Samsung Electronics Co., Ltd.

CONSOLIDATED FINANCIAL STATEMENTS OF

SAMSUNG ELECTRONICS CO., L

TD. AND ITS SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Page

Independent Auditors’ Report

1-4

Consolidated Financial Statements

Consolidated Statements of Financial Position

5-7

Consolidated Statements of Profit or Loss

8

Consolidated Statements of Comprehensive Income

9

Consolidated Statements of Changes in Equity

10-13

Consolidated Statements of Cash Flows

14-15

Notes to the Consolidated Financial Statements

16

Independent

Auditors’

Report

[English T

ranslation of Independent

Auditor

’

s Report Originally

Issued in Korean on February 16,

2022]

To the Shareholders and the Board of Directors of Samsung Electronics Co., Ltd.

Audit Opinion

We

have audited

the accompanying

consolidated

financial stateme

nts

of Samsung

Electronics Co.,

Ltd.

and its su

bsidiaries (the “Company”), which

comprise the consolidated statements

of financial position

as

of

December

31,

2021

and 2020,

and

the

consolidated statemen

ts of

profit

or

loss, the

consolidated

statements of

comprehensive

inco

me,

the consolidated statement

s

of changes

in equity

and the

consolidated statements of cash f

lows, for the years then ended

, and notes to the consolidated financial

statements, including a summary of significant accounting polic

ies.

In

our

opinion,

the

accompanying

c

onsolidated

financial

stateme

nts

present

fairly,

in

all

material

respects,

the

consolidated

financial

position

of

the

Company

as

of

December

31,

2021

and

2020,

and

its

consolidated

financial

perfo

rmance

and

its

consolidated

cas

h

flows

for

the

years

then

ended

in

accordance with Korean International Financial Reporting Standa

rds (“K-IFRS”).

Basis for

Audit Opinion

W

e conducted our audits in accordance with the Korean Standards

on

Auditing (“KSAs”). Our

responsibilities

under

those

standards

are

further

described

in

the

Auditor

’

s

Responsibilities

for

the

Audit

of

the

Consolidate

d

Financial

Statements

section

of

our

r

eport.

W

e

are

independent

of

the

Company in accordance with the

eth

ical requirements that are

re

levant to our audit of the co

nsolidated

financial statements in

the Republic of

Korea, and we have fulf

illed our other ethical

responsibilities in

accordance

with

these

requirements

. W

e

believe

that

the audit

e

vidence

we

have

obtained

is

sufficient

and appropriate to provide a basis for our audit opi

nion.

Deloitte Anjin LLC

9F

.

, One IFC,

10, Gukjegeumyung-ro,

Y

oungdeungpo-gu, Seoul

07326, K

orea

T

el: +82 (2) 6676 1000

F

ax: +82 (2) 6674 2114

www.deloitteanjin.co

.kr

Key

Audit Matters

The

key

audit

matter

is

a matter

that,

in

o

ur

professional

judgment,

was

of

most

significance

in

our

audit

of the consolidated financial sta

tements of the current period.

This matter

was addressed in the context

of

our

audit

of

the

consolidated

financial

statements

as

a

whol

e,

and

in

forming

our

opinion

thereon,

and we do not provide a separ

ate opinion on this matter

.

(A)

Sales deduction related

to sales promotion activities

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

The Information technology &

Mobile communications (IM) and Con

sumer Electronics (CE) business

divisions

perform

sales

promotion

activities,

such

as

price

or

volume

discounts

and

incentives,

based

on explicit

or

implicit agreements

with

customers, including

retail and

telecommunication

companies.

As

disclosed

in

Notes

2

(Significant Accounting

Policies)

and

3

(Critical

Accounting

Estimates

and

Assumptions),

these

activities

are

recognized

as

deductions

fro

m

revenue

at

the

expected

payment

amount.

As

for

the

appropriateness

of

t

he

revenue

deduction

amounts,

su

ch

amounts

may

involve

significant

management estimates

and judgments.

In addition,

we believe

that those amounts

could be

material to

the

consolidated

financial

state

ments.

As

such,

we

determined

t

he

sales

deduction

sales

promotion activities as a key audit matter

.

How the Key Audit Matter was addressed in the audit

Our

audit

procedures

with

respect

to

the

Company’s

sales

promot

ion

activities

the

sales

of

products included, but were not

limited to the followi

ng:

•

Obtained an understanding

of management’

s accounting

policies,

processes a

nd internal

controls related to the sales deduction.

•

Obtained

an

understanding

and

evaluated

the

Company’

s

informati

on

technology

system

related to the sales deduction.

•

Assessed the

Company’

s internal controls

relating to the approv

al p

rocess of the

sales

deduction policy

.

•

Evaluated the

Company’

s internal controls

relating to the

appro

val process of the

sales

deduction estimation and post-settled amounts.

•

Evaluated

the

estimates

and

accompanying

assumptions

by

inspect

ing

supporting

documentation relating to the

sales deduction transactions.

•

Examined

the

sales

deduction

amount

by

comparing

the

sales

dedu

ction

estimates

to

post-

settled amounts and inspecting supporting documentation.

Responsibilities of

Management and

Those Charged

with Governanc

e

for

the Consolidated

Financial Statements

Management

is responsible

for

t

he

preparation of

the accompanyi

ng

consolidated financial

statements

in

accordance

with

K-IFRS,

and

fo

r

such

internal

control

as

the

y determine

is

n

ecessary

to

enable

the

preparation of

consolidated financial

statements that

are free

from material

misstatement,

whether due

to fraud or error

.

In

preparing

the

consolidated

financial

statements,

management

of

the

Company

is

responsible

for

assessing

the

Company’

s

ability

to

continue

as

a

going

concern,

disclosing,

as

applicable,

matters

going

concern

and

using

the

going

concern

basis

of

a

ccounting

unless

management

either

intends to liquidate the Company or to cease operations, or has

no realistic alternative but to

do so.

Those

charged

with

governance

are

responsible

for

overseeing

the

Company’

s

financial

reporting

process.

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

Our

objectives

are to

obtain

reasonable

assurance

about

whether

the

consolidated financial

statements

as a whole are free from material

misstatement, whether due to

fraud or error

, and to issue an auditor

’

s

report

that

includes

our

opinion.

Reasonable

assuranc

e

is

a

hig

h

level

of

assurance,

but

is

not

a

guarantee

that

an

audit

conducted

in

accord

ance

with

KSAs

will

always

det

ect

a

material

misstatement

when

it

exists. Misstatements can arise

from fraud or error and

are con

sidered material if, indivi

dually or in the

aggregate, they

could reasonably be

expected to

influence the e

cono

mic decisions

of users

tak

en on

the

basis of these consolidated financial statements.

As part of an audit in accordan

ce with KSAs, we exercise profes

sional judgment and maintain

professional skepticism throughout the audit.

W

e also:

•

Identify and

assess the

risks of

material misstatement of

the c

onsolidated financial statements,

whether

due

to fraud

or

error

,

design

and

perform audit

procedu

res

responsive

to

those

risks,

and

obtain

audit

evidence

that

is

sufficient

and

appropriate

to

p

r

o

v

i

d

e

a

b

a

s

i

s

f

o

r

o

u

r

a

u

d

i

t

opinion. The risk

of

not detecting

a

material

misstatement

resu

lting from

fraud is

higher

than

for

one

resulting

from

error,

as

fraud

may

involve

collusion,

f

orgery

,

intentional

omissions,

misrepresentations, or the ove

rride of internal control.

•

Obtain

an

understanding

of

internal

c

ontrol

relevant

to

the

aud

it

in

order

to

design

audit

procedures that are

appropriate in the

circumstances, but

not f

or the

purpose of expressing an

opinion on the ef

fectiveness of the Company’

s internal control.

•

Evaluate

the

appropriateness of

accounting

policies used

and th

e reasonableness

o

f

accounting

estimates and related disclos

ures made by management.

•

Conclude

on

the

appropriateness

of

the

management’

s

use

of

the

going

concern

basis

of

accounting

and,

based

on

the

audit

evidence

obtained,

whether

a

material

uncertainty

exists

events

or

conditions

that

may

cast

significant

doubt

on

the

Company’

s

ability

to

continue as a

going concern. If

we conclude that a

material unc

ertainty exists, we

are required

to draw attention

in our auditor

’

s report to the

related disclo

sures in the consolidated

financial

statements

or

,

if

such

disclosures

are

inadequate,

to

modify

ou

r

opinion.

Our conclusions

are

based

on

the

audit

evidence

obtained

up

to

the

date

of

our

audi

tor’

s

report.

However

,

future

events or conditions may cause

the Company to cease to continue

as a going concern.

•

Evaluate

the

overall

presentation,

structure

and

content

of

t

he

consolidated

financial

statements, including

the disclosures, and whether the

consolid

ated financial statements

represent the underlying transacti

ons and events in a manner that achieves fair presentation.

•

Obtain suf

ficient appropriate

audit evidence regarding

the fina

ncial

information of

the entities

or business activities within

the Company to express an opinion

on the consolidated

financial

statements.

W

e

are

responsible

for

the

d

irection,

supervision

a

nd

p

erformance

o

f

the

group

audit. W

e are

solely responsible for our audit opinion.

W

e

communicate

with

those

charged

with

governance

regarding,

am

ong

other

matters,

the

planned

scope

and

timing

of

the

audit

and

significant

audit

findings,

i

ncluding

any

significant

defici

encies

in

internal control that we identify during our audit.

W

e

also

provide those

charged with

governance with

a

statement

that we

have

complied

with relevant

ethical

requirements

regarding

independence,

and

to communicate

with

them all

relationships

and

other

matters

that

may

reasonably

be

t

hought

to

bear

on

our

independe

nce,

and

where

applicable,

From the m

atters communicated with

those charged with

governanc

e, we det

ermine those

matters that

were of

most significance in

the audit of

the consolidated

fina

ncial statements of

the current period

and

are

therefore

the

key

audit

matters.

W

e

describe

these

matters

in

our

auditor

’

s

report

unless

law

or

regulation

precludes

public

disclosure

about

the

matter

or

when

,

in

extremely

rare

circumstances,

we

determine that

a matter

should

not be

communicated in

our repor

t

because the adverse consequences

of

doing

so w

ould reasonably

be

expected

to outweigh

the

public

in

terest benefits

of

such communication.

The engagement

partner on the

audit resulting

in this

independe

nt auditor

’

s report

is Byung M

oon

Y

oo.

Seoul, Korea

February 16, 2022

Notice to Readers

This report is

effective as of

February 16, 2022, the auditor’s report date.

Certain subsequent events

or

circumstan

ces

may

have

occurre

d

between

the

auditor’s

report

date

and

the

time

the

auditor’s

report

is

read.

Such

events

or

circumstances

could

significantl

y

affect

the

financial

statements

and

may result in modifications to the auditor’s report.

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statemen

ts of financial position should

be read in conjunction with

the accompanying

notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

December 31,

D

ecember 31,

D

ecember 31,

D

ecember 31,

Notes

2021

2020

2021

2020

KRW

USD

Assets

Current assets

Cash and cas

h equivalents

4, 28

39,031,415

29,382,578

34,115,412

25,681,845

Short-term f

inancial instrum

ents

4, 28

81,708,986

92,441,703

71,417,748

80,798,680

Short-term financial assets at am

ortized cost

4, 28

3,369,034

2,757,111

2,944,705

2,409,853

Short-term financial assets at fair value

throu

g

h profit or lo

ss

4, 6, 28

40,757

71,451

35,624

62,452

Trade receivables

4, 5,

7, 28

40,713,415

30,965,058

35,585,565

27,065,012

Non-trade

receivables

4, 7, 28

4,497,257

3,604,539

3,930,828

3,150,548

Prepaid ex

penses

2,336,252

2,266,100

2,042,001

1,980,685

Inventories

8

41,384,404

32,043,145

36,172,043

28,007,314

Other cur

rent assets

4, 28

5,081,665

3,754,462

4,441,629

3,281,589

Assets held-for-

sale

32

-

929,432

-

812,370

218,163,185

198,215,579

190,685,555

173,250,348

Non-current assets

Financial assets at fair value

throu

g

h other c

o

mprehe

nsive income

4, 6, 28

13,965,839

12,575,216

12,206,843

10,991,369

Financial assets at fair value

throu

g

h profit

or loss

4, 6, 28

1,525,344

1,202,969

1,333,227

1,051,455

Investment i

n associates and joint

ventures

9

8,932,251

8,076,779

7,807,235

7,059,510

Property,

plant and equipme

nt

10

149,928,539

128,952,892

131,045,055

112,711,289

Intangibl

e assets

11

20,236,244

18,468,502

17,687,491

16,142,396

Net define

d benefit assets

14

2,809,590

1,355,502

2,455,722

1,184,777

Deferred i

ncome tax assets

25

4,261,214

4,275,000

3,724,515

3,736,564

Other no

n-current assets

4, 7, 28

6,798,952

5,113,279

5,942,625

4,469,261

208,457,973

180,020,139

182,202,713

157,346,621

Total assets

426,621,158

378,235,718

372,888,268

330,596,969

JRJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statemen

ts of financial position should

be read in conjunction with

the accompanying

notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

December 31,

D

ecember 31,

D

ecember 31,

D

ecember 31,

Notes

2021

2020

2021

2020

KRW

USD

Liabilities and Equity

Current liabilities

Trade paya

bles

4, 28

13,453,351

9,739,222

11,758,903

8,512,568

Short-term bo

rrowings

4, 5, 12, 28

13,687,793

16,553,429

11,963,817

14,468,526

Other payab

les

4, 28

15,584,866

11,899,022

13,621,954

10,400,341

Advances received

17

1,224,812

1,145,423

1,070,547

1,001,157

Withholdi

ngs

4, 28

1,294,052

974,521

1,131,066

851,780

Accrued exp

enses

4, 17, 28

27,928,031

24,330,339

24,410,498

21,265,935

Current income tax liabilities

6,749,149

4,430,272

5,899,094

3,872,280

Current portion of lon

g-term liabilities

4, 12, 13,

28

1,329,968

716,099

1,162,459

625,906

Provisio

ns

15

5,372,872

4,349,563

4,696,159

3,801,736

Other current liabilities

4, 17, 28

1,492,239

1,127,719

1,304,292

985,685

Liabilities held-for-sale

32

-

338,742

-

296,077

88,117,133

75,604,351

77,018,789

66,081,991

Non-current liabilities

Debentures

4, 13,

28

508,232

948,137

444,220

828,719

Long-term b

orrowings

4, 12, 28

2,866,156

1,999,716

2,505,164

1,747,852

Long-term ot

her payables

4, 28

2,991,440

1,682,910

2,614,668

1,470,948

Net defined benefit liabilities

14

465,884

464,458

407,206

405,960

Deferred income tax liabilities

25

23,198,205

18,810,845

20,276,394

16,441,621

Long-term

provisions

15

2,306,994

1,051,428

2,016,428

919,001

Other non-current liab

ilities

4, 17, 28

1,267,183

1,725,857

1,107,582

1,508,485

33,604,094

26,683,351

29,371,662

23,322,586

Total liabilities

121,721,227

102,287,702

106,390,451

89,404,577

JSJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statemen

ts of financial position should

be read in conjunction with

the accompanying

notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

D

ecember 31,

D

ecember 31,

D

ecember 31,

D

ecember 31,

Notes

2021

2020

2021

2020

KRW

USD

Equity attributable to owners of the Company

Preference s

h

ares

18

119,467

104,420

Ordinary

shares

18

778,047

680,052

Share premi

um

4,403,893

3,849,223

Retained earnings

19

293,064,763

271,068,211

256,153,287

236,927,198

Other comp

onents of equity

20

(2,128,473)

(8,687,155)

(1,860,392)

(7,593,008)

Accumulated

other

comprehensive

income

attribu

t

able to assets held-fo

r

-sale

32

-

(12,132)

-

(10,604)

296,237,697

267,670,331

258,926,590

233,957,281

Non-contr

olling interests

31

8,662,234

8,277,685

7,571,227

7,235,111

Total equity

304,899,931

275,948,016

266,497,817

241,192,392

Total liabilities and equity

426,621,158

378,235,718

372,888,268

330,596,969

JTJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

The above consolidated

statements of profit or

loss should be r

ead in conjunction with t

he accompanying notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

For the ye

ars ended December 31,

Notes

2021

2020

2021

2020

KRW

USD

US

D

Revenue

29

279,604,799

236,806,988

244,388,604

206,981,172

Cost o

f sales

21

166,411,342

144,488,296

145,451,851

126,290,010

Gross profit

113,193,457

92,318,692

98,936,753

80,691,162

Selling and a

dministrative expens

es

21, 22

61,559,601

56,324,816

53,806,176

49,230,711

Operating profit

29

51,633,856

35,993,876

45,130,577

31,460,451

Other no

n-operating income

23

2,205,695

1,384,068

1,927,888

1,209,745

Other no

n-operating expense

23

2,055,971

2,488,902

1,797,022

2,175,425

Share of net profit o

f associates and joint ventures

9

729,614

506,530

637,719

442,733

Financial income

24

8,543,187

12,267,600

7,467,173

10,722,497

Financial e

xpense

24

7,704,554

11,318,055

6,734,165

9,892,548

Profit before i

ncome tax

53,351,827

36,345,117

46,632,170

31,767,453

Income tax exp

ense

25

13,444,377

9,937,285

11,751,059

8,685,685

Profit for the

year

39,907,450

26,407,832

34,881,111

23,081,768

Profit attributabl

e to

Owners of

the Company

39,243,791

26,090,846

34,301,040

22,804,707

Non-control

ling interests

663,659

316,986

580,071

277,061

Earnings per

share

(in Korea

n won, in US doll

ars)

26

- Basic

5,777

3,841

5.05

3.36

- Diluted

5,777

3,841

5.05

3.36

JUJ

Samsung Electronics Co., L

td. and its subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The above consolidated statements of compr

ehensive income shoul

d be read in conjunction w

ith th

e accompanying notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

For the years ended December 31,

Notes

2021

2020

2021

2020

KRW

USD

Profit for the

year

39,907,450

26,407,832

34,881,111

23,081,768

Other

comprehen

sive inco

me (loss)

Items that will not be reclas

sified subsequently to

profit or loss:

Gain on valuat

ion of finan

cial assets at fair value

throu

g

h other com

prehensive income, net

of tax

6, 20

2,980,896

2,502,733

2,605,452

2,187,514

Share of othe

r comprehensive inco

me of

associates and

j

oint ventur

es, net of tax

9, 20

51,816

5,591

45,290

4,887

Remeasurement of net def

ined benefit assets,

net of tax

14, 20

(524,606)

(719,560)

(458,532)

(628,931)

Items that may be reclassified subsequently to

profit or

loss:

Share of othe

r comprehensive inco

me (loss) of

associates and

j

oint ventu

res, net of tax

9, 20

160,163

(48,888)

139,990

(42,731)

Gain (loss) on ov

erseas business translation,

net of tax

20

7,283,620

(5,380,375)

6,366,250

(4,702,717)

Gain (loss)

on valuation of cash

flow hedge

derivatives

20

50,410

(33,406)

44,060

(29,199)

Other

comprehen

sive inco

me (loss)

for the

year,

net of tax

10,002,299

(3,673,905)

8,742,510

(3,211,177)

Total comprehensive income for the year

49,909,749

22,733,927

43,623,621

19,870,591

Comprehensive income

a

ttributable to:

Owners of the Company

49,037,912

22,374,398

42,861,591

19,556,345

Non-control

ling interests

871,837

359,529

762,030

314,246

JVJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS

OF CHANGES IN EQ

UITY

The above consolidated statements of ch

anges in equity should b

e read in conjunction with

the accompanying notes.

(In millions of Ko

rean won)

2020 KRW

Notes

Preference

shares

Ordinary

shares

Share

premium

Ret

ained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as

of January 1, 2020

119,467

778,047

4,403,893

254,582,894

(4,968,829)

-

254,915,472

7,964,949

262,880,421

Profit for the year

-

26,090,846

-

26,090,846

316,986

26,407,832

Gain on val

uation of financia

l assets at fair value

throu

g

h other com

prehensive income, net

of tax

6, 20

-

13,713

2,402,226

86,794

2,502,733

Share of othe

r comprehensive income

of associates

and

j

oint ven

tures, net of tax

9, 20

-

(45,894)

2,597

(43,297)

Loss on overseas business tr

anslation, net of tax

20

-

(5,343,946)

(36,429)

(5,380,375)

Remeasurement of net d

efined

benefit liabilities

(assets), net of tax

14, 20

-

(709,141)

(10,419)

(719,560)

Loss on valuati

on of derivatives

20

-

(33,406)

-

2,415,939

-

(45,894)

-

(5,343,946)

-

(709,141)

-

(33,406)

-

(33,406)

Reclassification as

held-for-sale

32

-

12,132

(12,132)

-

Total comprehensive income for the year

-

26,104,559

(3,718,029)

(12,132)

22,374,398

359,529

22,733,927

Dividen

ds

19

-

(9,619,242)

-

(9,619,242)

(59,028)

(9,678,270)

Capital

transaction under c

ommon control

-

(830)

-

(830)

(701)

(1,531)

Changes in consolidated

entities

-

17,838

Other

-

533

-

533

(4,902)

(4,369)

Total transa

ctions with

owners

-

(9,619,242)

(297)

-

(9,619,539)

(46,793)

(9,666,332)

Balance as of

December 31, 2020

119,467

778,047

4,403,893

271,068,211

(8,687,155)

(12,132)

267,670,331

8,277,685

275,948,016

JNMJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS

OF CHANGES IN E

QUITY

The above consolidated statements of ch

anges in equity should b

e read in conjunction with

the accompanying notes.

(In thousa

nds of US dollars (No

te 2.29))

2020 USD

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as

of January 1, 2020

104,420

680,052

3,849,223

222,518,205

(4,343,005)

-

222,808,895

6,961,765

229,770,660

Profit for the year

-

22,804,707

-

22,804,707

277,061

23,081,768

Gain on valuat

ion of finan

cial assets at fair value

throu

g

h other com

prehensive income, net of t

ax

6, 20

-

11,986

2,099,666

75,862

2,187,514

Share of othe

r comprehensive income

of associates

a

n

d

j

oint ven

tures, net of tax

9, 20

-

(40,114)

2,270

(37,844)

Loss on overseas business transl

ation, net of tax

20

-

(4,670,876)

(31,841)

(4,702,717)

Remeasurement of net d

efined

benefit liabilities

(assets), net of tax

14, 20

-

(619,825)

(9,106)

(628,931)

Loss on valuati

on of derivatives

20

-

(29,199)

-

2,111,652

-

(40,114)

-

(4,670,876)

-

(619,825)

-

(29,199)

-

(29,199)

Reclassification as held-for-sal

e

32

-

10,604

(10,604)

-

Total comprehensive income for the year

-

22,816,693

(3,249,744)

(10,604)

19,556,345

314,246

19,870,591

Dividends

19

-

(8,407,700)

-

(8,407,700)

(51,593)

(8,459,293)

Capital

transaction under c

ommon control

-

(725)

-

(725)

(613)

(1,338)

Changes in consolidated

entities

-

15,591

Other

-

466

-

466

(4,285)

(3,819)

Total transa

ctions with

owners

-

(8,407,700)

(259)

-

(8,407,959)

(40,900)

(8,448,859)

Balance as of

December 31, 2020

104,420

680,052

3,849,223

236,927,198

(7,593,008)

(10,604)

233,957,281

7,235,111

241,192,392

JNNJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS

OF CHANGES IN E

QUITY

The above consolidated statements of ch

anges in equity should b

e read in conjunction with

the accompanying notes.

(In millions of Ko

rean won)

2021 KRW

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2

021

119,467

778,047

4,403,893

271,068,211

(8,687,155)

(12,132)

267,670,331

8,277,685

275,948,016

Profit for the year

-

39,243,791

-

39,243,791

663,659

39,907,450

Gain(loss) on valuation of financi

al assets

at fair value through other comprehensi

ve

inc

ome, ne

t of ta

x

6, 20

-

3,232,934

(359,117)

107,079

2,980,896

Share of o

ther comprehensiv

e income (loss)

of associates and

j

oint ventur

es, net of

ta

x

9, 20

-

225,464

(13,485)

211,979

Gain on overseas bu

siness

translation, net of tax

20

-

7,164,982

118,638

7,283,620

Remeasurement of net

defined b

enefit

assets, net of tax

14

, 20

-

(520,552)

(4,054)

(524,606)

Gain on valuat

ion of cash flow hedge

derivatives

20

-

50,410

-

2,873,817

-

225,464

-

7,164,982

-

(520,552)

-

50,410

-

50,410

Reclassification to assets held-for-sale

32

-

(12,132)

12,132

-

Total comprehensive i

ncome for the year

-

42,476,725

6,549,055

12,132

49,037,912

871,837

49,909,749

Dividen

ds

19

-

(20,480,721)

-

(20,480,721)

(32,005)

(20,512,726)

Capital transacti

ons under common control

-

12,553

Changes in consolidated

entities

-

(477,617)

Others

-

548

9,627

-

10,175

9,781

19,956

Total transa

ctions with

owners

-

(20,480,173)

9,627

-

(20,470,546)

(487,288)

(20,957,834)

Balance as of

December 31, 2021

119,467

778,047

4,403,893

293,064,763

(2,128,473)

-

296,237,697

8,662,234

304,899,931

JNOJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS

OF CHANGES IN EQ

UITY

The above consolidated statements of ch

anges in equity should b

e read in conjunction with

the accompanying notes.

(In thousa

nds of US dollars (No

te 2.29))

2021 USD

Notes

Prefer

ence

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2

021

104,420

680,052

3,849,223

236,927,198

(7,593,008)

(10,604)

233,957,281

7,235,111

241,192,392

Profit for the year

-

34,301,040

-

34,301,040

580,071

34,881,111

Gain(loss) on valuation of financi

al assets

at fair value through other comprehensi

ve

income, net of tax

6,

20

-

2,825,746

(313,886)

93,592

2,605,452

Share of o

ther comprehensiv

e income (loss)

of associates and

j

oint ventur

es, net of

ta

x

9, 20

-

197,067

(11,787

)

185,280

Gain on overseas bu

siness

translation, net of tax

20

-

6,262,553

103,697

6,366,250

Remeasurement of net

defined b

enefit

as

s

et

s,

n

e

t

of

ta

x

14, 20

-

(454,989)

(3,543)

(458,532)

Gain on valuat

ion of cash flow hedge

derivatives

2

0

-

44,060

-

2,511,860

-

197,067

-

6,262,553

-

(454,989)

-

44,060

-

44,060

Reclassification to assets held-for-sale

32

-

(10,604)

10,604

-

Total comprehensive i

ncome for the year

-

37,126,786

5,724,201

10,604

42,861,591

762,030

43,623,621

Dividen

ds

19

-

(17,901,176)

-

(17,901,176)

(27,974)

(17,929,150)

Capital transacti

ons under common control

-

10,972

Changes in consolidated

entities

-

(417,461)

Others

-

479

8,415

-

8,894

8,549

17,443

Total transa

ctions with

owners

-

(17,900,697)

8,415

-

(17,892,282)

(425,914)

(18,318,196)

Balance as of

December 31, 2021

104,420

680,052

3,849,223

256,153,287

(1,860,392)

-

258,926,590

7,571,227

266,497,817

JNPJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

The above consolidated

statements of cash

flows should be read

in conjunction with

the

accompanying notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

For the years ended December 31,

Notes

2021

2020

2021

2020

KRW

US

D

USD

Operating activities

Profit for the year

39,907,450

26,407,832

34,881,111

23,081,768

Adjustments

27

49,055,633

41,618,554

42,877,081

36,376,702

Changes in assets and liabilities arising

from operatin

g

activities

27

(16,286,884)

122,424

(14,235,553)

107,005

Cash generated fr

o

m operations

72,676,199

68,148,810

63,522,639

59,565,475

Interest received

1,406,706

2,220,209

1,229,532

1,940,574

Interest paid

(434,441)

(555,321)

(379,723)

(485,378)

Dividends received

299,033

243,666

261,370

212,976

Income tax paid

(8,842,049)

(4,770,355)

(7,728,394)

(4,169,530)

Net cash from operating ac

tivities

65,105,448

65,287,009

56,905,424

57,064,117

Investing activities

Net decr

ease (increase)

in short-term finan

cial instruments

10,917,128

(20,369,616)

9,542,117

(17,804,065)

Net decrease (increase) i

n short-term financial assets

at amortized cos

t

(336,959)

184,104

(294,519)

160,916

Net decrease in short

-term fin

ancial assets at fair value

throu

g

h profit

or loss

30,694

1,704,512

26,828

1,489,829

Disposal of l

ong-term financial instru

ments

10,216,082

12,184,301

8,929,368

10,649,690

Acquisition of long-term f

inancial instrum

ents

(6,981,810)

(8,019,263)

(6,102,452)

(7,009,238)

Disposal of financial assets at amortized cost

-

1,023,117

Disposal of financial assets at fair value

throu

g

h other com

prehensive income

2,919,888

32,128

2,552,128

-

894,256

28,081

Acquisition of financial

assets at fair v

alue

throu

g

h other com

prehensive income

(1,121,201)

(245,497)

(979,986)

(214,577)

Disposal of financial asset

s at fair value through profit or l

oss

350,212

39,746

306,103

34,740

Acquisition of financial

assets at fair v

alue

throu

g

h profit

or loss

(208,262)

(84,184)

(182,031)

(73,581)

Disposal of investment in ass

ociates and

joint ventures

19,169

-

Acquisition of invest

ment in associates and joint ventures

(47,090)

(83,280)

(72,791)

Disposal of p

roperty, plant and

equipment

358,284

376,744

-

16,755

(41,159)

313,158

329,293

Acquisition of property, p

lant and equipment

(47,122,106)

(37,592,034)

(41,187,082)

(32,857,321)

Disposal of i

n

tangi

ble assets

1,752

7,027

1,531

6,142

Acquisition of intangible assets

(2,706,915)

(2,679,779)

(2,365,979)

(2,342,261)

Cash outfl

ow from business combinat

ions

(5,926)

(49,420)

(5,180)

(43,196)

Cash inflow from sale

of assets-held-for-sale

661,168

-

Cash inflow (outflow) from

other investing activities

8,129

(57,197)

-

577,894

7,105

(49,993)

Net cash used in investing activities

(33,047,763)

(53,628,591)

(28,885,401)

(46,874,076)

JNQJ

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

The above consolidated

statements of cash

flows should be read

in conjunction with

the

accompanying notes.

