>Ltd.** | **BC Card Co., <br>Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Sales | W | 763223 | W | 3579438 | W | 468004 | W | 965721 | W | 124161 |
|  Profit for the year |  | 62309 |  | 120308 |  | 24944 |  | 19034 |  | 27120 |
|  Other comprehensive income (loss) |  | 12686 |  | 2270 |  | 3725 |  | (2120) |  | 871 |
|  Total comprehensive income |  | 74995 |  | 122578 |  | 28669 |  | 16914 |  | 27991 |

---

Summarized consolidated statements of cash flows for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card <br>Co., Ltd.** | **BC Card <br>Co., Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Cash flows from operating activities | W | 176407 | W | (798043) | W | 13809 | W | 19423 | W | 22015 |
|  Cash flows from investing activities |  | (78928) |  | (7733) |  | 9813 |  | 13245 |  | 3845 |
|  Cash flows from financing activities |  | (79455) |  | 914441 |  | (29199) |  | (35578) |  | (11136) |
|  Net increase (decrease) in cash and cash equivalents |  | 18024 |  | 108665 |  | (5577) |  | (2910) |  | 14724 |
|  Cash and cash equivalents at beginning of year |  | 80672 |  | 326482 |  | 30521 |  | 63884 |  | 71396 |
|  Exchange differences |  | (1) |  | (100) |  |  |  | 840 |  | 13 |
|  Cash and cash equivalents at end of the year |  | 98695 |  | 435047 |  | 24944 |  | 61814 |  | 86133 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **KT Skylife <br>Co., Ltd.** | **KT Skylife <br>Co., Ltd.** | **BC Card <br>Co., Ltd.** | **BC Card <br>Co., Ltd.** | **KTIS<br> Corporation** | **KTIS<br> Corporation** | **KTCS<br> Corporation** | **KTCS<br> Corporation** | **Nasmedia, <br>Co., Ltd.** | **Nasmedia, <br>Co., Ltd.** |
|  Cash flows from operating activities | W | 102947 | W | (157645) | W | 49011 | W | 6945 | W | 44500 |
|  Cash flows from investing activities |  | (352116) |  | (283313) |  | (27143) |  | (1039) |  | (16966) |
|  Cash flows from financing activities |  | 230010 |  | 526563 |  | (23126) |  | (16622) |  | (9843) |
|  Net increase (decrease) in cash and cash equivalents |  | (19159) |  | 85605 |  | (1258) |  | (10716) |  | 17691 |
|  Cash and cash equivalents at beginning of year |  | 99834 |  | 240584 |  | 31779 |  | 75440 |  | 53720 |
|  Exchange differences |  | (3) |  | 293 |  |  |  | (840) |  | (15) |
|  Cash and cash equivalents at end of the year |  | 80672 |  | 326482 |  | 30521 |  | 63884 |  | 71396 |

---

**(3)** **Transactions with Non-Controlling Interests** 

The effect of changes in the ownership interest on the equity attributable to owners of the Group for the years ended December 31, 2022 and 2021 is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Carrying amount of non-controlling interests acquired | W | 19272 | W | 14702 |
|  Consideration paid to non-controlling interests |  | 69652 |  | 1095 |
|  Effect of changes in equity (net amount) | W | 88924 | W | 15797 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

**41.** **Business Combination** 

Kt cloud Co., Ltd., a subsidiary of the Group, acquired 100,000 common shares (100%) of SPARK AND ASSOCIATES INC. for W 20,328 million on October 4, 2022 to secure business capabilities of the car cloud business and also gain first mover advantage in the multi/hybrid cloud market.

The details of major business combinations that occurred for the year ended December 31, 2022, are as follows.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Major transfer business** | **Business combination<br>date** | **Business combination<br>date** | **Transfer price** | **Transfer price** |
|  SPARK AND ASSOCIATES INC. | Network service industry |  | Oct. 4, 2022 |  | 20328 |

---

The values of assets and liabilities acquired on the acquisition date from major business combinations for the year ended December 31, 2022, are as follows:

---

| | | |
|:---|:---|:---|
| *(in millions of Korean won)* | **SPARK AND ASSOCIATES INC.** | **SPARK AND ASSOCIATES INC.** |
| I. Total transfer price (A) | W | 20328 |
| II. Amount recognized as identifiable assets and liabilities |  |  |
|  Fair value of identifiable assets |  | 11446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents |  | 427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables, net |  | 1039 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net |  | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net |  | 9715 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets |  | 242 |
|  Fair value of identifiable liabilities |  | 2793 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables |  | 410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current income tax liabilities |  | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net defined benefit liabilities |  | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities |  | 2330 |
|  Total identifiable net assets (B) |  | 8653 |
| III. Non-controlling interest (C) |  |  |
| IV. Fair value of net assets acquired (D=B-C) |  | 8653 |
| V. Goodwill (E=A-D) | W | 11675 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation and Subsidiaries** 

**Notes to the Consolidated Financial Statements** 

**December 31, 2022 and 2021** 

------

Intangible assets additionally identified by the Group as a result of major business combinations for the year ended December 31, 2022, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Goodwill** | **Goodwill** | **Customer relationship** | **Customer relationship** |
|  SPARK AND ASSOCIATES INC. | W | 11675 | W | 9715 |

---

Operating income and net profit and loss before elimination of intercompany transactions of the acquired companies transferred through major business combinations for the year ended December 31, 2022, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **After business combination** | **After business combination** | **After business combination** | **After business combination** | **2022** | **2022** | **2022** | **2022** |
|  | **Operating income** | **Operating income** | **Profit (loss) for<br>the year** | **Profit (loss) for<br>the year** | **Operating income** | **Operating income** | **Profit (loss) for<br>the year** | **Profit (loss) for<br>the year** |
|  SPARK AND ASSOCIATES INC. | W | 1637 | W | 413 | W | 6856 | W | 670 |

---

**42.** **Events After the Reporting Period** 

The Group has issued the following bonds after the end of the reporting period.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Type** | **Issuance date** | **Face value**<br> **(in millions of Korean won)** | **Face value**<br> **(in millions of Korean won)** | **Interest rate** | **Redemption date** |
|  The 198-1st Public bond | Jan. 12, 2023 | W | 70000 | 3.847% | Jan. 10, 2025 |
|  The 198-2nd Public bond | Jan. 12, 2023 |  | 150000 | 3.869% | Jan. 12, 2026 |
|  The 198-3rd Public bond | Jan. 12, 2023 |  | 80000 | 3.971% | Jan. 12, 2028 |

---

The Group decided to acquire treasury stocks equivalent to W 300,000 million, in accordance with the resolution of the Board of Directors on February 9, 2023, to enhance shareholder value. Treasury stocks amounting to W 100,000 million of the acquired treasury stocks will be retired in August 2023.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Index** 

**December 31, 2022 and 2021** 

------

---

| | |
|:---|:---|
|  | **Page(s)** |
|  **[Independent Auditor's Report](#tx2toc479793_1)** | 1 – 4 |
|  **Separate Financial Statements** |  |
|  [Separate Statements of Financial Position](#tx2toc479793_2) | 5 – 6 |
|  [Separate Statements of Profit or Loss](#tx2toc479793_3) | 7 |
|  [Separate Statements of Comprehensive Income](#tx2toc479793_4) | 8 |
|  [Separate Statements of Changes in Equity](#tx2toc479793_5) | 9 |
|  [Separate Statements of Cash Flows](#tx2toc479793_6) | 10 |
|  [Notes to the Separate Financial Statements](#tx2toc479793_7) | 11 – 98 |
|  **[Report on Independent Auditor's Audit of Internal Control over Financial Reporting](#tx2toc479793_8)** | 99 – 100 |
|  **[Report on the Effectiveness of Internal Control over Financial Reporting](#tx2toc479793_9)** | 101 |

---

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##### [**Table of Contents**](#toc)
![LOGO](g479793dsp003-2.jpg)

**Independent Auditor's Report** 

(English Translation of a Report Originally Issued in Korean)

To the Board of Directors and Shareholders of

KT Corporation

**Opinion** 

We have audited the accompanying separate financial statements of KT Corporation (the Company), which comprise the separate statements of financial position as at December 31, 2022 and 2021, and the separate statements of profit or loss, separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for the years then ended, and notes to the separate financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as at December 31, 2022 and 2021, and its separate financial performance and its separate cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS).

We also have audited, in accordance with Korean Standards on Auditing, the Company's Internal Control over Financial Reporting as of December 31, 2022, based on Conceptual Framework for Designing and Operating Internal Control over Financial Reporting, and our report dated March 8, 2023 expressed an unqualified opinion.

**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 Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the separate 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 separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

*Samil PricewaterhouseCoopers, 100 Hangang-daero, Yongsan-gu, Seoul 04386, Korea, www.samil.com* 

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##### [**Table of Contents**](#toc)
Cash-Generating Unit Impairment Assessment

• *Why the matter was determined to be a key audit matter* 

As described in Note 2.14 and Note 12 in the separate financial statements, the Company assesses whether indicators of impairment on assets exist at the end of every reporting period in accordance with Korean IFRS 1036 *Impairment of Assets*, and tests for impairment whenever there is an impairment indicator. Given that there is a significant difference between the market value of the Company and the total net assets of the Company, the Company determined that indicators of impairment on the cash-generating units ("CGUs") with respect to the wire, wireless, and corporate business existed as at December 31, 2022. Management completed an impairment assessment, and no impairment loss was recognized as the recoverable amount of each of the CGUs exceeds their respective carrying amounts.

To determine the recoverable amounts of the CGUs, the Company estimated future cash flows which reflected forecast information such as the number of users for communication services, average profit per user ("ARPU"), and other assumptions. Another critical assumption was the determination of a discount rate to apply to these forecasted future cash flows. Significant judgment is used by management in determining these key assumptions.

The carrying amounts of assets allocated to each of the CGUs are material in the separate financial statements. Management's assumptions have a significant impact on determining the recoverable amounts. This results in a high degree of judgment, effort and specialized knowledge being used by management. Therefore, we determined that the impairment assessment of assets allocated to each of the aforementioned CGUs as a key audit matter.

• *How the matter was addressed in the audit:* 

We have performed the following audit procedures to address the above key audit matter:

• We obtained an understanding of the Company's procedures for asset impairment assessment and evaluated
relevant internal controls.

• We obtained an understanding of the Company's procedures to identify the CGUs and evaluated relevant
internal controls.

• We evaluated the appropriateness of valuation models used by management to estimate the recoverable amounts.

• We evaluated the appropriateness of internal and external information used by management to estimate the
recoverable amounts.

• We assessed the consistency of key assumptions used by management to estimate the recoverable amounts, by
comparing the historical results, current market conditions and future business plans.

• We evaluated the qualifications and independence of management's external experts.

------

##### [**Table of Contents**](#toc)
**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 separate financial statements may differ from those generally accepted and applied in other countries.

**Responsibilities of Management and Those Charged with Governance for the Financial Statements** 

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with Korean IFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Company'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 Company or to cease operations.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

**Auditor's Responsibilities for the Audit of the Financial Statements** 

Our objectives are to obtain reasonable assurance about whether the separate 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 separate 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 separate financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

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##### [**Table of Contents**](#toc)
• 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 Company'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 separate 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 Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 separate 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 Ho-Sung Han, Certified Public Accountant.

![LOGO](g479793dsp006-2.jpg)

Seoul, Korea

March 8, 2023

&nbsp;&nbsp;&nbsp;&nbsp; This report is effective as of March 8, 2023, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.<br>

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##### [**Table of Contents**](#toc)
**December 31, 2022 and 2021** 

**Separate Statements of Financial Position** 

**December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Assets** |  |  |  |  |  |
|  **Current assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 4536 | W | 966307 | W | 1708714 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables, net | 4636 |  | 3055649 |  | 3092397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 4736 |  | 232837 |  | 104062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | 8 |  | 349870 |  | 289345 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 9 |  | 1998825 |  | 1972529 |
|  Total current assets |  |  | 6603488 |  | 7167047 |
|  **Non-current assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables, net | 4636 |  | 526988 |  | 750820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets | 4736 |  | 1993893 |  | 591201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net | 10 |  | 11540162 |  | 12021117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets | 20 |  | 983049 |  | 1078129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties, net | 1136 |  | 1137489 |  | 997344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | 12 |  | 1855679 |  | 2236564 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in subsidiaries, associates and joint ventures | 13 |  | 4879219 |  | 3816915 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net defined benefit assets | 17 |  | 180689 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 9 |  | 717118 |  | 703232 |
|  Total non-current assets |  |  | 23814286 |  | 22195322 |
|  **Total assets** |  | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30417774 | W | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29362369 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Statements of Financial Position** 

**December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Liabilities** |  |  |  |  |  |
|  **Current liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables | 41436 | W | 4411056 | W | 4523621 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 41536 |  | 984720 |  | 1338207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 4736 |  |  |  | 17807 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current income tax liabilities | 29 |  | 127944 |  | 104481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 16 |  | 87720 |  | 155660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income | 25 |  | 44042 |  | 48977 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | 9 |  | 665968 |  | 779967 |
|  Total current liabilities |  |  | 6321450 |  | 6968720 |
|  **Non-current liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables | 41436 |  | 979050 |  | 1259709 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 41536 |  | 6510841 |  | 5611447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities | 4736 |  | 37566 |  | 5572 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net defined benefit liabilities | 17 |  |  |  | 116456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions | 16 |  | 79374 |  | 77284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income | 25 |  | 158161 |  | 187309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax liabilities | 29 |  | 763113 |  | 487107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities | 9 |  | 710139 |  | 783871 |
|  Total non-current liabilities |  |  | 9238244 |  | 8528755 |
|  **Total liabilities** |  |  | 15559694 |  | 15497475 |
|  **Equity** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share capital | 21 |  | 1564499 |  | 1564499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share premium |  |  | 1440258 |  | 1440258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 22 |  | 12347403 |  | 11931481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 23 |  | (72672) |  | 125610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other components of equity | 23 |  | (421408) |  | (1196954) |
|  **Total equity** |  |  | 14858080 |  | 13864894 |
|  **Total liabilities and equity** |  | W | 30417774 | W | 29362369 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Statements of Profit or Loss** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won, except per share amounts)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Operating revenue** | 25 | W | 18289243 | W | 18387434 |
|  **Operating expenses** | 26 |  | 17121140 |  | 17319161 |
|  **Operating profit** |  |  | 1168103 |  | 1068273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income | 27 |  | 408025 |  | 346907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other expenses | 27 |  | 228723 |  | 244261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance income | 28 |  | 577334 |  | 638931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance costs | 28 |  | 653996 |  | 488533 |
|  **Profit before income tax** |  |  | 1270743 |  | 1321317 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 29 |  | 506993 |  | 330826 |
|  **Profit for the year** |  | W | 763750 | W | 990491 |
|  **Earnings per share** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic earnings per share | 30 | W | 3153 | W | 4211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted earnings per share | 30 |  | 3152 |  | 4203 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Statements of Comprehensive Income** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Profit for the year** |  | W | 763750 | W | 990491 |
|  **Other comprehensive income (loss)** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Items that will not be reclassified to profit or loss:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 17 |  | 114154 |  | 31025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on valuation of equity instruments at fair value through other comprehensive income |  |  | (149638) |  | 116913 |
|  **Items that may be subsequently reclassified to profit or loss:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation of debt instruments at fair value through other comprehensive income | 4 |  | (13902) |  | (15110) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation gain on cash flow hedges | 47 |  | 56259 |  | 137865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss from cash flow hedges reclassified to profit or loss | 4 |  | (91012) |  | (133728) |
|  **Total other comprehensive income (loss)** |  | W | (84139) | W | 136965 |
|  **Total comprehensive income for the year** |  | W | 679611 | W | 1127456 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Statements of Changes in Equity** 

**Years Ended December 31, 2022 and 2021** 

------

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **Share<br>capital** | **Share<br>capital** | **Share<br>premium** | **Share<br>premium** | **Retained<br>earnings** | **Retained<br>earnings** | **Accumulated<br>other<br>comprehensive<br>income** | **Accumulated<br>other<br>comprehensive<br>income** | **Other<br>components<br>of<br>equity** | **Other<br>components<br>of<br>equity** | **Total** | **Total** |
|  **Balance at January 1, 2021** |  | W | 1564499 | W | 1440258 | W | 11233714 | W | 42906 | W | (1077820) | W | 13203557 |
|  **Comprehensive income** |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the year |  |  |  |  |  |  | 990491 |  |  |  |  |  | 990491 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation of financial assets at fair value through other comprehensive income | 429 |  |  |  |  |  | 23236 |  | 78567 |  |  |  | 101803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 1729 |  |  |  |  |  | 31025 |  |  |  |  |  | 31025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation gain on cash flow hedge | 429 |  |  |  |  |  |  |  | 4137 |  |  |  | 4137 |
|  **Total comprehensive income for the year** |  |  |  |  |  |  | 1044752 |  | 82704 |  |  |  | 1127456 |
|  **Transactions with equity holders** |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | 31 |  |  |  |  |  | (326487) |  |  |  |  |  | (326487) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appropriation of retained earnings related to loss on disposal of treasury stock | 22 |  |  |  |  |  | (20498) |  |  |  | 20498 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of treasury stock | 23 |  |  |  |  |  |  |  |  |  | (190105) |  | (190105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of treasury stock | 23 |  |  |  |  |  |  |  |  |  | 50954 |  | 50954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  |  | (481) |  | (481) |
|  **Balance at December 31, 2021** |  | W | 1564499 | W | 1440258 | W | 11931481 | W | 125610 | W | (1196954) | W | 13864894 |
|  **Balance at January 1, 2022** |  | W | 1564499 | W | 1440258 | W | 11931481 | W | 125610 | W | (1196954) | W | 13864894 |
|  **Comprehensive income** |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Profit for the year |  |  |  |  |  |  | 763750 |  |  |  |  |  | 763750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation of financial assets at fair value through other comprehensive income | 429 |  |  |  |  |  | (11) |  | (163529) |  |  |  | (163540) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements of net defined benefit liabilities | 1729 |  |  |  |  |  | 114154 |  |  |  |  |  | 114154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation loss on cash flow hedge | 429 |  |  |  |  |  |  |  | (34753) |  |  |  | (34753) |
|  **Total comprehensive income for the year** |  |  |  |  |  |  | 877893 |  | (198282) |  |  |  | 679611 |
|  **Transactions with equity holders** |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends paid | 31 |  |  |  |  |  | (450394) |  |  |  |  |  | (450394) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appropriation of retained earnings related to loss on disposal of treasury stock | 22 |  |  |  |  |  | (11577) |  |  |  | 11577 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of treasury stock | 23 |  |  |  |  |  |  |  |  |  | 763081 |  | 763081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  |  | 888 |  | 888 |
|  **Balance at December 31, 2022** |  | W | 1564499 | W | 1440258 | W | 12347403 | W | (72672) | W | (421408) | W | 14858080 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Separate Statements of Cash Flows** 

**Years Ended December 31, 2022 and 2021** 

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---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Notes** | **2022** | **2022** | **2021** | **2021** |
|  **Cash flows from operating activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash generated from operations | 32 | W | 4128185 | W | 4998368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest paid |  |  | (202579) |  | (228368) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest received |  |  | 211170 |  | 230509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends received |  |  | 98874 |  | 76629 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax paid |  |  | (173297) |  | (117810) |
|  **Net cash inflow from operating activities** |  |  | 4062353 |  | 4959328 |
|  **Cash flows from investing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collection of loans |  |  | 133864 |  | 47254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of current financial instruments at amortized cost |  |  | 900 |  | 189976 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of financial assets at fair value through profit or loss |  |  | 1695 |  | 33651 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of financial assets at fair value through |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; other comprehensive income |  |  |  |  | 36749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of investments in subsidiaries, associates and joint ventures | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of investments in subsidiaries, associates and joint ventures |  | 36028 |  | 70785 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of property and equipment |  |  | 60619 |  | 40722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of intangible assets |  |  | 17047 |  | 6036 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disposal of right-of-use assets |  |  | 96 |  | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans granted |  |  | (125146) |  | (42815) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of current financial instruments at amortized cost |  |  | (117764) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of non-current financial instruments at amortized cost |  |  | (226030) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of financial assets at fair value through profit or loss |  |  | (115415) |  | (71899) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of financial assets at fair value through |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; other comprehensive income |  |  | (442176) |  | (40182) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of investments in subsidiaries, associates and joint ventures |  |  | (348607) |  | (383221) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of property and equipment |  |  | (2980008) |  | (2946975) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of intangible assets |  |  | (307689) |  | (633847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of right-of-use assets |  |  | (1984) |  | (3330) |
|  **Net cash outflow from in investing activities** |  |  | (4414570) |  | (3696986) |
|  **Cash flows from financing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from borrowings and bonds |  |  | 1741962 |  | 1038456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement of derivative instruments (inflow) |  |  | 76280 |  | 216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend paid |  |  | (450394) |  | (326487) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of borrowings and debentures |  |  | (1359117) |  | (1223841) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement of derivative instruments (outflow) |  |  | (41197) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of treasury stock |  |  |  |  | (190105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in lease liabilities |  |  | (357337) |  | (393634) |
|  **Net cash outflow from financing activities** | 33 |  | (389803) |  | (1095395) |
|  **Effect of exchange rate change on cash and cash equivalents** |  |  | (387) |  | 557 |
|  **Net increase (decrease) in cash and cash equivalents** |  |  | (742407) |  | 167504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning of the year | 5 |  | 1708714 |  | 1541210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; End of the year | 5 | W | 966307 | W | 1708714 |

---

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

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**1.** **General Information** 

KT Corporation (the "Company") commenced operations on January 1, 1982, when it spun off from the Korea Communications Commission (formerly the Korean Ministry of Information and Communications) to provide telecommunication services and to engage in the development of advanced communications services under the Act of Telecommunications of Korea. The address of the Company's registered office is 90, Buljeonga-ro, Bundang-gu, Seongnam City, Gyeonggi Province, Korea.

On October 1, 1997, upon the announcement of the Act on the Management of Government-Invested Institutions and the Privatization Law, the Company became a government-funded institution under the Commercial Code of Korea.

On December 23, 1998, the Company's shares were listed on the Korea Exchange.

On May 29, 1999, the Company issued 24,282,195 additional shares and issued American Depository Shares (ADS), which represents new shares and 20,813,311 government-owned shares, on the New York Stock Exchange. On July 2, 2001, additional ADS, representing 55,502,161 government-shares, were issued on the New York Stock Exchange.

In 2002, the Company acquired the entire government-owned shares in accordance with the Korean government's privatization plan. As at December 31, 2022, the Korean government does not own any shares in the Company.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**2.** **Significant Accounting Policies** 

The principal accounting policies applied in the preparation of these separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

**2.1** **Basis of Preparation** 

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying separate financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB) that have been adopted by the Republic of Korea.

