Equibles

6-K

KT CORP (KT)

6-K 2023-08-28 For: 2023-08-28
View Original
Added on April 07, 2026

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OFFOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number 1-14926

KT Corporation

(Translation of registrant’s name into English)

90, Buljeong-ro,

Bundang-gu,Seongnam-si,

Gyeonggi-do,

Korea

(Address ofprincipal executive offices)

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  ☐

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: August 28, 2023
KT Corporation
By: /s/ Seunghoon Chi
Name: Seunghoon Chi
Title: Vice President
By: /s/ Sanghyun Cho
Name: Sanghyun Cho
Title: Director

KT Corporation and Subsidiaries

Consolidated Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

KT Corporation and Subsidiaries

Index

June 30, 2023 and 2022

Page(s)
Report on Review of Interim Financial Statements 1 – 2
Consolidated Interim Financial Statements
Consolidated Interim Statements of Financial Position 3 – 4
Consolidated Interim Statements of Profit or Loss 5
Consolidated Interim Statements of Comprehensive Income 6
Consolidated Interim Statements of Changes in Equity 7 – 8
Consolidated Interim Statements of Cash Flows 9 – 10
Notes to the Consolidated Interim Financial Statements 11 – 76
Deloitte Anjin LLC<br> <br>9F., One IFC,<br><br><br>10, Gukjegeumyung-ro,<br> <br>Youngdeungpo-gu, Seoul<br> <br>07326, Korea<br> <br><br><br><br>Tel: +82 (2) 6676 1000<br> <br>Fax: +82 (2) 6674 2114<br><br><br>www.deloitteanjin.co.kr
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Independent Auditor’s Review Report

[English Translation of Independent Auditor’s Review Report Originally Issued in Korean on August 14, 2023]

To the Shareholders and the Board of Directors of KT Corporation.

Reviewed Consolidated Interim Financial Statements

We have reviewed the accompanying consolidated interim financial statements of KT Corporation and its subsidiaries (the “Group”). The consolidated interim financial statements consist of the consolidated statement of financial position as of June 30, 2023, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month periods ended June 30, 2023 and 2022, all expressed in Korean won, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for theConsolidated Interim Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No. 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the accompanying consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semi-annual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of consolidated interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

1

LOGO

Other Matters

The accompanying consolidated interim statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month period ended June 30, 2022 for comparative purpose, were reviewed by other auditors, whose report thereon dated August 16, 2022, expressed that nothing came to their attention that caused them to believe that those consolidated interim financial statements as of June 30, 2022 were not prepared fairly, in all material respects, in accordance with K-IFRS.

The consolidated statement of financial position as of December 31, 2022, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors, whose report thereon dated March 8, 2023, expressed an unqualified opinion. The accompanying statement of financial position as of December 31, 2022, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

LOGO

Seoul, Korea

August 14, 2023

Notice to Readers

This review report is effective as of August 14, 2023, the auditor’s review report date. Certain subsequent events or circumstances may have occurred between the auditor’s review report date and the time the auditor’s review report is read. Such events or circumstances could significantly affect the financial statements and may result in modifications to the auditor’s review report.

2

KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2023 and December 31, 2022

(in millions of Korean won) Notes June 30, 2023<br><br><br>(Unaudited) December 31, 2022
Assets
Current assets
Cash and cash equivalents 4,29 ~~W~~ 1,805,497 ~~W~~ 2,449,062
Trade and other receivables, net 4,5,29 5,477,552 6,098,072
Other financial assets 4,6,29 1,295,818 1,322,452
Current tax assets 1,297 1,543
Inventories, net 7 636,921 709,191
Other current assets 8 2,188,675 2,101,212
Total current assets 11,405,760 12,681,532
Non-current assets
Trade and other receivables, net 4,5,29 1,448,655 1,491,046
Other financial assets 4,6,29 2,689,954 2,501,484
Property and equipment, net 9,27 14,675,564 14,772,179
Right-of-use assets 16,27 1,251,634 1,280,334
Investment properties, net 9,27 2,093,792 1,933,358
Intangible assets, net 9,27 3,004,113 3,129,833
Investments in associates and joint ventures 10 1,526,297 1,480,722
Deferred tax assets 597,009 578,443
Net defined benefit assets 14 254,617 311,142
Other non-current assets 8 808,643 820,608
Total non-current assets 28,350,278 28,299,149
Total assets ~~W~~ 39,756,038 ~~W~~ 40,980,681

(Continued)

See accompanying notes to the consolidated financial statements.

3

KT Corporation and Subsidiaries

Consolidated Interim Statements of Financial Position

June 30, 2023 and December 31, 2022

(in millions of Korean won) Notes June 30, 2023(Unaudited) December 31,2022
Liabilities
Current liabilities
Trade and other payables 4,11,29 ~~W~~ 6,225,900 ~~W~~ 7,333,165
Borrowings 4,12,29 2,105,609 1,827,042
Other financial liabilities 4,6,29 17,722 8,791
Current tax liabilities 268,172 232,382
Provisions 13 112,260 109,133
Deferred income 19 56,874 55,737
Other current liabilities 8 1,076,335 1,133,018
Total current liabilities 9,862,872 10,699,268
Non-current liabilities
Trade and other payables 4,11,29 818,496 1,064,099
Borrowings 4,12,29 7,930,432 8,179,643
Other financial liabilities 4,6,29 454,641 412,650
Net defined benefit liabilities 14 56,681 51,654
Provisions 13 102,626 91,233
Deferred income 19 159,792 165,186
Deferred tax liabilities 1,012,199 967,650
Other non-current liabilities 8 904,559 934,575
Total non-current liabilities 11,439,426 11,866,690
Total liabilities 21,302,298 22,565,958
Equity attribute to owners of the Controlling Company
Share capital 1,564,499 1,564,499
Share premium 1,440,258 1,440,258
Retained earnings 17 14,403,961 14,257,343
Accumulated other comprehensive income 25,013 (77,776 )
Other components of equity 18 (818,382 ) (572,152 )
16,615,349 16,612,172
Non-controlling interests 1,838,391 1,802,551
Total equity 18,453,740 18,414,723
Total liabilities and equity ~~W~~ 39,756,038 ~~W~~ 40,980,681

(Concluded)

See accompanying notes to the consolidated financial statements.

4

KT Corporation and Subsidiaries

Consolidated Interim Statements of Profit or Loss

Three- and Six-month Periods Ended June 30, 2023 and 2022

Three- and Six-Month Periods Ended June 30
(in millions of Korean won, except per share amounts) Notes 2023<br>(Unaudited) 2022<br>(Unaudited)
Three months Six months Three months Six months
Operating revenue 19,27 ~~W~~ 6,547,521 ~~W~~ 12,991,197 ~~W~~ 6,312,152 ~~W~~ 12,589,852
Operating expenses 20 5,971,413 11,928,984 5,852,981 11,504,062
Operating profit 27 576,108 1,062,213 459,171 1,085,790
Other income 21 62,945 131,931 91,614 154,311
Other expenses 21 74,399 134,636 64,203 115,359
Finance income 22 126,026 299,360 353,519 514,040
Finance costs 22 148,498 375,279 321,519 474,363
Share of net profits of associates and joint ventures 10 5,952 2,147 21,113 17,468
Profit before income tax expense 548,134 985,736 539,695 1,181,887
Income tax expense 23 115,635 243,609 176,335 363,132
Profit for the period ~~W~~ 432,499 ~~W~~ 742,127 ~~W~~ 363,360 ~~W~~ 818,755
Profit for the period attributable to:
Owners of the Controlling Company ~~W~~ 394,533 ~~W~~ 691,147 ~~W~~ 313,120 ~~W~~ 722,945
Non-controlling interest 37,966 50,980 50,240 95,810
Earnings per share attributable to the equity holders of the Controlling Company during theperiod (in Korean won): 24
Basic earnings per share ~~W~~ 1,580 ~~W~~ 2,734 ~~W~~ 1,327 ~~W~~ 3,064
Diluted earnings per share 1,578 2,731 1,325 3,057

See accompanying notes to the consolidated financialstatements.

5

KT Corporation and Subsidiaries

Consolidated Interim Statements of Comprehensive Income

Three- and Six-month Periods Ended June 30, 2023 and 2022

Three- and Six-Month Periods Ended June 30
(in millions of Korean won) Notes 2023<br><br><br>(Unaudited) 2022<br><br><br>(Unaudited)
Three months Six months Three months Six months
Profit for the period ~~W~~ 432,499 ~~W~~ 742,127 ~~W~~ 363,360 ~~W~~ 818,755
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurements of the net defined benefit liabilities 14 4,114 (1,296 ) 7,492 7,012
Share of remeasurement gain of associates and joint ventures (836 ) 232 (14 ) (16 )
Gain (loss) on valuation of equity instruments at fair value through other comprehensive<br>income 6 41,222 114,039 (29,773 ) (30,759 )
Items that may be subsequently reclassified to profit or loss:
Valuation gain on cash flow hedges 6 (9,247 ) 47,349 102,533 130,365
Other comprehensive income from cash flow hedges reclassified to profit or loss (8,388 ) (75,413 ) (120,076 ) (153,359 )
Share of other comprehensive income from associates and joint ventures 4,532 13,371 (11,677 ) (16,610 )
Exchange differences on translation of foreign operations 13,924 21,401 9,710 14,547
Other comprehensive income (loss) for the period, net of tax 45,321 119,683 (41,805 ) (48,820 )
Total comprehensive income for the period ~~W~~ 477,820 ~~W~~ 861,810 ~~W~~ 321,555 ~~W~~ 769,935
Total comprehensive income for the period attributable to:
Owners of the Controlling Company ~~W~~ 430,149 ~~W~~ 795,672 ~~W~~ 273,169 ~~W~~ 675,229
Non-controlling interests 47,671 66,138 48,386 94,706

See accompanying notes to the consolidated financial statements.

The above interim separate statements of Comprehensive Income should be read in conjunction with the accompanying notes.

6

KT Corporation and Subsidiaries

Consolidated Statements of Changes in Equity

Six-month Periods Ended June 30, 2023 and 2022

Attributable to owners of the Controlling Company
(in millions of Korean won) **** Notes Sharecapital Sharepremium Retainedearnings Accumulatedothercomprehensiveincome Othercomponentsof equity Total Non-<br><br><br>controllinginterest Total equity
Balance at January 1, 2022 ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 13,287,390 ~~W~~ 117,469 ~~W~~ (1,433,080 ) ~~W~~ 14,976,536 ~~W~~ 1,590,625 ~~W~~ 16,567,161
Comprehensive income
Profit for the period — — 722,945 — — 722,945 95,810 818,755
Remeasurements of net defined benefit liabilities 14 — — 2,514 — — 2,514 4,498 7,012
Share of remeasurement of the net defined benefit liabilities of associates and joint<br>ventures — — 79 — — 79 (95 ) (16 )
Share of other comprehensive loss of associates and joint ventures — — — (11,607 ) — (11,607 ) (5,003 ) (16,610 )
Valuation loss on cash flow hedge 6 — — — (23,790 ) — (23,790 ) 796 (22,994 )
Loss on valuation of financial instruments at fair value through other comprehensive<br>income — — — (30,126 ) — (30,126 ) (633 ) (30,759 )
Exchange differences on translation of foreign operations — — — 15,214 — 15,214 (667 ) 14,547
Total comprehensive income for the period — — 725,538 (50,309 ) — 675,229 94,706 769,935
Transactions with owners
Dividends paid by the Controlling Company — — (450,393 ) — — (450,393 ) — (450,393 )
Dividends paid to non-controlling interest of subsidiaries — — — — — — (26,407 ) (26,407 )
Effect of change in connection range — — — — — — 1,000 1,000
Change in ownership interest in subsidiaries — — — — 3,285 3,285 (19,070 ) (15,785 )
Appropriations of loss on disposal of treasury stock — — (11,577 ) — 11,577 — — —
Disposal of treasury stock — — — — 4,429 4,429 — 4,429
Conversion of redeemable convertible preferred shares of subsidiaries to common shares — — — — — — 58,234 58,234
Others — — — — (5,289 ) (5,289 ) 1,693 (3,596 )
Subtotal — — (461,970 ) — 14,002 (447,968 ) 15,450 (432,518 )
Balance at June 30, 2022 (Unaudited) ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 13,550,958 ~~W~~ 67,160 ~~W~~ (1,419,078 ) ~~W~~ 15,203,797 ~~W~~ 1,700,781 ~~W~~ 16,904,578

7

KT Corporation and Subsidiaries

Consolidated Statements of Changes in Equity

Six-month Periods Ended June 30, 2023 and 2022

Attributable to owners of the Controlling Company
(in millions of Korean won) **** Notes Sharecapital Sharepremium Retainedearnings Accumulatedothercomprehensiveincome Othercomponentsof equity Total Non-<br><br><br>controllinginterest Total equity
Balance as at January 1, 2023 ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 14,257,343 ~~W~~ (77,776 ) ~~W~~ (572,152 ) ~~W~~ 16,612,172 ~~W~~ 1,802,551 ~~W~~ 18,414,723
Comprehensive income
Profit for the period — — 691,147 — — 691,147 50,980 742,127
Remeasurements of net defined benefit liabilities 14 — — 1,291 — — 1,291 (2,587 ) (1,296 )
Share of remeasurement of the net defined benefit liabilities of associates and joint<br>ventures — — 223 — — 223 9 232
Share of other comprehensive gain of associates and joint ventures — — — 10,303 — 10,303 3,068 13,371
Valuation loss on cash flow hedge 6 — — — (27,888 ) — (27,888 ) (176 ) (28,064 )
Gain on valuation of financial instruments at fair value through other comprehensive<br>income — — 222 113,822 — 114,044 (5 ) 114,039
Exchange differences on translation of foreign operations — — — 6,552 — 6,552 14,849 21,401
Total comprehensive income for the period — — 692,883 102,789 — 795,672 66,138 861,810
Transactions with owners
Dividends paid by the Controlling Company — — (501,843 ) — — (501,843 ) — (501,843 )
Dividends paid to non-controlling interest of subsidiaries — — — — — — (24,441 ) (24,441 )
Change in ownership interest in subsidiaries — — — — 2,405 2,405 (7,608 ) (5,203 )
Appropriations of loss on disposal of treasury stock — — (44,422 ) — 44,422 — — —
Acquisition of treasury stock — — — — (300,086 ) (300,086 ) — (300,086 )
Others — — — — 7,029 7,029 1,751 8,780
Subtotal — — (546,265 ) — (246,230 ) (792,495 ) (30,298 ) (822,793 )
Balance as at June 30, 2023 (Unaudited) ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 14,403,961 ~~W~~ 25,013 ~~W~~ (818,382 ) ~~W~~ 16,615,349 ~~W~~ 1,838,391 ~~W~~ 18,453,740

(Concluded)

See accompanying notes to the consolidated financial statements.

8

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-month Periods Ended June 30, 2023 and 2022

Six-Month Period Ended June 30
(in millions of Korean won) Notes 2023<br><br><br>(Unaudited) 2022(Unaudited)
Cash flows from operating activities
Cash generated from operations 25 ~~W~~ 2,864,299 ~~W~~ 2,207,890
Interest paid (190,745 ) (118,981 )
Interest received 173,784 138,633
Dividends received 37,661 57,050
Income tax paid (207,457 ) (232,423 )
Net cash inflow from operating activities 2,677,542 2,052,169
Cash flows from investing activities
Collection of loans 22,240 25,122
Disposal of financial assets at fair value through profit or loss 65,088 707,256
Disposal of financial assets at amortized cost 924,623 328,574
Disposal of financial assets at fair value through comprehensive income 306 89,792
Disposal of current assets held for sale — 4,600
Disposal of investments in associates and joint ventures 5,405 35,168
Disposal of property and equipment and investment properties 33,556 110,426
Disposal of intangible assets 4,641 125
Disposal of right-of-use assets 1,330 273
Cash inflow from derivatives contracts 4,888 —
Increase in cash due to business combination 1,765 —
Loans granted (16,865 ) (5,393 )
Acquisition of financial assets at fair value through profit or loss (49,719 ) (867,557 )
Acquisition of financial assets at amortized cost (960,331 ) (956,632 )
Acquisition of financial assets at fair value through other comprehensive income (501 ) (94,384 )
Acquisition of investments in associates and joint ventures (42,911 ) (228,490 )
Acquisition of property and equipment and investment properties (1,690,823 ) (1,651,881 )
Acquisition of intangible assets (471,838 ) (472,864 )
Acquisition of right-of-use assets (568 ) (1,789 )
Acquisition of derivatives — (10 )
Decrease in cash due to business combination (3,134 ) (335 )
Acquisition of business — (7,900 )
Net cash outflow from investing activities (2,172,848 ) (2,985,899 )

9

KT Corporation and Subsidiaries

Consolidated Interim Statements of Cash Flows

Six-month Periods Ended June 30, 2023 and 2022

Six-Month Period Ended June 30
(in millions of Korean won) Notes 2022<br><br><br>(Unaudited) 2021(Unaudited)
Cash flows from financing activities
Proceeds from borrowings 3,356,398 2,418,749
Cash inflow from derivatives contracts 26,593 —
Cash inflow from consolidated capital transactions — 1,040
Cash inflow from other financing activities 2,017 148
Repayments of borrowings (3,497,760 ) (1,006,272 )
Dividends paid (526,268 ) (476,800 )
Decrease in lease liabilities (208,342 ) (189,389 )
Decrease in other financial liabilities (4 ) —
Acquisition of treasury stock (300,086 ) —
Transactions with non-controlling interest (3,085 ) (15,779 )
Net cash inflow (outflow) from financing activities 26 (1,150,537 ) 731,697
Effect of exchange rate change on cash and cash equivalents 2,278 4,165
Net increase (decrease) in cash and cash equivalents (643,565 ) (197,868 )
Cash and cash equivalents
Beginning of the period 2,449,062 3,019,592
End of the period ~~W~~ 1,805,497 ~~W~~ 2,821,724

See accompanying notes to the consolidated financialstatements.

10

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

1. General Information

The consolidated financial statements have been prepared by KT Corporation, the “Controlling company” as defined under Korean IFRS 1110 Consolidated Financial Statements, by consolidating 86 subsidiaries (collectively referred to as the “Group”) including BC Card Co., Ltd., etc. as described in Note 1.2

1.1 The Controlling Company

The Controlling Company, in accordance with the Korea Telecommunications Corporation Act, was established as a 100% government-invested institution on January 1, 1982, when it comprehensively succeeded the telegraph and telephone business from the Korea Communications Commission (former Ministry of Information and Communication) to promote management of public telecommunications business and communication technology, and to contribute to improvement of public welfare. After its establishment, the Controlling Company has been operating in public telecommunications business through a nationwide business network including headquarters and business departments. The address of the registered headquarter is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province, Republic of Korea.

On October 1, 1997, the Controlling Company was converted into a government-invested institution pursuant to the Act on Management Structure Improvement and Privatization of Public Enterprises and was listed on the KRX stock market which was established by the Korea Exchange. On May 29, 1999, the Controlling Company was listed on the New York Stock Exchange by issuing a stock depository certificate containing newly issued 24,282,195 shares of common stock along with 20,813,311 shares held by the government. On July 2, 2001, a stock depository certificate containing 55,502,161 stocks held by the government was additionally issued and listed on the New York Stock Exchange.

In 2002, the Controlling Company acquired the entirety of shares previously held by the government in accordance with the Korean government’s public enterprise privatization plan. As of June 30, 2023, the Korean government does not own any shares in the Controlling Company.

1.2 Consolidated Subsidiaries
(1) The consolidated subsidiaries as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
Controlling Interest ^1^(%)
--- --- --- --- --- --- --- --- --- ---
Subsidiary Type of business Location June30, 2023 December31, 2022 Closingmonth
KT Linkus Co., Ltd. Public telephone maintenance Korea 92.4 % 92.4 % December
KT Submarine Co., Ltd. ^2,5^ Submarine cable construction and maintenance Korea 32.9 % 32.9 % December
KT Telecop Co., Ltd. Security service Korea 86.8 % 86.8 % December
KT Alpha Co., Ltd. ^5^ Data communication Korea 73.0 % 73.0 % December
KT Service Bukbu Co., Ltd. Opening services of fixed line Korea 67.3 % 67.3 % December

11

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

Controlling Interest ^1^(%)
Subsidiary Type of business Location June30, 2023 December31, 2022 Closingmonth
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.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. ^5^ Payment security service for credit card, others Korea 69.7 % 69.7 % 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. ^5^ Internet banking ASP and security solutions Korea 63.5 % 61.3 % December
Smartro Co., Ltd. VAN (Value Added Network) business Korea 64.5 % 64.5 % December
KTDS Co., Ltd. ^5^ System integration and maintenance Korea 95.6 % 95.6 % December
KT M&S Co., Ltd. PCS distribution Korea 100.0 % 100.0 % December
GENIE Music Corporation ^3,5^ Online music production and distribution Korea 36.0 % 36.0 % December
KT MOS Bukbu Co., Ltd. ^5^ Telecommunication facility maintenance Korea 100.0 % 100.0 % December
KT MOS Nambu Co., Ltd. ^5^ Telecommunication facility maintenance Korea 98.4 % 98.4 % December
KT Skylife ^5^ Satellite TV Korea 50.6 % 50.2 % 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. 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. ^2,5^ Solution provider and IPTV advertisement sales business Korea 44.1 % 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
KT-Michigan Global Content Fund Content investment business Korea 88.6 % 88.6 % December
KTCS Corporation ^2,5^ Database and online information provider Korea 34.1 % 34.1 % December
KTIS Corporation ^2,5^ Database and online information provider Korea 33.3 % 33.3 % 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

12

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

Controlling Interest ^1^(%)
Subsidiary Type of business Location June30, 2023 December31, 2022 Closingmonth
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 % 90.9 % 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 % 79.8 % December
HCN Co., Ltd. Cable television service Korea 100.0 % 100.0 % December
Millie Seojae ^3^ 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
Nasmedia-KT Alpha Future Growth<br><br><br>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
Altimidia B.V. (formerly Alticast B.V.) Software development and delivery Netherlands 100.0 % 100.0 % December
Altimidia Vietnam (formerly 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 % 100.0 % December

13

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

Controlling Interest ^1^(%)
Subsidiary Type of business Location June30, 2023 December31, 2022 Closingmonth
Hangang Real Estate Investment Trust No. 24 Investment fund Korea 75.0 % 75.0 % December
KT DX Vietnam Company Limited Software development Vietnam 100.0 % 100.0 % December
KT Cloud Co., Ltd Information telecommunication business Korea 100.0 % 100.0 % December
Pocheon Jeonggyori Development Co., Ltd. Residential building development Korea 80.9 % 80.9 % December
PT CRANIUM ROYAL ADITAMA Software development Indonesia 67.0 % 67.0 % December
KT Primorye IDC LLC Data processing and associated service delivery Russia 99.0 % 99.0 % December
Juice Inc.^3,5^ Online information provider/Software development and delivery Korea 42.6 % 41.2 % December
open cloud lab Co., Ltd (formerly SPARK AND ASSOCIATES INC.) IT consulting service and Telecommunication equipment sales Korea 100.0 % 100.0 % December
KD Living, Inc. Residential building management Korea 100.0 % — December
KT HEALTHCARE VINA COMPANY LIMITED Medical service Vietnam 80.9 % — December
K-Realty Qualified Private Real Estate Investment Trust<br>No. 1 ^4^ Real estate management Korea 6.5 % — December
AQUA RETAIL VIETNAM COMPANY LIMITED E-voucher issuance and trading business Vietnam 100.0 % — December
^1^ Sum of the interests owned by the Controlling Company and subsidiaries.
--- ---
^2^ Although the Controlling Company owns less than 50% interest in Nasmedia, Co., Ltd., KT Submarine Co., Ltd.,<br>KTCS Corporation and KTIS Corporation, these entities are consolidated as the Controlling Company can exercise the majority of the voting rights in its decision-making process at all times considering voting patterns at previous shareholders’<br>meetings.
--- ---
^3^ Although the Controlling Company owns less than 50% interest in Millie Seojae, Juice Inc. and GENIE Music<br>Corporation, these entities are consolidated as the Controlling Company holds the majority of the voting right based on an agreement with other investors.
--- ---
^4^ Although the Controlling Company owns less than 50% interest in K-Realty<br>Qualified Private Real Estate Investment Trust No. 1, the company is consolidated by comprehensively considering the criteria for determining control, such as ‘power’, ‘variable profit’, and ‘relationship between power<br>and variable profit’, rather than simply judging by the interests owned by the company.
--- ---
^5^ The number of treasury stocks held by subsidiaries are deducted from the total number of shares when calculating<br>the controlling percentage interest.
--- ---
(2) Changes in Scope of Consolidation
--- ---

Subsidiaries newly included/excluded in the consolidation during the six-month period ended June 30, 2023:

Changes Location Name of subsidiary Reason
Included Korea KD Living, Inc. Transferred
Included Vietnam KT HEALTHCARE VINA COMPANY LIMITED Newly established
Included Korea K-Realty Qualified Private Real Estate Investment Trust No. 1 Transferred
Included Vietnam AQUA RETAIL VIETNAM COMPANY LIMITED Newly established
Excluded United Arab Emirates Epsilon M E A General Trading LLC Liquidated
Excluded Korea Alpha DX Solution Co., Ltd. Merged
Excluded Korea KT Strategic Investment Fund No.2 Liquidated

14

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Summarized information for consolidated subsidiaries as of June 30, 2023 and December 31, 2022 and<br>for the six-month periods ended June 30, 2023 and 2022, is as follows:
(in millions of Korean won) June 30, 2023 Six-month periods endedJune 30, 2023 ^3^
--- --- --- --- --- --- --- --- --- ---
Total assets Total liabilities Operatingrevenues ^3^ Profit (loss) forthe period ^3^
KT Linkus Co., Ltd. ~~W~~ 64,074 ~~W~~ 62,762 ~~W~~ 39,337 ~~W~~ 1,254
KT Submarine Co., Ltd. 149,486 31,686 26,527 6,186
KT Telecop Co., Ltd. 382,108 239,507 262,124 3,216
KT Alpha Co., Ltd. 394,546 146,814 217,449 12,496
KT Service Bukbu Co., Ltd. 55,952 49,580 115,457 (2,482 )
KT Service Nambu Co., Ltd. 70,699 59,219 140,109 (2,491 )
BC Card Co., Ltd. ^1^ 5,090,199 3,508,963 2,002,365 30,635
H&C Network ^1^ 81,639 4,449 13,728 933
Nasmedia Co., Ltd. ^1^ 476,831 234,458 67,510 7,646
KTDS Co., Ltd. ^1^ 352,989 171,761 340,777 18,873
KT M&S Co., Ltd. 222,899 168,709 320,488 3,215
KT MOS Bukbu Co., Ltd. 49,323 27,393 47,848 5,798
KT MOS Nambu Co., Ltd. 46,124 25,284 47,564 4,246
KT Skylife Co., Ltd. ^1^ 1,323,728 442,921 516,072 24,208
KT Estate Inc. ^1^ 2,480,465 843,122 258,212 10,979
KT GDH Co., Ltd. 12,335 1,568 2,233 303
KT Sat Co., Ltd. 679,578 84,686 86,592 13,567
KT Sports Co., Ltd. 32,372 25,907 30,107 (6,291 )
KT Music Contents Fund No.2 15,721 142 285 138
KT-Michigan Global Content Fund 2,357 — — 13
KT M Mobile Co., Ltd. 165,156 59,754 145,227 3,119
KT Investment Co., Ltd. ^1^ 111,833 83,979 23,019 3,681
KTCS Corporation ^1^ 398,979 205,250 470,984 9,910
KTIS Corporation 403,005 198,931 287,211 9,489
Next Connect PFV 668,291 323,038 — (1,514 )
KT Japan Co., Ltd. ^1^ 1,752 2,969 1,382 (6 )
KT America, Inc. 6,100 738 4,562 86
KT Rwanda Networks Ltd. ^2^ 126,245 290,245 16,247 (28,379 )
AOS Ltd. ^2^ 11,152 805 4,129 680
KT Hong Kong Telecommunications Co., Ltd. 11,281 5,199 9,475 115
KT Huimangjieum ^1^ 8,314 2,536 8,159 1,359
KT Engineering Co., Ltd. 110,547 64,160 80,823 (5,235 )
KT Studio Genie Co., Ltd. ^1^ 984,991 250,663 233,832 14,975
Lolab Co., Ltd. 47,789 36,785 79,795 (6,841 )
East Telecom LLC ^1^ 47,201 22,985 14,594 3,373
KT ES Pte. Ltd. ^1^ 249,157 97,582 43,125 (3,851 )
KTP SERVICES INC. 2,770 903 283 12