(In millions of Korean won, in thousand

s of US dollars (Note 2.29))

For the years ended December 31,

Not

es

2021

2020

2

021

2

020

KRW

US

D

USD

Financing acti

vities

Net increase(decrease) in short-

term borrowings

27

(2,616,943)

2,191,186

(2,287,339)

1,915,206

Increase in long-term b

orrowings

27

58,279

14,495

50,939

12,669

Repayment of d

ebentures and long-ter

m borrowings

27

(894,749)

(864,947)

(782,055)

(756,007)

Dividends p

aid

(20,510,350)

(9,676,760)

(17,927,074)

(8,457,973)

Net decrease (increase) in

non-controlling interests

(27,270)

8,187

(23,835)

7,156

Net cash used in fin

ancing activities

(23,991,033)

(8,327,839)

(20,969,364)

(7,278,949)

Reclassification to assets held-

for-sale

32

139

(139)

(121)

Effect of foreign exchange ra

te changes

1,582,046

(833,861)

121

1,382,787

(728,836)

Net increase (decrease) in c

ash and c

ash equivalents

9,648,837

2,496,579

8,433,567

2,182,135

Cash and cash equi

valents

Beginning

of the year

29,382,578

26,885,999

25,681,845

23,499,710

End of the year

39,031,415

29,382,578

34,115,412

25,681,845

JNRJ

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

As of December 3

1, 2021 and 2020

, and

For the years ended D

ecember 31, 2

021 and 2020

1. General In

formation

1.1 Compa

ny Overview

Samsung

Electronics

Co.,

Ltd. (“SEC”

) was

incorporated

under

th

e laws

of

the Republic

of Korea

in 1969

an

d

listed

its shares

on

the

K

orea

Stock

Exch

ange

in

1975

.

SEC

and

its

subsidiar

ies

(

collectively

referred

to

as

the

“Company”)

operate

four

business divisions: Consume

r

El

ectronics (“CE”), Information te

chnology & Mobile communicati

ons

(“IM”), Device

Solutions (“DS”)

and Harman. CE

division includes d

igital TVs,

monit

ors, air conditione

rs and refrigerat

ors and IM div

ision

includes

mobil

e

p

hones,

communication

systems,

and

computers.

D

S

division

incl

udes

semiconductor

products

such

as

memory, foundry, and syste

m LSI (

“Semiconductor”), and display products such as LC

D and O

LED panels (“DP”). Harman

division includes

connected car

systems,

audio

and visual

produ

cts,

enterprise

au

tomation

solu

tions

and

connected

services.

The Company is domiciled in the R

epublic of Korea and is locate

d in Suwon, the Republic of Korea.

These

consolidated

financial

sta

tements

have

been

prepared

in

a

ccordance

with

Korean

International

Financial

Reporting

Standards

(“

Kor

ean I

FRS

”) 1110,

Consolidated

Financial Statements

. SEC,

as the controll

ing Company, c

onsolidates its

228

subsidiaries, i

ncluding Samsung Displ

ay and Samsung Electroni

cs

America. The Company also ap

plies the equity method of

accounting for its 41 associates a

nd joint vent

u

res, includi

ng

Samsung Electro-Mecha

nics Co., Ltd.

1.2 Consoli

dated Subsidiaries

The consolidated subsidiaries as

of December 31, 2021 are

as fo

llows:

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

America

Samsung Electronics Ame

rica, Inc. (SEA)

Sale

of electronic devi

ces

100.0

Samsung International, Inc. (SII)

Manufacture of electronic dev

ices

100.0

Samsung Mexicana S.A. de C.V (SAMEX)

Manufacture of electronic

devices

100.0

Samsung Elect

ronics Home Appliances Am

erica, LLC (SEHA)

M

a

n

u

f

a

c

t

ure of home appliances

100.0

Samsung Research America, Inc. (SRA)

R&D

100.0

Samsung Next LLC (SNX)

Managemen

t of overseas subsidiaries

100.

0

Samsung Next Fund LLC (SNXF)

Te

ch

nol

og

y b

us

in

ess

,

ven

tu

re

ca

pit

al

in

ve

st

me

nts

100.0

NeuroLogica Corp.

Manufacture and sale of medical equipment

100

.0

Samsung HVAC America, LLC

Sale

of air conditioning products

100

.0

Joyent, Inc.

Cloud services

100.0

Dacor Holdings, Inc.

Management of overseas subsidiaries

100.0

Dacor, Inc.

Manufacture and sale of home appliances

100.0

Dacor Canada Co.

Sale of home appliances

100.0

SmartThings, Inc.

Sale of sm

art home electronics

100.0

TeleWorld Solutions, Inc. (TWS)

Installation & optimization of

network devices

100.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’

ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

America

Samsung Semiconductor, Inc. (SSI)

Sale of semiconductor and dis

play panels

100.0

Samsung Austin Semiconductor LLC

(SAS)

Manufacture of semiconductors

100.0

Samsung Oak Holdings, Inc. (SHI)

M

anagement of overseas subsidi

aries

100.0

SEMES America, Inc.

Semiconducto

r equipment services

100.0

Samsung Electronics Canada, Inc. (

SECA)

Sale of electronic devi

ces

100.0

AdGear Technologies Inc.

Digita

l advertising platforms

100.0

Samsung Eletronica da Amazonia Lt

da. (SEDA)

Manufacture and sal

e of electronic devices

100.0

Samsung Electronics Mexico S.A. d

e C.V. (SEM)

Sale of electroni

c devices

100.0

Samsung Electronics Digital Applia

nce Mexico, S.A. de C.V. (SED

A

M

)

Manufacture of

home appliances

100.0

Samsung Elect

ronics Latinoamerica

(Zona Libre), S. A. (SELA)

S

a

l

e

of electronic devices

100.0

Samsung Electronics Latinoa

meri

ca Miami

, Inc. (SEMI)

Sa

le

of e

le

ctronic devices

100.0

Samsung Electronica Colombia S.A.

(SAMCOL)

Sale of electronic d

evices

100.0

Samsung Electronics Argentina S.A.

(SEASA)

Marketing and servic

es

100.0

Samsung Electronics Chile Limitada (SECH)

Sale of electronic de

vices

100.0

Samsung Electronics Per

u S.A.C. (SEPR)

Sale

of electronic devic

es

100.0

Samsung Electronics Venezuela, C.A

. (SEVEN)

Marketing and servi

ces

100.0

Samsung Electronics Panama. S.A. (SEPA)

Consulting

100.0

Harman International Industries, Inc.

Holding company

100.0

Harman Becker Automotive System

s, Inc.

Manufacture and sale of

audio products, R&D

100.0

Harman Connected Services, Inc.

Connected service provider

100.

0

Harman Connected Services Engineering Corp

.

Connected service p

rovider

100.0

Harman da A

mazonia Industr

ia Eletronica e Pa

rticipacoes L

tda.

M

anufacture and sale of audio products

100.0

Harman de Mexico, S. de R.L. d

e C.V.

Manufacture of audio produ

cts

100.0

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Sa

l

e of audio products, R&D

100.0

Harman Financial Group LLC

Management company

100.0

Harman International Industries Ca

nada Ltd.

Sale of audio produ

cts

100.0

Harman International Mexico, S. d

e

R.L. de C.V.

Sale of audio p

roducts

100.0

Harman KG Holding, LLC

Managem

ent of overseas subsidiaries

100.

0

Harman Professional, Inc.

Sale of audio products, R&D

100.0

Beijing

Integrated C

ircuit Indus

try Internatio

nal Fund, L.P

V

en

t

ure capital investments

61.4

China Materialia New Materials 2

016 Limited Partnership

V

e

nt

ur

e

capital

investments

99.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’ ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Europe/CIS

Samsung Electronics (UK

) Ltd. (SEUK)

Sale of electronic devices

100.0

Samsung Electronics Ltd. (SEL)

Ma

nagement of overseas subsidiar

ies

100.0

Samsung Semiconductor Europe Limited (SSEL)

Sale of semiconduct

or and display panels

100.0

Samsung Electronics GmbH (SEG)

Sa

le of electronic devices

100.0

Samsung Electronics Hol

ding GmbH (SE

HG)

Management of o

verseas

subsidiaries

100.0

Samsung Semiconductor Europe GmbH

(SSEG)

Sale of semiconductor

and display panels

100.0

Samsung Electronics France S.A.S

(SEF)

Sale of electronic

devic

es

100.0

Samsung Electronics Ita

lia S.P.A. (SEI)

Sale of electronic devi

ces

100.0

Samsung Electronics Iberia, S.A.

(SESA)

Sale of electronic devi

ces

100.0

Samsung Elect

ronics Portuguesa, Uni

pessoal, Lda. (SEP)

S

al

e

o

f

electronic devices

100.0

Samsung Electronics Hungarian P

rivate Co., Ltd. (SE

H)

M

anu

fact

ur

e and sale of electronic devices

100.0

Samsung Electronics Europe Logis

tics B.V. (SELS)

Logistics

100.

0

Samsung Electronics Ben

elux B.V. (SEBN)

Sale

of electronic devi

ces

100.0

Samsung Electronics Europe Holdi

ng Cooperatief U.A. (SEEH)

M

a

n

a

gement of overseas subsidiaries

100.0

Samsung Electronics Nordic Aktiebol

ag (SENA)

Sale of electronic

devices

100.0

Samsung Electronics Slovakia s.r.

o. (SESK)

Manufacture of T

V an

d monitors

100.0

Samsung Display Slovakia s.r.o. (

SDSK)

Toll processing of displ

ay panels

100.0

Samsung Electronics Polska, SP.Zo

.o (SEPOL)

Sale of electronic

devices

100.0

Samsung Electronics Pola

nd Manu

facturing SP.Zo.o (SEP

M)

M

a

n

u

f

a

c

t

ure of home appliances

100.0

Samsung Electronics Romania LLC (

SEROM)

Sale of electronic devi

ces

100.0

Samsung Electronics Austria GmbH

(SEAG)

Sale of electronic devi

ces

100.0

Samsung Electronics Switzerland GmbH (SESG)

Sale of electronic

devices

100.0

Samsung Electronics Czech and Slovak s

.r.o. (SECZ)

Sale of elec

tronic devices

100.0

Samsung Electronics Baltics SIA (SEB)

Sale of electronic device

s

100.0

Samsung Electronics Gr

eece S.M.S.A (SEGR)

Sale of electronic de

vices

100.0

Samsung Electronics Air Cond

itio

ner Europe B.V. (SEACE)

S

a

l

e

o

f

air conditioning products

100.0

Samsung Nanoradio Design

Center (SNDC)

R&D

100.0

Samsung Denmark Research Center ApS

(SDRC)

R&D

100.0

Samsung Cambridge Solution Centre Limited (SCSC)

R&D

100.0

Zhilabs, S.L.

Development and

sale of network solutions

100.0

Foodient Ltd.

R&D

100.0

Samsung Electronics Rus

Company LLC (SE

RC)

S

ale of electronic d

evices

100.0

Samsung Electronics Rus Kaluga

LLC (SERK)

Manufacture of TV

100

.0

Samsung Electronics Ukr

aine Company LLC (S

EUC)

Sale of electron

ic devices

100.0

Samsung Electronics Central Euras

ia LLP (SE

CE)

Sale of electron

ic devices

100.0

Samsung Electronics Overseas B.V.

(SEO)

Sale of electronic devi

ces

100.0

Samsung R&D Institute Rus LLC (SRR)

R&D

100.

0

Samsung Electronics Cau

casus Co., Ltd. (SECC)

Marketing

100.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’ ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Europe/CIS

AKG Acoustics GmbH

Manufacture an

d sale of audio products

100.0

AMX UK Limited

Sale of audio products

100.0

Harman Audio Iberia Espana

Soci

edad Limitada

Sale of audio prod

ucts

100.0

Harman Automotive UK Limited

Manufacture of audio products

100.

0

Harman Becker Automotive Systems

GmbH

Manufacture and sale of a

udio products, R&D

100.0

Harman Becker Automotive Systems

Italy S.R.L.

Sal

e of audio pro

ducts

100.0

Harman Becker Automotive Systems Manufac

turing Kft

Man

ufa

ctu

re

o

f audio products, R&D

100.0

Harman Belgium SA

Sale of audio products

100.0

Harman Connected Services AB.

C

onnected service provider

100.0

Harman Finland Oy

Connected service provider

100.0

Harman Connected Services GmbH

C

onnected service provider

100.0

Harman Connected Services Poland

Sp.Zo

.o

Connected service prov

ider

100.0

Harman Connected Services UK Ltd.

Connected service provider

10

0.0

Harman Consumer Nederland B.V.

Sale of audio products

100.0

Harman Deutschland GmbH

Sal

e of audio products

100.0

Harman Finance International GP S.a.r

.l

Management of overseas

subsidiaries

100.0

Harman France SNC

Sale of audio products

100.0

Harman Holding GmbH & Co. KG

Management company

100.0

Harman Hungary Financing Ltd.

Financing company

100.0

Harman Inc. & Co. KG

Management of overseas subsidiaries

100.0

Harman International Estonia OU

R&D

100.0

Harman International Industries Limited

Sale of audio products,

R&D

100.0

Harman International Romania SRL

R&D

100.0

Harman Finance International, SCA

Financing company

100.0

Harman International s.r.o.

Ma

nufacture of audio products

100.0

Harman Management GmbH

Management of overseas subsidiaries

100.

0

Harman Professional Kft

Manufacture of audio products, R&D

100.

0

Harman Professional Denmark ApS

Sale of audio products, R&D

100

.0

Red Bend Software Ltd.

Software design

100.0

Red Bend Software S.A.S

Software design

100.0

Studer Professional Audio GmbH

S

ale of audio products, R&D

100.

0

Harman Connected Services OOO

Connected service provider

100.0

Harman RUS CIS LLC

Sale

of audio products

100.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’

ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Middle East

& Africa

Samsung Gulf Electronics Co., Ltd

. (SGE)

Sale of electronic

dev

ices

100.0

Samsung Electronics Turkey (SETK)

Sale of electronic devices

10

0.0

Samsung Electronics Indu

stry a

nd Commerce Ltd. (

SETK-P)

M

a

n

u

f

a

c

ture of electronic devices

100.0

Samsung Electronics Levant Co.,Ltd. (SE

LV)

Sale of electronic d

evices

100.0

Samsung Electronics Maghreb Arab

(SEMAG)

Sale of electronic dev

ices

100.0

Samsung Electronics Egypt S.A.E (SEEG)

Manufacture and

sale of

electronic devices

100.0

Samsung Electronics Israel L

td. (SEIL)

Marketing

100.0

Samsung Electronics Tunisia S.

A.R.L (SETN)

Marketing

100.0

Samsung Electronics Pakistan (Pri

vate) Ltd. (SEPAK)

Marketing

1

00.0

Samsung Electronics Saudi Arabia

Ltd. (SESAR)

Sale of electroni

c devices

100.0

Sa

ms

ung

S

emi

co

nd

uct

or

Is

ra

el

R&

D

Cen

te

r,

Lt

d.

(S

IR

C)

R&D

100.0

Corephotonics Ltd.

R&D

100.0

Samsung Electronics Sout

h Africa (Pty) Ltd. (

SSA)

Sale of elect

ronic devices

100.0

Samsung Elec

tronics South Africa Produ

ction (Pty) Ltd.

(SSAP)

M

a

nufacture of TV and monitors

100.0

Samsung Electronics West Africa

Ltd. (SEWA)

Marketing

100.0

Samsung Electronics East Africa

Ltd. (SEEA)

Marketing

100.0

Global Symphony Technology Gr

oup Private Ltd.

Management of ov

erseas subsidiaries

100.0

Harman Connected Services Morocco

Connected service provider

10

0.0

Harman Industries Holdings Mauritius Ltd.

Management of oversea

s subsidiaries

100.0

Red Bend Ltd.

Manufacture of audio products

100.0

Asia

(Excluding

China)

Samsung Asia Pte. Ltd. (SAPL)

Ma

nagement of overseas subsidiari

es

100.0

Samsung Electronics Singapore Pte.

Ltd. (SESP)

Sale of electron

ic devices

100.0

Samsung Malaysia El

ectronics (SME) Sdn. Bhd. (SME)

S

ale

of e

lec

tronic devices

100.0

Samsung Electronics Display (M) S

dn. Bhd. (SDMA)

Manufacture of

electronic devices

100.0

Samsung Electronics (M)

Sdn. Bhd. (SEM

A

)

Manufacture of home ap

pliances

100.0

Samsung Vina Electronics Co., Lt

d. (SAVINA)

Sale of electronic

devices

100.0

Samsung Electronics Vietnam Co.,

Ltd. (SEV)

Manufacture of elec

tronic devices

100.0

Samsung Electronics Vietnam THAING

UYEN Co., Ltd. (S

EVT)

M

a

n

u

f

a

c

t

ure of communication equipment

100.0

Samsung Electronics HCMC CE Com

plex Co., Ltd. (SEHC)

M

a

n

u

f

a

c

t

u

r

e and sale of electronic devices

100.0

Samsung Display Vietnam Co., Ltd

. (SD

V)

Manufacture of display

panels

100.0

PT Samsung Electronics

Indonesia (SEIN)

Manufacture and

sale of

electronic devices

100.0

PT Samsung Telecommunications Indone

sia (STIN)

Sale of electronic devices and services

100.0

Thai Samsung Electronics Co., Lt

d. (TSE)

Manufacture and sale o

f electronic devices

91.8

Laos Samsung Electroni

cs Sole Co., Ltd. (L

SE)

Marketing

100.0

Samsung Electronics Philippines Co

rporation (SEPCO)

Sale

of electronic devices

100.0

Samsung Electronics Australia Pty

. Ltd. (SEAU)

Sale of electron

ic devices

100.0

Samsung Electronics New Zealand L

imited (SENZ)

Sale of electron

ic devices

100.0

Samsung India Electronics Private

Ltd. (SIEL)

Manufacture and s

ale of electronic devices

100.0

Samsung Display Noida Private Limited (SDN)

Manufacture of disp

lay panels

100.0

Samsung R&D Institute India-Bangalore Private Limited (SRI-B)

R

&D

100.0

Samsung R&D Institute BanglaDesh Limited (SRBD)

R&D

100.0

Samsung Nepal Services Pvt,

Ltd. (SNSL)

Service

100.0

Samsung Japan Corporation (SJC)

Sale of semiconductor and display panels

100.0

Samsung R&D Institute Japan Co., Ltd. (SRJ)

R&D

100.0

Samsung Electronics Japan Co., Lt

d. (SEJ)

Sale of electronic de

vices

100.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’

ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Asia

(Excluding

China)

Harman Connected Services Corp. I

ndia Pvt. Ltd.

Connected servi

ce provider

100.0

Harman International (India) Private Limited

Sale of audio prod

ucts, R&D

100.0

Harman International Industries

Pty Ltd.

Management of overseas

subsidiaries

100.0

Harman International Japan Co., Ltd.

Sale of audio products, R&

D

100.0

Harman Singapore Pte. Ltd.

Sa

le of audio products

100.0

China

Samsung (CHINA) Investment Co.,

Ltd. (SCIC)

Sale of electronic

devices

100.0

Samsung Electronics Hong Kong Co.

, Ltd. (SEHK)

Sale of electron

ic devices

100.0

Samsung Electronics Taiwan Co., Ltd

. (SET)

Sale of electronic d

evices

100.0

Tianjin Samsung Electronics Co.

, Ltd. (TSEC)

Manufacture of TV

and monitors

91.2

Suzhou Samsung Electronics Co.

, Ltd. (SSE

C

)

Manufacture of h

ome

appliances

88.3

Samsung Suzhou Electronics Export Co., Ltd. (SSEC-E)

Manu

fac

ture

of home appliances

100.0

Samsung Ele

ctronics Suzhou Compu

ter Co., Ltd. (SESC)

M

an

u

fa

ct

u

r

e of electronic devices, R&D

100.0

Tianjin Samsung Telecom Techno

logy Co., Ltd. (TSTC)

Man

ufa

ctu

re

of communication equipment

90.0

Beijing Samsung Telecom R&D Ce

nter (SRC-Beijing)

R&D

100.0

Sam

sung

Elec

troni

cs Ch

ina

R&D C

enter

(SR

C-Nanj

ing)

R&D

100.0

Samsung Mo

bile R&D Center Ch

ina-Guangzhou (SRC

-Guangzhou

)

R

&

D

1

00.0

Samsung R&D Institute China-Shenzhen (SRC-Shenzhen)

R&

D

100.0

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

Sale of semicond

uctor and display panels

100.0

Samsung (China) Semiconductor Co.,

Ltd. (SCS)

Manufacture of se

miconductors

100.0

Samsung SemiConductor Xian Co., Lt

d. (SSCX)

Sale of semiconduct

or and display panels

100.0

Samsung Ele

ctronics Suzhou S

emiconductor

Co., Ltd. (SESS)

T

o

l

processing of semiconductors

100.0

Tianjin Samsung LED Co., Ltd. (

TSLE

D)

Manufacture of LED

100.0

Sa

ms

ung

S

emi

co

nd

uct

or

(C

hi

na

) R

&D

Co

.,

L

td.

(

SSC

R)

R&D

100.0

Samsung Display Dongguan Co., Ltd

. (SDD)

Manufacture of display

panels

100.0

Samsung Display Tianjin Co., Ltd

. (SDT)

Manufacture of display panels

95.0

SEMES (XIAN) Co., Ltd.

Semiconductor equipment services

100.0

Samsung Semiconductor Investment L.P. І

T

ec

hnology business, Venture c

apital investments

9

.

0

Harman (China) Technologies Co.,

Ltd.

Manufacture of audio prod

ucts

100.0

Harman (Suzhou) Audio and Infotainment Systems Co., Ltd

.

Sa

le

o

f audio products

100.0

Harman Automotive Electronic Sy

stems (Suzhou) Co., Ltd.

M

a

n

uf

a

c

t

ure of audio products, R&D

100.0

Harman Commercial (Shanghai) Co.

, Ltd.

Sale of audio products

1

00.0

Harman Connected Services Sol

utions (Chengdu)

Co., Ltd.

C

onnected service provider

100.0

Harman Holding Limited

Sale

of audio products

100.0

Harman International (China) Hold

ings Co

.

, Ltd.

Sale of audio p

roducts, R&D

100.0

Harman Technology (Shenzhen) Co.

, Ltd.

Sale of audio products,

R&D

100.0

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’

ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Domestic

Samsung Display Co., Ltd.

Manufact

ure and sale of display panel

s

84.8

SU Materials

Manufacture

of display components

50.0

STECO Co., Ltd.

Ma

nufacture of semiconductor co

mponents

70.0

SEMES Co., Ltd.

Manufacture and

sale of semiconductor/FPD

91.5

Samsung Electronics Service Co., Ltd.

Repair

services for elect

ronic devices

99.3

Samsung Electronics Ser

vice Customer Satisfaction Co., Ltd.

Cal

l

ce

n

te

r

f

or

r

ep

a

ir

s

er

v

ic

e

s

fo

r

e

l

ec

tr

o

ni

c

d

ev

i

ce

s

100.0

Samsung Electronics Sal

es Co., Ltd.

Sale of electronic devices

100.0

Samsung Electronics Logitech Co.,

Ltd.

General logistics agency

100.0

Samsung Medison Co., Ltd.

Manufact

ure and sale of medical equip

ment

68.5

Mirero System Co., Ltd.

Developm

ent and supply of semiconductor

p

rocess defect and quality control software

99.9

Dowooinssys Co., Ltd.

Manuf

acture of display components

69.0

Gf-System Co., Ltd.

Manufactur

e of display components

100.0

Harman International Korea

Software development and supply, etc

.

100.0

Samsung Venture Capital Union #21

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #22

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #26

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #28

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #29

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #32

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #33

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #37

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #40

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #42

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #43

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #45

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #48

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #52

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #55

Te

c

hnology business, Venture c

apital investments

99

.

0

Samsung Venture Capital Union #56

Te

c

hnology business, Venture c

apital investments

99

.

0

Growth typ

e private equity trust sp

ecialized in semiconducto

rs

Investment on semiconductor industry

66.7

System LSI Mutual benefit privat

e equity trust

Investment on se

miconductor industry

62.5

1

Ownership represents the Co

mpa

ny’s ownership of the voting rig

hts in each entity, including

subsidiaries’

ownerships.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

1.3 Summary of Financial

Data of

Major Consolidated Subsidiarie

s

Summary of financial data of maj

or consolidated subsidiari

es is

as follows:

(1)

2021

(

In millions o

f

Korean won

)

As of December 31, 2021

Fo

r

t

he

y

e

ar

e

nd

ed

D

ecember 31

, 2021

Ma

j

or subsidiaries

1

Assets

Liabilities

Sales

Profit (loss)

for the year

Samsung Display

54,967,156

9,081,737

28,755,975

2,770,060

Samsung Electronics America, Inc

. (SEA)

42,982,054

19,246,751

4

2,325,524

823,914

Samsung (China) Semiconductor Co., Ltd. (SCS)

19,049,536

5,168,

738

7,341,018

1,708,832

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

1

7

,

5

2

1

,

446

3,425,127

32,184,024

2,298,273

Harman and its subsidiaries

2

15,887,380

6,104,012

10,015,092

357,612

Samsung Asia Pte. Ltd. (SAPL)

14,683,789

58,381

-

4,668,478

Samsung Electronics Europe Holdi

ng Cooperatief U.A. (SEEH)

1

4

,

65

1,496

8,998,502

-

24,527

Samsung Semiconductor, Inc. (SSI)

13,744,799

7,955,060

33,895,8

05

74,531

Samsung (CHINA) Investment Co.,

Ltd. (SCIC)

13,599,093

9,685,27

8

2,615,685

451,062

Samsung Electronics Vietnam Co.,

Ltd. (SEV)

13,023,272

2,085,411

21,583,038

1,455,704

Samsung Austin Semiconductor LLC

(SAS)

8,705,085

958,537

3,703,

472

759,206

Shanghai Samsung Semiconductor Co.,

Ltd. (SSS)

7,765,126

5,799,

690

31,326,186

325,397

Samsung India Electronics Private

Ltd. (SIEL)

7,765,019

3,236,7

45

12,222,643

522,672

Samsung Display Vietnam Co., Ltd

. (SD

V)

6,821,066

2,486,703

21,

722,446

981,311

Samsung Eletronica da Amazonia Lt

da. (SEDA)

4,589,505

1,671,097

6,020,523

490,202

Samsung Ele

ctronics HCMC CE Complex Co.,

Ltd. (SEHC)

3

,1

2

9,

10

4

919,721

6,551,242

472,666

Thai Samsung Electronics Co., Lt

d. (T

SE)

3,018,358

474,223

4,44

3,031

142,191

Samsung Electronics (UK

) Ltd. (SEUK)

2,925,062

1,992,367

5,621,

922

241,403

Samsung Electronics Benelux B.V

. (SEBN)

2,612,357

766,034

2,569,603

284,816

Samsung Electronics Hungarian Pri

vate Co., Ltd

. (SEH)

2,504,075

641,004

4,357,137

157,616

Samsung Electronics Europe Logistic

s B.V. (SELS)

2,305,275

2,144,805

14,700,517

13,943

Samsung Electronics GmbH (SEG)

2,

289,391

2,228,650

6,385,080

2

,158

Samsung Display Dongguan Co., Ltd. (S

DD)

2,149,277

339,425

3,987,674

163,637

Samsung International, Inc. (SII)

2,125,719

1,041,168

7,948,982

105,444

Samsung Electronics Taiwan Co., Ltd

. (SET)

2,033,992

1,459,353

5,638,204

50,966

1

Summary of condens

ed financial i

nformation is based on separat

e financial

statements of each subsidiary.

