SK Telecom (SKM) - 2024 Q1 - Quarterly Report

Resolution to Call the Annual General Meeting of Shareholders The Board resolved to convene the annual general meeting on March 26, 2024, to approve financial statements, amend articles, appoint directors, and set remuneration Meeting Details and Agenda The Board resolved to convene the annual general meeting on March 26, 2024, to approve 2023 financial statements, amend articles, appoint directors, and set remuneration Annual General Meeting Details | Item | Details | | :--- | :--- | | Date / Time | March 26, 2024 (Tuesday), 10:00 am (Seoul time) | | Place | SUPEX Hall, 4th Floor, SK T-Tower, 65, Eulji-ro, Jung—gu, Seoul, Korea | | Agenda | 1. Approval of Financial Statements for the 40th Fiscal Year (2023)
2. Amendments to the Articles of Incorporation
3. Appointment of Directors (Executive, Non-executive, Independent)
4. Appointment of a Member of the Audit Committee
5. Approval of the Ceiling Amount of Remuneration for Directors
6. Amendments to the Remuneration Policy for Executive Officers | Approval of Financial Statements for the 40th Fiscal Year (2023) Shareholders will vote on approving the 2023 financial statements, prepared under K-IFRS, with the audit report available in early March 2024 - The company seeks shareholder approval for the financial statements of the 40th fiscal year (2023)[6] - The audited financial statements will be publicly available on SK Telecom's and the SEC's websites in early March 2024, with consolidated and separate statements provided in Appendices 1 and 2, respectively[6] Amendments to the Articles of Incorporation Proposed amendments to the Articles of Incorporation aim to align dividend policies and extend the Board meeting notice period - The company proposes to amend its articles to distribute dividends equally for all shares of the same class, regardless of their issuance dates, aligning with the model articles of the Korea Listed Companies Association[7] - A key proposed change allows the Board of Directors to set the record date for dividends after the resolution to distribute them, which is intended to enhance dividend predictability for shareholders. The record date must be announced two weeks prior[8] - The notice period for convening a Board of Directors' meeting is proposed to be extended from two days to at least seven days, with an exception for urgent matters where notice can be given one day prior[8] Appointment of Directors The company proposes appointing four directors, including executive, non-executive, and independent non-executive roles Director Candidates | Name of Candidate | Position | Recommended by | | :--- | :--- | :--- | | Ryu, Young Sang | Executive Director | Board | | Kim, Yang Seob | Executive Director | Board | | Lee, Sung Hyung | Non-executive Director | Board | | Noh, Mi Kyung | Independent Non-executive Director | Independent Director Nomination Committee | Candidate Details and Recommendations Candidates are recommended for their expertise in financial performance, AI business expansion, and risk management - Ryu, Young Sang is recommended for reappointment due to his role in improving financial performance and establishing the company's AI Pyramid strategy[13] - Kim, Yang Seob, a finance expert, is recommended for his capabilities in maintaining financial stability and supporting the expansion of global AI-related businesses[13] - Noh, Mi Kyung is recommended as an independent director for her expertise in global risk management, which is expected to strengthen the company's practices and support its growth as an AI Company[13] Appointment of a Member of the Audit Committee Noh, Mi Kyung is recommended for the audit committee to enhance its professionalism, independence, and management transparency - Noh, Mi Kyung is recommended for the audit committee based on her expertise in finance, accounting, and risk management from her career in the global finance industry[14] - The Board believes her appointment will enhance the professionalism and independence of the audit committee and improve management transparency[14] Approval of the Ceiling Amount of Remuneration for Directors Shareholders will vote on a proposed KRW 10 billion director remuneration ceiling for 2024, a decrease from the prior year Director Remuneration Comparison | | Fiscal year 2024 (Proposed) | Fiscal year 2023 (Actual) | | :--- | :--- | :--- | | Number of directors | 9 | 8 | | Maximum authorized remuneration | KRW 10,000,000,000 | KRW 12,000,000,000 | | Total remuneration paid | — | KRW 4,138,735,160 | Amendments to the Remuneration Policy for Executive Officers Amendments to the executive remuneration policy clarify severance pay calculations and introduce a non-compete clause - The primary purpose of the amendment is to change the criteria for calculating severance pay for an executive officer promoted from executive vice president to president[18] - A new clause stipulates that any severance payment exceeding the statutory amount is considered compensation for non-compete obligations. If this obligation is violated, the executive must return the excess amount as a penalty[16] - The amendments will take effect on April 1, 2024, with transitional provisions for executives promoted before this date[19] Appendix 1: Consolidated Financial Statements (FY 2023) This appendix presents the consolidated financial statements for fiscal year 2023, including financial position, profit or loss, cash flows, and detailed notes Consolidated Statement of Financial Position Consolidated total assets decreased to KRW 30,119 billion in 2023, while liabilities also decreased, and equity slightly increased Consolidated Financial Position (in millions of KRW) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | 30,119,227 | 31,308,262 | | Total Liabilities | 17,890,828 | 19,153,066 | | Total Shareholder's Equity | 12,228,399 | 12,155,196 | Consolidated Statement of Profit or Loss Operating revenue increased to KRW 17,609 billion in 2023, with operating profit and profit attributable to owners also growing significantly Consolidated Profit or Loss (in millions of KRW, except EPS) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Operating revenue | 17,608,511 | 17,304,973 | | Operating profit | 1,753,204 | 1,612,070 | | Profit for the year (attributable to owners) | 1,093,611 | 912,400 | | Basic earnings per share (in won) | 4,954 | 4,118 | Consolidated Statement of Cash Flows Net cash from operating activities slightly decreased in 2023, with increased cash usage in investing and financing, leading to a net decrease in cash Consolidated Cash Flows (in millions of KRW) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | 4,947,205 | 5,159,317 | | Net cash used in investing activities | (3,352,905) | (2,807,795) | | Net cash used in financing activities | (2,020,990) | (1,349,882) | | Net increase (decrease) in cash | (426,690) | 1,001,640 | | Cash and cash equivalents at end of year | 1,454,978 | 1,882,291 | Notes to the Consolidated Financial Statements This section details the reporting entity, basis of preparation under K-IFRS, material accounting policies, and changes in consolidation scope Reporting Entity and Subsidiaries SK Telecom Co., Ltd. is a Korean cellular service provider controlled by SK Inc., with changes in consolidated subsidiaries in 2023 - SK Inc. is the ultimate controlling entity of SK Telecom Co., Ltd[34] - In 2023, Global AI Platform Corporation and Global AI Platform Corporation Korea were newly included in the consolidation scope[40] - SK Telecom Japan Inc. and SK Planet Japan, K. K. were excluded from the consolidation scope in 2023 due to a loss of control[39] Basis of Preparation and Accounting Policies Financial statements are prepared under K-IFRS, involving estimates, with new standards adopted in 2023 having no material impact, and key revenue recognition policies detailed - The consolidated financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (K-IFRS)[43] - The Group has adopted new and amended standards effective January 1, 2023, including amendments to KIFRS 1001, 1008, and 1012, which had no material impact on the financial statements[57][59] - For contracts with customers that include both handset sales and wireless services, the Group allocates the transaction price to each performance obligation based on their relative stand-alone selling prices. Incremental costs of obtaining a contract, such as commissions, are capitalized and amortized over the expected contract period[180][181][182] Appendix 2: Separate Financial Statements (FY 2023) This appendix presents the separate financial statements for fiscal year 2023, including financial position, profit or loss, cash flows, and detailed notes Separate Statement of Financial Position Separate total assets decreased to KRW 24,996 billion in 2023, while liabilities also decreased, and equity remained stable Separate Financial Position (in millions of KRW) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | 24,995,932 | 26,432,121 | | Total Liabilities | 14,559,839 | 16,048,739 | | Total Shareholder's Equity | 10,436,093 | 10,383,382 | Separate Statement of Profit or Loss Separate operating revenue increased to KRW 12,589 billion in 2023, with operating profit and profit for the year also growing significantly Separate Profit or Loss (in millions of KRW, except EPS) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Operating revenue | 12,589,220 | 12,414,588 | | Operating profit | 1,455,870 | 1,321,131 | | Profit for the year | 1,059,750 | 869,490 | | Basic earnings per share (in won) | 4,798 | 3,921 | Separate Statement of Cash Flows Separate net cash from operating activities slightly decreased in 2023, with increased cash usage in investing and financing, leading to a net decrease in cash Separate Cash Flows (in millions of KRW) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | 4,008,340 | 4,072,281 | | Net cash used in investing activities | (2,371,006) | (1,964,831) | | Net cash used in financing activities | (2,223,771) | (1,048,738) | | Net increase (decrease) in cash | (586,437) | 1,058,712 | | Cash and cash equivalents at end of year | 631,066 | 1,217,504 | Notes to the Separate Financial Statements This section details the separate financial statements prepared under K-IFRS 1027, outlining corporate information and accounting policies for investments - These financial statements are separate financial statements prepared in accordance with KIFRS 1027, Separate Financial Statements[221] - The Company applies the cost method to investments in subsidiaries, associates, and joint ventures. Dividends from these entities are recognized in profit or loss when the right to receive the dividends is established[235] Other Information This section includes disclaimers regarding the unaudited nature of financial statements and forward-looking statements, along with the report's official signatures Disclaimers and Forward-Looking Statements The report includes disclaimers for unaudited financial statements and forward-looking statements, highlighting inherent risks and uncertainties - The financial statements included in this report are unaudited and subject to change upon completion of the audit process[356] - The report contains forward-looking statements based on current plans and estimates, which are subject to known and unknown risks and uncertainties that could cause actual results to differ[357] Signatures The report was officially signed on February 22, 2024, by Hee Jun Chung, Vice President of SK Telecom Co., Ltd - The report was signed on February 22, 2024, by Hee Jun Chung, Vice President of SK Telecom Co., Ltd[358]