15

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) June 30, 2023 Six-month periods endedJune 30, 2023 ^3^
Total assets Total liabilities Operatingrevenues ^3^ Profit (loss) forthe period ^3^
Altimedia Corporation ^1^ 46,299 14,512 21,909 2,768
KT RUS LLC ^1^ 511 4 — (382 )
KT DX Vietnam Company Limited 1,809 27 23 (94 )
KT Cloud Co., Ltd. ^1^ 1,333,268 211,249 302,433 18,345
KT Healthcare Vina Co., Ltd. 13,979 518 — (138 )
K-Realty Qualified Private Real Estate Investment Trust<br>No. 1 80,488 50,825 1,965 (947 )
AQUA RETAIL VIETNAM COMPANY LIMITED 1,449 — — 4
^1^ As intermediate controlling companies, financial information from their consolidated financial statements is<br>presented.
--- ---
^2^ Convertible preferred stock issued by subsidiaries as of the end of the reporting period is included in<br>liabilities.
--- ---
^3^ Profit or loss from the date of acquisition of control to the end of the reporting period is included.<br>
--- ---
(in millions of Korean won) December 31, 2022 Six-month periods endedJune 30, 2022^3^
--- --- --- --- --- --- --- --- --- ---
Total assets Total liabilities Operatingrevenues ^3^ Profit (loss) forthe period
KT Linkus Co., Ltd. ~~W~~ 47,734 ~~W~~ 47,498 ~~W~~ 36,268 ~~W~~ (1,495)
KT Submarine Co., Ltd. 120,255 7,884 22,307 417
KT Telecop Co., Ltd. 370,004 230,965 255,936 3,401
KT Alpha Co., Ltd. 406,236 172,211 262,842 8,938
KT Service Bukbu Co., Ltd. 74,673 65,820 120,640 1,623
KT Service Nambu Co., Ltd. 80,450 66,479 142,359 2,976
BC Card Co., Ltd. ^1^ 5,666,075 4,109,200 1,893,430 108,161
H&C Network ^1^ 82,737 6,640 13,951 549
Nasmedia Co., Ltd. ^1^ 516,945 275,730 71,606 14,069
KTDS Co., Ltd. ^1^ 401,932 228,474 339,308 26,081
KT M&S Co., Ltd. 255,310 204,336 335,839 8,391
KT MOS Bukbu Co., Ltd. 38,684 22,553 37,064 1,685
KT MOS Nambu Co., Ltd. 42,011 25,416 36,518 1,958
KT Skylife Co., Ltd. ^1^ 1,359,166 503,679 495,018 35,414
KT Estate Inc. ^1^ 2,480,489 836,672 248,227 52,921
KT GDH Co., Ltd. 12,059 1,596 2,156 247
KT Sat Co., Ltd. 677,980 89,644 87,192 14,580
KT Sports Co., Ltd. 28,220 15,461 31,294 (4,150 )
KT Music Contents Fund No.2 15,718 277 754 593
KT-Michigan Global Content Fund 2,371 27 22 (2 )
KT M Mobile Co., Ltd. 152,114 49,816 125,077 (124 )
KT Investment Co., Ltd. ^1^ 103,354 79,182 2,852 879
KTCS Corporation ^1^ 419,726 228,618 494,582 10,469
KTIS Corporation 396,208 199,204 260,534 11,596
Next Connect PFV 624,734 277,967 — (814 )

16

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022 Six-month periods endedJune 30, 2022^3^
Total assets Total liabilities Operatingrevenues ^3^ Profit (loss) forthe period
KT Japan Co., Ltd. ^1^ 1,888 3,141 847 796
KT America, Inc. 5,945 843 3,546 90
KT Rwanda Networks Ltd. ^2^ 126,721 267,369 14,392 (11,617 )
AOS Ltd. ^2^ 10,972 905 4,013 677
KT Hong Kong<br><br><br>Telecommunications Co., Ltd. 10,505 4,768 9,988 317
KT Huimangjieum ^1^ 6,984 2,582 8,965 1,200
KT Engineering Co., Ltd. 141,463 89,853 103,050 4,958
KT Studio Genie Co., Ltd. ^1^ 987,270 268,911 221,286 8,383
Lolab Co., Ltd. 35,091 17,247 18,867 (1,776 )
East Telecom LLC ^1^ 42,691 21,645 13,361 3,772
KT ES Pte. Ltd. ^1^ 240,721 88,640 34,720 (8,130 )
KTP SERVICES INC. 3,832 2,044 515 54
Altimedia Corporation ^1^ 44,861 15,777 22,896 4,097
KT RUS LLC 967 16 — (633 )
KT DX Vietnam Company Limited 1,815 6 — (4 )
KT Cloud Co., Ltd. ^1^ 1,348,684 245,872 129,696 15,478
^1^ As intermediate controlling companies, financial information from their consolidated financial statements is<br>presented
--- ---
^2^ Convertible preferred stock issued by subsidiaries as of the end of the reporting period is included in<br>liabilities.
--- ---
^3^ Profit or loss from the date of acquisition of control to the end of the reporting period is included.<br>
--- ---

17

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2. Material Accounting Policies
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” or “K-IFRS”). The accompanying consolidated interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The consolidated interim financial statements of the Group for the six-month period ended June 30, 2023, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as of June 30, 2023.

2.2 Changes in Accounting Policies and Disclosures
(1) New and amended standards and interpretations adopted by the Group
--- ---

The Group has applied the following standards and interpretations for the first time for their annual reporting period commencing January 1, 2023.

• K-IFRS 1001 Presentation of Financial Statements and IFRSPractice Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies (Amendment)

The amendments change the requirements in K-IFRS 1001 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

The supporting paragraphs in K-IFRS 1001 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.

18

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

• K-IFRS 1001 Presentation of Financial Statements - Disclosure of<br>financial liabilities with condition to adjust exercise price (Amendment)

The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS 1032.

• K-IFRS 1008 Accounting Polices, Changes in Accounting Estimates andErrors - Definition of Accounting Estimates (Amendment)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.

The definition of a change in accounting estimates was deleted. However, the KASB retained the concept of changes in accounting estimates in the Standard with the following clarifications:

• A change in accounting estimate that results from new information or new developments is not the correction of an<br>error
• The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes<br>in accounting estimates if they do not result from the correction of prior period errors
--- ---
• K-IFRS 1012 Income Taxes - Deferred Tax related to Assets and<br>Liabilities arising from a Single Transaction (Amendment)
--- ---

The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.

Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may arise upon recognition of a lease liability and the corresponding right-of-use asset applying K-IFRS 1116 at the commencement date of a lease.

Following the amendments to K-IFRS 1012, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in K-IFRS 1012.

19

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period an entity recognises:

• A deferred tax asset (to the extent that it is probable that taxable profit will be available against which the<br>deductible temporary difference can be utilised) and a deferred tax liability for all deductible and taxable temporary differences associated with:
① Right-of-use assets and lease<br>liabilities
--- ---
② Decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the<br>cost of the related asset
--- ---
• The cumulative effect of initially applying the amendments is recognized as an adjustment to the opening balance<br>of retained earnings (or other component of equity, as appropriate) at that date.
--- ---

20

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

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

The amended accounting standard issued that is not mandatory for the annual reporting period commencing January 1, 2023 and has not been early adopted by the Group is as follows:

• K-IFRS 1001 Presentation of Financial Statements - Classification<br>of Liabilities as Current or Non-current (Amendment)

The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

In addition, the amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date. Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.

The amendments also specify that the right to defer settlement is not affected if an entity only has to comply with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them), the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying with the covenants.

The above amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024, with early application permitted.

The Group is in review for the impact of the above amendments on the Group’s consolidated financial statements.

21

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2.3 Accounting Policies

Material accounting policies and method of computation used in the preparation of the consolidated interim financial statements are consistent with those of the consolidated financial statements for the year ended December 31, 2022, except for the changes due to the application of amendment and enactments of standards described in Note 2.2 (1) and as described below.

(1) Income Tax Expense

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual effective income tax rate is applied to the pre-tax income of the interim period.

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.

22

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

4. Financial Instruments by Category
(1) Financial instruments by category as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- ---
Financial assets Financial<br><br><br>assets atamortized<br><br><br>cost Financialassets at fairvalue throughprofit or loss Financial assets atfair value throughother comprehensiveincome Derivatives<br><br><br>used forhedging Total
Cash and cash equivalents ~~W~~ 1,805,497 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 1,805,497
Trade and other receivables 6,802,420 — 123,787 — 6,926,207
Other financial assets 1,099,733 1,015,820 1,660,016 210,203 3,985,772
(in millions of Korean won) June 30, 2023
Financial liabilities Financialliabilities atamortized<br><br><br>cost Financialliabilities at fairvalue through<br><br><br>profit or loss Derivatives<br><br><br>used for hedging Others Total
Trade and other payables ~~W~~ 6,546,696 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 6,546,696
Borrowings 10,036,041 — — — 10,036,041
Other financial liabilities 290,806 164,088 17,469 — 472,363
Lease liabilities — — — 1,131,461 1,131,461
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Financial assets Financial<br><br><br>assets atamortized<br><br><br>cost Financial assetsat fair valuethrough profitor loss Financial assets atfair value throughother comprehensiveincome Derivatives<br><br><br>used forhedging Total
Cash and cash equivalents ~~W~~ 2,449,062 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 2,449,062
Trade and other receivables 7,459,994 — 129,124 — 7,589,118
Other financial assets 1,060,058 1,064,856 1,508,192 190,830 3,823,936
(in millions of Korean won) December 31, 2022
Financial liabilities Financialliabilities atamortized<br><br><br>cost Financialliabilities at fair<br><br><br>value through<br> <br>profit orloss Derivatives<br><br><br>used for hedging Others Total
Trade and other payables ^1^ ~~W~~ 8,397,264 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 8,397,264
Borrowings 10,006,685 — — — 10,006,685
Other financial liabilities 246,606 141,280 33,555 — 421,441
Lease liabilities — — — 1,172,038 1,172,038
^1^ Amounts related to employee benefit plans are included in Trade and other payables.
--- ---

23

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

5. Trade and Other Receivables
(1) Trade and other receivables as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- ---
Total amounts Provision forimpairment Present valuediscount Carrying<br><br><br>amount
Current assets
Trade receivables ~~W~~ 3,380,771 ~~W~~ (346,930 ) ~~W~~ (7,712 ) ~~W~~ 3,026,129
Other receivables 2,535,545 (80,887 ) (3,235 ) 2,451,423
Total ~~W~~ 5,916,316 ~~W~~ (427,817 ) ~~W~~ (10,947 ) ~~W~~ 5,477,552
Non-current assets
Trade receivables ~~W~~ 332,665 ~~W~~ (1,039 ) ~~W~~ (16,742 ) ~~W~~ 314,884
Other receivables 1,281,414 (133,858 ) (13,785 ) 1,133,771
Total ~~W~~ 1,614,079 ~~W~~ (134,897 ) ~~W~~ (30,527 ) ~~W~~ 1,448,655
(in millions of Korean won) December 31, 2022
Total amounts Provision forimpairment Present valuediscount Carrying<br><br><br>amount
Current assets
Trade receivables ~~W~~ 3,439,542 ~~W~~ (342,539 ) ~~W~~ (6,926 ) ~~W~~ 3,090,077
Other receivables 3,092,261 (82,243 ) (2,023 ) 3,007,995
Total ~~W~~ 6,531,803 ~~W~~ (424,782 ) ~~W~~ (8,949 ) ~~W~~ 6,098,072
Non-current assets
Trade receivables ~~W~~ 408,098 ~~W~~ (1,199 ) ~~W~~ (11,540 ) ~~W~~ 395,359
Other receivables 1,249,096 (136,300 ) (17,109 ) 1,095,687
Total ~~W~~ 1,657,194 ~~W~~ (137,499 ) ~~W~~ (28,649 ) ~~W~~ 1,491,046

24

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Details of other receivables as of June 30, 2023 and December 31, 2022, are as follows:<br>
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Loans ~~W~~ 89,087 ~~W~~ 98,953
Receivables ^1^ 2,085,260 2,668,545
Accrued income 39,072 32,218
Refundable deposits 325,561 339,450
Loans receivable 1,085,320 1,013,428
Finance lease receivables 114,510 105,690
Others 61,129 63,941
Less: Provision for impairment (214,745 ) (218,543 )
~~W~~ 3,585,194 ~~W~~ 4,103,682
^1^ As of June 30, 2023, credit sales asset of ~~W~~1,353,593 million (December 31, 2022:<br>~~W~~1,960,579 million) held by BC Card Co., Ltd. are included.
--- ---
(3) The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of<br>receivables mentioned above as of June 30, 2023.
--- ---
(4) The Group classifies a certain portion of trade receivables as financial assets at fair value through other<br>comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.
--- ---

25

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

6. Other Financial Assets and Liabilities
(1) Details of other financial assets and liabilities as of June 30, 2023 and December 31, 2022, are as<br>follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Other financial assets
Financial assets at amortized cost ^1^ ~~W~~ 1,099,733 ~~W~~ 1,060,058
Financial assets at fair value through profit or loss ^1,2^ 1,015,820 1,064,856
Financial assets at fair value through other comprehensive income ^1^ 1,660,016 1,508,192
Derivatives used for hedging 210,203 190,830
Less: Non-current (2,689,954 ) (2,501,484 )
Current ~~W~~ 1,295,818 ~~W~~ 1,322,452
Other financial liabilities
Financial liabilities at amortized cost<br>^3^ ~~W~~ 290,806 ~~W~~ 246,606
Financial liabilities at fair value through profit or loss 164,088 141,280
Derivatives used for hedging 17,469 33,555
Less: Non-current (454,641 ) (412,650 )
Current ~~W~~ 17,722 ~~W~~ 8,791
^1^ As of June 30, 2023, the Group’s other financial assets amount to<br>~~W~~114,598 million (December 31, 2022: ~~W~~102,215 million) and consist of checking account deposits, time deposits and others which are subject to withdrawal restrictions.
--- ---
^2^ As of June 30, 2023, the Group provided investments in Korea Software Financial Cooperative and others<br>amounting to ~~W~~7,155 million as a collateral for the payment guarantee provided by the Cooperative.
--- ---
^3^ The amount includes liabilities related to the obligation to acquire additional shares in Epsilon Global<br>Communications Pte. Ltd. and MILLIE Co., Ltd. (Note 15).^^
--- ---
(2) Financial Assets at fair value through profit or loss
--- ---
1) Details of financial assets at fair value through profit or loss as of June 30, 2023 and December 31,<br>2022, are as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Equity instruments (Listed) ~~W~~ 16,260 ~~W~~ 26,647
Equity instruments (Unlisted) 50,311 72,517
Debt securities 945,860 942,274
Derivative held for trading ^1^ 3,389 23,418
Subtotal 1,015,820 1,064,856
Less: Non-current (622,961 ) (609,887 )
Current ~~W~~ 392,859 ~~W~~ 454,969
^1^ Derivative assets amounting to ~~W~~1,015 million, which is recognized by an agreement with<br>LS Cable & System Ltd. in connection with KT Submarine Co., Ltd, is included. (Note 15).
--- ---
2) The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to<br>credit risk is the carrying amount as of June 30, 2023.
--- ---

26

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Financial Assets at fair value through other comprehensive income
1) Details of financial assets at fair value through other comprehensive income as of June 30, 2023 and<br>December 31, 2022, are as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Equity instruments (Listed) ~~W~~ 1,158,897 ~~W~~ 1,006,476
Equity instruments (Unlisted) 495,482 496,284
Debt securities 5,637 5,432
Subtotal 1,660,016 1,508,192
Less: Non-current (1,660,016 ) (1,508,192 )
Current ~~W~~ — ~~W~~ —
2) Upon disposal of these equity instruments, any balance within the accumulated other comprehensive income is<br>reclassified to retained earnings rather than to profit or loss. Upon disposal of debt securities, remaining balance of the accumulated other comprehensive income of debt investments is reclassified to profit or loss.
--- ---
(4) Derivatives used for hedging
--- ---
1) Details of valuation of derivatives used for hedging as of June 30, 2023 and December 31, 2022, are<br>as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Assets Liabilities Assets Liabilities
Interest rate swap ^1,3^ ~~W~~ 2,853 ~~W~~ — ~~W~~ 4,236 ~~W~~ —
Currency swap ^2,3^ 207,350 17,469 186,594 33,555
Subtotal 210,203 17,469 190,830 33,555
Less: Non-current (189,756 ) (17,469 ) (147,141 ) (33,555 )
Current ~~W~~ 20,447 ~~W~~ — ~~W~~ 43,689 ~~W~~ —
^1^ The interest rate swap contract is to hedge the risk of variability in cash flow from the floating-rate<br>borrowings due to changes in interest rate.
--- ---
^2^ The currency swap contract is to hedge the risk of variability in cash flow from the borrowings due to changes<br>in interest rate and foreign exchange rate and the expected maximum period for the Group to be exposed to risks of cash flow fluctuation by hedged items is until September 7, 2034.
--- ---
^3^ The balance of derivative assets subject to the second phase of interest rate benchmark reform is<br>~~W~~83,847 million and the Group has completed the consultation with the counterparty so that the alternative clause, which sets the interest rate of the alternative benchmark, can be inserted into the existing contract.<br>
--- ---

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

27

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2) The valuation gains and losses on the derivative contracts for the<br>six-month periods ended June 30, 2023 and 2022, are as follows:
(in millions of Korean won)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023 2022
Type of transaction Valuationgain Valuationloss Other<br><br><br>comprehensiveincome ^1^ Valuationgain Valuationloss Other<br><br><br>comprehensiveincome ^1^
Interest rate swap ~~W~~ — ~~W~~ 31 ~~W~~ (1,353 ) ~~W~~ — ~~W~~ 10 ~~W~~ 4,305
Currency swap 96,663 185 (36,178 ) 232,797 25,137 171,296
Total ~~W~~ 96,663 ~~W~~ 216 ~~W~~ (37,531 ) ~~W~~ 232,797 ~~W~~ 25,147 ~~W~~ 175,601
^1^ The amounts are before adjustments of deferred income tax directly reflected in equity and allocation to the non-controlling interest.
--- ---
3) The ineffective portion recognized in profit or loss on the cash flow hedge is valuation gain of<br>~~W~~958 million for the period ended June 30, 2023 (six-month period ended June 30, 2022: valuation gain of ~~W~~2,404 million).
--- ---
(5) Financial Liabilities at fair value through profit or loss
--- ---
1) Details of financial liabilities at fair value through profit or loss as of June 30, 2023 and<br>December 31, 2022, are as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Derivatives held for trading ^1,2,3^ ~~W~~ 164,088 ~~W~~ 141,280
^1^ Derivative liabilities recognized as the Group signed a shareholders’ agreement with financial investors<br>participating in capital increase of K Bank Inc are included. In case of IPO failure of K Back Inc. on the terms agreed upon from the date of completion of the acquisition of shares, financial investors may exercise the Drag-Along right to the<br>Group, and the Group may accede to it or exercise the right to claim for sale. If financial investors exercise the Drag-Along Right, the Group should exercise the right to claim for sale or guarantee the rate of return on the terms agreed upon by<br>financial investors.
--- ---
^2^ The amount includes derivatives separated from convertible bonds issued by the Group (Note 12).<br>
--- ---
^3^ Derivative liabilities of ~~W~~5,204 million recognized by an agreement with LS<br>Cable & System Ltd. in connection with KT Submarine Co., Ltd, is included. (Note 15).
--- ---
2) The valuation gain and loss on financial liabilities at fair value through profit or loss for the six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Valuation<br><br><br>gain Valuation<br><br><br>loss Valuation<br><br><br>gain Valuation<br><br><br>loss
Derivative liabilities held for trading ~~W~~ — ~~W~~ 22,808 ~~W~~ 62,511 ~~W~~ —

28

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

7. Inventories

Inventories as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won)
June 30, 2023 December 31, 2022
Acquisitioncost Valuationallowance Carrying<br><br><br>amount Acquisitioncost Valuationallowance Carrying<br><br><br>amount
Merchandise ~~W~~ 691,996 ~~W~~ (89,327 ) ~~W~~ 602,669 ~~W~~ 768,748 ~~W~~ (96,010 ) ~~W~~ 672,738
Others 34,252 — 34,252 36,453 — 36,453
Total ~~W~~ 726,248 ~~W~~ (89,327 ) ~~W~~ 636,921 ~~W~~ 805,201 ~~W~~ (96,010 ) ~~W~~ 709,191

Cost of inventories recognized as expenses for the six-month period ended June 30, 2023, amounts to ~~W~~1,574,186 million (six-month period ended June 30, 2022: ~~W~~1,662,510 million) and reversal of valuation loss on inventory amounts to ~~W~~6,683 million for the six-month period ended June 30, 2023 (six-month period ended June 30, 2022: reversal of valuation loss of ~~W~~45,694 million).

8. Other Assets and Liabilities

Other assets and liabilities as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023 December 31, 2022
Other assets
Advance payments ~~W~~ 221,245 ~~W~~ 181,150
Prepaid expenses 197,619 107,775
Contract cost 1,749,945 1,817,678
Contract assets 802,632 802,253
Others 25,877 12,964
Less: Non-current (808,643 ) (820,608 )
Current ~~W~~ 2,188,675 ~~W~~ 2,101,212
Other liabilities
Advances received ^1^ ~~W~~ 380,618 ~~W~~ 376,830
Withholdings 127,656 155,017
Unearned revenue 25,195 46,493
Lease liabilities 1,131,461 1,172,038
Contract liabilities 303,351 284,107
Others 12,613 33,108
Less: Non-current (904,559 ) (934,575 )
Current ~~W~~ 1,076,335 ~~W~~ 1,133,018
^1^ The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue from Contracts withCustomers (Note 19).
--- ---

29

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

9. Property and Equipment, Investment Properties, and Intangible Assets
(1) Changes in property and equipment for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 14,772,179 ~~W~~ 14,464,885
Acquisition and capital expenditure 1,417,303 1,506,437
Disposal and termination (38,069 ) (46,856 )
Depreciation (1,346,129 ) (1,308,935 )
Transfer to investment property (130,250 ) (100,249 )
Changes in consolidation scope 76,631 —
Impairment (522 ) (1,066 )
Others (75,579 ) 26,226
Ending, net ~~W~~ 14,675,564 ~~W~~ 14,540,442

Details of property and equipment provided as collateral as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Carrying<br><br><br>amount Secured<br><br><br>amount Relevantaccount Relatedamount Secured party
Land and Buildings ~~W~~ 11,242 ~~W~~ 15,775 Borrowings ~~W~~ 3,229 Industrial Bank of Korea/Korea Development Bank
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- ---
Carryingamount Securedamount Relevantaccount Relatedamount Secured party
Land and Buildings ~~W~~ 11,353 ~~W~~ 15,774 Borrowings ~~W~~ 3,228 Industrial Bank of Korea/Korea Development Bank

30

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Changes in investment properties for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 1,933,358 ~~W~~ 1,720,654
Acquisition 61,659 37,637
Disposal (4,228 ) (5,281 )
Depreciation (25,325 ) (24,207 )
Transfer from property and equipment 130,250 100,249
Others (1,922 ) (35,121 )
Ending, net ~~W~~ 2,093,792 ~~W~~ 1,793,931

As of June 30, 2023, the Group (Lessor) has entered into a non-cancellable operating lease contract relating to real estate lease. The future minimum lease payments under this contract are ~~W~~111,840 million for one year or less, ~~W~~132,170 million for more than one year and less than five years, ~~W~~26,027 million for over five years, and ~~W~~270,037 million in total.

Details of investment properties provided as collateral as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Carryingamount Securedamount Relevant<br><br><br>account Relatedamount
Land and Buildings ~~W~~ 490,954 ~~W~~ 59,799 Deposits ~~W~~ 53,364
Land and Buildings 2,504 3,325 Borrowings 2,771
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- ---
Carryingamount Securedamount Relevant<br><br><br>account Relatedamount
Land and Buildings ~~W~~ 460,166 ~~W~~ 61,733 Deposits ~~W~~ 52,662
Land and Buildings 2,546 3,326 Borrowings 2,772

31

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Changes in intangible assets for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 3,129,833 ~~W~~ 3,447,333
Acquisition and capital expenditure<br>^1^ 236,076 154,514
Disposal and termination (7,367 ) (5,083 )
Amortization ^2^ (386,055 ) (319,080 )
Impairment (695 ) (3,045 )
Changes in consolidation scope 6,207 —
Others 26,114 36,136
Ending, net ~~W~~ 3,004,113 ~~W~~ 3,310,775
^1^ Amounts include transfer from property and equipment.
--- ---
^2^ Amounts include transfer to service costs.
--- ---

The carrying amount of memberships and others, excluding goodwill, assessed to have indefinite useful life and, therefore, not subject to amortization is ~~W~~215,995 million as of June 30, 2023 (December 31, 2022: ~~W~~210,114 million).

Goodwill is allocated to the Group’s cash-generating unit which is identified by operating segments. As of June 30, 2023, goodwill allocated to each cash-generating unit is as follows:

(In millions of Korean won)
Cash-Generating Unit Amount
Mobile services ~~W~~ 65,057
BC Card Co., Ltd.^.^ 41,234
HCN Co., Ltd. 228,674
GENIE Music Corporation 50,214
Millie Seojae 54,725
PlayD Co., Ltd. 42,745
KT Telecop Co., Ltd. 15,418
Epsilon Global Communications Pte. Ltd. 165,779
MEDIA GENIE Co., Ltd. 10,633
KT MOS Bukbu Co., Ltd. and others 45,951
Total ~~W~~ 720,430

The recoverable amount of goodwill was determined based on calculation of the value in use or fair value less costs of disposal. The pre-tax cash flow estimate was used to calculate the value in 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 sales growth rate based on past performance and expectations of future market fluctuations. The Group has determined cash flow estimates based on past earnings and market growth forecasts, and the discount rate used reflects the specific risks of related operations.