2

Consolidated financi

al data of an intermediate

company that inc

ludes Harman Internati

onal Industries, Inc. and its subsidiarie

s.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

2020

(

In millions o

f

Korean won

)

As of December 31, 2020

Fo

r

t

he

y

e

ar

e

nd

ed

D

ecember 31

, 2020

Ma

j

or subsidiaries

1

Assets

Liabilities

Sales

Profit (loss)

for the year

Samsung Display

50,039,755

7,612,332

27,149,102

1,798,100

Samsung Electronics America, Inc

. (SEA)

36,765,070

15,828,083

3

5,237,365

1,623,555

Samsung Electronics Vietnam T

HAINGUYEN Co., Ltd. (SEVT

)

15,500,024

2,574,442

28,284,397

2,066,842

Samsung (CHINA) Investment Co.,

Ltd. (SCIC)

15,438,819

12,358,8

81

2,475,454

127,051

Harman and its subsidiaries

2

14,702,005

5,776,884

9,161,142

(735,426)

Samsung (China) Semiconductor Co., Ltd. (SCS)

14,348,735

3,511,

003

5,321,312

1,100,619

Samsung Electronics Vietnam Co.,

Ltd. (SEV)

12,623,956

1,805,326

19,952,957

1,408,088

Samsung Electronics Europe Holdi

ng Cooperatief U.A. (SEEH)

1

,

49

5,430

7,641,709

-

16,150

Samsung Semiconductor, Inc. (SSI)

9,669,349

4,427,701

23,562,96

2

182,290

Samsung Asia Pte. Ltd. (SAPL)

9,552

,755

523,402

1,634,692

968,

504

Shanghai Samsung Semiconductor Co.,

Ltd. (SSS)

7,678,989

5,010,

041

25,829,119

271,691

Samsung Display Vietnam Co., Ltd

. (SD

V)

7,400,563

4,354,887

19,

209,100

559,006

Samsung Austin Semiconductor LLC. (SAS)

6,912,610

538,28

8

3,913

,100

922,007

Samsung Eletronica da Amazonia Lt

da. (SEDA)

6,280,131

1,556,057

6,390,696

819,561

Samsung India Electronics Private

Ltd. (SIEL)

6,250,492

2,523,0

27

10,943,343

611,571

Thai Samsung Electronics Co., Lt

d. (T

SE)

2,920,299

451,055

3,74

4,080

160,264

Samsung Electronics (UK

) Ltd. (SEUK)

2,767,563

1,886,447

4,987,

522

133,016

Samsung Electronics GmbH (SEG)

2,

687,535

2,626,979

6,306,675

6

05

Samsung Electronics

HCMC CE Complex Co., Ltd. (SEHC)

2

,60

9,15

0

1

,026,901

6,273,162

419,313

Samsung Electronics Hungarian Pri

vate Co., Ltd

. (SEH)

2,230,457

504,952

3,665,360

148,056

Samsung Electronics Benelux B.V

. (SEBN)

2,145,488

736,480

2,324,308

58,579

Samsung Display Dongguan Co., Ltd. (S

DD)

1,767,663

300,080

2,947,506

110,194

Samsung Electronics Europe Logistic

s B.V. (SELS)

1,700,033

1,550,350

13,444,960

20,623

Samsung Electronics France S.A.S

(SEF)

1,688,580

1,207,359

3,46

4,937

61,596

Samsung Japan Corporation (SJC)

1,668,902

1,381,443

3,317,644

7,684

1

Summary of condens

ed financial i

nformation is based on separat

e financial

statements of each subsidiary.

2

Consolidated financi

al data of an intermediate

company that in

cludes Harman International Indus

tries, In

c. and its subsidiari

es.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

1.4 Chan

ges in Consolidation

Scope

Changes in co

n

solidat

ion scope during the year e

nded December 3

1, 2021 are as follows:

Change

Area

Subsidiary

Description

Included

Middle East

& Africa

Samsung Electronics Industry and Co

mmerce Ltd. (S

ETK-P)

Establi

shment

China

Samsung Semiconductor Inve

stment L.P. І

Establishment

Domestic

Samsung Venture Capital

Union #52

Establishment

Samsung Venture Capital

Union #55

Establishment

Samsung Venture Capital

Union #56

Establishment

Excluded

America

Viv Labs, Inc.

Merger

Prismview, LLC

Merger

Stellus Technologies, Inc.

Liquidation

SigMast Communicati

ons Inc.

Liquidation

Zhilabs Inc.

Liquidation

TWS LATAM B, LLC

Liquidation

TWS LATAM S, LLC

Liquidation

SNB Technologies, Inc. Mexi

co, S.A. de C.V

Liquidation

RT SV CO-INVEST, LP

Liquidation

Europe / CIS

Arcam Limited

Liquidation

A&R Cambridge Limited

Liquidation

Harman Connected Servi

ces Limited

Liquidation

Martin Manufacturing (UK) Ltd

Liquidation

China

Samsung Suzhou Module Co., L

td. (SSM)

Sale of

business

Samsung Suzhou LCD Co., Ltd

. (SSL)

Sale of business

Samsung Electronics Huizhou C

o., Ltd

.

(SEHZ)

Liquidation

Shenzhen Samsung Electronics Tel

ecommunication Co

., Ltd.(SSET)

Liquidation

Domestic

Samsung Venture Capital Union #27

Liquidation

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2. Significant Accounting Policies

2.1 Basis of

Presentation

The

principal a

ccounting pol

icies use

d to

prepare t

he consoli

d

a

ted

financial statements are

set

out

below. Ex

cept for

the effe

ct

of

the

amendments

to

the

Korean

IFRS a

nd

new i

nterpretations

se

t

o

ut

below, the

principal accounting

policies used

to

prep

are

the consolidated

f

inancial state

ments

as

of and

for

the year

en

ded

December

31,

2021

are

consistent

with

those

used

to pr

epare

the consolidated fin

ancial state

ments as of

and for th

e year en

ded December 31, 2020.

The

Company

maintains

its

accoun

ting

records

in

Korean

won

and

prepares

th

e

statuto

ry

f

inancial

statements

in

Korean

language

(Hangul)

in

accordance

with

International

Financial

Re

porting

Standards

as

adopted

b

y

the

Republic

of

Korea

(“Korean

IFRS”).

The accompanyi

ng

cons

olidated financial

statem

ents

have been

condensed,

rest

ructured,

and translated

into

English from t

he Korean language fi

nancial statements.

Certain

information

attache

d

to

the

Korean

language

financial

s

tatements

that

are

not

required

for

a

fair

presentation

of

the

Company’s

financial

positio

n,

financial

performance

or

cash

flo

ws,

are

no

t

pr

esented

in

the

accompanying

consolidated

financial statements.

The

consolidated

financial

state

ments

of

the

Company

have

been

prepared

in

accordance

with

Korean

IFRS.

These

are

the

standards,

subsequent

amendment

s a

nd

is

sued

by

the

International

Accounting

Standards

Board

(IASB)

that have bee

n

adopted

by the Republic of

Korea.

Korean

IFRS

permits

the

use

of

critical

accounting

estimates

in

the preparation

of

the consolidated

financial

stat

ements

and

requires

man

agement

judgmen

ts

in

apply

ing

the

accoun

ting

polici

es.

The

areas

involving

a

high

er

degree

of

judgment

or

complexity, or

areas where

assumption

s

and

estimates are signif

icant

to the

consolidated

financi

al statements,

are disclosed i

n

Note 3.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.2 Chan

ges in Accounting Poli

cies and Disclosures

(A)

New and amended st

andards adopted by the Com

pany

The

Company

applied

the

following

amende

d

and/or

enacted

standa

rds

for

the

first

time

for

their

annu

al

repo

rting

period

commencing on Ja

nuary 1, 2021:

Amendments to Ko

rean IFRS 1116, Lease

The

amendments

introduced

a

prac

tical

expedient

that

simplifies

the

lessee’s

accounting

trea

tments

for

COVID-19

cessions, and through suc

h expedient a lessee may elect

not t

o assess whether t

he rent concessions

granted as a di

rect

consequence

of

the

COVID-19

pande

mic

are

lease

modifications.

A

lessee

that

makes

this

election

shall

account

for

any

changes

in leas

e payments

resulting

from

the

rent conce

ssions t

he

same

way

as prescri

bed by

this

standard

if

the cha

nges were

not

considered

as

lease

modifications.

The

application

of

amend

ments

does

not

have

a

significant

impact

on

the

year-end

consolidated finan

cial statements.

(B)

New and amended standards

not yet adopted by

the Company

The

amended

accounting

standard

i

ssued

that

is

not

mandatory

fo

r

the

annual

repor

ting

period

co

mmencing

on

Janu

ary

1,

2021 and ha

s not been early a

dopted by the Com

pany is as follow

s:

Amendments to Ko

rean IFRS 1116, Lease

During

the

year

ended

December

31,

2020,

the

amendments

to

Kore

an

IFRS

1116

introduced

a

practical

expedient

that

provided

practical

relief

to

les

sees

in

accoun

ting

for

rent con

cessions

occurring

as

a

direct

consequence

of

COVID-19.

The

amendments ext

end the practical expedient

to apply to red

uction

in lease payments o

riginally d

ue on or b

efore 30 June 2022

.

The

amendments

are

effectiv

e

fo

r

annual

reporting

periods

begi

n

ning

on

or

after

Ap

ril

1,

2021

,

with

early

application

permitted.

Amendments t

o Korean IFRS 110

3, Business Combinati

ons

The amendments add to Korean IFRS

11

03 a

r

equirement that, for

obligati

ons within

the scope

of IAS

37, an

acquirer appl

ies

Korean IFRS

1037 or

Korean

IFRS

2121

Levies

to

determine

whethe

r

at

the

acquisition

date

a presen

t oblig

ation ex

ists as

a

result of the past events. Th

e

amendments also add an exp

licit

statement th

at an acquirer

does not recogni

ze contingent asset

s

acquired

in

a b

usiness com

bination.

The ame

ndments are

effectiv

e for

business com

binations

for

w

hich

the

date

of acq

uisition

is on or a

fter the beginning

of the first annual pe

riod beginni

ng on or after January 1, 2022

, with early application permitte

d

.

Amendments to Ko

rean IFRS 1016 Property, Plant and

Equipment

The

amendments

prohibit

deducting

from

the

cost

of

an

item

of

p

roperty,

plant and

equipment

a

ny

proceeds

from

selling items

produced

while

bringing

that

asset

to

the

location

and

conditio

n

necessary

for

it

to

be

capable

of

operating

in

the

manner

intended

by management. Instead,

an entity

recognizes the

proce

eds f

rom selling

such

items, and

the cost

of pr

oducing those

items, in

pro

fit

o

r loss.

The amendments are effective

for annu

al reporting periods beginning o

n

o

r after

January 1, 2022, wit

h

early application permitted.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

Amendments to Korean IFRS 1037 Pro

visions

, Contingent Liabilities and

Contingent Assets

The

amendments

specify that

the

‘cost of

fulfilling’

a

contract

comprises

the ‘costs

that relat

e directly

to

the contract’. Co

sts

that relate directly t

o a c

ontract consist

of both the inc

remen

tal costs of fulfilling th

at contract and an allocation of othe

r costs

that relate directly to fulfillin

g the contract. The amen

dments

are effect

ive for annual

periods beginni

ng on or a

fter January

1,

2022, with early application

permitted.

Amendments t

o Korean IFRS 100

1 Presentation of Fi

nancial Statements

The amendments clarify th

at the classification of liabilities a

s current or n

on-current is based

on rights that

are in existen

ce at

the end of

the reporting period, specify that classification is

unaffected

by expectations

about

whether

an entity

will

exerci

se

its right to defer settlement o

f a liability

, and elucidate tha

t settlement refers to the transfer to the counterparty of cash

, equity

i

n

s

t

r

u

m

e

n

t

s

,

o

t

h

e

r

a

s

e

t

s

o

r

s

e

r

v

i

c

e

s

.

T

h

e

a

m

e

n

d

m

e

n

t

s

a

r

e

a

p

l

i

ed

retrospectively

for

annual

p

eriods

beginni

ng

on

or

after

January 1, 2023,

with early application permitted.

Amendments t

o Korean IFRS 100

1 Presentation of Fi

nancial Statements

The

amendments

define

the

term

‘material

accounting

policy

info

r

mation’,

and

d

evelop

guidan

ce

and

examp

les

in

IFRS

Practice

Statement

2

to

explain

a

nd

demonstrate

the

application

of

‘materiality’.

The

amendments

are

effective

for

annual

periods be

ginning on or after

January 1, 2023, wi

th earlier app

lication permitted and are app

lied prospectively.

Amendments to Ko

rean IFRS 1008 Accounting Po

lic

ies, Changes in Accounting Estimates and Erro

rs

The

amendments

define

accounting

estima

tes,

and

clarify

that

it

is

different

from

changes

in

acco

unting

poli

cies.

The

amendments

are

effectiv

e

for

annu

al

periods

b

eginning

on

or

aft

er

January

1,

2023,

to

chang

es

in

accoun

ting

policies

and

changes in accounting estimates t

hat occur on or after the begi

nning of the same period, with earlier applicatio

n permitted.

Amendments to Ko

rean IFRS 1012, Income Taxes

The amendments

intro

duce a

further exception

to the i

n

itial rec

ognition

exemp

tion. Under

the amendments, an

en

tity

do

es

no

t

apply the initial recogn

ition exem

ption fo

r transactions that g

ive rise to e

qual taxable and deduct

ible temporary diffe

rences.

The

amendments

are

effective

for

annual

reporting

periods

begin

ning

on

o

r

after

January

1

,

2023,

with

earlier

application

permitted.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.3 Consoli

dation

The Company prepares

the consolidated financial statements in

a

ccordance with

Korean IFRS

1110

Consoli

dated Financial

Statements

.

(A)

Sub

sidiaries

Subsidiaries

are

all

entities

(includ

ing

the

special

purp

ose

entities)

over

which

the

Company

has

control.

The

Company

controls

the c

orresponding

investee

when

it

is

exposed,

or

has

rights,

to

variable

returns

from

its

involvement

wi

th

the

inves

tee

and

has

th

e

ability

to

affect

tho

se

returns

thro

ugh

its

power

o

ver

the inv

estee.

Consolidation

of

a

subsidiary

begins

from

the

date the Company obtai

ns control of a subs

idiary and ceases whe

n the Co

mpany loses control

of the subsidiary.

The

Company

applies

the ac

quisition

method t

o accou

nt for

busin

ess

combinations. T

h

e

consider

ation transferred

is

measured

at the fair values of the

assets transferred, and identifiable

assets acquired and liab

ilities and conting

ent liabilities assu

med in

a

business

combination

are

initially

measured

at

th

eir

fair

val

ues

at

the

acquisition

d

ate.

The

Comp

any

recognizes

any

non-

controlling

interest

in

the

acquiree

o

n

an

acquisition-by-acqu

isition

basis

in

the

event

of

liquidation

at

the

non-contro

lling

interest’s

proportion

ate

share

of

the

recognized

amounts

of

acq

uiree’s

identifiable

net

assets.

Acquisition-related

co

sts

are

expensed as i

ncurred.

The

excess of

consideration

transferred,

of any

non-contro

lling

interest

in the

acquired

entity,

and acquisition

-date fair

val

ue

of

any

interest

in

th

e

acquired

entity

over

the

fair

value of

the

net

identifiable assets

acquired is

recorded

a

s

goodwill.

If those

amounts

are less

than th

e fair v

alue of

the

net identifiable

assets o

f the

business

acquired,

the differenc

e is

recognized directly in

the pro

fit or loss as a bargain p

urchase

.

Balances

of

receivables

and

payables,

income

and expe

nses and

u

nrealized

gains or

losses

on transactions

between the

entities

within

the

Company

are

eliminated.

Accounting

policies

o

f

subsi

diaries

are

changed

where

necessary

to

ensure

consistency

with the p

olicies adopted by t

he Company.

(B)

Changes in ownership interests i

n

subsidiaries without change

o

f control

Transactions with

non-contro

lling in

terests that

do not

result

i

n lo

ss

of

co

ntr

ol

ar

e ac

co

un

ted

fo

r a

s e

qui

ty

tr

ans

ac

tio

ns

– t

hat

is, as

trans

actions with

the owners in

th

eir capacity

as owners

. T

h

e

difference between the

fair

value

of any considerati

o

n

pa

id

and

the relevant

share acquired

of

the

carrying

value

of net

as

sets

of

the subsidiary

is

recorded

in

equity.

Gains or

losses

o

n

disposals of non-con

trolling inte

rests are also recorded in eq

u

ity.

(C)

Disposal of subsidiaries

If the Company loses control o

f a

subsidiary, any investment co

ntinuously retained in the subsidiary is re-measured at its fai

r

value

at

the

d

ate

when

control

is

lo

st

and

any

resulting

differ

ences

are r

ecognized

in

profit

or

loss.

Such fair

value

becomes

the

in

itial

carrying amount

for

t

he subsequent

measurement of

t

he

retained

interest

accounted

for

as

an

associate,

joint

ventu

re,

or

financial ass

et. In

addition,

any a

mounts pr

eviously rec

ogni

zed in

o

ther

co

mprehensive income

in respect of

such entity are

accounted

as

if

the

Company

had

di

rectly

disposed

of

the

relate

d

assets

or

liabilities.

As

a

result,

the

previously

recogn

ized

other com

p

rehensi

v

e inc

o

me are reclassi

fied into profit or l

oss

or equ

ity.

(D

)

No

n-controll

ing interests

Each comp

onent of

profit or

loss and ot

her comprehe

nsive income

is attributed to owners of the parent and to

non-con

trolling

interests. T

otal comprehe

nsive income is

attributed

to owners

o

f the parent

and to n

on-controlling interests

even if this

resu

lts

in a negative balance of non-co

ntrolling interests.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(E)

Associates

Associates are all entities over w

hich the Company has sign

ific

ant influence but does

not have

control, generally investees of

which

from

20%

to

50

%

voting

shar

es

are

owned

by

the

Company.

I

nvestments

in

associates

a

re

accounted

for

using

the

equity

method of

accounting, after

initially being

recognized a

t

cost. Unrealized g

ains on transactions

between the Company

and its associates are eliminated

to the exten

t of the Company’

s interest in the associates. If

the

Company’s share of losses

of

an

associate

equals

or

exceeds

its

interest

in

the

associate

(i

ncluding

long-t

erm

interests

that,

in

substance,

form

part

of

t

he

Company’s

net

investment

in

the

associate),

the

Company

discont

inues

recognizing

its

sh

are

o

f

further

losses.

After

the

Company’s

interest is redu

ced to

zero, additio

nal losses

are pr

o

vided for, an

d a

liability is

recognized, only

to the

extent t

hat

the Compa

ny has incurred lega

l or constructive obl

igations or m

ade paym

ents on behalf of the as

sociate. If there is objective

evidence

of impairment

for

the

investment in

the

associate,

the Company

recognizes

the

difference between

the

recoverable

amount

of

the

associate

and

its

carrying

amount

as

an

impairmen

t

loss.

If

an

associate

u

ses

accounting

policies

o

ther

than

those

of

the

Company

for

like

transactions

and

events

in

simila

r

circumstances,

adjustments

shall

be

made,

if

necessary,

to

make the

associate’s accounting

policies

conform to those of

th

e Company when the associate’s financial statements are used

by the entity in applying

the equity method.

(F)

Joint arrangements

A joint arra

ngement of which t

wo or more partie

s have joint con

trol is classified as

either a joint operatio

n or a joint ventu

re.

A

jo

int

operator

has

rights

to

the

assets,

and

oblig

ations

for

the

liabilities,

relating

to

the

joint

operation

and

recognizes

t

h

e

assets, liabilities, revenues and

expenses relating to its inte

rest

in a joint

operation.

A joint ve

nturer has ri

ghts to t

he n

et assets

relating to t

he joint venture and acc

ounts for that inve

stment using the eq

uity method.

2.4 Foreign Currency Translation

(A)

Fun

ctional and presentation cu

rrency

Items included in the consolidated financial statements of each

o

f the Compan

y’s entities are measured

using the currency

of

the

primary

economic

environment

in

wh

ich

each

en

tity

operates

(the

“functional

currency”).

The

consolidated

financial

statements are

presented in Korean won

, which is the paren

t com

pany’s functi

onal and pr

esentation currency.

(B)

Transactions and bala

nces

Foreign

currency

transactions

are

translated

into t

he functi

ona

l currency using

the exchange

rates prevailing at

th

e

dates of

the

transactions

or

valuation

where

items

are

r

e-measured.

Foreign

exchan

ge

gains

and

losses

resulting

from

the

settlement

of

such

transactions

and

from

the t

ranslation at

year-end

excha

nge

r

ates

of monetary

assets and

liabilities denominated

in

foreig

n

currencies are reco

gnized in profit or loss. Exc

hange differenc

es arising on non-monetary financial

assets and liab

ilities suc

h

as

equity

instr

uments

at

fair

value

through

profit

or

loss

and

equity

instruments

at

fair

value

through

oth

er

comprehensive

income are rec

ognized in profit or l

oss and other com

prehensive

income, respectively, as part o

f the fair value

gain or loss.

(C)

Tran

slation into t

he presentation currenc

y

Th

e

results

and

financial

position

of

all

the

fo

reign

entities

that

have

a

fun

ctional

currency

different

from

the

presentation

curren

cy of th

e Compan

y are translated into the presentation cu

rrency as

f

ollows:



Assets and liabilities for

each c

onsolidated statement of finan

cial

position presen

ted are translated

at the closing

rate at

the end of the

reporting date.



Income and

expenses

for

each

cons

olidated statemen

t

of pro

fit

o

r loss

are

translated

at

aver

age

exchange rates,

unless

this average is not a

reasona

ble

approximati

on

of the cumulativ

e

effect of

the rates

prevaili

ng on

the

transaction

dates,

in which case income and expenses

are tra

nslated at the as-of r

ate on the dates of the t

r

ansactions.



All resulti

ng exchange differe

nces are recognized in other

comp

rehensive income.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.5 Cash and

Cash Equivalents

Cash and

cash equivalents i

nclude cash on

hand, deposits

held a

t call with bank

s, and other shor

t-term inv

estment assets with

high liquidity

that

are readily

convertible to

a known

amount o

f

cash

and

are

subject

to a

n insi

gnificant

risk

of c

h

ange

in

va

lue.

2.6 Financial

Assets

(A)

Classification

From

January

1

,

2018

,

the

initial

application

date

for

Korean

IFRS

1109

Financial Instruments,

t

h

e

C

o

m

p

a

n

y

c

l

a

s

i

f

i

e

s

i

t

s

financial assets in the followi

ng measurement categories:

-

Financia

l ass

ets me

asured

at fa

ir

value

(changes

in

fair

value

recogn

ized

in either

other comprehensive i

n

come,

or profit

or l

oss)

-

Financial assets measur

ed at amortized

cost.

The

classification

depe

nds

on

the

Company’s business

model f

or

managin

g

the

financial

assets

and

the contractual

terms of

the cash flows.

For

financial

assets

measured

at

fair

value,

gains

and

losses

w

ill

either

be

record

ed

in

profit

or

loss

or

o

ther

comprehensive

income.

For

investmen

ts

in

debt

instruments,

this

will

d

epend

o

n

the

business

model

in

which

the

investment

is

held.

The

Company recla

ssifies debt investments

only when its busin

ess model for managin

g those assets changes.

For

investments

in

equity

instruments

that

are

not

held

for

tra

ding,

classification

will

depend

on

whether

the

Company

has

made an

irrevocable election

at the

time of

initial recognition

to account for

the equity

investme

n

t at fair value

through oth

er

comprehensi

v

e

income. Chan

ges in fair

value of

the invest

ments

in e

quity instruments that

are not elected

to be

accounted for

as other comprehensive income

are

recognized in profi

t or loss.

(B)

Measurement

At

initial

recognition,

the

Company measures

a

financial

asset

at

its

fair

value.

In

the

case

of

financial

asset

not

measured

at

fair

value

through

profit

or

loss,

transaction

costs

that

are

d

irectly

attributable

to

th

e

acquisition

o

f

the

finan

cial

asset

or

the

issuance of

the financial liabilities are added

to its fair

v

al

ue

. Transaction costs

of financial

assets carried

at fair value

thro

ugh

profit or l

oss are expensed in profi

t or loss.

Hybrid (co

mbined) contracts

with embedded de

rivatives are consi

dered in their e

ntirety when determini

ng whether their cas

h

flows solely consist of the paym

ents of principal and interest.

a) Debt instruments

Subsequent

measurement of

debt instruments

depends on t

he Compa

ny’s

business model

for managing t

he asset and t

he cash

flow

characteri

stics

of

the

ass

et.

The

Company

classi

fies

its

d

ebt

instruments

into

one

of

the

following

three

measurement

categories:

①

Financial assets measur

ed

at amor

tized cos

t

Assets that are

held

for

collec

tion of c

ontractual cash fl

ows w

here those

cash flows

represent sol

ely the p

ayments of pri

ncipa

l

and

interest

are

measured

at amortized

cost

.

A

g

ain

or

loss

on

a

debt investment

that is

subs

equently measured

at

amortized

cost

and i

s not

part of

a

hedging

relationship

is

recognized

in

profit

or loss

when the

asset

is

derecognized

or i

mpaired.

Int

erest

income from these financial asse

ts is included in ‘financial in

come’ using the effectiv

e interest rate method.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

②

Financial assets measu

red at fair

value through other comprehen

sive i

ncome

Assets

that are

held

for collec

tion

of

contractual cash

flows

a

nd

for

selling

th

e

financial

assets,

where

the

assets’

cash

flo

ws

represent

solely

the

payments

of

principal

and

interest,

are

me

a

s

u

r

e

d

a

t

f

a

i

r

v

a

l

u

e

t

h

r

o

u

g

h

o

t

h

e

r

c

o

m

p

r

e

h

e

n

s

i

v

e

i

n

c

o

m

e

.

Movements

in the carrying amo

unt are taken through othe

r

compre

hensive

income, except

for the

recognition

of impairment

loss

(reversal

of

impairment

loss),

interest

income

and

foreign

exch

ange

gain

s

and

los

ses

wh

ich

ar

e

reco

gnized

in

prof

it

or

loss.

When

the

financial

assets

are

derecognized,

the

cumulativ

e

gain or

loss previously

recognized

in

other

comprehensive

income

is

reclassified f

rom equ

ity

to

profit

or l

oss.

Interest

income

from th

ese financial

assets is

included

in

‘financial i

n

come’

using

the

effective

interest

rate

method.

Foreign

exchange

gain

s

and

losses

are presented

in

‘financial

income’

or

‘financial

expenses’ an

d impairment losses are

presented in ‘other

non-ope

rating e

xpenses’.

③

Financial assets meas

ured at fair value thr

ough profit or loss

Assets that do no

t meet the criteria

for amortized cost or fair

v

alue through other comprehensive income are measured at fair

value through profit or loss. A gain or

loss on a debt investme

nt

that is

subsequ

ently measured

at

fair value

through

profit o

r

loss

and

is

not

part

of

a

hedging

relationshi

p

is

recognize

d

in

profit

or

loss

and

presented

in

the

c

onsolidated

statement

of

profit or

loss within ‘othe

r non-operatin

g income’ or ‘ot

her no

n-operating expenses

’ in the

year in which it arises.

b) Equit

y instruments

The

Company subsequ

ently measures

all eq

uity investmen

ts at

fai

r value. Where

the Company’s management

has elected to

present

fair

valu

e

gains

and

losses

on

equ

ity

investments

in

ot

her

comprehensive

income,

there

is

no

subsequent

reclassification

of

fair

value

ga

ins

and

losses to

profit

o

r

lo

ss

following

the

derecognit

ion

of

the

investment.

When

the

fina

ncial

asset

is

derecognized, the

cumulative gain

or

loss

on

valuation

of

financial

assets

at

fair

value

through

o

ther

comprehensive

income

recognized

in

eq

uity

is

reclassif

ied

to

r

etained

earning

s.

Dividend

income

from

such

investments

continue

to

be

recognized in

profit or loss a

s ‘other non-op

erating income’ wh

e

n the right to receive the payments is est

ablished.

Changes in the fair value of

fin

ancial assets a

t fair value thr

ough p

rofit or

loss are

recognized in

‘other non

-operating i

ncome’

or ‘other

non-operating expens

es’ in the consolidated

statement

s of profit or loss as applicable.

(C)

Impairment

The

Company

assesses

on

a

forward-looking

basis

the

expected

cr

edit

losses

associated

with

its

debt

instruments

carried

at

amortized

cost

and

fair

value

through

other

comprehe

nsive i

ncom

e.

The

impairment

methodology

applie

d

depends

on

whether

there ha

s been a sig

nificant increase i

n credit ris

k. For trade

receivables, the Company applies

the

simplified

approach, whic

h

requires expected lifetime losses to

be recognized from initial

recognition of the receivables.

(D)

Recogn

ition and derecognition

Regular way purchases and sales o

f fi

nancial assets are recogni

zed or derecognized o

n a trade date basis. Financial assets are

derecognized

when

t

he

rights

to

receive

cash

flows

from

the

fin

ancial

assets

have

expired

or

have

been

transferred

and

the

Company

has

transferred

substantially

all

the

risks

and

rewards

of

ownership.

If

a

transfer

does

not

result

in

derecognition

because the

Company has retained substantially all the

risks an

d rewards of ownership of the transferre

d asset,

the Company

continues

to

reco

gnize

the

transf

erred

asset

in

its

entirety

an

d

recogn

izes

a

f

inancial

liability

for

the

consideration

receiv

ed.

The Company classifies the finan

cial liab

ility as ‘borrowings’ in the conso

lidated statement of financial position.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(E)

Offsetting of financial instruments

Financial assets

and liabilities are o

ffset and the net amoun

t

is reported

in the statements of

financial position

when there

is

a

legally enf

orceable right to of

fset the recognized amo

unts and

there is an intention to settle

on a net basis or realize the a

ssets

and

settle

the

liability

simu

ltaneously.

The

legally

enfo

rceabl

e

right

must

not

b

e

contingent

on

future

events

and

must

be

enforceable

in

the

normal

course

of

business, even

in

the

event

of

default, insolvency

or bankruptcy

of

the

Company or

the

counterparty.

2.7 Trade Rec

eivables

Trade

receivables

are

amounts

due

from

customers

for

inventorie

s

sold

or

services

performed

in

the

ordinary

course

of

business

.

If collection

is expected within

one year

or less,

they are cla

ssified

as c

urrent assets. If

c

ollection is expected

beyond one

y

ea

r,

they

are

presented

as

non-current

assets.

Trade

receivables

are

recog

nized

initially

at

transaction

price

and

subsequently

measured

at

amortized

cost

using

the

effective

interest

method,

less

loss

allowance,

unless

the

trade

receivables

bear

signifi

cant

financial

component.

2.8 Invent

ories

Inventories are stated

at

the lower of

cost and

net realizable

value.

Cost is determined using

the

average cost method,

except

for

materials

in

transit.

The

cost

of

finished

goods

and

work

i

n

progress

comprises

raw

materials,

di

rect

labor,

oth

er

direct

costs

and

ion

overheads

(based

on

normal

operati

ng

capacity).

