LIFETIME PARTNER IN AUTOMOBILES AND BEYOND H Y U N D A I M O T O R C O M P A N Y A N N U A L R E P O R T 2 0 1 5 HYUNDAI MOTOR COMPANY ANNUAL REPORT 2015 Hyundai Motor Company www.hyundai.com Copyright © 2016 Hyundai Motor Company. All Rights Reserved. www.facebook.com/hyundaiworldwide www.youtube.com/HyundaiWorldwide plus.google.com/+hyundai https://twitter.com/hyundai_global https://www.instagram.com/hyundai_worldwide BEYOND & BEHIND STORIES CONTENTS 10 16 18 20 24 26 28 30 32 34 36 38 42 46 52 56 58 60 62 64 66 68 70 72 76 78 80 176 180 MEANING OF MODERN PREMIUM FINANCIAL HIGHLIGHTS & BUSINESS HIGHLIGHTS WHAT IS MODERN PREMIUM? VALUE OF MODERN PREMIUM TOMORROW OF MODERN PREMIUM BEYOND STORIES THE MOST BELOVED BRAND HYUNDAI MOTORSTUDIO FUTURE TECHNOLOGY SMART TECHNOLOGY POWERTRAIN FLUIDIC SCULPTURE ART HIGH-PERFORMANCE ‘N’ BLUE DRIVE LUXURY EVOLVED GENESIS BEHIND STORIES CEO’S MESSAGE HIGHLIGHTS THE WAY OF HMC GLOBAL PRESENCE CUSTOMER VALUE : QUALITY CUSTOMER VALUE : CONVENIENCE CUSTOMER VALUE : GLOBAL MARKETING INNOVATION OF HMC COMMITMENT TO THE ENVIRONMENT COMMITMENT TO CSR HMC NETWORK FINANCIAL CORPORATE GOVERNANCE AND BOARD OF DIRECTORS FINANCIAL STATEMENTS MILESTONES OF HMC HMC PRODUCT LINEUP EPILOGUE MEANING OF MODERN PREMIUM THINK DIFFERENTLY Modern Premium is about changing the way people think about automobiles. Automobiles have been just a means of transportation for people. Regardless of the advancements that are being made in automotive technologies and design, automobiles are still perceived as just automobiles. So, Hyundai Motor’s philosophy of Modern Premium is to redefine automobiles and add more significance to our cars in our lives. In other words, the concept of Modern Premium was created to change how the world thinks about automobiles. Modern Premium is about much more than just superior quality, performance, design or service. It is about providing an automobile experience beyond all expectations. Ultimately, our vision of Modern Premium is about making automobiles become a valued lifetime partner. Hyundai Motor strives to deliver ‘premium’ experiences to yet more customers of today with our products and new technologies. THE STORY OF HYUNDAI MODERN PREMIUM Our vision of Modern Premium is to provide a unique premium experience that delivers values and touches the hearts of our customers. 09 SALES REVENUE Unit : KRW Million GLOBAL RETAIL SALES Unit : Thousand 2015 91,958,736 2 0 1 4 89,256,319 2 0 1 3 87,307,636 2 0 1 2 84,469,721 77,797,895 1 1 0 2 4,843 2015 4,835 2014 4,621 2013 4,392 2012 4,099 2011 91,958,736 4,843 11 12 HYUNDAI MOTOR COMPANY Annual Report 2015 FINANCIAL HIGHLIGHTS SALES REVENUE Unit : KRW Million 87,307,636 89,256,319 91,958,736 84,469,721 77,797,895 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR Sales Revenue1 Operating Income Net Income2 Basic EPS(KRW)3 Margin(%) Margin(%) 2011 2012 2013 2014 77,797,895 84,469,721 87,307,636 89,256,319 8,028,829 10.3% 8,440,601 10.0% 8,315,497 7,549,986 9.5% 8.5% 8,104,863 9,061,132 8,993,497 7,649,468 10.4% 28,200 10.7% 31,532 10.3% 31,441 8.6% 27,037 Unit : KRW Million 2015 91,958,736 6,357,906 6.9% 6,509,165 7.1% 23,861 3.0% 1 Business results of BHMC is accounted in equity income accounting 2 Net income includes non-controlling interest 3 Basic earnings per common share attributable to the owners of the Parent Company 2011 2012 2013 2014 2015 OPERATING INCOME Unit : KRW Million 8,028,829 8,440,601 8,315,497 7,549,986 10.3% 10.0% 9.5% 8.5% 6,357,906 6.9% 2011 2012 2013 2014 2015 Operating Income Margin 13 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Unit : KRW Million AT YEAR END Assets Liabilities Shareholder’s Equity Liab. to Eqt. Ratio(%) 2011 2012 2013 2014 2015 109,479,975 121,537,814 133,421,479 147,225,117 165,222,844 69,152,273 73,620,239 76,838,690 84,604,552 40,327,702 47,917,575 56,582,789 62,620,565 171.5% 153.6% 135.8% 135.1% 98,341,443 66,881,401 147.0% CREDIT RATING KIS Domestic NICE Korea Rating S&P Moody’s Overseas 2011 AA+ AA+ AA+ BBB Baa2 2012 AAA AAA AAA BBB+ Baa1 2013 AAA AAA AAA BBB+ Baa1 2014 AAA AAA AAA BBB+ Baa1 2015 AAA AAA AAA A- Baa1 2008 2009 AA AA AA BBB- Baa3 AA AA AA BBB- Baa3 2010 AA+ AA+ AA+ BBB Baa2 14 HYUNDAI MOTOR COMPANY Annual Report 2015 BUSINESS HIGHLIGHTS GLOBAL RETAIL SALES Unit : Thousand SALES BY REGION Unit : Thousand SALES BY SEGMENT Unit : Thousand 4,835 4,843 4,621 4,392 4,099 Total Korea 2011 2012 2013 2014 2015 682 667 641 684 712 2011 2012 2013 2014 2015 4,151 4,130 3,980 3,724 3,417 Overseas 2011 2012 2013 2014 2015 15 5 1 4 Total 2 4,843 4 3 3 2 Total 1 4,843 1. Korea 2. N. America 3. Europe 4. Asia 5. Others 712 897 650 1,686 898 14.7% 18.5% 13.4% 34.8% 18.5% 1. Small PC 2. Mid-Large PC 3. RV 4. CV 2,628 815 1,101 299 54.3% 16.8% 22.7% 6.2% SALES BY PLANT Unit : Thousand PRODUCTION BY PLANT Unit : Thousand Korea US China India Czech Russia Turkey Brazil China(CV) Korea US China India Czech Russia Turkey Brazil China(CV) 37.6% 1,867 7.7% 380 21.4% 1,063 13.0% 6.9% 4.6% 4.7% 3.5% 0.6% 643 342 230 231 174 32 Total 4,963 16 37.6% 1,858 7.8% 385 21.3% 1,052 13.0% 6.9% 4.6% 4.7% 3.5% 0.6% 645 342 230 231 175 31 Total 4,948 HYUNDAI BLUE WAVES THE STORY OF ‘MODERN PREMIUM’ FOR YOU WHAT IS MODERN PREMIUM? Friends, family, colleagues, lovers... Happiness, freedom, prosperity, scenery, rest, comfort, Delight, thrill, excitement, surprise, reassurance, warmth... Beginning, anticipation, meeting, companionship, empathy... Dream, imagination, longing, promise, progress, change... Going beyond just automobiles to become a true lifetime partner - this is what Modern Premium is all about. memories... C o p y r i gh t © 2 016 H y u n d a i M o t o r C o m p a n y . A ll R i gh t s R e s e r v e d . VALUE OF MODERN PREMIUM CREATING A NEW LIFESTYLE MODERN PREMIUM CREATES NEW VALUES AND EXPERIENCES FOR CUSTOMERS. Modern Premium experience is delivered through interactions between Hyundai Motor and our customers. Some elements of Modern Premium are; Hyundai Motor’s unique design language ‘Fluidic Sculpture’, ‘Dealer Shops’ that communicate with customers through various contents, a brand experience space ‘Hyundai Motorstudio’, ‘Home to Home Service’ at your doorsteps, ‘Before Service’ on the move to meet your needs in advance, the world’s first user manual applying augmented reality ‘Hyundai Virtual Guide’, ‘Brilliant Memories’ which is a special artwork exhibition showcasing your memories in the form of a car, and various art projects encompassing art, photography, music and fashion. There are many more ways that Hyundai Motor is creating new lifestyles through delivering values beyond our customer’s expectations. Since Hyundai Motor announced Modern Premium as its new brand identity, its brand value has sharply increased, thanks to the variety of promotion efforts. TOMORROW OF MODERN PREMIUM ENDLESSLY EVOLVING MODERN PREMIUM PROMISES TO EVOLVE AND PRESENT NEW EXPERIENCES. Just as people’s lifestyles change over time, the concept of Modern Premium needs to evolve as well. That is because the special value of today may become an ordinary value tomorrow, and new experiences cannot be new anymore tomorrow. Modern Premium strives to stay ahead of customer’s thinking. Developing accessible green cars, high-performance ‘N’ and next generation connected cars are all part of Hyundai Motor’s efforts to create new paradigms. The ever-evolving design philosophy ‘Fluidic Sculpture’ and our ever-advancing powertrains are also part of our efforts to realize Modern Premium. Hyundai Motor has appealed to our customers worldwide through innovative customer services and will continue to do so with more customer-focused services. Likewise, Hyundai Motor will deliver new experiences and touch the hearts of our customers through diverse culture and art related contents created by renowned artists. Modern Premium is about delivering ‘premium’ experiences to yet Hyundai Motor will become a lifetime partner beyond automobiles by providing new experiences and values. more customers of today. HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND STORIES Your new Hyundai Motor is a car built to become a partner for life. Modern Premium has multi-faceted goals; providing a new experience beyond customers’ expectations, delivering customer value with new technologies, providing more people with the opportunity to enjoy art, preparing for the long-term future, and serving as a partner for life. Hyundai Motor’s endeavor will continue into the future. 