32

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

10. Investments in Associates and Joint Ventures
(1) Details of major associates as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
Percentage of ownership (%) Location Closing month
--- --- --- --- --- --- --- --- ---
June 30,<br>2023 December 31,<br>2022
KIF Investment Fund 33.3 % 33.3 % Korea December
K Bank Inc. 33.7 % 33.7 % Korea December
HD Hyundai Robotics Co., Ltd. (Formerly Hyundai Robotics Co., Ltd.) ^1^ 10.0 % 10.0 % Korea December
Megazone Cloud Corporation ^1^ 6.8 % 6.8 % Korea December
IGIS No. 468-1 General Private Real Estate Investment<br>Company 44.6 % 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
^1^ The Group has less than 20% interest in the investees, but the investments are classified as investments in<br>associates as the Group has significant influence in determining the operational and financial policies.
--- ---
(2) Changes in investments in associates and joint ventures for the<br>six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
2023
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Korean won) Beginning Acquisition<br><br><br>(Disposal) Share of net profit(loss) fromassociates andjoint ventures ^1^ Others Ending
KIF Investment Fund ~~W~~ 170,979 ~~W~~ — ~~W~~ 1,122 ~~W~~ 300 ~~W~~ 172,401
K Bank Inc. 852,756 — 6,222 10,173 869,151
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) 49,372 — 252 (155 ) 49,469
Megazone Cloud Corporation 136,199 — (3,117 ) 799 133,881
IGIS No. 468-1 General Private Real Estate Investment<br>Company 23,589 — (54 ) — 23,535
KT-DSC Creative Economy Youth Start-up Investment Fund 22,123 (500 ) 1,985 — 23,608
IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 16,620 — (715 ) — 15,905
Others^1^ 209,084 39,877 (3,498 ) (7,116 ) 238,347
Total ~~W~~ 1,480,722 ~~W~~ 39,377 ~~W~~ 2,197 ~~W~~ 4,001 ~~W~~ 1,526,297

33

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2022
(in millions of Korean won) Beginning Acquisition<br><br><br>(Disposal) Share of net profit(loss) fromassociates andjoint ventures ^1^ Others Ending
KIF Investment Fund ~~W~~ 178,935 ~~W~~ — ~~W~~ 2,626 ~~W~~ (8,135 ) ~~W~~ 173,426
KT-IBKC Future Investment Fund 1 12,081 (3,190 ) 4,395 (2,098 ) 11,188
K Bank Inc. 831,737 — 14,671 (16,228 ) 830,180
HD Hyundai Robotics Co., Ltd. (Formerly Hyundai Robotics Co., Ltd.) 48,725 — 523 (79 ) 49,169
Megazone Cloud Corporation — 130,001 (762 ) 48 129,287
Others^1^ 216,951 76,642 (3,470 ) (52,959 ) 237,164
Total ~~W~~ 1,288,429 ~~W~~ 203,453 ~~W~~ 17,983 ~~W~~ (79,451 ) ~~W~~ 1,430,414
^1^ KT Investment Co., Ltd., a subsidiary of the Group, recognized net profit (loss) in the investments in<br>associates as operating income. Net profit recognized as operating income for the six-months period ended June 30, 2023 amount to ~~W~~51 million<br>(six-month period ended June 30, 2022: net profit of ~~W~~515 million).
--- ---
(3) Summarized statements of financial position of the major associates and joint ventures as of June 30, 2023<br>and December 31, 2022 and summarized statements of profit or loss for the six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) June 30, 2023 June 30, 2023
--- --- --- --- --- --- --- --- --- ---
Assets Liabilities Operatingrevenue Profit (loss)<br><br><br>for the period
KIF Investment Fund ~~W~~ 517,205 ~~W~~ — ~~W~~ 15,474 ~~W~~ 3,368
K Bank Inc. 19,549,049 17,697,271 447,675 23,614
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) 400,591 113,166 80,234 (1,427 )
Megazone Cloud Corporation 1,125,352 504,363 710,068 (7,239 )
IGIS No. 468-1 General Private Real Estate Investment<br>Company 52,730 11 3 (121 )
KT-DSC Creative Economy Youth Start-up Investment Fund 82,732 103 10,659 6,948
IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 146,241 101,176 — (154 )

34

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022 June 30, 2022
Assets Liabilities Operatingrevenue Profit (loss)<br><br><br>for the period
KIF Investment Fund ~~W~~ 512,936 ~~W~~ — ~~W~~ 15,777 ~~W~~ 7,878
K Bank Inc. 16,634,007 14,833,151 225,602 44,883
HD Hyundai Robotics Co., Ltd. (Formerly Hyundai Robotics Co., Ltd.) 413,793 127,344 90,402 (6,564 )
Megazone Cloud Corporation 1,059,856 424,821 534,073 (9,413 )
IGIS No. 468-1 General Private Real Estate Investment<br>Company 52,851 12 — (1,977 )
KT-DSC Creative Economy Youth Start-up Investment Fund 77,792 362 (16,378 ) (5,214 )
IGIS Professional Investors Private Investment Real Estate Investment LLC No 395 136,665 90,545 — (233 )
(4) Due to the discontinuance of equity method of accounting, the Group has not recognized loss from associates and<br>joint ventures of ~~W~~334 million for the six-month period ended June 30, 2023 (six-month period ended June 30, 2022: loss of<br>~~W~~1,064 million). The unrecognized accumulated comprehensive loss of associates and joint ventures as of June 30, 2023, is ~~W~~10,249 million (December 31, 2022: ~~W~~9,915 million).<br>
--- ---

35

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

11. Trade and Other Payables
(1) Details of trade and other payables of the Group as of June 30, 2023 and December 31, 2022, are as<br>follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Current liabilities
Trade payables ~~W~~ 1,157,344 ~~W~~ 1,150,515
Other payables 5,068,556 6,182,650
Total ~~W~~ 6,225,900 ~~W~~ 7,333,165
Non-current liabilities
Trade payables ~~W~~ 1,204 ~~W~~ —
Other payables 817,292 1,064,099
Total ~~W~~ 818,496 ~~W~~ 1,064,099
(2) Details of other payables of the Group as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Non-trade payables ^1^ ~~W~~ 3,582,869 ~~W~~ 4,981,300
Accrued expenses 1,318,639 1,234,023
Operating deposits 769,951 818,603
Others 214,389 212,823
Less: Non-current (817,292 ) (1,064,099 )
Current ~~W~~ 5,068,556 ~~W~~ 6,182,650
^1^ As of June 30, 2023, credit sale liabilities amounting to ~~W~~1,142,669 million<br>(December 31, 2022: ~~W~~1,754,075 million) held by BC Card Co., Ltd. (a subsidiary of the Group) are included.
--- ---

36

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

12. Borrowings
(1) Details of borrowings of the Group as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
1) Debentures
--- ---
(in millions of Korean won and foreign currencies in thousands) June 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- ---
Type Maturity Annual interest<br><br><br>rates Foreign<br><br><br>currency Foreign<br><br><br>currency
MTNP notes ^1^ Sep. 7, 2034 6.500% 100,000 131,280 100,000 126,730
MTNP notes Jul. 18, 2026 2.500% 400,000 525,120 400,000 506,920
FR notes ^2^ Aug. 23, 2023 LIBOR(3M)+0.900% 100,000 131,280 100,000 126,730
MTNP notes Jul. 19, 2024 0.330% 400,000 3,628 400,000 3,813
MTNP notes Sep. 1, 2025 1.000% 400,000 525,120 400,000 506,920
FR notes ^2^ Nov. 1, 2024 LIBOR(3M)+0.980% 350,000 459,480 350,000 443,555
FR notes Jun. 19, 2023 — — — SGD 284,000 267,843
MTNP notes Jan. 21, 2027 1.375% 300,000 393,840 300,000 380,190
MTNP notes Aug. 08, 2025 4.000% 500,000 656,400 500,000 633,650
The 183-3rd Public bond Dec. 22, 2031 4.270% — 160,000 — 160,000
The 184-2nd Public bond Apr. 10, 2023 — — — — 190,000
The 184-3rd Public bond Apr. 10, 2033 3.170% — 100,000 — 100,000
The 186-3rd Public bond Jun. 26, 2024 3.418% — 110,000 — 110,000
The 186-4th Public bond Jun. 26, 2034 3.695% — 100,000 — 100,000
The 187-3rd Public bond Sep. 2, 2024 3.314% — 170,000 — 170,000
The 187-4th Public bond Sep. 2, 2034 3.546% — 100,000 — 100,000
The 188-2nd Public bond Jan. 29, 2025 2.454% — 240,000 — 240,000
The 188-3rd Public bond Jan. 29, 2035 2.706% — 50,000 — 50,000
The 189-3rd Public bond Jan. 28, 2026 2.203% — 100,000 — 100,000
The 189-4th Public bond Jan. 28, 2036 2.351% — 70,000 — 70,000
The 190-2nd Public bond Jan. 30, 2023 — — — — 150,000
The 190-3rd Public bond Jan. 30, 2028 2.947% — 170,000 — 170,000
The 190-4th Public bond Jan. 30, 2038 2.931% — 70,000 — 70,000
The 191-2nd Public bond Jan. 15, 2024 2.088% — 80,000 — 80,000
The 191-3rd Public bond Jan. 15, 2029 2.160% — 110,000 — 110,000
The 191-4th Public bond Jan. 14, 2039 2.213% — 90,000 — 90,000
The 192-2nd Public bond Oct. 11, 2024 1.578% — 100,000 — 100,000
The 192-3rd Public bond Oct. 11, 2029 1.622% — 50,000 — 50,000
The 192-4th Public bond Oct. 11, 2039 1.674% — 110,000 — 110,000
The 193-1st Public bond Jun. 16, 2023 — — — — 150,000
The 193-2nd Public bond Jun. 17, 2025 1.434% — 70,000 — 70,000
The 193-3rd Public bond Jun. 17, 2030 1.608% — 20,000 — 20,000
The 193-4th Public bond Jun. 15, 2040 1.713% — 60,000 — 60,000
The 194-1st Public bond Jan. 26, 2024 1.127% — 130,000 — 130,000
The 194-2nd Public bond Jan. 27, 2026 1.452% — 140,000 — 140,000
The 194-3rd Public bond Jan. 27, 2031 1.849% — 50,000 — 50,000
The 194-4th Public bond Jan. 25, 2041 1.976% — 80,000 — 80,000
The 195-1st Public bond Jun. 10, 2024 1.387% — 180,000 — 180,000
The 195-2nd Public bond Jun. 10, 2026 1.806% — 80,000 — 80,000
The 195-3rd Public bond Jun. 10, 2031 2.168% — 40,000 — 40,000
The 196-1st Public bond Jan. 27, 2025 2.596% — 270,000 — 270,000
The 196-2nd Public bond Jan. 27, 2027 2.637% — 100,000 — 100,000

All values are in US Dollars.

37

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won and foreign currencies in thousands) June 30, 2023 December 31, 2022
Type Maturity Annual interest<br><br><br>rates Foreign<br><br><br>currency Korean<br><br><br>won Foreign<br><br><br>currency Korean<br><br><br>won
The 196-3rd Public bond Jan. 27, 2032 2.741% — 30,000 — 30,000
The 197-1st Public bond Jun. 27, 2025 4.191% — 280,000 — 280,000
The 197-2nd Public bond Jun. 29, 2027 4.188% — 120,000 — 120,000
The 198-1st Public bond Jan. 10, 2027 3.847% — 70,000 — —
The 198-2nd Public bond Jan. 12, 2026 3.869% — 150,000 — —
The 198-3rd Public bond Jan. 12, 2028 3.971% — 80,000 — —
The 18-1st unsecured bond Jul. 2, 2024 1.844% — 100,000 — 100,000
The 18-2nd unsecured bond Jul. 2, 2026 2.224% — 50,000 — 50,000
The 148th Won-denominated unsecured bond Jun. 23, 2023 — — — — 100,000
The 149-1st<br>Won-denominated unsecured bond Mar. 8, 2024 1.440% — 70,000 — 70,000
The 149-2nd<br>Won-denominated unsecured bond Mar. 10, 2026 1.756% — 30,000 — 30,000
The 150-1st<br>Won-denominated unsecured bond Apr. 7, 2023 — — — — 20,000
The 150-2nd<br>Won-denominated unsecured bond Apr. 8, 2024 1.462% — 30,000 — 30,000
The 151-1st<br>Won-denominated unsecured bond May 12, 2023 — — — — 10,000
The 151-2nd<br>Won-denominated unsecured bond May 14, 2024 1.432% — 40,000 — 40,000
The 152-1st<br>Won-denominated unsecured bond Aug. 30, 2024 1.813% — 80,000 — 80,000
The 152-2nd<br>Won-denominated unsecured bond Aug. 28, 2026 1.982% — 20,000 — 20,000
The 153-1st Won denominated unsecured bond Nov. 10, 2023 2.310% — 30,000 — 30,000
The 153-2nd<br>Won-denominated unsecured bond Nov. 11, 2024 2.425% — 70,000 — 70,000
The 154th Won-denominated unsecured bond Jan. 23, 2025 2.511% — 40,000 — 40,000
The 155-1st<br>Won-denominated unsecured bond Feb. 29, 2024 2.615% — 50,000 — 50,000
The 155-2nd<br>Won-denominated unsecured bond Sep. 2, 2024 2.745% — 20,000 — 20,000
The 155-3rd<br>Won-denominated unsecured bond Feb. 28, 2025 2.880% — 20,000 — 20,000
The 156-1st<br>Won-denominated unsecured bond^3^ Mar. 25, 2025 5Y CMS+0.404% — 60,000 — 60,000
The 156-2nd<br>Won-denominated unsecured bond ^3^ Mar. 25, 2032 10Y CMS+0.965% — 40,000 — 40,000
The 157-1st<br>Won-denominated unsecured bond Apr. 28, 2023 — — — — 30,000
The 157-2nd<br>Won-denominated unsecured bond Oct. 27, 2023 3.024% — 30,000 — 30,000
The 158th Won-denominated unsecured bond Jan. 27, 2025 4.421% — 50,000 — 50,000
The 159-1st<br>Won-denominated unsecured bond Aug. 09, 2024 4.267% — 30,000 — 30,000

38

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won and foreign currencies in thousands) June 30, 2023 December 31, 2022
Type Maturity Annual interest<br><br><br>rates Foreign<br><br><br>currency Korean<br><br><br>won Foreign<br><br><br>currency Korean<br><br><br>won
The 159-2nd<br>Won-denominated unsecured bond Aug. 11, 2027 4.505% — 30,000 — 30,000
The 160-1st<br>Won-denominated unsecured bond Jun. 14, 2024 5.615% — 20,000 — 20,000
The 160-2nd<br>Won-denominated unsecured bond Dec. 13, 2024 5.667% — 20,000 — 20,000
The 160-3rd<br>Won-denominated unsecured bond Dec. 12, 2025 5.769% — 30,000 — 30,000
The 161-1st<br>Won-denominated unsecured bond Jun. 21, 2024 5.527% — 10,000 — 10,000
The 161-2nd<br>Won-denominated unsecured bond Dec. 20, 2024 5.557% — 20,000 — 20,000
The 161-3rd<br>Won-denominated unsecured bond Jun. 20, 2025 5.594% — 30,000 — 30,000
The 161-4th<br>Won-denominated unsecured bond Dec. 22, 2025 5.615% — 10,000 — 10,000
The 162-1st<br>Won-denominated unsecured bond Dec. 27, 2023 5.066% — 50,000 — 50,000
The 162-2nd<br>Won-denominated unsecured bond Jan. 26, 2024 5.069% — 40,000 — 40,000
The 162-3rd<br>Won-denominated unsecured bond Apr. 26, 2024 5.080% — 10,000 — 10,000
The 163-1st<br>Won-denominated unsecured bond Feb. 20, 2026 4.059% — 20,000 — —
The 163-2nd<br>Won-denominated unsecured bond Feb. 22, 2028 4.311% — 80,000 — —
The 164-1st<br>Won-denominated unsecured bond Apr. 12, 2024 3.778% — 10,000 — —
The 164-2nd<br>Won-denominated unsecured bond Oct. 24, 2024 3.821% — 30,000 — —
The 164-3rd<br>Won-denominated unsecured bond Apr. 14, 2028 4.220% — 30,000 — —
The 165-1st<br>Won-denominated unsecured bond May. 09, 2025 3.870% — 30,000 — —
The 165-2nd<br>Won-denominated unsecured bond Nov. 09, 2026 3.932% — 10,000 — —
The 165-3rd<br>Won-denominated unsecured bond May. 07, 2027 3.972% — 30,000 — —
The 6^th^short-term^^bond Jul. 04, 2023 4.110% — 100,000 — —
The 7^th^short-term^^bond Jul. 06, 2023 4.110% — 30,000 — —
Subtotal 8,256,148 8,406,351
Less: Current portion (1,150,466 ) (1,154,101 )
Discount on bonds (22,052 ) (23,728 )
Total ~~W~~ 7,083,630 ~~W~~ 7,228,522

39

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

^1^ As of June 30, 2023, the Controlling Company has outstanding notes in the amount of USD 100 million<br>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 MTNP has been terminated since 2007.<br>
^2^ The Libor (3M) is approximately 5.545% as of June 30, 2023. The loans have not been converted to<br>alternative benchmark interest rates, and the Group has completed the consultation with the counterparty so that the alternative clause, which sets the interest rate of the alternative benchmark, can be inserted into the existing contract.<br>
--- ---
^3^ The CMS (5Y) and CMS (10Y) is approximately 3.500% and 3.420%, respectively as of June 30, 2023.<br>
--- ---
2) Convertible bonds
--- ---
(in millions of Korean won)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Type Issuance Date Maturity Annualinterest Rate June 30, 2023 December 31, 2022
The 1st CB (Private) ^1^ Jun. 5, 2020 Jun. 5, 2025 ^2^ ~~W~~ 8,000 ~~W~~ 8,000
The 1st unsecured CB ^3^ Jul. 25, 2022 Jan. 25, 2025 ^4^ 30,000 30,000
Redemption premium 4,565 4,565
Conversion rights adjustment (5,845 ) (7,206 )
Subtotal 36,720 35,359
Amount settled within 1 year (Current portion of convertible bonds) (36,720 ) —
Total ~~W~~ — ~~W~~ 35,359
^1^ Common shares of Storywiz Co., Ltd. are subject to conversion (appraisal period: June 5, 2021~May 4,<br>2025).
--- ---
^2^ Nominal interest rate and maturity yield is approximately 0% and 5%, respectively, and the sum of principal and<br>interest will be settled on maturity.
--- ---
^3^ Common shares of KT cloud are subject to conversion (appraisal period: July 27, 2022~December 25, 2024).<br>
--- ---
^4^ Nominal interest rate and maturity yield is approximately 0% and 3%, respectively, and the sum of principal and<br>interest will be settled on maturity.
--- ---

40

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

3) Borrowings
a. Short-term borrowings
--- ---
(in millions of Korean won)
--- --- --- --- --- --- --- --- --- --- ---
Type Financial institution Annual interest rates June 30, 2023 December 31, 2022
Foreign<br><br><br>currency Foreign<br><br><br>currency
Working Capital Loans Shinhan Bank^^ 3.840%~6.360% — 86,000 — 105,000
— — — — 30,000
Woori Bank^1^ — — — — 50,000
CD(91D)+1.960% — 20,000 — —
Korea Development Bank 4.980%~6.200% — 13,000 — 27,201
Industrial Bank of Korea 4.880% — 6,000 — 6,000
Hana Bank^1^ CD(91D)+0.126% — 4,800 — 5,000
KB SECURITIES 4.000%~5.904% — 157,742 — 94,822
NH INVESTMENT & SECURITIES 3.840% — 20,000 — 20,000
HSBC 6.590% 19,900 26,154 18,500 23,451
NongHyup Bank^^ 4.830% — 11,365 — 9,000
— — — — 15,000
IBK Securities — — — — 20,000
Hi Investment & Securities — — — — 99,524
KOREA INVESTMENT & SECURITIES 4.050% — 20,000 — —
Total 365,061 504,998

All values are in US Dollars.

^1^ CD (91D) is approximately 3.470% as of June 30, 2023.

41

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

b. Long-term borrowings
(in millions of Korean won and thousands of foreign currencies) December 31, 2022
--- --- --- --- --- --- --- --- --- ---
Financial institution Type Annual interest<br>rates Foreign<br><br><br>currency
Export-Import Bank of Korea Inter-Korean<br>Cooperation Fund^1^ 1.000% — 1,727 — 1,974
CA-CIB General loans 3.380%~4.150% — 200,000 — 200,000
JPM General loans 2.700%~4.480% — 200,000 — 100,000
DBS General loans 4.109% — 100,000 — 100,000
Shinhan Bank General loans ^2^ Term SOFR(3M)+1.000% 8,910 11,697 8,910 11,292
General loans — — — 38,000 48,158
General loans 1.900%~3.230% 31,472 41,360 31,472 39,855
General loans ^3^ 4.490% — 62,398 — 62,398
General loans ^2^ Term SOFR(3M)+1.300% 21,127 27,735 21,127 26,774
General loans ^2^ Term SOFR(3M)+1.940% 35,000 45,948 — —
General loans ^2^ CD(91D)+1.800% — 16,900 — —
Woori Bank General loans ^2^ IBOR(3M)+0.900% 7,700 10,985 7,700 10,404
General loans 3.320% — 15,000 — 15,000
PF loans 2.000%~3.470% — 27,026 — 40,682
Hi Investment & Securities CP 2.302% — 91,852 — 90,724
Bookook Securities CP 3.490%~3.603% — 19,466 — 18,806
Korea Investment & Securities CP 3.622% — 74,471 — 73,039
Korea Development Bank General loans 3.000%~4.870% — 137,000 — 38,000
NH Jayang PF loans^2^ CD(91D)+1.150% — 71,833 — 59,066
Kyobo Life Insurance PF loans^2^ CD(91D)+1.150%~CD(91D)+3.450% — 95,745 — 66,390
Standard Chartered Bank Korea PF loans^2^ CD(91D)+1.150%~CD(91D)+3.450% — 63,830 — 44,260
General loans ^2^ CD(91D)+0.750% — 32,000 — —
Samsung Life Insurance PF loans 1.860%~4.160% — 53,191 — 36,883
Subtotal 1,400,164 1,083,705
Less: Current portion (553,362 ) (167,943 )
846,802 915,762

All values are in Euros.

^1^ The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a seven-year grace<br>period.
^2^ EURIBOR (3M), Term SOFR (3M) and CD (91D) are approximately 3.038%, 5.268% and 3.470%, respectively, as of<br>June 30, 2023.
--- ---
^3^ The general loans are repayable in installments over 4 years after a three-year grace period.<br>
--- ---

42

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Repayment schedule of the Group’s debentures and borrowings including the current portion of liabilities<br>as of June 30, 2023, is as follows:

(in millions of Korean won)

Debentures Borrowings Total
In localcurrency In foreigncurrency Sub-<br><br><br>total In localcurrency In foreigncurrency Sub-<br><br><br>total
Jul. 1, 2023~ Jun. 30, 2024 ~~W~~ 1,058,000 ~~W~~ 131,280 ~~W~~ 1,189,280 ~~W~~ 886,400 ~~W~~ 32,023 ~~W~~ 918,423 ~~W~~ 2,107,703
Jul. 1, 2024~ Jun. 30, 2025 1,800,000 463,108 2,263,108 522,929 131,856 654,785 2,917,893
Jul. 1, 2025~ Jun. 30, 2026 560,000 1,181,520 1,741,520 17,193 — 17,193 1,758,713
Jul. 1, 2026~ Jun. 30, 2027 330,000 918,960 1,248,960 112,699 — 112,699 1,361,659
After Jul. 1, 2027 1,720,000 131,280 1,851,280 62,125 — 62,125 1,913,405
~~W~~ 5,468,000 ~~W~~ 2,826,148 ~~W~~ 8,294,148 ~~W~~ 1,601,346 ~~W~~ 163,879 ~~W~~ 1,765,225 ~~W~~ 10,059,373
13. Provisions
--- ---

Changes in provisions for the six-month periods ended June 30, 2023 and 2022, are as follows:

(in millions of Korean won) 2023
Litigation Restoration cost Others Total
Beginning balance ~~W~~ 36,329 ~~W~~ 108,962 ~~W~~ 55,075 ~~W~~ 200,366
Increase (transfer) 40 13,835 4,124 17,999
Usage (262 ) (602 ) (2,003 ) (2,867 )
Reversal — (561 ) (51 ) (612 )
Others — (445 ) 445 ~~W~~ —
Ending balance ~~W~~ 36,107 ~~W~~ 121,189 ~~W~~ 57,590 ~~W~~ 214,886
Current ~~W~~ 34,532 ~~W~~ 20,556 ~~W~~ 57,172 ~~W~~ 112,260
Non-current 1,575 100,633 418 102,626
(in millions of Korean won) 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Litigation Restoration cost Others Total
Beginning balance ~~W~~ 80,165 ~~W~~ 107,358 ~~W~~ 69,874 ~~W~~ 257,397
Increase (transfer) 523 6,536 7,788 14,847
Usage (150 ) (1,145 ) (2,645 ) (3,940 )
Reversal (730 ) (2,688 ) (11,105 ) (14,523 )
Ending balance ~~W~~ 79,808 ~~W~~ 110,061 ~~W~~ 63,912 ~~W~~ 253,781
Current ~~W~~ 79,739 ~~W~~ 22,937 ~~W~~ 61,626 ~~W~~ 164,302
Non-current 69 87,124 2,286 89,479

43

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

14. Net Defined Benefit Liabilities
(1) The amounts recognized in the statement of financial position as of June 30, 2023 and December 31,<br>2022, are determined as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Present value of defined benefit obligations ~~W~~ 2,320,147 ~~W~~ 2,218,655
Fair value of plan assets (2,518,083 ) (2,478,143 )
Liabilities ~~W~~ 56,681 ~~W~~ 51,654
Assets ~~W~~ 254,617 ~~W~~ 311,142
(2) Changes in the defined benefit obligations for the six-month periods<br>ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning ~~W~~ 2,218,655 ~~W~~ 2,494,930
Current service cost 105,230 120,199
Interest expense 49,252 28,214
Benefits paid (58,602 ) (79,436 )
Remeasurements 5,045 (13,304 )
Changes in consolidation scope 427 —
Others 140 (823 )
Ending ~~W~~ 2,320,147 ~~W~~ 2,549,780
(3) Changes in the fair value of plan assets for the six-month periods<br>ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning ~~W~~ 2,478,143 ~~W~~ 2,314,632
Interest income 57,257 27,126
Remeasurements on plan assets 3,777 (4,797 )
Employer contributions 1,558 13,699
Benefits paid (44,586 ) (78,788 )
Changes in consolidation scope 339 —
Others 21,595 22,631
Ending ~~W~~ 2,518,083 ~~W~~ 2,294,503
(4) Amounts recognized in the consolidated statement of profit or loss for the<br>six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Current service cost ~~W~~ 105,230 ~~W~~ 120,199
Net interest cost (income) (8,005 ) 1,088
Account transfers (5,437 ) (7,429 )
Total expenses ~~W~~ 91,788 ~~W~~ 113,858

44

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

15. Commitments and Contingencies
(1) As of June 30, 2023, major commitments with local financial institutions are as follows:<br>
--- ---

(in millions of Korean won and foreign currencies in thousands)

Commitments Financial institution Used amount
Bank overdraft Kookmin Bank and others 372,000 —
Inter-Korean Cooperation Fund The Export-Import Bank of Korea 37,700 1,727
Insurance for Economic Cooperation project The Export-Import Bank of Korea 3,240 1,732
Collateralized loan on electronic accounts receivable-trade Kookmin Bank and others 566,150 45,763
Plus electronic notes payable Industrial Bank of Korea 50,000 2,995
Korea Development Bank andothers 1,551,900 86,800
Loans for working capital Shinhan Bank 76,509 USD 76,509
Woori Bank 7,700 EUR 7,700
Facility loans Shinhan Bank and others 924,000 474,024
Derivatives transaction limit Korea Development Bank and others 2,070,000 USD 2,070,000
Citi Bank 400,000 JPY 400,000
Total KRW 3,504,990 613,041
2,146,509 2,146,509
7,700 7,700
400,000 400,000

All values are in US Dollars.

45

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) As of June 30, 2023, guarantees received from financial institutions are as follows:<br>

(in millions of Korean won and foreign currencies in thousands)

Guarantee provisions
Hana Bank Guarantee for payment in Korean currency 4,000
Comprehensive credit line and others 3,100
Guarantee for payment in foreign currency 59
Comprehensive credit line and others 10,300
Kookmin Bank Guarantee for payment in foreign currency 6,484
Shinhan Bank Guarantee for payment in Korean currency<br>and others 29,000
Guarantee for payment in foreign currency<br>and others 94,517
Woori Bank Guarantee for payment in Korean currency 5,200
Guarantee for payment in foreign currency 7,000
Korea Development Bank Refund guarantee for advances received 6,811
HSBC Guarantees for depositions 808
Seoul Guarantee Insurance Company Performance guarantee and others 374,919
Korea Software Financial Cooperative Performance guarantee and others 1,398,432
Korea Specialty Contractor Financial Cooperative Performance guarantee and others 135
Korea Housing Finance Corporation Performance guarantee and others 12,835
Korea Housing & Urban Guarantee Corporation Performance guarantee and others 717,074
Information & Communication Financial Cooperative Performance guarantee and others 76,428
Total KRW 2,621,123
125,979

All values are in US Dollars.