The financial statements have been prepared on a historical cost basis, except for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain financial assets and liabilities (including derivative instruments)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Defined benefit pension plans – plan assets measured at fair value

The preparation of the separate financial statement requires the use of critical accounting estimates. Management also needs to exercise judgement in applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in Note 3.

**2.2** **Changes in Accounting Policies and Disclosures** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *New and amended standards adopted by the Company* 

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1116 *Leases – Concession on COVID-19—Related Rent Concessions Beyond June 30, 2021* 

The application of the practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the COVID-19 pandemic is a lease modification, is extended to lease payments originally due on or before June 30, 2022. A lessee shall apply the practical expedient consistently to eligible contracts with similar characteristics and in similar circumstances. The amendment does not have a significant impact on the separate financial statements.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1103 *Business Combination – Reference to the Conceptual Framework* 

The amendments update a reference of definition of assets and liabilities to be recognized in a business combination in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of Korean IFRS *1037 Provisions, Contingent Liabilities and Contingent Assets*, and Korean IFRS 2121 *Levies.* The amendments also clarify that contingent assets should not be recognized at the acquisition date. The amendments do not have a significant impact on the separate financial statements,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS **  1016 *Property, Plant and Equipment – Proceeds Before Intended Use* 

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments do not have a significant impact on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1037 *Provisions, Contingent Liabilities and Contingent Assets—Onerous Contracts: Cost of Fulfilling a Contract* 

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments do not have a significant impact on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual improvements to Korean IFRS 2018-2020

Annual improvements of Korean IFRS 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1101 *First Time Adoption of Korean international Financial Reporting Standards* –
Subsidiaries that are firs-time adopters

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1109 *Financial Instruments* – Fees related to the 10% test for derecognition of financial
liabilities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1041 *Agricultur* e – Measuring fair value

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *New standards and interpretations not yet adopted by the Company* 

The following new accounting standards and interpretations that have been published are not mandatory for December 31, 2022 reporting periods and have not been early adopted by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amendments to Korean IFRS 1001 *Presentation of Financial Statements – Classification of Liabilities as Current or Non-Current* 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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The amendments clarify that liabilities are classified as either current or non-current, depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability includes the transfer of the entity's own equity instruments, however, it would be excluded if an option to settle them by the entity's own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company is in review for the impact of these amendments on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1001 *Presentation of Financial Statements – Disclosure of Accounting Policies* 

The amendments to Korean IFRS 1001 define and require entities to disclose their material accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company is in review for the impact of these amendments on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Korean IFRS 1008 *Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates* 

The amendments define accounting estimates and clarify how to distinguish them from changes in accounting policies. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Korean IFRS 1012 Income Taxes – Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction* 

The amendments include an additional condition to the exemption to initial recognition of an asset or liability that a transaction does not give rise to equal taxable and deductible temporary differences at the time of the transaction. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Korean IFRS 1001 Presentation of Financial Statements – Disclosure of Gain or Loss on Valuation of Financial Liabilities Subject to Adjustment of Exercise Price* 

If the entire or a part of financial instrument, whose exercise price is subject to change due to the issuer's share price, is classified as a financial liability, the carrying amount of the financial liability and related gains and losses shall be disclosed. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Company does not expect that these amendments have a significant impact on the separate financial statements.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**2.3** **Subsidiaries, Associates and Joint Ventures** 

The financial statements of the Company are the separate financial statements prepared in accordance with Korean IFRS 1027 *Separate Financial Statements*. Investments in subsidiaries, joint ventures and associates are recognized at cost under the direct equity method. Management applied the carrying amounts under the previous K-GAAP at the time of transition to Korean IFRS as deemed cost of investments. The Company recognizes dividend income from subsidiaries, joint ventures and associates in profit or loss when its right to receive the dividend is established.

**2.4** **Foreign Currency Translation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Functional and presentation currency* 

Items included in the financial statements of each of the Company are measured using the currency of the primary economic environment in which each entity operates (the "functional currency"). The separate financial statements are presented in Korean won, which is the Company's functional and presentation currency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Transactions and balances* 

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying effective portion of net investment hedges, or are attributable to monetary part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to financial instruments are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss within 'other income' or 'other expense'.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities, such as equities held at fair value through profit or loss, are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets, such as equities classified as available-for-sale financial assets, are recognized in other comprehensive income.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**2.5** **Financial Assets** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Classification* 

The Company classifies its financial assets in the following measurement categories:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• those to be measured at fair value through profit or loss

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• those to be measured at fair value through other comprehensive income, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 when, and only when, its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, this will depend on whether the 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Measurement* 

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is
derecognized or impaired. Interest income from these financial assets is included in 'finance income' using the effective interest rate method.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 (and reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the
cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included in 'finance income' using the effective interest rate
method. Foreign exchange gains and losses are presented in 'finance income' or 'finance costs' and impairment loss in 'finance costs' or 'operating expenses'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair value through
other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or
loss and presented net in the statement of profit or loss within 'finance income or finance costs' in the period in which it arises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*B.* *Equity instrument* 

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. Dividend income from such investments continue to be recognized in profit or loss as 'finance income' when the Company's right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in 'finance income' or 'finance costs' in the statement of profit or loss as applicable. Impairment loss (reversal of impairment loss) on equity investments, measured at fair value through other comprehensive income, are not reported separately from other changes in fair value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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 and lease receivables, the Company applies the simplified approach, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.6** **Derivative Instruments** 

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting treatment for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company has hedge relationships and designates certain derivatives as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly
probable forecast transactions (cash flow hedges)

At inception of the hedge relationship, the Company documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.

The fair values of derivative financial instruments designated in hedge relationships are disclosed in Note 36.

The full fair value of a hedging derivative is classified as a non-current asset or non-current liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. A non-derivative financial asset and a non-derivative financial liability is classified as a current or non-current based on its expected maturity and its settlement, respectively.

The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity, and the ineffective portion is recognized in 'finance income (costs)'.

Amounts of changes in fair value of effective hedging instruments accumulated in equity are recognized as 'finance income (costs)' for the periods when the corresponding transactions affect profit or loss.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge no longer meets the criteria for hedge accounting, any accumulated cash flow hedge reserve at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cash flow hedge reserve and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.7** **Trade Receivables** 

Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less loss allowance. See Note 6 for further information about the Company's accounting treatment for trade receivables and Note 2.5 (c) for a description of the Company's accounting policy on impairment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.8** **Inventories** 

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the moving average method, except for inventories in-transit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.9** **Property and Equipment** 

Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items.

Depreciation of all property and equipment, except for land, is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:

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| | |
|:---|:---|
|  | **Useful Life** |
|  Buildings | 10 – 40 years |
|  Structures | 10 – 40 years |
|  Telecommunications equipment | 2 – 40 years |
|  Vehicles | 4 years |
|  Tools | 4 years |
|  Office equipment | 2 – 4 years |

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The depreciation method, residual values, and useful lives of property and equipment are reviewed at the end of each reporting period and, if appropriate, accounted for as changes in accounting estimates.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.10** **Investment Property** 

Real estate held for rental income or investment gains is classified as investment property and right—of-use asset. An investment property is measured initially at its cost. After recognition as an asset, investment property is carried at cost less accumulated depreciation and impairment losses. Investment property, except for land, is depreciated using the straight-line method over their useful lives from 10 to 40 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.11** **Intangible Assets** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Goodwill* 

Goodwill represents the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition date fair value of the Company's previously held equity interest in the acquiree over the net acquired identifiable assets at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Intangible assets, except for goodwill* 

Intangible assets, except for goodwill, are initially recognized at its historical cost, and carried at cost less accumulated amortization and accumulated impairment losses. Membership rights (condominium membership and golf membership) and broadcast rights that have indefinite useful life are not subject to amortization because there is no foreseeable limit to the period over which the assets are expected to be utilized. The Company amortizes intangible assets with a limited useful life using the straight-line method over the following periods:

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| | |
|:---|:---|
|  | **Useful Life** |
| Development costs | 6 years |
| Software | 6 years |
| Industrial property rights | 5 – 50 years |
| Frequency usage rights | 5 – 10 years |
| Others <sup>1</sup> | 2 – 50 years |

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<sup>1</sup> Membership rights (condominium membership and golf membership) included in others are classified as intangible assets with indefinite useful life.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.12** **Borrowing Costs** 

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.13** **Government Grants** 

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants related to assets are presented in the statement of financial position by setting up the grant as deferred income that is recognized in profit or loss on a systematic basis over the useful life of the asset. Grants related to income are deferred and presented as a credit in the statement of profit or loss within 'other income'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.14** **Impairment of Non-Financial Assets** 

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The Company estimates the recoverable amount for each asset, and, in cases when the recoverable amount cannot be estimated for an individual asset, the recoverable amount of the cash generating unit to which the asset belongs is estimated. Corporate assets are allocated to individual cash generating units on a reasonable and consistent basis and if they cannot be allocated to individual cash generating units, they are allocated to the smallest group of cash generating units on a reasonable and consistent basis. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount (higher of its fair value less costs of disposal and value in use). Impairment loss on non-financial assets other than goodwill are evaluated for reversal at the end of each reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.15** **Trade and Other Payables** 

These amounts represent liabilities for goods and services provided to the Company prior to the end of reporting period which are unpaid. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.16** **Financial Liabilities** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Classification and measurement* 

Financial liabilities at fair value through profit or loss are financial instruments held for trading. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. Derivatives that are not designated as hedging instruments or derivatives separated from financial instruments containing embedded derivatives are also categorized as held for trading.

The Company classifies non-derivative financial liabilities, except for financial liabilities at fair value through profit or loss, financial guarantee contracts and financial liabilities that arise when a transfer of financial assets does not qualify for derecognition, as financial liabilities carried at amortized cost and present as 'trade payables and other payables', 'borrowings', and 'other financial liabilities' in the statement of financial position.

Borrowings are is initially recognized as the amount obtained by subtracting the transaction cost incurred from the fair value and is then measured as amortized cost. The difference between the consideration received (net of transaction cost) and the redemption amount is recognized as profit or loss over the period using the effective interest rate method. Fees paid to receive the borrowing limit are recognized as transaction costs for loans to the extent that they are likely to be borrowed as part or all of the borrowing limit. In this case, the fee will be deferred until draw-down occurs. There is a high possibility that borrowings will be executed as part or all of the borrowing limit agreement (relevant fees to the extent that there is no evidence) are recognized as assets as advance payments for liquidity services and amortized over the relevant borrowing limit period.

Preferred shares that require mandatory redemption at a particular date are classified as liabilities. Interest expenses on these preferred shares using the effective interest method are recognized in the statement of profit or loss as 'finance costs', together with interest expenses recognized from other financial liabilities.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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 or transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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The Company's financial liabilities at fair value through profit or loss are financial instruments held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is held for trading if it is incurred principally for the purpose of repurchasing in the near term. A derivative that is not a designated as hedging instruments and an embedded derivative that is separated are also classified as held for trading. Financial liabilities designed as at fair value through profit or loss are structured financial liabilities containing embedded derivatives issued by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.17** **Employee Benefits** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Post-employment benefits* 

The Company operates both defined contribution and defined benefit pension plans.

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The contributions are recognized as employee benefit expenses when an employee has rendered service.

A defined benefit plan is a pension plan that is not a defined contribution plan. Generally, post-employment benefits are payable after the completion of employment, and the benefit amount depended on the employee's age, periods of service or salary levels. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Termination benefits* 

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: when the entity can no longer withdraw the offer of those benefits or when the entity recognizes costs for a restructuring.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Long-term employee benefits* 

Certain entities within the Company provide long-term employee benefits that are entitled to employees with service period at least five years and above. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. The Company recognizes service cost, net interest on other long-term employee benefits and remeasurements as profit or loss for the year. These liabilities are valued annually by an independent qualified actuary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.18** **Share-Based Payments** 

Equity-settled share-based payment is recognized at fair value of equity instruments granted, and employee benefit expense is recognized over the vesting period. At the end of each period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.19** **Provisions** 

Provisions for service warranties, make good obligation, and legal claims are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period, and the increase in the provision due to the passage of time is recognized as interest expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.20** **Leases** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Lessee* 

The Company leases various repeater server racks, offices, communication line facilities, machinery, and cars.

Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fixed payments (including in-substance fixed payments), less any lease
incentives receivable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Amounts expected to be payable by the Company (the lessee) under residual value guarantees

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The exercise price of a purchase option if the Company (the lessee) is reasonably certain to exercise that
option, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Payments of penalties for terminating the lease, if the lease term reflects the Company (the lessee) exercising
that option

Measurement of lease liability also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease.

The Company determines the lease term as the non-cancellable period of a lease, together with both (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. When the lessee and the lessor each has the right to terminate the lease without permission from the other party, the Company should consider a termination penalty in determining the period for which the contract is enforceable.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the initial measurement of lease liability

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any lease payments made at or before the commencement date less any lease incentives received

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any initial direct costs

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restoration costs

The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, such as vehicles, machinery, and others. Low-value assets are comprised of tools, office equipment, and others.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Lessor* 

Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Extension and termination options* 

Extension and termination options are included in a number of property and equipment leases across the Company. These terms are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Company and not by the respective lessor. Information on critical accounting estimates and assumptions related to the determination of the lease term is presented in Note 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.21** **Share Capital** 

The Company classifies ordinary shares as equity.

Where the Company purchases its own shares, the consideration paid including any directly attributable incremental costs is deducted from equity attributable to the equity holders of the Company until the share are cancelled or reissued. When these treasury shares are reissued, any consideration received is included in equity attributable to the equity holders of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.22** **Revenue Recognition** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Identifying performance obligations* 

The Company mainly provides telecommunication services and sells handsets. The Company identifies performance obligations with a customer such as providing telecommunication services, selling handsets, and others. Revenue from handsets is recognized when a performance obligation is satisfied by transferring promised goods to customers, and the revenue from telecommunication services is recognized over the estimated contract periods of each services by transferring promised services to customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Allocation the transaction price and revenue recognition* 

The Company allocates the transaction price to each performance obligation identified in the contract based on a relative stand-alone selling prices of the goods or services being provided to the customer. To allocate the transaction price to each performance obligation on a relative stand-alone price basis, the Company determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocate the transaction price in proportion to those stand-alone selling price. The stand-alone selling price is the price at which the Company would sell a promised good or service separately to the customer. The best evidence of a stand-alone selling price is the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar customers. The Company recognizes the allocated amount as contract assets or contract liabilities, and amortizes it through the remaining period which is adjusted in operating income.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Incremental contract acquisition costs* 

The Company pays commission fees when new customers subscribe to telecommunication services. The incremental contract acquisition costs are those commission fees that the Company incurs to acquire a contract with a customer that would not have been incurred if the contract had not been acquired. The Company recognizes the incremental contract acquisition costs as an asset and amortizes it over the expected period of benefit. However, as a practical expedient, the Company may recognize the incremental contract acquisition cost as an expense when it is incurred if the amortization period of the asset is one year or less.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.23** **Current and Deferred Tax** 

The tax expense for the period consists of current and deferred tax. Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax expense is measured at the amount expected to be paid to taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the separate financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

The Company recognizes a deferred tax liability all taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, except to the extent that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, the Company recognizes a deferred tax asset for all deductible temporary differences arising from such investments to the extent that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.24** **Dividend** 

Dividend distribution to the Company's shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company's shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.25** **Approval on Issuance of the Separate Financial Statements** 

The separate financial statements of 2022 were approved for issuance by the Board of Directors on February 9, 2023 and are subject to change with the approval of shareholders at their Annual General Meeting.

**3.** **Critical Accounting Estimates and Assumptions** 

The preparation of financial statements requires the Company to make estimates and assumptions concerning the future. Management also needs to exercise judgement in applying the Company's accounting policies. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. As the resulting accounting estimates will, by definition, seldom equal the actual results, it poses significant risk of resulting in a material adjustment.

Estimates and assumptions that have significant risks of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Additional information of significant judgement and assumptions of certain items are included in relevant notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1** **Impairment of Non-Financial Assets (including Goodwill)** 

The Company determines the recoverable amount of a cash generating unit (CGU) based on fair value or value-in-use calculations to assess non-financial assets (including goodwill) for impairment (Notes 12 and 13).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2** **Income Taxes** 

The Company's taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain (Note 29).

If certain portion of the taxable income is not used for investments or increase in wages or dividends in accordance with the *Tax System for Recirculation of Corporate Income*, the Company is liable to pay additional income tax calculated based on the tax laws. Accordingly, the measurement of current and deferred income tax is affected by the tax effects from the new system. As the Company's income tax is dependent on the investments as well as wage increase, there is uncertainty in measuring the final tax effects.

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**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3** **Fair Value of Financial Instruments** 

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its judgment to select a variety of methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period (Note 36).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4** **Net Defined Benefit Liability** 

The present value of net defined benefit liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions including the discount rate (Note 17).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5** **Amortization of Contract Assets, Contract Liabilities and Contract Cost Assets** 

Contract assets, contract liabilities and contract cost assets recognized under the application of Korean IFRS 1115 are amortized over the expected periods of customer relationships. The estimate of the expected terms of customer relationship is based on the historical data. If management's estimate changes, it may cause significant differences in the timing of revenue recognition and amounts recognized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6** **Critical Judgements in Determining the Lease Term** 

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of properties, machinery, and communication line facilities, the following factors are normally the most relevant:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If there are significant penalties to terminate (or not extend), the Company is typically reasonably certain to
extend (or not terminate).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If any leasehold improvements are expected to have a significant remaining value, the Company is typically
reasonably certain to extend (or not terminate).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Otherwise, the Company considers other factors including historical lease durations and the costs and business
disruption required to replace the leased asset.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**4.** **Financial Instruments by Category** 

Financial instruments by category as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Financial assets** | **Financial assets at<br>amortized cost** | **Financial assets at<br>amortized cost** | **Financial<br>assets at fair<br>value through profit<br>or loss** | **Financial<br>assets at fair<br>value through profit<br>or loss** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Total** | **Total** |
|  Cash and cash equivalents | W | 966307 | W |  | W |  | W |  | W | 966307 |
|  Trade and other receivables |  | 3453513 |  |  |  | 129124 |  |  |  | 3582637 |
|  Other financial assets |  | 416294 |  | 410388 |  | 1214059 |  | 185989 |  | 2226730 |
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Financial liabilities** | **Financial liabilities<br>at amortized**<br> **cost** | **Financial liabilities<br>at amortized**<br> **cost** | **Financial liabilities at<br>fair value through<br>profit and loss** | **Financial liabilities at<br>fair value through<br>profit and loss** | **Derivatives used for<br>hedging** | **Derivatives used for<br>hedging** | **Others** | **Others** | **Total** | **Total** |
|  Trade and other payables | W | 5390106 | W |  | W |  | W |  | W | 5390106 |
|  Borrowings |  | 7495561 |  |  |  |  |  |  |  | 7495561 |
|  Other financial liabilities |  |  |  | 5164 |  | 32402 |  |  |  | 37566 |
|  Lease liabilities |  |  |  |  |  |  |  | 865280 |  | 865280 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Financial assets** | **Financial assets at<br>amortized cost** | **Financial assets at<br>amortized cost** | **Financial<br>assets at fair<br>value through profit<br>or loss** | **Financial<br>assets at fair<br>value through profit<br>or loss** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Financial assets at<br>fair value through<br>other comprehensive<br>income** | **Derivatives**<br> **used for<br>hedging** | **Derivatives**<br> **used for<br>hedging** | **Total** | **Total** |
|  Cash and cash equivalents | W | 1708714 | W |  | W |  | W |  | W | 1708714 |
|  Trade and other receivables |  | 3351504 |  |  |  | 491713 |  |  |  | 3843217 |
|  Other financial assets |  | 72501 |  | 299410 |  | 226331 |  | 97021 |  | 695263 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Financial liabilities** | **Financial liabilities<br>at amortized**<br> **cost** | **Financial liabilities<br>at amortized**<br> **cost** | **Financial liabilities at<br>fair value through<br>profit and loss** | **Financial liabilities at<br>fair value through<br>profit and loss** | **Derivatives used for<br>hedging** | **Derivatives used for<br>hedging** | **Others** | **Others** | **Total** | **Total** |
|  Trade and other payables | W | 5783330 | W |  | W |  | W |  | W | 5783330 |
|  Borrowings |  | 6949654 |  |  |  |  |  |  |  | 6949654 |
|  Other financial liabilities |  |  |  | 5329 |  | 18050 |  |  |  | 23379 |
|  Lease liabilities |  |  |  |  |  |  |  | 966700 |  | 966700 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

Gains and losses arising from financial instruments by category for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  **Financial assets at amortized cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | W | 44248 | W | 35496 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss |  | (63593) |  | (71709) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency transactions |  | 16421 |  | 9773 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency translation |  | 3868 |  | 6134 |
|  **Financial assets at fair value through profit or loss** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 326 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income |  | 5 |  | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on valuation |  | (16353) |  | 74560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal |  | 1555 |  | 29162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on foreign currency translation |  | 15209 |  | 17787 |
|  **Financial assets at fair value through other comprehensive income** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 190021 |  | 222038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend income |  | 8974 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal |  | (62630) |  | (22695) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss) for the year <sup>1</sup> |  | (163540) |  | 101803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation |  |  |  | 16793 |
|  **Derivative assets used for hedging** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) on transactions |  | 27479 |  | (6209) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation |  | 150570 |  | 199736 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income for the year <sup>1</sup> |  | 80225 |  | 140978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassified to profit or loss from other comprehensive income for the year <sup>1,2</sup> |  | (106149) |  | (139057) |
|  **Financial liabilities at amortized cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | (226977) |  | (200631) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on foreign currency transactions |  | (35483) |  | (1208) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on foreign currency translation |  | (141768) |  | (189075) |
|  **Financial liabilities at fair value through profit or loss** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation |  | 166 |  |  |
|  **Derivative liabilities used for hedging** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on valuation |  | (20722) |  | (7206) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss for the year <sup>1</sup> |  | (23966) |  | (3113) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassified to profit or loss from other comprehensive<br> income for the year <sup>1,2</sup> |  | 15137 |  | 5328 |
|  **Lease liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | (31625) |  | (32171) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (338602) | W | 186521 |

---

<sup>1</sup> The amounts directly reflected in equity are after adjustments of deferred income tax. 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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<sup>2</sup> During the years ended December, 31, 2022 and 2021, certain derivatives of the Company were settled and the related gain or loss on valuation of cash flow hedges in other comprehensive income was reclassified to profit or loss for the current year.

**5.** **Cash and Cash Equivalents** 

Restricted cash and cash equivalents as at December 31, 2022 and 2021, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **Description** |
|  Bank deposits | W | 8440 | W | 15527 | Deposits restricted for<br>government projects and others |

---

Cash and cash equivalents in the separate statement of financial position are equal to cash and cash equivalents in the separate statement of cash flows.