22 23 HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND CARS THE MOST BELOVED BRAND HYUNDAI MOTOR IS RAISING VALUE NOT JUST AS AN AUTO MANUFACTURER BUT AS A LIFETIME PARTNER FOR OUR CUSTOMERS ALL OVER THE WORLD. THE MOST BELOVED BRAND CHANGING OUR LIVES Hyundai Motor’s brand value is not simply built on high quality products and advanced technologies, but on a deep understanding of people’s lifestyle and what they really need. Our ultimate goal is to make Hyundai Motor a brand which represents a rich lifestyle and great value. This will be the face of Hyundai Motor. Hyundai Motor will go beyond perfecting its technologies and product quality and provide a new experience beyond our customer’s expectations and become a lifetime partner. We will continue to build our brand value by providing unprecedented new services, opportunities for people to enjoy art and share the excitement of sporting events. Most importantly, Hyundai Motor will fulfill its role as a responsible global corporate citizen. Our efforts so far has positioned Hyundai Motor as the 39th most valuable brand in the world. We will continue to build on our success until we become a lifetime partner for our ever increasing customers. 24 25 Hyundai Motorstudio Goyang Hyundai Motorstudio Digital BEYOND CARS HYUNDAI MOTORSTUDIO HYUNDAI MOTORSTUDIO, A PLACE WHERE THE AUTOMOBILE REACHES OUT TO CUSTOMERS IN A UNIQUE WAY. A CULTURAL SPACE GOING BEYOND AUTOMOBILES Hyundai Motorstudio is a brand experience center in Seoul established by Hyundai Motor in 2014. Going beyond just an exhibition center for boosting sales, the studio was built to interact with customers through artworks that embody Hyundai Motor’s brand direction, contents unique to Hyundai Motor, a library specializing in automobile books and new services for our customers. The studio is staffed by automobile culture experts designated as ‘Gurus’ and highly trained staff who serve as guides for studio tours and provide programs for guests. The studio has space for exhibitions from a wide variety of artists including painters, movie directors, cartoonists and musicians. Talk shows dubbed as ‘Human Library’ also take place providing customers with the opportunity to learn from well-known figures in various disciplines. Thanks to the great programs and the extensive promotional efforts, the first Hyundai Motorstudio has attracted 260,000 visitors in the first two years. More recently, a new Hyundai Motorstudio Digital opened in the Coex Mall in Samsungdong, Seoul. The new studio allows visitors to have a virtual experience of the latest Hyundai Motor’s vehicles, using advanced digital devices. In 2015, Hyundai Motor opened its second Hyundai Motorstudio, with floor space totaling 880 m² in Moscow, Russia. Hyundai Motorstudio Goyang, which will be the largest automobile experience center in South Korea, will open in 2017 and provide Hyundai Motorstudio visitors with a new way to enjoy automobiles. 26 27 HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND THE FUTURE FUTURE TECHNOLOGY BECOMING A LEADER IN THE GLOBAL MARKET WITH HUMAN- FOCUSED TECHNOLOGIES. CREATING NEW VALUES FOR CUSTOMERS Hyundai Motor has created a roadmap to improve fuel efficiency by 2020 and is continuing to develop advanced new technologies to gain global competitiveness in fuel efficiency. The ultimate goal of the roadmap is to achieve a 25 percent improvement in fuel efficiency beyond the baseline by 2020. This requires the incorporation of next-generation powertrains in up to 70 percent of vehicles sold. Vehicle weight reduction effort is at full force, with the goal of an average 5 percent reduction. Part of the reduction will be achieved by increasing the use of high strength steel plates to 48 to 62 percent and incorporating a proportion of parts made with advanced materials such as aluminum, engineering plastics and carbon fibers. As a leading automaker of green cars, Hyundai Motor launched its first dedicated eco-friendly model IONIQ in January 2016, which has the highest fuel efficiency in its class at 22.4 km/L. Hyundai Motor will continue to introduce new green vehicles, from compact cars to SUVs, in order to create a full product line-up serving a wide range of customers. We will also make sustained progress in improving convenience and safety including intelligent safety enhancement, in order to better cater to customer needs. We firmly believe that creating advanced safety features based on smart technologies will serve as the foundation for future autonomous driving technology. 1 9 8 0 1 9 9 0 2 0 1 0 2 0 1 5 2 0 2 0 28 29 [ A d v a n c e d s a f e t y t e c h n o o g y l r o a d m a p ] Level of automation M a n u a l l y c o n t r o l l e d l E e c t r o n i c a l l y l E e c t r o n i c a l l y c o n t r o l l e d E C U ● A u t o T M , E S C , M D P S A D A S ● S C C , L K A S i n d e p e n d e n t s e n s o r s a c t u a t o r c o n t r o l l e d a c t u a t o r I n d e p e n d e n t c o n t r o l o f A D A S c o m p o n e n t s I n t e g r a t e d s e n s o r s y s t e m ● H D A , T J A a n d e t c . A D A S c o m p o n e n t s I n t e g r a t e d c o n t r o l o f p r o c e s s i n g [ N e w G P S - b a s e d c o m m u n c a t i o n i s e n s o r ] A u t o n o m o u s d r i v n g i / I n t e g r a t e d i n f o r m a t i o n ● A u t o n o m o u s i h g h w a y d r i v n g i L K A S , A S C C A u t o n o m o u s p a r k n g i Future Technology HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND THE FUTURE SMART TECHNOLOGY MAKING PEOPLES’ DREAMS COME TRUE, AUTONOMOUS DRIVING IS RIGHT AROUND THE CORNER. ACCELERATING THE ERA OF ‘CAR TO LIFE’ Four main service fields of Hyper-connected Intelligent Cars The core of autonomous driving is the Advanced Driver Assistance System (ADAS). Hyundai Motor first introduced its ADAS technology in 2010 with the ix35 (Tucson) autonomous demonstration car. The company has since introduced a number of new technologies which enable autonomous driving and are applying those technologies to production cars. November 2015, Hyundai Motor acquired a license to test autonomous driving technologies with its ix35 Fuel Cell (Tucson Fuel Cell) in Nevada, U.S. Hyundai Motor was the second company to acquire a license to test autonomous driving technology in the U.S. The ix35 Fuel Cell (Tucson Fuel Cell) was equipped with a large number of new autonomous driving and safety technologies, including features for various types of roads including congested ones, making emergency maneuvers to the hard shoulder, navigating narrow roads and more. In December 2015, the ‘Genesis Smart Sense’, a collection of ADAS technologies was unveiled with the Genesis G90. It was the latest iteration of Hyundai Motor’s autonomous driving technology. ADAS technologies currently employed in production models Lane Keeping Assist System (LKAS) Autonomous Emergency Braking system (AEB) Advanced Smart Cruise Control (ASCC) Advanced Smart Parking Assist System (ASPAS) Forward Collision Warning System (FCWS) Highway Driving Assist (HDA) Smart Blind Spot Detection (SBSD) AUTOMOBILES AS A MOVING LIVING SPACE, HYUNDAI MOTOR IS ACCELERATING INTO THE FUTURE. An automobile is not just a means of transport or just a product of engineering. Hyundai Motor is leading the development of technologies to utilize automobiles as IT machines which can effortlessly access information on the Internet and communicate vehicle information wherever necessary. The ‘Connected Car’ currently under development by Hyundai Motor will not only enable new features such as remote diagnostics but also autonomous driving. Through full integration of latest IT technologies, automobiles can function like a high performance computers on wheels. Hyundai Motor’s vision of ‘Hyper-connected Intelligent Cars’ is to link automobiles not just with homes and offices of drivers but with the network of cities or regions it is located in. Smart Remote Maintenance Service Autonomous Driving Smart Traffic Hyundai Motor plans to introduce four main service fields which include: Mobility Hub Smart Remote Maintenance Service, Autonomous Driving, Smart Traffic, and Mobility Hub. In addition to continued R&D investment and recruitment of top talent, Hyundai Motor is actively pursuing open innovations through collaboration with global partners. Hyundai Motor plans to embark on a new era of connecting the ‘Car to Life’ with cars becoming the hub of infinite information. 