46

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) As of June 30, 2023, guarantees provided by the Group to third parties, are as follows:<br>

(in millions of Korean won)

Subject to payment guarantees Creditor Limit Usedamount Period
KT Estate Inc. Wonju Bando U-bora Mark Bridge Buyer Hana Bank 103,000 27,520 Aug. 05, 2022<br> <br>~ Feb. 28, 2025
KT Engineering Co., Ltd. ^1^ Gasan solar power plant Inc. Shinhan Bank 4,700 587 Jan. 07, 2010<br> <br>~ Jan. 08, 2025
KT Engineering Co., Ltd. ^1^ SPP Inc. Suhyup Bank 3,250 117 Feb. 17, 2014<br> <br>~ Feb. 16, 2024
KT Engineering Co., Ltd. ^1^ Korea cell Inc. Suhyup Bank 3,250 244 Feb. 17, 2014<br> <br>~ Feb. 16, 2024
KT Engineering Co., Ltd. ^1^ San-ya agricultural association corporation Suhyup Bank 3,250 249 Feb. 17, 2014<br> <br>~ Feb. 16, 2024
KT Alpha Co., Ltd. T commerce Cash payers T commerce<br>Cash payers 821 — Apr. 14, 2023<br> <br>~ Apr. 12, 2024
Nasmedia Co., Ltd. Stockholders Association Members Korea Securities<br>Finance Corp 1,135 755 —
^1^ KT Engineering Co., Ltd., a subsidiary of the Controlling Company is subject to payment, depending on the<br>reimbursement of principal debtor.
--- ---
(4) The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd., a subsidiary, to pay KT Sat<br>Co., Ltd.’s liabilities incurred prior to spin-off. As of June 30, 2023, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of<br>~~W~~653 million.
--- ---
(5) For the six-month period ended June 30, 2023 and year ended<br>December 31, 2022, the Group made agreements with the Securitization Specialty Companies (June 30, 2023: First 5G 67^th^to 69^t^^h^ Securitization Specialty Co., Ltd., December 31, 2022: First 5G 61^st^ to 66^th^<br>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<br>receive asset management fees upon liquidation of securitization specialty company.
--- ---
(6) As of June 30, 2023, the Group is a defendant in 193 lawsuits with the total claimed amount of<br>~~W~~75,244 million. As of June 30, 2023, litigation provisions of ~~W~~36,107 million for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of<br>business. The final outcomes of the cases cannot be estimated as of the reporting date.
--- ---
(7) Under the agreement of bond issuance and borrowings, the Group is required to maintain certain financial<br>ratios, such as debt-to-equity ratio, and to 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.<br>
--- ---

47

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(8) As of June 30, 2023, the Group participates in Algerie Sidi Abdela new town development consortium<br>(percentage of ownership: 2.5%) and has joint liability with other consortium participants.
(9) As of June 30, 2023, the contracted amount of property and equipment acquisition agreement made but not<br>yet recognized amounts to ~~W~~1,335,548 million (December 31, 2022: ~~W~~1,294,823 million).
--- ---
(10) As of June 30, 2023, there are derivatives generated by the Group granting Drag-Along Right to financial<br>investors participating in the paid-in capital increase of K Bank Inc. (Note 6).
--- ---
(11) The Group has an agreement with a transferor participated in share transfer agreement of MILLE Co., Ltd. If<br>certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, the transferor may exercise Tag-Along Right, Drag-Along Right or Put Option for the ordinary and<br>redeemable convertible preferred shares it owns (Note 6).
--- ---
(12) The Group entered into an agreement with financial investors of Epsilon Global Communications Pte. Ltd in the<br>acquisition of shares contract. 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<br>the right to sell shares for the convertible preferred shares they own (Note 6).
--- ---
(13) The Group has an obligation for additional contributions as per agreements to Future Innovation Private Equity<br>Fund No.3 and other. As of June 30, 2023, the remaining committed amount of ~~W~~5,473 million and USD 32,350 thousand will be invested through the Capital Call method in the future.
--- ---
(14) The Group has joint responsibility obligation and an obligation to provide financial support as a construction<br>investor during the construction period with respect to K Defense Co., Ltd. established in accordance with the Private Investment Act on Social Infrastructure. During the operating period, the group has an obligation to provide financial support as<br>an operating investor.
--- ---
(15) During the prior period, the Group entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR<br>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<br>priority.
--- ---
(16) During the prior period, the Group entered into an agreement with LS Cable & System Ltd., which<br>participated in the stock acquisition contract of KT Submarine Co., Ltd. As per the agreement, the Group may exercise a put-option to LS Cable & System Ltd in the future. (Note 6).<br>
--- ---

48

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

16. Leases

Information of leases in which the Group is a lessee is as follows. Information when the Group is a lessor is described in Note 9.

(1) Amount recognized in the consolidated statement of financial position

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

(in millions of Korean won) June 30, 2023 December 31, 2022
Right-of-use<br>assets
Property and buildings ~~W~~ 1,034,505 ~~W~~ 1,081,067
Machinery and telecommunication line facilities 60,321 50,794
Others 156,808 148,473
Total ~~W~~ 1,251,634 ~~W~~ 1,280,334
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Lease liabilities ^1^
Current ~~W~~ 296,899 ~~W~~ 315,892
Non-current 834,562 856,146
Total ~~W~~ 1,131,461 ~~W~~ 1,172,038
^1^ Included in the line items ‘other current liabilities and other<br>non-current liabilities’ in the consolidated statement of financial position (Note 8).
--- ---

Right-of-use assets related to leases increased by ~~W~~185,196 million and ~~W~~234,906 million for the six-month periods ended June 30, 2023 and 2022, respectively.

49

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Amount recognized in the consolidated statement of Profit or Loss

The consolidated statement of profit or loss relating to leases for the six-month periods ended June 30, 2023 and 2022, are as follows:

(in millions of Korean won) June 30, 2023 June 30, 2022
Depreciation of<br>right-of-use assets
Property and buildings ~~W~~ 149,002 ~~W~~ 153,864
Machinery and telecommunication line facilities 13,390 16,398
Others 34,754 27,697
Total ~~W~~ 197,146 ~~W~~ 197,959
Depreciation of investment properties ~~W~~ 1 ~~W~~ 15
Interest expense relating to lease liabilities 25,402 19,858
Expenses relating to short-term leases 6,336 5,393
Expenses relating to leases of low-value assets that are<br>not short-term leases 11,535 12,781
Expenses relating to variable lease payments not included in lease liabilities 4,198 3,205

Total cash outflow from leases was \ 253,730 million and \ 231,022 million during six-month periods ended June 30, 2023 and 2022, respectively.

17. Retained Earnings

Details of retained earnings as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023 December 31, 2022
Legal reserve ^1^ ~~W~~ 782,249 ~~W~~ 782,249
Voluntary reserves ^2^ 4,651,362 4,651,362
Unappropriated retained earnings 8,970,350 8,823,732
Total ~~W~~ 14,403,961 ~~W~~ 14,257,343
^1^ The Commercial Code of the Republic of Korea requires the Controlling Company to appropriate, as a legal<br>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<br>of the Controlling Company’s Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the Controlling Company’s majority shareholders.
--- ---
^2^ The reserves of research and development of human resources in other surplus reserves are separately<br>accumulated on disposal of retained earnings on tax filing adjustments when calculating income taxes in accordance with regulations of Tax Reduction and Exemption Control Act of Korea. Reversal of the reserves according to the relevant tax law can<br>be paid out as dividends.
--- ---

50

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

18. Other Components of Equity
(1) The Group’s other components of equity as of June 30, 2023 and December 31, 2022, are as<br>follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Treasury stock ~~W~~ (502,381 ) ~~W~~ (202,295 )
Gain or loss on disposal of treasury stock 2,919 (41,503 )
Share-based payments 12,958 6,222
Equity transactions within consolidated entities<br>^1^ (331,878 ) (334,576 )
Total ~~W~~ (818,382 ) ~~W~~ (572,152 )
^1^ Profit or loss incurred from transactions with non-controlling interest<br>and investment difference incurred from change in proportion of subsidiaries are included.
--- ---
(2) As of June 30, 2023 and December 31, 2022, the details of treasury stock are as follows:<br>
--- ---
June 30, 2023 December 31, 2022
--- --- --- --- ---
Number of shares 14,825,082 5,069,130
Amount (in millions of Korean won) ~~W~~ 502,381 ~~W~~ 202,295

Treasury stock is expected to be used for the stock compensation for the Group’s directors, employees and other purposes.

51

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

19. Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities
(1) The Group has recognized the following amounts as revenue for the three- and<br>six-month periods ended June 30, 2023 and 2022:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Revenue from contracts with customers ~~W~~ 6,490,230 ~~W~~ 12,879,571 ~~W~~ 6,261,441 ~~W~~ 12,485,658
Revenue from other sources 57,291 111,626 50,711 104,194
Total ~~W~~ 6,547,521 ~~W~~ 12,991,197 ~~W~~ 6,312,152 ~~W~~ 12,589,852
(2) Operating revenues for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Services provided ~~W~~ 5,834,448 ~~W~~ 11,431,988 ~~W~~ 5,563,061 ~~W~~ 10,950,124
Sales of goods 713,073 1,559,209 749,091 1,639,728
Total ~~W~~ 6,547,521 ~~W~~ 12,991,197 ~~W~~ 6,312,152 ~~W~~ 12,589,852

Revenues from services provided are recognized over time, and sales of goods are recognized at a point in time. Revenues from construction commitments included in sales of goods are recognized using the percentage of completion method.

(3) The contract assets, liabilities and deferred revenue recognized in relation to revenue from contracts with<br>customers are as follows:
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Contract assets^1^ ~~W~~ 1,019,698 ~~W~~ 963,133
Contract liabilities^1^ 337,942 344,869
Deferred revenue ^2^ 83,591 81,653
^1^ The Group recognized contract assets of ~~W~~217,066 million and contract liabilities of<br>~~W~~34,591 million for long-term construction contracts as of June 30, 2023 (December 31, 2022: contract assets of ~~W~~160,880 million and contract liabilities of ~~W~~60,762 million). The<br>Group recognizes contract assets as trade and other receivables, and contract liabilities as other current liabilities.
--- ---
^2^ Deferred revenue recognized relating to government grants is excluded.
--- ---
(4) The contract costs recognized as assets are as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Incremental costs of contract establishment ~~W~~ 1,677,880 ~~W~~ 1,744,096
Costs of contract performance 72,064 73,582

The Group recognized ~~W~~888,317 million as operating expenses for the six-month period ended June 30, 2023 (six-month period ended June 30, 2022: ~~W~~902,391 million) related to contract cost assets.

52

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(5) For the three- and six-month periods ended June 30, 2023 and 2022,<br>the revenue recognition arising from carried-forward contract liabilities from prior year is as follows:

(in millionsof Korean won)

2023 2022
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Revenue recognized that was included in the contract liability balance at the beginning of the<br>year
Allocation of the transaction price ~~W~~ 59,902 ~~W~~ 134,898 ~~W~~ 70,089 ~~W~~ 157,130
Deferred revenue of joining/installment fees 11,016 23,208 12,064 23,970
Total ~~W~~ 70,918 ~~W~~ 158,106 ~~W~~ 82,153 ~~W~~ 181,100
20. Operating Expenses
--- ---
(1) Operating expenses for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Salaries and wages ~~W~~ 1,131,456 ~~W~~ 2,200,537 ~~W~~ 1,120,880 ~~W~~ 2,161,294
Depreciation 675,525 1,347,057 656,204 1,305,848
Depreciation of<br>right-of-use assets 97,717 197,146 101,265 197,959
Amortization of intangible assets 155,948 314,430 170,568 315,906
Commissions 298,182 600,587 274,974 604,332
Interconnection charges 109,660 220,898 135,366 257,217
International interconnection fees 44,244 92,018 50,850 99,793
Purchase of inventories 540,295 1,495,233 728,633 1,615,936
Changes of inventories 142,661 72,270 79,585 880
Sales promotion expense and sales commissions 600,486 1,165,094 583,380 1,134,518
Service costs 491,994 1,037,326 574,408 1,093,480
Utilities 89,160 192,477 85,618 178,945
Taxes and dues 63,368 128,582 64,413 132,216
Rent 41,725 81,475 36,545 69,706
Insurance premiums 14,427 32,270 13,707 29,614
Installation fees 38,049 91,349 13,089 52,000
Advertising expenses 40,145 75,460 51,305 98,400
Research and development expenses 41,690 84,525 39,169 79,296
Card service costs 825,748 1,584,610 808,295 1,533,866
Others 528,933 915,640 264,727 542,856
Total ~~W~~ 5,971,413 ~~W~~ 11,928,984 ~~W~~ 5,852,981 ~~W~~ 11,504,062

53

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Details of employee benefits for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Short-term employee benefits ~~W~~ 1,054,610 ~~W~~ 2,049,482 ~~W~~ 1,038,991 ~~W~~ 1,997,764
Post-employment benefits (defined benefits) 46,314 91,788 55,869 113,858
Post-employment benefits (defined contributions) 18,953 40,467 18,624 34,416
Share-based compensation 6,417 9,338 5,256 9,884
Others 5,162 9,462 2,140 5,372
Total ~~W~~ 1,131,456 ~~W~~ 2,200,537 ~~W~~ 1,120,880 ~~W~~ 2,161,294
21. Other Income and Other Expenses
--- ---
(1) Other income for the three- and six-month periods ended June 30,<br>2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Gain on disposal of property and equipment and investment properties ~~W~~ 5,007 ~~W~~ 12,617 ~~W~~ 14,622 ~~W~~ 24,425
Gain on disposal of intangible assets — 300 83 83
Gain on disposal of<br>right-of-use assets 1,496 1,861 426 2,254
Compensation on impairment of property and equipment 37,836 69,848 45,428 74,576
Gain on government subsidies 7,957 17,359 6,039 11,967
Gain on disposal of investments in associates 2,880 6,054 9,176 9,176
Others 7,769 23,892 15,840 31,830
Total ~~W~~ 62,945 ~~W~~ 131,931 ~~W~~ 91,614 ~~W~~ 154,311

54

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Other expenses for the three- and six-month periods ended June 30,<br>2023 and 2022, are as follows:
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Loss on disposal of property and equipment ~~W~~ 19,125 ~~W~~ 31,900 ~~W~~ 22,913 ~~W~~ 40,724
Loss on disposal of intangible assets 2,456 3,026 3,378 5,040
Loss on disposal of<br>right-of-use assets 719 949 887 1,368
Loss on disposal of investments in associates — — — 295
Donations 411 17,261 4,959 9,904
Other allowance for bad debts 7,640 11,651 3,189 8,250
Others 44,048 69,849 28,877 49,778
Total ~~W~~ 74,399 ~~W~~ 134,636 ~~W~~ 64,203 ~~W~~ 115,359
22. Financial Income and Costs
--- ---
(1) Details of financial income for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Interest income ~~W~~ 63,542 ~~W~~ 131,736 ~~W~~ 64,572 ~~W~~ 132,464
Gain on foreign currency transactions 5,728 10,671 7,855 11,933
Gain on foreign currency translation 8,913 14,482 38,988 55,383
Gain on settlement of derivatives 3,159 4,771 — —
Gain on valuation of derivatives 7,434 97,891 229,518 300,752
Gain on disposal of trade receivables 3,441 3,441 — —
Others 33,809 36,368 12,586 13,508
Total ~~W~~ 126,026 ~~W~~ 299,360 ~~W~~ 353,519 ~~W~~ 514,040
(2) Details of financial costs for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Interest expenses ~~W~~ 92,158 ~~W~~ 170,865 ~~W~~ 66,237 ~~W~~ 126,736
Loss on foreign currency transactions 8,442 15,861 5,071 7,514
Loss on foreign currency translation 22,569 125,617 197,834 264,502
Loss on settlement of derivatives — — — 3
Loss on valuation of derivatives 2,784 18,749 13,887 25,147
Loss on disposal of trade receivables 2,129 7,065 13,584 19,281
Others 20,416 37,122 24,906 31,180
Total ~~W~~ 148,498 ~~W~~ 375,279 ~~W~~ 321,519 ~~W~~ 474,363

55

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

23. Income Tax Expense

Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual effective income tax rate used for the year ending December 31, 2023 is 24.7%.

24. Earnings per Share

Basic earnings per share for the three- and six-month periods ended June 30, 2023 and 2022, are calculated as follows:

(1) Basic Earnings per Share

Basic earnings per share is calculated by dividing the net income attributable to the ordinary shares by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares held by the Group as treasury stock.

2023 2022
Three months Six months Three months Six months
Profit attributable to ordinary shares (in millions of Korean won) ~~W~~ 394,248 ~~W~~ 690,580 ~~W~~ 313,009 ~~W~~ 722,725
Weighted average number of ordinary shares outstanding (in number of shares) 249,590,243 252,588,199 235,918,651 235,863,704
Basic earnings per share (in Korean won) ~~W~~ 1,580 ~~W~~ 2,734 ~~W~~ 1,327 ~~W~~ 3,064

56

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Diluted Earnings per Share

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding assuming that all dilutive potential ordinary shares are converted into ordinary shares. The Group has dilutive potential ordinary shares from convertible bonds, convertible preferred stock and other share-based payments.

2023 2022
Three months Six months Three months Six months
Profit attributable to ordinary shares (in millions of Korean won) ~~W~~ 394,248 ~~W~~ 690,580 ~~W~~ 313,009 ~~W~~ 722,725
Adjusted net income attributable to ordinary shares (in millions of Korean won) (256 ) (443 ) (425 ) (1,375 )
Diluted profit attributable to ordinary shares (in millions of Korean won) 393,992 690,137 312,584 721,350
Number of dilutive potential ordinary shares outstanding (in number of shares) 135,219 123,912 42,213 85,328
Weighted average number of ordinary shares outstanding (in number of shares) 249,725,462 252,712,111 235,960,864 235,949,032
Diluted earnings per share (in Korean won) ~~W~~ 1,578 ~~W~~ 2,731 ~~W~~ 1,325 ~~W~~ 3,057

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. Convertible bonds and convertible preferred stocks without dilutive effects are excluded from the calculation

57

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

25. Cash Generated from Operations
(1) Cash flows from operating activities for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
1. Profit for the period ~~W~~ 742,127 ~~W~~ 818,755
2. Adjustments for:
Income tax expense 243,609 363,132
Interest income ^1^ (186,786 ) (156,441 )
Interest expense ^1^ 197,753 135,670
Dividend income ^2^ (35,758 ) (2,717 )
Depreciation 1,371,454 1,333,142
Amortization of intangible assets 386,055 319,080
Depreciation of<br>right-of-use assets 197,146 197,959
Provisions for post-employment benefits (defined benefits) 97,225 121,287
Allowance for bad debts 79,106 51,914
Share of net profit or loss of associates and joint ventures (2,197 ) (17,468 )
Gain on disposal of associates and joint ventures (6,054 ) (8,881 )
Loss (gain) on disposal of property, equipment and investment properties ^3^ 8,741 (58,290 )
Impairment loss on property and equipment 522 1,066
Gain on disposal of<br>right-of-use assets (912 ) (886 )
Loss on disposal of intangible assets 2,726 4,957
Impairment loss on intangible assets 695 3,046
Loss on foreign currency translation 111,135 209,119
Gain on valuation of derivatives (61,657 ) (275,121 )
Loss on disposal of financial assets at amortized cost 1 2
Gain on disposal of financial assets at fair value through profit or loss (908 ) (1,490 )
Loss on valuation of financial assets at fair value through profit or loss ^4^ 2,821 21,009
Others 71,256 31,813
3. Changes in operating assets and liabilities
Decrease (increase) in trade receivables 5,765 (830,013 )
Decrease (increase) in other receivables 436,030 (672,126 )
Increase in other current assets (43,890 ) (372,350 )
Increase in other non-current assets (32,768 ) (58,887 )
Decrease in inventories 69,973 44,085
Decrease in trade payables (15,205 ) (204,410 )
Increase (decrease) in other payables (651,115 ) 1,335,158
Decrease in other current liabilities (56,394 ) (41,260 )
Decrease in other non-current liabilities (18,017 ) (17,510 )
Increase (decrease) in provisions 2,885 (10,065 )
Increase (decrease) in deferred revenue 639 (1,460 )
Decrease in plan assets 115,748 160,708
Payment of post-employment benefits (defined benefit) (167,452 ) (214,637 )
4. Cash generated from operations (1+2+3) ~~W~~ 2,864,299 ~~W~~ 2,207,890

58

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

^1^ BC Card Co., Ltd. and other subsidiaries of the Group recognize interest income and expense as operating<br>revenue and expense, respectively. Interest income of ~~W~~55,050 million (six-month period ended June 30, 2022: ~~W~~23,977 million) and interest expense of<br>~~W~~27,778 million (six-month period ended June 30, 2022: ~~W~~8,934 million) that are recognized as operating revenue and expense, respectively, for the six-month period ended June 30, 2023 are included.
^2^ BC Card Co., Ltd. recognizes dividend income as operating revenue. Dividend income of<br>~~W~~1,426 million (six-month period ended June 30, 2022: ~~W~~1,323 million) that is recognized as operating revenue for the<br>six-month period ended June 30, 2023 is included.
--- ---
^3^ KT Estate Inc. recognizes gain and loss on disposal of investment properties as operating revenue and expense,<br>respectively. Gain on disposal of investment properties of ~~W~~10,542 million (six-month period ended June 30, 2022: Gain on disposal of ~~W~~74,589 million) that is<br>recognized as operating revenue for the year ended June 30, 2023 is included.
--- ---
^4^ KT Investment Co., Ltd. and other subsidiaries of the Group recognize gain and loss on valuation of financial<br>assets at fair value through profit or loss as operating revenue and expense, respectively. Gain on valuation of financial assets at fair value through profit or loss of ~~W~~11,727 million<br>(six-month period ended June 30, 2022: Loss on valuation of ~~W~~1,212 million) that is recognized as operating income/expense for the year ended June 30, 2023 is included.<br>
--- ---
(2) Significant transactions not affecting cash flows for the six-month<br>periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Reclassification of the current portion of borrowings ~~W~~ 1,286,741 ~~W~~ 883,468
Reclassification of<br>construction-in-progress to property and equipment 1,343,059 1,198,889
Reclassification of other payables relating to acquisition of property and equipment (211,861 ) (107,809 )
Reclassification of other payables relating to acquisition of intangible assets (235,761 ) (318,351 )
Reclassification of other payables from defined benefit liabilities (108,747 ) (135,201 )
Reclassification of other payables from plan assets 95,733 121,219

59

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

26. Changes in Liabilities Arising from Financing Activities

Details of changes in liabilities related to cash flows that have been classified as financing activities or will be classified as financing activities in the consolidated statement of cash flows for the six-month periods ended June 30, 2023 and are as follows:

(in millions of Korean won) Six-month period ended June 30, 2023
Beginning Cash flows Others Ending
Newlyacquired Changes inFX rate Fair valuechanges Others
Borrowings ~~W~~ 10,006,685 ~~W~~ (141,362 ) ~~W~~ — ~~W~~ 100,058 ~~W~~ 515 ~~W~~ 70,145 ~~W~~ 10,036,041
Lease liabilities 1,172,038 (208,342 ) 173,095 — 50 (5,380 ) 1,131,461
Derivative liabilities 33,555 — — (22,565 ) 6,479 — 17,469
Derivative assets (190,830 ) 26,593 — (71,435 ) 28,601 (3,132 ) (210,203 )
Total ~~W~~ 11,021,448 ~~W~~ (323,111 ) ~~W~~ 173,095 ~~W~~ 6,058 ~~W~~ 35,645 ~~W~~ 61,633 ~~W~~ 10,974,768
(in millions of Korean won) Six-month period ended June 30, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning Cash flows Others
Newlyacquired Changes inFX rate Fair valuechanges Others Ending
Borrowings ~~W~~ 8,437,703 ~~W~~ 1,412,477 ~~W~~ — ~~W~~ 219,645 ~~W~~ 449 ~~W~~ 4,255 ~~W~~ 10,074,529
Lease liabilities 1,159,369 (189,389 ) 193,535 — 114 30,862 1,194,491
Derivative liabilities 75,176 — — 25,137 (504 ) (57,126 ) 42,683
Derivative assets (99,453 ) — — (226,014 ) 25,927 713 (298,827 )
Total ~~W~~ 9,572,795 ~~W~~ 1,223,088 ~~W~~ 193,535 ~~W~~ 18,768 ~~W~~ 25,986 ~~W~~ (21,296 ) ~~W~~ 11,012,876

60

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

27. Segment Information
(1) The management of the Group determines the operating segments based on the reported information when<br>establishing the business strategy.
--- ---
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
(2) Details of operating revenues and profit by each segment for the three- and<br>six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Operating<br>revenues Operating<br>profit Depreciation<br>and amortization^1^
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
ICT ~~W~~ 4,487,417 ~~W~~ 9,106,412 ~~W~~ 407,424 ~~W~~ 795,567 ~~W~~ 782,598 ~~W~~ 1,561,821
Finance 959,350 1,843,337 33,008 43,842 8,299 20,211
Satellite TV 181,008 359,687 18,831 35,135 13,480 27,188
Real estate 141,876 251,993 23,021 27,415 17,452 34,902
Others 1,995,074 3,828,946 105,929 166,042 140,621 275,424
Subtotal 7,764,725 15,390,375 588,213 1,068,001 962,450 1,919,546
Elimination (1,217,204 ) (2,399,178 ) (12,105 ) (5,788 ) (33,260 ) (60,913 )
Consolidated amount ~~W~~ 6,547,521 ~~W~~ 12,991,197 ~~W~~ 576,108 ~~W~~ 1,062,213 ~~W~~ 929,190 ~~W~~ 1,858,633
^1^ Sum of the amortization of property and equipment, intangible assets, investment properties and right-of-use assets.
--- ---

61

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won)
2022
Operating<br>revenues Operating<br>profit Depreciation<br>and amortization^1^
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
ICT ~~W~~ 4,517,852 ~~W~~ 9,126,241 ~~W~~ 303,481 ~~W~~ 733,374 ~~W~~ 767,401 ~~W~~ 1,554,654
Finance 920,371 1,759,502 26,811 59,783 11,956 23,621
Satellite TV 174,878 343,051 16,929 36,323 14,596 29,236
Real estate 96,524 247,097 13,359 91,592 16,323 32,670
Others 1,487,918 3,552,269 96,562 169,672 138,289 237,764
Subtotal 7,197,543 15,028,160 457,142 1,090,744 948,565 1,877,945
Elimination (885,391 ) (2,438,308 ) 2,029 (4,954 ) (20,528 ) (58,232 )
Consolidated amount ~~W~~ 6,312,152 ~~W~~ 12,589,852 ~~W~~ 459,171 ~~W~~ 1,085,790 ~~W~~ 928,037 ~~W~~ 1,819,713
^1^ Sum of the amortization of property and equipment, intangible assets, investment properties and right-of-use assets.
--- ---

During the prior period, the Group changed certain operating segments for efficient business operation, and comparative information on the relevant segments was restated as the changed operating segments.