**6.** **Trade and Other Receivables** 

Trade and other receivables as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| *(in millions of Korean won)* | **Total amounts** | **Total amounts** | **Provision for<br>impairment** | **Provision for<br>impairment** | **Present value<br>discount** | **Present value<br>discount** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
|  Current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 2929574 | W | (278135) | W | (6872) | W | 2644567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 443525 |  | (30549) |  | (1894) |  | 411082 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 3373099 | W | (308684) | W | (8766) | W | 3055649 |
|  Non-current assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 370471 | W | (869) | W | (11180) | W | 358422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 177815 |  | (429) |  | (8820) |  | 168566 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 548286 | W | (1298) | W | (20000) | W | 526988 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Total amounts** | **Total amounts** | **Provision for<br>impairment** | **Provision for<br>impairment** | **Present value<br>discount** | **Present value<br>discount** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
|  **Current assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 2899669 | W | (280059) | W | (7615) | W | 2611995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 528562 |  | (44374) |  | (3786) |  | 480402 |
|  Total | W | 3428231 | W | (324433) | W | (11401) | W | 3092397 |
|  **Non-current assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables | W | 579253 | W | (2602) | W | (16973) | W | 559678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other receivables |  | 201193 |  |  |  | (10051) |  | 191142 |
|  Total | W | 780446 | W | (2602) | W | (27024) | W | 750820 |

---

The fair values of trade and other receivables with original maturities less than one year are equal to their carrying amount because the discounting effect is immaterial. The fair value of trade and other receivables with original maturities longer than one year, which are mainly from sales of goods, is determined by discounting the expected future cash flow at the weighted average interest rate.

Details of changes in provisions for impairment for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
|  | **Trade**<br> **receivables** | **Trade**<br> **receivables** | **Other**<br> **receivables** | **Other**<br> **receivables** | **Trade**<br> **receivables** | **Trade**<br> **receivables** | **Other**<br> **receivables** | **Other**<br> **receivables** |
|  Beginning | W | 282660 | W | 44374 | W | 263750 | W | 53829 |
|  Provision |  | 49727 |  | 13866 |  | 54669 |  | 17040 |
|  Write-off/transfer |  | (53383) |  | (27262) |  | (35758) |  | (26495) |
|  Ending | W | 279004 | W | 30978 | W | 282661 | W | 44374 |

---

Provision for impairment on trade and other receivables is recognized as operating expenses, other expenses and finance costs.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

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Details of other receivables as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Loans | W | 46463 | W | 55184 |
|  Receivables |  | 262557 |  | 338951 |
|  Accrued income |  | 6996 |  | 874 |
|  Refundable deposits |  | 294575 |  | 319357 |
|  Others |  | 35 |  | 1552 |
|  Provision for impairment |  | (30978) |  | (44374) |
|  Total | W | 579648 | W | 671544 |

---

The maximum exposure of trade and other receivables to credit risks is the carrying amount of each class of receivables mentioned above as at December 31, 2022.

A portion of the trade receivables is classified as financial assets at fair value through other comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.

**7.** **Other Financial Assets and Liabilities** 

Details of other financial assets and liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Other financial assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at amortized cost <sup>1</sup> | W | 416294 | W | 72501 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss <sup>2</sup>  |  | 410388 |  | 299410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 1214059 |  | 226331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives used for hedging |  | 185989 |  | 97021 |
|  Less: Non-current |  | (1993893) |  | (591201) |
|  Current | W | 232837 | W | 104062 |
|  **Other financial liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial liabilities at fair value through profit or loss | W | 5164 | W | 5329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives used for hedging |  | 32402 |  | 18050 |
|  Less: Non-current |  | (37566) |  | (5572) |
|  Current | W |  | W | 17807 |

---

<sup>1</sup> As at December 31, 2022, the Company's financial instruments amount to W 30,464 million (December 31, 2021: W 22,501 million), which consist of checking account deposits and time deposits and others, are subject to withdrawal restrictions. 

<sup>2</sup> Investment in Korea Software Financial Cooperative amounting to W 1,136 million is provided as collateral. 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of financial assets at fair value through profit or loss as at December 31, 2022 and December 31, 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Equity instruments (Listed) | W |  | W | 147 |
|  Debt instruments |  | 387594 |  | 297371 |
|  Derivative liabilities held for trading <sup>1</sup>  |  | 22794 |  | 1892 |
|  Less: Non-current |  | (410388) |  | (299410) |
|  Current | W |  | W |  |

---

<sup>1</sup> During the year ended December 31, 2022, derivative assets amount to W 18,996 million, which is recognized by an agreement with LS Cable & System Ltd. in connection with KT Submarine Co., Ltd. and call option amounts to W 3,798 million in connection with the acquisition of Epsilon Global Communications Pte. Ltd. (Note 19). 

The maximum exposure of debt instruments of financial assets at fair value through profit or loss to credit risk is the carrying amount as at December 31, 2022.

Details of financial assets at fair value through other comprehensive income as at December 31, 2022 and December 31, 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Equity instruments (Listed) <sup>1</sup>  | W | 1015606 | W | 35510 |
|  Equity instruments (Unlisted) |  | 198453 |  | 190821 |
|  Less: Non-current |  | (1214059) |  | (226331) |
|  Current | W |  | W |  |

---

<sup>1</sup> As at December 31, 2022, financial assets at fair value through other comprehensive income include shares of Shinhan Financial Group Co., Ltd., HYUNDAI MOBIS, and HYUNDAI MOTOR COMPANY.<sup></sup>

Upon disposal of these equity instruments, any balance within the other comprehensive income is not reclassified to profit or loss, but to retained earnings. Upon disposal of these debt instruments, the remaining balance of the accumulated other comprehensive income is reclassified to profit or loss.

Derivatives used for hedging as at December 31, 2022 and December 31, 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| *(in millions of Korean won)* | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Assets** | **Assets** | **Liabilities** | **Liabilities** |
|  Currency swap <sup>1,2</sup>  | W | 185989 | W | 32402 | W | 97021 | W | 18050 |
|  Less: Non-current |  | (143413) |  | (32402) |  | (65456) |  | (243) |
|  Current | W | 42576 | W |  | W | 31565 | W | 17807 |

---

<sup>1</sup> The currency swap contract is entered to hedge bond payables' cash flow fluctuation risks arising from fluctuations of interest rates and exchange rates, and the maximum expected period exposed to cash flow fluctuation risks due to the forecast transactions subject to hedge is September 7, 2034. 

<sup>2</sup> The amount of derivatives subject to interest rate benchmark reform (phase 2 amendments) is W 96,301 million, and the Company is assessing the impact of switching to an alternative interest rate indicator. 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The valuation gain and loss on the derivative contracts for the years ended December 31, 2021 and 2022, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* |
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| **Type of transaction** | **Valuation<br>gain** | **Valuation<br>gain** | **Valuation<br>loss** | **Valuation<br>loss** | **Other<br>comprehensive**<br> **loss<sup>1</sup>** | **Other<br>comprehensive**<br> **loss<sup>1</sup>** | **Valuation<br>gain** | **Valuation<br>gain** | **Valuation<br>loss** | **Valuation<br>loss** | **Other<br>comprehensive<br>income<sup>1</sup>** | **Other<br>comprehensive<br>income<sup>1</sup>** |
|  Currency swap | W | 150570 | W | 20722 | W | 75112 | W | 199736 | W | 7206 | W | 186455 |

---

<sup>1</sup> The amounts directly reflected in equity are before adjustments of deferred income tax. 

The ineffective portion recognized in profit or loss concerning cash flow hedges are valuation gains of W 3,408 million for the year ended December 31, 2022 (December 31, 2021: valuation gains of W 12,688 million).

The unsettled amount of derivative instruments for the years ended December 31, 2022 and 2021, are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i) Hedging instruments* 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  |  |  |  | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
| **Currency** | **Foreign<br>currency** | **Contract<br>amount** | **Contract<br>amount** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
|  USD | 2070000 | W | 2474770 | W | 159638 | W | 31993 | W | 169994 |
|  JPY | 400000 |  | 4357 |  |  |  | 409 |  | (308) |
|  SGD | 284000 |  | 245208 |  | 26351 |  |  |  | 20511 |
|  Total |  | W | 2724335 | W | 185989 | W | 32402 | W | 190197 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  |  |  | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Book value of hedging<br>instruments** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
| **Currency** | **Foreign<br>currency** | **Contract<br>amount** | **Contract<br>amount** | **Assets** | **Assets** | **Liabilities** | **Liabilities** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of<br>hedges** |
|  USD | 1970000 | W | 2269170 | W | 91590 | W |  | W | 182211 |
|  JPY | 30000000 |  | 326751 |  |  |  | 18050 |  | (7199) |
|  SGD | 284000 |  | 245208 |  | 5431 |  |  |  | 18387 |
|  Total |  | W | 2841129 | W | 97021 | W | 18050 | W | 193399 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii) Hedged item* 

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | | | | | | | | | | | | |
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| **Currency** | **Book value of<br>hedged items** | **Book value of<br>hedged items** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of hedges** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Book value of<br>hedged items** | **Book value of<br>hedged items** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of hedges** | **Changes in fair<br>value to calculate<br>the ineffective<br>portion of hedges** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** | **Cash flow<br>hedge<br>reserves<sup>1</sup>** |
|  USD | W | 2623311 | W | (168377) | W | (13287) | W | 2335435 | W | (172340) | W | 21648 |
|  JPY |  | 3813 |  | 306 |  | 116 |  | 309072 |  | 7199 |  | 269 |
|  SGD |  | 267843 |  | (18720) |  | 3406 |  | 249108 |  | (15570) |  | 3071 |
|  Total | W | 2894967 | W | (186789) | W | (9765) | W | 2893615 | W | (180711) | W | 24988 |

---

<sup>1</sup> The amounts directly reflected in equity are after adjustments of deferred income tax. 

Details of financial liabilities at fair value through profit or loss as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Financial liabilities at fair value through profit or loss |  |  |  |  |
|  Derivative liabilities held for trading <sup>1</sup>  | W | 5164 | W | 5329 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative liabilities recognized amount to W 930 million, which is recognized by an agreement with LS Cable & System Ltd. in connection with KT Submarine Co., Ltd. and W 4,234 million in connection with the acquisition of Epsilon Global Communications Pte. Ltd. (Note 19). 

**8.** **Inventories** 

Inventories as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* | *(in millions of Korean won)* |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Acquisition<br>cost** | **Acquisition<br>cost** | **Valuation<br>allowance** | **Valuation<br>allowance** | **Carrying**<br> **amount** | **Carrying**<br> **amount** | **Acquisition<br>cost** | **Acquisition<br>cost** | **Valuation<br>allowance** | **Valuation<br>allowance** | **Carrying**<br> **amount** | **Carrying**<br> **amount** |
| Merchandise | W | 439598 | W | (89728) | W | 349870 | W | 402637 | W | (113292) | W | 289345 |

---

Cost of inventories recognized as expenses for the year ended December 31, 2022 amounts to W 2,581,671 million (December 31, 2021: W 2,952,856 million), and reversal of loss on valuation inventories amounts to W 23,564 million for the year ended December 31, 2022 (December 31, 2021: reversal of loss on valuation inventories of W 15,227 million).

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**9.** **Other Assets and Liabilities** 

Other assets and liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  **Other assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advance payments | W | 54315 | W | 64357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses |  | 54044 |  | 62782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract costs |  | 1883084 |  | 1867633 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract assets |  | 724500 |  | 680989 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-current |  | (717118) |  | (703232) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 1998825 | W | 1972529 |
|  **Other liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advances received <sup>1</sup>  | W | 189780 | W | 226590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Withholdings |  | 38561 |  | 20946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unearned revenue |  | 1051 |  | 15308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities |  | 865280 |  | 966700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 281435 |  | 334294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Non-current |  | (710139) |  | (783871) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 665968 | W | 779967 |

---

<sup>1</sup> The amounts include adjustments arising from adoption of Korean IFRS 1115 *Revenue form Contracts with Customers* (Note 25). 

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**10.** **Property and Equipment** 

Changes in property and equipment for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Land** | **Land** | **Buildings and<br>structures** | **Buildings and<br>structures** | **Telecommunications<br>equipment** | **Telecommunications<br>equipment** | **Others** | **Others** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 888928 | W | 3326224 | W | 37839901 | W | 1106319 | W | 997905 | W | 44159277 |
|  Less: Accumulated depreciation (including accumulated impairment losses and others) |  | (132) |  | (1761393) |  | (29350392) |  | (1005623) |  | (620) |  | (32138160) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning, net | W | 888796 | W | 1564831 | W | 8494509 | W | 80696 | W | 997285 | W | 12021117 |
|  Acquisitions and capital expenditures |  |  |  | 2015 |  | 16512 |  | 16760 |  | 2901085 |  | 2936372 |
|  Disposals and terminations |  | (2556) |  | (4292) |  | (66672) |  | (3985) |  |  |  | (81044) |
|  Depreciation |  |  |  | (80667) |  | (2178314) |  | (31493) |  |  |  | (2290474) |
|  Impairment |  |  |  |  |  | (2063) |  |  |  | (906) |  | (2969) |
|  Transfers in (out) |  | 24647 |  | 211503 |  | 2569792 |  | 19590 |  | (2936585) |  | (111053) |
|  Investment in kind |  | (26681) |  | (488870) |  | (207516) |  | (228) |  | (25254) |  | (748549) |
|  Others |  | (17485) |  | (166144) |  | 3029 |  | (2638) |  |  |  | (183238) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending, net | W | 866721 | W | 1038376 | W | 8624277 | W | 78702 | W | 932086 | W | 11540162 |
|  Acquisition cost | W | 866853 | W | 2645631 | W | 38883058 | W | 630481 | W | 932584 | W | 43958607 |
|  Less: Accumulated depreciation (including accumulated impairment losses and others) |  | (132) |  | (1607255) |  | (30258781) |  | (551779) |  | (498) |  | (32418445) |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Land** | **Land** | **Buildings and<br>structures** | **Buildings and<br>structures** | **Telecommunications<br>equipment** | **Telecommunications<br>equipment** | **Others** | **Others** | **Construction-<br>in-progress** | **Construction-<br>in-progress** | **Total** | **Total** |
|  Acquisition cost | W | 892646 | W | 3244503 | W | 36945119 | W | 1085839 | W | 972127 | W | 43140234 |
|  Less: Accumulated depreciation (including accumulated impairment losses and others) |  | (132) |  | (1679945) |  | (28450956) |  | (1005525) |  | (3959) |  | (31140517) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning, net | W | 892514 | W | 1564558 | W | 8494163 | W | 80314 | W | 968168 | W | 11999717 |
|  Acquisitions and capital expenditures |  | 2 |  | 6562 |  | 7223 |  | 20864 |  | 2813943 |  | 2848594 |
|  Disposals and terminations |  | (4694) |  | (5675) |  | (68128) |  | (2260) |  |  |  | (80757) |
|  Depreciation |  |  |  | (101716) |  | (2203759) |  | (40889) |  |  |  | (2346364) |
|  Transfers in (out) |  | 4607 |  | 415736 |  | 2257955 |  | 23371 |  | (2784826) |  | (83157) |
|  Others |  | (3633) |  | (314634) |  | 2055 |  | (704) |  |  |  | (316916) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending, net | W | 888796 | W | 1564831 | W | 8489509 | W | 80696 | W | 997285 | W | 12021117 |
|  Acquisition cost | W | 888928 | W | 3326224 | W | 37839901 | W | 1106319 | W | 997905 | W | 44159277 |
|  Less: Accumulated depreciation (including accumulated impairment losses and others) |  | (132) |  | (1761393) |  | (29350392) |  | (1025623) |  | (620) |  | (32138160) |

---

The borrowing costs capitalized for qualifying assets amount to W 4,697 million for the year ended December 31, 2022 (December 31, 2021: W 4,111 million). The interest rate applied to calculate the capitalized borrowing costs in 2022 is 2.71% (2021: 2.02%).

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**11.** **Investment Properties** 

Changes in investment properties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Land** | **Land** | **Buildings** | **Buildings** | **Total** | **Total** | **Land** | **Land** | **Buildings** | **Buildings** | **Total** | **Total** |
|  Acquisition cost | W | 192392 | W | 1356769 | W | 1549161 | W | 188759 | W | 1112495 | W | 1301254 |
|  Less: Accumulated depreciation |  |  |  | (551817) |  | (551817) |  |  |  | (565691) |  | (565691) |
|  Beginning, net |  | 192392 |  | 804952 |  | 997344 |  | 188759 |  | 546804 |  | 735563 |
|  Depreciation |  |  |  | (43441) |  | (43441) |  |  |  | (38665) |  | (38665) |
|  Transfer increase |  | 17484 |  | 166102 |  | 183586 |  | 3633 |  | 296813 |  | 300446 |
|  Ending, net | W | 209876 | W | 927613 | W | 1137489 | W | 192392 | W | 804952 | W | 997344 |
|  Acquisition cost | W | 209876 | W | 1560143 | W | 1770019 | W | 192392 | W | 1356769 | W | 1549161 |
|  Less: Accumulated depreciation |  |  |  | (632530) |  | (632530) |  |  |  | (551817) |  | (551817) |

---

The fair value of investment properties is W 3,182,157 million as at December 31, 2022 (December 31, 2021: W 2,503,930 million). The fair value of investment properties is estimated based on the expected cash flow.

Rental income from investment properties is W 205,386 million for the year ended December 31, 2022 (December 31, 2021: W 181,183 million) and direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the period are recognized as operating expenses.

As at December 31, 2022, the Company (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease fee under this contract is W 99,121 million for one year or less, W 250,139 million for more than five years, W 537,454 million over five years, and W 886,714 million in total.

Details of investment properties provided as collateral as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Collateral** | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related account** | **Related<br>amount** | **Related<br>amount** |
|  Land and buildings | W | 168904 | W | 35456 | Deposits received | W | 29638 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Collateral** | **Carrying<br>amount** | **Carrying<br>amount** | **Secured<br>amount** | **Secured<br>amount** | **Related account** | **Related<br>amount** | **Related<br>amount** |
|  Land and buildings | W | 173493 | W | 45942 | Deposits received | W | 38695 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.** **Intangible Assets** 

Changes in intangible assets for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
| *(in millions of Korean won)* | **Goodwill** | **Goodwill** | **Industrial<br>rights** | **Industrial<br>rights** | **Development<br>costs** | **Development<br>costs** | **Software** | **Software** | **Frequency**<br> **usage**<br> **rights** | **Frequency**<br> **usage**<br> **rights** | **Others** | **Others** | **Total** | **Total** |
|  Acquisition cost | W | 65057 | W | 34988 | W | 1768049 | W | 718107 | W | 2610171 | W | 218111 | W | 5414483 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  |  |  | (17994) |  | (1594563) |  | (665813) |  | (771040) |  | (128509) |  | (3177919) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning, net | W | 65057 | W | 16994 | W | 173486 | W | 52294 | W | 1839131 | W | 89602 | W | 2236564 |
|  Acquisition and capital expenditure <sup>1</sup>  |  |  |  | 5082 |  | 55677 |  | 17440 |  |  |  | 38657 |  | 116856 |
|  Disposals and terminations |  |  |  | (121) |  | (5502) |  | (4) |  |  |  | (17397) |  | (23024) |
|  Amortization |  |  |  | (2935) |  | (77351) |  | (18818) |  | (350701) |  | (17247) |  | (467052) |
|  Investment in kind |  |  |  |  |  | (3391) |  | (3883) |  |  |  | (391) |  | (7665) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending, net | W | 65057 | W | 19020 | W | 142919 | W | 47029 | W | 1488130 | W | 93224 | W | 1855679 |
|  Acquisition cost | W | 65057 | W | 38732 | W | 1774505 | W | 719185 | W | 2610171 | W | 238896 | W | 5446546 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  |  |  | (19712) |  | (1631586) |  | (672156) |  | (1121741) |  | (145672) |  | (3590867) |
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
| *(in millions of Korean won)* | **Goodwill** | **Goodwill** | **Industrial<br>rights** | **Industrial<br>rights** | **Development<br>costs** | **Development<br>costs** | **Software** | **Software** | **Frequency**<br> **usage**<br> **rights** | **Frequency**<br> **usage**<br> **rights** | **Others** | **Others** | **Total** | **Total** |
|  Acquisition cost | W | 65057 | W | 32750 | W | 1744422 | W | 697893 | W | 3365972 | W | 199846 | W | 6105940 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  |  |  | (16387) |  | (1529842) |  | (646238) |  | (2205159) |  | (124858) |  | (4522484) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beginning, net | W | 65057 | W | 16363 | W | 214580 | W | 51655 | W | 1160813 | W | 74988 | W | 1583456 |
|  Acquisition and capital expenditure |  |  |  | 3742 |  | 44992 |  | 20612 |  | 1065096 |  | 18843 |  | 1153285 |
|  Disposals and terminations |  |  |  | (228) |  | (7893) |  | (118) |  |  |  | (577) |  | (8816) |
|  Amortization |  |  |  | (2883) |  | (78168) |  | (19688) |  | (386778) |  | (3652) |  | (491169) |
|  Transfers to property and equipment |  |  |  |  |  | (25) |  | (167) |  |  |  |  |  | (192) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ending, net | W | 65057 | W | 16994 | W | 173486 | W | 52294 | W | 1839131 | W | 89602 | W | 2236564 |
|  Acquisition cost | W | 65057 | W | 34988 | W | 1768049 | W | 718107 | W | 2610171 | W | 218111 | W | 5414483 |
|  Less: Accumulated depreciation (including accumulated impairment loss and others) |  |  |  | (17994) |  | (1594563) |  | (665813) |  | (771040) |  | (128509) |  | (3177919) |

---

<sup>1</sup> Amounts include transfer from property and equipment. 

The carrying amount of membership rights with an indefinite useful life not subject to amortization is W 55,319 million as at December 31, 2022 (December 31, 2021: W 72,652 million).

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

The Company annually performs an assessment of goodwill impairment. The recoverable amount of all CGUs has been determined based on value-in-use. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates of 0%. The growth rate does not exceed the long-term average growth rate included in industry report specific to the industry in which the CGU operates.

The Company determines the gross margin rate based on past performance and its expectations of market changes. The average growth rates used are estimated based on historical growth rate. In addition, the Company estimated pre-tax cash flow based on past performance and its expectation of market growth. The discount rate applied is pre-tax discount rate of 8.48%, reflecting specific risks related to the relevant CGUs.

As a result of impairment tests, the Company concluded that the carrying amount of CGUs does not exceed the recoverable amount of CGUs. Therefore, the Company did not recognize any impairment loss on goodwill for the years ended December 31, 2022 and 2021.