30 31 Smart Technology HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND THE WORLD POWERTRAIN DEMONSTRATING HYUNDAI MOTOR’S R&D CAPACITY TWO GREEN POWERTRAINS WIN 2016 Wards 10 Best Engines. The Sonata Plug-in Hybrid Electric Vehicle (PHEV) selected as one of PRESTIGIOUS WARDSAUTO RECOGNITION. Although, many companies have produced Plug-in Hybrids, this is the first time that a Plug-in Hybrid Powertrain has made the list. Hyundai Motor’s Fuel Cell Powertrain for the ix35 Fuel Cell (Tucson Fuel Cell) made it onto the 2015 Wards 10 Best Engines. Receiving this award for two consecutive years demonstrates Hyundai Motor’s continued presence as a leader in advanced powertrains. Hyundai Motor’s Tau engine made it onto Wards 10 Best Engines list for three consecutive years from 2008 to 2010. In 2011, the Gamma GDi engine made it onto the list as well. Hyundai Motor has made it onto this prestigious list six times so far. Hyundai 2.0L DOHC 4-cyl./50-kW Drive Motor Model: Sonata Plug-in Hybrid Electric Vehicle Maximum Power Output: 156 ps (engine), 68 ps (electric motor) Maximum Torque: 19.3 kgf·m (engine), 20.9 kgf·m (electric motor) POWERTRAIN TECHNOLOGY DEVELOPMENT HISTORY 1991 Alpha engine and transmission: 2009 R-engine & 6-speed transmission Hyundai Motor’s first in-house powertrain First Korean engine to achieve Euro-5 1995 Beta engine (1.6L, 1.8L, 2.0L) and emission compliancy transmission 2010 Nu engine 1997 Epsilon engine and transmission 2011 Tau GDi engine & rear wheel 8-speed 1998 High performance/high tech V6 Delta engine automatic transmission 1999 GDi V8 Omega engine 2004 Eco-friendly Theta engine 2005 Lambda engine 2006 Gamma and S engine 2007 Diesel F, G and H engine First Korean automatic transmission for rear wheel powertrain Gamma GDi engine: Wards 10 best engines 2014 Fuel Cell Powertrain selected as 2015 Wards 10 best engines, 7-speed Dual Clutch Propriety 7-speed Dual Clutch Transmission 2008 Tau engine: Wards 10 best engines Transmission 2015 Plug-in Hybrid Powertrain: Wards 10 best engines 32 33 HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND THE WORLD FLUIDIC SCULPTURE PUSHING THE BOUNDARY OF AUTOMOTIVE DESIGN INNOVATIVE DESIGN WITH BEST ELEMENTS OF ART AND NATURE. UNIQUE DESIGN PHILOSOPHY OF HYUNDAI MOTOR ‘Fluidic Sculpture’ is Hyundai Motor’s design philosophy which aspires to create advanced designs for automobiles. The design philosophy also guides us to create unique designs which stand out from the crowd as uniquely Hyundai Motor. ‘Fluidic Sculpture’ takes its inspiration from nature and through a unique process turns this inspiration into a great design. The end result embodies nature’s vibrant energy and dynamism. Breaking down the barriers between art and automobile design, ‘Fluidic Sculpture’ has led to the creation of some outstanding artistic automobile designs. The smooth and dynamic design of Hyundai Motor’s vehicles has in turn given a unique design identity to Hyundai Motor. Hyundai Motor’s design identity is not a fixed concept but will continue to evolve in order to meet the ever increasing customer demands for greater design. Design Philosophy 34 35 HYUNDAI MOTOR COMPANY Annual Report 2015 I n s t a l l a t i o n P h o t o g r a p h , Dia n a T h a t e r: T h e S y m p a t h e tic Im a gin a tio n, L o s A n g e e s l C o u n t y M u s e u m o f A r t , N o v e m b e r 2 2 , 2 0 1 5 - F e b r u a r y 2 1 , 2 0 1 6 , ⓒ D a n a i T h a t e r , p h o t o ⓒ F r e d r i k N i l s e n . BEYOND THE WORLD ART GLOBAL ART PROJECTS HYUNDAI MOTOR AS A PARTNER OF ARTISTS, SUPPORTING THE FUTURE OF ART. Hyundai Motor has signed an agreement with the National Gallery of Modern Art in Seoul and the Tate Museum of Modern Art in 2014. In 2015, it signed another long-term partnership agreement with the Los Angeles County Museum of Art. The new agreement commits Hyundai Motor and the Los Angeles County Museum of Art to collaborate together on programs to explore new possibilities in art and technology. The commitment will last for the next 10 years until 2024. In 2015, Hyundai Motor hosted a design exhibition on ‘Fluidic Sculpture’ design philosophy titled ‘Sculpture in Motion’. Hosted at the Sejong Art Center, the most prestigious art center in South Korea, the exhibition was a great success with enthusiastic responses from visitors. EXPLORING NEW WAYS TO EXPLORE ART BRILLIANT PROJECT Hyundai Motor launched ‘The Brilliant Art Project’ in 2013 with the goal to enable a greater number of people to experience art. In South Korea, we are working with local artists from different genres each year and creating various art works. Hyundai Motor also hosted exhibitions for people to share their best moments with their cars with the help of artists. Titled ‘Brilliant Memories Created Together’, the exhibition received positive reviews from visitors, helping them relive their fond memories. Through the ‘Brilliant Music Project’, one of the longest music videos containing some vivid life stories from over 170,000 people in 17 countries was produced. Hyundai Motor and global media group Bloomberg is preparing to launch a collaborative project ‘Brilliant Ideas’ TV series, which highlights the life of 75 artists over at three year period. 36 37 Hyundai Motor Art Project HYUNDAI MOTOR COMPANY Annual Report 2015 Results : Hyundai WRC Team 2016 6th Rally Italia Sardegna Manufacturer’s Standing: 2nd Driver’s Standing: 1st 4th Rally Argentina Manufacturer’s Standing: 1st Driver’s Standing: 1st 2nd Rally Sweden Manufacturer’s Standing: 2nd Driver’s Standing: 2nd 1st Rallye Monte-Carlo Manufacturer’s Standing: 1st Driver’s Standing: 3rd 2015 13th Wales Rally GB Manufacturer’s Standing: 3rd 12th Rally RACC-Rally de España Manufacturer’s Standing: 3rd 10th Rally Australia Manufacturer’s Standing: 2nd 9th Rallye Deutschland Manufacturer’s Standing: 2nd 8th Rally Finland Manufacturer’s Standing: 2nd 6th Rally Italia Sardegna Manufacturer’s Standing: 2nd 3rd Rally Guanajuato Mexico Manufacturer’s Standing: 3rd 2nd Rally Sweden Manufacturer’s Standing: 1st Driver's Standing: 2nd 1st Rallye Monte-Carlo Manufacturer’s Standing: 2nd 2014 9th Rallye Deutschland Manufacturer’s Standing: 1st Driver’s Standing: 1st 7th Rally Poland Driver’s Standing: 3rd 3rd Rally Guanajuato Mexico Driver’s Standing: 3rd 2nd Rally Sweden Completed rally 1st Rallye Monte-Carlo Return to WRC Motorsports provide automobile manufacturers with New Generation Hyundai i20 WRC opportunities to push technologies from powertrains to chassis. Unlike F1 racing cars, WRC rally cars are built on a mass production car with an annual production volume higher than 25,000 units. Hyundai Motor created the Hyundai i20 WRC using the i20 compact car as the basis in 2014. The Hyundai i20 WRC was the first racing car for the Hyundai WRC Team which returned to the WRC arena after a long absence and has since achieved many victories. In 2015, the Hyundai WRC Team placed 3rd or higher in 9 out of 13 races. Hyundai Motor ranked 3rd in the overall manufacturer’s standing in 2015. In 2016, Hyundai Motor introduced the New Generation Hyundai i20 WRC which helped the Hyundai WRC Team rank 1st in the manufacturer’s standing. In the 4th race at Rally Argentina, Hyundai WRC Team drivers and manufacturers both placed 1st. Hyundai i20 WRC first debuted at the 2012 Paris Motor Show and has since been a car for the Hyundai WRC Team. After continued enhancements and evolutions, the New Generation Hyundai i20 WRC was born at the Hyundai Motorsport HQ in Alzenau. The New Generation Hyundai i20 WRC is powered by a 1,600 cc turbo charged engine with maximum power of 300 horsepower. It also has a 4WD drive and a special suspension system built for auto racing and for optimal performance on rally courses. BEYOND THE DREAM HIGH-PERFORMANCE ‘N’ DRIVERS WILL EXPERIENCE THE THRILLS OF MOTORSPORT WITH OUR PERFORMANCE- ORIENTED ‘N’ MODELS BUILT WITH LATEST TECHNOLOGY. ENABLING THE DRIVING EXPERIENCE OF MOTORSPORT Hyundai Motor’s high-performance ‘N’ models are built using technologies and experience gained through its participation in WRC. The logo ‘N’ stands for Hyundai Motor’s Namyang Technology Research Center. Nürburgring is the world’s most challenging race track in Germany, used to hone N’s high-performance technologies. The track plays a crucial role in developing, testing and perfecting the performance characteristics that will be applied to future ‘N’ products. Hyundai Motor launched the high-performance brand ‘N’ at the 2015 Frankfurt Motor Show in Germany, the birthplace of high-performance automobiles. So far, Hyundai Motor has concentrated on improving design, ride quality, performance and customer service. The ‘N’ will help drivers experience the thrills and emotions of motorsport for themselves, in performance- High-performance ‘N’ oriented and race-track-capable cars. 38 39 HYUNDAI MOTOR COMPANY Annual Report 2015 THE POTENTIAL AND VISION OF ‘N’ N 2025 VISION GRAN TURISMO Hyundai Motor introduced the N 2025 Vision Gran Turismo, showing the potential and vision of its high-performance ‘N’. The N 2025’s powertrain is based on a dual hydrogen fuel cell system with a total system output of 650 kw (884 ps). The super capacitor system generates an additional 150 kw (204 ps) by using energy regenerated when braking. The maximum combined power output is 884 ps. The compact, lightweight fuel cell stacks and flexible CFRP monocoque structure allow the car to tip the scales at a lean 972 kg. The system is also designed with a low center of gravity, making this a car that can be best enjoyed on a challenging racetrack, especially on the chicane. 