(3) Operating revenues for the six-month periods ended June 30, 2023<br>and 2022, and non-current assets as of June 30, 2023 and December 31, 2022, by geographical region, are as follows:
(in millions of Korean won) 2023
--- --- --- --- --- --- ---
Operating revenues Non-current assets^1^
Three months Six months June 30, 2023
Domestic ~~W~~ 6,501,361 ~~W~~ 12,904,253 ~~W~~ 20,741,656
Overseas 46,160 86,944 283,446
Total ~~W~~ 6,547,521 ~~W~~ 12,991,197 ~~W~~ 21,025,102
(in millions of Korean won) 2022
--- --- --- --- --- --- ---
Operating revenues Non-current assets^1^
Three months Six months December 31, 2022
Domestic ~~W~~ 6,272,679 ~~W~~ 12,513,236 ~~W~~ 20,845,214
Overseas 39,473 76,616 270,490
Total ~~W~~ 6,312,152 ~~W~~ 12,589,852 ~~W~~ 21,115,704
^1^ Sum of property and equipment, intangible assets, investment properties and right-of-use assets.
--- ---

62

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

28. Related Party Transactions
(1) The list of related parties of the Group as of June 30, 2023, is as follows:
--- ---
Relationship Name of Entity
--- ---
Associates and joint ventures KIF Investment Fund, QTT Global (Group) Company Limited, CU Industrial Development Co., Ltd., LoginD Co., Ltd., K Bank Inc., Daiwon<br>Broadcasting Co., Ltd., KT-DSC creative economy youth start-up investment fund, Korea Electronic Vehicle Charging Service,<br>K-REALTY RENTAL HOUSING REIT 2, AI RESEARCH INSTITUTE, KT-IBKC Future Investment Fund 1, Gyeonggi-KT Yoojin Superman Fund, FUNDA<br>Co., Ltd., CHAMP IT Co., Ltd., Alliance Internet Corp., Little Big Pictures, Virtua Realm Sendirian Berhad, KT-Smart Factory Investment Fund, KT Young Entrepreneurs DNA Investment Fund, HD Hyundai Robotics<br>Co., Ltd.(formerly 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<br>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<br>Investment Fund I, Home Choice Corp., K-REALTY RENTAL HOUSING REIT V, K-Realty 11th Real Estate Investment Trust Company, IBK-KT<br>Emerging Digital Industry Investment Fund, SG-IBKC K-Contents Investment Fund No.1, Megazone Cloud Corporation, Suseo Station Transfer Center Complex Development,<br>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<br>Company, Mastern Hongdae Rental Housing General Private, Real Estate Investment Company No.167, Kiamco Data Center Blind Fund, Mastern No.172 Seongsu Office PFV Co. Ltd., OASISALPHA Corporation, Shinhan EZ General Insurance, Ltd, New Media Tech<br>Fund, SH-KT Logistics Investment Type Private Real Estate Investment Trust No.1, GRANDWEST PFV Co., Ltd., Telco Credit Bureau Co., Ltd., STIC Place General Private Placement Real Estate Investment Trust No.2,<br>Super Growth K-contents Fund
Others ^1^ Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd.
^1^ Although they are evaluated by applying Korea IFRS 1109, these entities are included in the scope of related<br>parties under Korean IFRS 1024 as the Group has significant influence over them.
--- ---

63

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Outstanding balances of receivables and payables in relation to transactions with related parties as of<br>June 30, 2023 and December 31, 2022, are as follows:
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Receivables Payables
Relationship Name of Entity Tradereceivables Otherreceivables Lease<br><br><br>paymentreceivables Tradepayables Other<br><br><br>payables Lease<br><br><br>liabilities
Associates and joint ventures K Bank, Inc. ~~W~~ 735 ~~W~~ 259,690 ~~W~~ 908 ~~W~~ — ~~W~~ 313 ~~W~~ —
Little Big Pictures 1,469 5,462 — 9 2 —
K-Realty 11th Real Estate Investment Trust<br>Company 113 1,283 — — — 8,063
Others 2,015 10 — 2,779 1,652 —
Total ~~W~~ 4,332 ~~W~~ 266,445 ~~W~~ 908 ~~W~~ 2,788 ~~W~~ 1,967 ~~W~~ 8,063
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- ---
Receivables Payables
Relationship Name of Entity Tradereceivables Otherreceivables Tradepayables Other<br><br><br>payables Lease<br><br><br>liabilities
Associates and joint ventures K Bank, Inc. ~~W~~ 682 ~~W~~ 258,999 ~~W~~ — ~~W~~ 299 ~~W~~ —
Little Big Pictures 1,454 7,645 — 9 —
K-Realty 11th Real Estate Investment Trust<br>Company 151 1,283 — — 8,824
Others 2,285 2 3,235 2,932 —
Total ~~W~~ 4,572 ~~W~~ 267,929 ~~W~~ 3,235 ~~W~~ 3,240 ~~W~~ 8,824

64

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Significant transactions with related parties for the six-month periods<br>ended June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023
--- --- --- --- --- --- --- --- --- --- --- ---
Sales Purchases Acquisitionof right-of-useassets
Relationship Name of Entity Operating<br>revenue Other<br><br><br>income Operating<br>expenses Others^1^
Associates and joint ventures K Bank, Inc. ~~W~~ 11,196 ~~W~~ — ~~W~~ 5,647 ~~W~~ — ~~W~~ —
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) 40 — 182 — —
K-Realty 11th Real Estate Investment Trust<br>Company 128 100 1,149 — 34
Others ^2^ 8,085 413 20,061 137 —
Total ~~W~~ 19,449 ~~W~~ 513 ~~W~~ 27,039 ~~W~~ 137 ~~W~~ 34
^1^ The amount of acquisition of property and equipment and others is included.
--- ---
^2^ Transactions with KD Living, Inc. before it was classified as subsidiary of the Group are included.<br>
--- ---
(in millions of Korean won) 2022
--- --- --- --- --- --- --- --- --- --- --- ---
Sales Purchases Acquisitionof right-of-useassets
Relationship Name of Entity Operating<br>revenue Other<br>income Operating<br>expenses Others^1^
Associates and joint ventures K Bank, Inc. ~~W~~ 16,307 ~~W~~ — ~~W~~ 5,260 ~~W~~ — ~~W~~ —
HD Hyundai Robotics Co., Ltd. (formerly Hyundai Robotics Co., Ltd.) 46 — 606 2,120 —
Others 3,135 1,413 9,949 1,547 —
Total ~~W~~ 19,488 ~~W~~ 1,413 ~~W~~ 15,815 ~~W~~ 3,667 ~~W~~ —
^1^ The amount of acquisition of property and equipment and others is included.
--- ---

65

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) 2023
Finance<br><br><br>income Finance<br><br><br>costs Dividend<br><br><br>income
Associates and joint ventures K Bank, Inc. ~~W~~ 3,853 ~~W~~ — ~~W~~ —
HD Hyundai Robotics Co., Ltd.<br><br><br>(formerly Hyundai Robotics Co., Ltd.) — — —
K-Realty 11th Real Estate Investment Trust Company — 129 277
Others ^1^ — — 1,629
Total ~~W~~ 3,853 ~~W~~ 129 ~~W~~ 1,906
^1^ Transactions with KD Living, Inc. before it was classified as subsidiary of the Group are included.<br>
--- ---
(in millions of Korean won) 2022
--- --- --- --- --- --- --- ---
Finance<br><br><br>income Finance<br><br><br>costs Dividend<br><br><br>income
Associates and joint ventures K-Realty Qualified Private Real Estate Investment Trust No. 1 ^1^ ~~W~~ — ~~W~~ — ~~W~~ 45,549
K Bank, Inc. 418 — —
Others — 110 9,158
Total ~~W~~ 418 ~~W~~ 110 ~~W~~ 54,707
^1^ Transaction details before it was excluded from associates and joint ventures.
--- ---
(4) Key management compensation for the six-month periods ended<br>June 30, 2023 and 2022, consists of:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- ---
Salaries and other short-term benefits ~~W~~ 619 ~~W~~ 999
Post-employment benefits 71 163
Stock-based compensation 302 644
Total ~~W~~ 992 ~~W~~ 1,806

66

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(5) Fund transactions with related parties for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023
--- --- --- --- --- --- ---
Borrowing transactions^1^ Equity<br>contributions in<br>cash
Borrowings Repayments
Associates and Joint ventures
Megazone Cloud Corporation ~~W~~ 30,000 ~~W~~ — ~~W~~ —
K-Realty 11th Real Estate Investment Trust<br>Company — 494 —
STIC Place General Private Placement Real Estate Investment Trust No.2 — — 20,000
Telco Credit Bureau Co.,Ltd. — — 6,500
Super Growth K-contents Fund — 6,000
Others ^2^ — — 5,967
Total ~~W~~ 30,000 ~~W~~ 494 ~~W~~ 38,467
^1^ Lease transactions are included in borrowing transactions.
--- ---
^2^ Includes transactions before Studio Discovery Co., Ltd. was excluded from the associates.<br>
--- ---
(in millions of Korean won) 2022
--- --- --- --- --- --- ---
Borrowing transactions^1^ Equity<br>contributions in<br>cash
Borrowings Repayments
Associates and Joint ventures
Megazone Cloud Corporation ~~W~~ — ~~W~~ — ~~W~~ 130,001
IBK-KT Emerging Digital Industry Investment Fund — — 10,800
Mastern KT Multi-Family Real Estate Private Equity Investment Fund I — — 18,859
IGIS No. 468-1 General Private Real Estate Investment<br>Company — — 25,000
Others — 330 40,288
Total ~~W~~ — ~~W~~ 330 ~~W~~ 224,948
^1^ Lease transactions are included in borrowing transactions.
--- ---
(6) Provision of collateral and investment agreement and others
--- ---

Provision of collateral and investment agreement The Group has an obligation to invest in Kiamco Data Center Blind Fund, a related party, according to the agreement. As of June 30, 2023, the Group is planning to invest an additional ~~W~~114,509 million.

(7) As of June 30, 2023, the limit of the credit card contract provided by the Group to K Bank, Inc. is<br>~~W~~985 million (December 31, 2022: ~~W~~1,000 million).

67

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

29. Fair Value
(1) Fair Value of Financial Instruments by Category
--- ---

Carrying amount and fair value of financial instruments by category as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023 December 31, 2022
Carryingamount Fair value Carryingamount Fair value
Financial assets
Cash and cash equivalents ~~W~~ 1,805,497 ^1^ ~~W~~ 2,449,062 ^1^
Trade and other receivables
Financial assets at amortized cost^2^ 6,698,347 ^1^ 7,364,516 ^1^
Financial assets at fair value through other comprehensive income 123,787 123,787 129,124 129,124
Other financial assets
Financial assets at amortized cost 1,099,733 ^1^ 1,060,058 ^1^
Financial assets at fair value through profit or loss 1,015,820 1,015,820 1,064,856 1,064,856
Financial assets at fair value through other comprehensive income 1,660,016 1,660,016 1,508,192 1,508,192
Derivative financial assets for hedging 210,203 210,203 190,830 190,830
Total ~~W~~ 12,613,403 ~~W~~ 13,766,638
Financial liabilities
Trade and other payables ^3^ ~~W~~ 6,546,696 ^1^ ~~W~~ 8,397,264 ^1^
Borrowings 10,036,041 9,685,846 10,006,685 9,405,992
Other financial liabilities
Financial liabilities at amortized cost 290,806 ^1^ 246,606 ^1^
Financial liabilities at fair value through profit or loss 164,088 164,088 141,280 141,280
Derivative financial liabilities for hedging 17,469 17,469 33,555 33,555
Total ~~W~~ 17,055,100 ~~W~~ 18,825,390
^1^ The Group did not conduct a fair value estimation since the book amount is a reasonable approximation of fair<br>value.
--- ---
^2^ Lease receivables are excluded from fair value disclosure in accordance with Korean IFRS 1107.<br>
--- ---
^3^ Amounts related to employee benefit plans are included in trade and other payables at the end of previous year.<br>
--- ---

68

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(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:

• Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices<br>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.
• Level 2: The fair value of financial instruments that are not traded in an active market is determined using<br>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.<br>
--- ---
• Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is<br>included in level 3.
--- ---

69

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value or disclosed in fair value as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Level 1 Level 2 Level 3 Total
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ — ~~W~~ 123,787 ~~W~~ — ~~W~~ 123,787
Other financial assets
Financial assets at fair value through profit or loss 16,260 374,981 624,579 1,015,820
Financial assets at fair value through other comprehensive income 1,158,355 5,282 496,379 1,660,016
Derivative financial assets for hedging — 210,203 — 210,203
Total ~~W~~ 1,174,615 ~~W~~ 714,253 ~~W~~ 1,120,958 ~~W~~ 3,009,826
Liabilities
Borrowings ~~W~~ — ~~W~~ 9,685,846 ~~W~~ — ~~W~~ 9,685,846
Other financial liabilities
Financial liabilities at fair value through profit or loss — 804 163,284 164,088
Derivative financial liabilities for hedging — 17,469 — 17,469
Total ~~W~~ — ~~W~~ 9,704,119 ~~W~~ 163,284 ~~W~~ 9,867,403

70

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022
Level 1 Level 2 Level 3 Total
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ — ~~W~~ 129,124 ~~W~~ — ~~W~~ 129,124
Other financial assets
Financial assets at fair value through profit or loss 26,647 426,140 612,069 1,064,856
Financial assets at fair value through other comprehensive income 1,005,900 5,163 497,129 1,508,192
Derivative financial assets for hedging — 189,717 1,113 190,830
Total ~~W~~ 1,032,547 ~~W~~ 750,144 ~~W~~ 1,110,311 ~~W~~ 2,893,002
Liabilities
Borrowings ~~W~~ — ~~W~~ 9,405,992 ~~W~~ — ~~W~~ 9,405,992
Other financial liabilities
Financial liabilities at fair value through profit or loss — — 141,280 141,280
Derivative financial liabilities for hedging — 33,555 — 33,555
Total ~~W~~ — ~~W~~ 9,439,547 ~~W~~ 141,280 ~~W~~ 9,580,827

71

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements
1) Details of transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value<br>measurements
--- ---

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements.

2) Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements.<br>

Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements are as follows:

(In millions of Korean won) June 30, 2023
Financial assets Financialliabilities
Financialassets at fairvalue throughprofit or loss Financial assetsat fair valuethrough othercomprehensiveincome Derivativefinancial assetsfor hedging Financialliabilities at fairvalue throughprofit or loss
Beginning balance ~~W~~ 612,069 ~~W~~ 497,129 ~~W~~ 1,113 ~~W~~ 141,280
Acquisitions 38,358 — — —
Reclassifications (2,453 ) (511 ) (1,113 ) —
Changes in consolidation scope 252 — — —
Disposals (4,704 ) (6 ) — —
Amount recognized in profit or loss (18,943 ) — — 22,004
Amount recognized in other comprehensive income — (233 ) — —
Ending balance ~~W~~ 624,579 ~~W~~ 496,379 ~~W~~ — ~~W~~ 163,284

72

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(In millions of Korean won) June 30 2022
Financial assets Financialliabilities
Financialassets at fairvalue throughprofit or loss Financial assetsat fair valuethrough othercomprehensiveincome Derivativefinancial assetsfor hedging Financialliabilities at fairvalue throughprofit or loss
Beginning balance ~~W~~ 577,085 ~~W~~ 323,373 ~~W~~ 31,565 ~~W~~ 215,332
Acquisitions 126,058 9,409 — —
Reclassifications (1,589 ) 3,239 — (54,922 )
Disposals (118,046 ) (89,245 ) — —
Amount recognized in profit or loss 15,464 38 42,851 (61,804 )
Amount recognized in other comprehensive income — 1,795 (22,828 ) —
Ending balance ~~W~~ 598,972 ~~W~~ 248,609 ~~W~~ 51,588 ~~W~~ 98,606

73

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(4) Valuation Techniques and Inputs

Valuation techniques and inputs used in recurring and non-recurring fair value measurements and disclosed fair values categorized within Level 2 and Level 3 of the fair value hierarchy as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Fair value Level Valuation techniques
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ 123,787 2 DCF Model
Other financial assets
Financial assets at fair value through profit or loss 999,560 2,3 DCF Model,<br> <br>Adjusted Net Asset Model,<br><br><br>Monte-Carlo Simulation
Financial assets at fair value through other comprehensive income 501,661 2,3 DCF Model,<br> <br>Market Approach Model
Derivative financial assets for hedging 210,203 2 DCF Model
Liabilities
Borrowings ~~W~~ 9,685,846 2 DCF Model
Other financial liabilities
Financial liabilities at fair value through profit or loss 164,088 2,3 DCF Model,<br>Binomial Option Pricing<br>Model, Monte-Carlo<br>Simulation
Derivative financial liabilities for hedging 17,469 2 DCF Model

74

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022
Fair value Level Valuation techniques
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ 129,214 2 DCF Model
Other financial assets
Financial assets at fair value through profit or loss 1,038,209 2,3 DCF Model,<br> <br>Adjusted Net Asset Model,<br><br><br>Monte-Carlo Simulation
Financial assets at fair value through other comprehensive income 502,292 2,3 DCF Model,<br> <br>Market Approach Model
Derivative financial assets for hedging 190,830 2,3 DCF Model
Liabilities
Borrowings ~~W~~ 9,405,992 2 DCF Model
Other financial liabilities
Financial liabilities at fair value through profit or loss 141,280 3 DCF Model,<br> <br>Binomial Option Pricing<br>Model,<br><br><br>Monte-Carlo Simulation
Derivative financial liabilities for hedging 33,555 2 DCF Model
(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 discuss the valuation processes and results with the CFO in line with the Group’s closing dates.

(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 valuation methods using such data differs from the transaction price, then the fair value of the financial instrument is recognized at 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 the inputs of the valuation methods become observable in markets, the remaining deferred difference is immediately recognized in full in profit or loss.

75

KT Corporation and Subsidiaries

Notes to the Consolidated Interim Financial Statements

As of June 30, 2023 and 2022 (Unaudited), and December 31, 2022

In relation to this, details and changes of total deferred differences for the six-month periods ended June 30, 2023 and 2022, are as follows:

(in millions of Korean won) 2023 2022
Derivatives used forhedging Derivatives used forhedging
Beginning balance ~~W~~ — ~~W~~ 831
Recognized at fair value through profit or loss — (713 )
Ending balance ~~W~~ — ~~W~~ 118
30. Events After the Reporting Period
--- ---
(1) The Company has issued the following bonds after June 30, 2023.
--- ---
(in millions of Korean won) Issue date Face value Nominal<br><br><br>interest rate Maturity
--- --- --- --- --- --- --- --- --- ---
The 199-1st Public bond 2023-07-12 85,000 4.030 % 2025-07-11
The 199-2nd Public bond 2023-07-12 160,000 4.150 % 2026-07-10
The 199-3rd Public bond 2023-07-12 155,000 4.220 % 2028-07-12
(2) The consolidated subsidiary, KT Cloud Co., Ltd. decided on paid-in-capital increase based on the resolution of the board of directors on May 11, 2023. The amount of paid-in capital increase was<br>~~W~~600,000 million, and the capital increase was carried out on July 6, 2023.
--- ---

76

KT Corporation

Separate Interim Financial Statements

June 30,2023 and 2022 (Unaudited), and December 31, 2022

KT Corporation

Index

June 30, 2023 and 2022

KT Corporation

Separate Interim Financial Statements

June 30, 2023 and 2022

Page(s)
Report on Review of Interim Financial Statements 1 – 2
Separate Interim Financial Statements
Separate Interim Statements of Financial Position 3 – 4
Separate Interim Statements of Profit or Loss 5
Separate Interim Statements of Comprehensive Income 6
Separate Interim Statements of Changes in Equity 7 – 8
Separate Interim Statements of Cash Flows 9
Notes to the Separate Interim Financial Statements 10 – 58
Deloitte Anjin LLC<br> <br>9F., One IFC,<br><br><br>10, Gukjegeumyung-ro,<br> <br>Youngdeungpo-gu, Seoul<br> <br>07326, Korea<br> <br><br><br><br>Tel: +82 (2) 6676 1000<br> <br>Fax: +82 (2) 6674 2114<br><br><br>www.deloitteanjin.co.kr
---

Independent Auditor’s Review Report

[English Translation of Independent Auditor’s Review Report Originally Issued in Korean on August 14, 2023]

To the Shareholders and the Board of Directors of KT Corporation.

Reviewed Separate Interim Financial Statements

We have reviewed the accompanying separate interim financial statements of KT Corporation (the “Company”). The separate interim financial statements consist of the separate statement of financial position as of June 30, 2023, and the related separate statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month periods ended June 30, 2023 and 2022, all expressed in Korean won, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Separate Interim Financial Statements

Management is responsible for the preparation and fair presentation of these separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No. 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the accompanying separate interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semi-annual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of separate interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying separate interim financial statements referred to above are not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

1

LOGO

Other Matters

The accompanying separate interim statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month period ended June 30, 2022 for comparative purpose, were reviewed by other auditors, whose report thereon dated August 16, 2022, expressed that nothing came to their attention that caused them to believe that those separate interim financial statements as of June 30, 2022 were not prepared fairly, in all material respects, in accordance with K-IFRS.

The separate statement of financial position as of December 31, 2022, and the related separate statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors, whose report thereon dated March 8, 2023, expressed an unqualified opinion. The accompanying statement of financial position as of December 31, 2022, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

LOGO

Seoul, Korea

August 14, 2023

Notice to Readers

This review report is effective as of August 14, 2023, the auditor’s review report date. Certain subsequent events or circumstances may have occurred between the auditor’s review report date and the time the auditor’s review report is read. Such events or circumstances could significantly affect the financial statements and may result in modifications to the auditor’s review report.

2

KT Corporation

Separate Interim Statements of Financial Position

June 30, 2023 and December 31, 2022

(in millions of Korean won) Notes June 30, 2023 December 31,
(Unaudited) 2022
Assets
Current assets
Cash and cash equivalents 4,28 ~~W~~ 625,676 ~~W~~ 966,307
Trade and other receivables, net 4,5,28 3,018,417 3,055,649
Other financial assets 4,6,28 219,971 232,837
Inventories, net 7 260,075 349,870
Other current assets 8 2,048,382 1,998,825
Total current assets 6,172,521 6,603,488
Non-current assets
Trade and other receivables, net 4,5,28 402,761 526,988
Other financial assets 4,6,28 2,146,333 1,993,893
Property and equipment, net 9 11,276,254 11,540,162
Right-of-use<br>assets 16 965,444 983,049
Investment properties, net 9 1,199,486 1,137,489
Intangible assets, net 9 1,682,148 1,855,679
Investments in subsidiaries, associates and joint ventures 10 4,893,653 4,879,219
Net defined benefit assets 14 155,522 180,689
Other non-current assets 8 698,035 717,118
Total non-current assets 23,419,636 23,814,286
Total assets ~~W~~ 29,592,157 ~~W~~ 30,417,774

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

(Continued)

See accompanying notes to the separate financial statements.

3

KT Corporation

Separate Interim Statements of Financial Position

June 30, 2023 and December 31, 2022

(in millions of Korean won) Notes June 30, 2023 December 31,
(Unaudited) 2022
Liabilities
Current liabilities
Trade and other payables 4,11,28 ~~W~~ 4,022,325 ~~W~~ 4,411,056
Borrowings 4,12,28 1,131,454 984,720
Other financial liabilities 4,6,28 5,205 —
Current tax liabilities 190,943 127,944
Provisions 13 88,964 87,720
Deferred income 19 39,820 44,042
Other current liabilities 8 675,004 665,968
Total current liabilities 6,153,715 6,321,450
Non-current liabilities
Trade and other payables 4,11,28 722,262 979,050
Borrowings 4,12,28 6,205,612 6,510,841
Other financial liabilities 4,6,28 21,028 37,566
Provisions 13 88,764 79,374
Deferred income 19 150,422 158,161
Deferred tax liabilities 809,493 763,113
Other non-current liabilities 8 666,211 710,139
Total non-current liabilities 8,663,792 9,238,244
Total liabilities 14,817,507 15,559,694
Equity
Share capital 1,564,499 1,564,499
Share premium 1,440,258 1,440,258
Retained earnings 17 12,428,997 12,347,403
Accumulated other comprehensive income 11,264 (72,672 )
Other components of equity 18 (670,368 ) (421,408 )
Total equity 14,774,650 14,858,080
Total liabilities and equity ~~W~~ 29,592,157 ~~W~~ 30,417,774

(Concluded)

See accompanying notes to the separate financial statements.

4

KT Corporation

Separate Interim Statements of Profit or Loss

Three- and Six-Month Periods Ended June 30, 2023 and 2022

Three- and Six-Months Periods Ended June 30
(in millions of Korean won, except per share amounts) Notes 2023 <br>(Unaudited) 2022 <br>(Unaudited)
Three months Six months Three months Six months
Operating revenue 19 ~~W~~ 4,487,418 ~~W~~ 9,106,412 ~~W~~ 4,517,852 ~~W~~ 9,126,241
Operating expenses 20 4,079,994 8,310,845 4,214,371 8,392,867
Operating profit 407,424 795,567 303,481 733,374
Other income 21 55,079 171,599 83,128 218,502
Other expenses 21 63,349 112,011 55,462 96,831
Finance income 22 109,563 258,098 275,958 409,299
Finance costs 22 114,066 290,909 280,584 408,772
Profit before income tax expense 394,651 822,344 326,521 855,572
Income tax expense 23 89,596 197,424 302,085 440,167
Profit for the period ~~W~~ 305,055 ~~W~~ 624,920 ~~W~~ 24,436 ~~W~~ 415,405
Earnings per share
Basic earnings per share 24 ~~W~~ 1,222 ~~W~~ 2,474 ~~W~~ 104 ~~W~~ 1,761
Diluted earnings per share 24 1,222 2,473 104 1,761

See accompanying notes to theseparate financial statements.

5

KT Corporation

Separate Interim Statements of Comprehensive Income

Three- and Six-Month Periods Ended June 30, 2023 and 2022

Three- and Six-Months Periods Ended June 30
(in millions of Korean won) Notes 2023<br>(Unaudited) 2022<br>(Unaudited)
Threemonths Six months Threemonths Six months
Profit for the period ~~W~~ 305,055 ~~W~~ 624,920 ~~W~~ 24,436 ~~W~~ 415,405
Other comprehensive income
Items that will not be subsequently reclassified to profit or loss:
Remeasurements of the net defined benefit liability 14 641 2,717 (1,986 ) (2,694 )
Gain (loss) on valuation of financial instruments at fair value through other comprehensive<br>income 40,764 111,735 (34,457 ) (39,039 )
Items that may be subsequently reclassified to profit or loss:
Valuation gain on cash flow hedge 6 (10,419 ) 46,169 94,703 121,686
Other comprehensive income from cash flow hedges reclassified to profit or loss (8,850 ) (73,746 ) (116,154 ) (148,462 )
Other comprehensive income (loss) for the period, net of tax 22,136 86,875 (57,894 ) (68,509 )
Total comprehensive income (loss) for the period ~~W~~ 327,191 ~~W~~ 711,795 ~~W~~ (33,458 ) ~~W~~ 346,896

See accompanying notes to theseparate financial statements.

6

KT Corporation

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2023 and 2022

(in millions of Korean won) Notes Share capital Sharepremium Retainedearnings Accumulatedothercomprehensiveincome Othercomponents ofequity Total equity
Balance as at January 1, 2022 ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 11,931,481 ~~W~~ 125,610 ~~W~~ (1,196,954 ) ~~W~~ 13,864,894
Comprehensive income
Profit for the period — — 415,405 — — 415,405
Gain on valuation of financial assets at fair value through other comprehensive income — — — (39,039 ) — (39,039 )
Remeasurements of net defined benefit liabilities 14 — — (2,694 ) — — (2,694 )
Valuation gain on cash flow hedge 6 — — — (26,776 ) — (26,776 )
Total comprehensive income for the period — — 412,711 (65,815 ) — 346,896
Transactions with owners
Dividends paid — — (450,393 ) — — (450,393 )
Appropriation of retained earnings related to loss on disposal of treasury stock — — (11,577 ) — 11,577 —
Acquisition of treasury stock — — — — 4,429 4,429
Others — — — — (2,223 ) (2,223 )
Subtotal — — (461,970 ) — 13,783 (448,187 )
Balance as at June 30, 2022 (Unaudited) ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 11,882,222 ~~W~~ 59,795 ~~W~~ (1,183,171 ) ~~W~~ 13,763,603

7

KT Corporation

Separate Interim Statements of Changes in Equity

Six-Month Periods Ended June 30, 2023 and 2022

(in millions of Korean won) Notes Share capital Sharepremium Retainedearnings Accumulatedothercomprehensiveincome Othercomponents ofequity Total equity
Balance as at January 1, 2023 ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 12,347,403 ~~W~~ (72,672 ) ~~W~~ (421,408 ) ~~W~~ 14,858,080
Comprehensive income
Profit for the period — — 624,920 — — 624,920
Loss on valuation of financial assets at fair value through other comprehensive income — — 222 111,513 — 111,735
Remeasurements of net defined benefit liabilities 14 — — 2,717 — — 2,717
Valuation loss on cash flow hedge 6 — — — (27,577 ) — (27,577 )
Total comprehensive income for the period — — 627,859 83,936 — 711,795
Transactions with owners
Dividends paid — — (501,843 ) — — (501,843 )
Appropriation of retained earnings related to loss on disposal of treasury stock — — (44,422 ) — 44,422 —
Acquisition of treasury stock — — — — (300,086 ) (300,086 )
Others — — — — 6,704 6,704
Subtotal — — (546,265 ) — (248,960 ) (795,225 )
Balance as at June 30, 2023 (Unaudited) ~~W~~ 1,564,499 ~~W~~ 1,440,258 ~~W~~ 12,428,997 ~~W~~ 11,264 ~~W~~ (670,368 ) ~~W~~ 14,774,650

(Concluded)

See accompanying notes to the separate financial statement.

8

KT Corporation

Separate Interim Statements of Cash Flows

Six-Month Periods Ended June 30, 2023 and 2022

Six-Month Periods EndedJune 30
(in millions of Korean won) Notes 2023(Unaudited) 2022(Unaudited)
Cash flows from operating activities
Cash generated from operations 25 ~~W~~ 2,524,688 ~~W~~ 2,388,089
Interest paid (136,173 ) (94,662 )
Interest received 94,543 104,821
Dividends received 91,780 89,933
Income tax paid (121,150 ) (94,194 )
Net cash inflow from operating activities 2,453,688 2,393,987
Cash flows from investing activities
Collection of loans 18,880 23,536
Disposal of current financial assets at amortized cost 300,000 —
Disposal of non-current financial assets at amortized<br>cost 12,956 —
Disposal of financial assets at fair value through profit or loss 2,064 632
Disposal of financial assets at fair value through other comprehensive income 306 —
Disposal of investments in subsidiaries, associates and joint ventures 10,316 36,028
Disposal of property and equipment 13,979 29,450
Disposal of intangible assets 1,235 105
Disposal of<br>right-of-use assets 333 30
Loans granted (14,775 ) (107,333 )
Acquisition of current financial assets at amortized cost (300,000 ) (537,530 )
Acquisition of financial assets at fair value through profit or loss (2,195 ) (65,551 )
Acquisition of financial assets at fair value through other comprehensive income — (4,646 )
Acquisition of investments in subsidiaries, associates and joint ventures (25,525 ) (315,301 )
Acquisition of property and equipment (1,301,592 ) (1,466,383 )
Acquisition of intangible assets (308,939 ) (345,819 )
Acquisition of<br>right-of-use assets (489 ) (1,699 )
Net cash outflow from investing activities (1,593,446 ) (2,754,481 )
Cash flows from financing activities
Proceeds from borrowings 1,808,990 1,097,540
Settlement of derivative instruments (inflow) 24,935 —
Dividends paid (501,843 ) (450,394 )
Repayments of borrowings (2,072,333 ) (220,247 )
Acquisition of treasury stock (300,086 ) —
Decrease in lease liabilities (160,719 ) (182,763 )
Net cash inflow (outflow) from financing activities 26 (1,201,056 ) 244,136
Effect of exchange rate change on cash and cash equivalents 183 49
Net increase (decrease) in cash and cash equivalents (340,631 ) (116,309 )
Cash and cash equivalents
Beginning of the period 966,307 1,708,714
End of the period ~~W~~ 625,676 ~~W~~ 1,592,405

See accompanying notes to theseparate financial statements.