It

excludes

costs

of

idle

plant

and

abnormal

waste.

Net

realizable

value

is

the

estimated

selling

price

in

t

he

ordinary

course

of

bu

siness,

less

applicable

variable

sellin

g

expenses.

The Compan

y regularly estimat

es the changes in

future customer de

mand in the pro

ducts that may cause

a significant c

hange

in

the

valuation

allowance a

nd recognizes

the

valuation allowan

ce

if

there

is

any case

such

as

excess,

obsolescence

and

declin

e

in market value. Loss on

valuati

on of inventories is rec

orded a

s cost of sales.

2.9 Property

, Plant and Equipment

Property, plant

and equipment ar

e

stated at cost less accumulat

ed depreciation and

acc

umulated impairment losses. Historical

cost

includes

expenditures

that

are

directly

attributable

to

th

e

acquisition.

Subsequent

costs

are i

ncluded

in the

asset’s

car

rying

amount

or

recognized

as

a

separa

te

asset,

as

appropriate,

only

when

it

is

probable

that

future

economic

benefits

associated

with

the cost

will

flow to

the

Company

and th

e cost

can b

e meas

ured r

eliably. The

carrying amount

of the r

eplaced parts

are

derecognized a

nd the repairs and maintena

nce expenses are recog

ni

zed in profit or loss

in the period the

y are incurred.

Depreciation

on

tangible

assets

i

s calcu

lated

using

the

straigh

t-line

method

to

allocate

the

di

fference between

their

cost

and

their

residual

values

over

their

estimated

useful

lives.

Land

i

s

n

ot

depreciated.

Costs

that

are

d

irectly

attribu

table

to

the

acquisition,

construction

or

production

of

a qu

alifying

asset,

including

capitalized

interest co

sts, form

part of

the cost

of

tha

t

asset and are amortized over

t

he estimated useful lives.

The Company’s policy is that p

rop

erty, plant and equipment shou

ld be depreciated over the followi

ng estimated

useful lives:

Estimated useful lives

Buildings and structures

15, 30 years

Machinery and equipment

5 years

Other

5 years

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

The

depreciation

method,

residual

values

and

useful

lives

of

pr

operty,

plant

and

equipment

are

reviewed,

and

adjusted

if

appropriate,

at

the

end

of

each

rep

orting

period.

An

asset’s

ca

rrying

amount

is

written

down

immediately

to

its

r

ecoverable

amount

if

the

asset’s

carrying

a

mount

is

greater

than

its

estim

ated

recoverable

amount.

Gains

and

losses

on

disposals

are

determined

by

comparing

the

pro

ceeds

with

the

carrying

amount

a

nd

are

recognized

within

th

e

consolid

ated

s

tatement

of

profit or

loss as ‘other

non-operating i

ncome’ or ‘other n

on-op

erating expenses’

.

2.10 Borr

owing Costs

General

and

specific

borrowing

costs

that are

directly

attribut

able to

the acquisition,

constructio

n

or production

of a

qualif

ying

asset

are

cap

italized

during the

period of

time that

is

require

d

to

complete

and p

repare

the

asset fo

r it

s i

ntended

use.

Inves

tment

income earne

d on the

temporary

investment of speci

fic borrowing

s

pending

their expe

nditure on

qualifying

assets is

deducted

from

the

borrowing

costs

elig

ible

for

capitalization.

Other

bor

rowing

costs

are

expensed

in

the

period

in

which

they

are

incurred.

2.11 Intangi

ble Assets

Goodwill

represents

the

excess

of

the

cost

of

acquisition

over

the

fair

value

of

the

Company’s

share

of

the

net

i

dentifiable

assets

of

the

acqui

red

subsi

diaries,

associates,

joint

ventures

and

businesses

at

the

date

of

acquisition.

Goodwill

on

an

acquisition

of

subsid

iaries’ bu

sinesses

is

included

in

tangib

le

assets

and

good

will

on

an

acquisition

of

associates

and

join

t

ventures’ sha

res is included in the investme

nts in associates a

nd j

oint ventures.

Intangible

assets,

except

for

goodwill,

are

initially

recognize

d

at

their

historical

cost

and

carried

at

cost

less

accumulated

amortization and accumulated impairment losses.

Internally

generated

development

costs

are

the

ag

gregate costs

recognized

after

meeting

t

he asset

recognition

crit

eria,

including

technical

feasibility,

and

determined

to

have

future

economic

benefits.

Membership

rights

and

certain

trademarks

are

regarded

as

intangible

assets

with

an

indefinite

useful

lif

e

and

not

amortized because

ther

e

is

no

foreseeable

limit

to

th

e

period ov

er which

the assets

are expected

to

be utilized

. Howev

er, the

Compa

ny

records impairment based on its

reasonable

estimation

of

the

benefits

associa

ted with

the membership right

s

and

assessment of

impairment

indicators,

such as

a

decline

in

the

mark

et

value.

Intan

gible

assets

with

definite

useful

liv

es

such

as

trademarks, licenses,

and

other

intangi

ble

asset

s,

a

re

amortized using the straight-line

method over their esti

mated u

seful lives.

The Company

’s policy is that int

angible assets should

be amorti

zed over the following estimated useful lives:

Estimated useful lives

Development costs

2 years

Trademarks, licenses and other

intangible

assets

3 - 25 years

2.12 Impairm

ent of Non-Financial

Assets

Goodwill

or

intangible

assets

with

indefinite

useful

lives

are

not

subject

to

amortizat

ion

and

are

tested

annually

for

impairm

ent.

Assets

that are

subject

to amortization

are

reviewed for

impair

ment

whenev

er events

or

changes

in

circumstances

indicate

that

the carrying amount may not

be recoverable. An impairment loss

is

recognized for

the amount

by which

the asset’s

carrying

amount

excee

ds

its

recoverable

am

ount.

The

recoverable

amount

i

s

the

higher

of

an

asset’s

fair

value

less

costs

to

sell

and

value

in

use.

For

the

pu

rposes

o

f

assessing

impairment,

assets

are

grouped

at

the

lowest level

for

which

there

are

separately

identifiable

cash

flows

(cash-ge

ne

rating

units).

Non-f

inancial

assets

other

th

an

goodwill

that

suffered

an

impairment

are

reviewed for

possible reversal of the im

pairment at the end of

each reporting period.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.13 Assets

Held-for-Sale (Dis

posal Group)

Non-current

assets

(or

disposal

g

roups)

are

classified

as

asset

s

held-f

or-sale

when

their

carrying

amount

is

to

be

recovered

principally

through a sale t

r

ans

action and t

he sale is consider

ed highly prob

able. The assets are measured at th

e lower of the

ir

carrying amount

and

the fair

value

less costs

to

sell.

Gain or

loss on

disposal

is determined

by

comparing

the

proceeds

with

the carryi

ng amount

of relevant

assets, and

is recognized

in th

e stateme

nts of profit or

loss as

‘ot

her non-operat

ing income

’

or

‘other non

-operating expense

s’.

2.14 Financial Liabilities

(A)

Classification and measurement

The Company shall classify all

financial liabilit

ies as financi

al liabilities measured su

bsequen

tly at amortized cost, excep

t

for

the following:

-

Financial

liabilities

at

f

air

value

through

profit

o

r

loss.

Such

liabilities,

including

derivatives

that

are

liabilities,

shal

l

be

subsequently measured

at fair v

alue.

-

Financial

liabilities that

arise

w

hen

a

transfer

of

a

financial

asset

does

not

qualify

for

derecognition

or

when

the

conti

nuin

g

involvement

approach

applies.

Su

ch

financial

liabilities

are

me

asured

based

on

the

methodology

described

in

Note

2.6

Financial Assets.

-

Financial

gu

arantee

contracts.

After

the

initial

recognition,

a

n

issuer of

su

ch

a contract

shall

subsequentl

y

measure it

at

the higher

of:

(a)

The amount of the loss allowance

determined based on the expect

ed credit losses.

(b)

The amount

initially

r

ecognized

l

ess the

cumulative amount

of i

ncome

recognized

in acc

ordance with

the

principles

of Korean

IFRS 1115

Revenue from Contracts with Customers,

when appropriate

.

-

Commitments to provide loan at

belo

w-market interest rate.

An i

ssuer of

such a commitment sh

all

subsequently me

asure

it at the hi

gher of:

(a)

The amount of the loss allowance

determined based on the expect

ed credit losses.

(b)

The amount

initially

r

ecognized

l

ess the

cumulative amount

of i

ncome

recognized

in acc

ordance with

the

principles

of Korean

IFRS 1115

Revenue from Contracts with Customers

,

when appropriate

.

-

Contingent

consideration

recognized

by

an

acquirer

in

a

busines

s

combination

to

which

Korean

IFRS

1103

Business

Combinations

applies. Such continge

nt

considerat

ion

shall subsequent

ly b

e m

easured at fair value

with change

s

recognized in

profit or loss.

(B)

Derecogn

ition

Financial

liabilities are

removed from

the

consolidated stateme

nts

of

financial po

sition when

it

is ex

tinguished;

for exa

mple,

when the obligation specified

in the contract is

discharged or

can

celled

or

expired

or

when

the

terms

of

an

existing financial

liability

a

re

substantially

modified.

The

difference

between

th

e

carry

ing

amount

of

a

fin

ancial

liability

extinguished

or

transferred

to

another

party

and

the

consideration

paid

(incl

ud

ing

an

y

non-cash

assets

transferred

or

liabilities

assumed)

is

recognized in

profit or loss.

2.15 Trade Pa

yables

Trade payables are amounts due

to suppliers for inventories pur

chased or

services received

in the

ordinary course

of business.

If pa

yment is

expected

to be

made wi

thin 12

months,

they are

cl

assified as

curren

t liabilities.

If not, they are

presented as

non-

current

liabilities.

Non-current

t

rade

payables

are

recognized

initially

at

fair

value

and

subsequently

measured

at

amortized

cost using the effective interest method.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.16 Borr

owings

Borrowings

are

recognized

initia

lly

at

fair

value,

net

of

tran

s

action

co

sts,

and

are

subsequently

measured

at

amortized

cost.

Any

difference

between

cost

and

th

e

redemption

value

is

recogni

zed

in

th

e

consolidated

statement

of

profit

or

loss

over

the

period

of

the

borrowin

gs

using

the

effect

ive

interest

method.

I

f

the

Company has

an

indefinite

right

to

defer

payment

for

a

period

longer

than

12

months

af

ter

the

end

of

the

reporting

dat

e,

such

liabilities

are

recorded

as

non-current

liabilities,

otherwise, they are record

ed as current liabilities.

2.17 Provisions and Co

ntingent Liabilities

A

provision

is

recognized

when

the

Company

has

a

present

legal

or

constructive

obligation

as

a

r

esult

of

a

past

event,

it

is

probable

that

an

outflow

of

resources

embodying

economic

benefi

ts

will

be

required

to

settle

the

obligation,

and

a

reliable

estimate can be made of the amo

unt of the obligation. Provision

s are not recognized for

future operatin

g losses.

Provisions

are

measured

at

presen

t

value

of

the

expenditures

ex

pected

to

be

required

to

settle

th

e

obligation

using

a

pre-tax

rate

that

reflects

the

current

market

assessments

of

the

time

v

alue

of

money

and

the

risks

specific

to

the

obligation.

The

inc

rease

in the provisi

on due to the passage

of time is recognized as

in

terest expense.

The C

o

mpany

d

iscloses

a contingent liability

if there

is a

poss

ible obligation

from past

even

ts

in which

the existence

may onl

y

be

identified

thro

ugh

the

occurrence

of

uncert

ain

future

events

;

or

there

is

a

present

ob

ligations

that

the

possib

ility

on

the

outflow

of

economic

resources

is

uncertain;

or

the

amount

o

f

ec

onomic

resources

required

to

s

ettle

the

present

obligation

cannot be reasonably estimated.

2.18 Employe

e Benefits

The Company

has a variety of retireme

nt pension plans includi

ng a defined bene

fit plan and a defi

ned contribution pla

ns.

A

defined

contribution

plan

is

a

pension

plan

under

which

the

C

ompan

y

pays

fixed

contributions

into

a

separate

fund.

The

Company has

no legal or con

struc

tiv

e obligation to pay

further

contrib

utions if the f

und does not h

old sufficient asset

s to pa

y

all

employees

the

b

enefits

relati

ng

to

employee

service

receive

d

in

the

current and

prior

periods.

For

a defined

contribution

plans,

the

Compa

ny

pa

ys

c

ontributions

to

annuity

pla

ns

that

are

man

aged

either

publicly

or

privately

on

a

mandatory,

contractual

or

voluntary

basis.

The

Company

has no

further

futu

re

payment

obligations

once

the contri

butions

h

ave

been

paid.

The contrib

utions are recogni

zed as employee benefit

expense w

hen they are due. Prepai

d contributions

are recognized as an

asset to the extent that a cash

refund or a reduction in the

f

u

ture payments is available.

A

defined benefit plan

is

a

pension

plan that

is

not

a

defined

contribution plan.

Typically,

a defined

benefit

plan establishe

s

an

amount of

pension

benefit

th

at

an

employee

will receive

upon

retirement, usually

dependent on one

or

more

factors such

as age,

years of serv

ice and co

mpensation. The

liability

(asset

) recognized

in the

consolidated

statement of

financial positio

n

with

respect

to the

defined

benefit

pension

plan

is

the present

value

o

f

the

defined

benefit

obligation

at

the end

of

the

repo

r

ting

period less

the fair

value of

plan

assets. The defined

benefit

oblig

ation

is calculated

annually

by

indep

endent actuaries

usin

g

the

projected

unit

credit

method.

The

present

value

of

the

defi

ned

be

nefit

obligation

is

determined

by

disco

unting

the

estimat

ed

future cash

outflows using the

interest rates of

high-qu

ality c

orporate

b

onds that are

denominat

ed i

n the currenc

y in which

th

e

benefits will be paid and that h

ave the terms to

maturity approximating to the terms of th

e related pension obligation.

Actuarial

gains

and

losses

resulting

from

the

changes

in

actuarial

assumptions,

and

the

differences

between

the

assumptions

and what

has

actually

occurred, are

recog

nized in

other comprehensive

income in

the period

in which

they

were

incurred.

When

plan

amendments,

curtailments

and

sett

l

e

ments

occur,

past

service

costs

or

gain

or

loss

from

settlements are immediately recognized in profit or loss.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.19 Financi

al Guarantee Contract

Financial

guarantee

contracts

ar

e

contra

cts

that

require

the

is

suer

to

mak

e

specified

payments

to

reimburse

the

holder

for

a

loss it incurs because a speci

fied debtor fails to make payment

s when du

e.

The

liability

is

initially

measured

at

fair

value

and

then subs

eque

ntly

measured

at

the

higher

of

the

following,

and

is

recogn

ized

in the consolidated

statements

of financial position within ‘ot

he

r financial liabilities’:

-

the amount determined in accordance with the expected credit lo

ss model under Korean IFRS 1109

Financial Instrumen

ts

and

-

the amount

initially recognized

less the

cumulative amoun

t of i

ncome recognized in

accorda

nce with Korean IFRS 1115

Revenue from Contracts with Customers

, where appropriat

e

.

2.20 Current an

d Deferred Tax

The

tax

expense

for

the

year

comprises

cur

rent

and

deferred

tax

.

Curren

t

and deferred

tax is

recognized

in profit

or loss,

exc

ept

to

the

exten

t

that

it

relates

to

the

items

recognized

in

other

comprehensive

in

come

or

directly

in

equity.

The

tax

expense

is

calculated on the basis o

f the tax laws enacted or sub

stantivel

y enacted at the e

n

d of t

he reporting period.

Deferred

tax

is

recognized

for

temporary

differen

ces arising

be

tween

the

tax

bases

of

assets and

liabilitie

s an

d their

carryin

g

amounts

as

expected

tax

consequences

at

the

recovery

or

settlement

of

the

carrying

amounts

of

tho

se

assets

and

liabilities.

However, deferred tax assets an

d liabilitie

s are not recognized

if they arise fro

m initial reco

gnition of an asset o

r liabilit

y in a

transaction

other

th

an

a

business

combination

that,

at

the

time

of

the

t

r

ansaction,

affects

neither

the

accounting

nor

taxable

profit.

Defer

red

tax

assets

are

r

ecogni

zed

only

to

the

exte

nt

t

hat

it

is

prob

able

that

a

futur

e

taxable

profit

will

be

availab

le

against which

the temporary differences can be utilized.

A

d

eferred

tax liability

is recognized

for taxable

tempor

ary

differences associated

with investm

ents

in subsidiaries,

associat

es,

and

interests

in

joint

v

entures,

e

xcept

to

the

extent

that

th

e

Company

is

able

to

control

the

timing

of

the

reversal

of

the

temporary difference

and it

is probable that the

temporary diff

erence will

not r

everse in

the foreseeable

future. In

addition,

a

deferred

tax

asset

is

recognized

for

deducti

ble

temporary

diffe

rences

arising

from

such

investments

to

the

extent

that

it

is

probable the tempo

rary difference will reverse in

the foreseeab

le future and

taxable profit will be

available against which

th

e

temporary difference can be u

tilized.

Deferred tax assets and liabilitie

s are

offset when there is

a

legally enf

orceable right

to offset

the current

tax assets

agai

nst the

current tax

liabilities and when

the deferred i

n

come

tax

assets and liabilities relate

to income

taxes levied by

the same taxa

tio

n

authority on either the same ta

xab

le entity or different tax

abl

e entities with an in

tention to s

ettle the balances on

a net ba

sis.

2.21 Derivati

ve Instruments

The

Company

initially

recognizes

rights

and o

bligations

from

de

rivative co

ntracts as

assets

and

liabilities

at

fair value.

Gai

n

or loss arising

fr

om these

contracts are recognized in profit

o

r

loss. Qualifi

ed hedge

d amount

from cas

h flow

hedge a

nd hedge

of a net investment in a foreign

operation is deferred in equit

y.

The Company

applies cash

flow

hedge accounting

to

hedge

the pri

ce risk

associated with inventory purchase and other. The

effectiv

e

portion

of

changes

in

f

air valu

e

of

derivatives

that

are

designated

and

qualify

as

cash

flow

hedges

is

recognized

in

other com

prehensive income, an

d

the in

effective portion is reco

gnized in financial i

ncome or expenses.

2.22 Divi

dend

Dividend is recognized as a liab

ility when approved by th

e Comp

any’s shareholders.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.23 Share C

apital

Ordinary

shares

and

preference

shares

with

no

repayme

nt

obligat

i

o

n

s

a

r

e

c

l

a

s

i

f

i

e

d

a

s

e

q

u

i

t

y

.

W

h

e

n

t

h

e

C

o

m

p

a

n

y

o

r

a

subsidiary

acquires

the

Company’s

ordinary

shares,

the a

cquisition

costs,

including

direct

transaction

costs,

are ded

ucted

fro

m

equity

until

the

redemption

or

reissuance

as

treasury

shares.

C

onsideration

received

on

the

rei

ssuance

of

treasury

shares

is

credited to e

quity attributable

to owners of th

e parent company

.

2.24 Revenue

Recognition

Revenue

mainly

comprises

the

f

air

value

of

the

consideration

re

ceived

or

receivable

for

the

sale

of

goods

in

the

ordinary

course of

the Company’s activities. Revenue

is shown net

o

f

v

al

ue-added tax, returns,

sales incentives and discounts and

after

eliminating intercompany tran

sactions.

The Company

applied Korean IFRS 11

15

Revenue from Contracts with Customers

to the

annual period beginni

ng January 1,

2018. The Company shall recogn

ize revenue in accordance with Ko

rean IFRS

1115

Revenue fr

om Contracts with

Customers

by

applying

the

following

5

steps:

①

Identify

the

contracts

with

the

customers,

②

Id

entify

the

separate

performan

ce

obligations,

③

Determine

the

transaction

price

of

the

contract,

④

Allocate

the

transaction

price

to

each

of

the

separate

performance ob

ligations, and

⑤

Recognize the revenue as each p

erformance obligation is satisfi

ed.

(A)

Identification of performan

ce obligations

The

Company

exports

various

products

and

merchandise

in

accorda

nce wi

th Incoterms

Group

C

trad

ing

conditions

(Inco

terms

CIF

and

other).

According

to

Korean

IFRS

1115

Revenue from Contracts with Customers

since

the

seller

provid

es

the

shipp

ing

service

after

the

control

of

the produ

ct

or

merchandise

ha

s

bee

n

transferred to

the

customer,

the shipping

service

(includi

ng

insurance) is recognized as a se

p

arate performance obligation.

(B)

Performance ob

ligations satisfied over time

The

Company

delivers

products

to

customers

and

installs

them

in

accordance

with

the

sys

tem

ai

r

conditioner

contracts

awarded

by

the Public

Procureme

nt

Service.

Accordi

ng

to

Korean IFRS

111

5

Revenue from Contracts with C

u

stomers

the

Company

should

recognize

revenue

over

time

if

the

Company

creates

or

en

hances

an

asset

(for

example,

work

in

progress)

that

the

customer

controls

as

the

asset

is

created

or

enhanced.

The

Comp

any

recognizes

the

revenue

from

system

air

conditioner

installation over time as the cus

tomer controls the o

utcome of

the service.

(C)

Var

iable consideration

The

Company

estimates

amount

of

variable consideration

by

using

the

‘expected

value

method’

or

the

‘most

likely

amount

method’,

depending

on

which

method

the

Company

expects

to

bette

r

predict

the

amount

of

consideration.

The

Company

recognizes rev

enue only to

the extent t

h

at i

t is highly

probabl

e that

a significant reversal

in

the amount of cumulative reven

ue

recognized will not occur, and

classifies the amount which the

Company does no

t expect to be entitled as contract liab

ilities.

The Company measures

refund liability at the

amount of consider

ation rec

eived for

which t

he Company

does not

expect

to be

entitled.

Th

e

Company

has

a

righ

t

to

recover

the produ

ct

from

t

he

customer

when the

customer

exercises his

right

of

return

and

recognizes

an

asset

and

a

corresponding adjustment

to

cost

of

sales.

The

asset

is m

easured with

reference to

the former

car

ry

ing amount of the pro

duct le

ss the costs to recover the

pr

odu

cts.

(D)

Allocatio

n of the transaction price

The

transactio

n

price

in

an

arrangement

must

be

allocated

to

ea

ch

separate

performance

oblig

ation

based

on

the

relative

standalone

selling

prices

of

the

go

ods

or

services

being

provid

ed

to

a

customer.

The

Company

determines

the

standalone

selling price

for each separate p

erformance obligation by usin

g

methods such as the ‘adju

sted

market assessment approach’.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.25 Leases

A lease is a contract, whereby the lessor c

onveys to the lessee

, the

right to control

the use of an ident

ified asset for a per

iod

of time in e

xchange for consi

deration.

At inceptio

n of a contract, the

Company assesses

whether the co

ntract is, o

r contains

, a lease. However,

the Company did

not

reassess all contracts

at initial application

of Korean IFRS 11

16

Leases

because the Company applied the practical expedient

to contracts entered into b

efore January 1, 2019.

For

a

contract

that

is,

or

contains,

a

lease,

both

lessee

and

l

essor

account

for

each

lease

comp

onent

within

the

contract

as

a

lease

separately from

the

non-l

ease components

of

the contract.

In

lessee a

ccounting, however,

the Company

does not account

for

them

separately

but

instead

applies

the

practical

expedient

to account

for

each

lease

component

and

any

associated

non-

lease components as a single lease component.

(A)

Lessee accounting

The

Company

recognizes

a

rig

ht-of-use

asset

r

epresenting

its

ri

ght

to

use

the

und

erlying

leased

a

sset

and

a

lease

liability

representing its obligatio

n to m

ake lease payments at the c

omme

ncemen

t date of the lease.

The

right-of-use

asset

is

in

itially

measured

at

cost

and

su

bseq

uently

measured

at

cost

less

accumulated

depreciation

and

accumulated

impairment

losses,

adj

usted

for

the

remeasurement

o

f

lease

liability.

The

right-of-use

asset

is

depreciated

ove

r

the shorter

of the

asset’s useful life

and the lease

term from

the

commencement date

of the leas

e

and is

classified as ‘prope

r

ty,

plant and equi

pment’ in the cons

olidated financial stat

ements.

At th

e commencement

date,

the

lease liability

is

measured at

th

e present

value of

the lease

paym

ents that

are no

t paid

at th

at

date. W

hen measuring

the present

value, the

lease payments

are

disco

unted

usin

g th

e int

eres

t rat

e imp

lici

t in t

he le

ase.

If su

ch

implicit

rate cannot

be

readily

determined, the

Company

uses th

e

Company’

s incremental

borrowing

rate. The

lease

liability

is

subsequently

increased

by

the

amount

of

interest

expenses

re

cognized

on

the

lease

liability

and

reduced

by

the

lease

payments made. Lease liabilities are remeasur

ed when the future

lease payment

s are changed due t

o the following:



Changes in a

n index or rate



Changes in amounts expected to be

payable by the lessee under t

he residual value guarantees



Changes in the

assessment of whether a purc

h

ase option o

r an op

tion to

renew is

reason

ably c

ertain

to be exercised, or



Changes

in the

assessment of

whether it

is reasonabl

y certain t

hat

an option to

terminate the lease will

not be exercised.

Lease

liabilitie

s

are

classified

as

‘current

portion

of

long-te

rm

liabilities’

and/or

‘long-term

borrowings’

in

the

consolidat

ed

financial statements.

The

Company

elected

the

practi

cal expedient

for

short-ter

m

leas

es

(lease

s

that

have

a

lease

term

of 12

months

or

less at

the

commencement

date)

and

leases

of

low-value

assets

(leases

for

w

hich

the

underlying

asset

is

valued

at

USD

5,000

or

less),

for which t

h

e lease pa

yments are recognized

as an expense on a

straight

-line basis over the lease term.

(B)

Lessor accounting

The

ac

counting

treatment

as

a

lessor

did

not

change

significant

ly

from

the

Korean

IFRS

1116

Leases

initially

applied

on

January 1, 2

019.

The Company classifies a lease a

s a

finance leas

e if it transfe

rs substantially all th

e risks an

d rewards inciden

tal to owners

hip

at the

inception

of the

lease. A

lease

other than

a finance

lease

is classified

as an

operating lease.

Lease

income from

opera

ting

leases

is

recognized

in

income

o

n

a

straight-line

basis

over

th

e

lease

term.

In

itial

d

irect

co

sts

in

curred

b

y

the

lessor

in

negotiating and

arranging an

operating lease

are

added to

the c

arrying

amount

of

the lease

d asse

t

and recognized

as

an

expense

over the lease term on the

same

basis as the lease income.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2.26 Gover

nment Grants

Government

gr

ants

are

recognized at

their

fair

values when

ther

e

is

reasonable

assurance

that

the grant

will

be

received

and

the Comp

any will comply

with the cond

itions attached

to it. Gov

ernment gra

nts relating to costs a

re deferred and recognize

d

in the

consolidated

statements of

profit

or loss ov

er the p

erio

d necessary to match the costs they

are intended to compensate.

Government grants relating to a

ssets are recognized in liabilit

ies as deferred income governmen

t

grants, and depreciated over

the expected lives of

the related assets, and are credited to

t

he consolidated statements o

f profit or loss.

2.27 Earni

ngs per Share

Basic

earnings

per

share

is

calculated

by

dividing

the

net

prof

it

for

the

perio

d

available

to

the

ordinary

share

holders

by

the

weighted-ave

rage number of ordi

nary shares outstandin

g during t

he year.

Diluted earn

ings per share

is calculated by

dividing

the profit

for the year attributable to ow

ners of

the parent

compan

y

from

the

consolidated

statements

of

profit

or

loss

by

the

weigh

ted-a

verage

num

ber

of

ordinary

shares

outstandi

ng

and

potential

dilutive shares. Potential dilutive shares a

re used in the

calc

ulation of

dilutive

earnings

per share

only wh

en they

have dil

u

tive

effects.

2.28 Repor

table Segments

Reportable

segments are

disclosed in a

manner consistent

with the reporting provided to

the chief operating decision-maker.

The

chief

ope

rating

decision-maker

is

responsible

for

makin

g st

rat

egic deci

sions on

resource

allocation

and

assessing

performance

of

the

reportable

se

gments.

The

Management

Committe

e,

which

makes

strategic

decisions,

is

regarded

as

the

chief operating

decis

ion-maker.

2.29 Conveni

ence Translation into

U

nited States

Dollar Amounts

The

Company

operates

primarily

in

Korean

won

and

its

official

a

ccounting

records

are

maintained in

Korean

won.

The

US

dollar

amounts

provided

in

the

consolidated

fin

ancial

statement

s

represent supplementa

ry

information solely for

the

convenience

of the

reader. All

Korean w

on amounts

are expressed

in US

dollar

at the

rate

of W

1,144.1

to USD

1, t

he average

exchange

rate

for

the

year

ended

December

31,

2021.

Such

presen

tation

is

not

in

accordance

with

generally

accepted

accounting principles,

and should not

be

construed as

a

represe

ntation that

the Korean won

amounts shown could b

e readily

converted, realized or settled in

US dollar at this or at any o

ther rate.

2.30 Approval of th

e Consolidated Fin

anci

al Statements

These consolidated financial sta

tements were approved b

y the Bo

ard of Di

rectors on January 27, 2

022, and may be modifi

ed

and approved at the Ann

ual General Sharehold

ers’ Meetings.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

3. Critical Accounting Estimates

and Assumptions

The

Company

mak

es

estimates

and

assumptions

concerning

the

fu

tu

re.

The

estimates

and

assumptions

are

continuously

assessed,

considering

historical

experience

and

other

factors,

including

expectations

of

future

events

that

are

believed

to

be

reasonable

under

the

circumstances.