0 ⇀ 100km/h 2.8s HIGH-PERFORMANCE ‘N’ DEBUT MODELS THE SIGNALING CONCEPT VEHICLE RM15 Hyundai Motor introduced the RM15 (Racing Midship 2015) concept car at the 2015 Seoul Motor Show, firmly demonstrating its intention to develop high-performance models. Although the RM15 shares a similar exterior design with the ‘2014 Veloster RM’, it is equipped with high-performance components specifically for the RM15. More specifically, the RM15 is powered by a Theta 2.0-liter T-GDi which generates 300 ps and 39 kgf·m for zero to 100 km/h in 4.7 seconds. It also boasts a lightweight design and one of the most aerodynamic bodies yet. Hyundai Motor is committed to building on the successful development of the RM15 as it continues to build capacity for high-performance models. Drive Type | MR (Mid-engine Rear-wheel-drive) PT | Theta 2.0 T-GDi with 6-speed manual Max Power | 300 ps@6,000 Max Torque | 39 kgf·m@2,000 Center of Gravity Height (CGH) | 491 mm Weight | 1,260 kg Suspension | In-wheel Double Wishbone Power to Weight Ratio (ps/ton) | 238 Weight Distribution (F:R) | 43:57 Acceleration 0-100km/h | 4.7s Tire Dimension | 235/35/19 (f), 265/35/19 (r) 40 41 HYUNDAI MOTOR COMPANY Annual Report 2015 BEYOND THE DREAM THERE HAS BEEN A CLEAR PARADIGM SHIFT TOWARDS GREEN AUTOMOBILES. MAKING THE WORLD GREENER Hyundai Motor is making the transition towards a new automobile market with its ‘Blue Drive’ strategies. ‘Blue Drive’ is the name of Hyundai Motor’s low carbon green technology strategy, designed to reduce CO2 emissions. It is also a brand name for vehicles equipped with fuel-saving technologies. Implementation of the ‘Blue Drive’ strategy began with Hyundai Motor’s development of the Sonata EV in 1991 and was quickly followed by the hybrid concept car in 1995. In 1998, the Hyundai Motor R&D team successfully developed its first hydrogen Fuel Cell Electric Vehicle (FCEV), laying the foundations for a diverse range of products. In 2013, Hyundai Motor became the first automobile manufacturer to mass produce a hydrogen FCEV. We also became the first company to produce a Plug-in Hybrid Electric Vehicle (PHEV), the Sonata PHEV, which was unveiled at the Detroit Motor Show in January 2015. In 2016, Hyundai Motor launched its first dedicated green car IONIQ, further strengthening its presence in the global green car market. Hyundai Motor’s fuel cell powertrain for the ix35 Fuel Cell (Tucson Fuel Cell) was one of the 2015 Wards 10 Best Engines, which was the first time that a fuel cell-based powertrain made it on to the list. In 2015, the Sonata PHEV was one of 2016 Wards 10 Best Engines, giving Hyundai Motor special recognition for two consecutive years. Blue Drive 43 l G o b a l t r a n s p o r t o u t l o o k t o 2 0 5 0 - I n t e r n a t i o n a l E n e r g y A g e n c y ( u n i t : u n i t s ) 3 3 % 2 6 % 1 9 % 8 % 1 4 % 42 6 0 m i l l i o n i l P u g - n H y b r i d 4 7 m i l l i o n l E e c t r i c V e h i c l e 3 4 m i l l i o n 1 4 m i l l i o n N a t u r a l G a s 1 1 m i l l i o n F u e l C e l l l E e c t r i c H y b r i d H y b r i d G a s o l i n e I C E 1 4 m i l l i o n i D e s e l 1 m i l l i o n HYUNDAI MOTOR COMPANY Annual Report 2015 IONIQ HYUNDAI MOTOR’S FIRST DEDICATED GREEN MODEL DEVELOPED AS PART OF THE ‘BLUE DRIVE’ STRATEGY. In January 2016, Hyundai Motor Built to provide a unique driving launched its first unique green car IONIQ experience with many advanced in South Korea and presented its new features, IONIQ presents a unique value vision of green automobiles. proposition. Developed under the concept of IONIQ’s unique powertrain provides ‘Launching future mobility for a better exceptional fuel efficiency and dynamic life’, IONIQ was created to be the performance in a single package. greenest car available in its class. IONIQ With a lightweight yet sturdier vehicle also serves as a forerunner of Hyundai body, a high performance sports car- Motor’s vision for the future and a key like low center of gravity, and agile high milestone for beginning the wave of new precision steering driving deliver an green vehicles. Hyundai Motor unveiled exciting experience. three models with its eco-friendly IONIQ The aerodynamic exterior design and line-up at the 86th Geneva International high-tech themed interior design strike Motor Show held in the Geneva Palexpo, a balance to create a great look inside Switzerland. and out that style-conscious drivers can The company offers Hybrid, Plug-in be proud of. Hybrid (PHEV) and battery-only Electric IONIQ has all the great merits of a green Vehicle (EV) models. car. However, it also provides a unique IONIQ will build upon its reputation as driving experience unlike other green one of the best hybrid electric cars and cars, marking the beginning of the begin the next chapter in mobility. future’s mobility. PROJECT IONIQ INCUBATING INNOVATION FOR FUTURE MOBILITY. FOUR KEY DIRECTIONS OF PROJECT IONIQ REALIZING MOBILITY FREEDOM BY REMOVING BOUNDARIES AND LIMITATIONS FREEDOM FROM ACCIDENTS AND FREEDOM FROM ENVIRONMENTAL INCONVENIENCES How much will our lives improve when POLLUTION AND ENERGY EXHAUSTION Meeting the needs of people, Project IONIQ is an innovation incubation we can enjoy automobiles that forecast society and the environment is program with the aim of realizing ‘Freedom in Mobility’ by going beyond limitations. We will break free from problems related to transportation in our daily lives and redefine mobility to achieve true ‘Freedom in Mobility’. The ultimate goal is to present a new lifestyle based on improved mobility. Project IONIQ is Hyundai Motor’s initiative to achieve the necessary innovations to traffic changes, evade the risks of car an absolute necessity for the future accidents and make their way to your of transportation. IONIQ comes with destination on their own? We have three eco-friendly powertrain options, already seen the possibilities. Project providing a means of transportation IONIQ makes it possible for people to free from environmental pollution and enjoy a more comfortable and time- energy depletion, achieving a new level efficient means of transport. of ‘Freedom in Mobility’. FREEDOM TO CONNECT WITH EVERYDAY LIFE WHILE ON THE MOVE With the improvements in network FREEDOM TO EFFORTLESSLY ACCESS MOBILITY WHENEVER AND WHEREVER Project IONIQ studies the new concepts technology, automobiles are not simply and methods to help more people move a means of transportation; but rather, easily and simply according to changing enable a new lifestyle with new means of a moving living space. This implies that social trends and lifestyles. The idea is transportation. Project IONIQ will innovate all aspects of the barrier that previously separated to allow anyone to enjoy the freedom of transportation and daily life no longer mobility anytime, anywhere. For example, exists. If one could go shopping, take by providing service with vehicles for mobility to enable a new lifestyle starting a rest, and get some work done in a car, use at an agreed place and time. with Hyundai Motor’s first dedicated our lives would be much more flexible. Hybrid Electric Plug-in Hybrid IONIQ & Project IONIQ green car IONIQ. 