9

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

1. General Information

KT Corporation (the “Company”) in accordance with the Korea Telecommunications Corporation Act, was established as a 100% government-invested institution on January 1, 1982, when it comprehensively succeeded the telegraph and telephone business from the Korea Communications Commission (former Ministry of Information and Communication) to promote management of public telecommunications business and communication technology, and to contribute to improvement of public welfare. After its establishment, the Company has been operating in public telecommunications business through a nationwide business network including headquarters and business departments. The address of the registered headquarter is 90, Buljeong-ro, Bundang-gu, Seongnam City, Gyeonggi Province, Republic of Korea.

On October 1, 1997, the Company was converted into a government-invested institution pursuant to the Act on Management Structure Improvement and Privatization of Public Enterprises and was listed on the KRX stock market which was established by the Korea Exchange. On May 29, 1999, the Company was listed on the New York Stock Exchange by issuing a stock depository certificate containing newly issued 24,282,195 shares of common stock along with 20,813,311 shares held by the government. On July 2, 2001, a stock depository certificate containing 55,502,161 stocks held by the government was additionally issued and listed on the New York Stock Exchange.

In 2002, the Company acquired the entirety of shares previously held by the government in accordance with the Korean government’s public enterprise privatization plan. As of June 30, 2023, the Korean government does not own any shares in the Company.

2. Significant Accounting Policies
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” or “K-IFRS”). The accompanying separate interim financial statements have been condensed, restructured and translated into English from the Korean language financial statements.

The separate interim financial statements of the Company for the six-month period ended June 30, 2023, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These separate interim financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as of June 30, 2023.

10

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2.2 Changes in Accounting Policies and Disclosures

(1) New and amended standards and interpretations adopted by the Company

The Company has applied the following standards and interpretations for the first time for their annual reporting period commencing January 1, 2023.

• K-IFRS 1001 Presentation of Financial Statements and IFRSPractice Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies (Amendment)

The amendments change the requirements in K-IFRS 1001 with regard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

The supporting paragraphs in K-IFRS 1001 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.

• K-IFRS 1001 Presentation of Financial Statements - Disclosure of<br>financial liabilities with condition to adjust exercise price (Amendment)

The amendments require disclosure of valuation gains or losses (limited to those recognized in the profit or loss) of the conversion options or warrants (or financial liabilities including them), if all or part of the financial instrument with exercise price that is adjusted depending on the issuer’s share price change is classified as financial liability as defined in paragraph 11 (2) of K-IFRS 1032.

• K-IFRS 1008 Accounting Polices, Changes in Accounting Estimates andErrors - Definition of Accounting Estimates (Amendment)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.

The definition of a change in accounting estimates was deleted. However, the KASB retained the concept of changes in accounting estimates in the Standard with the following clarifications:

• A change in accounting estimate that results from new information or new developments is not the correction of an<br>error
• The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes<br>in accounting estimates if they do not result from the correction of prior period errors
--- ---

11

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

• K-IFRS 1012 Income Taxes - Deferred Tax related to Assets and<br>Liabilities arising from a Single Transaction (Amendment)

The amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.

Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may arise upon recognition of a lease liability and the corresponding right-of-use asset applying K-IFRS 1116 at the commencement date of a lease.

Following the amendments to K-IFRS 1012, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in K-IFRS 1012.

The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period an entity recognises:

• A deferred tax asset (to the extent that it is probable that taxable profit will be available against which the<br>deductible temporary difference can be utilised) and a deferred tax liability for all deductible and taxable temporary differences associated with:
① Right-of-use assets and lease<br>liabilities
--- ---
② Decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the<br>cost of the related asset
--- ---
• The cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained<br>earnings (or other component of equity, as appropriate) at that date.
--- ---

12

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) New standards and interpretations not yet adopted by the Company

The amended accounting standard issued that is not mandatory for the annual reporting period commencing January 1, 2023 and has not been early adopted by the Company is as follows:

• K-IFRS 1001 Presentation of Financial Statements - Classification<br>of Liabilities as Current or Non-current (Amendment)

The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

In addition, the amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date. Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.

The amendments also specify that the right to defer settlement is not affected if an entity only has to comply with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them), the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying with the covenants.

The above amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024, with early application permitted.

The Company is in review for the impact of the above amendments on the financial statements.

13

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2.3 Significant Accounting Policies

Significant accounting policies and method of computation used in the presentation of the separate interim financial statements are consistent with those of the separate financial statements for the year ended December 31, 2022, except for the changes due to the application of amendment and enactments of standards described in Note 2.2 (1) and as described below.

(1) Income Tax Expense

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual effective income tax rate is applied to the pre-tax income of the interim period.

(2) Subsidiaries, Associates and Joint Ventures

The financial statements of the Company are the separate financial statements prepared in accordance with Korean IFRS 1027 SeparateFinancial Statements. Investments in subsidiaries, associates and joint ventures 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, associates and joint ventures in profit or loss when its right to receive the dividend is established.

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.

14

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

4. Financial Instruments by Category

Financial instruments by category as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Financial assets Financial assetsat amortizedcost Financialassets at fairvalue throughprofit or loss Financial assets atfair value throughother comprehensiveincome Derivatives<br><br><br>used forhedging Total
Cash and cash equivalents ~~W~~ 625,676 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 625,676
Trade and other receivables 3,297,391 — 123,787 — 3,421,178
Other financial assets 403,833 390,768 1,365,273 206,430 2,366,304
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- ---
Financial liabilities Financial<br>liabilities atamortized cost Financialliabilities at fairvalue throughprofit or loss Derivatives<br>used forhedging Others Total
Trade and other payables ~~W~~ 4,428,797 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 4,428,797
Borrowings 7,337,066 — — — 7,337,066
Other financial liabilities — 9,438 16,795 — 26,233
Lease liabilities — — — 840,951 840,951
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Financial assets Financial<br><br><br>assets atamortized cost Financial assetsat fair valuethrough profitor loss Financial assetsat fair valuethrough othercomprehensiveincome Derivatives<br><br><br>used forhedging Total
Cash and cash equivalents ~~W~~ 966,307 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 966,307
Trade and other receivables 3,453,513 — 129,124 — 3,582,637
Other financial assets 416,294 410,388 1,214,059 185,989 2,226,730
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Financial liabilities Financialliabilities atamortized cost Financialliabilities at fairvalue throughprofit or loss Derivatives used forhedging Others Total
Trade and other payables ^1^ ~~W~~ 5,390,106 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 5,390,106
Borrowings 7,495,561 — — — 7,495,561
Other financial liabilities — 5,164 32,402 — 37,566
Lease liabilities — — — 865,280 865,280
^1^ Amounts related to employee benefit plans are included in Trade and other payables.
--- ---

15

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

5. Trade and Other Receivables
(1) Trade and other receivables as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- ---
Total amounts Provision forimpairment Presentvaluediscount Carrying<br><br><br>amount
Current assets
Trade receivables ~~W~~ 2,879,848 ~~W~~ (279,420 ) ~~W~~ (7,628 ) ~~W~~ 2,592,800
Other receivables 455,016 (26,378 ) (3,021 ) 425,617
Total ~~W~~ 3,334,864 ~~W~~ (305,798 ) ~~W~~ (10,649 ) ~~W~~ 3,018,417
Non-current assets
Trade receivables ~~W~~ 287,704 ~~W~~ (709 ) ~~W~~ (15,741 ) ~~W~~ 271,254
Other receivables 139,221 (430 ) (7,284 ) 131,507
Total ~~W~~ 426,925 ~~W~~ (1,139 ) ~~W~~ (23,025 ) ~~W~~ 402,761
(in millions of Korean won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Total amounts Provision forimpairment Presentvaluediscount Carrying<br><br><br>amount
Current assets
Trade receivables ~~W~~ 2,929,574 ~~W~~ (278,135 ) ~~W~~ (6,872 ) ~~W~~ 2,644,567
Other receivables 443,525 (30,549 ) (1,894 ) 411,082
Total ~~W~~ 3,373,099 ~~W~~ (308,684 ) ~~W~~ (8,766 ) ~~W~~ 3,055,649
Non-current assets
Trade receivables ~~W~~ 370,471 ~~W~~ (869 ) ~~W~~ (11,180 ) ~~W~~ 358,422
Other receivables 177,815 (429 ) (8,820 ) 168,566
Total ~~W~~ 548,286 ~~W~~ (1,298 ) ~~W~~ (20,000 ) ~~W~~ 526,988
(2) Details of other receivables as of June 30, 2023 and December 31, 2022, are as follows:<br>
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Loans ~~W~~ 42,099 ~~W~~ 46,463
Receivables 255,412 262,557
Accrued income 7,527 6,996
Refundable deposits 278,894 294,575
Others — 35
Less: Provision for impairment (26,808 ) (30,978 )
Total ~~W~~ 557,124 ~~W~~ 579,648
(3) The maximum exposure of trade and other receivables to credit risk is the carrying amount of each class of<br>receivables mentioned above as of June 30, 2023.
--- ---
(4) The Company classifies a portion of the trade receivables as financial assets at fair value through other<br>comprehensive income considering the trade receivables business model for managing the asset and the cash flow characteristics of the contract.
--- ---

16

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

6. Other Financial Assets and Liabilities
(1) Details of other financial assets and liabilities as of June 30, 2023 and December 31, 2022, are as<br>follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Other financial assets
Financial assets at amortized cost ^1^ ~~W~~ 403,833 ~~W~~ 416,294
Financial assets at fair value through profit or loss ^2^ 390,768 410,388
Financial assets at fair value through other comprehensive income 1,365,273 1,214,059
Derivatives used for hedging 206,430 185,989
Less: Non-current (2,146,333 ) (1,993,893 )
Current ~~W~~ 219,971 ~~W~~ 232,837
Other financial liabilities
Financial liabilities at fair value through profit or loss ~~W~~ 9,438 ~~W~~ 5,164
Derivatives used for hedging 16,795 32,402
Less: Non-current (21,028 ) (37,566 )
Current ~~W~~ 5,205 ~~W~~ —
^1^ As of June 30, 2023, the Company’s financial assets amount to ~~W~~30,464 million<br>(December 31, 2022: ~~W~~30,464 million) and consist of checking account deposits, time deposits and others which are subject to withdrawal restrictions.
--- ---
^2^ The company provided investments in Korea Software Financial Cooperative and others amounting to<br>~~W~~1,136 million as collateral in exchange for the payment guarantee provided by the Korea Software Financial Cooperative and others.
--- ---
(2) Financial Assets at fair value through profit or loss
--- ---
1) Details of financial assets at fair value through profit or loss as of June 30, 2023 and December 31,<br>2022, are as follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Debt securities ~~W~~ 385,955 ~~W~~ 387,594
Derivative held for trading ^1^ 4,813 22,794
Less: Non-current (390,768 ) (410,388 )
Current ~~W~~ — ~~W~~ —
^1^ Derivative assets amounting to ~~W~~1,015 million, which is recognized by an agreement with<br>LS Cable & System Ltd. in connection with KT Submarine Co., Ltd., and a call option amounting to ~~W~~3,798 million in connection with the acquisition of Epsilon Global Communications Pte. Ltd. are included (Note 15).<br>
--- ---
2) The maximum exposure of debt instruments of financial assets recognized at fair value through profit or loss to<br>credit risk is the carrying amount as of June 30, 2023.
--- ---

17

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Financial Assets at fair value through other comprehensive income
1) Details of financial assets at fair value through other comprehensive income as of June 30, 2023 and<br>December 31, 2022, are as follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Equity instruments (Listed) ~~W~~ 1,165,539 ~~W~~ 1,015,606
Equity instruments (Unlisted) 199,734 198,453
Less: Non-current (1,365,273 ) (1,214,059 )
Current ~~W~~ — ~~W~~ —
2) Upon disposal of these equity instruments, any balance within the accumulated other comprehensive income is<br>reclassified to retained earnings rather than to profit or loss. Upon disposal of debt securities, remaining balance of the accumulated other comprehensive income of debt investments is reclassified to profit or loss.
--- ---
(4) Derivatives used for hedging
--- ---
1) Details of valuation of derivatives used for hedging as of June 30, 2023 and December 31, 2022, are<br>as follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Assets Liabilities Assets Liabilities
Currency swap ^1,2^ ~~W~~ 206,430 ~~W~~ 16,795 ~~W~~ 185,989 ~~W~~ 32,402
Less: Non-current (186,818 ) (16,795 ) (143,413 ) (32,402 )
Current ~~W~~ 19,612 ~~W~~ — ~~W~~ 42,576 ~~W~~ —
^1^ The currency swap contract is to hedge the risk of variability in cash flow from the borrowings due to changes<br>in interest rate and foreign exchange rate and the expected maximum period for the Company to be exposed to risks of cash flow fluctuation by hedged items is until September 7, 2034.
--- ---
^2^ The balance of derivative assets subject to the second phase of interest rate benchmark reform is<br>~~W~~83,847 million and the company has completed the consultation with the counterparty so that the alternative clause, which sets the interest rate of the alternative benchmark, can be inserted into the existing contract.<br>
--- ---

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

18

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2) Details of valuation gains and losses from derivatives for risk hedging purposes for the six-month periods ended June 30, 2023 and 2022, are as follows :
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Type of transaction Valuationgain Valuationloss Other<br><br><br>comprehensiveincome ^1^ Valuationgain Valuationloss Other<br><br><br>comprehensiveincome ^1^
Currency swap ~~W~~ 94,896 ~~W~~ 185 ~~W~~ (36,858 ) ~~W~~ 227,650 ~~W~~ 25,137 ~~W~~ 164,662
^1^ The amounts before adjustments of deferred income tax directly reflected in equity.
--- ---

The ineffective portion recognized in profit or loss on the cash flow hedge is valuation gain of ~~W~~711 million for the current period (six-month period ended June 30, 2022: valuation gain of ~~W~~2,349 million).

(5) Financial Liabilities at fair value through profit or loss
1) Details of financial liabilities at fair value through profit or loss as of June 30, 2023 and<br>December 31, 2022, are as follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Financial liabilities at fair value through profit or loss Derivative liabilities held for trading<br>^1^ ~~W~~ 9,438 ~~W~~ 5,164
^1^ Derivative liabilities of ~~W~~5,204 million recognized by an agreement with LS<br>Cable & System Ltd. in connection with KT Submarine Co., Ltd. and derivative liabilities of ~~W~~4,234 million related to the obligation to acquire Epsilon Global Communications Pte. Ltd. are included. (Note 15).<br>
--- ---

19

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

7. Inventories

Inventories as of June 30, 2023 and December 31, 2022, are as follows :

(in millions of Korean won) June 30, 2023 December 31, 2022
Acquisitioncost Valuationallowance Carrying<br><br><br>amount Acquisitioncost Valuationallowance Carrying<br><br><br>amount
Merchandise ~~W~~ 342,450 ~~W~~ (82,375 ) ~~W~~ 260,075 ~~W~~ 439,598 ~~W~~ (89,728 ) ~~W~~ 349,870

Cost of inventories recognized as expenses for the six-month period ended June 30, 2023, amounts to ~~W~~1,207,991 million (six-month period ended June 30, 2022: ~~W~~1,266,654 million) and reversal of inventory valuation loss amounts to ~~W~~7,353 million for the six-month period ended June 30, 2023 (six-month period ended June 30, 2022: reversal of inventory valuation loss ~~W~~45,187 million).

8. Other Assets and Liabilities

Other assets and liabilities as of June 30, 2023 and December 31, 2022, are as follows :

(in millions of Korean won) June 30, 2023 December 31, 2022
Other assets
Advance payments ~~W~~ 62,681 ~~W~~ 54,315
Prepaid expenses 128,009 54,044
Contract costs 1,821,450 1,883,084
Contract assets 734,277 724,500
Less: Non-current (698,035 ) (717,118 )
Current ~~W~~ 2,048,382 ~~W~~ 1,998,825
Other liabilities
Advances received ^1^ ~~W~~ 207,529 ~~W~~ 189,780
Withholdings 19,477 38,561
Unearned revenue 4,426 1,051
Lease liabilities 840,951 865,280
Contract liabilities 268,832 281,435
Less: Non-current (666,211 ) (710,139 )
Current ~~W~~ 675,004 ~~W~~ 665,968
^1^ The amounts include adjustments arising from adoption of Korean IFRS 1115 Revenue from Contracts withCustomers (Note 19)
--- ---

20

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

9. Property and Equipment, Investment Properties, and Intangible Assets
(1) Changes in property and equipment for the six-month periods ended<br>June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 11,540,162 ~~W~~ 12,021,117
Acquisition and capital expenditure 1,071,669 1,373,757
Disposal and termination (31,538 ) (44,114 )
Depreciation (1,153,835 ) (1,148,140 )
Transfer to investment properties (85,493 ) (24,991 )
Investment in kind — (748,548 )
Others (64,711 ) (24,038 )
Ending, net ~~W~~ 11,276,254 ~~W~~ 11,405,043
(2) Changes in investment properties for the six-month periods ended<br>June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 1,137,489 ~~W~~ 997,344
Depreciation (23,496 ) (20,968 )
Transfer 85,493 24,983
Ending, net ~~W~~ 1,199,486 ~~W~~ 1,001,359
(3) As of June 30, 2023, the Company (Lessor) has entered into a<br>non-cancellable operating lease contract relating to real estate lease. The future minimum lease payments under this contract are ~~W~~124,877 million for one year or less,<br>~~W~~250,053 million for more than one year and less than five years, ~~W~~518,141 million for over five years, and ~~W~~893,071 million in total.
--- ---
(4) Details of investment properties provided as collateral as of June 30, 2023 and December 31, 2022,<br>are as follows :
--- ---
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- ---
Carryingamount Securedamount Related account Related<br><br><br>amount
Land and Buildings ~~W~~ 161,871 ~~W~~ 33,539 Deposits received ~~W~~ 30,100
(in millions of Korean won) December 31, 2022
Carryingamount Securedamount Related account Related<br><br><br>amount
Land and Buildings ~~W~~ 168,904 ~~W~~ 35,456 Deposits received ~~W~~ 29,638

21

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(5) Changes in intangible assets for the six-month periods ended<br>June 30, 2023 and 2022, are as follows :
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning, net ~~W~~ 1,855,679 ~~W~~ 2,236,564
Acquisition and capital expenditure<br>^1^ 70,641 41,715
Disposal and termination (4,230 ) (4,371 )
Amortization (239,942 ) (230,656 )
Investment in kind — (7,664 )
Others — (12 )
Ending, net ~~W~~ 1,682,148 ~~W~~ 2,035,576
^1^ Amounts include transfer from property and equipment.
--- ---

The carrying amount of goodwill and memberships assessed to have indefinite useful life and, therefore, not subject to amortization is ~~W~~65,057 million (December 31, 2022: ~~W~~65,057 million) and ~~W~~56,157 million (December 31, 2022: ~~W~~55,319 million), respectively as of June 30, 2023.

22

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

10. Investments in Subsidiaries, Associates and Joint Ventures
(1) Carrying amount in investments in subsidiaries, associates and joint ventures as of June 30, 2023 and<br>December 31, 2022, is as follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Subsidiaries ~~W~~ 4,498,466 ~~W~~ 4,492,987
Associates and joint ventures 395,187 386,232
Total ~~W~~ 4,893,653 ~~W~~ 4,879,219
1) Investments in subsidiaries as of June 30, 2023 and December 31, 2022, are as follows :<br>
--- ---
(in millions of Korean won) Carrying amount
--- --- --- --- --- --- --- --- --- ---
Location Percentage ofownership (%) June 30,<br><br><br>2023 December 31,<br><br><br>2022
KT Estate Inc. Korea 100.0 % ~~W~~ 1,084,522 ~~W~~ 1,084,522
KT Sat Co., Ltd. Korea 100.0 % 390,530 390,530
KTCS Corporation ^1^ Korea 8.4 % 6,427 6,427
KTIS Corporation ^1^ Korea 33.3 % 30,633 30,633
KT Skylife Co., Ltd. Korea 50.6 % 311,696 311,696
BC Card Co., Ltd. Korea 69.5 % 633,004 633,004
KT M&S Co., Ltd. Korea 100.0 % 26,764 26,764
KT Alpha Co., Ltd. Korea 70.5 % 130,924 130,924
KT Telecop Co., Ltd. Korea 86.8 % 134,308 134,308
KT Submarine Co., Ltd. ^1^ Korea 32.9 % 24,370 24,370
Nasmedia, Inc. ^1^ Korea 44.1 % 23,051 23,051
KTDS Co., Ltd. Korea 95.6 % 19,616 19,616
KTGDH Co., Ltd. Korea 100.0 % 7,544 7,544
KT Strategic Investment Fund No.2 ^3^ Korea — — 2,381
KT Sports Korea 52.6 % 19,311 19,311
KT M Mobile Co., Ltd. Korea 100.0 % 102,237 102,237
KT Service Bukbu Co., Ltd. Korea 67.3 % 3,873 3,873
KT Service Nambu Co., Ltd. Korea 76.4 % 10,160 10,160
KT Strategic Investment Fund No.3 Korea 86.7 % 2,947 2,947
KT Strategic Investment Fund No.4 Korea 95.0 % 10,070 16,720
PlayD Co., Ltd. ^2^ Korea 23.5 % 20,000 20,000
KT MOS Bukbu Co., Ltd. Korea 100.0 % 6,334 6,334
KT MOS Nambu Co., Ltd. Korea 98.4 % 4,267 4,267
Next Connect PFV Korea 100.0 % 24,250 24,250
KT Strategic Investment Fund No.5 Korea 95.0 % 19,000 19,000
KT Engineering Co., Ltd. Korea 59.8 % 28,000 28,000
KT Studio Genie Co., Ltd.^^ Korea 90.9 % 283,620 283,620
Lolab Co., Ltd. Korea 79.8 % 21,958 21,950
KT ES Pte. Ltd. Singapore 57.6 % 96,878 96,878
Altimedia Corporation Korea 100.0 % 22,000 22,000
kt cloud Co., Ltd. Korea 100.0 % 901,504 901,504
Others 98,668 84,166
Total ~~W~~ 4,498,466 ~~W~~ 4,492,987

23

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

^1^ As of June 30, 2023, although sum of percentage of interest of the Company and its subsidiaries is less<br>than 50% ownership in these entities, these entities are included in investments in subsidiaries due to the dispersion of other shareholders excluding the Company and voting patterns at previous shareholders’ meetings.
^2^ As of June 30, 2023, as Nasmedia Co., Ltd.(a subsidiary of the Company) holds interest of 46.9% in PlayD<br>Co., Ltd., the Company and the subsidiary holds interest of 70.4% in total. Therefore, PlayD Co., Ltd is included in the investment in subsidiaries of the Company.
--- ---
^3^ Due to liquidation during the six-month period ended June 30,<br>2023, it was excluded from the investment details of the subsidiary^^.
--- ---
2) Investments in associates and joint ventures as of June 30, 2023 and December 31, 2022, are as<br>follows :
--- ---
Carrying amount
--- --- --- --- --- --- --- --- --- ---
(in millions of Korean won) Location Percentage ofownership (%) June 30,<br><br><br>2023 December 31,<br><br><br>2022
KIF Investment Fund Korea 33.3 % ~~W~~ 115,636 ~~W~~ 115,636
HD Hyundai Robotics Co., Ltd.<br><br><br>(formerly Hyundai Robotics Co., Ltd.) ^1^ Korea 10.0 % 50,000 50,000
Megazone Cloud Corporation ^1^ Korea 6.7 % 130,001 130,001
KT-DSC Creative Economy Youth Start-up Investment Fund ^1^ Korea 17.1 % 2,220 2,520
Others 97,330 88,075
Total ~~W~~ 395,187 ~~W~~ 386,232
^1^ The Company has less than 20% interest in the investees, but the investments are classified as investments in<br>associates as the Company has significant influence in determining the operational and financial policies.
--- ---
(2) Changes in investments in subsidiaries, associates and joint ventures for the<br>six-month periods ended June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning ~~W~~ 4,879,219 ~~W~~ 3,816,915
Acquisition 25,516 315,301
Disposal (10,311 ) (34,816 )
Others ^1^ (771 ) 751,504
Ending ~~W~~ 4,893,653 ~~W~~ 4,848,904
^1^ Others include transaction by the Company to increase investment in kind in kt cloud Co., Ltd. during the<br>period ended June 30, 2022.
--- ---

24

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

11. Trade and Other Payables
(1) Details of trade and other payables of the company as of June 30, 2023 and December 31, 2022, are as<br>follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Current liabilities
Trade payables ~~W~~ 691,971 ~~W~~ 568,260
Other payables 3,330,354 3,842,796
Total ~~W~~ 4,022,325 ~~W~~ 4,411,056
Non-current liabilities
Other payables ~~W~~ 722,262 ~~W~~ 979,050
(2) Details of other payables of the Company as of June 30, 2023 and December 31, 2022, are as follows :<br>
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Non-trade payables ~~W~~ 2,483,086 ~~W~~ 3,351,557
Accrued expenses 1,057,298 935,250
Operating deposits 417,129 436,485
Others 95,103 98,554
Less: Non-current (722,262 ) (979,050 )
Current ~~W~~ 3,330,354 ~~W~~ 3,842,796

25

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

12. Borrowings
(1) Details of borrowings as of June 30, 2023 and December 31, 2022, are as follows :<br>
--- ---
1) Debentures
--- ---
(in millions of Korean won and foreign currencies in thousands) June 30, 2023 December 31, 2022
--- --- --- --- --- --- --- --- ---
Type Maturity Annual interest<br><br><br>rate Foreigncurrency Foreigncurrency
MTNP notes ^1^ Sep. 7, 2034 6.500% 100,000 131,280 100,000 126,730
MTNP notes Jul. 18, 2026 2.500% 400,000 525,120 400,000 506,920
FR notes ^2^ Aug. 23, 2023 LIBOR(3M)+0.900% 100,000 131,280 100,000 126,730
MTNP notes Jul. 19, 2024 0.330% 400,000 3,628 400,000 3,813
MTNP notes Sep. 1, 2025 1.000% 400,000 525,120 400,000 506,920
FR notes ^2^ Nov. 1, 2024 LIBOR(3M)+0.980% 350,000 459,480 350,000 443,555
FR notes Jun. 19, 2023 — — — SGD 284,000 267,843
MTNP notes Jan. 21, 2027 1.375% 300,000 393,840 300,000 380,190
MTNP notes Aug. 8, 2025 4.000% 500,000 656,400 500,000 633,650
The 183-3rd Public bond Dec. 22, 2031 4.270% — 160,000 — 160,000
The 184-2nd Public bond Apr. 10, 2023 — — — — 190,000
The 184-3rd Public bond Apr. 10, 2033 3.170% — 100,000 — 100,000
The 186-3rd Public bond Jun. 26, 2024 3.418% — 110,000 — 110,000
The 186-4th Public bond Jun. 26, 2034 3.695% — 100,000 — 100,000
The 187-3rd Public bond Sep. 2, 2024 3.314% — 170,000 — 170,000
The 187-4th Public bond Sep. 2, 2034 3.546% — 100,000 — 100,000
The 188-2nd Public bond Jan. 29, 2025 2.454% — 240,000 — 240,000
The 188-3rd Public bond Jan. 29, 2035 2.706% — 50,000 — 50,000
The 189-3rd Public bond Jan. 28, 2026 2.203% — 100,000 — 100,000
The 189-4th Public bond Jan. 28, 2036 2.351% — 70,000 — 70,000
The 190-2nd Public bond Jan. 30, 2023 — — — — 150,000
The 190-3rd Public bond Jan. 30, 2028 2.947% — 170,000 — 170,000
The 190-4th Public bond Jan. 30, 2038 2.931% — 70,000 — 70,000
The 191-2nd Public bond Jan. 15, 2024 2.088% — 80,000 — 80,000
The 191-3rd Public bond Jan. 15, 2029 2.160% — 110,000 — 110,000
The 191-4th Public bond Jan. 14, 2039 2.213% — 90,000 — 90,000
The 192-2nd Public bond Oct. 11, 2024 1.578% — 100,000 — 100,000
The 192-3rd Public bond Oct. 11, 2029 1.622% — 50,000 — 50,000
The 192-4th Public bond Oct. 11, 2039 1.674% — 110,000 — 110,000
The 193-1st Public bond Jun. 16, 2023 — — — — 150,000
The 193-2nd Public bond Jun. 17, 2025 1.434% — 70,000 — 70,000
The 193-3rd Public bond Jun. 17, 2030 1.608% — 20,000 — 20,000
The 193-4th Public bond Jun. 15, 2040 1.713% — 60,000 — 60,000
The 194-1st Public bond Jan. 26, 2024 1.127% — 130,000 — 130,000
The 194-2nd Public bond Jan. 27, 2026 1.452% — 140,000 — 140,000
The 194-3rd Public bond Jan. 27, 2031 1.849% — 50,000 — 50,000
The 194-4th Public bond Jan. 25, 2041 1.976% — 80,000 — 80,000
The 195-1st Public bond Jun. 10, 2024 1.387% — 180,000 — 180,000

All values are in US Dollars.