**13.** **Investments in Subsidiaries, Associates and Joint Ventures** 

Carrying amounts in investments in subsidiaries, associates and joint ventures as at December 31, 2022 and 2021, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Subsidiaries | W | 4492987 | W | 3576438 |
|  Associates and joint ventures |  | 386232 |  | 240477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 4879219 | W | 3816915 |

---

Investments in subsidiaries as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Location** | **Percentage of<br>ownership (%)** | **Carrying amount** | **Carrying amount** | **Carrying amount** | **Carrying amount** |
|  | **Location** | **Percentage of<br>ownership (%)** | **December 31,**<br> **2022** | **December 31,**<br> **2022** | **December 31,**<br> **2021** | **December 31,**<br> **2021** |
|  KT Estate Inc. | Korea | 100.0% | W | 1084522 | W | 1084522 |
|  KT Sat Co., Ltd. | Korea | 100.0% |  | 390530 |  | 390530 |
|  KTCS Corporation <sup>1</sup> | Korea | 8.4% |  | 6427 |  | 6427 |
|  KTIS Corporation <sup>1</sup> | Korea | 33.3% |  | 30633 |  | 30633 |
|  KT Skylife Co., Ltd. | Korea | 50.2% |  | 311696 |  | 311696 |
|  BC Card Co., Ltd. | Korea | 69.5% |  | 633004 |  | 633004 |
|  KT M&S Co., Ltd. | Korea | 100.0% |  | 26764 |  | 26764 |
|  KT Alpha Co., Ltd. | Korea | 70.5% |  | 130924 |  | 130924 |
|  KT Telecop Co., Ltd. | Korea | 86.8% |  | 134308 |  | 134308 |
|  KT Submarine Co., Ltd. <sup>1</sup> | Korea | 32.9% |  | 24370 |  | 24370 |
|  Nasmedia, Inc. <sup>2</sup> | Korea | 44.0% |  | 23051 |  | 23051 |
|  KTDS Co., Ltd. | Korea | 95.6% |  | 19616 |  | 19616 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Location** | **Percentage of<br>ownership (%)** | **Carrying amount** | **Carrying amount** | **Carrying amount** | **Carrying amount** |
|  | **Location** | **Percentage of<br>ownership (%)** | **December 31,**<br> **2022** | **December 31,**<br> **2022** | **December 31,**<br> **2021** | **December 31,**<br> **2021** |
|  KTGDH Co., Ltd. | Korea | 100.0% |  | 7544 |  | 7544 |
|  KT Strategic Investment Fund No.2 | Korea | 90.9% |  | 2381 |  | 2381 |
|  KT Sports | Korea | 52.6% |  | 19311 |  | 14520 |
|  KT M Mobile Co., Ltd. | Korea | 100.0% |  | 102237 |  | 102237 |
|  KT Service Bukbu Co., Ltd. | Korea | 67.3% |  | 3873 |  | 3873 |
|  KT Service Nambu Co., Ltd. | Korea | 76.4% |  | 10160 |  | 10160 |
|  KT Strategic Investment Fund No.3 | Korea | 86.7% |  | 2947 |  | 2947 |
|  KT Strategic Investment Fund No.4 | Korea | 95.0% |  | 16720 |  | 19000 |
|  PlayD Co., Ltd. <sup>3</sup> | Korea | 23.5% |  | 20000 |  | 20000 |
|  KT MOS Bukbu Co., Ltd. | Korea | 100.0% |  | 6334 |  | 6334 |
|  KT MOS Nambu Co., Ltd. | Korea | 98.4% |  | 4267 |  | 4267 |
|  Next Connect PFV | Korea | 100.0% |  | 24250 |  | 24250 |
|  KT Strategic Investment Fund No.5 | Korea | 95.0% |  | 19000 |  | 19000 |
|  KT Engineering Co., Ltd. | Korea | 59.8% |  | 28000 |  | 28000 |
|  KT Studio Genie Co., Ltd.  | Korea | 90.9% |  | 283620 |  | 283620 |
|  Lolab Co., Ltd. | Korea | 79.8% |  | 21950 |  | 22008 |
|  KT ES Pte. Ltd. | Singapore | 57.6% |  | 96878 |  | 96878 |
|  Altimedia Corporation | Korea | 100.0% |  | 22000 |  | 22000 |
|  kt cloud Co., Ltd. | Korea | 100.0% |  | 901504 |  |  |
|  Others |  |  |  | 84166 |  | 71574 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  |  | W | 4492987 | W | 3576438 |

---

<sup>1</sup> As at December 31, 2022, although sum of percentage of ownership of the Company and its subsidiaries is less than 50% ownership in this entity, this entity is included in investments in subsidiaries due to the dispersion of the non-controlling interests and voting patterns at the shareholders' meetings in the past. 

<sup>2</sup> As at December 31, 2022, although the Company owns less than 50% ownership in this entity, this entity is included in investments in subsidiaries as the Company holds the majority of voting right based on an agreement with other investors. 

<sup>3</sup> As at December 31, 2022, this entity is included in investments in subsidiaries as Nasmedia Co., Ltd. holds ownership of 46.9% and the Company and the subsidiary holds ownership of 70.4%. 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

Investments in associates and joint ventures as at and for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | **Carrying amount** | **Carrying amount** | **Carrying amount** | **Carrying amount** |
| *(in millions of Korean won)* | **Location** | **Percentage of<br>ownership (%)** | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  KIF Investment Fund | Korea | 33.3% | W | 115636 | W | 115636 |
|  Hyundai Robotics Co., Ltd. <sup>1</sup> | Korea | 10.0% |  | 50000 |  | 50000 |
|  Megazone Cloud Corporation <sup>1</sup> | Korea | 6.7% |  | 130001 |  |  |
|  KT-DSC Creative Economy Youth Start-up Investment Fund <sup>1</sup> | Korea | 17.1% |  | 2520 |  | 2520 |
|  Others |  |  |  | 88075 |  | 72321 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  |  | W | 386232 | W | 240477 |

---

<sup>1</sup> As at December 31, 2022,although the Company has less than 20% ownership in ordinary share, this entity is included in investments in associates as the Company has significant influence in determining the operational and financial policies. 

Changes in investments in subsidiaries, associates and joint ventures for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning | W | 3816915 | W | 3505017 |
|  Acquisition |  | 348608 |  | 383221 |
|  Disposal |  | (34750) |  | (76398) |
|  Impairment |  | (3000) |  | (13553) |
|  Reversal of impairment loss |  |  |  | 7027 |
|  Investment in kind |  | 751504 |  |  |
|  Others |  | (58) |  | 11601 |
|  Ending | W | 4879219 | W | 3816915 |

---

The cost method is applied to account for investments in subsidiaries, associates and joint ventures and is reviewed for any indicators that an impairment loss may have occurred at the end of each reporting period. If there are such indicators, the recoverable amount of the asset is estimated using the future cash flow discount method, and if the recoverable amount falls short of the carrying amount, the carrying amount of the asset is reduced and the impairment loss is immediately recognized as loss in the current year.

During the year ended December 31, 2022, the difference between recoverable amount and carrying amount of W 3,000 million in relation to 'AI RESEARCH INSTITUTE', a subsidiary company, is recognized as other expenses.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**14.** **Trade and Other Payables** 

Details of trade and other payable as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  **Current liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | W | 568260 | W | 883159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables |  | 3842796 |  | 3640462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 4411056 | W | 4523621 |
|  **Non-current liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other payables |  | 979050 |  | 1259709 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 979050 | W | 1259709 |

---

Details of other payables as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Non-trade payable | W | 3351557 | W | 3544153 |
|  Accrued expenses |  | 935250 |  | 738969 |
|  Operating deposits |  | 436485 |  | 466808 |
|  Others |  | 98554 |  | 150241 |
|  Less: Non-current |  | (979050) |  | (1259709) |
|  Current | W | 3842796 | W | 3640462 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**15.** **Borrowings** 

Details of borrowings as at December 31, 2022 and 2021, are as follows:

**Debentures** 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Maturity** | **Annual interest**<br> **rates** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** |
|  MTNP notes <sup>1</sup> | Sep. 7, 2034 | 6.500% | USD 100,000 | W | 126730 | USD 100,000 | W | 118550 |
|  MTNP notes | Jul. 18, 2026 | 2.500% | USD 400,000 |  | 506920 | USD 400,000 |  | 474200 |
|  MTNP notes | Aug. 7, 2022 |  |  |  |  | USD 400,000 |  | 474200 |
|  FR notes <sup>2</sup> | Aug. 23, 2023 | LIBOR(3M)+0.900% | USD 100,000 |  | 126730 | USD 100,000 |  | 118550 |
|  MTNP notes | Jul. 19, 2022 |  |  |  |  | JPY 29,600,000 |  | 304951 |
|  MTNP notes | Jul. 19, 2024 | 0.330% | JPY 400,000 |  | 3813 | JPY 400,000 |  | 4121 |
|  MTNP notes | Sep. 1, 2025 | 1.000% | USD 400,000 |  | 506920 | USD 400,000 |  | 474200 |
|  FR notes <sup>2</sup> | Nov. 1, 2024 | LIBOR(3M)+0.980% | USD 350,000 |  | 443555 | USD 350,000 |  | 414925 |
|  FR notes <sup>2</sup> | Jun. 19, 2023 | SOR(6M)+0.500% | SGD 284,000 |  | 267843 | SGD 284,000 |  | 249108 |
|  MTNP notes | Jan. 21, 2027 | 1.375% | USD 300,000 |  | 380190 | USD 300,000 |  | 355650 |
|  MTNP notes | Aug. 9, 2025 | 4.000% | USD 500,000 |  | 633650 |  |  |  |
|  The 183-3rd Public bond | Dec. 22, 2031 | 4.270% |  |  | 160000 |  |  | 160000 |
|  The 184-2nd Public bond | Apr. 10, 2023 | 2.950% |  |  | 190000 |  |  | 190000 |
|  The 184-3rd Public bond | Apr. 10, 2033 | 3.170% |  |  | 100000 |  |  | 100000 |
|  The 186-3rd Public bond | Jun. 26, 2024 | 3.418% |  |  | 110000 |  |  | 110000 |
|  The 186-4th Public bond | Jun. 26, 2034 | 3.695% |  |  | 100000 |  |  | 100000 |
|  The 187-3rd Public bond | Sep. 2, 2024 | 3.314% |  |  | 170000 |  |  | 170000 |
|  The 187-4th Public bond | Sep. 2, 2034 | 3.546% |  |  | 100000 |  |  | 100000 |
|  The 188-2nd Public bond | Jan. 29, 2025 | 2.454% |  |  | 240000 |  |  | 240000 |
|  The 188-3rd Public bond | Jan. 29, 2035 | 2.706% |  |  | 50000 |  |  | 50000 |
|  The 189-3rd Public bond | Jan. 28, 2026 | 2.203% |  |  | 100000 |  |  | 100000 |
|  The 189-4th Public bond | Jan. 28, 2036 | 2.351% |  |  | 70000 |  |  | 70000 |
|  The 190-2nd Public bond | Jan. 30, 2023 | 2.749% |  |  | 150000 |  |  | 150000 |
|  The 190-3rd Public bond | Jan. 30, 2028 | 2.947% |  |  | 170000 |  |  | 170000 |
|  The 190-4th Public bond | Jan. 30, 2038 | 2.931% |  |  | 70000 |  |  | 70000 |
|  The 191-1st Public bond | Jan. 14, 2022 |  |  |  |  |  |  | 220000 |
|  The 191-2nd Public bond | Jan. 15, 2024 | 2.088% |  |  | 80000 |  |  | 80000 |
|  The 191-3rd Public bond | Jan. 15, 2029 | 2.160% |  |  | 110000 |  |  | 110000 |
|  The 191-4th Public bond | Jan. 14, 2039 | 2.213% |  |  | 90000 |  |  | 90000 |
|  The 192-1st Public bond | Oct. 11, 2022 |  |  |  |  |  |  | 340000 |
|  The 192-2nd Public bond | Oct. 11, 2024 | 1.578% |  |  | 100000 |  |  | 100000 |
|  The 192-3rd Public bond | Oct. 11, 2029 | 1.622% |  |  | 50000 |  |  | 50000 |
|  The 192-4th Public bond | Oct. 11, 2039 | 1.674% |  |  | 110000 |  |  | 110000 |
|  The 193-1st Public bond | Jun. 16, 2023 | 1.174% |  |  | 150000 |  |  | 150000 |
|  The 193-2nd Public bond | Jun. 17, 2025 | 1.434% |  |  | 70000 |  |  | 70000 |
|  The 193-3rd Public bond | Jun. 17, 2030 | 1.608% |  |  | 20000 |  |  | 20000 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | *(in millions of Korean won and foreign currencies in thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Type** | **Maturity** | **Annual interest**<br> **rates** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** | **Foreign<br>currency** | **Korean<br>won** | **Korean<br>won** |
|  The 193-4th Public bond | Jun. 15, 2040 | 1.713% |  |  | 60000 |  |  | 60000 |
|  The 194-1st Public bond | Jan. 26, 2024 | 1.127% |  |  | 130000 |  |  | 130000 |
|  The 194-2nd Public bond | Jan. 27, 2026 | 1.452% |  |  | 140000 |  |  | 140000 |
|  The 194-3rd Public bond | Jan. 27, 2031 | 1.849% |  |  | 50000 |  |  | 50000 |
|  The 194-4th Public bond | Jan. 25, 2041 | 1.976% |  |  | 80000 |  |  | 80000 |
|  The 195-1st Public bond | Jun. 10, 2024 | 1.387% |  |  | 180000 |  |  | 180000 |
|  The 195-2nd Public bond | Jun. 10, 2026 | 1.806% |  |  | 80000 |  |  | 80000 |
|  The 195-3rd Public bond | Jun. 10, 2031 | 2.168% |  |  | 40000 |  |  | 40000 |
|  The 196-1st Public bond | Jan. 27, 2025 | 2.596% |  |  | 270000 |  |  |  |
|  The 196-2nd Public bond | Jan. 27, 2027 | 2.637% |  |  | 100000 |  |  |  |
|  The 196-3rd Public bond | Jan. 27, 2032 | 2.741% |  |  | 30000 |  |  |  |
|  The 197-1st Public bond | Jun. 27, 2025 | 4.191% |  |  | 280000 |  |  |  |
|  The 197-2nd Public bond | Jun. 29, 2027 | 4.188% |  |  | 120000 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal |  |  | 7116351 |  |  | 6868455 |
|  Less: Current portion | Less: Current portion | Less: Current portion |  |  | (884227) |  |  | (1337714) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discount on bonds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discount on bonds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discount on bonds |  |  | (22764) |  |  | (21268) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | W | 6209360 |  | W | 5509473 |

---

<sup>1</sup> As at December 31, 2022, the Company has outstanding notes in the amount of USD 100 million with fixed interest rates under Medium Term Note Program ("MTNP") registered in the Singapore Stock Exchange, which allowed issuance of notes of up to USD 2,000 million. However, the MTN program has been suspended since 2007. 

<sup>2</sup> LIBOR (3M) and SOR (6M) is approximately 4.767% and 4.429% as at December 31, 2022. Debentures have not been converted to an alternative interest rates indicator and the Company is assessing the impact of switching to an alternative interest rates indicator as at December 31, 2022. 

**Long-Term Borrowings** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)*<br>**Financial institution** | **Type** | **Maturity** | **Annual<br>interest<br>rates** | **December 31,<br>2022** | **December 31,<br>2022** | **December 31,<br>2021** | **December 31,<br>2021** |
|  Export-Import Bank of Korea | Inter-Korean Cooperation Fund <sup>1</sup> | Jul. 10, 2026 | 1.000% | W | 1974 | W | 2467 |
|  CA-CIB | Long-term loan | May. 15, 2023 | 1.260% |  | 100000 |  | 100000 |
|  CA-CIB | Long-term loan | May. 28, 2024 | 3.380% |  | 100000 |  |  |
|  JPM | Long-term commercial papers | Feb. 28, 2025 | 2.700% |  | 100000 |  |  |
|  DBS | Long-term commercial papers | Jun. 28, 2024 | 4.109% |  | 100000 |  |  |
|  | Subtotal |  |  |  | 401974 |  | 102467 |
|  | Less: Current portion |  |  |  | (100493) |  | (493) |
|  | Net |  |  | W | 301481 | W | 101974 |

---

<sup>1</sup> Inter-Korean Cooperation Fund is repayable in installments over 13 years after a 7-year grace period.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

Repayment schedule of the Company's debentures and borrowings as at December 31, 2022, is as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Bonds** | **Borrowings** | **Borrowings** | | |
|  | **In local<br>currency** | **In local<br>currency** | **In foreign<br>currency** | **In foreign<br>currency** | **Sub-**<br> **total** | **Sub-**<br> **total** | **In local<br>currency** | **In local<br>currency** | **Total** | **Total** |
|  Jan. 1, 2023~Dec. 31, 2023 | W | 490000 | W | 394573 | W | 884573 | W | 100493 | W | 985066 |
|  Jan. 1, 2024~Dec. 31, 2024 |  | 770000 |  | 447368 |  | 1217368 |  | 200493 |  | 1417861 |
|  Jan. 1, 2025~Dec. 31, 2025 |  | 860000 |  | 1140570 |  | 2000570 |  | 100493 |  | 2101064 |
|  Jan. 1, 2026~Dec. 31, 2026 |  | 320000 |  | 506920 |  | 826920 |  | 494 |  | 827414 |
|  Thereafter |  | 1680000 |  | 506920 |  | 2186920 |  |  |  | 2186920 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 4120000 | W | 2996351 | W | 7116351 | W | 401974 | W | 7518325 |

---

**16.** **Provisions** 

Changes in provisions for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Litigation** | **Litigation** | **Restoration<br>cost** | **Restoration<br>cost** | **Others** | **Others** | **Total** | **Total** |
|  **Beginning balance** | W | 77119 | W | 99548 | W | 56227 | W | 232944 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (transfer) |  | 1630 |  | 7654 |  | 1783 |  | 11067 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Usage |  | (5691) |  | (7689) |  | (15241) |  | (28621) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  | (42120) |  | (2846) |  | (3330) |  | (48296) |
|  **Ending balance** | W | 30938 | W | 96667 | W | 38489 | W | 167094 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 30938 | W | 17752 | W | 39030 | W | 87720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current |  |  |  | 78915 |  | 459 |  | 79374 |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Litigation** | **Litigation** | **Restoration<br>cost** | **Restoration<br>cost** | **Others** | **Others** | **Total** | **Total** |
|  **Beginning balance** | W | 74179 | W | 97039 | W | 61527 | W | 232745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (transfer) |  | 3240 |  | 5598 |  | 13983 |  | 22821 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Usage |  | (277) |  | (2298) |  | (697) |  | (3272) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reversal |  | (23) |  | (791) |  | (18536) |  | (19350) |
|  **Ending balance** | W | 77119 | W | 99548 | W | 56277 | W | 232944 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 77119 | W | 26550 | W | 51991 | W | 155660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current |  |  |  | 72998 |  | 4286 |  | 77284 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**17.** **Net Defined Benefit Liabilities (Asset)** 

The amounts recognized in the separate statements of financial position are determined as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Present value of defined benefit obligations | W | 1493655 | W | 1721241 |
|  Fair value of plan assets |  | (1674344) |  | (1604785) |
|  Liabilities (Assets), net | W | (180689) | W | 116456 |

---

Changes in the defined benefit obligations for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning | W | 1721241 | W | 1809843 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current service cost |  | 128218 |  | 138330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | 41723 |  | 33338 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefits paid |  | (208060) |  | (216270) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others<sup>1</sup> |  | (21078) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial losses arising from changes in demographic assumptions |  |  |  | (11483) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial losses arising from changes in financial assumptions |  | (228246) |  | (34770) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actuarial losses arising from experience adjustments |  | 59857 |  | 2253 |
|  Ending | W | 1493655 | W | 1721241 |

---

<sup>1</sup> Others Include transactions by the Company to increase investment in kind in kt cloud Co., Ltd. during the period ended December 31, 2022.

Changes in the fair value of plan assets for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning | W | 1604785 | W | 1539553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 38900 |  | 28359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurements |  | (4949) |  | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employer contributions |  | 243900 |  | 235100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefits paid |  | (192028) |  | (198267) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others<sup>1</sup> |  | (16264) |  |  |
|  Ending | W | 1674344 | W | 1604785 |

---

<sup>1</sup> Others Include transactions by the Company to increase investment in kind in kt cloud Co., Ltd. during the period ended December 31, 2022.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

Amounts recognized in the separate statements of profit or loss for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Current service cost | W | 128218 | W | 138330 |
|  Net interest expense |  | 2823 |  | 4979 |
|  Transfer out |  | (15305) |  | (15486) |
|  Total expense | W | 115736 | W | 127823 |

---

Principal actuarial assumptions were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
|  Discount rate | 5.13% | 2.53% |
|  Future salary increases | 5.76% | 5.71% |

---

The sensitivity analysis of the defined benefit obligations as at December 31, 2022, to changes in the principal assumptions, is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** | **Effect on defined benefit obligation** |
|  | **Changes in<br>assumption** |  | **Increase in<br>assumption** | **Increase in<br>assumption** | **Decrease in<br>assumption** | **Decrease in<br>assumption** |
|  Discount rate | 0.50 | %p | W | (37672) | W | 39718 |
|  Future salary growth rate | 0.50 | %p |  | 35532 |  | (34035) |

---

A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings.

The above sensitivity analysis are based on changes in assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.

The Company reviews the funding level on an annual basis and has a policy of eliminating deficit from the fund. Expected contributions to post-employment benefit plans, for the year ending December 31, 2023, are W 106,752 million.

The expected maturity analysis of undiscounted pension benefits as at December 31, 2022, is as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **Between 1-2<br>years** | **Between 1-2<br>years** | **Between 2-5<br>years** | **Between 2-5<br>years** | **Over 5 years** | **Over 5 years** | **Total** | **Total** |
|  Pension benefits | W | 125271 | W | 239316 | W | 613973 | W | 1056612 | W | 2035172 |

---

The weighted average duration of the defined benefit obligations is 5.4 years.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**18.** **Defined Contribution Plan** 

For the year ended December 31, 2022, recognized expense related to the defined contribution plan is for the year ended December 31, 2022, is W 45,227 million (December 31, 2021: W 40,366 million).