The

resulting

accounting

estimates

will,

by

definition,

seldom

equal

the

results. In

particular, the recent

spread of

COVID-19 during th

e year

ended December 31,

2021 may result

in

changes to the

Company’s

assumptions

and

estimates

but

its

potential

financial

impact

cannot

be

reasonably

estimated

as

of

the

reporting

date.

The estimates and assumpt

ions that have a significant ris

k

of c

ausing a material adjustment to

the carrying amounts of

assets

and liabilities within the next financial y

ear are addressed be

low.

(A)

Rev

enue recognition

A refund li

ability and a ri

ght to the ret

urned goods are reco

gn

ized for the

products expect

ed to be returne

d at the time of

sa

le.

Accumulative

experience

is

used

to

estimate

such

returns

at

the

t

i

m

e

o

f

s

a

l

e

a

t

a

p

o

r

t

f

o

l

i

o

l

evel

(through

expected

value

method), and t

he Company’s revenue i

s affected by the change

s i

n expected return rate.

Sales

of

goods

are

recognized based

on

the

considerations

specified in

the

contract,

net

of

sales

incentives,

when

control

of

the products ha

s transferred. The

sales deduction, w

hich affect

s the

Company’s revenue,

is reasonably e

stimated based on

the

historical expe

rience and past contracts.

(B)

Provision for warranty

The Company recognizes provision for warranty on products sold.

The Compa

ny accrues

provision f

o

r

warranty based

on the

best

estimate

of

amounts

necessa

ry

to

settle

futur

e

and

existin

g

claims

at

the

end

of

each

reporting

period.

The

amounts

are

estimated based on the past expe

rience.

(C)

Fair value of fi

nancial instruments

The fair

value of fi

nancial instrument

s that are n

ot traded i

n

an active ma

rket is determine

d by using a

variety of met

hods an

d

assumptions that are mainly based on market condition

s existing

at the end of each reporting period

.

(D)

Impairment of financi

al assets

The loss allowance for

financial assets are based on assumption

s about risk of default and expecte

d

loss rates. The Compan

y

uses judgement in making these assumptions and selecting the

in

puts to the impairment calculati

on

based on the Company’s

past history, existin

g market c

onditions as well as forward loo

king estimates at the end

of each re

porting period.

(E)

Lease

In

determining

the

lease

term, th

e

Company

considers

all

facts

and

circumstances

that

create

an

economic

incentiv

e

to

exercise

an extensio

n option, or not to exercise a t

ermination option. E

xtension option

s (or periods after terminat

ion options) are onl

y

included i

n

the

lease term if th

e lease is reasonably certain t

o be

extended (or

not terminated).

The lease term is reassessed if

an option is

actually exercised

(or n

ot exercised) or the Com

pany becomes obliged t

o exercise

(or

not

exercise)

it.

The Co

mpany

reassesses whet

her it

is reas

onab

ly

certain to

exercise

an

extension

option (or

not to

e

xerc

ise

such

option)

upon

the

occurrence

of

either

a

significant

event

or

a

significant

change

in

circumstances

that

is

within

the

con

trol

of the lessee.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(F)

Net defined benefit liabilities (assets)

The

net

defined

benefit

liabilities

(assets)

depend

on

a

number

of

factors

that

are

determined

on

an

actuarial

basis

using

a

number of assumptions includin

g the discount rate. Any changes

in these

assumptions wil

l impact the carryin

g amount of the

net

defined

benefit liab

ility. Th

e Company

, in

consideration

of

the

interest rates

of

high-quality

corporate

bonds,

determines

the

appropriate

discount

rate

at

t

h

e

n

d

o

f

e

a

c

h

y

e

a

r

.

T

h

i

s

i

s

the

in

terest

rate

that

is

used

t

o

determine

the

present

value

o

f

estimated

future

cash

outflows

expected

to

be

required

to

settl

e

the

net

defined

b

enefit

liabilities

(assets).

The

principal

actuarial assumpti

ons associated

with the net defined be

n

efit l

iabilities (assets) are based on t

he current market expectation

s.

(G)

Imp

airment of goodwill and intang

ible assets that have an ind

ef

inite useful life

At

the

end of

each

reportin

g period

, the

Company

tests

whether

goodwill

and

intangible

assets

that

have a

n ind

efinite useful

life have become i

mpaired by comparing

the carrying amount

s of assets or cash-ge

nerating units to

the recovera

ble amounts.

The

recoverable

amounts

of

assets

or

cash-generating

units

have

been

determined

based

on

valu

e-in-use

calcu

lations,

an

d

these calculations are based on estimates.

(H)

Income taxes

on

the Company’s taxable

income from

operating act

ivities

are

subject

to

various

tax

laws

and

determination

s

of

each

tax

authority

across

va

rious

countries

throughout

the

w

orld.

There

is

uncertainty

in

determining

the

even

tual

tax

effe

cts

on

the

taxable income

from operating

activities. The

Company

ha

s recognized

current

ta

x

and deferred tax

at

the

end

of

the

fiscal

year

based

on the

best

estimate

of f

uture t

axes paya

ble

as

a result

of operating

activities. However,

the resulting

def

erred

income tax assets and liabilitie

s may n

ot equal the actual futu

re taxes paya

ble and such difference

may impact the cur

rent tax

and deferred income tax assets

and liab

ilities upon the determi

nation of eventual

tax effects.

Regarding ta

xes payable in Korea

, if a certain porti

on of taxable income i

s not used for i

nvestments or for inc

reases in wages

or

dividends,

in

accordance

with

the

Tax System For Recirculatio

n of Corporate Income

,

the

Company

is

liable

to

pay

additional

income

tax

calcu

lated

based

on

the

Ko

rean

tax

law.

T

he

current

and

deferred

tax

at

the

end

of

the

fiscal year

are

based

on the best

estimate of

future taxes

payable, whi

ch can d

iffer

from the actual future

taxes payable as

a result of c

hang

es

in investments, wages and

dividends; this results in

an additio

nal uncertainty in meas

uring the final tax

effects.

The

Company

assesses

uncertainty

over

a

tax

treatment.

When

the

Company

concludes

it

is

not

probabl

e

that

the

taxation

authority

will

accept

an

uncertain

t

ax

treatment,

the

Company

w

ill

reflect

th

e

effect

of

un

cert

ainty

for

each

uncertain

tax

treatment

by

using

eith

er

of

the

following

methods,

depen

ding

o

n

which

metho

d

the

Company

expects

to

better

predict

the

resolution of the uncertainty:

-

The most li

k

ely amount

: the single most like

ly amount in a range of

possible outcomes.

-

The expected value: the sum of t

h

e probability-weighted amounts

in a range of possi

ble outcomes.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

4. Financial Instruments

by Category

(A) Categorizations of financial assets and liabilities as of D

ecember 31, 2021 and 202

0 are as follows:

(1) As of D

ecember 31, 2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through

other

comprehensive

income

Financial assets

measured at fair

value through

profit or loss

Other

financial assets

1

Total

Financial assets

Cash and cash equivalents

39,031,415

-

39,031,415

Short-term financial instruments

81,708,986

-

81,708,986

Short-term financial assets at

amortized cos

t

3,369,034

-

3,369,034

Short-term financial assets at

fair value through profit or loss

-

40,757

-

40,757

Trade receivables

40,713,415

-

40,713,415

Financial assets at fair value through

other comprehensive income

-

13,965,839

-

13,965,839

Financial assets at fair value through

p

rofit or loss

-

1,525,344

-

1,525,344

Other

8,711,973

-

279,12

7

49,089

9,040,189

Total

173,534,823

13,965,839

1,845

,228

49,089

189,394,979

1

Other financial assets

inc

lude derivatives designated as hedgin

g in

struments which are not s

ubject to categorizations.

(

In millions o

f

Korean won

)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

p

rofit or loss

Other financial

liabilities

1

Total

Financial liabilities

Trade payables

13,453,351

-

13,453,351

Short-term borrowings

2,131,692

-

11,556,101

13,687,793

Other payables

14,126,970

-

14,126,970

Current portion of l

ong-term liabilities

518,065

-

811,903

1,329,968

Debentures

508,232

-

508,232

Long-term borrowings

1,500

-

2,864,656

2,866,156

Long-term other payables

2,562,158

-

2,562,158

Other

10,444,290

323,526

13,868

10,781,684

Total

43,746,258

323,526

15,246,528

59,316

,312

1

Other financial liabi

lities include collateralized

borrowings,

lease liabilities and

derivatives

designated as hedging instrum

ents,

which are not s

ubject to categorizations

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

As of December 3

1, 2020

(

In millions o

f

Korean won

)

Financial assets

measured at

amortized cost

Financial assets

measured at

fair value

through other

comprehensive

income

Financial assets

measured at

fair value

through profit

or loss

Other

financial assets

1

Total

Financial assets

Cash and cash equivalents

29,382,578

-

29,382,578

Short-term financial instruments

92,441,703

-

92,441,703

Short-term financial assets at

amortized cos

t

2,757,111

-

2,757,111

Short-term financial assets at

fair value through profit or loss

-

71,451

-

71,451

Trade receivables

30,965,058

-

30,965,058

Financial assets at fair value through

other comprehensive income

-

12,575,216

-

12,575,216

Financial assets at fair value through

p

rofit or loss

-

1,202,969

-

1,202,969

Other

6,395,766

-

215,797

23,310

6,634,873

Total

161,942,216

12,575,216

1,490,217

23,310

176,030,959

1

Other financial assets includ

e

d

erivatives d

esignated as hedgin

g instruments which are not s

ubject to categorizations.

(

In millions o

f

Korean won

)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

p

rofit or loss

Other financial

liabilities

1

Total

Financial liabilities

Trade payables

9,739,222

-

9,739,222

Short-term borrowings

2,278,386

-

14,275

,043

16,553,429

Other payables

10,645,637

-

10,645,637

Current portion of l

ong-term liabilities

5,318

-

710,781

716,099

Debentures

948,137

-

948,137

Long-term borrowings

-

1,999,716

Long-term other payables

1,272,128

2,176

-

1,274,304

Others

9,354,624

242,698

41,930

9,639,252

Total

34,243

,452

244,874

17,027,470

51,515,796

1

Other financial liabi

lities include collateralized

borrowings,

lease liabilities,

and derivatives designated

as hedging instru

ments,

which are not s

ubject to categorizations

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B) N

et gains

or

losses on

each

category

of f

inancial a

ssets an

d

liabilities for

the years

ended December 31,

2021 and

2020 ar

e

as follows:

(1)

2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured

at fair value

through other

comprehensive

income

Financial assets

measured

at fair value

through

profit or loss

Other financial

assets

1

Total

Financial assets

Gain (loss) on valuation

(

other com

p

rehensive income

)

-

2,980,896

-

27,715

3,008,611

Gain (loss) on valuation/disposal

(p

rofit or loss

)

(1,969)

-

420,100

437

418,568

Reclassification

from

other comprehensive in

come

to profit or loss

-

(148)

Interest income

1,278,051

-

227

-

1,278,278

Foreign exchange diff

erences

(

p

rofit or loss

)

29,834

-

29,834

Dividend income

-

133,532

2,308

-

135,840

Impairment/rever

sal

(

p

rofit or loss)

(27,194)

-

(27,194)

1

Other financial assets includ

e

d

erivatives d

esignated as hedgin

g instruments which are not s

ubject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

1

Total

Financial liabilities

Gain (loss) on valuation

(

other com

p

rehensive income

)

-

22,695

Gain (loss) on valuation/disposal

(

p

rofit or loss

)

-

(65,368)

-

(65,368)

Reclassification

from

other comprehensive in

come

to profit or loss

-

(121)

Interest expense

(213,477)

-

(218,063)

(431,540)

Foreign exchange diff

erences

(

p

rofit or loss)

362,820

-

3,447

366,267

1

Other financial liabi

lities include collateralized

borrowings,

lease liabilities,

and derivatives designated

as hedging instru

ments,

which are not s

ubject to categorizations

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

2020

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured

at fair value

through other

comprehensive

income

Financial assets

measured

at fair value

through

profit or loss

Other financial

assets

1

Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

-

2,502,733

-

(1,823)

2,500,910

Gain (loss) on valuation/disposal

(profit or loss)

(6,725)

-

206,850

126

200,251

Reclassification

from

other comprehensive in

come

to

p

rofit or loss

-

981

Interest income

1,974,141

-

317

-

1,974,458

Foreign exchange diff

erences

(

p

rofit or loss

)

(886,631)

-

(886,631)

Dividend income

-

149,617

2,823

-

152,440

Impairment/rever

sal

(

p

rofit or loss)

(42,824)

-

(42,824)

1

Other financial assets includ

e

d

erivatives d

esignated as hedgin

g instruments which are not s

ubject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

1

Total

Financial liabilities

Gain on valuation

(other comprehensive loss)

-

(22,995)

Gain (loss) on valuation/disposal

(

p

rofit or loss)

-

86,371

(154)

86,217

Reclassification

from

other comprehensive in

come

to

p

rofit or loss

-

12,368

Interest expense

(302,782)

-

(280,231)

(583,013)

Foreign exchange diff

erences

(

p

rofit or loss

)

180,110

-

9,730

189,840

1

Other financial liabi

lities include collateralized

borrowings,

lease liabilities,

and derivatives designated

as hedging instru

ments,

which are not s

ubject to categorizations

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

5. Transfer of

Financial Assets

Trade

receivables

of

the

Company

have

been

discounted

through

f

actoring

agreeme

nts

with

banks

during

the

years

ended

December

31,

2021

and

2020.

Trade

receivables

provided

as

colla

terals

in

such

factoring

transactions

do

not

meet

the

requirements for asset derecogn

ition as risks and rewards are n

ot

substantially transferred in th

e

event of a debtor de

fault due

to

the

recourse

oblig

ation,

e

tc.

Financial

liab

ilities

recogn

iz

ed

in

relation

to

these

transactions

are

included

as

‘short-ter

m

borrowings’ on the conso

lidated

statements of financial positio

n (refer t

o Note 12).

The followin

g

table p

resents a breakdown of di

scounted trade re

ceiva

bles as of December 31, 2021 and 2020:

(

In millions o

f

Korean won

)

December 31, 2021

December 31, 2020

Carrying amount of the discounted trade r

eceivables

1

11,556,101

14,275,043

Carrying amount of the relate

d borrowings

11,556,101

14,275,043

1

The discounted trade r

eceivables i

nclude the intercompany balan

ces.

6. Financial Asset

s at Fair Value

(A)

Details of financial assets at

fair val

ue as of

December 31, 20

21 an

d 2020 are as follows:

(1)

Financial assets at fair

value through other c

omprehensive inco

me

(In millions of Korean won)

December 31, 2021

December 31, 2

020

Non-current portion

Equity instruments

13,965,839

12,575,216

(2)

Financial assets at fair val

ue through

profit or loss

(In millions of Korean won)

December 31, 2021

December 31, 2020

Current portion

Debt instruments

40,757

71,451

Non-current portion

Equity instruments

905,094

819,144

Debt instruments

620,250

383,825

Subtotal

1,525,344

1,202,969

Total

1,566,101

1,274,420

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Changes in financial assets at fa

ir value

for the years ended D

ecembe

r 31, 2021 and

2020 are as follows:

(1)

Financial ass

ets at fair value thro

u

gh other c

omprehensive inco

me

(In millions of Korean won)

2021

2020

Balance as of January 1

12,575,216

8,920,712

Acquisition

1,146,868

245,497

Disposal

(3,551,604)

(23,872)

Fair value valuation

gain

3,653,253

3,423,908

Other

142,106

8,971

Balance as of Decemb

er 31

13,965,839

12,575,216

(2)

Financial assets at fair val

ue through profit or

loss

(

In millions o

f

Korean won

)

2021

2020

Balance as of January 1

1,202,969

1,049,004

Acquisition

208,262

84,184

Disposal

(142,406)

(37,554)

Fair value valuation gain

275,447

122,042

Other

(18,928)

(14,707)

Balance as of Decemb

er 31

1,525,344

1,202,969

(C)

Changes

in

gain on

valuation

of

financial

assets at

fair

value

through

other comprehensi

ve

income for the

years ended

December 31, 2021 and

2020 are as follows:

(

In millions o

f

Korean won

)

2021

2020

Balance as of January 1

7,071,415

3,663,998

Fair value valuation

gain

3,653,253

3,423,908

Reclassification to retained ear

n

ings due to disposals

(4,501,6

88)

(16,491)

Balance as of December 31

6,222,980

7,071,415

Income tax effects on equity

a

nd non-controlling interests

(1,60

6,341)

(2,095,659)

Total

4,616,639

4,975,756

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(D)

Details of listed equity secur

ities of financial assets at fair

value as of

D

ecember

31, 2021 and 2020 a

re as follows:

(In millions of Korean won,

number of shares and perc

entage)

December 31, 2021

D

e

c

e

m

b

e

r

3

1

,

2

0

2

0

Number of

shares owne

d

Percentage of

ownershi

p

1

(%)

Ac

q

uisition cos

t

Carrying amount

(Market

value

)

Carrying amount

(Market

value

)

Samsung Heavy Industries

134,027,2

81

15.2

932,158

759,935

708,882

Hotel Shilla

2,004

,717

5.1

13,957

156,368

164,988

iMarket Korea

647,320

1.9

324

6,926

5,658

SFA

3,644,000

10.2

38,262

131,366

140,658

Wonik Holdings

3,518,342

4.6

30,821

17,521

22,306

Wonik IPS

3,701,872

7.5

32,428

156,589

163,808

ASML Holding N.V

6,297,787

1.5

363,012

5,974,280

3,350,532

Wacom Co., Ltd

8,398,400

5.0

62,013

79,256

76,589

BYD Company Limited

2,380,100

0.1

79,049

118,862

1,695,488

Corning Incorporated

80,000,000

9.4

3,980

,636

3,530,893

-

Other

535,628

1,155,113

1,012,825

Total

6,068,288

12,087,109

7,341,734

1

Ownership represents the Co

mpa

ny’s ownership of the total ordi

nary shares issued by each entity.

7. Trade and Non-Trade

Receivables

(A)

Trade and non-trade receivables

as of December 31, 2021 and 202

0 are as follows:

December 31, 2021

December 31, 2020

(

In millions o

f

Korean won

)

Trade

Non-trade

Trade

Non-trade

Receivables

41,250,034

5,

572,176

31,369,364

4,065,404

Less: Loss allowance

(

310,880)

(72,805)

(318,731)

(59,487)

Subtotal

40,939,154

5,

499,371

31,050,633

4,005,917

Less: Non-current portion

(

225,739)

(1,002,114)

(85,575)

(401,378

)

Current portion

40,713,415

4,497,257

30,965,058

3,604,539

(B)

Movements in the loss allowance

for receiva

bles f

or the years e

nded December 31, 2

021 and 2020 are as follow

s:

2021

2020

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Balance as of January 1

318,731

59,487

340,410

58,666

Bad debt expense (revers

al)

17,990

9,009

40,006

2,869

Write-off

(19,095)

(2,424)

(40,384)

(103)

Other

(6,746)

6,733

(21,301)

(1,945)

Balance as of Decemb

er 31

310,880

72,805

318,731

59,487

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(C)

The

details

of

trade

and

non-trade

receivables

classified

by

pa

st

due

date

to

measure

expected

credit

losses

as

of

December

31, 2021 a

nd 2020 are as foll

o

ws:

December 31, 2021

December 31, 2020

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables not past due

39,677,264

5,125,414

29,395,528

3,585,376

Past due

1

:

Less than 31 days overdue

1,229,479

196,783

1,269,398

129,054

31 days to 90 days over

due

36,545

51,804

137,568

42,603

Over 90 days overdue

306,746

198,175

566,870

308,371

Subtotal

1,572,770

446,762

1,973,836

480,028

Total

41,250,034

5,572,176

31,369,364

4,065,404

1

The Company does not consider t

rade and non-trade receivab

les

that are overdue for less than o

r

equal to 31 days as impaired.

(D)

The

maximum

exposure

to

current

credit

risk

is

equivalent

to

th

e

carrying

amount

of

receivabl

es

as

of

December

31,

2021.

The Company has in place insuran

ce c

ontracts cove

ring the Compa

ny’s major receiva

bles.

8. Inventories

Inventorie

s as of December 31,

2021 and 2020 are

as follows:

December 31, 2021

December 31, 2020

(In millions of Korean

won

)

Gross

amount

Valuation

allowance

Carrying

amount

Gross

amount

Valuation

allowance

Carrying

amount

Finished goods

13,000,200

(

719,621)

12,280,579

9,711,668

(323,782)

9,387,886

Work in process

13,967,331

(493,713)

13,473,618

12,144,887

(326,797)

11,818,090

Raw materials and supplie

s

14,864,486

(679,645)

14,184,841

10,4

64,679

(673,913)

9,790,766

Materials in transit

1,445,

366

-

1,445,366

1,046,403

-

1,046,40

3

Total

43,277,383

(1,892,979)

41,384,404

33,367,637

(1,324,492)

32,043,145

The

inventories

recognized

as

expense

for

the

year

ended

Decemb

er

31,

20

21,

amount

to

W

164,319,031

million

(2020: W 143,172,74

3 million). The amount includes loss on v

alu

ation of i

nventories.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

9. Investment

s in Associates and Joint Ve

ntures

(A)

Changes in inv

estments in associates and j

oint ventures for the

yea

rs ended December 31

, 2021 and 2020 are as

follows:

(In millions of Korean won)

2021

2020

Balance as of January 1

8,076,779

7,591,612

Acquisition

47,090

83,280

Disposal

(34,664)

-

Share of profit

729,614

506,530

Other

1

113,432

(104,643)

Balance as of Decemb

er 31

8,932,251

8,076,779

1

Other consists of dividends, im

pairment, and re

classification.

(B)

Major investmen

ts in associates

and joint ventures as of De

cemb

er

31, 2021 are as fo

llows:

(1)

Investments in associates

Investee

Nature

of

relationship

with

associate

Percentage

of

ownership

(%)

1

Principal

business

location

Fiscal

period-end

Samsung Electro-

Mechan

ics Co., Ltd.

Manufacture and supply electronic components

including passive compone

nts, circuit boards,

and modules

23.7

Korea

December

Samsung SDS Co., Ltd.

Provide IT services including computer

programming, system inte

gration and management

and logistical services

22.6

Korea

December

Samsung

Bi

olog

ics

Co.,

Ltd.

New

business investment

31.5

Korea

December

Samsung SDI Co., Ltd.

2

Manufacture and supply

electronic components

including secondary cell batteries

19.6

Korea

December

Cheil Worldwide, Inc.

Advertising agency

25.2

Korea

December

1

Ownership represents the Co

mpa

ny’s ownership of the total ordi

nary shares issued by each entity.

2

The Company’s ownership of ordinary shar

es outstanding is 20.6%

.

(2)

Investments in joi

nt ventures

Investee

Nature

of

relationship

with

joint

venture

Percentage

of

ownership

(%)

1

Principal

business

location

Fiscal

period-end

Samsung Corning

Advanced Glass, LLC

Manufacture and supply industrial

glass devices

50.0

Korea

Dece

mber

1

Ownership represents the Co

mpa

ny’s ownership of the total ordi

nary shares issued by each entity.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(C)

Details of investments in associa

tes and join

t ventures as of D

ecember 31, 2021 and 202

0 are as follows:

(1)

Investments in associates

(In millions of Korean won)

December 31, 2021

Investee

Ac

q

uisition cost

Net asset value of

e

q

uit

y

shares

1

Carr

y

in

g

amount

Samsung Electro-Mechanics

359,237

1,573,570

1,556,386

Samsung SDS

147,963

1,632,847

1,652,155

Samsung Biologics

443,

193

1,571,809

1,577,664

Samsung SDI

1,242,605

2,960,235

2,529,650

Cheil Worldwide

506,162

320,301

621,292

Other

644,903

578,547

793,748

Total

3,344,063

8,637,309

8,730,895

1

The Company’s portion of net asse

t value of

associates is base

d on the Company

’s percentage of ownership.

(In millions of Korean won)

December 31, 2020

Investee

Ac

q

uisition cost

Net asset value of

e

q

uit

y

shares

1

Carr

y

in

g

amount

Samsung Electro-Mechanics

359,237

1,351,864

1,333,819

Samsung SDS

147,963

1,506,421

1,525,857

Samsung Biologics

443,

193

1,448,259

1,453,012

Samsung SDI

1,242,605

2,612,629

2,326,037

Cheil Worldwide

506,162

288,877

586,057

Other

620,233

458,182

666,506

Total

3,319,393

7,666,232

7,891,288

1

The Company’s portion of net asse

t value of

associates is base

d on the Company

’s percentage of ownership.

(2)

Investments in

joint ventures

(In millions of Korean won)

December 31, 2021

Investee

Ac

q

uisition cost

Net asset value of

e

q

uit

y

shares

1

Carr

y

in

g

amount

Samsung Corning Advanced Glass

215,000

135,584

135,580

Other

259,994

67,517

65,776

Total

474,994

203,101

201,356

1

The Company’s portion of net asse

t value of

joint ventures is

based on the Company’s pe

rcentage of ownership.

(In millions of Korean won)

December 31, 2020

Investee

Ac

q

uisition cost

Net asset value of

e

q

uit

y

shares

1

Carr

y

in

g

amount

Samsung Corning Advanced

Glass

215,000

123,360

123,356

Other

259,994

68,875

62,135

Total

474,994

192,235

185,491

1

The Company’s portion of net asse

t value of

joint ventures is

based on the Company’s pe

rcentage of ownership.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(D)

Details of the valuation of invest

ments in associates and

joint

ventures using the equity

method are as follows:

(1)

For the year

ended December 31, 2021

(

In millions o

f

Korean won

)

Balance as of

Januar

y

1

Share of profit

(loss)

Share of other

comprehensive

income

Other

1

Balance as of

December 31

Samsung Electro-Mechanics

1,

333,819

207,949

51,702

(37,084)

1,5

56,386

Samsung SDS

1,525,857

137,926

30,305

(41,933)

1,652,155

Samsung Biologics

1,453,

012

124,979

(327)

-

1,577,664

Samsung SDI

2,326,037

128,483

88,594

(13,464)

2,529,650

Cheil Worldwide

586,057

47,619

12,008

(24,392)

621,292

Samsung Corning Advanced Gla

ss

123,356

12,376

(129)

(23)

135,580

Other

728,641

70,282

29,826

30,775

859,524

Total

8,076,779

729,614

211,979

(86,121)

8,932,251

1

Other consists of acquisitions, d

isposals, div

idends, impairme

nt and

reclassification.

(2)

For the year

ended December 31, 2020

(

In millions o

f

Korean won

)

Balance as of

Januar

y

1

Share of

p

rofit

Share of other

comprehensive

income

Other

1

Balance as of

December 31

Samsung Electro-Mechanics

1,

152,734

199,249

1,298

(19,462)

1,33

3,819

Samsung SDS

1,499,571

100,231

(36,057)

(37,888)

1,525,857

Samsung Biologics

1,377,

043

73,135

2,834

-

1,453,012

Samsung SDI

2,233,516

62,106

43,878

(13,463)

2,326,037

Cheil Worldwide

570,215

44,433

(4,780)

(23,811)

586,057

Samsung Corning Advanced Gla

ss

173,742

(51,175)

789

-

123,356

Other

584,791

78,551

(51,259)

116,558

728,641

Total

7,591,612

506,530

(43,297)

21,934

8,076,779

1

Other consists of acquisitions, d

isposals, div

idends, impairme

nt, and recl

assification.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(E)

Summary of t

he condensed financial i

nformation of major

associa

tes and joint v

entures

(1)

Summary

of

condensed

financial

infor

mation

of

maj

or

associates

and

dividends

received

from

associates

as of

December 31, 2021 and

2020, and for the ye

ars ended December 31

, 2021 and 2020 are as follow

s:

2021

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung

SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

1. Condensed financial information

Condensed statements of

financial position :

Current assets

4,598,269

7,575,

968

2,823,175

7,444,907

2,018,5

98

Non-current assets

5,343,105

2,941,464

5,146,835

18,388,286

523,513

Current liabilities

2,234,657

2,370,290

1,107,295

6,461,286

1,

224,222

Non-current liabilities

835,

592

703,442

1,871,614

4,175,208

19

0,622

Non-controlling intere

sts

152,177

214,980

-

492,435

10,125

Condensed statement

s of comprehensive income:

Revenue

9,675,036

13,630,002

1,568,007

13,553,220

3,325,712

Profit from continuing operations, net of tax

1

1,055,411

611,171

393,589

1,169,801

165,485

Profit from discontinued operation, net of tax

1

(162,966)

-

Other comprehensive in

come (loss)

1

151,809

134,163

(1,270)

623,792

32,535

Total comprehen

sive income

1

1,044,254

745,334

392,319

1,793,593

198,020

Details of adjustments from the c

arrying amo

unt of investments

in associates

Net assets (a)

6,718,948

7,228,720

4,991,101

14,704,264

1,117,142

Ownership percentage (b)

2

23.4%

22.6%

31.5%

20.1%

28.7%

Net assets of equ

ity shares (a x b)

1,573,570

1,632,847

1,571,809

2,960,235

320,301

Goodwill

7,081

26,801

3,645

-

298,779

Intercompany transactions and

other

3

(24,265)

(7,493)

2,210

(430,585)

2,212

Carrying amount o

f associates

1,556,386

1,652,155

1,577,664

2,529,650

621,292

2. Dividends from as

sociates

Dividends

24,770

41,933

-

13,463

24,392

1

Profit (loss) a

ttributable t

o owners of the investee

2

Ownership percentage includes or

dinary and

preference shares.