44 45 HYUNDAI MOTOR COMPANY Annual Report 2015 GLOBAL LUXURY BRAND: GENESIS REALIZING HUMAN-CENTERED LUXURY Genesis, the luxury automotive brand, strives to create the finest automobiles and related products/services for connoisseurs around the globe. We want to make a positive difference to our customers’ lives by exploring new avenues and constantly pushing forward the boundaries in an infinite, yet mindful way, which shall lead us to creating truly aspirational products. Genesis Brand 46 HUMAN-FOCUSED INNOVATION REFINED PERFORMANCE To provide a valuable brand experience, Genesis focuses on three All Genesis vehicles will be engineered to provide excellent ride fields of technological innovation: intelligent safety, intuitive comfort, comfort while retaining confident sportiness. This refined and balanced and connectivity. Genesis strives to optimize user-friendly, advanced performance provides a luxurious and enjoyable driving experience that technology to offer a more seamless experience. heightens the sense of unity between the driver and the vehicle. ATHLETIC ELEGANCE IN DESIGN STRESS-FREE CUSTOMER EXPERIENCE From a design perspective, Genesis harmonizes beauty and dynamism, Continuing the customer-orientated approach that flows through every combining the elegance of movement with energy. Each model will display Genesis model, the sales and service experience will be focused on confidence and originality; highly desirable products that present new demonstrating respect for our customers’ time and intelligence. We will charm through innovative styling and proportions. endeavor to eliminate extra nuisances and streamline processes whenever and wherever possible. 47 FUTURE DESIGN DIRECTION OF GENESIS NEW YORK CONCEPT As a design-focused brand, Genesis has unveiled its striking ‘New York Concept’ luxury sports sedan at the 2016 New York International Auto Show. The New York Concept hints at future Genesis design direction that will distinguish forthcoming Genesis products. The advanced technological content, the precision in the design language and the superb execution are evidence of the dedication and devotion which characterize the Genesis brand. DESIGN AND DESIGN QUALITY OUR VISION IS TO BECOME AN AUTHENTIC AND RELEVANT GLOBAL LUXURY BRAND BY DELIVERING OUTSTAND AND FASCINATING PRODUCTS AND SERVICES. AND FASCINATION While design is what attracts people to a product in the first place, good design goes well beyond styling. Thoughtful, well- executed design makes us feel good, and intuitive design makes things easier to use. Intelligent design delivers a rewarding ALL STARTS WITH GREAT DESIGN, WHICH CAN BE experience for users, and has a positive impact on their lives. SENSED AT FIRST SIGHT. IT DOES NOT NEED ANY Genesis strives to go beyond the expectations of its customers EXPLANATION. and the market whenever it shows a new model by showing a more creative and progressive design. NEW YORK CONCEPT Acknowledging the Genesis brand’s sporty and agile nature, the hybrid concept generates 245 ps and 36.0 kgf·m of torque from its 2.0 T-GDi powertrain coupled with an 8-speed automatic transmission. 48 49 HYUNDAI MOTOR COMPANY Annual Report 2015 BEHIND STORIES More advanced vehicles can be made, thanks to sustained R&D efforts. Sustainability in the environment can be achieved, thanks to better environmental management. Greater satisfaction and confidence will be delivered, thanks to great services and quality management. People in the global community can be happier, if corporate citizens fulfill their responsibilities better. Hyundai Motor has emerged as a leading brand in the automotive industry, thanks to the staff’s tireless efforts. 50 51 CEO’S MESSAGE BUILDING COMPETITIVENESS TO BEGIN A NEW ERA FOR THE AUTOMOTIVE INDUSTRY Hyundai Motor will work hard to develop new technologies and products in order to further enhance the safety and convenience of our products and to enhance our future competitiveness. The global auto industry is experiencing ever accelerating changes, fueled by a volatile business environment, increasing competition and structural changes due to the introduction of cutting-edge technologies. In such a time of change and uncertainty, it is crucial to build a unique set of strengths in order to overcome the challenges that lie ahead and to achieve sustained growth. In addition to developing its capacity as a global automobile manufacturer by achieving qualitative growth, Hyundai Motor will continue to invest in R&D in order to become a leader in technological innovation. The technological advancements will not only allow Hyundai Motor to meet the safety and environmental regulations but allow us to begin a new era for the automotive industry. We will develop more green cars such as hybrids, electric vehicles and hydrogen fuel cells. Likewise, we are committed to the development of autonomous driving technologies in order to further enhance the safety and convenience of our drivers. Hyundai Motor will continue to strengthen its market presence and to build on its reputation as an industry leader. In 2016, we are aiming to achieve global sales of five million units, for the first time in the history of Hyundai Motor and, firmly establish our position in the global market. In addition to the development of products for the future, the on-going effort to improve our customer’s experience in sales and services will strengthen Hyundai Motor’s appeal as a brand. A concentrated effort will be made to quickly establish Genesis as a competitive luxury brand by providing unique merits which distinguish Genesis from other brands. Genesis will become a brand that represents ‘Human-centered Luxury’ and cutting-edge technologies. By 2020, Genesis will have a full lineup of products, consisting of six models, which will all become class leading models. We will continue to strive to maintain our leadership in product quality. We will further strengthen the quality verification system at R&D and preproduction processes and improve the manufacturing system by working with the labor union. Collaboration among R&D centers, sales offices and dealerships will be strengthened in order to improve our global production-sales operations. As we pursue our goals, we will continue to fulfill our responsibilities as a global corporate citizen. We will continue to expand the scope of our global CSR activities and strive to achieve win-win growth with our suppliers in order to tackle the challenges that arise and to make the world a better place for all. I would like to ask for your continued support for Hyundai Motor. Thank you. CEO & Chairman Chung Mong-koo 52 53 HYUNDAI MOTOR COMPANY Annual Report 2015 CEO’S MESSAGE All of our achievements were made possible due to the continued support of our shareholders. We will strive to make 2016 a great year with better business results and even WE ARE COMMITTED TO EVOLVING INTO A TRUE LEADER OF THE GLOBAL AUTOMOTIVE INDUSTRY In 2015, the global economy continued to remain sluggish. The automotive industry showed slow growth except in a few advanced markets. In particular, economic recession continued in Russia and Brazil. The Chinese market which led the growth in the automotive market slowed down significantly. Amid this situation, Japanese and European manufacturers are intensifying competition with low prices in part helped by weak exchange rates. Local Chinese manufacturers are expanding market share with low cost models. At home in Korea, competition is getting fierce from foreign automakers. Despite the challenging market environment surrounding the automotive industry, Hyundai Motor attained number of significant achievements. First, we ranked at the top in the JD Power 2015 Initial Quality Study (IQS) in the U.S., China and India, reaffirming our reputation for high product quality. In 2014, our fuel cell system was selected as one of the 2015 Wards 10 Best Engines. In 2015, the new Sonata Plug-in Hybrid made it into the 2016 Wards 10 Best Engines, proving Hyundai Motor’s leadership in clean powertrain technology. Moreover, Genesis was awarded the Insurance Institute for Highway Safety (IIHS) Top Safety Pick+ rating, as one of the safest cars in the world. In Germany, the home of luxury auto brands, Genesis placed first in terms of market share among imported cars, demonstrating its high quality and competitiveness among European customers. greater achievements. Dear shareholders, This year is expected to be another sluggish year for the economy with a potential U.S. interest rate hike, further slowing of the Chinese economy and low oil prices. Automobile demand in emerging markets including many Middle East and Asian countries, Brazil and Russia are expected to fall as well. However, Hyundai Motor is committed to overcoming these challenges and reaching a new milestone of five million units in sales. Likewise, we will further strengthen our foundation