**19.** **Commitments and Contingencies** 

As at December 31, 2022, major commitments with local financial institutions are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won and foreign currencies in<br>thousands)* | **Financial institution** |  | **Limit** |  | **Used amount** |
|  Bank overdraft | Kookmin Bank and others |  | 360000 |  |  |
|  Working capital loan | Kookmin Bank and others |  | 1070000 |  |  |
|  Inter-Korean Cooperation Fund | Export-Import Bank of Korea |  | 37700 |  | 1974 |
|  Economic Cooperation Business Insurance | Export-Import Bank of Korea |  | 3240 |  | 1732 |
|  Collateralized loan on electronic<br> accounts receivable-trade | Kookmin Bank and others |  | 247000 |  | 6927 |
|  Plus electronic notes payable | Industrial Bank of Korea |  | 50000 |  | 1663 |
|  Derivatives transaction limit | Korea Development Bank and others | USD | 2510511 | USD | 1970000 |
|  | DBS Bank | SGD | 284000 | SGD | 284000 |
|  | Citi Bank | USD | 400000 | JPY | 400000 |
|  |  |  |  | USD | 100000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | KRW | 1767940 |  | 12295 |
|  |  | USD | 2910511 |  | 2070000 |
|  |  | SGD | 284000 |  | 284000 |
|  |  | JPY |  |  | 400000 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

As at December 31, 2022, guarantees received from financial institutions are as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(in millions of Korean won and foreign<br>currencies in thousands)* | **Warranty details** |  | **Limit** |
|  Hana Bank | Comprehensive credit line |  | 3100 |
|  Hana Bank | Comprehensive credit line | USD | 8700 |
|  Shinhan Bank | Guarantee for payment in local currency and others |  | 1397 |
|  |  | USD | 39517 |
|  Kookmin Bank | Guarantee for payment in foreign currency | USD | 6484 |
|  Woori Bank | Guarantee for payment in foreign currency | USD | 5000 |
|  Korea Development Bank | Refund guarantee for advances received | USD | 6881 |
| Korea Software Financial Cooperative | Advance payment/other guarantee<br> and others |  | 1166700 |
|  Seoul Guarantee Insurance Company | Performance guarantee and others |  | 61166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  | KRW | 1232363 |
|  |  | USD | 66582 |

---

The Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.'s liabilities incurred prior to its spin-off. As at December 31, 2022, the Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of W 653 million.

For the year ended December 31, 2022, the Company entered into agreements with the Securitization Specialty Companies (2022: First 5G 61<sup>th</sup> to 66<sup>th</sup> Securitization Specialty Co., Ltd., 2021: First 5G 55<sup>rd</sup> to 60<sup>th</sup> Securitization Specialty Co., Ltd.) and disposed of its trade receivables related to handset sales. The Company also made asset management agreements with each securitization specialty company and in accordance with the agreement, the Company will receive asset management fees upon liquidation of the securitization specialty company.

As at December 31, 2022, the Company is a defendant in 138 lawsuits with the total claimed amount of W 53,235 million. As at December 31, 2022, litigation provisions of W 30,938 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated as at December 31, 2022.

According to the financial and other covenants included in certain debentures and borrowings, the Company is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restrictions on provision of additional collateral and disposal of certain assets.

As at December 31, 2022, the Company participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at December 31, 2022, the contract amount of property and equipment acquisition agreements made but not yet recognized amounts to W 653,639 million (December 31, 2021: W 704,698 million).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

For the year ended December 31, 2021, the Company entered into an agreement with financial investors, who participated in the acquisition of shares in Epsilon Global Communications Pte. Ltd. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, the financial investor of the equity acquisition contract may exercise the Tag-Along Right and Drag-Along Right for convertible preferred shares it owns (Note 7).

The Company has an additional investment obligation under the agreement to Future Innovation Private Equity Fund No.3 and others. As at December 31, 2022, remaining amount of W 5,473 million and USD 34,050 thousand will be invested using the Capital Call method in the future

The Company has an obligation to provide financial support as a construction investor during the construction period with respect to K Defense Co., Ltd. established in accordance with the Private Investment Act on Social Infrastructure, and there is a joint responsibility obligation. During the operating period, as an operating investor, the group has an obligation to provide financial support.

As at December 31, 2022, the Company entered into a shareholders' agreement with CJ ENM Co., Ltd., which signed a business cooperation contract with KT Studio Genie Co., Ltd. If certain conditions under the agreement are not satisfied, CJ ENM Co., Ltd. may exercise its stock purchase right of the Company.

As at December 31, 2022, the Company entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY. If a certain period of time has elapsed from the date of the contract and the acquired stocks are to be disposed to a third party, HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY may exercise a preferential purchase right to designate a buyer with priority.

As at December 31, 2022, the Company entered into an agreement with LS Cable & System Ltd., which participated in the stock acquisition contract of KT Submarine Co., Ltd. Under the agreement, LS Cable & System Ltd. may exercise a call-option to the Company in the future and the Company may exercise a put-option to LS Cable & System Ltd. (Note 7).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**20.** **Leases** 

Set out below is information for leases when the Company is a lessee. Information on leases when the Company is a lessor is provided in Note 11.

The separate statements of financial position shows the following amounts relating to leases:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Right-of-use assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and buildings | W | 889615 | W | 984348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Machinery and communication line facilities |  | 38112 |  | 51301 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 55322 |  | 42480 |
|  | W | 983049 | W | 1078129 |
|  Investment properties (building) | W |  | W | 24 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Lease liabilities <sup>1</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current | W | 223747 | W | 268453 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-current |  | 641533 |  | 698247 |
|  | W | 865280 | W | 966700 |

---

<sup>1</sup> Included in the line item 'other current liabilities and non-current liabilities' in the separate statements of financial position (Note 9).

For the years ended December 31, 2022 and 2021, right-of-use assets increased to W 276,784 million and W 310,693 million, respectively.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

The separate statements of profit or loss shows the following amounts relating to leases:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Depreciation of right-of-use assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and building | W | 299950 | W | 317667 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Machinery and communication line facilities |  | 29842 |  | 41254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 24284 |  | 22332 |
|  | W | 354076 | W | 381253 |
|  Depreciation of investment properties | W | 15 | W | 1793 |
|  Interest expense relating to lease liabilities |  | 31625 |  | 32171 |
|  Short-term leases |  | 4203 |  | 2732 |
|  Expense relating to leases of low-value assets that are not short-term leases |  | 12562 |  | 15719 |

---

The total cash outflow for leases for the years ended December 31, 2022 and 2021 is W 405,444 million and W 438,049 million, respectively.

**21.** **Share Capital** 

As at December 31, 2022 and 2021, the Company has 1,000,000,000 shares authorized to issue, and the details are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Number of**<br> **issued**<br> **shares** | **Par value**<br> **per share**<br> ***(in Korean won)*** | **Par value**<br> **per share**<br> ***(in Korean won)*** | **Ordinary shares**<br> ***(in millions of***<br> ***Korean won)*** | **Ordinary shares**<br> ***(in millions of***<br> ***Korean won)*** | **Number of**<br> **issued shares** | **Par value**<br> **per share**<br> ***(in Korean<br>won)*** | **Par value**<br> **per share**<br> ***(in Korean<br>won)*** | **Ordinary shares**<br> ***(in millions of***<br> ***Korean won)*** | **Ordinary shares**<br> ***(in millions of***<br> ***Korean won)*** |
|  Ordinary shares<sup>1</sup> | 261111808 | W | 5000 | W | 1564499 | 261111808 | W | 5000 | W | 1564499 |

---

<sup>1</sup> The Company retired 51,787,959 treasury shares against retained earnings. Therefore, the ordinary shares amount differs from the amount resulting from multiplying the number of shares issued. 

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**22.** **Retained Earnings** 

Details of retained earnings as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Legal reserve <sup>1</sup> | W | 782249 | W | 782249 |
|  Voluntary reserves <sup>2</sup> |  | 4651362 |  | 4651362 |
|  Unappropriated retained earnings |  | 6913792 |  | 6497870 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 12347403 | W | 11931481 |

---

<sup>1</sup> The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued share capital. The reserve is not available for the payment of cash dividends, but may be transferred to share capital with the approval of the Company's Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the Company's majority shareholders. 

<sup>2</sup> In accordance with the Restrictions on Special Taxation Act, R&D and HR related reserves under the voluntary reserves are separately accumulated when retained earnings from tax reserve funds are disposed, when income tax is recalculated from tax return adjustments. Reversal of these provisions can be paid out as dividends according to the related tax law. 

The appropriation of retained earnings for the year ended December 31, 2022 is expected to be appropriated at the shareholders' meeting on March 31, 2023. The appropriation date for the year ended December 31, 2021 was March 31, 2022.

The appropriation of retained earnings for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Note** | **2022** | **2022** | **2021** | **2021** |
|  Unappropriated retained earnings from prior year |  | W | 6035899 | W | 5453118 |
|  Remeasurements of net defined benefit liabilities | 17, 29 |  | 114154 |  | 31025 |
|  Gain (loss) on disposal of financial assets at fair value through other comprehensive income | 4 |  | (11) |  | 23236 |
|  Profit for the year |  |  | 763750 |  | 990491 |
|  Retained earnings available for appropriation |  |  | 6913792 |  | 6497870 |
|  Appropriation of loss on disposal of treasury stock | 23 |  | (44422) |  | (11577) |
|  Dividends | 31 |  |  |  |  |
|  (Cash dividend (%): Ordinary shares: |  |  | (501844) |  | (450394) |
|  W 1,960 (39.2%) in 2022 |  |  |  |  |  |
|  W 1,910 (38.2%) in 2021 |  |  |  |  |  |
|  Appropriation of retained earnings |  |  | (546266) |  | (461971) |
|  Retained earnings after appropriation |  | W | 6367526 | W | 6035899 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**23.** **Accumulated Other Comprehensive Income and Other Components of Equity** 

As at December 31, 2022 and 2021, the details of the Company's accumulated other comprehensive income, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income | W | (62907) | W | 100622 |
|  Gain (loss) on derivatives valuation |  | (9765) |  | 24988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (72672) | W | 125610 |

---

Changes in accumulated other comprehensive income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Increase**<br> **(Decrease)** | **Increase**<br> **(Decrease)** | **Reclassification**<br> **to gain or loss** | **Reclassification**<br> **to gain or loss** | **Ending** | **Ending** |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income | W | 100622 | W | (163529) | W |  | W | (62907) |
|  Gain (loss) on derivatives valuation |  | 24988 |  | 56259 |  | (91012) |  | (9765) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 125610 | W | (107270) | W | (91012) | W | (72672) |
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Increase**<br> **(Decrease)** | **Increase**<br> **(Decrease)** | **Reclassification**<br> **to gain or loss** | **Reclassification**<br> **to gain or loss** | **Ending** | **Ending** |
|  Gain on valuation of financial assets at fair value through other comprehensive income | W | 22055 | W | 78567 | W |  | W | 100622 |
|  Gain (loss) on derivatives valuation |  | 20851 |  | 137865 |  | (133728) |  | 24988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 42906 | W | 216432 | W | (133728) | W | 125610 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

As at December 31, 2022 and 2021, the Company's other components of equity, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Treasury stock <sup>1</sup> | W | (202295) | W | (1009798) |
|  Loss on disposal of treasury stock <sup>2</sup> |  | (44422) |  | (11577) |
|  Share-based compensation |  | 6222 |  | 4068 |
|  Other |  | (180913) |  | (179647) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (421408) | W | (1196954) |

---

<sup>1</sup> During the year ended December 31, 2022, the Company granted 20,105,609 treasury shares as equity exchange with HYUNDAI MOBIS and HYUNDAI MOTOR COMPANY and 128,923 treasury shares as share-based payments (Note 7 and 19).

<sup>2</sup> The amount of income tax effect directly reflected in equity is W 14,886 million for the year ended December 31, 2022 (December 31, 2021: W 4,080 million). 

As at December 31, 2022 and 2021, details of treasury stock, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Number of shares *(in shares)* |  | 5069130 |  | 25303662 |
|  Amount *(in millions of Korean won)* | W | 202295 | W | 1009798 |

---

Treasury stock is expected to be used for stock compensation for the Company's directors, employees, and other purposes.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**24.** **Share-Based Compensation** 

Details of share-based compensation granted by the Company to executives and employees, including the CEO, by the resolution the Board of Directors as at December 31, 2022 and 2021, are as follows:

---

| | |
|:---|:---|
|  | **2022** |
| *(in share)* | **16th grant** |
| Grant date | June 9, 2022 |
| Grantee | CEO, internal directors, external directors, executives |
| Vesting conditions | Service condition: 1 year<br>Non-market performance condition: achievement of performance |
| Fair value per option *(in Korean won)* | W 36,941 |
| Total compensation costs | W 6,222 million |
| Estimated exercise date | During 2023 |
| Valuation method | Fair value method |

---

---

| | |
|:---|:---|
|  | **2021** |
| *(in share)* | **15th grant** |
| Grant date | June 17, 2021 |
| Grantee | CEO, internal directors, external directors, executives |
| Vesting conditions | Service condition: 1 year<br>Non-market performance condition: achievement of performance |
| Fair value per option *(in Korean won)* | W 32,397 |
| Total compensation costs | W 7,206 million |
| Estimated exercise date | May 11, 2022 |
| Valuation method | Fair value method |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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---

| | |
|:---|:---|
|  | **2021** |
| *(in share)* | **Employee wage negotiation** |
| Grant date | September 6, 2021 |
| Grantee | All employees |
| Vesting conditions | Current employees as of September 6, 2021 |
| Fair value per option *(in Korean won)* | W 30,950 |
| Total compensation costs | W 40,083 million |
| Estimated exercise date | December 10, 2021 |
| Valuation method | Fair value method |

---

Changes in the number of share-based compensation for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in shares)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Granted** | **Expired** | **Exercised<sup>1</sup>** | **Ending** | **Number of<br>shares<br>exercisable** |
|  15th grant | 284209 |  | (155286) | (128923) |  |  |
|  16th grant |  | 258509 |  |  | 258509 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 284209 | 258509 | (155286) | (128923) | 258509 |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in shares)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Granted** | **Expired** | **Exercised<sup>1</sup>** | **Ending** | **Number of<br>shares<br>exercisable** |
|  14th grant | 398856 |  | (264286) | (134570) |  |  |
|  15th grant |  | 284209 |  |  | 284209 |  |
|  Employee wage negotiation |  | 1432332 |  | (1432332) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 398856 | 1716541 | (264286) | (1566902) | 284209 |  |

---

<sup>1</sup> The weighted average price of ordinary shares at the time of exercise, during the year ended December 31, 2022, is W 35,450 (2021: W 31,122).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**25.** **Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities** 

The Company has recognized the following amounts relating to revenue in the separate statement of profit or loss:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Revenue from contracts with customers | W | 18083857 | W | 18206251 |
|  Revenue from other sources |  | 205386 |  | 181183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total revenue | W | 18289243 | W | 18387434 |

---

Operating revenues for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Services provided | W | 15766188 | W | 15501216 |
|  Sales of goods |  | 2523055 |  | 2886218 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 18289243 | W | 18387434 |

---

Revenue from services provided are recognized over time and revenue from sales of goods are recognized at a point in time.

Contract assets, liabilities and deferred revenue recognized in relation to the revenues from contracts with customers, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Contract assets<sup>1</sup> | W | 885380 | W | 757804 |
|  Contract liabilities<sup>1</sup> |  | 342196 |  | 370740 |
|  Deferred revenue<sup>2</sup> |  | 70369 |  | 74594 |

---

<sup>1</sup> Company recognized contract assets of W 160,880 and, contract liabilities of W 60,761 million for long-term construction contracts as at December 31, 2022 (2021: contract assets and liabilities of W 76,816 million and W 36,446 million, respectively). The Company recognizes contract asset as trade receivables, and other receivables, and contract liabilities as other current liabilities. 

<sup>2</sup> Deferred revenue recognized relating to government grant is excluded.

The contract costs recognized as assets are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Incremental cost of obtaining a contract | W | 1729567 | W | 1727153 |
|  Cost of contract performance |  | 153517 |  | 140480 |

---

The Company recognized W 1,908,543 million (2021: W 1,929,958 million) of operating expenses during the year end December 31, 2022, which relates to contract cost assets.

The Company did not recognize an impairment loss in anticipation of full recovery of costs recognized as assets.

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

For the year ended December 31, 2022 and 2021, revenue recognized from carried-forward contract liabilities and deferred revenue from prior year, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Revenue recognized that was included in the contract liabilities balance at the beginning of the year |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allocation of the transaction price | W | 227331 | W | 253894 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred revenue of joining/installment fee |  | 37984 |  | 37669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 265315 | W | 291563 |

---

**26.** **Operating Expenses** 

Operating expenses for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Salaries and wages | W | 2380672 | W | 2308089 |
|  Depreciation |  | 2286741 |  | 2346895 |
|  Depreciation of intangible assets |  | 464991 |  | 489495 |
|  Depreciation of right-of-use assets |  | 354076 |  | 381253 |
|  Commissions |  | 1815415 |  | 1691778 |
|  Interconnection charges |  | 479644 |  | 507535 |
|  International interconnection fees |  | 186258 |  | 192037 |
|  Purchase of inventories |  | 2618632 |  | 2873665 |
|  Changes of inventories |  | (60524) |  | 63964 |
|  Sales promotion expense and sales commission |  | 2574457 |  | 2568842 |
|  Service costs |  | 832843 |  | 778973 |
|  Purchase of contents |  | 653265 |  | 605993 |
|  Utilities |  | 323821 |  | 343852 |
|  Taxes and dues |  | 222568 |  | 223048 |
|  Rent |  | 116112 |  | 106014 |
|  Insurance premiums |  | 57340 |  | 60238 |
|  Installation fees |  | 491461 |  | 465350 |
|  Advertising expenses |  | 148493 |  | 136182 |
|  Research and development expenses |  | 186212 |  | 172746 |
|  Bad debt expenses |  | 49727 |  | 54669 |
|  Others |  | 938936 |  | 948543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 17121140 | W | 17319161 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of employee benefits for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Short-term employee benefits | W | 2187465 | W | 2075119 |
|  Post-employment benefits (defined benefits) |  | 115736 |  | 127823 |
|  Post-employment benefits (defined contributions) |  | 45227 |  | 40366 |
|  Share-based compensation |  | 14192 |  | 46904 |
|  Others |  | 18052 |  | 17877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 2380672 | W | 2308089 |

---

**27.** **Other Income and Other Expenses** 

Other income for the years ended December 31, 2022 and 2021, consists of:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Gain on disposal of property and equipment | W | 52175 | W | 27307 |
|  Gain on disposal of right-of-use assets |  | 2935 |  | 1837 |
|  Gain on disposal of intangible assets |  | 263 |  | 964 |
|  Compensation on property and equipment |  | 159849 |  | 148927 |
|  Gain on disposal of investments in subsidiaries, associates and joint ventures |  | 1278 |  | 2268 |
|  Reversal of impairment loss on investments in subsidiaries, associates and joint ventures |  |  |  | 7028 |
|  Dividends received |  | 89895 |  | 76622 |
|  Gains on government subsidies |  | 44473 |  | 43822 |
|  Others |  | 57157 |  | 38132 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 408025 | W | 346907 |

---

Other expenses for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Loss on disposal of property and equipment | W | 72600 | W | 67349 |
|  Impairment loss on property and equipment |  | 2969 |  |  |
|  Loss on disposal of right-of-use assets |  | 1991 |  | 10527 |
|  Impairment loss on intangible assets |  | 6240 |  | 3744 |
|  Loss on disposal of investments in subsidiaries, associates and joint ventures |  |  |  | 7881 |
|  Impairment loss on investments in subsidiaries, associates and joint ventures |  | 3000 |  | 13553 |
|  Donations |  | 10576 |  | 6272 |
|  Others |  | 131347 |  | 134935 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 228723 | W | 244261 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**28.** **Finance Income and Costs** 

Details of financial income for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Interest income | W | 234595 | W | 257534 |
|  Gain on foreign currency transactions |  | 54875 |  | 16535 |
|  Gain on foreign currency translation |  | 40046 |  | 31238 |
|  Gain on derivative transactions |  | 50518 |  |  |
|  Gain on valuation of derivatives |  | 150570 |  | 199736 |
|  Gain on valuation of financial instruments |  | 36197 |  | 104214 |
|  Others |  | 10533 |  | 29674 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 577334 | W | 638931 |

---

Details of financial costs for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Interest expenses | W | 258504 | W | 234803 |
|  Loss on foreign currency transactions |  | 73937 |  | 7970 |
|  Loss on foreign currency translation |  | 162737 |  | 196393 |
|  Loss on derivative transactions |  | 23039 |  | 6209 |
|  Loss on valuation of derivatives |  | 20722 |  | 7206 |
|  Loss on disposal of trade receivables |  | 62630 |  | 22695 |
|  Loss on valuation of financial instruments |  | 52385 |  | 12861 |
|  Others |  | 42 |  | 396 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 653996 | W | 488533 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

**29.** **Deferred Income Tax and Income Tax Expense** 

Deferred tax assets and deferred tax liabilities as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Deferred tax assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets to be recovered within 12 months | W | 307377 | W | 298367 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets to be recovered after more than 12 months |  | 1042833 |  | 1096600 |
|  |  | 1350210 |  | 1394967 |
|  Deferred tax liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities to be recovered within 12 months |  | (529259) |  | (497747) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities to be recovered after more than 12 months |  | (1584064) |  | (1384327) |
|  |  | (2113323) |  | (1882074) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets (liabilities), net | W | (763113) | W | (487107) |

---

The movement in deferred income tax assets and liabilities as at December 31, 2022 and 2021, before taking into consideration the offsetting of balances, is as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiaries, associates and joint ventures | W | (31304) | W | (1596) | W |  | W | (32900) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense and impairment loss |  | (83769) |  | (64940) |  |  |  | (148709) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Plan assets |  | (418207) |  | (2054) |  |  |  | (420261) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax gain on disposal of fixed assets |  | (346934) |  | (182934) |  |  |  | (529868) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract assets |  | (664255) |  | 9704 |  |  |  | (654551) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | (64742) |  | (3453) |  | 36997 |  | (31198) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (272863) |  | (25458) |  | 2485 |  | (295836) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (1882074) | W | (270731) | W | 39482 | W | (2113323) |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in subsidiaries, associates and joint ventures |  | 5038 |  | (1505) |  |  |  | 3533 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense and impairment loss |  | 69327 |  | 18904 |  |  |  | 88231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 148693 |  | (27300) |  |  |  | 121393 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defined benefit liabilities |  | 448555 |  | (24362) |  | (49286) |  | 374907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | 276508 |  | 3304 |  |  |  | 279812 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  |  |  |  |  | 19548 |  | 19548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables |  | 1635 |  | (60) |  |  |  | 1575 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 311212 |  | 37953 |  | 9594 |  | 358759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1260968 | W | 6934 | W | (20144) | W | 1247758 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Temporary difference, net |  | (621106) |  | (263797) |  | 19338 |  | (865565) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit carryforwards |  | 133999 |  | (31547) |  |  |  | 102452 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net balance | W | (487107) | W | (295344) | W | 19338 | W | (763113) |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in subsidiaries, associates and joint ventures | W | (27796) | W | (3508) | W |  | W | (31304) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense and impairment loss |  |  |  | (83769) |  |  |  | (83769) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Plan assets |  | (403825) |  | (14382) |  |  |  | (418207) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax gain on disposal of fixed assets |  | (319848) |  | (27086) |  |  |  | (346934) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract assets |  | (629015) |  | (35240) |  |  |  | (664255) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | (3988) |  | (33132) |  | (27622) |  | (64742) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivable |  | (939) |  | 939 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (243967) |  | (27503) |  | (1393) |  | (272863) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (1629378) | W | (223681) | W | (29015) | W | (1882074) |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Statement of<br>profit or loss** | **Statement of<br>profit or loss** | **Other<br>comprehensive<br>income** | **Other<br>comprehensive<br>income** | **Ending** | **Ending** |
|  **Deferred tax assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investments in subsidiaries, associates and joint ventures |  | 34020 |  | (29619) |  | 637 |  | 5038 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense and impairment loss |  | 22516 |  | 46811 |  |  |  | 69327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 140703 |  | 7990 |  |  |  | 148693 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defined benefit liabilities |  | 474722 |  | (13152) |  | (13015) |  | 448555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions |  | 245972 |  | 30536 |  |  |  | 276508 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade receivables |  |  |  | 1635 |  |  |  | 1635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 295052 |  | 16160 |  |  |  | 311212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 121298 | W | 60361 | W | (12378) | W | 1260968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Temporary difference, net |  | (416393) |  | (163320) |  | (41393) |  | (621106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit carryforwards |  | 144939 |  | (10940) |  |  |  | 133999 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net balance | W | (271454) | W | (174260) | W | (41393) | W | (487107) |

---

Total unrecognized temporary differences as deferred tax liabilities as at December 31, 2022 is W 559,164 million (2021: W 536,447 million), relating to investment in subsidiaries, associates and joint ventures, and the total of unrecognized temporary differences as deferred tax assets as at December 31, 2022 is W 3,328,478 million (2021: W 2,326,197 million), relating to investment in subsidiaries, associates and joint ventures.