26

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won and foreign currencies in thousands) June 30, 2023 December 31, 2022
Type Maturity Annual interestrate Foreigncurrency Koreanwon Foreigncurrency Koreanwon
The 195-2nd Public bond Jun. 10, 2026 1.806 % — 80,000 — 80,000
The 195-3rd Public bond Jun. 10, 2031 2.168 % — 40,000 — 40,000
The 196-1st Public bond Jan. 27, 2025 2.596 % — 270,000 — 270,000
The 196-2nd Public bond Jan. 27, 2027 2.637 % — 100,000 — 100,000
The 196-3rd Public bond Jan. 27, 2032 2.741 % — 30,000 — 30,000
The 197-1st Public bond Jun. 27, 2025 4.191 % — 280,000 — 280,000
The 197-2nd Public bond Jun. 29, 2027 4.188 % — 120,000 — 120,000
The 198-1st Public bond Jan. 10, 2025 3.847 % — 70,000 — —
The 198-2nd Public bond Jan. 12, 2026 3.869 % — 150,000 — —
The 198-3rd Public bond Jan. 12, 2028 3.971 % — 80,000 — —
Subtotal 6,756,148 7,116,351
Less: Current portion (630,960 ) (884,227 )
Discount on bonds (20,809 ) (22,764 )
Total ~~W~~ 6,104,379 ~~W~~ 6,209,360
^1^ As of June 30, 2023, the Company has outstanding notes in the amount of USD 100 million with fixed<br>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 terminated since 2007.<br>
--- ---
^2^ The LIBOR (3M) is approximately 5.545% as of June 30, 2023. Loans have not been converted to alternative<br>benchmark interest rates, and the company has completed the consultation with the counterparty so that the alternative clause, which sets the interest rate of the alternative benchmark, can be inserted into the existing contract.<br>
--- ---

27

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

2) Long-term borrowings
(in millions of Korean won)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Financial institution Type Maturity Annualinterest rates June 30,<br><br><br>2023 December 31,2022
The Export-Import Bank of Korea Inter-Korean Cooperation Fund ^1^ Jul. 10, 2026 1.000 % ~~W~~ 1,727 ~~W~~ 1,974
CA-CIB General loan May. 15, 2023 — — 100,000
May. 28, 2024 3.380 % 100,000 100,000
Mar. 15, 2024 4.150 % 100,000 —
JPM General loan Feb. 28, 2025 2.700 % 100,000 100,000
Mar. 15, 2024 4.480 % 100,000 —
DBS General loan Jun. 28, 2024 4.109 % 100,000 100,000
Korea Development Bank General loan Mar. 14, 2024 4.380 % 100,000 —
Subtotal 601,727 401,974
Less: Current portion (500,494 ) (100,493 )
Total ~~W~~ 101,233 ~~W~~ 301,481
^1^ The above Inter-Korean Cooperation Fund is repayable in installments over 13 years after a seven-year grace<br>period.
--- ---
(2) Repayment schedule of the Company’s debentures and borrowings including the portion of current liabilities<br>as of June 30, 2023, is as follows:
--- ---
(in millions of Korean won) Bonds
--- --- --- --- --- --- --- --- --- --- ---
In localcurrency In foreigncurrency Sub-<br><br><br>total Borrowings Total
Jul.1, 2023 ~ Jun. 30, 2024 ~~W~~ 500,000 ~~W~~ 131,280 ~~W~~ 631,280 ~~W~~ 500,494 ~~W~~ 1,131,774
Jul.1, 2024 ~ Jun. 30, 2025 1,200,000 463,108 1,663,108 100,493 1,763,601
Jul.1, 2025 ~ Jun. 30, 2026 470,000 1,181,520 1,651,520 493 1,652,013
Jul.1, 2026 ~ Jun. 30, 2027 220,000 918,960 1,138,960 247 1,139,207
After Jul.1, 2027 1,540,000 131,280 1,671,280 — 1,671,280
~~W~~3,930,000 ~~W~~2,826,148 ~~W~~6,756,148 ~~W~~601,727 ~~W~~7,357,875

28

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

13. Provisions

Changes in provisions for the six-month periods ended June 30, 2023 and 2022, are as follows :

2023
(in millions of Korean won) Litigation Restoration cost Others Total
Beginning balance ~~W~~ 30,938 ~~W~~ 96,667 ~~W~~ 39,489 ~~W~~ 167,094
Increase (transfer) — 10,417 1,345 11,762
Usage — (495 ) (161 ) (656 )
Reversal — (472 ) — (472 )
Ending balance ~~W~~ 30,938 ~~W~~ 106,117 ~~W~~ 40,673 ~~W~~ 177,728
Current ~~W~~ 30,938 ~~W~~ 17,651 ~~W~~ 40,375 ~~W~~ 88,964
Non-current — 88,466 298 88,764
2022
--- --- --- --- --- --- --- --- --- --- --- ---
(in millions of Korean won) Litigation Restoration cost Others Total
Beginning balance ~~W~~ 77,119 ~~W~~ 99,548 ~~W~~ 56,277 ~~W~~ 232,944
Increase (transfer) — 4,952 220 5,172
Usage — (841 ) (2,316 ) (3,157 )
Reversal — (2,616 ) (11,033 ) (13,649 )
Ending balance ~~W~~ 77,119 ~~W~~ 101,043 ~~W~~ 43,148 ~~W~~ 221,310
Current ~~W~~ 77,119 ~~W~~ 23,685 ~~W~~ 41,056 ~~W~~ 141,860
Non-current — 77,358 2,092 79,450

29

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

14. Net Defined Benefit Liabilities (Assets)
(1) The amounts recognized in the statements of financial position as of June 30, 2023 and December 31,<br>2022, are determined as follows :
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Present value of defined benefit obligations ~~W~~ 1,570,349 ~~W~~ 1,493,655
Fair value of plan assets (1,725,871 ) (1,674,344 )
Liabilities (Assets), net ~~W~~ (155,522 ) ~~W~~ (180,689 )
(2) Changes in the defined benefit obligations for the six-month periods<br>ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning ~~W~~ 1,493,655 ~~W~~ 1,721,241
Current service cost 54,555 64,387
Interest expense 36,665 20,930
Benefit paid (14,526 ) (22,537 )
Other — (21,079 )
Ending ~~W~~ 1,570,349 ~~W~~ 1,762,942
(3) Changes in the fair value of plan assets for the six-month periods<br>ended June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Beginning ~~W~~ 1,674,344 ~~W~~ 1,604,785
Interest income 41,301 19,513
Remeasurements on plan assets 3,072 (3,645 )
Benefit paid (15,859 ) (25,511 )
Other 23,013 9,336
Ending ~~W~~ 1,725,871 ~~W~~ 1,604,478
(4) Amounts recognized in the separate statement of profit or loss for the<br>six-month periods ended June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Current service cost ~~W~~ 54,555 ~~W~~ 64,387
Net interest cost (4,636 ) 1,417
Account transfers (6,303 ) (7,619 )
Total expenses ~~W~~ 43,616 ~~W~~ 58,185

30

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

15. Commitments and Contingencies
(1) As of June 30, 2023, major commitments with local financial institutions are as follows :<br>
--- ---
(in millions of Korean won and foreigncurrencies in thousands) Financial institution Used amount
--- --- --- --- ---
Bank overdraft Kookmin Bank and others 360,000 —
Working capital loan Korea Development Bank and others 1,070,000 —
Facility loan Korea Development Bank 100,000 100,000
Inter-Korean Cooperation Fund The Export-Import Bank of Korea 37,700 1,727
Economic Cooperation Business Insurance The Export-Import Bank of Korea 3,240 1,732
Collateralized loan on electronic accounts receivable-trade Kookmin Bank and others 247,000 14,738
Plus electronic notes payable Industrial Bank of Korea 50,000 2,995
Derivatives transaction limit Korea Development Bank and others 2,070,000 USD 2,070,000
Citi Bank 400,000 JPY 400,000
Total KRW 1,867,940 121,192
2,070,000 2,070,000
400,000 400,000

All values are in US Dollars.

(2) As of June 30, 2023, guarantees received from financial institutions are as follows :<br>
(in millions of Korean won andforeign currencies in thousands) Warranty details
--- --- ---
Hana Bank Comprehensive credit line 3,100
8,700
Shinhan Bank Guarantee for payment in foreign currency and others 39,517
Kookmin Bank Guarantee for payment in foreign currency 6,484
Woori Bank Guarantee for payment in foreign currency 5,000
Korea Development Bank Refund guarantee for advances received 6,811
Korea Software Financial Cooperative Advance payment/other guarantee and others 1,085,486
Seoul Guarantee Insurance Company Performance guarantee and others 16,522
Total KRW 1,105,108
66,512

All values are in US Dollars.

31

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) The Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities<br>incurred prior to spin-off. As of June 30, 2023, the Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of ~~W~~653 million.
(4) For the six-month period ended June 30, 2023, and the year ended<br>December 31, 2022, the Company made agreements with Securitization Specialty Companies (2023: First 5G 67^th^ to 69^th^ Securitization<br>Specialty Co., Ltd., 2022: First 5G 61^st^ to 66^th^ Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset<br>sales. The Company also made asset management agreements with each securitization specialty company and in accordance with the agreements, the Company will receive asset management fees upon liquidation of the securitization specialty company.<br>
--- ---
(5) As of June 30, 2023, the Company is a defendant in 142 lawsuits with the total claimed amount of<br>~~W~~48,171 million. As of June 30, 2023, 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<br>business. The final outcomes of the cases cannot be estimated as of the reporting date.
--- ---
(6) Under the agreement of bond issuance and borrowings, the Company is required to maintain certain financial<br>ratios such as debt-to-equity ratio, and to use the funds for the designated purpose and report to the creditors periodically. The covenants also contain restriction on<br>provision of additional collateral and disposal of certain assets.
--- ---
(7) As of June 30, 2023, the Company participates in Algerie Sidi Abdela new town development consortium<br>(percentage of ownership: 2.5%) and has joint liability with other consortium participants.
--- ---
(8) As of June 30, 2023, the contracted amount of property and equipment and intangible assets acquisition<br>agreement made but not yet recognized amounts to ~~W~~694,178 million (December 31, 2022: ~~W~~653,639 million).
--- ---
(9) The Company entered into an agreement with financial investors of Epsilon Global Communications Pte., Ltd. in<br>the acquisition of shares contract. If certain conditions are not met in the future as disclosed in the terms and conditions of the agreement, the financial investors may exercise the Tag-Along Right,<br>Drag-Along Right, or the right to sell shares for the convertible preferred shares they own (Note 6).
--- ---
(10) The Company has an obligation for additional contributions as per agreements to Future Innovation Private<br>Equity Fund No.3 and others. As of June 30, 2023, the remaining committed amount of ~~W~~5,473 million and USD 32,350 thousand will be invested through the Capital Call method in the future.
--- ---
(11) The Company has joint responsibility obligation and an obligation to provide financial support as a<br>construction investor during the construction period with respect to K Defense Co., Ltd. established in accordance with the Private Investment Act on Social Infrastructure. During the operating period, the company has an obligation to provide<br>financial support as an operating investor.
--- ---

32

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(12) During the prior period, the Company entered into a stock sale contract with HYUNDAI MOBIS and HYUNDAI MOTOR<br>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<br>priority.
(13) During the prior period, the Company entered into an agreement with LS Cable & System Ltd., which<br>participated in the stock acquisition contract of KT Submarine Co., Ltd. As per the agreement, the Company may exercise a put-option to LS Cable & System Ltd in the future. (Note 6)<br>
--- ---
16. Leases
--- ---

Information of leases in which the Company is a lessee is as follows. Information for leases in which the Company is a lessor is provided in Note 9.

(1) The separate statement of financial position shows the following amounts relating to leases:<br>
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Right-of-use<br>assets
Property and buildings ~~W~~ 869,974 ~~W~~ 889,615
Machinery and telecommunication line facilities 48,179 38,112
Others 47,291 55,322
Total ~~W~~ 965,444 ~~W~~ 983,049
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Lease liabilities ^1^
Current ~~W~~ 231,341 ~~W~~ 223,747
Non-current 609,610 641,533
Total ~~W~~ 840,951 ~~W~~ 865,280
^1^ Included in the line items ‘other current liabilities and<br>non-current liabilities’ in the separate statement of financial position (Note 8).
--- ---

Right-of-use assets related to leases increased by ~~W~~155,436 million and ~~W~~152,059 million, for the six-month periods ended June 30, 2023 and 2022, respectively.

33

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) The separate statement of profit or loss for the six-month periods<br>ended 30 June 2023 and 2022 shows the following amounts relating to leases:
(in millions of Korean won) 2023 2022
--- --- --- --- ---
Depreciation of<br>right-of-use assets
Property and buildings ~~W~~ 142,301 ~~W~~ 152,014
Machinery and telecommunication line facilities 13,108 15,495
Others 13,634 11,701
~~W~~ 169,043 ~~W~~ 179,210
Depreciation of investment properties ~~W~~ — ~~W~~ 15
Interest expense relating to lease liabilities 19,218 15,481
Expense relating to short-term leases 1,877 2,482
Expense relating to leases of low-value assets that are<br>not short-term leases 5,487 5,283

The total cash outflow for leases for the six-month periods ended June 30, 2023 and 2022 was ~~W~~185,219 million and ~~W~~206,406 million, respectively.

17. Retained Earnings

Details of retained earnings as of June 30, 2023 and December 31, 2022, are as follows :

(in millions of Korean won) June 30, 2023 December 31, 2022
Legal reserve ^1^ ~~W~~ 782,249 ~~W~~ 782,249
Voluntary reserves ^2^ 4,651,362 4,651,362
Unappropriated retained earnings 6,995,386 6,913,792
Total ~~W~~ 12,428,997 ~~W~~ 12,347,403
^1^ The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount<br>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<br>Company’s Board of Directors or used to reduce accumulated deficits, if any, with the ratification of the Company’s majority shareholders.
--- ---
^2^ The reserves of research and development of human resources in other surplus reserves are separately<br>accumulated on disposal of retained earnings on tax filing adjustments when calculating income taxes in accordance with regulations of Tax Reduction and Exemption Control Act of Korea. Reversal of the reserves according to the relevant tax law can<br>be paid out as dividends.
--- ---

34

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

18. Other Components of Equity
(1) The Company’s other components of equity as of June 30, 2023 and December 31, 2022, are as<br>follows:
--- ---
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- --- --- ---
Treasury stock ~~W~~ (502,381 ) ~~W~~ (202,295 )
Loss on disposal of treasury stock — (44,422 )
Share-based compensation 12,958 6,222
Others (180,945 ) (180,913 )
Total ~~W~~ (670,368 ) ~~W~~ (421,408 )
(2) As of June 30, 2023 and December 31, 2022, the details of treasury stock are as follows:<br>
--- ---
June 30, 2023 December 31, 2022
--- --- --- --- ---
Number of shares (in shares) 14,825,082 5,069,130
Amount (in millions of Korean won) ~~W~~ 502,381 ~~W~~ 202,295

Treasury stock is expected to be used as stock compensation for the Company’s directors, employees and other purposes.

35

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

19. Revenue from Contracts with Customers and Relevant Contract Assets and Liabilities
(1) The Company has recognized the following amounts as revenue for the three- and<br>six-month periods ended June 30, 2023 and 2022:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Revenue from contracts with customers ~~W~~ 4,430,287 ~~W~~ 8,993,017 ~~W~~ 4,468,163 ~~W~~ 9,028,118
Revenue from other sources 57,131 113,395 49,689 98,123
Total revenue ~~W~~ 4,487,418 ~~W~~ 9,106,412 ~~W~~ 4,517,852 ~~W~~ 9,126,241
(2) Operating revenues for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Services provided ~~W~~ 4,018,611 ~~W~~ 7,971,223 ~~W~~ 3,937,312 ~~W~~ 7,898,446
Sales of goods 468,807 1,135,189 580,540 1,227,795
Total ~~W~~ 4,487,418 ~~W~~ 9,106,412 ~~W~~ 4,517,852 ~~W~~ 9,126,241

Revenues from services provided are recognized over time, and sales of goods are recognized at a point in time.

(3) The contract assets, liabilities and deferred revenue recognized in relation to revenue from contracts with<br>customers are as follows:
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Contract assets ^1^ ~~W~~ 951,343 ~~W~~ 885,380
Contract liabilities ^1^ 300,471 342,196
Deferred revenue ^2^ 70,141 70,369
^1^ The Company recognized contract assets of ~~W~~217,066 million and contract liabilities of<br>~~W~~31,639 million for long-term construction contracts as of June 30, 2023 (2022: contract assets of ~~W~~160,880 million and contract liabilities of ~~W~~60,761 million). The Company<br>recognizes contract assets as trade and other receivables, and contract liabilities as other current liabilities.
--- ---
^2^ Deferred revenue recognized relating to government grants is excluded.
--- ---

36

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(4) The contract costs recognized as assets are as follows :
(in millions of Korean won) June 30, 2023 December 31, 2022
--- --- --- --- ---
Incremental costs of obtaining a contract ~~W~~ 1,665,783 ~~W~~ 1,729,567
Costs of contract performance 155,667 153,517

The Company recognized ~~W~~946,595 million as operating expenses for the six-month period ended June 30, 2023 (six-month period ended June 30, 2022: ~~W~~953,573 million) related to contract cost assets.

The Company did not recognize an impairment loss in anticipation of full recovery of costs recognized as assets.

(5) For the three- and six-month periods ended June 30, 2023 and 2022,<br>the revenue recognition arising from carried-forward contract liabilities and deferred revenue from prior year are as follows :
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Revenue recognized that was included in the contract liabilities balance at the beginning of the<br>year
Allocation of the transaction price ~~W~~ 53,426 ~~W~~ 117,435 ~~W~~ 63,617 ~~W~~ 139,503
Deferred revenue of joining/installment fees 9,679 20,360 9,849 20,666
Total ~~W~~ 63,105 ~~W~~ 137,795 ~~W~~ 73,466 ~~W~~ 160,169

37

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

20. Operating Expenses
(1) Operating expenses for the three- and six-month periods ended June 30, 2023 and 2022, are as follows :<br>
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Salaries and wages ~~W~~ 583,266 ~~W~~ 1,113,418 ~~W~~ 605,819 ~~W~~ 1,155,143
Depreciation 579,976 1,154,267 563,053 1,145,715
Depreciation of<br>right-of-use assets 84,005 169,043 89,302 179,210
Amortization of intangible assets 118,617 238,511 115,045 229,729
Commissions 465,359 909,190 441,532 863,155
Interconnection charges 109,660 220,898 135,366 257,217
International interconnection fees 44,245 92,019 50,850 99,794
Purchase of inventories 341,221 1,110,843 464,037 1,170,815
Changes of inventories 120,064 89,795 94,902 50,651
Sales promotion expense and sales commissions 637,152 1,263,112 657,387 1,270,607
Service costs 181,808 364,503 209,273 410,807
Purchase of contents 152,634 299,551 164,131 328,525
Utilities 90,954 178,646 71,502 154,960
Taxes and dues 51,031 103,115 52,907 109,461
Rent 28,674 57,358 29,317 53,934
Insurance premiums 11,511 26,167 11,558 25,124
Installation fees 109,932 220,791 117,527 232,880
Advertising expenses 29,719 55,354 40,685 78,302
Research and development expenses 49,932 99,406 42,129 82,248
Bad debt expenses 14,100 27,421 12,653 26,853
Others 276,134 517,437 245,396 467,737
Total ~~W~~ 4,079,994 ~~W~~ 8,310,845 ~~W~~ 4,214,371 ~~W~~ 8,392,867
(2) Details of employee benefits for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three months Six months Three months Six months
Short-term employee benefits ~~W~~ 538,964 ~~W~~ 1,028,371 ~~W~~ 557,650 ~~W~~ 1,058,249
Post-employment benefits (defined benefits) 21,775 43,616 28,696 58,185
Post-employment benefits (defined contributions) 13,069 27,092 12,124 24,234
Share-based compensation 5,180 6,736 4,986 9,103
Others 4,278 7,603 2,363 5,372
Total ~~W~~ 583,266 ~~W~~ 1,113,418 ~~W~~ 605,819 ~~W~~ 1,155,143

38

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

21. Other Income and Other Expenses
(1) Other income for the three- and six-month periods ended June 30,<br>2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Gain on disposal of property and equipment ~~W~~ 4,704 ~~W~~ 12,210 ~~W~~ 14,511 ~~W~~ 24,143
Gain on disposal of<br>right-of-use assets 1,325 1,650 307 2,108
Compensation on impairment of property and equipment 37,836 69,848 45,428 74,576
Gain on disposal of investments in subsidiaries and associates — 5 1,090 1,278
Dividends received 65 60,707 8,742 89,891
Gain on government subsidies 7,957 17,359 6,039 11,967
Others 3,192 9,820 7,011 14,539
Total ~~W~~ 55,079 ~~W~~ 171,599 ~~W~~ 83,128 ~~W~~ 218,502
(2) Other expenses for the three- and six-month periods ended June 30,<br>2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Loss on disposal of property and equipment ~~W~~ 17,442 ~~W~~ 29,771 ~~W~~ 21,854 ~~W~~ 38,807
Loss on disposal of<br>right-of-use assets 687 916 956 1,431
Loss on disposal of intangible assets 2,436 2,995 2,606 4,266
Donations 17 15,277 4,110 8,385
Others 42,767 63,052 25,936 43,942
Total ~~W~~ 63,349 ~~W~~ 112,011 ~~W~~ 55,462 ~~W~~ 96,831

39

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

22. Finance Income and Costs
(1) Details of finance income for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Interest income ~~W~~ 50,050 ~~W~~ 105,009 ~~W~~ 55,310 ~~W~~ 115,244
Gain on foreign currency transactions 3,782 6,989 5,703 7,736
Gain on foreign currency translation 8,418 10,453 36,584 52,115
Gain on transaction of derivatives 3,132 3,132 — —
Gain on valuation of derivatives 7,388 94,896 171,807 227,650
Gain on disposal of trade receivables 3,441 3,441 — —
Gain on disposal of financial assets 69 892 543 543
Gain on valuation of financial assets 706 706 5,969 5,969
Others 32,577 32,580 42 42
Total ~~W~~ 109,563 ~~W~~ 258,098 ~~W~~ 275,958 ~~W~~ 409,299
(2) Details of finance costs for the three- and six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- --- --- ---
Three<br><br><br>months Six<br><br><br>months Three<br><br><br>months Six<br><br><br>months
Interest expenses ~~W~~ 77,362 ~~W~~ 142,588 ~~W~~ 58,674 ~~W~~ 110,028
Loss on foreign currency transactions 6,243 9,776 3,815 4,941
Loss on foreign currency translation 8,431 97,824 180,432 239,238
Loss on valuation of derivatives 185 185 13,887 25,137
Loss on disposal of trade receivables 2,129 7,065 13,584 19,221
Loss on valuation of financial assets 19,716 33,471 10,192 10,207
Total ~~W~~ 114,066 ~~W~~ 290,909 ~~W~~ 280,584 ~~W~~ 408,772
23. Income Tax Expense
--- ---

Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual effective income tax rate used for the year ending December 31, 2023 is 24.0%.

40

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

24. Earnings per Share

Basic earnings per share for the three- and six-month periods ended June 30, 2023 and 2022, are calculated as follows.

(1) Basic Earnings per Share

Basic earnings per share is calculated by dividing the net income attributable to the ordinary shares by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares held by the Company as treasury stock.

2023 2022
Three months Six months Three months Six months
Profit attributable to ordinary shares (in millions of Korean won) ~~W~~ 305,055 ~~W~~ 624,920 ~~W~~ 24,436 ~~W~~ 415,405
Weighted average number of ordinary shares outstanding (in number of shares) 249,590,243 252,588,199 235,918,651 235,863,704
Basic earnings per share (in Korean won) ~~W~~ 1,222 ~~W~~ 2,474 ~~W~~ 104 ~~W~~ 1,761
(2) Diluted Earnings per Share
--- ---

Diluted earnings per share from operations is calculated by adjusting the weighted average number of ordinary shares outstanding to assuming that all dilutive potential ordinary shares are converted into ordinary shares. The Company has dilutive potential ordinary shares from other share-based payments.

2023 2022
Three months Six months Three months Six months
Profit attributable to ordinary shares (in millions of Korean won) ~~W~~ 305,055 ~~W~~ 624,920 ~~W~~ 24,436 ~~W~~ 415,405
Diluted profit attributable to ordinary shares (in millions of Korean won) ~~W~~ 305,055 ~~W~~ 624,920 ~~W~~ 24,436 ~~W~~ 415,405
Number of dilutive potential ordinary shares outstanding (in number of shares) 135,219 123,912 42,213 85,328
Weighted average number of ordinary shares outstanding (in number of shares) 249,725,462 252,712,111 235,960,864 235,949,032
Diluted earnings per share (in Korean won) ~~W~~ 1,222 ~~W~~ 2,473 ~~W~~ 104 ~~W~~ 1,761

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 period by the sum of the number of ordinary shares and dilutive potential ordinary shares.