3

Consists of unrealized

gains and losses and

other differences.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

2020

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

1. Condensed financial information

Condensed statements of

financial position:

Current assets

4,150,303

6,581,

153

1,751,347

5,657,405

1,742,270

Non-current assets

5,075,196

2,573,766

4,672,854

15,876,827

500,19

4

Current liabilities

1,914,880

1,720,757

589,301

4,983,633

1,046,22

4

Non-current liabilities

1,

400,223

575,054

1,236,117

3,191,672

180,

710

Non-controlling interests

138,107

190,081

-

381,311

7,988

Condensed statement

s of comprehensive income:

Revenue

8,208,738

11,017,432

1,164,777

11,294,770

2,747,922

Profit from continuing operations, net of tax

1

595,938

443,455

240,975

574,723

157,400

Profit from discontinued operation, net of tax

1

8,024

-

Other comprehensive in

come (loss)

1

(33,475)

(134,669)

3,354

144,901

(14,795)

Total comprehen

sive income

1

570,487

308,786

244,329

719,624

142,605

Details of adjustments from the c

arrying amo

unt of investments

in associates

Net assets (a)

5,772,289

6,669,027

4,598,783

12,977,616

1,007,542

Ownership percentage (b)

2

23.40%

22.60%

31.50%

20.10%

28.70%

Net assets of equ

ity shares (a x b)

1,351,864

1,506,421

1,448,259

2,612,629

288,877

Goodwill

7,081

26,801

3,645

-

298,779

Intercompany transactions and

other

3

(25,126)

(7,365)

1,108

(286,592)

(1,599)

Carrying amount of associates

1,333,819

1,525,857

1,453,012

2,326,037

586,057

2. Dividends from as

sociates

Dividends

19,462

41,933

-

13,463

23,811

1

Profit (loss) a

ttributable t

o owners of the investee.

2

Ownership percentage includes or

dinary and

preference shares.

3

Consists of unrealized

gains and losses and

other differences.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

Summary

of

condensed financial

informatio

n

of

major

joint ventu

res

and

dividends received

from

joint v

entures as

of December 31, 2021

and 2020, a

nd f

or the years ended December

31, 2021 and 2020 are as follow

s:

Samsung Corning Advanced Glass

(

In millions o

f

Korean won

)

2021

2020

Condensed financial information

Condensed statements of

financial position:

Current assets

163,083

133,896

Non-current assets

141,411

153,792

Current liabilities

31,779

39,151

Non-current liabilities

1,547

1,817

Condensed statement

s of comprehensive income:

Revenue

204,130

144,016

Profit (loss) from continuing op

erations, net of tax

1

24,753

(12,668)

Profit (loss) from disconti

nued operations, n

et of tax

1

-

(89,681)

Other comprehensive in

come

1

(305)

1,578

Total comprehen

sive income

1

24,448

(100,771)

Details of adjustments from the c

arrying amo

unt of investments

in joint vent

ures

Net assets (a)

271,168

246,720

Ownership percentage (b)

50.00%

Net assets of equity sha

res (a x b)

135,584

123,360

Intercompany transactions and

other

2

(4)

Carrying amount of joint ventures

135,580

123,356

Dividends from joint venture

s

Dividends

-

1

Profit (loss) attributable to

owners of the paren

t company.

2

Consists of unrealized

gains an

d losses an

d other differences.

(3)

Profit

(loss)

attributable

to

own

er

s

of

th

e

p

arent

company

fr

om

associates

and

joint

ventures

which

are

not

individuall

y

material for the years ende

d D

ecember 31, 2021 and

2020 are as

follows:

2021

2020

(In millions of Korean won)

Associates

Joint ventures

Associates

Joint ventures

Profit from continuing opera

tions

68,646

1,636

77,296

1,255

Other comprehensive income (lo

ss)

29,258

568

(49,185)

(2,074)

Total comprehensive income (loss)

97,904

2,204

28,111

(819)

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(F)

Details o

f marketable investments

in associ

ates as of December

31, 2021 and 2020 ar

e as follows:

(In millions of Korean won

and number o

f

shares

)

December 31, 2021

December 31, 2020

Number of shares h

eld

Market value

Samsung Electro-Mechanics

17,693,084

3,494,384

3,149,369

Samsung SDS

17,472,110

2,734,385

3,118,772

Samsung Biologics

20,

836,832

18,815,659

17,211,223

Samsung SDI

13,462,673

8,818,051

8,454,559

Cheil Worldwide

29,038,075

663,520

598,184

(G)

Other matters

On

July

12,

2018,

the

Korea

Securities

and

Futures

Commission

d

etermined

an

initial

measure

following

an

investigation

relating

to

Samsung

Biologics

Co.,

Ltd.,

an

assoc

iate

of

the

Co

mpany,

and

its

accountin

g

for

its

investmen

t

in

Samsung

Bioepis Co., Ltd, a joint ve

n

ture

between Biogen Thera

p

eutics I

nc. a

nd Samsung Biologics Co., Ltd. This measure include

d

a

recommenda

tion

to

dismiss the

director in

charge, prosecution

charges, and

external auditor designation by

the

regulat

or,

on

the

basis

that

th

e

Joint

Venture

Agreement

was

not

disclosed

in

the

notes

to

the

financial

statements.

On

November

14,

2018,

the

Korea

Secu

rities

and

Futures

Commission

determined

a

second

measure

which

included

a

penalty

of

W

8,000

million,

a

recommendation

to

dismiss

the

CEO,

a

requirement

to

restate

its

financial

statements,

and

further

prosecutio

n

charges.

To prove justification of its

accounting

treatment,

Samsung Bio

logi

cs Co.,

Ltd. file

d

a suit for cancellation o

f

the

aforementioned

measures

to

the

Se

oul

Administrative

Court,

w

hic

h

is

currently

in

progress.

On

September

24,

2020,

the

Seoul

Administrative

Court

announ

ced

a

decision

to

cancel

the

f

irst

measu

re

charged

by

the

Korea

Securities

and

Futures

Commission, and

susp

ended i

ts execution until the

final rulings

o

f

th

e

app

eal.

On October 16,

2020, the Korea

Securities and

Futures

Commission

app

ealed

and

the

litigation

is

in

progress

a

t

Seoul

High

Court.

Samsung

Biologics

Co.,

Ltd.

also

filed

for

susp

ending

th

e

execu

tion

o

f

the

initial

and

second

measu

res

.

On

January

22,

2019

and

February

19,

2019,

the

Seoul

Administrative

Court

pronounced

d

ecisions

to

suspend

the

seco

nd

and

initial

measure,

respectively,

until

the

final

rulings.

The

Korea

Securities

an

d

Futures

Commission

immediately

appeale

d

against

the

decisions

but

the

appeals

were

dismissed

by

the

Seoul

High

Court

on M

ay

13, 201

9 and

May

24,

2019,

in

re

lation

to the

second and

first

measures, respectively.

On

May 23,

2019 and

June 10

, 2019,

The Korea

Securities

and Future

s Commission re-appealed

against the dismissals relating

to

the

second

and

first

measures,

respectively.

On

September

6,

2019

and

Oc

tober

11,

2019,

the

Supreme

Court

of

Korea

dismissed

the

Korea

Securities

and

Futures

Commission’s

re-appe

a

l

re

la

ti

ng

to

t

he

s

ec

o

nd

a

nd

f

irst

measures, respectively,

and confirmed the decision to su

spend t

h

e execution of t

hese me

asures.

Although

the

future

outcome

of

the

admin

istrative

litigation

ca

nnot

be

estimated,

should

Sam

sung

Biologics

Co.,

Ltd.

be

required to restate

its financial statemen

ts to amend its histo

rical

accounting treatment relating to its investment in Samsun

g

Bioepis Co.,

Ltd., the

Compa

n

y’s share

of profit or

loss relati

ng

to its

equity method investment, the

amount of

investment

in

associates,

and

retained

earnings,

for

the

years

ended

Decem

ber

31

,

2015

and

o

nwards,

and

the

p

rofit

on

disposal

of

investment for the

year ended

December 31,

2016, may be

impacte

d. Given

the

timing

of co

mpletion

and th

e final

result

of

the

administrative

litigation

between

Samsung

Biologics

Co.,

Lt

d.

and

th

e

Korea

Securities

and

Futures

Commission

is

uncertai

n and cannot curre

ntly b

e estimated, it

is not possible

for the Com

pany to reco

gnize th

e effects of these proce

edings

in the curre

nt period consolida

ted financial statements.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

10. Property, Plant and Equipment

(A)

Changes in pr

operty, plant and e

quipment for the yea

rs ended De

cember 31, 2021 and 2020 ar

e as follows:

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Construction in

progress

Other

Total

Balance as of January 1

9,772,156

34,552,004

60,994,130

20,175,91

7

3,458,685

128,952,

892

Acquisition cost

9,850,942

55,026,369

233,056,5

01

20,175,917

10,496,584

328,606,313

Accumulated depreciation

and impairmen

t

(

78,786)

(20,474,365)

(172,062,371)

-

(7,037

,899)

(199,653,421)

Acquisitions and capital

expenditures

1

117,933

6,608,620

43,862,769

(2,320,520)

1,696,362

49,965,164

Depreciation

(47,517)

(3,174,672)

(26,552,

958)

-

(1,510,062)

(31,285,209)

Disposals/scrap

(49,683)

(91,964)

(18,307)

(469)

(6,200)

(166,623)

Impairment(reversal)

-

(12,135)

(131,985)

-

(7,082)

(151,202)

Other

2

37,265

987,587

1,372,648

154,396

61,621

2,613,517

Balance as of December 31

9,830,154

38,869,440

79,526,297

18,009,32

4

3,693,324

149,928,

539

Acquisition cost

9,943,570

62,651,459

274,909,5

71

18,009,324

11,958,070

377,471,994

Accumulated depreciation

and impairmen

t

(113,416)

(23,782,019)

(195,383,274

)

-

(8,264,746)

(227,543,455)

1

The

capitalize

d

borrowing

costs are

W 24,908

million and

i

ntere

st

rate used

to

calcula

te

the

borrowing costs

eligible

for capi

talization

is 0

.

3%~1.1%.

2

Other includes effects of changes

in foreign currency exchange

rates and effects of

the offset related to government grants.

2020

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Construction in

progress

Other

Total

Balance as of January 1

9,774,554

30,469,620

52,149,936

23,930

,019

3,501,345

119,825,474

Acquisition cost

9,828,309

48,

839,439

211,41

6,021

23,930,019

1

0,061,981

304,075,769

Accumulated depreciation

and impairmen

t

(

53,755)

(18,369,819)

(159,266,085)

-

(6,560

,636)

(184,250,295)

Acquisitions and capital

expenditures

1

141,197

8,524,794

32,907,696

(3,443,884)

1,281,811

39,411,614

Depreciation

(45,707)

(2,978,741)

(22,780,113)

-

(1,311,174)

(27,1

15,735)

Disposals, scrap

(20,308)

(

276,235)

(108,935)

(618)

(104,829)

(510

,925)

Impairment (reversal)

-

(3,627)

(316,723)

-

(4,806)

(325,156)

Reclassification to

assets hel

d

-fo

r

-sale

(29,275)

(540,258)

(181,

744)

(8,947)

(6,390)

(766,614)

Other

2

(48,305)

(643,549)

(675,987)

(

300,653)

102,728

(1,565,766)

Balance as of December 31

9,772,156

34,552,004

60,994,130

20,175,917

3,458,685

128,952,

892

Acquisition cost

9,850,942

55,

026,369

233,05

6,501

20,175,917

1

0,496,584

328,606,313

Accumulated

depreciation

and impairmen

t

(

78,786)

(20,474,365)

(172,062,371)

-

(7,037

,899)

(199,653,421)

1

The capitalized bor

rowing c

osts are W

3

,897 million and interest rate

used

to calculate

the borrowing co

sts eligible for

capitalization

is 0.6%.

2

Other

includes the

cumulative effect

of

changes in

accounting

p

olicies, effects

of changes

in

f

oreign

currency exchange

rates

and

effects

of the offset related to government grants.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Changes in t

he right-of-use

assets included

in the pr

operty, plant

and equipment

for the years

ended Decembe

r 31, 202

1

and 2020 are as follow

s:

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

441,603

2,105,360

109,372

313,538

2,96

9,873

Acquisition

112,419

1,326,322

136,680

173,49

0

1,748,911

Depreciation

(57,699)

(553,324)

(54,233)

(66,868)

(732,124)

Disposals/scrap

(398)

(60,742)

(1,265)

(4,790)

(67,195)

Other

1

30,029

24,354

505

(23,786)

31,102

Balance as of December 31

525,954

2,841,970

191,059

391,584

3,950,567

1

Other includes effects of changes

in foreign currency exchange

rates.

2020

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

1

438,095

2,361,717

130,965

381,142

3,311,919

Acquisition

116,683

593,157

42,447

58,536

810,823

Depreciation

(64,078)

(715,950)

(56,618)

(97,886)

(934,532)

Disposals/scrap

(8,968)

(160,267)

(6,526)

(24,720)

(200,481)

Reclassification to

assets hel

d

-fo

r

-sale

(29,275)

-

(9)

(131)

(29,415)

Other

2

(10,854)

26,703

(887)

(3,403)

11,559

Balance as of December 31

441,603

2,105,360

109,372

313,538

2,969,873

1

The beginning balance is the fin

ancial lease assets recognized

in accordance with previous accounting standard,

Korean IFRS 10

17

Lease

2

Other includes the cumulative e

ffect of chang

es

in accounting p

olicie

s and effects

of changes

in foreign currency exchange rat

es.

(C)

Details of depr

eciation of propert

y, plant and equipme

nt for th

e years ended December 31

, 2021 and 2020 are

as

follows:

(In millions of Korean won)

2021

2020

Cost of sales

27,868,090

23,824,208

Selling and administrative expenses, and etc.

3,417,119

3,291,

527

Total

31,285,209

27,115,735

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

11. Intangi

ble Assets

(A)

Changes in intangi

ble assets for the years e

nded December 31, 2

02

1 and 2020 are as foll

ows:

(In millions of Korean won)

2021

Intellectual

property rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

4,033

,

904

371,391

229,987

5,673,642

8,1

59,578

18,468,502

External acquisitions

333,073

-

8,757

-

3,648,484

3,990,314

Internally generated/developed

-

193,708

-

193,708

Amortization

(278,288)

(321,608)

-

(2,362,256)

(2,962,152)

Disposals/scrap

(51,236)

-

(195)

-

(1,696)

(53,127)

Impairment (reversal)

(52,101)

-

(1,586)

-

(53,687)

Other

1

167,884

(6,581)

4,256

170,617

316,510

652,686

Balance as of December 31

4,153,236

236,910

241,219

5,844

,259

9,760,620

20,236

,244

1

Other includes the

cumulative effect of changes in fore

ign curr

ency exchange rates and others.

(In millions of Korean won)

2020

Intellectual

property rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

4,365,510

740,774

222,499

6,250

,439

9,124,282

20,703,504

External acquisitions

300,399

-

1,785

-

1,356,267

1,658,451

Internally generated/developed

-

109,482

-

109,482

Amortization

(297,465)

(455,990)

-

(2,466,426)

(3,219,881)

Disposals/scrap

(30,055)

-

(343)

-

(912)

(31,310)

Impairment (reversal)

(189,155)

(3,474)

7,091

(570,817)

(161,739)

(918,094)

Reclassification to

assets hel

d

-fo

r

-sale

-

(313)

-

(1,108)

(1,421)

Other

1

(115,330)

(19,401)

(732)

(5,980)

309,214

167,771

Balance as of December 31

4,033,904

371,391

229,987

5,673

,642

8,159,578

18,468,502

1

Other includes effec

ts of reclassification of licenses

and changes in foreign currency exchang

e rates.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Goodwill

Goodwill is allocated to each cas

h-generating

unit. Details of

goodwill as of Decemb

er 31

, 2021 and 2020 are as follows:

(In millions of Korean won)

December 31, 2021

December 31, 2020

CE segment

529,979

524,383

IM segment

684,751

657,146

DS segment

Semiconductor

160,026

153,520

Display panel

138,061

138,754

Harman segment

4,330,139

4,199,334

Other

1,303

505

Total

5,844,259

5,673,642

Goodwill

impairment

reviews

are

p

erformed

annually

,

and

the

rec

overable

amounts

of

cash-generating

units

have

been

determined

based

on

the

value-in-use

calculations,

etc.

These

c

alculations

g

enerally

use

the

p

re-tax

cash

flow

projections

based on the financial

budgets approved by mana

gement covering

a five-year period, unless

it is reasonable

to use long-term

financial budgets long

er than five years in the new technolog

y

business. Perpetual cash flows b

eyond the five-year per

iod are

extrapolated

usi

ng

a constant

growth rate

assumption.

The

growt

h r

ate

applied

wa

s

capped

at

the

long-term

average

growth

rate for the i

ndustry

.

(C)

Details of amorti

zation of intangible asset

s for the years ende

d Decemb

er 31, 2021 and 20

20 are as follow

s:

(In millions of Korean won)

2021

2020

Cost of sales

2,136,937

2,387,508

Selling and administrative e

xpenses and o

ther

825,215

832,373

Total

2,962,152

3,219,881

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

12. Borrowings

(A) Details of the carrying amo

un

ts of borrowings as of Decembe

r 31, 2021 and 202

0 are as follows:

(

In millions o

f

Korean won

)

Financial institutions

Interest rates (

%)

as of Dec 31, 2021

December 31, 2021

December 31, 2020

Short-term borrowings

Collateralized borrowings

1

Woori Bank and others

0.0~13.3

11,556,101

14,275,043

Non-collateralized borrowings

Citibank and others

0.0~30.0

2,13

1,692

2,278,386

Total

13,687,793

16,553,429

Current portion of long-te

rm borrowings

Bank borrowings

BNP

18.3~19.6

40,415

-

Lease liabilities

2

CSSD and others

3.3

811,902

710,781

Total

852,317

710,781

Long-term borrowings

Bank borrowings

Industrial Bank o

f Korea

1.

5

1

,

500

-

Lease liabilities

2

CSSD and others

3.3

2,864,656

1,999,716

Total

2,866,156

1,999,716

1

Collateralized

borrowings are secured by trade receivables

.

2

Interest expens

es arising from the lease liabil

ities for the y

ears ended December 31, 2021 and 2020 amoun

t to W 106,877 milli

on and

W

109,040 million,

respectively,

which

were

determined using

t

he weighted

average

incremental

borrowing rate.

The right-of-us

e ass

ets

are pledged as

collateral to the lessor in th

e event of default. Short-ter

m lease payments and low- valued

asset lease payments

that are

not included in measurement of

lease

liabilities during the ye

ars ended Decemb

er 31, 2021 and 2020 amount to W 129,686 millio

n and

W 120,151 million, respectively.

(B) Maturities of

Long-term borrowings

outstandi

ng as of December

31, 2021 are as follo

ws:

(In millions of Korean won)

Long-term borrowings

Repayment terms

2022

40,415

2023

-

2024

-

2025

-

2026 and thereafter

1,500

Total

41,915

(C) Maturities of lease liabilitie

s outstanding as of December

31, 2021 are

as follows:

(In millions of Korean won)

Lease liabilities

Repayment terms

2022

910,368

2023

748,573

2024

602,194

2025

471,056

2026 and thereafter

1,333,320

Total

4,065,511

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

13. Debentures

(A) Detail

s of the carrying amount

s of debentures as

of Decembe

r 31, 2021 and 2020 ar

e as follows:

(

In millions o

f

Korean won

)

Issue date

Due date

Interest rates (

%)

a

s

o

f

D

e

c

3

1

,

2

02

1

December 31,

2021

December 31, 2020

US dollar de

nominated straight bonds

1

1997.10.2

2027.10.1

7.7

35,565

38,080

(

US$ 30 million

)

(

US$ 35 million

)

US

dollar

denominated

debenture

bonds

2

2015.5.11

2025.5.15

4.2

474,200

435,200

(

US$ 400 million

)

(

US$ 400 million

)

EURO denom

inated debentur

e bonds

3

2015.5.27

2022.5.27

2.0

469,819

468,383

(

EUR 350 million

)

(

EUR 350 million

)

Less: Discounts

(708)

(853)

Add: Premium

7,007

12,645

Less:

Current

portio

n

(477,651)

(5,318)

Total

508,232

948,137

1

US dollar denominated straight

bonds are repaid

annually for twenty years after a ten-year gra

ce p

eriod from the date of issu

ance.

Interest is paid semi-annually.

2

Harman

International Industrie

s,

Inc. issued US

dollar denomin

ated deben

ture bonds.

These debentures

are repaid

on the

date o

f

10 years

maturity and interest

is paid semi-annually.

3

Harman Finance International, S

CA issued Euro denominated d

ebe

nture bonds. These debentures are repaid on the date of 7 years

maturity and intere

st is paid ann

ually.

(B) Maturities of debentu

res out

standing as of Decemb

er 31, 202

1 are as follows:

(In millions of Korean won)

Debentures

Repayment terms

2022

475,747

2023

5,928

2024

5,928

2025

480,128

2026 and thereafter

11,853

Total

979,584

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

14. Net Defined Benefi

t Liabilities (Assets)

(A)

Details

of

net

defined

benefit

liabilities

(assets)

recogn

ized

in

the

statements

of

financi

al

position

as

o

f

December

31,

2021 and 2020 are as fo

llows:

(In millions of Korean won)

December 31, 2

021

December 31, 2020

Present value of funded defined benefit obligations

14,391,209

12,400,964

Present value of unfunded define

d benefit obligations

266,976

548,035

Subtotal

14,658,185

12,948,999

Fair value of plan a

ssets

(17,001,891)

(13,840,043)

Total

(2,343,706)

(891,044)

(B)

The

components

of de

fined benef

it costs

recognized

in p

rofit or

loss

for th

e years

ended

December

31, 2021

and

2020

are as follows:

(In millions of Korean won)

2021

2020

Current service cost

1,247,857

1,131,355

Net interest income

(38,326)

(9,801)

Past service cost

2,718

2,377

Other

3,847

2,193

Total

1,216,096

1,126,124

The amount recognized as an expe

ns

e of defined contri

bution pla

ns for the years en

ded December

31, 2021 and 2020 are

W

144,248 million

and W 164,055

million, respectively.

(C)

The expenses related t

o the defined benefi

t plans recognized in

the

statements of pro

fit or loss for the yea

rs ended

December 31, 2021 and

2020 are as follows:

(In millions of Korean won)

2021

2020

Cost of sales

480,331

498,006

Selling and administrative e

xpenses and o

ther

735,765

628,118

Total

1,216,096

1,126,124

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(D)

Changes in the defined benefit

obligations for the years ended

December 31, 2021 and 2

020 are as follows:

(In millions of Korean won)

2021

2020

Balance as of January 1

12,948,999

11,148,069

Current service cost

1,247,857

1,131,355

Interest cost

396,730

328,919

Past service cost

2,718

2,377

Remeasurement:

Actuarial gains or losses arising from ch

anges in demographic a

ssumptions

(34,014)

(19,030)

Actuarial gains or losses arising from ch

anges in financial ass

umptions

126,297

622,647

Other

473,668

285,440

Benefits paid

(519,043)

(514,853)

Other

1

14,973

(35,925)

Balance as of Decemb

er 31

14,658,185

12,948,999

1

Other includes effects of changes

in foreign currency exchange

rates and business combinations.

(E)

Changes in the fair value o

f plan assets for the years

ended De

cember 31,

2021 and

2020 are as follows:

(In millions of Korean won)

2021

2020

Balance as of J

anuar

y

1

13,840,043

11,267,121

Interest income on plan assets

435,056

338,720

Remeasurement of plan assets

(146,239)

(108,066)

Contributions by employe

r

3,263,765

2,623,122

Benefits

p

ai

d

(397,678)

(295,520)

Othe

r

1

6,944

14,666

Balance as of Decemb

er 31

17,001,891

13,840,043

1

Other includes effects of changes

in foreign currency exchange

rates and business combinations.

Expected cont

ributions to post-empl

oyment benefit pla

n

s to be

p

aid in 2022 for the year ended Decembe

r 31, 2021 are

W 1,749,206 million

.

(F)

Plan assets as of Decembe

r 31, 2021 and 2020

consist of the fol

lowi

ng:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Principal guaran

teed fixed income

financial i

nstru

ments and oth

er

16,935,143

13,799,119

Other

66,748

40,924

Total

17,001,891

13,840,043

Plan assets are mostly invested in

instruments which ha

ve a quo

ted price in active markets.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(G)

The principal actuarial ass

umptions as of December

31, 2021 and

2020 a

re as follows:

(In

percentage)

December 31, 2021

December 31, 2020

Discount rate

0.2~

7.2

0.2 ~ 7.2

Salary growth rate (including

th

e effects of inflation)

1.5~10.

0

1.5 ~ 10.0

(H)

Th

e sensitivity

analysis

of the d

efined ben

efit obligation

s as

of December

31, 2021

and 20

20 to

changes in

the w

eighted

principal assumptions

is as follows:

(In percentage)

December 31, 2021

December 31, 2020

Discount rate

1%p increase

91

1%p decrease

110

111

Salary growth rate

1%p increase

110

111

1%p decrease

91

(I)

The weighted

average maturity of the defi

ned benefit oblig

ation

s is 9.53

years as of December

31, 2021.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

15. Provisi

ons

Changes in pro

visions for the year ende

d December 31, 2021 are

as follows:

(

In millions o

f

Korean won

)

Warrant

y

(A)

Royalty

ex

p

enses (B)

Long-term

incentives (C)

Other

(D, E)

Total

Balance as of January 1

1

,765,882

1,304,091

651,298

1,679,720

5,400,991

Charged to profit or lo

ss

1,628,023

606,265

288,712

2,562,479

5,085,479

Payment

(1,456,266)

(464,463)

(208,673)

(1,093,757)

(3,223,159)

Other

1

40,655

115,916

2,946

257,038

416,555

Balance as of December 31

1

,978,294

1,561,809

734,283

3,405,480

7,679,866

1

Other includes effects of chang

es

in foreign currency exchange

rates.

(A)

The Compa

ny accrues

warranty reserves

for

estimated costs

of qu

ality

assurance, exchanges, repairs, recalls,

and future

services based on historical e

xpe

rience and terms of warranty p

rograms.

(B)

The

Company recognizes provision

s

for the

estimated royalty

exp

enses that are

under negotiation with counterpartie

s.

The timing and amount of paymen

t

depend on the settlement of th

e negotiati

on.

(C)

The Comp

any has a long-term incentive p

lan for its executives b

ased on a three-year manag

ement pe

rformance criteria

and recognizes

a provision for the estim

ated incentive cost for

the accrued peri

od.

(D)

The Company records provisi

ons for

future expe

nses expected to

be

incu

rred

for prod

ucts that have been discontinu

ed

from manufacturing and sales.

(E)

The Company makes provis

ions

for the carrying amounts of

emissi

on right

s

held by the Company and the emission in

excess of

the emi

ssion rights

fo

r the applicable

years. Details

of emissi

on rights and liabilities as of

Decemb

er 31,

2021

are as follows:

(1)

Allocated

amount of

emission

per

mits and

the estimated

amoun

t

o

f emission

as of

December

31, 2021

are

as follows:

(In ten thousand metric tons)

December 31, 2021

Allocated emission permits

1,689

Estimated volume of emission

1,946

A

s

o

f

D

e

c

e

m

b

e

r

3

1

,

2

021, emission permits allocated

to the Company for the remainin

g plan periods are 65,420 thousand tons.

(2)

Changes in the emission permits

rights for the year ended Decem

ber 31,

2021 are as follows:

(In millions of Korean won)

2021

Balance as of J

anuary 1

44,865

Increase

1,422

Decrease

(213)

Balance as of Decemb

er 31

46,074

(3)

Changes in emissions liabilities

for the year e

nded December 31

, 2021 are as follows:

(In millions of Korean won)

2021

Balance as of J

anuary 1

31,876

Charged to profit or loss

13,374

Submission

(201)

Balance as of Decemb

er 31

45,049

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

16. Commitments

and Contingencies

(A)

Litigation

The C

ompany i

s involve

d in

various cl

aims, disp

utes, and

invest

igati

ons cond

ucted by

regulatory

bodies,

which ar

o

se

during

the

normal

course

of

business

with

numerous

en

tities.

Although

the

outflow

of

resources

and

timing

of

these

matters

are

uncertain,

as of

the reporting

date,

th

e

Company

believes t

h

e

o

utcome

will

no

t

have

a

material

impact

on the

financial

po

sitio

n

of the Com

pany.

(B)

Other commit

ments

(1)

As

of December

3

1,

2021, t

he Company

has

trade fi

nancing a

greem

ents, trade

notes receivable

discoun

ting

facilities

,

and

loan facilities

with accounts

receivable

pledged as

collate

ral

with 25

financial institutions including

W

oori

Bank,

with a combined limit of up to

W 20,836,952 millio

n. In additio

n, the Co

mpany has a trade fi

nancing agreement

(up

to

W

1

4,513,419

million)

with

19

financial

institu

tions

includi

ng

Shinhan

Bank

and

loan

facilities

with

accounts

receivable pledged as collateral

and other financial agreements

(up to W 2,154,508 million).

(2)

As of December 31, 2

021, unfu

lfilled agreements relating to the

acquisition of p

roperty, plant and equipment and

intangible assets amount to W 9,683,328

million.

17. Contract Liabilities

The Company has recognized con

tract liabilities related to cont

racts with customers as follows:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Contract liabilities

1

13,235,108

11,902,130

1

Contract liabilities

include advances received, accrued expens

es,

other current liabilities and others

.

The

revenue

recognized

during

th

e

year

ended

December

31,

2021

in

relation

to

carried-forward

contract

liabilities

as

of

January 1, 2021

amounts to W 969,30

0 million.