The tax impact recognized directly to equity as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Before<br>recognition** | **Before<br>recognition** | **Tax effect** | **Tax effect** | **After<br>recognition** | **After<br>recognition** | **Before<br>recognition** | **Before<br>recognition** | **Tax effect** | **Tax effect** | **After<br>recognition** | **After<br>recognition** |
|  Gain (loss) on valuation of financial assets at fair value through other comprehensive income | W | (220074) | W | 56545 | W | (163529) | W | 106189 | W | (27622) | W | 78567 |
|  Hedge instruments valuation gain (loss) |  | (46832) |  | 12079 |  | (34753) |  | 5530 |  | (1393) |  | 4137 |
|  Remeasurements of net defined benefit liabilities |  | 163440 |  | (49286) |  | 114154 |  | 44040 |  | (13015) |  | 31025 |
|  Loss on disposal of treasury stock |  | (59308) |  | 14886 |  | (44422) |  | (15657) |  | 4080 |  | (11577) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | (162774) | W | 34224 | W | (128550) | W | 140102 | W | (37950) | W | 102152 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

------

Details of income tax expenses for the years ended December 31, 2022 and 2021, are calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Current income tax expenses | W | 211649 | W | 156566 |
|  Impact of change in temporary differences |  | 295344 |  | 174260 |
|  Total income tax expense | W | 506993 | W | 330826 |

---

The relationship between the company profit before tax and income tax expense for the years ended December 31, 2022 and 2021, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Profit before income tax | W | 1270743 | W | 1321317 |
|  Expected tax expense at statutory tax rate | W | 339092 | W | 353000 |
|  Tax effects of |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income not taxable for tax purposes |  | (3515) |  | (2879) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expenses not deductible for tax purposes |  | 20089 |  | 7938 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax credit and deferred tax effects due to consolidated tax return |  | (49393) |  | (44490) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Temporary difference not recognized as deferred tax |  | 245871 |  | 22595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax due to tax rate changes |  | (39602) |  |  |
|  Others |  | (5549) |  | (5338) |
|  Income tax expense | W | 506993 | W | 330826 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**30.** **Earnings per Share** 

Basic earnings per share is calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Company and held as treasury stock.

Basic earnings per share for the years ended December 31, 2022 and 2021, is calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Profit attributable to ordinary shares | W | 763750 | W | 990491 |
|  Weighted average number of ordinary shares outstanding in shares |  | 242235332 |  | 235201782 |
|  Basic earnings per share *(in Korean won)* |  | 3153 |  | 4211 |

---

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares from other share-based compensation.

Diluted earnings per share for the years ended December 31, 2022 and 2021, is calculated as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Profit attributable to ordinary shares *(in millions of Korean won)* | W | 763750 | W | 990491 |
|  Adjusted profit for the year attributable to ordinary shares *(in millions of Korean won)* |  | 763750 |  | 990491 |
|  Number of dilutive potential ordinary shares outstanding |  | 91931 |  | 483760 |
|  Weighted-average number of ordinary shares outstanding and dilutive ordinary shares |  | 242327263 |  | 235685542 |
|  Diluted earnings per share *(in Korean won)* |  | 3152 |  | 4203 |

---

Diluted earnings per share is earnings per outstanding of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated by dividing adjusted profit for the year by the sum of the number of ordinary shares and dilutive potential ordinary shares.

**31.** **Dividends** 

The dividends paid by the Company in 2022 are W 450,394 million (W 1,910 per share). The dividends paid by the Company in 2021 were W 326,487 million (W 1,350 per share). A dividend in respect of the year ended December 31, 2022, of W 1,960 per share, amounting to a total dividend of W 501,844 million, is to be proposed at the shareholders' meeting on March 31, 2023.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

**32.** **Cash Generated from Operations** 

Cash flows from operating activities for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
| 1. Profit for the year | W | 763750 | W | 990491 |
| 2. Adjustments for: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense |  | 506993 |  | 330826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | (234595) |  | (257534) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | 258504 |  | 234803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends income |  | (98874) |  | (76629) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation |  | 2333915 |  | 2385029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangible assets |  | 467052 |  | 491169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation of right-of-use assets |  | 354076 |  | 381253 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provisions for post-employment |  | 131041 |  | 143309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for bad debts |  | 63593 |  | 71709 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of subsidiaries, associates and joint ventures |  | (1278) |  | 5613 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment loss on interests in subsidiaries, associates and joint ventures |  | 3000 |  | 6525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of property and equipment |  | 20425 |  | 40042 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of intangible assets |  | 5977 |  | 2780 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on disposal of right-of-use assets |  | (944) |  | 8690 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on foreign currency translation |  | 122691 |  | 165155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on valuation of derivatives, net |  | (177600) |  | (186321) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on valuation of financial assets at fair value <br>through profit or loss |  | 37256 |  | (91353) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of financial assets at fair value <br>through profit or loss |  | (1555) |  | (29162) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | (122170) |  | 18952 |
| 3. Changes in operating assets and liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in trade receivables |  | 118814 |  | 346856 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease (increase) in other receivables |  | 67940 |  | (50182) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other current assets |  | (26665) |  | (106080) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other non-current assets |  | (13886) |  | (68009) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease (increase) in inventories |  | (39879) |  | 74974 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in trade payables |  | (313744) |  | 206643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in other payables |  | 314512 |  | 196684 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in other current liabilities |  | (69292) |  | (16402) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in other non-current liabilities |  | (17018) |  | (17418) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in provisions |  | (26519) |  | (1206) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in deferred revenue |  | (34083) |  | 40897 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment of post-employment benefits |  | (238219) |  | (147411) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in plan assets |  | (25033) |  | (96325) |
| 4. Cash generated from operations (1+2+3) | W | 4128185 | W | 4998368 |

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

Significant transactions not affecting cash flows for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Reclassification of current portion of borrowings | W | 957218 | W | 1304112 |
|  Reclassification of construction-in-progress to property and equipment |  | 2936585 |  | 2784826 |
|  Reclassification of accounts payable from property and equipment |  | (46638) |  | (185196) |
|  Reclassification of accounts payable from intangible assets |  | (304125) |  | 519017 |
|  Reclassification of payable from net defined benefit liabilities |  | (3320) |  | 9367 |
|  Disposal of treasury stock related to the acquisition of financial instrument |  | 747161 |  |  |
|  Increase of in subsidiary shares due to investment in kind |  | 751504 |  |  |

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**33.** **Changes in Liabilities Arising from Financing Activities** 

Changes in liabilities arising from financing activities, and liabilities related to cashflow to be classified as future financing activities, for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Beginning** | **Beginning** | **Financing<br>activities<br>cash flows** | **Financing<br>activities<br>cash flows** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |
|  | **Beginning** | **Beginning** | **Financing<br>activities<br>cash flows** | **Financing<br>activities<br>cash flows** | **Newly<br>acquired** | **Newly<br>acquired** | **Exchange<br>difference** | **Exchange<br>difference** | **Fair value<br>change** | **Fair value<br>change** | **Other<br>changes** | **Other<br>changes** | **Ending** | **Ending** |
|  Borrowing | W | 6949654 | W | 382845 | W |  | W | 136787 | W |  | W | 26275 | W | 7495561 |
|  Lease liabilities |  | 966700 |  | (357337) |  | 295207 |  |  |  |  |  | (39290) |  | 865280 |
|  Derivative liabilities |  | 18050 |  | (41197) |  |  |  | 19858 |  | 11788 |  | 23903 |  | 32402 |
|  Derivative assets |  | (97021) |  | 76280 |  |  |  | (147161) |  | 31636 |  | (49723) |  | (185989) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 7837383 | W | 60591 | W | 295207 | W | 9484 | W | 43424 | W | (38835) | W | 8207254 |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Beginning** | **Beginning** | **Financing<br>activities<br>cash flows** | **Financing<br>activities<br>cash flows** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |
|  | **Beginning** | **Beginning** | **Financing<br>activities<br>cash flows** | **Financing<br>activities<br>cash flows** | **Newly<br>acquired** | **Newly<br>acquired** | **Exchange<br>difference** | **Exchange<br>difference** | **Fair value<br>change** | **Fair value<br>change** | **Other<br>changes** | **Other<br>changes** | **Ending** | **Ending** |
|  Borrowing | W | 6945768 | W | (185385) | W |  | W | 188421 | W |  | W | 850 | W | 6949654 |
|  Lease liabilities |  | 1066144 |  | (393634) |  | 330246 |  |  |  |  |  | (36056) |  | 966700 |
|  Derivative liabilities |  | 120349 |  |  |  |  |  | 7206 |  | (2143) |  | (107362) |  | 18050 |
|  Derivative assets |  | (7684) |  | 216 |  |  |  | (188982) |  | (15223) |  | 114652 |  | (97021) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 8124577 | W | (578803) | W | 330246 | W | 6645 | W | (17366) | W | (27916) | W | 7837383 |

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**34.** **Related Party Transactions** 

The list of subsidiaries, associates, joint ventures and others of the Company as at December 31, 2022, is as follows:

---

| | |
|:---|:---|
| **Relationship** | **Name of Entity** |
| Subsidiaries | KT Alpha Co., Ltd.(KT Hitel Co., Ltd.), KTCS Corporation, KTIS Corporation, KT Service Bukbu Co., Ltd., KT Service Nambu Co., Ltd., KT Linkus Co., Ltd., KT Telecop Co., Ltd., KTDS Co., Ltd., Nasmedia, Inc., KT M&S Co., Ltd., GENIE Music Corporation, KT Estate Inc., KT Skylife Co., Ltd., H&C Network, KTGDH Co., Ltd., KT Sat Co., Ltd., KT Submarine Co., Ltd., KT Sports Co., Ltd., KT Strategic Investment Fund No.2, KT America, Inc., KT Japan Co., Ltd., KT AMC(KT investment management Inc.), KT Commerce Inc., BC Card Co., Ltd., VP Inc., BC Card China Co., Ltd., Skylife TV Co., Ltd., Initech Co., Ltd., Smartro Co., Ltd., East Telecom LLC, KT NEXR Co., Ltd., KT Rwanda Networks Ltd., KT-Michigan Global Contents Fund, AOS Ltd., KT M Mobile Co., Ltd., KT Investment Co., Ltd., PT. BC Card Asia Pacific, KT Hongkong Telecommunications Co., Ltd., KT Strategic Investment Fund No.3, PlayD Co., Ltd., Korea Telecom Singapore Pte, Ltd., Texnoprosistem LLC, KT Music Contents Fund No.2, KT Strategic Investment Fund No.4, BC-VP Strategic Investment Fund No.1, KT MOS Bukbu Co., Ltd., KT MOS Nambu Co., Ltd., Nasmedia Thailand Co., Ltd., Next Connect PFV, KT Huimangjieum, KT Strategic Investment Fund No.5, K Real T Rental House No.3, Storywiz Co., Ltd., KT Engineering Co., Ltd., KT Studio Genie Co., Ltd., Lolab Co., Ltd., KHS Corporation, HCN Co., Ltd., Millie Seojae, KT ES Pte. Ltd., Epsilon Global Communications Pte. Ltd., Epsilon Telecommunications (SP) Pte. Ltd., Epsilon Telecommunications (US) Pte. Ltd., Epsilon Telecommunications Limited, Epsilon Telecommunications (HK) Limited, Epsilon US Inc., Epsilon Telecommunications (BG) EOOD, Epsilon M E A General Trading L.L.C, KTP SERVICES INC., Nasmedia-KT Alpha Future Growth Strategic Investment Fund, KT Strategic Investment Fund 6, Altimedia Corporation, Alticast B.V., Alticast Company Limited, BCCARD VIETNAM LTD., KT RUS LLC, Hangang Real Estate Investment Trust No. 24, KT DX Vietnam Company Limited, kt cloud Co., Ltd., Pocheon Jeonggyori Development Co., Ltd, Alpha DX Solution Co., Ltd., PT. Cranium Royal Aditama, KT Primorye IDC LLC, Juice Inc., SPARK AND ASSOCIATE INC. |
| Associates and joint ventures | KIF Investment Fund, QTT Global (Group) Company Limited, CU Industrial Development Co., Ltd., KD Living, Inc., LoginD Co., Ltd., K Bank Inc., Daiwon Broadcasting Co., Ltd., KT-DSC creative economy youth start-up investment fund, Korea Electronic Vehicle Charging Service, K-REALTY RENTAL HOUSING REIT 2, AI RESEARCH INSTITUTE, KT-IBKC Future Investment Fund 1, Gyeonggi-KT Yoojin Superman Fund, FUNDA Co., Ltd., CHAMP IT Co., Ltd., Alliance Internet Corp., Little Big Pictures, Virtual Realm Sendirian Berhad, KT Smart Factory Investment Union, Studio Discovery Co., Ltd., KT Youth Startup DNA Investment Association, Hyundai Robotics Co., Ltd., IGIS Professional investors Private Investment Real Estate Investment LLC No 395, Maruee Limited Company Specializing in the Cultural Industry, Trustay Co., Ltd., The skyk Co., Ltd., Mastern No.127 Logispoint Daegu Co., Ltd., SMART KOREA KT NEXT VENTURE FUND, KT Early Stage Investment Fund, Pacific Professional Investors Private Investment Real Estate Investment LLC No. 55, Mastern KT Multi-Family Real Estate Private Equity Investment Fund I, Home Choice Corp., K-REALTY RENTAL HOUSING REIT V , K-Realty 11th Real Estate Investment Trust Company, IBK-KT Emerging Digital Industry Investment Fund, SG-IBKC K-Contents Investment Fund No.1, Daemuga Limited Company Specializing in the Cultural Industry, Megazone Cloud Corporation, SuseoyeokwhanseungcenterbokhapDevelopment Co., Ltd., TeamFresh Corp., KORAMKO No. 143 General Private Real Estate Investment Company, Jumbo Film, KB Three Telecommunications Companies ESG Fund, IGIS No. 468-1 General Private Real Estate Investment Company, Mastern Hongdae Rental Housing General Private, Kiamco Data Center Blind Fund, Mastern No.172 Seongsu Office PFV Co. Ltd, OASISALPHA Corporation, Shinhan EZ General Insurance, Ltd, New Media Tech Fund, SH-KT Logistics Investment Type Private Real Estate Investment Trust No.1, K-Realty Qualified Private Real Estate Investment Trust No. 1, GRANDWEST PFV Co., Ltd. |
| Others<sup>1</sup> | Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd. |

---

<sup>1</sup> Although the entity is evaluated by applying Korean IFRS 1109, the entity is included in the scope of related parties according to Korean IFRS 1024, as the Company has significant influence on determining the operational and financial policies

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

The amount of the installment handset sales receivable inherited from KTIS Corporation, KTCS Corporation, KT Commerce Inc., KT Telecop Co., Ltd., KT M&S Co., Ltd. and KT Service Nambu Co., Ltd. for the year ended December 31, 2022 is W 578,582 million.

The Company has entered into an additional agreement in relation to providing communication service in wholesale with KT M Mobile Co., Ltd. in connection with the agreement, the Company offsets all or partial receivables against payables for joining mobile telecommunication services and usage of network arising from telecommunication operations.

Outstanding balances of receivables and payables in relation to transaction with related parties as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** |
|  | **Trade<br>receivables** | **Trade<br>receivables** | **Loans and<br>others** | **Loans and<br>others** | **Other<br>receivables** | **Other<br>receivables** | **Trade<br>payables** | **Trade<br>payables** | **Other<br>payables** | **Other<br>payables** | **Lease**<br> **liabilities** | **Lease**<br> **liabilities** |
|  **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Linkus Co., Ltd. | W | 13 | W |  | W |  | W |  | W | 11241 | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Telecop Co., Ltd. |  | 673 |  |  |  | 382 |  | 2043 |  | 25528 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTCS Corporation |  | 173 |  |  |  | 11221 |  |  |  | 60045 |  | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTIS Corporation |  | 7634 |  |  |  | 255 |  |  |  | 46722 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Bukbu Co., Ltd. |  | 114 |  |  |  | 6 |  |  |  | 23105 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Nambu Co., Ltd. |  |  |  |  |  | 1 |  |  |  | 25998 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Skylife Co., Ltd. |  | 7091 |  |  |  | 27642 |  |  |  | 11411 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTDS Co., Ltd. |  | 1245 |  |  |  | 1421 |  |  |  | 107863 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  | 3011 |  |  |  | 42267 |  |  |  | 50563 |  | 3062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skylife TV Co., Ltd. |  | 23 |  |  |  |  |  |  |  | 2528 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BC Card Co., Ltd. <sup>1</sup>  |  | 323 |  |  |  | 4201 |  |  |  | 1077 |  | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Sat Co., Ltd. |  | 1552 |  |  |  |  |  |  |  | 1724 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Alpha Co., Ltd. <br>(KT Hitel Co., Ltd.) |  | 5869 |  |  |  | 77 |  |  |  | 9812 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Commerce Inc. |  | 163 |  |  |  |  |  | 8017 |  | 21996 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. |  | 340 |  | 8400 |  |  |  |  |  | 111718 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GENIE Music Corporation |  | 17308 |  |  |  | 1106 |  |  |  | 28658 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M Mobile Co., Ltd. |  | 30663 |  |  |  | 131 |  |  |  | 6160 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nasmedia, Inc. |  | 3079 |  |  |  | 3 |  |  |  | 1522 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Bukbu Co., Ltd.  |  | 13 |  |  |  | 829 |  |  |  | 14086 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Nambu Co., Ltd. |  |  |  |  |  | 264 |  |  |  | 14098 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Engineering Co., Ltd |  | 547 |  |  |  | 620 |  | 753 |  | 85174 |  | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Studio Genie Co., Ltd. |  | 8 |  |  |  | 1442 |  |  |  | 52912 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; kt cloud Co., Ltd. |  | 15844 |  |  |  | 2 |  |  |  | 31816 |  | 290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; East Telecom LLC |  | 5048 |  | 11974 |  |  |  |  |  | 525 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 9253 |  |  |  | 156 |  | 121 |  | 26266 |  | 29 |
|  **Associates and joint ventures** |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K Bank Inc. |  | 204 |  |  |  | 100253 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 124 |  |  |  | 2 |  |  |  | 685 |  | 1666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 110315 | W | 20374 | W | 192281 | W | 10934 | W | 773233 | W | 5060 |

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

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| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Receivables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** | **Payables** |
|  | **Trade<br>receivables** | **Trade<br>receivables** | **Loans and<br>others** | **Loans and<br>others** | **Other<br>receivables** | **Other<br>receivables** | **Lease**<br> **receivables** | **Lease**<br> **receivables** | **Trade<br>payables** | **Trade<br>payables** | **Other<br>payables** | **Other<br>payables** | **Lease**<br> **Liabilities** | **Lease**<br> **Liabilities** |
|  **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** | **Subsidiaries** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Linkus Co., Ltd. | W | 2 | W |  | W | 3 | W |  | W |  | W | 16062 | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Telecop Co., Ltd. |  | 877 |  |  |  | 428 |  |  |  | 1626 |  | 20352 |  | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTCS Corporation |  | 304 |  |  |  | 10551 |  |  |  |  |  | 49530 |  | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTIS Corporation |  | 7546 |  |  |  |  |  |  |  |  |  | 41658 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Bukbu Co., Ltd. |  | 11 |  |  |  |  |  | 16 |  |  |  | 24255 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Nambu Co., Ltd. |  |  |  |  |  |  |  |  |  | 1068 |  | 23228 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Skylife Co., Ltd. |  | 6872 |  |  |  | 6633 |  |  |  |  |  | 8264 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTDS Co., Ltd. |  | 1051 |  |  |  | 934 |  |  |  |  |  | 126552 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  | 3091 |  |  |  | 45796 |  |  |  |  |  | 29343 |  | 38502 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skylife TV Co., Ltd. |  | 8 |  |  |  | 1 |  |  |  |  |  | 1680 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BC Card Co., Ltd.<sup>1</sup>  |  | 509 |  |  |  | 3299 |  |  |  |  |  | 1189 |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Sat Co., Ltd. |  | 1958 |  |  |  |  |  |  |  |  |  | 1244 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Alpha Co., Ltd <sup></sup>(KT Hitel Co., Ltd.) <sup>2</sup>  |  | 5562 |  |  |  | 80 |  |  |  | 12609 |  | 16713 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Commerce Inc. |  | 17 |  |  |  | 71 |  |  |  | 6372 |  | 50952 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. |  | 86 |  | 7088 |  | 399 |  |  |  |  |  | 101365 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GENIE Music Corporation |  | 5 |  |  |  | 545 |  |  |  |  |  | 22438 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M Mobile Co., Ltd. |  | 23265 |  |  |  | 29 |  |  |  |  |  | 636 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nasmedia, Inc. |  | 3743 |  |  |  | 2 |  |  |  |  |  | 722 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Bukbu Co., Ltd.  |  | 8 |  |  |  | 391 |  |  |  |  |  | 10548 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Nambu Co., Ltd. |  |  |  |  |  |  |  |  |  |  |  | 12268 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Engineering Co., Ltd. |  | 6 |  |  |  | 1724 |  |  |  | 3004 |  | 151593 |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KHS Corporation<br> KHS Corporation |  |  |  |  |  | 29 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Studio Genie Co., Ltd. |  | 377 |  |  |  |  |  |  |  |  |  | 17109 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; East Telecom LLC |  | 5502 |  | 10979 |  |  |  |  |  |  |  | 149 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; kt seezn Co., Ltd. |  | 10220 |  |  |  | 152 |  |  |  |  |  | 21710 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 3197 |  |  |  | 3023 |  |  |  | 395 |  | 12481 |  | 45 |
|  **Associates and joint ventures** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K Bank Inc. |  | 334 |  |  |  | 143 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; others |  | 51 |  |  |  | 1 |  |  |  |  |  | 3482 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 74602 | W | 18067 | W | 74234 | W | 16 | W | 25074 | W | 765523 | W | 38578 |

---

<sup>1</sup> As at December 31, 2022, the unsettled amount of W 1,062 million (2021: W 1,024 million) in credit card transaction with BC Card Co., Ltd. is included in trade payables. 