41

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

25. Cash Generated from Operations
(1) Cash flows from operating activities for the six-month periods ended<br>June 30, 2023 and 2022, are as follows :
--- ---
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
1. Profit for the period ~~W~~ 624,920 ~~W~~ 415,405
2. Adjustments for:
Income tax expense 197,424 440,167
Interest income (105,009 ) (115,244 )
Interest expense 141,697 110,028
Dividend income (93,288 ) (89,933 )
Depreciation 1,177,331 1,169,108
Amortization of intangible assets 239,942 230,656
Depreciation of<br>right-of-use assets 169,043 179,210
Provisions for post-employment benefits (defined benefits) 49,919 65,804
Allowance for bad debts 37,712 34,168
Loss (gain) on disposal of investments in subsidiaries and associates (5 ) (1,278 )
Loss (gain) on disposal of property and equipment 17,561 14,664
Loss (gain) on disposal of intangible assets 2,995 4,266
Loss (gain) on disposal of<br>right-of-use assets (734 ) (677 )
Loss (gain) on foreign currency translation 87,371 187,123
Loss (gain) on valuation of derivatives, net (75,587 ) (202,513 )
Loss (gain) on valuation of financial assets at fair value through profit or loss 10,509 4,238
Loss (gain) on disposal of financial assets at fair value through profit or loss (892 ) (543 )
Others 10,166 (71,343 )
3. Changes in operating assets and liabilities
Decrease in trade receivables 123,299 108,371
Decrease in finance lease receivables — 577
Decrease in other receivables 1,521 65,726
Increase in other current assets (48,762 ) (128,752 )
Decrease (increase) in other non-current assets 19,084 (19,709 )
Decrease in inventories 94,416 93,479
Increase (decrease) in trade payables 122,742 (152,980 )
Increase (decrease) in other payables (222,477 ) 144,032
Increase in other current liabilities 1,382 1,203
Decrease in other non-current liabilities (12,004 ) (18,228 )
Increase (decrease) in provisions 1,943 (11,850 )
Decrease in deferred revenue (11,961 ) (27,342 )
Payment of post-employment benefits (defined benefits) (123,868 ) (161,396 )
Decrease in plan assets 88,298 121,652
4. Cash generated from operations (1+2+3) ~~W~~ 2,524,688 ~~W~~ 2,388,089

42

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Significant transactions not affecting cash flows for the six-month<br>periods ended June 30, 2023 and 2022, are as follows:
(in millions of Korean won) 2023 2022
--- --- --- --- --- --- ---
Reclassification of current portion of borrowings ~~W~~ 999,724 ~~W~~ 838,409
Reclassification of<br>construction-in-progress to property and equipment 1,127,413 1,177,643
Changes in non-trade payables relating to acquisition of<br>property and equipment (231,455 ) (118,377 )
Changes in non-trade payables relating to acquisition of<br>intangible assets (304,125 ) (304,125 )
Reclassification of other payables from defined benefit obligations (109,342 ) (138,859 )
Reclassification of other payables from plan assets 95,452 121,741
26. Cash Generated from Financing Activities
--- ---

Details of changes in liabilities related to cash flows that have been classified as financing activities or will be classified as financing activities in the separate statement of cash flows for the six-month periods ended June 30, 2023 and 2022 are as follows:

(in millions of Korean won) 2023
Beginning Cash flows Others Ending
Newlyacquired Changes inFX rate Changes inFair value Others
Borrowings ~~W~~ 7,495,561 ~~W~~ (263,343 ) ~~W~~ — ~~W~~ 97,148 ~~W~~ — ~~W~~ 7,700 ~~W~~ 7,337,066
Financial lease liabilities 865,280 (160,719 ) 158,293 — — (21,902 ) 840,951
Derivative liabilities 32,402 — — (22,564 ) 6,957 — 16,795
Derivative assets (185,989 ) 24,935 — (71,435 ) 29,190 (3,131 ) (206,430 )
Total ~~W~~ 8,207,254 ~~W~~ (399,127 ) ~~W~~ 158,293 ~~W~~ 3,149 ~~W~~ 36,147 ~~W~~ (17,333 ) ~~W~~ 7,988,382
(in millions of Korean won) 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning Cash flows Others Ending
Newlyacquired Changes inFX rate Changesin Fairvalue Others
Borrowings ~~W~~ 6,949,654 ~~W~~ 877,293 ~~W~~ — ~~W~~ 208,358 ~~W~~ — ~~W~~ 3,431 ~~W~~ 8,038,736
Financial lease liabilities 966,700 (182,763 ) 157,773 — — (26,362 ) 915,348
Derivative liabilities 18,050 — — 25,137 (504 ) — 42,683
Derivative assets (97,021 ) — — (226,014 ) 34,369 713 (287,953 )
Total ~~W~~ 7,837,383 ~~W~~ 694,530 ~~W~~ 157,773 ~~W~~ 7,481 ~~W~~ 33,865 ~~W~~ (22,218 ) ~~W~~ 8,708,814

43

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

27. Related Party Transactions
(1) The list of related parties of the Company as of June 30, 2023, is as follows :
--- ---
Relationship Name of Entity
--- ---
Subsidiaries KT Alpha 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<br>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 America, Inc., KT Japan Co., Ltd., KT investment management Inc., KT Commerce Inc., BC Card Co.,<br>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<br>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,<br>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<br>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<br>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,<br>KTP SERVICES INC., Nasmedia-KT Alpha Future Growth Strategic Investment Fund, KT Strategic Investment Fund 6, Altimedia Corporation, Altimedia B.V.(Alticast B.V.), Altimedia Vietnam(Alticast Company Limited),<br>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<br>LLC, Juice Inc., open cloud lab Co., Ltd, KT HEALTHCARE VINA COMPANY LIMITED, KD Living, Inc., K-Realty Qualified Private Real Estate Investment Trust No. 1, AQUA RETAIL VIETNAM COMPANY<br>LIMITED

44

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

Relationship Name of Entity
Associates KIF Investment Fund, QTT Global (Group) Company Limited, CU Industrial Development Co., Ltd., 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<br>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,<br>KT Youth Startup DNA Investment Association, HD Hyundai Robotics Co., Ltd.(formerly Hyundai Robotics Co., Ltd.), IGIS Professional investors Private Investment Real Estate Investment LLC No 395, Maruee Limited Company Specializing in the Cultural<br>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,<br>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<br>Company, IBK-KT Emerging Digital Industry Investment Fund, SG-IBKC K-Contents Investment Fund No.1, Megazone Cloud Corporation,<br>Suseo Station Transfer Center Complex DevelopmentTeamFresh Corp., KORAMKO No. 143 General Private Real Estate Investment Company, Jumbo Film, KB Three Telecommunications Companies ESG Fund, IGIS<br>No. 468-1 General Private Real Estate Investment Company, Mastern Hongdae Rental Housing General Private Real Estate Investment Company No.167, Kiamco Data Center Blind Fund, Mastern No.172 Seongsu Office<br>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, , GRANDWEST PFV Co., Ltd., Telco Credit<br>Bureau Co., Ltd., STIC Place General Private Placement Real Estate Investment Trust No.2, Super Growth K-contents Fund
Others ^1^ Goody Studio Co., Ltd., Rebellion Inc., Digital Pharm Co., Ltd.
^1^ Although they are evaluated by applying Korean IFRS 1109, these entities are included in the scope of Related<br>Party under Korean IFRS 1024 as the Company has significant influence over them.
--- ---
(2) The amount of installment handset sales receivable inherited from KTIS Corporation, KTCS Corporation, KT<br>Telecop Co., Ltd., KT M&S Co., Ltd. and KT Service Nambu Co., Ltd for the six-month period ended June 30, 2023 is ~~W~~262,688 million.
--- ---
(3) The Company has entered into an additional agreement in relation to providing communication service in<br>wholesale with KT M Mobile Co., Ltd. In connection with the agreement, the Company offsets all or partial payables arising from joining mobile telecommunication services against receivables arising from the usage of network arising from<br>telecommunication operating.
--- ---

45

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(4) Outstanding balances of receivables and payables in relation to transactions with related parties as of<br>June 30, 2023 and December 31, 2022, are as follows :
(in millions of Korean won) June 30, 2023
--- --- --- --- --- --- --- --- --- --- --- --- ---
Receivables Payables
Tradereceivables Loans andothers Otherreceivables Tradepayables Otherpayables Lease<br><br><br>liabilities
Subsidiaries
KT Linkus Co., Ltd. ~~W~~ 90 ~~W~~ — ~~W~~ 42 ~~W~~ — ~~W~~ 10,521 ~~W~~ —
KT Telecop Co., Ltd. 457 — 564 2,032 29,111 —
KTCS Corporation 169 — 7,265 — 66,854 7
KTIS Corporation 8,811 — 10 — 50,536 —
KT Service Bukbu Co., Ltd. 172 — — — 19,163 —
KT Service Nambu Co., Ltd. 28 — — — 21,866 —
KT Skylife Co., Ltd. 22,770 — 5,943 — 11,743 —
KTDS Co., Ltd. 1,031 — 1,683 — 109,426 —
KT Estate Inc. 1,083 — 43,446 — 9,520 13,971
Skylife TV Co., Ltd. 2,765 — — — 2,106 —
BC Card Co., Ltd. ^1^ 542 — 5,938 — 872 4
KT Sat Co., Ltd. 900 — — — 1,306 —
KT Alpha Co., Ltd. 5,706 — 80 — 10,142 —
KT Commerce Inc. 38 — 3 2,105 19,561 —
KT M&S Co., Ltd. 5 5,774 110 — 100,527 —
GENIE Music Corporation 13,714 — 315 — 13,108 —
KT M Mobile Co., Ltd. 40,600 — 47 — 983 —
Nasmedia, Co., Ltd. 2,310 — 2 — 939 —
KT MOS Bukbu Co., Ltd.^^ 6 — — — 11,463 —
KT MOS Nambu Co., Ltd. — — 180 — 11,348 —
KT Engineering Co., Ltd. 57 — 1,090 443 50,685 —
KT Studio Genie Co., Ltd. 9 — 8,246 — 18,813 —
kt cloud Co., Ltd. — — 5,634 — 23,577 674
East Telecom LLC 5,130 12,758 — — 257 —
Others 13,053 1 8,826 2,186 10,874 24
Associates and joint ventures
K Bank Inc. 249 — 100,467 — 1 —
Others 150 — 1 — 294 1,579
Total ~~W~~ 119,845 ~~W~~ 18,533 ~~W~~ 189,892 ~~W~~ 6,766 ~~W~~ 605,596 ~~W~~ 16,259

46

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022
Receivables Payables
Tradereceivables Loans andothers Otherreceivables Tradepayables Otherpayables Lease<br><br><br>liabilities
Subsidiaries
KT Linkus Co., Ltd. ~~W~~ 13 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 11,241 ~~W~~ —
KT Telecop Co., Ltd. 673 — 382 2,043 25,528 —
KTCS Corporation 173 — 11,221 — 60,045 7
KTIS Corporation 7,634 — 255 — 46,722 —
KT Service Bukbu Co., Ltd. 114 — 6 — 23,105 —
KT Service Nambu Co., Ltd. — — 1 — 25,998 —
KT Skylife Co., Ltd. 7,091 — 27,642 — 11,411 —
KTDS Co., Ltd. 1,245 — 1,421 — 107,863 —
KT Estate Inc. 3,011 — 42,267 — 50,563 3,062
Skylife TV Co., Ltd. 23 — — — 2,528 —
BC Card Co., Ltd. ^1^ 323 — 4,201 — 1,077 4
KT Sat Co., Ltd. 1,552 — — — 1,724 —
KT Alpha Co., Ltd. 5,869 — 77 — 9,812 —
KT Commerce Inc. 163 — — 8,017 21,996 —
KT M&S Co., Ltd. 340 8,400 — — 111,718 —
GENIE Music Corporation 17,308 — 1,106 — 28,658 —
KT M Mobile Co., Ltd. 30,663 — 131 — 6,160 —
Nasmedia, Inc. 3,079 — 3 — 1,522 —
KT MOS Bukbu Co., Ltd.^^ 13 — 829 — 14,086 —
KT MOS Nambu Co., Ltd. — — 264 — 14,098 —
KT Engineering Co., Ltd 547 — 620 753 85,174 2
KT Studio Genie Co., Ltd. 8 — 1,442 — 52,912 —
kt cloud Co., Ltd. 15,844 — 2 — 31,816 290
East Telecom LLC 5,048 11,974 — — 525 —
Others 9,253 — 156 121 26,266 29
Associates and joint ventures
K Bank Inc. 204 — 100,253 — — —
Others 124 — 2 — 685 1,666
Total ~~W~~ 110,315 ~~W~~ 20,374 ~~W~~ 192,281 ~~W~~ 10,934 ~~W~~ 773,233 ~~W~~ 5,060
^1^ As of June 30, 2023, ~~W~~852 million of the unsettled amount (December 31, 2022:<br>~~W~~1,062 million) in credit card transactions with BC Card Co., Ltd. a related party, is included in trade payables.
--- ---

47

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(5) Significant transactions with related parties for the six-month periods<br>ended June 30, 2023 and 2022, are as follows :
(in millions of Korean won) 2023
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Sales Purchases Acquisitionofright-of-useassets Financeincome Financecosts Dividendsreceived
Operatingrevenue Other<br><br><br>income Operatingexpenses Others ^1^
Subsidiaries
KT Linkus Co., Ltd. ~~W~~ 3,397 ~~W~~ 1 ~~W~~ 29,649 ~~W~~ — ~~W~~ 1 ~~W~~ — ~~W~~ — ~~W~~ —
KT Telecop Co., Ltd. 3,318 33 82,692 — — 6 — —
KTCS Corporation 44,595 2 165,320 — — — — 381
KTIS Corporation 36,163 — 164,839 — — — — 1,224
KT Service Bukbu Co., Ltd. 7,503 — 108,535 — — — — —
KT Service Nambu Co., Ltd. 7,560 — 125,141 — — — — —
KT Skylife Co., Ltd. 57,019 8 12,410 — — — — 8,368
KTDS Co., Ltd. 6,210 — 222,850 — — 1 424 7,560
KT Estate Inc. ^1^ 27,360 22 41,278 491 24,487 — — 17,500
Skylife TV Co., Ltd. 7,562 — 5,184 — — — — —
BC Card Co., Ltd. 4,763 14 16,432 — — 3 — 11,320
KT Sat Co., Ltd. 3,992 — 5,253 — — — — 7,000
KT Alpha Co., Ltd. 31,776 — 17,246 — — 1 — —
KT Commerce Inc. ^1^ 709 — 41,899 37,819 — — — —
KT M&S Co., Ltd. 145,460 21 126,603 — — — — —
GENIE Music Corporation 450 — 26,089 — — — — —
KT M Mobile Co., Ltd. 107,018 22 4,279 — — — — —
Nasmedia, Co., Ltd. 257 — 1,983 — — — — 3,170
KT MOS Nambu Co., Ltd. 923 — 47,125 — — — — —
KT MOS Bukbu Co., Ltd.^^ 1,368 — 47,561 — — — — —
KT Engineering Co., Ltd. ^1^ 478 — 12,507 52,856 — — — —
KHS Corporation 2 — 4,189 — — — — —
KT Studio Genie Co., Ltd. ^1^ 61 — 12,234 41,638 — — — —
kt cloud Co., Ltd. 50,945 — 67,663 — 776 — 5 —
Others ^2^ 12,359 8 41,930 1 10 — 1 3,045
Associates and joint ventures
K Bank Inc. 1,197 — 74 — — 1,355 — —
Others ^3^ 579 67 2,866 — 34 — 36 1,139
Total ~~W~~ 563,024 ~~W~~ 198 ~~W~~ 1,433,831 ~~W~~ 132,805 ~~W~~ 25,308 ~~W~~ 1,366 ~~W~~ 466 ~~W~~ 60,707
^1^ The amount of acquisition of property, equipment and others is included.
--- ---
^2^ Transactions with KT Strategic Investment Fund No.2 before it was excluded from subsidiary are included.<br>
--- ---
^3^ Transactions with KD living Inc. before it was classified as subsidiary are included.
--- ---

48

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) 2022
Sales Purchases Acquisitionofright-of-useassets Financeincome Financecosts Dividendsreceived
Operatingrevenue Other<br><br><br>income Operatingexpenses Others ^1^
Subsidiaries
KT Linkus Co., Ltd. ~~W~~ 2,991 ~~W~~ 3 ~~W~~ 26,487 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ —
KT Telecop Co., Ltd. 5,288 — 82,665 — — 4 — —
KTCS Corporation 45,885 3 165,999 8 — — 1 318
KTIS Corporation 34,175 166 157,083 — — — — 1,020
KT Service Bukbu Co., Ltd. 6,644 2 113,137 — — — — —
KT Service Nambu Co., Ltd. 6,723 2 133,384 — — — — —
KT Skylife Co., Ltd. 44,179 — 20,902 — — 3 — 8,368
KTDS Co., Ltd. ^1^ 7,840 1 225,948 108 — 2 — 4,920
KT Estate Inc. 14,642 — 50,723 — 44 — 332 —
Skylife TV Co., Ltd. 48 — 4,482 — — — — —
BC Card Co., Ltd. 8,417 4 15,152 — — 3 — 17,439
KT Sat Co., Ltd. 7,653 — 5,292 — — — — —
KT Alpha Co., Ltd. 31,965 — 48,529 — — 1 — —
KT Commerce Inc. ^1^ 550 — 61,357 42,994 — — — —
KT M&S Co., Ltd. ^1^ 169,144 8 119,379 24 — — — —
GENIE Music Corporation 754 — 26,389 — — — — —
KT M Mobile Co., Ltd. 90,582 — 14,299 — — — — —
Nasmedia, Co., Ltd. 387 — 2,559 — — 1 — 3,293
KT MOS Nambu Co., Ltd.^1^ 873 — 35,969 97 — — — —
KT MOS Bukbu Co., Ltd.^^ 1,244 — 36,861 — — — — —
KT Engineering Co., Ltd. ^1^ 253 — 12,131 76,955 — — — —
KHS Corporation 8 — 5,352 — — — — —
KT Studio Genie Co., Ltd. 20 — 14,911 — — — — —
kt cloud Co., Ltd. 27,536 — 26,451 — — — — —
kt seezn Co., Ltd. 19,691 — 46,290 — — — — —
Others 12,076 — 35,538 97 — 1 1 243
Associates and joint ventures
K-REALTY CR REITs No.1 ^2^ — — — — — — — 45,549
K Bank Inc. 6,967 — 106 — — — — —
Others 360 70 2,901 2,120 1,916 — 4 8,741
Total ~~W~~ 546,895 ~~W~~ 259 ~~W~~ 1,490,276 ~~W~~ 122,403 ~~W~~ 1,960 ~~W~~ 15 ~~W~~ 338 ~~W~~ 89,891
^1^ The amount of acquisition of property, equipment and others is included.
--- ---
^2^ Transaction amount until the point when K-REALTY CR REITs No.1 was<br>excluded from associates.
--- ---

49

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(6) Key management compensation

Key management compensation for the six-month periods ended June 30, 2023 and 2022, consists of:

(in millions of Korean won) 2023 2022
Salaries and other short-term benefits ~~W~~ 619 ~~W~~ 999
Post-employment benefits 71 163
Stock-based compensation 302 644
Total ~~W~~ 992 ~~W~~ 1,806
(7) Fund transactions with related parties for the six-month periods ended<br>June 30, 2023 and 2022, are as follows:
--- ---
(in millions of Korean won) 2023
--- --- --- --- --- --- --- --- --- --- --- ---
Loan transactions Borrowing transactions^1^ Equity contributionsin cash
Loans Collections Borrowings Refunds
Subsidiaries
KT M&S Co., Ltd. ~~W~~ 29,400 ~~W~~ 32,025 ~~W~~ — ~~W~~ — ~~W~~ —
KT Estate Inc. — — 29 12,728 —
KT HEALTHCARE VINA COMPANY LIMITED — — — — 13,001
Others ^2^ 784 — — 413 (9,030 )
Associates and joint ventures
Telco Credit Bureau Co., Ltd. — — — — 6,500
KT-IBKC Future Investment Fund 1 — — — — (910 )
Others — — — 155 3,955
Total ~~W~~ 30,184 ~~W~~ 32,025 ~~W~~ 29 ~~W~~ 13,296 ~~W~~ 13,516
^1^ Lease transactions are included in borrowing transactions.
--- ---
^2^ Transactions with KT Strategic Investment Fund No.2 before it was excluded from subsidiary are included.<br>
--- ---
(in millions of Korean won) 2022
--- --- --- --- --- --- --- --- --- --- ---
Loan transactions Borrowing transactions^1^ Equity contributionsin cash
Loans Collections Borrowings Refunds
Subsidiaries
KT Strategic Investment Fund 6 ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ — ~~W~~ 9,200
KT M&S Co., Ltd. 29,400 31,588 — — —
KT Estate Inc. — — 44 25,139 —
kt cloud Co., Ltd. 95,900 1,800 — — 901,504
Others 1,111 — — 19 1,112
Associates and joint ventures
Megazone Cloud Corporation — — — — 130,001
IBK-KT Emerging Digital Industry Investment Fund — — — — 9,000
Others — — 1,916 — 11,238
Total ~~W~~ 126,411 ~~W~~ 33,388 ~~W~~ 1,960 ~~W~~ 25,158 ~~W~~ 1,062,055
^1^ Lease transactions are included in borrowing transactions.
--- ---

50

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(8) At the end of the reporting period, the Company entered into a credit card agreement with a limit of<br>~~W~~9,339 million (December 31, 2022: ~~W~~8,995 million) with BC Card Co., Ltd.
(9) Provision of collateral and Obligation to supplement funds, etc.
--- ---

The Company has an obligation to invest in Kiamco Data Center Blind Fund, a related party, and others according to the agreement. As of June 30, 2023 the Company is planning to invest an additional ~~W~~46,135 million

51

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

28. Fair Value

During the period ended June 30, 2023, there have been no significant changes in the business or economic environment that affect the fair value of the Company’s financial assets and liabilities.

(1) Fair Value of Financial Instruments by Category

Carrying amount and fair value of the financial assets and financial liabilities by category as of June 30, 2023 and December 31, 2022, are as follows :

(in millions of Korean won) June 30, 2023 December 31, 2022
Carrying amount Fair value Carrying amount Fair value
Financial assets
Cash and cash equivalents ~~W~~ 625,676 ^1^ ~~W~~ 966,307 ^1^
Trade and other receivables
Financial assets at amortized cost ^2^ 3,297,391 ^1^ 3,453,513 ^1^
Financial assets at fair value through other comprehensive income 123,787 123,787 129,124 129,124
Other financial assets
Financial assets at amortized cost 403,833 ^1^ 416,294 ^1^
Financial assets at fair value through profit or loss 390,768 390,768 410,388 410,388
Financial assets at fair value through other comprehensive income 1,365,273 1,365,273 1,214,059 1,214,059
Derivative financial assets for hedging 206,430 206,430 185,989 185,989
Total ~~W~~ 6,413,158 ~~W~~ 6,775,674
Financial liabilities
Trade and other payables ^3^ ~~W~~ 4,428,797 ^1^ ~~W~~ 5,390,106 ^1^
Borrowings 7,337,066 6,933,549 7,495,561 6,968,828
Other financial liabilities
Financial liabilities at fair value through profit or loss 9,438 9,438 5,164 5,164
Derivative financial liabilities for hedging 16,795 16,795 32,402 32,402
Total ~~W~~ 11,792,096 ~~W~~ 12,923,233
^1^ The Company did not conduct a fair value estimation since the book amount is a reasonable approximation of fair<br>value.
--- ---
^2^ Lease receivables are excluded from fair value in accordance with Korean IFRS 1107.
--- ---
^3^ Amounts related to employee benefit plans are included in trade and other payables at the end of the previous<br>year.
--- ---

52

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(2) Fair Value Hierarchy

Assets measured at fair value are categorized within the fair value hierarchy, and the defined levels are as follows :

• Level 1: The quoted (unadjusted) price in active markets for identical assets or liabilities that an<br>entity can access at the measurement date.
• Level 2: All inputs other than quoted prices included in Level 1 that are observable, either directly<br>or indirectly, for the asset or liability.
--- ---
• Level 3: The unobservable inputs for the asset or liability.
--- ---

Fair value hierarchy classifications of financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as of June 30, 2023 and December 31, 2022, are as follows:

(in millions of Korean won) June 30, 2023
Level 1 Level 2 Level 3 Total
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ — ~~W~~ 123,787 ~~W~~ — ~~W~~ 123,787
Other financial assets
Financial assets at fair value through profit or loss — — 390,768 390,768
Financial assets at fair value through other comprehensive income 1,165,539 — 199,734 1,365,273
Derivative financial assets for hedging — 206,430 — 206,430
Total ~~W~~ 1,165,539 ~~W~~ 330,217 ~~W~~ 590,502 ~~W~~ 2,086,258
Liabilities
Borrowings ~~W~~ — ~~W~~ 6,933,549 ~~W~~ — ~~W~~ 6,933,549
Other financial liabilities
Financial liabilities at fair value through profit or loss — — 9,438 9,438
Derivative financial liabilities for hedging — 16,795 — 16,795
Total ~~W~~ — ~~W~~ 6,950,344 ~~W~~ 9,438 ~~W~~ 6,959,782

53

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022
Level 1 Level 2 Level 3 Total
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ — ~~W~~ 129,124 ~~W~~ — ~~W~~ 129,124
Other financial assets
Financial assets at fair value through profit or loss — — 410,388 410,388
Financial assets at fair value through other comprehensive income 1,015,606 — 198,453 1,214,059
Derivative financial assets for hedging — 185,989 — 185,989
Total ~~W~~ 1,015,606 ~~W~~ 315,113 ~~W~~ 608,841 ~~W~~ 1,939,560
Liabilities
Borrowings ~~W~~ — ~~W~~ 6,968,828 ~~W~~ — ~~W~~ 6,968,828
Other financial liabilities
Financial liabilities at fair value through profit or loss — — 5,164 5,164
Derivative financial liabilities for hedging — 32,402 — 32,402
Total ~~W~~ — ~~W~~ 7,001,230 ~~W~~ 5,164 ~~W~~ 7,006,394

54

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(3) Transfers Between Fair Value Hierarchy Levels of Recurring Fair Value Measurements<br>
1) Details of transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value<br>measurements.
--- ---

There are no transfers between Level 1 and Level 2 of the fair value hierarchy for recurring fair value measurements.

2) Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements.<br>

Details of changes in Level 3 of the fair value hierarchy for recurring fair value measurements for the six-month periods ended June 30, 2023 and 2022 are as follows:

(in millions of Korean won) June 30, 2023
Financial assets Financial liabilities
Financial assets at fairvalue through profit orloss Financial assets at fairvalue through othercomprehensive income Financial liabilities at fairvalue through profit orloss
Beginning balance ~~W~~ 410,388 ~~W~~ 198,453 ~~W~~ 5,164
Amount recognized in profit or loss (20,643 ) — 4,274
Acquisitions 2,195 — —
Transfers — 1,287 —
Disposals (1,172 ) (6 ) —
Ending balance ~~W~~ 390,768 ~~W~~ 199,734 ~~W~~ 9,438
(in millions of Korean won) June 30, 2022
--- --- --- --- --- --- --- --- --- --- ---
Financial assets Financial liabilities
Financial assets atfair value throughprofit or loss Financial assets atfair value throughother comprehensiveincome Derivativefinancial assetsfor hedging Financial liabilitiesat fair value throughprofit or loss
Beginning balance ~~W~~ 299,263 ~~W~~ 190,821 ~~W~~ 31,565 ~~W~~ 5,329
Amount recognized in profit or loss 15,366 — 42,851 —
Amount recognized in other comprehensive income — — (22,828 ) —
Acquisitions 65,551 4,646 — —
Disposals (89 ) — — —
Ending balance ~~W~~ 380,091 ~~W~~ 195,467 ~~W~~ 51,588 ~~W~~ 5,329

55

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(4) Valuation Methods

Valuation methods used in recurring fair value measurements categorized within Level 2 and Level 3 of the fair value hierarchy as of June 30, 2023 and December 31, 2022, are as follows :

(in millions of Korean won) June 30, 2023
Fair value Level Valuation techniques
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ 123,787 2 DCF Model
Other financial assets
Financial assets at fair value through profit or loss 390,768 3 DCF Model,<br> <br>Adjusted Net Asset Model,<br><br><br>Binomial Option Pricing Model,<br><br><br>Monte Carlo Simulation
Financial assets at fair value through other comprehensive income 199,734 3 Market Approach Model
Derivative financial assets for hedging 206,430 2 DCF Model
Liabilities
Borrowings 6,933,549 2 DCF Model
Other financial liabilities
Financial liabilities at fair value through profit or loss 9,438 3 Binomial Option Pricing Model,<br>Monte Carlo Simulation
Derivative financial liabilities for hedging ~~W~~ 16,795 2 DCF Model

56

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

(in millions of Korean won) December 31, 2022
Fair value Level Valuation techniques
Assets
Trade and other receivables
Financial assets at fair value through other comprehensive income ~~W~~ 129,124 2 DCF Model
Other financial assets
Financial assets at fair value through profit or loss 410,388 3 DCF Model,<br> <br>Adjusted Net Asset Model,<br><br><br>Binomial Option Pricing Model,<br><br><br>Monte Carlo Simulation
Financial assets at fair value through other comprehensive income 198,453 3 Market Approach Model
Derivative financial assets for hedging 185,989 2 DCF Model
Liabilities
Borrowings ~~W~~ 6,968,828 2 DCF Model
Other financial liabilities
Financial liabilities at fair value through profit or loss 5,164 3 Binomial Option Pricing Model,<br>Monte Carlo Simulation
Derivative financial liabilities for hedging 32,402 2 DCF Model
(5) Valuation Processes for Fair Value Measurements Categorized Within Level 3<br>
--- ---

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 discuss the valuation processes and results with the CFO in line with the Company’s closing dates.

(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 valuation methods using such data differs from the transaction price, then the fair value of the financial instrument is recognized at 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 the inputs of the valuation method become observable in markets, the remaining deferred difference is immediately recognized in full in profit or loss.

In relation to this, details and changes of the total deferred difference for the six-month periods ended June 30, 2023 and 2022, are as follows :

(in millions of Korean won) 2023 2022
Derivatives used forhedging Derivatives used forhedging
Beginning balance ~~W~~ — ~~W~~ 831
Recognized at fair value through profit or loss — (713 )
Ending balance ~~W~~ — ~~W~~ 118

57

KT Corporation

Notes to the Separate Interim Financial Statements

June 30, 2023 and 2022 (Unaudited), and December 31, 2022

29. Events After the Reporting Period

The Company has issued the following bonds after June 30, 2023.

(in millions of Korean won) Issue date Face value Nominal interestrate Maturity
The 199-1st Public bond 2023-07-12 85,000 4.030 % 2025-07-11
The 199-2nd Public bond 2023-07-12 160,000 4.150 % 2026-07-10
The 199-3rd Public bond 2023-07-12 155,000 4.220 % 2028-07-12

58

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