18. Share C

apital

As of

December 31, 2021, the Com

pany’s total number

of authoriz

ed shar

es is 25,00

0,000,000 sha

res (W 100

per share

). The

Company

has i

ssued 5,9

69,782,550 sha

res of

ordinary

shares

and

822,886,700

shares

of

preference

shares

as of

December 31,

2021, excluding the

retired shares. As

of the December 31, 2021, the number o

f shares outstandi

ng is the same as the number

of shares issue

d above, and no changes were made to t

he number

of shares outstandi

ng during th

e years ended December 31,

2021 and 2020. Due to the

retire

ment of shares, the total par v

alue

of th

e shares issued is W

679,267 millio

n (ordinary shares

of

W

596,978

m

illion

an

d

prefer

ence

shares

of

W

82,289

millio

n)

,

w

hich

does

not

agree

with

paid-in

capital

of

W

897,514

million.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

19. Retained

Earnings

(A)

Retained earnings

as of December 31, 202

1 and 2020 consist of t

he following:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Discretionary reserve

, etc.

170,814,107

174,739,565

Unappropriated retained

earnings

122,250,656

96,328,646

Total

293,064,763

271,068,211

(B)

Details of interim and year-end

dividends are as follows:

(1) Interim

dividends (Record dat

e: March 31, 2021 a

nd 2020, Ju

ne 30, 2021 and 2020

and September 30, 20

21 and

2020)

(In millions of Korean w

on and n

umber of shares)

2021

2020

1

st

Quarter

Number of shares eligible

for dividends

Ordinary shares

5,969,

782,550

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par valu

e)

361%

354%

Dividend amount

Ordinary shares

2,155,092

2,113,303

Preference shares

297,062

291,302

Total

2,452,154

2,404,605

2

nd

Quarter

Number of shares eligible

for dividends

Ordinary shares

5,969,

782,550

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par valu

e)

361%

354%

Dividend amount

Ordinary shares

2,155,092

2,113,303

Preference shares

297,062

291,302

Total

2,452,154

2,404,605

3

rd

Quarter

Number of shares eligible

for dividends

Ordinary shares

5,969,

782,550

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par valu

e)

361%

354%

Dividend amount

Ordinary shares

2,155,092

2,113,303

Preference shares

297,062

291,302

Total

2,452,154

2,404,605

(2) Year-end dividends (Record

date: December 31, 2021 a

n

d 2020

)

(

In millions o

f

Korean won and number o

f

shares

)

2021

2020

Number of shares eligible

for dividends

Ordinary shares

5,969,

782,550

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par valu

e)

Ordinary shares

361%

1932%

Preference shares

362%

1933%

Dividend amount

Ordinary shares

2,155,092

11,533,620

Preference shares

297,884

1,590,640

Total

2,452,976

13,124,260

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

20. Other Components

of Equity

Other components of equity a

s of

December 31, 2021

and 2020 are

as follows:

(In millions of Korean won)

December 31, 2021

D

ecember 31, 2020

Gain on valuation of fin

ancial a

ssets at fair value through oth

er comprehensiv

e income

4,616,639

4,975,756

Share of other c

omprehensive loss of associates and joint

ventu

res

166,835

(58,629)

Loss on overseas business tran

slation

(3,824,733)

(10,977,583)

Remeasurement of net

defined

benefit assets

(3,173,977)

(2,653,

425)

Other

86,763

26,726

Total

(2,128,473)

(8,687,155)

21. Expenses by Nature

Expenses by n

ature for the years e

nded December 31, 20

21 and 20

20 consist of the following

:

(In millions of Korean won)

2021

2020

Changes in finished goods, work i

n pro

cess, and other

(4,517,560)

(3,234,887)

Raw materials used, merchandis

e purchased, and other

95,625,437

81,792,130

Wages and salaries

28,207,782

25,054,684

Post-employment bene

fit

1,360,344

1,290,179

Depreciation

31,285,209

27,115,735

Amortization

2,962,152

3,219,881

Welfare

5,073,002

4,655,347

Utilities

4,928,929

4,717,553

Outsourcing

5,594,602

5,409,889

Advertising

5,376,015

4,269,043

Sales promotion expenses

6,286,159

5,861,954

Other

45,788,872

40,661,604

Total

1

227,970,943

200,813,112

1

Equal to the su

m of cost of sales and selling and

administrati

ve expenses in the cons

olidated statements of profit or loss.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

22. Selling and Administrative Expenses

Selling and administrative expens

es for the

years ended Decembe

r 31, 20

21 and 2020 are as fol

lows:

(

In millions o

f

K

orean won

)

2021

2020

Selling and administrative expenses

Wages and salaries

7,245,981

6,763,143

Post-employment benefit

310,823

279,711

Commissions

6

,192,568

5,678,703

Depreciation

1,529,507

1,593,365

Amortization

543,544

492,314

Advertising

5,376,015

4,269,043

Sales promotion expenses

6,286,159

5,861,954

Transportation

2,792,690

2,218,422

Service charges

4,039,642

3,368,401

Other

4,840,946

4,688,270

Subtotal

39,157,875

35,213,326

Research and de

velopment expenses

Total expenses

22,595,434

21,220,972

Capitalized expenses

(193,708)

(109,482)

Subtotal

22,401,726

21,111,490

Total

61,559,601

56,324,816

23. Other Non

-Operating Income an

d Expenses

Details of ot

her non-operatin

g income and expe

nses for the year

s e

nded December 31

, 2021 and 2020

are as follows:

(

In millions o

f

Korean won

)

2021

2020

Other non-operatin

g income

Dividend income

135,840

152,440

Rental income

132,801

147,104

Gain on disposal of property,

plant and equipment

340,400

154,

249

Other

1,596,654

930,275

Total

2,205,695

1,384,068

(In millions of Korean won)

2021

2020

Other non-operating expense

s

Loss on disposal of property, pl

ant and equipmen

t

75,586

87,67

3

Donations

270,927

311,421

Other

1,709,458

2,089,808

Total

2,055,971

2,488,902

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

24. Financial Income

and Expenses

Details of financial income and e

xpens

es for the

years ende

d De

cember 31, 20

21 and 2020 are as fo

llows:

(

In millions of Korean won

)

2021

2020

Financial income

Interest income

1,278,278

1,974,458

Interest income f

rom financial assets meas

ured at amortized cos

t

1,278,051

1,974,141

Interest

income

from

financial

assets

measured

at

fair

value

th

rough

profit

or loss

227

317

Foreign exchange differen

ces

6,525,676

9,270,039

Gains from derivatives

739,233

1,023,103

Total

8,543,187

12,267,600

(

In millions o

f

Korean won

)

2021

2020

Financial expenses

Interest expenses

431,540

583,013

Interest expenses from financ

ial liabilities measured at amorti

zed cost

213,477

302,782

Other financial liab

ilities

218,063

280,231

Foreign exchange differen

ces

6,486,093

9,868,591

Losses from derivatives

786,921

866,451

Total

7,704,554

11,318,055

The Company recognizes foreign ex

c

hange gains and losses arisin

g

from foreign curre

ncy transactions and tra

nslation as

financial income and expenses.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

25. Income Tax Expense

(A)

Income tax expense for the years

ende

d December 31,

2021 and 20

20 consists of the following:

(In millions of Korean won)

2021

2020

Current taxes

Current tax on profits for

the year

11,135,521

7,361,115

Adjustments recognize in the current year

(195,237)

339,673

Subtotal

10,940,284

7,700,788

Deferred taxes

Changes in deferred taxes aris

ing from unused tax credits

(332,

975)

(325,880)

Changes in deferred taxes arisin

g from temporary differences

2,172,312

2,312,926

Changes in deferred taxes aris

ing from unused tax losses

507,31

3

264,349

Other

157,443

(14,898)

Subtotal

2,504,093

2,236,497

Items charged d

irectly to equity

-

Income tax expense

13,444,377

9,937,285

(B)

The tax on the Com

pany’s profit bef

o

re inc

ome tax differs fr

om

the theoretical amount that would a

rise using the

weigh

ted-average statutory

tax rate applicable to profits

of the C

ompany as follows:

(

In millions o

f

Korean won

)

2021

2020

Profit before income tax

53,351,827

36,345,117

Tax calculated at weighted av

e

rage of applicable tax rates

1

15,760,775

8,972,156

Adjustments

:

Permanent differences

(464,839)

(269,002)

Temporary differences for which

no deferred in

come tax was reco

gnized

(80,250)

(130,892)

Tax credits and exemptions

(4,627,136)

(1,902,680)

Results of interest in subsid

iaries, etc.

2,267,026

2,774,410

Impact of changes in tax rates

8,691

(5,019)

Other

580,110

498,312

Subtotal

(2,316,398)

965,129

Income tax expense

13,444,377

9,937,285

1

The weighted average of statutor

y tax rates are

applied to the

respective pro

fits of the Company applicable to

each tax

author

ity as of

December 31, 2021 and 2020

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(C)

The

movement

in

deferred

income

tax

assets

and

liabilities

resu

lting

from

th

e

tax

effect

of

temporary

differences

for

the years ended December 31,

2021 and 2020 a

re as follows:

(1)

2021

Temporary differences

Deferred inc

ome tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arising from temp

orary differences

Revaluation of land

(3,420,

886)

14,261

(3,406,625)

(940,744)

3,9

22

(936,822)

Investments in subsidiaries, associates and

joint ventures

1

(111,924,859)

(14,891,920)

(126,

816,779)

(19,172,409)

(1,442,145)

(20,614,554)

Accumulated depreciation and ot

her

(2,285,841)

(1,528,757)

(3,814,598)

(992,777)

(779,016)

(1,771

,793)

Accrued income

(139,406)

117,25

3

(22,153)

(31,486)

38,339

6,853

Provisions, accrued expenses and other

13,121,41

6

2,858,039

15,

979,455

3,764,808

796,066

4,560,874

Foreign currency translation

(24,683)

87,298

62,615

(10,077)

22

,153

12,076

Asset impairment losses

1,855,

765

(721,717)

1,134,048

453,486

(1

94,600)

258,886

Other

562,628

(1,054,853)

(

492,225)

(21,726)

(617,031)

(638,757)

Subtotal

(102,255,866)

(15,120,396)

(117,376,262)

(16,950,925)

(2

,172,312)

(19,123,237)

Deferred tax arising from tax

losses

Unused tax losses

3,618,601

(1,

603,153)

2,015,448

943,794

(507,3

13)

436,481

Deferred tax arising from tax

credits

Unused tax credits

1,328

,527

358,538

1,687,065

1,333,387

332,975

1,666,362

Deferred tax recognized in equit

y

Gain (loss) on valuation of financial

assets

at fair value through other

comprehensive income and othe

r

(1,660,421)

(1,914,673)

(3,575,

094)

(909,176)

(2,246,134)

(3,155,3

10)

Remeasurement of

net defined benefit assets

3,735,320

712,190

4,447,510

1,047,075

191,638

1,238,713

Subtotal

2,074,899

(1,202,483)

872,416

137,899

(2,054,496)

(1,916

,597)

Deferred tax assets

4,

275,000

(13,786)

4,261,214

Deferred tax liabilities

(18,810,845)

(4,387,360)

(23,198,205)

Total

(14,535,845)

(4,401,146)

(18,936,991)

1

Deferred

tax

assets

are

not

recognized

i

f

it

is

probable

that

the

temporary

differences

will

not

reverse

in

the

foreseeable

f

uture

for

investments in subsidiaries, a

s

sociates and joint ventures.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

2020

Temporary differences

Deferred inc

ome tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arising from temp

orary differences

Revaluation of land

(3,417,

804)

(3,082)

(3,420,886)

(939,896)

(84

8)

(940,744)

Investments in subsidiaries, associates and

joint ventures

1

(96,397,199)

(15,527,660)

(111,924

,859)

(16,669,138)

(2,503,271)

(

19,172,409)

Accumulated depreciation and ot

her

(4,529,334)

2,243,493

(2,285,841)

(982,556)

(10,221)

(992,777)

Accrued income

(248,662)

109,25

6

(139,406)

(61,332)

29,846

(31,4

86)

Provisions, accrued expenses and other

12,251,64

7

869,769

13,12

1,416

3,282,747

482,061

3,764,808

Foreign currency translation

(97,929)

73,246

(24,683)

(30,227)

2

0,150

(10,077)

Asset impairment losse

s

1,790,729

65,036

1,855,765

492,332

(38,846)

453,486

Other

2,252,684

(1,690,056)

562,628

270,071

(291,797)

(21,726)

Subtotal

(88,395,868)

(13,859,

998)

(102,255,866)

(14,637,999)

(2,312,926)

(16,950,925)

Deferred tax arising from tax

losses

Unused tax losses

4,563,095

(

944,494)

3,618,601

1,208,143

(264,3

49)

943,794

Deferred tax arising from tax

credits

Unused tax credits

1,311

,498

17,

029

1,328,527

1,007,507

325,880

1,333,387

Deferred tax recognized in equit

y

Loss on valuation of financial assets at

fair value through other comprehensive

income and othe

r

(2,928,550)

1,268,129

(1,

660,421)

(895,922)

(13,254)

(909,176)

Remeasurement of

net defined benefit assets

2,

738,197

997,123

3,735,320

769,512

277,563

1,047,075

Subtotal

(190,353)

2,265,252

2

,074,899

(126,410)

264,309

137,89

9

Deferred tax assets

4,

505,049

(230,049)

4,275,000

Deferred tax liabilities

(17,053,808)

(1,757,037)

(18,810,845)

Total

(12,548,759)

(1,987,086)

(14,535,845)

1

Deferred

tax

assets

are

not

r

ecognized

if

it

is

probable

that

the

temporary

differences

will

not

reverse

in

the

foreseeable

f

uture

for

investments in subsidiaries, a

ssociates and joint ventures

.

The Company assessed that the

def

erred

tax asset is realizable

as the

estimated average

annual taxable

income in futu

re years

exceeds

the

tax

loss

carry

forwar

ds

and

tax

credit

carry

forwar

ds

to

be

reversed

in

each

accounting

period.

Temporary

differences

in which

deferred

tax

effects

were

not

recogniz

ed

d

u

e

to

uncertainty

reg

arding

the

ultimate

realizability

of

su

ch

assets as of Decembe

r 31, 2021 and 2020 a

re as follows:

(In millions of Korean won)

2021

2020

Unused tax losses

706,512

751,255

Unused tax credits

47,929

37,816

Expected expir

y dates of unused tax

losses and credits for

whic

h no deferred t

ax asset is

recognized are as follows:

(In millions of Korean won)

2021

2022

2023 and after

Unused tax losses

-

1,316

-

705,196

Unused tax credits

13,302

3,145

24,364

7,118

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(D)

Details of the period when

the

deferred tax assets (liabilities

) are recovered (settled) as

of December 31, 2

021 and 2020

are as follows:

(

In millions o

f

Korean won

)

December

31, 2021

December 31, 2020

Deferred tax assets

Deferred tax assets to be recove

red with

in 12 months

2,999,046

2,839,030

Defer

red ta

x asset

s to b

e recov

e

red after more th

an 12 months

1

,262,168

1,435,970

Subtotal

4,261,214

4,275,000

Deferred tax liab

ilities

Deferred tax liabilit

ies to be settled after more than 12 month

s

(23,198,205)

(18,810,845)

Total

(18,936,991)

(14,535,845)

26. Earnings

per Share

(A)

Basic earnings per share

Basic earnings per share for t

he

years ended December 31, 2021

and 2020 are calcula

ted as follows:

(1)

Ordina

ry shares

(

In millions o

f

Korean won, thousands o

f

number o

f

s

hare

s

)

2021

2020

Profit for the year attributable t

o owners of the p

arent compan

y

39,243,791

26,090,846

Profit for the year available

for ordinary shares

34,488,944

2

2,929,390

Weighted-average number of

ordinary shares outstanding

5,969,78

3

5,969,783

Basic earnings

per ordinary share

(in Korean won)

5,777

3,841

(2)

Preference s

h

ares

(In millions of Korean won, t

housands of number of shares)

2021

2020

Profit for the year attributable t

o owners of the p

arent compan

y

39,243,791

26,090,846

Profit for the year available fo

r preference shares

4,754,847

3,161,456

Weighted-average number of

prefe

rence shares outstanding

822,887

Basic earnings

per preference sha

re

(in Korean won)

5,778

3,842

(B)

Diluted

earnings per share

The

Company does

not

have

dilutive potential

ordinary shares

an

d

as

a

result,

basic

earnings

per

share

and

diluted

earning

s

per share are the same for the y

ears ended Decembe

r 31, 2021 an

d 2020

.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

27. Statement

s of Cash Flows

(A)

The Company

used

the indirect

method

to present

cash

flows

from

operating activities.

Adjus

tmen

ts

and changes in

assets

and liabilities arising from op

erating activities for the year

s ended December 31, 2021

and 2020 are as follows:

-

Adjustme

nts

(In millions of Korean won)

2021

2020

Adjustments:

Income tax expense

13,444,377

9,937,285

Financial income

(2,485,679)

(3,718,841)

Financial expenses

1,917,705

2,306,770

Post-employment benefits

1,360,344

1,290,179

Depreciation

31,285,209

27,115,735

Amortization

2,962,152

3,219,881

Bad debt expenses (re

versal)

17,990

40,006

Dividend income

(135,840)

(152,440)

Share of profit of associates

and joint ventures

(729,614)

(506

,530)

Gain on disposal of property,

plant and equipment

(340,400)

(154,249)

Loss on disposal of property, pl

ant and equipmen

t

75,586

87,67

3

Loss on valuation of inventor

ies

1,735,741

1,000,763

Others

(51,938)

1,152,322

Total

49,055,633

41,618,554

-

Changes in assets and liabilities

arising from op

erating activi

ties

(In millions of Korean won)

2021

2020

Changes in assets and liabi

lities :

Decrease (increase) in trade receivables

(7,302,604)

1,269,982

Decrease (increase) in non-trade receivables

(204,348)

471,034

Increase in prepaid expenses

(204,971)

(16,429)

Decrease (increase) in inventories

(9,712,379)

(7,540,656)

Increase (decrease) in trad

e payables

1,027,017

3,885,742

Increase (decrease) in othe

r payables

1,516,076

196,710

Increase (decrease) in adva

nces received

(24,371)

95,851

Increase (decrease) in

withholdings

275,998

99,300

Increase (decrease) in accrue

d expenses

3,340,697

5,332,676

Increase (decrease) in provisions

1,862,320

944,417

Payment of post-employment benefits

(606,870)

(610,734)

Increase in plan asse

ts

(2,866,087)

(2,327,602)

Other

(3,387,362)

(1,677,867)

Total

(16,286,884)

122,424

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Significant

non-cash

investin

g

and

financi

ng

transactions

for

the

y

ears

ended

December

31,

2021

and

2020 a

r

e

as

fo

llows:

(

In millions o

f

Korean won

)

2021

2020

Valuation of financi

al assets at fair value through other compr

ehensive income

3,653,253

3,423,908

Valuation of investments in asso

ciates and jo

int ventures

211,9

79

43,297

Reclassification of construc

tion

in progress to property, plant

and equipment

50,451,574

42,177,828

Acquisition of right-of-use assets

(New lease cont

racts establi

shed)

1,748,911

810,823

Reclassification of current portio

n of debentures

477,651

5,31

8

Reclassification of current portio

n of long-term borrowings

852

,317

710,781

(C)

Change

s in liabilities arising

from financing activities for th

e years ended Decembe

r 31, 2021 and 2020 are as follows:

(1)

2021

As of

January 1

Cash flows from

financing

activities

Non-cash transactions

As of

December 31

(In millions of Korean won)

New lease

contracts

Other

1

Short-term borrowings

16,553,

429

(2,616,943)

-

(248,693)

13,687,7

93

Debentures and long-term bo

rrowings

3,663,952

(836,470)

1,748,91

2

127,962

4,704,356

Total

20,217,381

(3,453,413)

1,748,

912

(120,731)

18,392,149

1

Other includes amorti

zation and effe

cts of changes in foreign

currency

exchange rates.

(2)

2020

As of

Januar

y

1

Cash flows from

financing

activities

Non-cash transactions

As of

December 31

(

In millions o

f

Korean won

)

New lease

contracts

Other

1

Short-term borrowings

14,

393,468

2,191,186

-

(31,225)

16,553,429

Debentures and long-term bo

rrowings

4,018,569

(850,452)

810,823

(314,988)

3,663,952

Total

18,412,037

1,340,734

810,823

(346,213)

20,217,381

1

Other includes amortization, eff

ects of changes in foreign curr

ency exchange rates, and the cumulative effect of changes in ac

counting

policies.

For the years

ended December

31, 2021 an

d 2020, cash ou

tflows f

rom pr

incipal repayment (fi

nancial

activities) amount to

W

876,437

million

and

W 823

,935

million, r

espectively,

and

cash

outflows due

to interest expenses (operating

activit

ies)

in relation to the lease liab

ilities amoun

t to W 106,880 millio

n

and W 109,040 million

, respectively.

(D)

The

Company

reported

cash

receipt

s

and

payments

arising

from

tr

ansactions

occurring

frequently,

of

large

gross

amounts,

and

with

short-term

maturities,

such

as

short-term

financial

in

strument

s,

borrowings

and

other,

on

a

net

basis.

As

of

December 31, 2021, most

of the Company’s cas

h and cas

h equivale

nts consist of ban

k deposits.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

28. Financi

al Risk Management

The Company’

s financial risk management focuses on mi

nimizing t

he market

risk, credit risk,

and liquidity r

isk arising from

operating

activities.

To

mitigate

these

risks,

the

Company

implements

and

operates

a

financial

risk

p

olicy

and

pro

gram

that

closely monit

ors and manages such

risks. In addition,

the Compa

ny uses

derivatives to hedge ce

rtain risk exposure

.

The finance

team mainly carries

out the

Company’s financial ris

k management. After implementing the global financial risk

management

policies,

the fina

n

ce

team

p

eriodically

measures,

ev

aluates,

and

hedges

the

financial

risk

and

also est

ablishes

and

implements the global fin

ancial risk management policy

.

The

Company

also

manages

the

foreign

exchange

risk

by

monitorin

g

foreign

exchange

rate

fluctuations

at

local

f

inance

centers

across major

region

s (United

States, United Kingdom, Singapore,

China, Brazil,

and Russia) and

acting

as

an agent of

for

eign

exchange

transact

ions.

In

addition,

the

Company

manages

the

liq

uidity

r

isk

by

utilizing

a

globally

integrated fi

na

nce

structur

e.

The

Company’s

financial

assets

t

hat

are

under

the

financial

ris

k

management

are

comprised

of

cash

and

cash

equivalents,

short-term

fin

ancial

instru

ments

,

financial

assets

at

amortized

cost,

trade

receivables

and

oth

ers.

The

Company’s

financial

liabilities under financial risk man

ageme

n

t are comprised of tr

ade pa

yables, borrowi

ngs, and others.

(A)

Market risk

(1)

Foreig

n exchange risk

The Company is exposed to the fo

reign

exchange risk arising fro

m its

global operatio

ns performed in

currencies other tha

n

its

functiona

l

currency.

Th

e

majo

r

currencies

that

are

exposed

to

the

foreign

e

xchange

risk

are

the

US

dollar

,

Euro,

and

Indian Rupee.

The

Company

focuses

on

minimizing

the

imp

act

of

the

foreign

exchang

e

fluctuation

by

maintaining

the

equal

amount

of

assets and liabilities denominated in each foreig

n currency, ir

respective of the

foreign exchange fluctuation considerations.

To

prevent

the

exchange

position,

the

Company’s

foreign

exchang

e

management

policy

requires

the

normal

business

transactions, including imports and

exports, as well

as the fin

ancing transactions

su

ch as

depositing and borrowing, to

b

e in

local

currency

or

for

the

cash-in

currency

to

be

matched

up

wit

h

the

cash-out

currency.

Moreover,

the

Company

periodically

evaluates

and

monit

o

rs

the

foreign

exchange

risk

to

efficient

ly

mitigate

su

ch

risk,

and

th

e

speculative

foreign

exchang

e

transactions are strictly prohibited.

As of December 31,

2

021 and 2020,

wh

en the currency rates

chang

e by

5%, the impact

on profit or loss

(before income tax

effects) a

rising from financial

assets and

liab

ilities

deno

mina

ted

in f

oreign currencies

other

than the

functional

currency

ar

e

as follows:

(

In millions o

f

Korean won

)

December 31, 2021

December 31, 2020

Increase

Decrease

Increase

Decrease

USD

250,489

(250,489)

174,400

(174,400)

EUR

107,519

(107,519)

112,244

(112,244)

INR

24,216

(24,216)

21,959

(21,959)

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

Interest rate ris

k

Risk

of

change

s

in

interest

rates

for

floating

interest

rate

fi

nan

cial

instruments

is

defined

as

the

risk

that

the

fair

v

alue

of

components

of

the

statements

of

financial

p

osition,

and

fu

ture

cash

flows

of

interest

income

(

expenses)

of

a

financial

instrument,

will

fluctuate

because

of

the ch

anges

in

market

in

t

erest

rates.

The

Company’s

pos

ition

with

regard

to

interest

rate risk exposure is

main

ly driven by

its floating interest ra

te debt

obligations a

nd interest-bearin

g deposits. T

he Company

implemented policies and op

erate

s to minimize uncertainty arisi

ng from ch

anges in interest rates a

nd financial expense

s.

As

of

December

31,

2021

and

2020,

changes

in

profit

or

loss

(be

f

o

r

e

i

n

c

o

m

e

t

a

x

e

f

e

c

t

s

)

a

s

a

r

e

s

u

l

t

o

f

a

1

%

p

c

h

a

n

g

e

i

n

interest rates on floating in

tere

st rate financial assets and l

iabilities are presented below:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Increase

Decrease

Increas

e

Decrease

Financial assets

71,

131

(71,131)

81,013

(81,013)

Financial liabilities

(

18,779)

18,779

(2,195)

2,195

Net effect

52,352

(52,352)

78,818

(78,818)

(3)

P

r

i

c

e

r

i

s

k

The C

ompany’s

investment

portfo

lio consists

of direct

and indir

ect in

v

estments

in

equity

instruments

classified

as fina

ncial

assets at

fair value throu

gh other compre

hensive income a

nd fin

ancial assets at fair value throug

h profit or loss, which is in

line with the C

ompany’s strategy.

As of

December

31, 2021

and 2020,

price

fluctuation

of marketab

le

equity

securities (listed

stocks) by

1% would

result in

changes i

n other

comprehensive inc

ome (before

income tax)

of W

116,087 million

and

W 69,101 million, respectively,

and

changes in profit b

efore tax of W 4,784 million and W 4,316 millio

n, respectively.

(B)

Credit risk

Credit

risk

arises

during

the

normal

course

of

transactions

and

investing

activities

wh

ere

clients

or

other

parties

fail

to

di

scharge

an obli

gation. The Com

pany monitors

and sets

the client’s

and t

he c

ounterparty’s cre

dit limit on

a periodic

basis based on

the

client’s a

nd counterparty

’s financial condi

tions, default

histo

ries and other im

portant factors. Adeq

uate insurance coverage

i

s

maintained for trade receivables r

elated to the trading partner

s situated in higher risk countries.

Credit risk can arise from tran

sactions with financial in

stitut

ions w

hich include financi

al instrument transact

ions such as ca

sh

and

cash

equivalents,

deposits,

and

derivati

ve

instruments.

To

minimize

such

risk,

the

Company

transacts

only

with

banks

which

have strong

international

credit

rating (S&P

A and

above),

and

all new

transactions

with financial

institutions

with

no

prior transaction history are approved, managed and monitored b

y the

Company’s finance team

and the local

finance center.

The

Company

generally

enters

into

a

financial

agreement

with

n

o

restrictions,

such

as

debt

ratio

covenants

,

provision

o

f

collateral an

d/or repayment of loans/

borrowings. The C

ompany r

equires separate app

rovals for

contracts with restrictions.

As

of

December

31,

2021

and

Decem

ber

31,

2020,

the

Company

esti

mates

that

its

maximum

exp

osure

to

credit

risk

is

th

e

carrying amount of its

financial assets, net of impairment loss

es.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(C)

Liqu

idity risk

Due t

o large

investments made

by the

Company, mai

ntaining adequ

ate

lev

els

of liquidity risk is

critical. The

Comp

any strives

to ach

ieve this

goal by

periodically

forecasting its

capital

ba

lance, estimating the requi

red cash levels, and managing income

and expenses.

The Company manages its liquidity risk by

period

ically forecast

ing t

he projected

cash flows.

If abnormal

signs are

identified,

the

Company

works

with

the

local

f

inance

center

and

provides

li

quidity

support

by

utilizing

a

globally

integrated

finance

structure,

such

as

Cash

Po

oling.

In

addition,

the

Company

maint

ains

a

liqui

dity

management

process

which

provides

an

additional fin

ancial support fro

m the lo

cal finance cen

ter and

the Company. T

he Cash Pooli

ng program allows

the sharing

of

surplus

fu

nds

among

the

en

tities

and

contributes to

minimizing

the

liquidity

r

isk

and

strengthen

ing

the

Company’s competitive

position by redu

cing capital oper

ation exp

enses and financial e

xpenses.

For

the

need

of

large

scale

of

liqu

idity,

the

Company

secures

t

he

credit

limit

for

overseas

subsidiaries

through

payment

guarantees.

As

of

December

31,

2021

and

2020

,

the

following

table

is

an

und

iscounted

cash fl

ow

analysis

for

financial

liabilities

accordin

g

to their remai

ning contractual maturi

ty.

December 31, 2021

(In millions of

K

orean won)

Less than

3 months

4 - 6 months

7 – 12 months

1 - 5 years

More than

5 years

Financial liabilities

55,185,

809

1,814,271

1,674,980

5,462,057

944

,232

December 31, 2020

(In millions of

K

orean won)

Less than

3 months

4 – 6 months

7

- 12 months

1 - 5 years

More than

5 years

Financial liabilities

44,988,

792

733,776

1,651,951

3,945,429

578,3

46

The

table

above

shows

the

Company’s

financial

liab

ilities

based

on

the

remaining

period

at

the

consolidated

statements

of

financial position date until the

contractual maturity date. Th

e amou

nts disclosed

in the t

able are t

he contractual

undiscount

ed

cash flows.