for sustained growth by responding to ever changing trends in the automobile market. With the following strategies, we plan to achieve our 2016 goals. First, we will focus on successfully establishing our new luxury brand Genesis in key markets including Korea. Our Genesis brand models are built to surpass even the quality of European luxury brands and offer great customer service, providing human-centered luxury, which the Genesis brand promises to deliver. Second, we will lead the green car market, starting with our eco-friendly dedicated model IONIQ. Launched in January of this year, IONIQ is built on an innovative versatile platform and can be configured as a hybrid, plug-in or electric vehicle. IONIQ has fuel efficiency and performance that surpasses that of all leading competitor models. Going forward, we will further strengthen R&D to develop top quality green cars. Third, we will enhance our efforts to prepare for the smart car market, which will be the future arena of competition for top tier automakers. Therefore, Hyundai Motor plans to invest further in advanced autonomous driving technology that was applied to the Genesis G90. We will also increase our investments in intelligent safety enhancement technologies and connectivity to ultimately create smart cars with maximum safety and convenience. Lastly, all of us at Hyundai Motor will continue to innovate and make necessary changes to overcome difficult challenges surrounding the business market and achieve our 2016 sales target of 5.01 million units while further strengthening Hyundai Motor’s competitiveness for the future. Dear shareholders, I would like to ask for your unwavering support for Hyundai Motor. We will do our best to meet your expectations by taking all the necessary steps to become the most beloved automaker in the world, delivering outstanding values to our customers. I wish you a year full of happiness and great fortune. Thank you. CEO & President Yoon Gap-han 54 55 HYUNDAI MOTOR COMPANY Annual Report 2015 HIGHLIGHTS CONSUMER CONFIDENCE Hyundai Motor was named No. 1 in CarMD’s 2015 Vehicle Index Manufacturer & Vehicle Reliability Rankings for its leadership in vehicle dependability. The 2015 rankings identify the most reliable cars from more than 3,800 different models built over the last 20 years. 1 No. Spot BRAND VALUE Hyundai Motor’s brand value reached the global top 39 at 11.3 billion USD according to Interbrand’s Best Global Brands 2015. Hyundai Motor’s brand value ranking increased from 40th in 2014. SALES Hyundai Motor sold 4.96 million units demonstrating its competitiveness even in a difficult market. This is a significant achievement considering slowing demand in the Chinese market and declining demand in other emerging markets. HIGH VOLUME MODELS In 2015, sales of 14 models joined the ranks of high volume sales models with 100,000 units in markets including South Korea, U.S., Russia, India, Brazil and China. Hyundai Motor classifies unique vehicle models with sales above 100,000 units per market as high volume models. 11.3 billion USD 4.96 million units 14 models 56 57 HYUNDAI MOTOR COMPANY Annual Report 2015 THE WAY OF HMC CORE CONCEPTS OF MANAGEMENT PHILOSOPHY ● Unlimited Sense of Responsibility ● Realization of Possibilities ● Respect for Mankind With its founding spirit and values as the driving force, Hyundai Motor Group has achieved sustained growth since its incorporation. We have selected 5 core values, created vision and defined management philosophy, creating a management philosophy structure which clarifies our goals and serves as a driving force. Moreover, these values are helping us write brand new chapters in Hyundai Motor’s history. MANAGEMENT PHILOSOPHY The management philosophy of a company is the basis for its business management. The essence of our management philosophy is ‘Realize the dream of mankind by creating a new future through ingenious thinking and continuously challenging new frontiers’. Hyundai Motor will continue to conduct various business activities in line with our management philosophy, in order to become an internationally respected company, making a positive contribution to humanity. VISION Hyundai Motor recognizes the importance and impact that automobiles have on society and mankind. It strives to play a role that extends beyond being simply a car manufacturer to become a customers’ lifelong companion. It will build connections with customers by fulfilling its vision to become a ‘Lifetime partner in automobiles and beyond’ and participate in working ‘Together for a better future’ as a member of the Hyundai Motor Group. 5 CORE VALUES The five core values are the cultural DNA embedded in the Hyundai Motor Group and its employees, which serves as the guidelines towards a better future. By upholding the five core values, Hyundai Motor plans to foster an outstanding corporate culture which will match Hyundai Motor’s growing reputation. CUSTOMER FIRST We promote a customer-driven corporate culture by providing the best quality and impeccable service with values centered on our customers. CHALLENGE We refuse to be complacent, embrace every opportunity for greater challenge, and are confident in achieving our goals with unwavering passion and ingenious thinking. COLLABORATION We create synergy through a sense of ‘Togetherness’ that is fostered by mutual communication and cooperation within the company and with our business partners. PEOPLE We believe the future of our organization lies in the hearts and capabilities of individual members, and will help them develop their potential by creating a corporate culture that respects talent. GLOBALITY We respect the diversity of cultures and customs, aspire to be the world’s best at what we do, and strive to become a respected global corporate citizen. 58 59 HYUNDAI MOTOR COMPANY Annual Report 2015 GLOBAL PRESENCE WE ARE BUILDING OUR GLOBAL REPUTATION FOR HIGH QUALITY PRODUCTS AND OUTSTANDING BRAND VALUE. MAINTAINING A MARKET PRESENCE IN ranking did not change significantly, units in sales in 2016. Maintaining high AN EVER UNCERTAIN MARKET brand value has increased by 8.5% from product quality will play a key role in In 2015, Hyundai Motor recorded 10.4 billion USD in 2014 to 11.3 billion achieving this year’s ambitious goal. 4.96 million units in sales, maintaining USD in 2015. its market presence despite many We will also be working to establish our new luxury brand, Genesis, as a brand challenges. This is a significant PRODUCT QUALITY PROVEN IN THE of choice, by providing superior quality achievement considering the slowing GLOBAL MARKET products and services. Our lineup for growth in demand in the Chinese market In addition to achieving great sales green vehicles will significantly increase and declining demand in other emerging and an increase in brand value, starting with IONIQ, the first dedicated market. In the U.S. market, Hyundai Hyundai Motor has made significant green model, which will enable Hyundai Motor hit a new milestone of 10 million achievements in important areas such Motor to meet emission and fuel units in accumulated sales. Hyundai as quality, R&D and safety, bolstering efficiency regulations. Hyundai Motor Motor’s market presence in Europe has its strength as a leading automaker. is committed to creating the industry also increased thanks to a record sales For example, Hyundai Motor ranked as leading clean energy cars. increase in Germany. one of the best brands in JD Power’s Hyundai Motor is also committed to Initial Quality Study in the U.S., China, leading smart car technologies by EVER-INCREASING BRAND VALUE and India. Hyundai Motor’s fuel cell increasing its investment in developing Hyundai Motor’s brand value has powertrain for the ix35 Fuel Cell autonomous driving, smart safety and continued to increase in 2015. (Tucson Fuel Cell) made it into the connectivity technologies. As always, Hyundai Motor’s brand value reached 2015 Wards 10 Best Engines in 2014. the systems for our smart cars will be the global top 39 at 11.3 billion USD The 2015 Sonata PHEV was on Wards built to ensure outstanding quality and according to Interbrand’s Best Global prestigious 10 Best Engines list as well. features way ahead of the competition. Brands 2015. Hyundai Motor’s brand The Genesis sedan was awarded the Efforts will also be made to reduce value went up a ranking from 40th in Top Safety Pick+ by the Insurance costs in order to deliver the best 2014. It was the first time that Hyundai Institute for Highway Safety. possible customer satisfaction. Motor made it into the top 30-39th tier. Hyundai Motor’s brand value has LEADING A NEW TREND IN THE recorded a sustained increased for 11 AUTOMOBILE MARKET consecutive years since it first made it Building on its competitiveness, Hyundai into the top 100 in 2005. Although the Motor is aiming to surpass 5 million Global Sales Unit: thousand units 2016 (target) 5,030 2015 2014 2013 2012 South Korea China India U.S. Czech Republic Russia Turkey Brazil Elantra Accent (Verna) Tucson Sonata Santa Fe 4,965 4,964 4,733 4,410 1,869 1,063 643 380 342 230 227 174 812 670 581 450 323 Sales by Plants (2015) Unit: thousand units Global Sales Top Five Models (2015) Unit: thousand units 60 61 HYUNDAI MOTOR COMPANY Annual Report 2015 CUSTOMER VALUE : QUALITY HYUNDAI MOTOR STRIVES TO BECOME A TRUSTED BRAND BY EMPLOYING CREATIVITY IN QUALITY MANAGEMENT. 