<sup>2</sup> During the year ended December 31, 2021, KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) merged with KTM House Co., Ltd. as a surviving company.

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

Significant transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Sales** | **Sales** | **Sales** | **Sales** | **Purchases** | **Purchases** | **Purchases** | **Purchases** | **Acquisition of<br>right-of-use<br>assets** | **Acquisition of<br>right-of-use<br>assets** | **Finance**<br> **income** | **Finance**<br> **income** | **Finance**<br> **costs** | **Finance**<br> **costs** | **Dividends<br>received** | **Dividends<br>received** |
|  | **Operating<br>revenue** | **Operating<br>revenue** | **Other**<br> **income** | **Other**<br> **income** | **Operating<br>expenses** | **Operating<br>expenses** | **Others <sup>1</sup>** | **Others <sup>1</sup>** | **Acquisition of<br>right-of-use<br>assets** | **Acquisition of<br>right-of-use<br>assets** | **Finance**<br> **income** | **Finance**<br> **income** | **Finance**<br> **costs** | **Finance**<br> **costs** | **Dividends<br>received** | **Dividends<br>received** |
|  **Subsidiaries** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Linkus Co., Ltd. | W | 6962 | W | 3 | W | 57043 | W |  | W |  | W |  | W |  | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Telecop Co., Ltd. |  | 8543 |  |  |  | 164091 |  |  |  |  |  | 13 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTCS Corporation |  | 88579 |  | 69 |  | 331560 |  | 8 |  |  |  |  |  | 1 |  | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTIS Corporation |  | 71136 |  | 345 |  | 319531 |  |  |  |  |  |  |  |  |  | 1020 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Bukbu Co., Ltd. |  | 13611 |  | 2 |  | 238377 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Nambu Co., Ltd. |  | 12582 |  | 2 |  | 280857 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Skylife Co., Ltd.  |  | 104188 |  |  |  | 38644 |  |  |  |  |  | 4 |  |  |  | 8368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTDS Co., Ltd. <sup>1</sup>  |  | 14753 |  | 1 |  | 442263 |  | 108 |  |  |  | 3 |  |  |  | 4920 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  | 34246 |  |  |  | 152000 |  |  |  | 44 |  |  |  | 481 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skylife TV Co., Ltd. |  | 416 |  |  |  | 12030 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BC Card Co., Ltd. |  | 11742 |  | 4 |  | 31515 |  |  |  |  |  | 5 |  |  |  | 17439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Sat Co., Ltd. |  | 12042 |  |  |  | 10106 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) |  | 64318 |  | 5 |  | 83262 |  |  |  |  |  | 2 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Commerce Inc. <sup>1</sup>  |  | 1710 |  |  |  | 128254 |  | 92128 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. <sup>1</sup>  |  | 339590 |  | 23 |  | 251867 |  | 79 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GENIE Music Corporation |  | 6545 |  |  |  | 54925 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M Mobile Co., Ltd. |  | 192654 |  |  |  | 25825 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nasmedia, Co., Ltd. |  | 647 |  |  |  | 5306 |  |  |  |  |  | 1 |  |  |  | 3293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Nambu Co., Ltd. <sup>1</sup>  |  | 1742 |  |  |  | 82108 |  | 98 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Bukbu Co., Ltd.  |  | 2540 |  |  |  | 82560 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Engineering Co., Ltd. <sup>1</sup>  |  | 2094 |  |  |  | 40160 |  | 173025 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KHS Corporation |  | 13 |  |  |  | 13834 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Studio Genie Co., Ltd. |  | 78 |  |  |  |  |  | 49263 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; kt cloud Co., Ltd. |  | 77641 |  | 150 |  | 86884 |  |  |  | 775 |  | 937 |  | 14 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; kt seezn Co., Ltd. <sup>2</sup>  |  | 36185 |  |  |  | 78952 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 22065 |  |  |  | 103440 |  | 97 |  |  |  | 2 |  | 1 |  | 243 |
|  **Associates and joint ventures** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K-REALTY CR REITs No.1 <sup>3</sup>  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 45549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K Bank Inc. |  | 10287 |  |  |  | 167 |  |  |  |  |  | 599 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others <sup>1</sup>  |  | 816 |  | 100 |  | 6868 |  | 3170 |  | 1966 |  |  |  | 48 |  | 8741 |
|  **Others** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Digital Pharm Co., Ltd. |  | 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1137726 | W | 704 | W | 3122449 | W | 317976 | W | 2785 | W | 1566 | W | 545 | W | 89891 |

---

<sup>1</sup> Amounts include acquisition of property and equipment and others. 

<sup>2</sup> Transaction amount before being excluded from subsidiaries. 

<sup>3</sup> Transaction amount before being excluded from associates. 

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Sales** | **Sales** | **Sales** | **Sales** | **Purchases** | **Purchases** | **Purchases** | **Purchases** | **Acquisition of<br>right-of-use<br>assets** | **Acquisition of<br>right-of-use<br>assets** | **Finance**<br> **income** | **Finance**<br> **income** | **Finance**<br> **costs** | **Finance**<br> **costs** | **Dividends<br>received** | **Dividends<br>received** |
|  | **Operating<br>revenue** | **Operating<br>revenue** | **Other**<br> **income** | **Other**<br> **income** | **Operating<br>expenses** | **Operating<br>expenses** | **Others <sup>1</sup>** | **Others <sup>1</sup>** | **Acquisition of<br>right-of-use<br>assets** | **Acquisition of<br>right-of-use<br>assets** | **Finance**<br> **income** | **Finance**<br> **income** | **Finance**<br> **costs** | **Finance**<br> **costs** | **Dividends<br>received** | **Dividends<br>received** |
|  **Subsidiaries** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Powertel Co., Ltd <sup>2</sup>  | W | 2954 | W |  | W | 508 | W |  | W |  | W |  | W |  | W |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Linkus Co., Ltd. |  | 12612 |  | 2 |  | 60354 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Telecop Co., Ltd. |  | 12492 |  |  |  | 169722 |  |  |  |  |  | 3 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTCS Corporation |  | 91840 |  | 43 |  | 310016 |  |  |  |  |  | 7 |  |  |  | 254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTIS Corporation |  | 59432 |  | 5 |  | 293164 |  |  |  |  |  | 30 |  | 4 |  | 816 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Bukbu Co., Ltd. |  | 16880 |  | 5 |  | 212637 |  |  |  |  |  | 2 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Service Nambu Co., Ltd. |  | 12466 |  | 5 |  | 247345 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Skylife Co., Ltd. |  | 62192 |  | 7 |  | 35321 |  |  |  |  |  | 1 |  |  |  | 8368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTDS Co., Ltd. <sup>1</sup>  |  | 14996 |  | 17 |  | 464292 |  | 519 |  |  |  | 1 |  |  |  | 3000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  | 26380 |  |  |  | 128860 |  |  |  | 165 |  |  |  | 933 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skylife TV Co., Ltd. |  | 1871 |  |  |  | 8162 |  |  |  |  |  | 25 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BC Card Co., Ltd. |  | 9197 |  | 3 |  | 30483 |  |  |  |  |  | 4 |  |  |  | 14686 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Sat Co., Ltd. |  | 20197 |  |  |  | 10694 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Alpha Co., Ltd. (KT Hitel Co., Ltd.) |  | 45879 |  |  |  | 85808 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Commerce Inc. |  | 1281 |  |  |  | 139875 |  | 79364 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M Hows Co., Ltd.<sup>2</sup>  |  | 861 |  |  |  | 460 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. |  | 422854 |  | 116 |  | 221309 |  |  |  |  |  |  |  | 7 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GENIE Music Corporation |  | 1949 |  |  |  | 58583 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M Mobile Co., Ltd. |  | 131462 |  |  |  | 25064 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nasmedia, Co., Ltd. |  | 813 |  |  |  | 6094 |  |  |  |  |  | 1 |  |  |  | 2994 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Nambu Co., Ltd. <sup>1</sup>  |  | 1828 |  |  |  | 69720 |  | 638 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT MOS Bukbu Co., Ltd.  |  | 2520 |  |  |  | 69510 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Engineering Co., Ltd. <sup>1</sup>  |  | 531 |  |  |  | 38824 |  | 219451 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KHS Corporation |  | 13 |  |  |  | 3357 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 31646 |  | 5 |  | 121376 |  | 3987 |  |  |  | 28 |  | 1 |  | 15134 |
|  **Associates and joint ventures** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K-REALTY CR REITs No.1 |  |  |  |  |  | 1307 |  |  |  |  |  |  |  | 205 |  | 40142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K Bank Inc. |  | 4811 |  | 33 |  | 63 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 789 |  | 103 |  | 5885 |  | 4255 |  |  |  |  |  |  |  | 6120 |
|  **Others** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KHS Corporation <sup>3</sup>  |  | 8 |  | 27 |  | 1744 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 990754 | W | &nbsp;&nbsp;&nbsp;&nbsp;371 | W | 2820537 | W | 308214 | W | 165 | W | 102 | W | 1150 | W | 91514 |

---

<sup>1</sup> Amounts include acquisition of property and equipment and others. 

<sup>2</sup> Transaction amount before being excluded from subsidiaries. 

<sup>3</sup> Transaction amount before being included as a subsidiary. 

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

Key management compensation for the years ended December 31, 2022 and 2021, consists of:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Salaries and other short-term benefits | W | 1855 | W | 2189 |
|  Post-employment benefits |  | 294 |  | 412 |
|  Stock-based compensation |  | 976 |  | 669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 3125 | W | 3270 |

---

Fund transactions with related parties for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Loan transactions** | **Loan transactions** | **Loan transactions** | **Loan transactions** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Equity<br>contributions<br>in cash and<br>others** | **Equity<br>contributions<br>in cash and<br>others** |
|  | **Loans** | **Loans** | **Collections** | **Collections** | **Borrowings** | **Borrowings** | **Repayments** | **Repayments** | **Equity<br>contributions<br>in cash and<br>others** | **Equity<br>contributions<br>in cash and<br>others** |
|  **Subsidiaries** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Strategic Investment Fund 6 | W |  | W |  | W |  | W |  | W | 9200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. |  | 62300 |  | 60988 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  |  |  |  |  | 44 |  | 37452 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; kt cloud Co., Ltd. |  | 95900 |  | 95900 |  | 775 |  | 500 |  | 901504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 995 |  |  |  |  |  | 33 |  | 5837 |
|  **Associates** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K-Realty 11th Real Estate Investment Trust Company |  |  |  |  |  | 1916 |  | 176 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Megazone Cloud Corporation |  |  |  |  |  |  |  |  |  | 130001 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IBK-KT Emerging Digital Industry |  |  |  |  |  |  |  |  |  | 9000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  | 39753 |
|  Total | W | 159195 | W | 156888 | W | 2735 | W | 38161 | W | 1095295 |

---

<sup>1</sup> Borrowing transactions include lease transactions.

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Loan transactions** | **Loan transactions** | **Loan transactions** | **Loan transactions** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Borrowing transactions<sup>1</sup>** | **Equity<br>contributions<br>in cash and<br>others** | **Equity<br>contributions<br>in cash and<br>others** |
|  | **Loans** | **Loans** | **Collections** | **Collections** | **Borrowings** | **Borrowings** | **Repayments** | **Repayments** | **Equity<br>contributions<br>in cash and<br>others** | **Equity<br>contributions<br>in cash and<br>others** |
|  **Subsidiaries** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Strategic Investment Fund No.5 | W |  | W |  | W |  | W |  | W | 6460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KTIS Corporation |  |  |  |  |  |  |  | 7 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Estate Inc. |  |  |  |  |  | 165 |  | 28202 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Studio Genie Co., Ltd. |  | 102 |  | 102 |  |  |  |  |  | 283620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT M&S Co., Ltd. |  | 52400 |  | 48963 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Skylife TV Co., Ltd. |  |  |  |  |  |  |  |  |  | (3000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT ES Pte. Ltd. |  |  |  |  |  |  |  |  |  | 93440 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  | 14 |  | 875 |  |  |  | 33 |  | (25272) |
|  **Associates** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Smart Factory Investment |  |  |  |  |  |  |  |  |  | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K-REALTY CR REITs No.1 |  |  |  |  |  |  |  | 15964 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT Youth Startup DNA |  |  |  |  |  |  |  |  |  | 7700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KT-IBKC Future Investment Fund 1 |  |  |  |  |  |  |  |  |  | (4940) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Others |  |  |  |  |  |  |  |  |  | 6280 |
|  Total | W | 52516 | W | 49940 | W | 165 | W | 44206 | W | 365288 |

---

<sup>1</sup> Borrowing transactions include lease transactions.

As at December 31, 2022, the Company entered into a credit card agreement with a limit of W 8,995 million (2021: W 4,752 million) with BC Card Co., Ltd.

The Company has an obligation to invest in KT Strategic Investment Association No. 6, a related party, and others according to the agreement. As at December 31, 2022 the Company is planning make an additional investment of W 21,100 million.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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**35.** **Financial Risk Management** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Financial Risk Factors** 

The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Company uses derivatives to hedge certain financial risk exposures such as cash flow risk.

The Company's financial policy is set up in the long-term perspective and annually reported to the Board of Directors. The financial risk management is carried out by the Value Management Office, which identifies, evaluates and hedges financial risks. The treasury department in the Value Management Office considers various market conditions to estimate the effect from the market changes.

*1) Market risk* 

The Company's market risk management focuses on controlling the extent of exposure to the risk in order to minimize revenue volatility. Market risk is a risk that decreases value or profit of the Company's portfolio due to changes in market interest rate, foreign exchange rate and other factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i) Sensitivity analysis* 

Sensitivity analysis is performed for each type of market risk to which the Company is exposed. Reasonably possible changes in the relevant risk variable such as prevailing market interest rates, currency rates, equity prices or commodity prices are estimated and if the rate of change in the underlying risk variable is stable, the Company does not alter the chosen reasonably possible change in the risk variable. The reasonably possible change does not include remote or 'worst case' scenarios or 'stress tests'.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii) Foreign exchange risk* 

The Company is exposed to foreign exchange risk arising from operating, investing and financing activities. Foreign exchange risk is managed within the range of the possible effect on the Company's cash flows. Foreign exchange risk (i.e. foreign currency translation of overseas operating assets and liabilities) not affecting the Company's cash flows is not hedged but can be hedged at a particular situation.

As at December 31, 2022 and 2021, if the foreign exchange rate had strengthened or weakened by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Fluctuation of foreign<br>exchange rate** | **Impact on profit<br>before income tax <sup>1</sup>** | **Impact on profit<br>before income tax <sup>1</sup>** | **Impact on equity** | **Impact on equity** |
| 2022.12.31 | + 10% | W | (7672) | W | (17684) |
|  | - 10% |  | 7672 |  | 17684 |
| 2021.12.31 | + 10% | W | (429) | W | 5243 |
|  | - 10% |  | 429 |  | (5243) |

---

<sup>1</sup> Computed with considering derivatives hedging effect applied by the Company to hedge foreign exchange risk of liabilities in foreign currencies.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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The analysis above is a simple sensitivity analysis, which assumes that all the variables other than foreign exchange rates are held constant. Therefore, the analysis does not reflect any correlation between foreign exchange rates and other variables, nor management's decision to decrease the risk.

Details of financial assets and liabilities in foreign currencies as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in thousands of foreign currencies)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Financial<br>assets** | **Financial<br>assets** | **Financial<br>liabilities** | **Financial<br>liabilities** | **Financial<br>assets** | **Financial<br>assets** | **Financial<br>liabilities** | **Financial<br>liabilities** |
|  USD | W | 55617 | W | 2186739 | W | 156849 | W | 2131013 |
|  SDR |  | 255 |  | 722 |  | 255 |  | 722 |
|  JPY |  |  |  | 400000 |  |  |  | 30000000 |
|  EUR |  | 1 |  | 6 |  | 1 |  | 6 |
|  RWF |  | 462 |  |  |  | 586 |  |  |
|  VND |  | 280226 |  |  |  | 257896 |  |  |
|  TZS |  | 1464 |  |  |  | 1644 |  |  |
|  BWP |  | 183 |  |  |  | 93 |  |  |
|  SGD |  |  |  | 284000 |  |  |  | 284000 |
|  THB |  | 265 |  |  |  | 2160 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iii)* *Price risk* 

As at December 31, 2022 and 2021, the Company is exposed to equity securities price risk because the securities held by the Company are traded in active markets. If the increased or decreased by 10% with all other variables held constant, the effects on profit before income tax and equity would have been as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Fluctuation of price** | **Impact on profit<br>before tax** | **Impact on profit<br>before tax** | **Impact on equity** | **Impact on equity** |
| 2022.12.31 | + 10% | W |  | W | 112222 |
|  | - 10% |  |  |  | (112222) |
| 2021.12.31 | + 10% | W | 20 | W | 3285 |
|  | - 10% |  | (20) |  | (3285) |

---

The analysis above is based on the assumption that the equity index increased or decreased by 10% with all other variables held constant and all the Company's marketable equity instruments moved according to the historical correlation with the index. Equity would increase or decrease as a result of gain or loss on equity securities classified as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iv)* *Cash flow and fair value interest rate risk* 

The Company's interest rate risk arises from liabilities in foreign currency such as foreign currency debentures. Debentures in foreign currency issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by swap transactions. Debentures and borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company sets the policy and operates to minimize the uncertainty of changes in interest rates and financial costs.

As at December 31, 2022 and 2021, if the market interest rate increased or decreased by 100bp with other variables held constant, the effects on profit before income tax and equity would be as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Fluctuation of interest<br>rate** | **Impact on profit<br>before tax** | **Impact on profit<br>before tax** | **Impact on equity** | **Impact on equity** |
| 2022.12.31 | + 100 bp | W | (30) | W | (2338) |
|  | - 100 bp |  | (4) |  | 2361 |
| 2021.12.31 | + 100 bp | W | 18 | W | 5272 |
|  | - 100 bp |  | 4 |  | (5446) |

---

The analysis above is a simple sensitivity analysis which assumes that all the variables other than market interest rates are held constant. Therefore, the analysis does not reflect any correlation between market interest rates and other variables, nor the management's decision to decrease the risk.

*2)* *Credit risk* 

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's trade receivables from customers, debt securities and others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Risk management* 

Credit risk is managed on the Company basis with the purpose of minimizing financial loss. Credit risk arises from the normal transactions and investing activities, where clients or other party fails to discharge an obligation on contract conditions. To manage credit risk, the Company considers the counterparty's credit based on the counterparty's financial conditions, default history and other important factors.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as outstanding receivables. To minimize such risk, only financial institutions with strong credit ratings are accepted.

The Company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Security* 

For some trade receivables, the Company may obtain security in the form of guarantees or letters of credit, etc. which can be called upon if the counterparty defaults under the terms of the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Impairment of financial assets* 

The Company has three types of financial assets that are subject to the expected credit loss model:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• trade receivables for sales of goods and provision of services,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• contract assets relating to provision of services, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other financial assets carried at amortized cost.

While cash equivalents are also subject to the impairment requirement, the identified expected credit loss is immaterial.

The maximum exposure to credit risk of the Company's financial instruments without considering the value of collaterals as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Cash and cash equivalents (except for cash on hand) | W | 954935 | W | 1679509 |
|  Trade and other receivables |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at amortized costs |  | 3453513 |  | 3351504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 129124 |  | 491713 |
|  Contract assets |  | 724500 |  | 680989 |
|  Other financial assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivatives financial assets for hedging purposes |  | 185989 |  | 97021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 410388 |  | 299263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at amortized costs |  | 416294 |  | 72501 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 6274743 | W | 6672500 |

---

The Company is exposed to credit risk for financial guarantee contracts. As at December 31, 2022, the Company's maximum exposure amount is W 653 million (2021: W 733 million).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(i)* *Trade receivables at amortized costs* 

The Company applies the simplified approach to measuring expected credit loss allowance, which uses lifetime expected credit loss for all trade receivables at amortized costs.

The Company measures the expected credit loss by considering the future irrecoverability rate of the remaining balance of trade receivables and other receivables at the end of the reporting period. Each trade receivables and other receivables are classified considering the credit risk characteristics and overdue periods in order to measure expected credit loss. The expected credit loss rate calculation is based on historical payment and credit loss information in relation to revenue for 36 months period up to December 31, 2022.

The expected credit losses reflect forward-looking information. Provision for impairment as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Less than**<br> **6 months** | **Less than**<br> **6 months** | **7-12 months** | **7-12 months** | **More than**<br> **1 years** | **More than**<br> **1 years** | **Total** | **Total** |
|  Expected credit loss rate |  | 5.72% |  | 17.38% |  | 63.85% |  |  |
|  Gross carrying amount | W | 2952701 | W | 38246 | W | 161922 | W | 3152869 |
|  Provision for impairment |  | (168974) |  | (6646) |  | (103384) |  | (279004) |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Less than**<br> **6 months** | **Less than**<br> **6 months** | **7-12 months** | **7-12 months** | **More than**<br> **1 years** | **More than**<br> **1 years** | **Total** | **Total** |
|  Expected credit loss rate |  | 7.48% |  | 12.06% |  | 35.48% |  |  |
|  Gross carrying amount | W | 2705784 | W | 46024 | W | 210613 | W | 2962621 |
|  Provision for impairment |  | (202375) |  | (5551) |  | (74735) |  | (282661) |

---

Details of changes in provisions for impairment the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning balance | W | 282661 | W | 263750 |
|  Increase in loss allowance recognized in profit or loss during the year |  | 49727 |  | 54669 |
|  Receivables written off during the year as uncollectible |  | (53384) |  | (35758) |
|  Ending balance | W | 279004 | W | 282661 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

As at December 31, 2022, the maximum exposure of the trade receivables carrying amount to credit risk is W 2,873,865 million (2021: W 2,679,960 million).