The

Comp

any’s

derivativ

e

financial

liabilities

of

W

113,590

mil

lion

(December

31,

2020:

W

47,704

million)

has

been

included within the less than 3 months bucket. These are the Co

mpany

’s

trading portfoli

o

of derivative instrument

s,

on a net

settlement

term,

of

wh

ich

the

con

tractual

maturities

are

not

es

senti

al

for

understandi

ng

its

cash

flows.

These

contracts

are

managed on

a

n

et

fair value

basis rather than

by the

maturity

d

ate. Net

settled derivatives

consi

st of

fo

rwards

on

cu

rrency ra

tes

used b

y the Comp

any to manag

e

the exchange rate profile.

Derivatives

that

are

settled

on

a

gross

basis

by

the

delivery

o

f

underlying

items,

including

derivatives

for

hedging,

will

be

settled within the n

ext 60 months

from th

e end of the reporting

period. T

hese derivative are not i

ncluded in the ta

ble above.

There is

no maximum

liquidity risk

exposure

from t

hos

e

other

than the

above

financial

liabilities (e.g.,

payment

and

performance guarantees)

as of December 31, 2021.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(D)

Derivative financial instru

ments

The

Company

applies

cash

flow

hedge

accounting

to

hedge

the

for

eign

currency

risk

of

forecasted

transaction

including

hedging the

price

risk associated

with inventory

.

Details

of de

rivative

financi

al

instruments that

qualify as

cash

flow

hedges

as of December 31

, 2021 and 2020 a

re as follows:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Assets

Liabilities

Assets

Liabilities

Currency forward exchange contracts

Current items

34,075

11,090

11,311

22,236

Non-current items

16,790

3,280

11,999

19,694

Total

50,865

14,370

23,310

41,930

For

the

y

ears

en

ded

December

31,

2021

and

2020

,

the

Comp

any

rec

ognizes

the

gains

and

losses

relating

to

the

effective

portion

of

changes

in

fair

value

of

derivati

ves

that

are

design

ate

d

and

qualify

as

cash

flow

hedges

in

other

comprehensive

income,

which amount

to

the gain

of W

50,410

million

(after tax

)

and lo

ss of

W 33,406

million

(after

tax), resp

ectively, and

recognizes the gains and losses

relating to the ineffective por

tion in profit or loss, which amount to the gain of W 451 milli

on

(before tax) and

loss of W 27

million

(before tax

), respectivel

y. For

the years e

nded Dece

mber 31, 20

21 and 2020,

gains and

losses

reclassified di

rectly from

other

comprehensive

income to

profit

or

loss amount

to

the gain

of

W

1,11

7

million (after

ta

x)

and

the

gain

of

W

4,664

million

(after

tax),

respectively

and

t

he

gains

reclassified

from

othe

r

comprehensive

income

to

the

carrying

amou

nt

of

inventory

amount to

the

gain

of

W

1,539

mill

ion

(after

tax)

and

the

gain

of

W

3

,792

million

(after

tax),

respectively.

(E)

Capital risk management

The

purpose

of

ca

pital

mana

gement

is

to

maintain

a

sound

capi

ta

l

s

t

r

u

c

t

u

r

e

.

T

h

e

C

o

m

p

a

n

y

m

o

n

i

t

o

r

s

c

a

p

i

t

a

l

o

n

t

h

e

b

a

s

i

s

o

f

credit ratings and debt ratio. Debt ratio is calculated

by divi

ding the total liabilities by total equ

ity in the financial sta

tements.

The Company’s capital

risk

managemen

t

policy

has

not

changed si

nce

the

prio

r

reportin

g

periods.

The

Compa

ny

has

maintained an AA- and Aa3 cred

it

ratings fr

om S&P and Moody’s,

respectively.

The total liabilities to equity ra

tios as o

f December 31, 2021

and 2020 are as follows:

(In millions of Korean won)

December 31, 2021

December 31, 2020

Total liabilitie

s

121,721,227

102,287,702

Total equity

304,899,931

275,948,016

Debt ratio

39.9%

37.1%

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(F)

Fair value estimation

(1)

Carryi

ng

amounts

and

fair

values

of

financial

instruments

by

ca

tegory

as

of

Decemb

er

31,

2021

and

2020

are

as

follows:

December 31, 2021

December 31, 2020

(In millions of Korean won)

Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

Cash and cash equi

valents

39,031,415

(*1)

29,382,578

(*1)

Short-term financial instruments

81,708,986

(*1)

92,441,703

(*1)

Short-term financial assets

at amortized cost

3,369,034

(*1)

2,757,111

(*1)

Short-term financial assets

at fair value

throu

g

h

p

rofit or loss

40,757

71,451

Trade receivables

40,713,415

(*1)

30,965,058

(*1)

Financial assets at

fair value through

other com

p

rehensive income

13,965,

839

13,965,839

12,575,216

Financial assets at

fair value through

p

rofit or loss

1,525,344

1,202,969

Other

(

*

2)

9,040,189

328,216

6,634,873

239,107

Total financial assets

189,394,979

176,030,959

Financial liabilities

Trade payables

13,453,351

(*1)

9,739,222

(*1)

Short-term borrowings

13,687,793

(*1)

16,553,429

(*1)

Other payables

14,126,970

(*1)

10,645,637

(*1)

Current portion of long-term li

abilities

1,329,968

554,106

716,

099

5,318

- Current portion of long-term b

orrowing

852,317

(*1)(*3)

710,781

(*3)

- Current portion of debentures

477,651

554,106

5,318

Debentures

508,232

546,339

948,137

997,101

Long-term borrowings

2,866,156

(*1)(*3)

1,999,716

(*3)

Long-term other payab

les

(

*

2)

2,562,158

(*1)

1,274,304

2,176

Other

(

*

2)

10,781,684

337,394

9,639,252

284,628

Total financial liabilities

59,316,312

51,515,796

(*1)

Assets and liabilities

whose carrying amount

is a reasonable a

pproximation of

fair value are

excluded from

the fair value dis

closures.

(*2)

Assets

measured

at

the cost

of W

8,711,973

million

(December

31

,

2020:

W

6,395,766

million)

and

lia

bilities

measured

at

the

co

st

of

W 13,006,448

million (December

31, 2020:

W 10,626,752 million

)

are exc

luded as

the carrying am

o

unt is a reasonab

le estimation

of fair

value.

(*3)

Lease liabilities, classified under the current portion of

long

-term liabilities and

long-term

borrowings, are

excluded from t

he

fair value

disclosures in

accordance with

Korean IFRS 1107.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(2)

Fair

valu

e

hierarchy

classifications

of

the

finan

cial

in

strumen

ts

that

are

measured

or

disclosed

at

fair

value

as

of

December 31, 2021 and

2020 are as follows:

December 31, 2021

(In millions of Korean won)

Level 1

Level 2

Leve

l 3

Total balance

1) Assets

Short-term financial assets

at fair value

through profit or loss

-

35,620

5,137

40,757

Financial assets at

fair value through

other comprehensive inco

me

11,608,708

-

2,357,131

13,965,839

Financial assets at

fair value through

p

rofit or loss

478,401

-

1,046,943

1,525,344

Other

-

307,213

21,003

328,216

2) Liabilities

Current portion of deben

tures

-

554,106

-

554,106

Debentures

-

546,339

-

546,339

Other

-

331,956

5,438

337,394

December 31, 2020

(In millions of Korean won)

Level 1

Level 2

Leve

l 3

Total balance

1) Assets

Short-term financial assets

at fair value

throu

g

h

p

rofit or loss

-

58,763

12,688

71,451

Financial assets at

fair value through

other com

p

rehensive income

6,910,108

-

5,665,108

12,575,216

Financial assets at

fair value through

p

rofit or loss

431,626

-

771,343

1,202,969

Other

-

239,107

-

239,107

2) Liabilities

Current portion of deben

tures

-

5,318

-

5,318

Debentures

-

997,101

-

997,101

Long-term other payab

les

-

2,176

Other

-

277,556

7,072

284,628

The levels of the fair value hie

rarchy and its application to f

inan

cial assets and liabilities are described below.

ㆍ

Level 1: Quoted prices (unadjus

ted) in activ

e markets for iden

tical assets or liabilities

ㆍ

Level

2:

Inputs

other

than

quoted

prices

include

d

within

Level

1

th

at

are

observable

for

the

asset

or

liability

,

either

directly or indirectly

ㆍ

Level 3: Inputs fo

r the asset

or liability that are not based

on observa

ble market data (that is, u

nobservable inputs)

The

fair

value

o

f

financial

instruments

traded

in

active

market

s

is

based

on

quoted

market

prices

at

the

statements

of

financi

al

position d

ate. A market

is regard

ed as

active if quo

ted prices

are

readily and regularl

y

avail

able

from an exchange, deal

er,

broker,

industry

group,

pricing

service,

or

regulatory

agency,

and

those

prices

represent

actual

and

regularly

occurring

market transact

ions on an arm

’s length basis.

The quoted market

price used for financial assets

held by the Company is the

current

bid

pri

ce.

These

instruments

are

in

cluded

in

Level

1.

T

he

ins

truments

included

in

Level

1

are

listed equity

investments,

most of which are cl

assified as financial assets

a

t f

air value through

other comprehen

sive income.

The fair

value of fi

nancial instrument

s that are n

ot traded i

n

an active market (for example,

ove

r-the-counter derivatives) is

determined by

using valuation techniques. These

valuation techn

iques maximize

the use

of

observable

market data

where

it is

available

and

rely as

little

as possible

on

the entity

-sp

ecific estimates.

If all

significant

inputs r

equired for

a fair

valu

e

of an instrume

nt are observable, the i

nstrument is incl

uded in

Level 2.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

If one or m

ore of the significant in

puts are not based on o

bser

vable market data, t

he instrument is incl

uded in Level 3.

The

Company

performs

the

fair val

ue measurement

s requi

red for

f

inancial

reporting

purposes,

including Level

3

fair

values

and

discusses

valuatio

n

processes

and

results

at

least

once

eve

ry

quarter

in

line

with

the

Company

’s

quarterly

reporti

n

g

dates.

The

Company’s

policy

is

to

recognize

transfers

between

l

evels

at

the

end

of

the

reporting

period,

if

co

rresponding

events or changes in circu

mst

ances have occurred.

Specific valuation techni

ques use

d to value financial instrumen

ts include:

ㆍ

Quoted market prices or deale

r quotes for similar instruments

ㆍ

The

fair

value

of

forward foreig

n

exchange

contracts

is d

etermi

ned using

forward

exchange

rates

at

the

statements

of

financial position date, with the

resulting v

alue discounted b

a

ck to present value

Other

techniques,

such

as

discounted

cash

flow

analysis,

are

us

ed

to

determine

fair

value

for

the

remaining

financial

instruments.

For trade

and other

receivables

that are classifie

d

as current

assets, the

book value

approximates

a reasonable

estimate of fair value.

(3)

Valuation technique and the in

puts

The

Company

utilizes

a

p

resent

value

technique

to

discount

futu

re

cash

flows

using

a

proper

interest

rate

for

corporate

bonds, government an

d public bonds, and bank debentures that ar

e classified as Le

vel 2 in the fair val

ue hierarchy.

The foll

owing table

presents the

valuation te

chnique and

the in

puts used

fo

r major

financial instruments classified as Level

3 as of December 31, 2021.

(In millions of Korean won and percentage)

Classification

Fair

value

Valuation technique

Level 3

inputs

Input range

(Wei

g

hted avera

g

e)

Financial assets at fair value t

h

rough other comprehensive in

co

me

Samsung Venture Investment

22,198

Discounted cash flow

Permanent growth rate

-1.0%~1.0%(0.0%)

W

e

i

g

h

t

e

d

a

v

e

r

a

g

e

c

o

s

t

o

f

c

a

p

i

t

a

l

19.7%~21.7%(20.7%)

MiCo Ceramics Co., Ltd.

24,636

Discounted cash flow

Permanent growth rate

-1.0%~1.0%(0.0%)

W

e

i

g

h

t

e

d

a

v

e

r

a

g

e

c

o

s

t

o

f

c

a

p

i

t

a

l

14.7%~16.7%(15.7%)

TCL China Star Optoele

ctronics

Technology Co., Ltd. (CSOT)

1,309,315

Discounted cash

flow

Permanent growth rate

-1.0%~1.0%(0.0%)

W

e

i

g

h

t

e

d

a

v

e

r

a

g

e

c

o

s

t

o

f

c

a

p

i

t

a

l

11.1%~13.1%(12.1%)

China Star Optoelectroni

cs

Semiconductor Display

Technolo

gy

Ltd.

(

CSOSDT

)

418,040

Discounted cash

flow

Permanent growth rate

-1.0%~1.0%(0.0%)

Weighted average cost of capital

11.1%~13.1%(12.1%)

Others

Put option on equity instrum

en

ts

21,003

Binomial model

Risk-free discount rate

0.8%~1.4%, 2.6%

Price volatility

17.7%~27.7%(22.7%)

23.6%~33.6%(28.6%)

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(4)

Changes in Level 3 instruments f

or the years ended December 31,

2021 and 2020 ar

e as fo

llows:

(In millions of Korean won)

2021

2020

Financial assets

Balance as of January 1

6,449,139

7,407,684

Acquisitions

1,075,389

882,331

Disposals

(402,782)

(2,531,276)

Amount recognized in profit or loss

463,818

(55,103)

Amount recognized in other compre

hensive income

1,543,511

829,

764

Other

(5,698,861)

(84,261)

Balance as of December 31

3,430,214

6,449,139

(In millions of Korean won)

2021

2020

Financial liabilities

Balance as of January 1

9,248

2,316

Amount recognized in profit or loss

(784)

196

Other

(3,026)

6,736

Balance as of December 31

5,438

9,248

(5)

Sensitivity analysis for recurrin

g

fair value measurements cate

gorized within Level 3

Sensitivity analysis of

f

inancial instruments is

performed to m

easure favora

ble and unfavorable

changes in

the fair

value of

financial instrumen

ts which are affected b

y the unobservab

le pa

rameters, using a statistical tec

hnique. When the fair value

is affected by

more than two inp

ut parameters, the amount

s repr

esent the most favorable or u

nfavorable.

The results of the sensitivity ana

ly

sis for the effect on profi

t or loss (be

fore tax amount for ot

her comprehensive incom

e or

loss) from

changes in

inputs for

major financial

instruments

w

h

ich are

categorized within Level

3

a

nd subject to se

nsitivity

analysis are as follows:

(In millions of Korean won)

Favorable changes

Unfavorable changes

Classification

Profit or loss

Equity

Profit or loss

Equity

Financial assets at

fair value through

other com

p

rehensive in

come

1

-

150,377

-

(

109,915

)

Others

2

2,920

-

(

4,898

)

-

1

For equity

securities, changes

in fair value

are calculated wi

th

the correlation between the

growth rate (-1%~1%) an

d the dis

count rate,

which are significant unobservable inpu

ts.

2

Changes

were

calculated

based

on

the

correla

tion

be

tween

the

f

air

value

and

price

volatility

(-5%~5%),

which

is

a

significant

unobservable input.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

29. Segment Information

(A)

Operating

segment information

The chief

operati

ng

decision-maker has been

identified as the

M

anagement Committee. The

Company determines operating

segments

b

ased

on

the

units

repo

rted

to

the

Man

agement

Co

mmitte

e.

Th

e

M

anagemen

t

Committe

e

r

eviews

the

oper

ating

profits of

each operating segment in

order to assess the

perfor

mance

and to

make strategic decisions

regarding the allocation

of resources to the segme

n

ts.

Sales

revenu

e

consists

mostly

of

product

sales.

The

operatin

g

s

egments

are

product-based

and

are

identified

based

on

the

internal

organizati

on

and

revenue

streams.

As

of

the

reporting

date,

the

operating

segments

are

comprised

of

CE,

IM,

DS

(Semiconductor an

d DP)

, Harman, and

others.

The

segment

information

for

each

reporting

period

is

prepared

a

fter

allocating

the

intercompa

ny

reconcili

ations

to

depreciatio

n,

amortization

of

intangible

assets

and

operating

profits.

Total

assets and

liabilities

of each

op

er

ating

segment are

exclud

ed

f

rom

the disclosure as t

h

ese have

not

been prov

ided r

egularly to the

Management Committee.

(1)

For the year ended D

ecember 31, 2021

(In millions of

K

orean won)

CE

IM

DS

Harman

Total

1

Total

1

Semi-

conductor

DP

Net revenue

55,832,435

109,

251,383

125,089,024

94,158,569

31,712,526

10,039,922

279,604,799

Depreciation

668,356

739,774

28,353,128

22,826,329

5,504,216

311,237

31,285,209

Amortization

74,182

1,264,

152

1,179,743

930,002

239,821

229,772

2,962,152

Operating profit

3,645,721

13,647,575

33,734,199

29,199,292

4,

457,365

599,097

51,633,856

1

Other operating segmen

ts are not separately dis

closed.

(2)

For the year ended D

ecember 31, 2020

(In millions of

K

orean won

)

CE

IM

DS

Harman

Total

1

Total

1

Semi-

conductor

DP

Net revenue

48,173,324

99,

587,493

103,036,146

72,857,803

30,585,715

9,183,748

236,806,988

Depreciation

582,929

855,573

24,330,737

18,124,847

6,183,077

264,928

27,115,735

Amortization

76,270

1,394,

396

1,321,305

1,053,892

257,446

233

,518

3,219,881

Operating profit

3,561,536

11,472,671

21,120,231

18,804,970

2,

236,919

55,518

35,993,876

1

Other operating segmen

ts are not separately dis

closed.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Region

al information

The re

gional se

gment inf

ormation p

rovided t

o the

Management

Com

mittee for

the reportable

segments

as of a

nd for

the years

ended December 31

, 2021 and 2020 a

re as follows:

(1)

As of and for the year

ended Decem

ber 31, 2021

(In millions of Korean won)

Korea

America

Europe

Asia

and Africa

China

Intercompany

elimination

Consolidated

Net revenue

43,971,631

97,903,868

50,323,287

41,834,609

45,571

,4

04

-

279,604,799

Non-current assets

1

127,116,179

10,758,956

5,951,90

5

9,088,409

18,244,469

(995,135)

170,164,783

1

Financial instr

uments, deferred

tax assets, investments in ass

ociates and joint ventures, and

other

s are excluded from non-cu

rrent assets.

(2)

As of and for the year

ended Decem

ber 31, 2020

(In millions of Korean won)

Korea

America

Europe

Asia

and Africa

China

Intercompany

elimination

Consolidated

Net revenue

37,035,377

78,305,571

45,967,097

37,692,286

37,806

,657

-

236,80

6,988

Non-current assets

1

110,075,478

9,035,

206

6,087,436

8,972,711

13,782,478

(531,915)

147,42

1,394

1

Financial instr

uments, deferred

tax assets, investments in ass

ociates and joint ventures, and

other

s are excluded from non-cu

rrent assets.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

30. Related P

arty Transactions

(A)

Sale and purchase transactions

Sale and purchase transactions w

ith related parties for the yea

rs ended December 31, 2

021 and 2020 are as follows:

2021

(In millions of

K

orean won)

Name of com

p

an

y

1

S

a

l

e

s

Disposal of

non-cur

rent

as

se

ts

Purchas

es

Purchase of

non-cur

rent

assets

Associates and

joint ventures

Samsung SDS

142,435

-

1,732,273

569,840

Samsung Electro-Mechanics

47,031

-

1,525,854

-

Samsung SDI

76,160

269

671,169

36,180

Cheil Worldwide

27,740

-

758,877

16

Other

1,288,094

68

12,361,130

118,099

Total

1,581,460

337

17,049,303

724,135

Other related

parties

Samsung C&T

79,183

32,

705

334,386

4,045,297

Other

352,919

-

1,608,435

633,109

Total

432,102

32,705

1,942,821

4,678,406

Other

2

Samsung Engineering

787

-

48,284

2,404,314

S-1

13,819

-

469,979

35,762

Other

129,439

2,371

496,451

261,614

Total

144,045

2,371

1,014,714

2,701,690

1

Transactions with sep

arate entities that are re

lated parties o

f the Company.

2

Although

these

e

ntities

are

not

of

the

Company

in

accordance

with

Korean IFRS 1024

,

they

belong

to

the

same

large

enterprise group in accordance

with the Monopoly Regulation and

Fair Trade Act.

2020

(In millions of

K

orean won)

Name of com

p

an

y

1

S

a

l

e

s

Disposal of

non-cur

rent

as

se

ts

Purchas

es

Purchase of

non-cur

rent

assets

Associates and

joint ventures

Samsung SDS

108,634

77

1,752,792

469,270

Samsung Electro-Mechanics

37,837

-

1,664,069

-

Samsung SDI

73,561

272

601,286

91,949

Cheil Worldwide

26,996

-

649,164

-

Other

1,059,045

30

10,556,776

166,842

Total

1,306,073

379

15,224,087

728,061

Other related

parties

Samsung C&T

94,736

43,

214

328,484

4,057,233

Other

309,819

-

1,105,252

497,163

Total

404,555

43,214

1,433,736

4,554,396

Other

2

Samsung Engineering

4,104

-

70,073

1,946,409

S-1

17,199

-

436,211

43,336

Other

100,591

-

422,989

172,023

Total

121,894

-

929,273

2,161,768

1

Transactions with sep

arate entities that are re

lated parties o

f the Company.

2

Although

these

e

ntities

are

not

of

the

Company

in

accordance

with

Korean IFRS 1024

,

they

belong

to

the

same

large

enterprise group in accordance

with the Monopoly Regulation and

Fair Trade Act.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(B)

Balances of receivables and payables

Balances of receivables and payables arising from the sales and

purchases of goods

and services as of D

ecember 31, 2021

and 2020 are as follow

s:

December 31, 2021

(In millions of Korean won)

Name of company

1

Receivables

Payables

2

Associates and

joint ventures

Samsung SDS

64,521

616,949

Samsung Electro-Mechanics

3,659

176,549

Samsung SDI

130,638

100,835

Cheil Worldwide

206

428,090

Other

397,709

1,361,554

Total

596,733

2,683,977

Other related parties

Samsung C&T

220,550

1,739,997

Other

20,306

251,766

Total

240,856

1,991,763

Othe

r

3

Samsung Engineering

338

1,151,536

S-1

2,423

40,558

Other

48,703

185,256

Total

51,464

1,377,350

1

Balances due fr

om and to separate entities

that are related pa

rties of the Company.

2

Payables and o

thers include lease liabilities

.

3

Although

these

entities

are

not

rel

ated

parties

of

the

Company

in

accordance

with

Korean IFRS 1024

,

they

belong

to

the

same

large

enterprise group in accordance

with the Monopoly Regulation and

Fair Trade Act.

December 31, 2020

(In millions of Korean won)

Name of company

1

Receivables

Payables

2

Associates and

joint ventures

Samsung SDS

36,905

543,388

Samsung Electro-Mechanics

379

120,407

Samsung SDI

108,561

89,178

Cheil Worldwide

195

398,836

Other

253,921

1,154,549

Total

399,961

2,306,358

Other related parties

Samsung C&T

245,138

2,327,126

Other

20,484

172,726

Total

265,622

2,499,852

Other

3

Samsung Engineering

492

538,853

S-1

2,091

45,257

Other

11,344

55,053

Total

13,927

639,163

1

Balances due fr

om and to separate entities

that are related pa

rties of the Company.

2

Payables and o

thers include lease liabilities

.

3

Although

these

entities

are

not

rel

ated

parties

of

the

Company

in

accordance

with

Korean IFRS 1024

,

they

belong

to

the

same

large

enterprise group in accordance

with the Monopoly Regulation and

Fair Trade Act.

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(C)

For

the

years

ended

December

31,

2021

and

2020,

the

Company

inv

ested

W

47,090

million

and

W

83,280

million,

respectively, in

associates

and

joint

ventures.

In

addition,

the

Company

recovered

W 19

,169

million

of inv

estments in

associates

and

joint

ventures

for

the

year e

nded Dece

mber

31,

2

021,

and

there

was n

o ret

urn

of i

nvestments

in

associates

and joint ventures for the yea

r ended December 31, 2020.

(D)

For t

h

e

year ended

December 31,

2021, the Company

declared W

3,

527,449

million

o

f dividends (W

1,659,962 million

for

the

year

ended

December

31,

2020)

to

the

In

addition,

for

the

year

ended

December

31,

2021,

the

Company

declared W

267,738

million (W

125,744

million

for the

y

ear

ended

December

31,

2020) o

f divid

ends to

the

entities

that

are

not

of

the

Company

in

accorda

nce

with

Ko

rean IFRS 1024

,

but

be

long

to

the

same

conglomerate according

to the

Mo

nopoly Regulation and Fair

Trad

e Act. As of

December 31, 2021 and 2020, there is

no dividend payab

les to the entities that are not in scope o

f K

orean

IFRS 1024.

(E)

For t

h

e

year ended

December 31

, 2021, t

he Company

entered int

o

lease a

greements with its

r

elated parties amounted

to

W 12,602 million, and the lease pa

yments mad

e to the relat

ed

pa

rties f

or the years ende

d December 31, 202

1 and 2020

amounted to W 31,893 million and

W 51,798 million, respectively

.

(F)

Key management compensat

ion

The

compensation

paid

or

payable to

key

management

(executi

ve d

irectors)

for their

services

f

or the

years

ended

December

31, 2021 a

nd 2020 consists

of:

(In millions of Korean won)

2021

2020

Short-term employee benefits

20,370

13,333

Post-employment benefits

886

987

Other long-term employee b

e

nefits

8,092

7,287

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

31. Information for Non

-Controlling Interests

(A)

Ch

anges in accumulated non-controlling

interests

The

profit

or

loss

allocated

to

non-controlling

interests

and

accumulated

non-controlling

interests

of

subsidiaries

that

are

material to the Company for the

years

ended December 31, 2021 a

nd 2020 are as follows:

(In millions of Korean won)

Samsung Disp

l

ay Co., Ltd. an

d its subsidiaries

2021

2020

Percentage of non-contro

lling interests

15.2%

Balance as of January 1

7,723,784

7,427,228

Profit for the year

580,164

294,139

Dividends

(3,123)

(54,121)

Other

(272,270)

56,538

Balance as of Decemb

er 31

8,028,555

7,723,784

(B)

The summa

rized financial

informa

tion

for

each s

ubsidiary with

n

on-controlling interests

that

are material

to

the Company

before the i

ntercompany elimina

tions for the year

s December 31,

2021 and 2

020 are as follows:

(1)

Summarized

consolidated statements o

f financial position

(In millions of Korean won)

Samsung Disp

l

ay Co., Ltd. an

d its subsidiaries

December 31, 2021

December 31, 2020

Current assets

35,220,985

28,354,913

Non-current assets

24,773,119

26,904,627

Current liabilities

7,539,403

7,631,559

Non-current liabilities

1,359,478

841,323

Equity attributable t

o:

51,095,223

46,786,658

Owners of the parent company

51,012,895

46,282,988

Non-controlling interests

82,328

503,670

(2)

Summarized consoli

dated statements of co

mprehensive income

(In millions of Korean won)

Samsung Disp

l

ay Co., Ltd. an

d its subsidiaries

2021

2020

Sales

31,557,504

30,474,830

Profit for the year

3,511,314

1,874,486

Other comprehensive in

come (loss)

1,256,904

408,022

Total comprehensive in

come attr

ibutable to:

4,768,218

2,282,50

8

Owners of the parent company

4,752,963

2,267,953

Non-controlling interests

15,255

14,555

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

(3)

Summarized consoli

dated statements of cas

h flows

(In millions of Korean won)

Samsung Disp

l

ay Co., Ltd. an

d its subsidiaries

2021

2020

Cash flows from operating activities

10,943,029

7,800,766

Cash flows from investing

activities

(9,

927,110)

(6,933,401)

Cash flows from financin

g activities

(1,284,749)

(536,883)

Reclassification to assets held-for-sale

-

(139)

Effect of exchan

ge rate change

s on cash and cash equivalents

52

,154

(27,688)

Increase (decrease) in cash a

nd cash equivalents

(216,676)

302,

655

Cash and cash equivalents at b

eginning of the year

975,535

672

,880

Cash and cash equivalents at

end of year

758,859

975,535

32. Assets and Liab

ilities Held-for-Sa

le

(A) Sales of o

wnership i

nterest in SSM and SSL

For the year ended Dece

mbe

r 31, 2020, the Company decided to se

l

l its 100%

ownership in

Samsung Suz

hou Module C

o.,

Ltd.

(“SSM”)

and

60%

ownersh

ip

in

Samsung

Suzhou

LCD

Co.,

Ltd.

(“SSL”)

to

TCL

China

Star

Opto-electronics

Technologies Co., Ltd. (“CS

O

T”). The Company entered

into the s

ales agreement on August

28, 2020, and the

sales were

completed on A

pril 1, 2021.

(B) Details of assets and l

iabilities classified as held-for

-sale as of December 3

1, 2020 are as fo

llows:

(In millions of Korean won)

December 31, 2020

Assets held-for-sale

Cash and cash equivalents

139

Inventories

53,157

Other current ass

e

ts

26,474

Property, plant and equipment

766,614

Intangible assets

1,421

Other non-current assets

81,627

Total

929,432

Liabilities held-for-sale

Current liabilities

337,032

Non-current liabilities

1,710

Total

338,742

(C) Details of accumulated other

comprehensive income

attributa

ble to assets held-for-s

ale are as follows:

(In millions of Korean won)

December 31, 2020

Loss on overseas business tr

anslation, n

et of tax

(12,132)