2nd JD Power U.S. IQS Non-luxury Brand 1st JD Power China IQS Non-luxury brand 3rd Autobild 2015 Quality Report, Germany PROACTIVE QUALITY MANAGEMENT The process is internally referred to as 2015 China Initial Quality Study, Hyundai STRATEGY the ‘Safety Quality Troubleshooter’. Motor ranked first out of 46 non-luxury When it comes to quality management, In terms of after-sales service, Hyundai brands. Moreover, four Hyundai Motor’s our goal is to produce vehicles with Motor is increasing its capacity to models Verna, Langdong Elantra, Mingtu zero defects. In order to realize this detect, improve and address problems and ix25 were all segment leaders, out ambitious goal, we implemented what while the scale of issues is as small as of 11 segments. It was the first time we call a ‘Proactive & Creative Global possible, promoting safety and quality Hyundai Motor’s models won four Safety Quality Management’ structure at the same time. which drives our efforts. segment titles since the study began in 2000. Of particular note is the Langdong It is a unique strategy which promotes RECOGNITION FOR HIGH QUALITY Elantra which was a segment winner quality management as the top priority Thanks to all of our quality management for the second year in a row, further within the company and strengthens efforts, Hyundai Motor ranked as the strengthening its reputation for quality internal capacity in all areas including number two non-luxury automaker in in the Chinese auto market. development, production and support, the JD Power 2015 U.S., maintaining its In Europe, Hyundai Motor ranked with the single goal of making ranking from the previous year. In terms third among 20 automakers in the Hyundai Motor the most trusted brand. of vehicle models, the 2015 Tucson 2015 Quality Report by AutoBild, Hyundai Motor has also created a and Accent (Verna) were awarded the one of the most authoritative customer-oriented quality management highest initial quality in the Small SUV automotive magazines in Europe. platform and process, Q-Culster, which and Small Car segments respectively. identifies and addresses potential Elantra and Santa Fe also ranked as quality issues associated with vehicle one of the top three models in their safety at the development stage. respective segments. In the JD Power Proactive & Creative Global Safety Quality Management Hyundai Motor is competing with experienced automakers in the U.S., China and Europe as well as emerging markets. By providing a uniquely refined customer experience in the different markets around the world, Hyundai Motor has achieved the highest brand value yet. R e f r a m e s a f e t t y A c h h i e v e b e s t i p r o q e u c a u s l i t t y o m m e a n r ’ s a g p e c o m p e t i t i v B e c o m e t h e R a i s e i n c u s s a t f o A b e m e e t e n c e h i s e s v i n e g s l a o l e b s a l s t r a a d t u y n b n h e m u e d w c t y a q r m q r s e p n t b e u e u a r a n a n r a l i t e k s e l i t d y s t y c f t i v r o e m Sales Best Buy Brand SQ Global SQ SQ Mindset Marketing Winner Innovation Hyundai Motor Global Production Sites 62 63 HYUNDAI MOTOR COMPANY Annual Report 2015 CUSTOMER VALUE : CONVENIENCE EXPANDING THE BOUNDARIES OF PREMIUM SERVICE BEYOND CUSTOMERS’ EXPECTATIONS. World’s first virtual reality-based manual Hyundai Virtual Guide Virtual reality-based user manual World’s first automated service center for dealerships Providing real-time service updates via smart devices World’s first GDS Mobile diagnostics Mobile-device based vehicle diagnostics system CREATING CUSTOMER-ORIENTED service reinforced the management improving customer service, for example SMART SERVICES of its ‘Global Service Support Center by launching the automotive industry’s Hyundai Motor has developed a new (GSSC)’ and implemented high-tech, first ‘Before Service’ (free vehicle customer service system, based on remote diagnostic technology to resolve inspections before breakdowns) to more advanced IT technologies, which makes difficult repair problems in real-time so than four million people worldwide, and more services available anywhere, that it can guarantee complete vehicle expanding the ‘Home-to-Home Service’ anytime. For example, Hyundai Motor maintenance services to customers to facilitate maintenance by offering launched ‘Hyundai Virtual Guide’, worldwide. customers convenient vehicle pick-up the world’s first user manual created on Hyundai Motor began to automate its and delivery services. The recently a virtual reality platform, providing service centers across the world in launched ‘Sunday Services’ by select a brand new user experience and a new 2014, as part of our ongoing efforts to ‘Bluehands’ service centers is enjoying level of convenience. create customer-friendly services and much popularity with customers who are In 2014, Hyundai Motor released a new to increase the credibility and efficiency too busy to visit service centers other mobile platform-based diagnostics of our maintenance services. From the days of the week. system, which allows a comprehensive time of arrival until departure, every Thanks to the collective efforts which assessment of a vehicle’s condition in procedure is managed electronically to have been made to improve customer much less time than before. facilitate communication and provide services, Hyundai Motor was placed Because the new system is PC-based, a customer-oriented service. 1st in the Korean Service Quality Index diagnostics can also take place (KSQI) and in the Hyundai Customer away from service stations, further MORE CONVENIENT AND ACCESSIBLE Satisfaction Index (HCSI) for four and enhancing customer convenience. SERVICES two years, respectively. Furthermore, Hyundai Motor launched their Hyundai Motor provides world-class Hyundai Motor ranked 3rd in a global remote diagnostic service to provide services through its global service customer satisfaction survey conducted high quality service to customers network to customers across the over six regions. worldwide. The remote diagnostic world. Hyundai Motor is dedicated to 64 65 HYUNDAI MOTOR COMPANY Annual Report 2015 CUSTOMER VALUE : GLOBAL MARKETING HYUNDAI MOTOR IS SPONSORING MAJOR SPORTING EVENTS TO REACH OUT TO MORE PEOPLE. GLOBAL SPORTING EVENT SPONSORSHIP Hyundai Motor began its association with FIFA and UEFA (Union of European Football Association) in 1999 and has supported all FIFA competitions including the 2002, 2006, 2010 and 2014 World Cups in Korea-Japan, Germany, South Africa and Brazil respectively. Hyundai Motor has also supported other FIFA events such as the Euro FIFA Confederation Cups, Womens World Cups and U-20 World Cups. As an official sponsor, Hyundai Motor has also supported the UEFA Champions Leagues held in 2000, 2004, 2008 and 2012 in Belgium-Netherland, Portugal, Austria- Switzerland and Poland-Ukraine respectively. In 2016, Hyundai Motor provided official vehicles for UEFA Euro 2016 and conducted a series of marketing activities, in major European cities, including the Hyundai Fan Park, various test drive events, Digital Fan Park and Vehicle Escort programs to help fans enjoy the games and get to know Hyundai Motor at the same time. SUPPORTING DIVERSE SPORT EVENTS TO REACH OUT TO A WIDER AUDIENCE Hyundai Motor’s sports sponsorship has in recent years expanded into archery, golf and American football. For example, Hyundai Motor has been the title sponsor of the PGA opening tournament since 2011, the ‘Hyundai Tournament of Champions’. High-end and green cars were displayed at tournament sites as part of the marketing efforts. In June 2015, Hyundai Motor became an official sponsor of the National Football