Losses recognized in profit or loss in relation to impaired trade receivables for the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Impairment loss |  |  |  |  |
|  Bad debt expenses | W | 49727 | W | 54669 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(ii)* *Cash equivalents (except for cash on hand)* 

The Company is also exposed to credit risk in relation to cash equivalents. The maximum exposure, as at December 31, 2022, is the carrying amount of these investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iii)* *Other financial assets at amortized costs* 

Other financial assets at amortized cost include time deposits, other long-term financial instruments, and others.

All of the financial assets at amortized costs are considered to have low credit risk, and the loss allowance recognized during the period was, therefore, limited to 12 months expected losses. Management considers 'low credit risk' for other instruments when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.

Details of changes in provisions for impairment the years ended December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  Beginning balance | W | 44374 | W | 53829 |
|  Increase in loss allowance recognized in profit or loss during the year |  | 13866 |  | 17040 |
|  Receivables written off during the year as uncollectible |  | (27262) |  | (26495) |
|  Ending balance | W | 30978 | W | 44374 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(iv)* *Financial assets at fair value through profit or loss* 

The Company is also exposed to credit risk in relation to financial assets that are measured at fair value through profit or loss. The maximum exposure, as at December 31, 2022, is the carrying amount of these investments.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

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*3) Liquidity risk* 

The Company manages its liquidity risk by liquidity strategy and plans. The Company considers the maturity of financial assets and financial liabilities and the estimated cash flows from operations.

The table below analyzes the Company's liabilities (including interest expenses) into relevant maturity groups based on the remaining period at the report date to the contractual maturity date and these amounts are contractual undiscounted cash flows and can differ from the amount in the separate financial statement:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Trade and other payables | W | 4422798 | W | 927888 | W | 80715 | W | 5431401 |
|  Borrowings (including debentures) |  | 1180004 |  | 5367808 |  | 1877126 |  | 8424938 |
|  Lease liabilities |  | 240518 |  | 441836 |  | 321393 |  | 1003747 |
|  Others<sup>1</sup>  |  | 653 |  |  |  |  |  | 653 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 5843973 | W | 6737532 | W | 2279234 | W | 14860739 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Trade and other payables | W | 4536310 | W | 1159739 | W | 152989 | W | 5849038 |
|  Borrowings (including debentures) |  | 1475860 |  | 4058692 |  | 2243233 |  | 7777785 |
|  Lease liabilities |  | 355609 |  | 327456 |  | 353493 |  | 1036558 |
|  Others<sup>1</sup>  |  | 733 |  |  |  |  |  | 733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 6368512 | W | 5545887 | W | 2749715 | W | 14664114 |

---

<sup>1</sup> Consists of the maximum limit related to joint responsibility and agreement of assumption of debts. The cash flows on agreements are classified based on the earliest period that the agreement can be executed (Note 19).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

As at December 31, 2022, the cash outflows and inflows by maturity of the Company's derivatives held for trading and gross-settled derivatives, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Derivatives held for trading<sup>1</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W |  | W |  | W | 5164 | W | 5164 |
|  Derivatives settled gross<sup>2</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W | 407526 | W | 2451015 | W | 28786 | W | 2887327 |
|  Inflows |  | 483374 |  | 2622968 |  | 36878 |  | 3143220 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative liabilities held-for-trading are classified under the 'more than 5 years' category as they are relevant to the fair value of derivatives liabilities in the amount of W 4,234 million, which is recognized in connection with the acquisition of Epsilon Global Communications Pte. Ltd. (Note 19). 

As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taking into consideration to understand the timing of cash flows.

<sup>2</sup> Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the separate statement of financial position. 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Less than**<br> **1 year** | **Less than**<br> **1 year** | **1-5 years** | **1-5 years** | **More than**<br> **5 years** | **More than**<br> **5 years** | **Total** | **Total** |
|  Derivatives held for trading<sup>1</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W |  | W |  | W | 5329 | W | 5329 |
|  Derivatives settled gross<sup>2</sup>  |  |  |  |  |  |  |  |  |
|  Outflows | W | 811467 | W | 1786214 | W | 377302 | W | 2974983 |
|  Inflows |  | 825295 |  | 1846416 |  | 394134 |  | 3065845 |

---

<sup>1</sup> During the year ended December 31, 2022, derivative liabilities held-for-trading are classified under the 'more than 5 years' category as they are relevant to the fair value of derivatives liabilities recognized in connection with the acquisition of Epsilon Global Communications Pte. Ltd. (Note 19). 

As these derivatives held-for-trading are managed based on net fair value, their contractual maturities are not necessarily taken into consideration to understand the timing of cash flows.

<sup>2</sup> Cash outflow and inflow of gross-settled derivatives are undiscounted contractual cash flow and may differ from the amount in the separate statement of financial position. 

Meanwhile, as at December 31, 2022, the Company has an investment obligation of W 21,100 million to invest KT Strategic Investment Fund 6, a related party, and others, and W 5,473 million and USD 34,050 thousand to make payment using the future Capital Call method (Notes 19 and 34).

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements** 

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Capital Risk Management** 

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company's capital structure consists of liabilities including borrowings, cash and cash equivalents, and shareholders' equity. The treasury department monitors the Company's capital structure and considers cost of capital and risks related to each capital component.

The Company's debt-to-equity ratios as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Total liabilities | W | 15559694 | W | 15497475 |
|  Total equity |  | 14858080 |  | 13864894 |
|  Debt-to-equity ratio |  | 105% |  | 112% |

---

The Company manages capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as 'equity' as shown in the separate statement of financial position plus net debt.

The Company's gearing ratios as at December 31, 2022 and 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  Total borrowings | W | 7495561 | W | 6949654 |
|  Less: cash and cash equivalents |  | (966307) |  | (1708714) |
|  Net debt |  | 6529254 |  | 5240940 |
|  Total equity |  | 14858080 |  | 13864894 |
|  Total capital | W | 21387334 | W | 19105834 |
|  Gearing ratio |  | 31% |  | 27% |

---

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##### [**Table of Contents**](#toc)
**KT Corporation**

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)** **Offsetting Financial Assets and Financial Liabilities** 

Details of the Company's financial assets recognized, subject to enforceable master netting arrangements or similar agreements, as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Gross<br>assets** | **Gross<br>assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross<br>assets** | **Gross<br>assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade receivables | W | 48282 | W | (2206) | W | 46076 | W | (44518) | W | W | 1558 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 48282 | W | (2206) | W | 46076 | W | (44518) | W | W | 1558 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross<br>assets** | **Gross<br>assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross<br>assets** | **Gross<br>assets** | **Gross<br>liabilities<br>offset** | **Gross<br>liabilities<br>offset** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | **Net amounts<br>presented in<br>the statement<br>of financial<br>position** | <br> **Financial<br>instruments** | <br> **Financial<br>instruments** | <br> **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade receivables | W | 74786 | W | (3909) | W | 70877 | W | (65607) | W | W | 5270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 74786 | W | (3909) | W | 70877 | W | (65607) | W | W | 5270 |

---

These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.

------

##### [**Table of Contents**](#toc)
**KT Corporation**

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021** 

------

Details of the Company's financial liabilities recognized, subject to enforceable master netting arrangements or similar agreements, as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Gross**<br> **liabilities** | **Gross**<br> **liabilities** | **Gross**<br> **assets**<br> **offset** | **Gross**<br> **assets**<br> **offset** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross**<br> **liabilities** | **Gross**<br> **liabilities** | **Gross**<br> **assets**<br> **offset** | **Gross**<br> **assets**<br> **offset** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade payables | W | 62551 | W | (2206) | W | 60345 | W | (44518) | W | W | 15827 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 62551 | W | (2206) | W | 60345 | W | (44518) | W | W | 15827 |
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross**<br> **liabilities** | **Gross**<br> **liabilities** | **Gross**<br> **assets**<br> **offset** | **Gross**<br> **assets**<br> **offset** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Amounts not offset** | **Amounts not offset** | **Amounts not offset** | **Net<br>amount** | **Net<br>amount** |
|  | **Gross**<br> **liabilities** | **Gross**<br> **liabilities** | **Gross**<br> **assets**<br> **offset** | **Gross**<br> **assets**<br> **offset** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Net amounts<br>presented in<br>the statement<br>of financial**<br> **position** | **Financial<br>instruments** | **Financial<br>instruments** | **Cash<br>collateral** | **Net<br>amount** | **Net<br>amount** |
|  Trade payables | W | 82107 | W | (3909) | W | 78198 | W | (65607) | W | W | 12591 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 82107 | W | (3909) | W | 78198 | W | (65607) | W | W | 12591 |

---

These include price subject to netting arrangements on facility interconnection and data sharing among telecommunication companies.

------

##### [**Table of Contents**](#toc)
**KT Corporation**

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021** 

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**36.** **Fair Value** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Fair Value by Financial Instruments Category** 

Carrying amounts and fair values of the financial assets and financial liabilities by category as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Carrying<br>amount** | **Carrying<br>amount** | **Fair value** | **Carrying<br>amount** | **Carrying<br>amount** | **Fair value** |
|  **Financial assets** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | W | 966307 | <sup>1</sup> | W | 1708714 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at amortized cost <sup>2</sup>  |  | 3453513 | <sup>1</sup> |  | 3350104 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 129124 | 129124 |  | 491713 | 491713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets measured at amortized cost |  | 416294 | <sup>1</sup> |  | 72501 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 410388 | 410388 |  | 299410 | 299410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 1214059 | 1214059 |  | 226331 | 226331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 185989 | 185989 |  | 97021 | 97021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 6775674 |  | W | 6245794 |  |
|  **Financial liabilities** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other payables | W | 5390106 | <sup>1</sup> | W | 5783330 | <sup>1</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  | 7495561 | 6968828 |  | 6949654 | 7081027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 5164 | 5164 |  | 5329 | 5329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 32402 | 32402 |  | 18050 | 18050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 12923233 |  | W | 12756363 |  |

---

<sup>1</sup> The Company did not conduct fair value estimation since the book amount is a reasonable approximation of the fair value. 

<sup>2</sup> With the application of Korean IFRS 1107, lease receivables are excluded from fair the value disclosure.

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Fair Value Hierarchy** 

Assets measured at fair value or for which the fair value is disclosed are categorized within the fair value hierarchy, and the defined levels are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1: The quoted (unadjusted) price in active markets for identical assets or liabilities that an entity
can access at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2: All inputs other than quoted prices included in Level 1 that are observable (either directly
that is, or indirectly that is, derived from prices) for the asset or liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3: The unobservable inputs for the asset or liability.

Fair value hierarchy classifications of the financial assets and financial liabilities that are measured or disclosed at fair value or its fair value is disclosed as at December 31, 2022 and 2021, are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Level 1** | **Level 1** | **Level 2** | **Level 2** | **Level 3** | **Level 3** | **Total** | **Total** |
|  **Assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W |  | W | 129124 | W |  | W | 129124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  |  |  |  |  | 410388 |  | 410388 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 1015606 |  |  |  | 198453 |  | 1214059 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  |  |  | 185989 |  |  |  | 185989 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties  |  |  |  |  |  | 3185157 |  | 3185157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 1015606 | W | 315113 | W | 3790998 | W | 5121717 |
|  **Liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W |  | W | 6968828 | W |  | W | 6968828 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  |  |  |  |  | 5164 |  | 5164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  |  |  | 32402 |  |  |  | 32402 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W |  | W | 7001230 | W | 5164 | W | 7006394 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Level 1** | **Level 1** | **Level 2** | **Level 2** | **Level 3** | **Level 3** | **Total** | **Total** |
|  **Assets** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W |  | W | 491713 | W |  | W | 491713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 147 |  |  |  | 299263 |  | 299410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 35510 |  |  |  | 190821 |  | 226331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  |  |  | 65456 |  | 31565 |  | 97021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties  |  |  |  |  |  | 2503930 |  | 2503930 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W | 35657 | W | 557169 | W | 3025579 | W | 3618405 |
|  **Liabilities** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings | W |  | W | 7081027 | W |  | W | 7081027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  |  |  |  |  | 5329 |  | 5329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  |  |  | 18050 |  |  |  | 18050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | W |  | W | 7099077 | W | 5329 | W | 7104406 |

---

------

##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)** **Transfers between Fair Value Hierarchy Levels of Recurring Fair Value Measurements** 

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for the recurring fair value measurements.

Details of changes in Level 3 of the fair value hierarchy for the recurring fair value measurements are as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial liabilities** | **Financial liabilities** |
|  | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial assets at<br>fair value through<br>other<br>comprehensive<br>income** | **Financial assets at<br>fair value through<br>other<br>comprehensive<br>income** | **Derivatives**<br> **used for**<br> **hedging** | **Derivatives**<br> **used for**<br> **hedging** | **Financial liabilities at fair<br>value through profit or<br>loss** | **Financial liabilities at fair<br>value through profit or<br>loss** |
|  Beginning balance | W | 299263 | W | 190821 | W | 31565 | W | 5329 |
|  Amount recognized in profit or loss |  | (1150) |  |  |  |  |  | (165) |
|  Amount recognized in other comprehensive income |  |  |  | (14) |  |  |  |  |
|  Acquisition |  | 115415 |  | 4646 |  |  |  |  |
|  Disposal |  | (140) |  |  |  | (31565) |  |  |
|  Replacement |  | (3000) |  | 3000 |  |  |  |  |
|  Ending balance | W | 410388 | W | 198453 | W |  | W | 5164 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial assets** | **Financial liabilities** | **Financial liabilities** |
|  | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial<br>assets at fair<br>value through<br>profit or loss** | **Financial assets at<br>fair value through<br>other<br>comprehensive<br>income** | **Financial assets at<br>fair value through<br>other<br>comprehensive<br>income** | **Derivatives**<br> **used for**<br> **hedging** | **Derivatives**<br> **used for**<br> **hedging** | **Financial liabilities at<br>fair value through profit or<br>loss** | **Financial liabilities at<br>fair value through profit or<br>loss** |
|  Beginning balance | W | 155695 | W | 21035 | W | (4194) | W |  |
|  Amount recognized in profit or loss |  | 92310 |  |  |  | 43150 |  |  |
|  Amount recognized in other comprehensive income |  |  |  | 135004 |  | (7391) |  |  |
|  Acquisition |  | 73791 |  | 25751 |  |  |  | 5329 |
|  Disposal |  | (4489) |  | (5325) |  |  |  |  |
|  Replacement |  | (18044) |  | 14356 |  |  |  |  |
|  Ending balance | W | 299263 | W | 190821 | W | 31565 | W | 5329 |

---

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(4)** **Valuation Techniques and Inputs** 

Valuation techniques and inputs used in the recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as at December 31, 2022 and 2021, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Fair value** | **Fair value** | **Level** | **Valuation techniques** | **Inputs** |
|  **Assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W | 129124 | 2 | DCF Model | Guaranteed bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 410388 | 3 | DCF Model,<br> Adjusted Net Asset Model,<br> Binomial Option Pricing<br>Model, Monte Carlo<br>Simulation |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 198453 | 3 | Market Approach Model |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 185989 | 2 | DCF Model | Market observation<br>discount rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  | 3182157 | 3 | DCF Model |  |
|  **Liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  | 6968828 | 2 | DCF Model | Corporate bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 5164 | 3 | Binomial Option Pricing<br>Model, Monte Carlo<br>Simulation |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 32402 | 2 | DCF Model | Market observation<br>discount rate |

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Fair value** | **Fair value** | **Level** | **Valuation techniques** | **Inputs** |
|  **Assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income | W | 491713 | 2 | DCF Model | Guaranteed bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 299263 | 3 | DCF Model,<br> Adjusted Net Asset Model,<br> Binomial Option Pricing<br>Model |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through other comprehensive income |  | 190821 | 3 | Market Approach Model |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial assets for hedging purpose |  | 65456 | 2 | DCF Model | Market observation<br>discount rate |
|  |  | 31565 | 3 | Hull-White Model, DCF<br>Model |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment properties |  | 2503930 | 3 | DCF Model |  |
|  **Liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Borrowings |  | 7081027 | 2 | DCF Model | Corporate bond<br>interest rate |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial assets at fair value through profit or loss |  | 5329 | 3 | Binomial Option Pricing<br>Model |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Derivative financial liabilities for hedging purpose |  | 18050 | 2 | DCF Model |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(5)** **Valuation Processes for Fair Value Measurements Categorized Within Level 3** 

The Company uses external experts that perform the fair value measurements required for financial reporting purposes. External experts report directly to the chief financial officer (CFO), and discusses valuation processes and results with the CFO in line with the Company's closing dates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(6)** **Gains and Losses on Valuation at the Transaction Date** 

In the case that the Company values derivative financial instruments using inputs not based on observable market data, and the fair value calculated by the said valuation technique differs from the transaction price, then the fair value of the financial instruments is recognized as the transaction price. The difference between the fair value at initial recognition and the transaction price is deferred and amortized using a straight-line method by maturity of the financial instrument. However, in the case where inputs of the valuation techniques become observable in markets, the remaining deferred difference is immediately recognized in full as profit for the year.

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##### [**Table of Contents**](#toc)
**KT Corporation** 

**Notes to the Separate Financial Statements**

**December 31, 2022 and 2021**

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Changes in deferred amount for the years ended December 31, 2022 and 2021, are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **2022** | **2022** | **2021** | **2021** |
|  | **Derivatives used<br>for hedging** | **Derivatives used<br>for hedging** | **Derivatives used<br>for hedging** | **Derivatives used<br>for hedging** |
| I. Beginning balance | W | 832 | W | 2257 |
| II. New transactions |  |  |  |  |
| III. Recognized at fair value through profit or loss |  | (832) |  | (1425) |
| IV. Ending balance (I+II+III) | W |  | W | 832 |

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**37.** **Events After the Reporting Period** 

The Company has issued the following bonds after the end of the reporting period.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(in millions of Korean won)* | **Issuance date** | **Face value** | **Face value** | **Interest<br>rate** | **Redemption<br>date** |
|  Public Offer Bonds 198-1 | 2023-01-12 | W | 70000 | 3.847% | 2025-01-10 |
|  Public Offer Bonds 198-2 | 2023-01-12 |  | 150000 | 3.869% | 2026-01-12 |
|  Public Offer Bonds 198-3 | 2023-01-12 |  | 80000 | 3.971% | 2028-01-12 |

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The Company decided to acquire treasury stocks equivalent to W 300,000 million, in accordance with the resolution of the Board of Directors on February 9, 2023, to enhance shareholder value. Treasury stocks amounting to W 100,000 million of the acquired treasury stocks will be retired in August 2023.

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##### [**Table of Contents**](#toc)
![LOGO](g479793dsp101-2.jpg)

**Report on Independent Auditor's** 

**Audit of Internal Control over Financial Reporting** 

(English Translation of a Report Originally Issued in Korean)

To the Board of Directors and Shareholders of

KT Corporation

**Opinion on Internal Control over Financial Reporting** 

We have audited KT Corporation's (the Company) Internal Control over Financial Reporting as at December 31, 2022, based on *Conceptual Framework for Designing and Operating Internal Control over Financial Reporting*.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as at December 31, 2022, based on *Conceptual Framework for Designing and Operating Internal Control over Financial Reporting*.

We also have audited, in accordance with Korean Standards on Auditing, the separate financial statements of the Company, which comprise the separate statement of financial position as at December 31, 2022, and the separate statement of profit or loss, separate statement of comprehensive income, separate statement of changes in equity and separate statement of cash flow for the year then ended, and notes to the separate financial statements including a summary of significant accounting policies, and our report dated March 8, 2023 expressed an unqualified opinion.

**Basis for Opinion on Internal Control over Financial Reporting** 

We conducted our audit in accordance with Korean Standards on Auditing. Our responsibility under these standards are further described in the *Auditor's Responsibilities for the Audit of Internal Control over Financial Reporting* section of our report. We are independent of the Company in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of internal control over financial reporting 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.

**Responsibilities of Management and Those Charged with Governance for Internal Control over Financial Reporting** 

Management is responsible for designing, implementing and maintaining effective internal control over financial reporting, and for its assessment about the effectiveness of internal control over financial reporting, included in the accompanying *Report on the Effectiveness of Internal Control over Financial Reporting.*

Those charged with governance have the responsibilities for overseeing internal control over financial reporting.

Samil PricewaterhouseCoopers, 100 Hangang-daero, Yongsan-gu, Seoul 04386, Korea, www.samil.com

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##### [**Table of Contents**](#toc)
**Auditor's Responsibilities for the Audit of Internal Control over Financial Reporting** 

Our responsibility is to express opinion on the Company's internal control over financial reporting based on our audit. We conducted the audit in accordance with Korean Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

An audit of internal control over financial reporting involves performing procedures to obtain audit evidence about whether a material weakness exists. The procedures selected depend on the auditor's judgment, including the assessment of the risks that a material weakness exists. An audit includes obtaining an understanding of internal control over financial reporting and testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk.

**Definition and Inherent Limitations of Internal Control over Financial Reporting** 

An entity's internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea. An entity's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements. Also, projections of any assessment of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The engagement partner on the audit resulting in this independent auditor's report is Ho-Sung Han, Certified Public Accountant.

![LOGO](g479793dsp102-2.jpg)

Seoul, Korea

March 8, 2023

This report is effective as of March 8, 2023, 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 Company's internal control over financial reporting thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

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##### [**Table of Contents**](#toc)
**Report on the Effectiveness of the** 

**Internal Control over Financial Reporting** 

To the Shareholders, Audit Committee and Board of Directors of

KT Corporation

We, as the Chief Executive Officer ("CEO") and (he Internal Control over Financial Reporting ("ICFR") Officer of KT Corporation ("the Company"), assessed the effectiveness of the design and operation of the Company's Internal Control over Financial Reporting for the year ended December 31, 2022.

The Company's management, Including ourselves, is responsible for designing and operating ICFR.

We assessed the design and operating effectiveness of the ICFR in the prevention and detection of an error or fraud which may cause material misstatements in the preparation and disclosure of reliable financial statements.

We designed and operated ICFR in accordance with Conceptual Framework for Designing and Operating internal Control over Financial Reporting established by the Operating Committee of Internal Control over Financial Reporting in Korea ("the ICFR Committee"), And, we conducted an evaluation of ICFR based on Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting established by the ICFR Committee.

Based on the assessment results, we believe that the Company's ICFR, as at December 31, 2022, is designed and operating effectively, in all material respects, In conformity with the Conceptual Framework for Designing and Operating Internal Control over Financial Reporting

We certify that this report does not contain any untrue statement of a fact, or omit to State a fact necessary to be presented herein. We also certify that this report does not contain or present any statement which cause material misunderstandings, and we have reviewed and verified this report with sufficient due care.

March 7, 2023

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| | | |
|:---|:---|:---|
| Chief Executive Officer<br>| Hyeon-Mo Ku<br>| ![LOGO](g479793dsp103a.jpg) |
| Internal Control over Financial Reporting Officer<br>| Young-Jin Kim<br>| ![LOGO](g479793dsp103b.jpg) |

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