League (NFL), allowing Hyundai Motor to conduct a variety of marketing activities including digital marketing with NFL logos and vehicle promotion events. During the 2015-2016 Super Bowl, Genesis commercial topped the Super Bowl spot in the USA Today poll. Hyundai Motor also signed a three-year sponsorship deal to support the World Archery as a title sponsor of the Archery World Cup. Hyundai Motor will continue to reach out to more people as it support different sports. MAJOR AUTO SHOWS IN 2015 MOTOR SHOWS IN 2016 (1ST HALF) Detroit Motor Show Unveiled Sonata PHEV, the first PHEV developed in South Korea, and the HCD-15 Santa Cruz, a pickup style concept model Geneva Motor Show Shanghai Motor Show Frankfurt Motor Show World premiere of the all-new Tucson built as a strategic SUV for the growing global SUV market All-new Tucson Concept model, exclusively adapted for China made its debut Brand identity of high-performance ‘N’, Next Generation Hyundai i20 WRC and world premiere of ‘N 2025 Vision Gran Turismo’ Detroit Motor Show Geneva Motor Show Unveiled flagship sedan of new global luxury brand Genesis G90 in North America Unveiled three models (Electric, HEV, PHEV) of Hyundai Motor’s first dedicated eco-friendly model, IONIQ and announced Project IONIQ which aims to incubate innovation for future mobility New York Auto Show World premiere of New York Concept, a four door Genesis branded sports sedan concept car. Debut of three models (Electric, HEV, PHEV) of IONIQ 66 67 HYUNDAI MOTOR COMPANY Annual Report 2015 INNOVATION OF HMC HYUNDAI MOTOR HAS ESTABLISHED AN EXTENSIVE R&D NETWORK, PREPARING FOR THE FUTURE OF THE AUTOMOBILE. DOMESTIC R&D NETWORK: BUILDING EXPANDING GLOBAL R&D NETWORK LEADING THE GLOBAL TREND : FOUNDATION FOR A MORE GLOBAL FOR ENHANCED CAPACITY DESIGN CENTERS AND GREENER FUTURE U.S. TECHNICAL CENTER NAMYANG DESIGN CENTER NAMYANG TECHNOLOGY RESEARCH The U.S. Technical Center is a state- The Namyang Design Center is Hyundai CENTER of-the-art R&D center located in Motor’s main design center and also Located in South Korea, the Namyang Ann Arbor, Michigan. The center also the birth place of ‘Fluidic Sculpture’, Technology Research Center is the core manages the Hyundai California Design Hyundai Motor’s highly acclaimed of Hyundai Motor’s global network. & Technical Center, and driving tracks unique design philosophy. The center consists of a planning for the development of localized center, a design center, a power models. train center, wind tunnel facilities, OVERSEAS DESIGN CENTERS Overseas design centers are responsible collision testing facilities and a EUROPEAN TECHNICAL CENTER for identifying lifestyles of customers in comprehensive proving ground. Over Located near Frankfurt, Germany, their respective markets and developing 11,000 researchers work at the center, the center is responsible for the innovative designs for their local market. developing and testing new models. development of high quality automobiles and engines tailored for the European WORLD CLASS PROVING GROUNDS KOREA CENTRAL RESEARCH INSTITUTE market. The Korea Central Research Institute is responsible for developing new CHINA TECH CENTER NAMYANG TECHNOLOGY RESEARCH CENTER COMPREHENSIVE PROVING technologies including environmental, Based in Beijing, China, the center GROUND alternative energy, intelligent safety develops vehicles tailored to the Chinese Spanning over 1.65 million m2 in area, features, convenience features and new market, which has emerged as the the Namyang Technology Research materials. biggest automotive market in the world. center has a proving ground with a MABUK ENVIRONMENTAL clean technologies. surface types and a 4.5 km long high It is also responsible for developing 70 km long track, which includes 34 road TECHNOLOGY CENTER speed track. The Mabuk Environmental Technology JAPAN TECHNICAL CENTER Center is largely responsible for the Located in Yokohama, the center U.S. PROVING GROUND IN CALIFORNIA development of hydrogen FCEV. focuses on advanced technologies, such Hyundai Motor’s U.S. proving ground A number of core subsystems for FCEV as cutting-edge electronics and hybrid in California is the third largest proving including fuel cell stack system, electric technology. motor, and hydrogen storage system ground established by a non-domestic brand. It is carefully designed to are developed at the center. INDIA TECHNICAL CENTER emulate the various driving conditions The center, located in Hyderabad, is found in the U.S., playing an integral responsible for the development of role in Hyundai Motor’s localization vehicles tailored for the Indian market effort. and supports back-end operations. Hyundai Motor Global R&D Center 68 69 HYUNDAI MOTOR COMPANY Annual Report 2015 COMMITMENT TO THE ENVIRONMENT HYUNDAI MOTOR IS SETTING NEW STANDARDS IN CLEAN CARS BASED ON MAXIMIZING ENVIRONMENTAL CREDENTIALS. SOLAR POWER NEW MATERIALS AND TECHNOLOGIES MINIMIZING WASTE AND MAXIMIZING our plants, including the installation of FOR A NEW GENERATION OF GREEN RECYCLING high efficiency facilities, waste heat CARS Hyundai Motor established the first recovery and energy conservation. We Hyundai Motor has demonstrated Automobile Recycling Center in Korea are also working on transitioning to its technological capability with the which processes 4,200 cars per renewable energy. Our effort will help development of a three way catalytic year. Significant investment has also us effectively respond to the ever- converter which meets California’s been made to minimize the negative strengthening GHG emissions reduction stringent SULEV standard. environmental impact of cars at all policy. Hyundai Motor has been developing stages of their life cycle. Efforts will lightweight design technologies to continue to further increase the amount THE WORLD’S SECOND LARGEST improve quality in terms of fuel of recycled automobile parts in order to ROOFTOP SOLAR GENERATOR efficiency to reduced emissions. retrieve more materials for reuse and Hyundai Motor installed the world’s We are also developing bio plastics, reduce waste. using plant-based materials, which are second largest solar electricity generator at its Asan Plant, which already being applied in some models. REDUCING GREENHOUSE GAS generated 12,460 MWh of electricity Bio plastics can contribute to as much EMISSIONS AT PRODUCTION PLANTS in 2015. as a 40 percent reduction in lifetime CO2 Hyundai Motor is working hard to This is enough to power 3,800 homes emissions compared to regular plastics reduce GreenHouse Gas (GHG) for one year and contributes to made using petroleum. Sustained efforts emissions at all stages of its operations a reduction in GHG emissions of in the development of green materials including purchasing, logistics, 5,600 tons. and new technologies will accelerate the production, sales and service. The solar generator brings additional transition to a clean car era. Since 85 percent of GHG emissions environmental benefits because it was are from production plants, we are built on the rooftop without destroying introducing a number of measures at nature. The Asan Plant generated 12,460 MWh of renewable electricity in 2015 using its rooftop solar system. 12,460 MWh 5,600t The 10MW rooftop solar generation system can reduce GHG emissions by 5,600 tons per year. CO2 70 71 HYUNDAI MOTOR COMPANY Annual Report 2015 COMMITMENT TO CSR SIX MOVES TO MAKE THE WORLD A BETTER PLACE FOR MANKIND, NATURE AND THE FUTURE. Eco system restoration in China Number of ‘Kids’ Hyundai’ web site visitors supporting the children of traffic accident victims 90 million m2 6.33 million 1,380 children Hyundai Motor has completed restoration of an area spanning 50 million m2 and is now working on an additional 40 million m2 as part of Hyundai Motor created the Kids’ Hyundai website The program was launched as a ‘Make-a-wish’ and blog for children to learn about traffic safety. support program. In 2013, the program changed As of April 2016, the site had into a mentoring program. A total of 1,380 children ‘Hyundai Green Zone’ project. over 6.3 million visitors. have been supported over the past 10 years. ‘Looking for Three-Leaf Clovers’ SAFE MOVE : PROMOTING TRAFFIC SAFETY EASY MOVE : GRANTING MOBILITY FOR ALL Hyundai Motor supports a number of traffic safety promotion Hyundai Motor has been a supporter of improving mobility activities with global initiatives such as the educational for people with disabilities for a long time in ways such as animation series ‘Traffic Safety Stories with Poli’ and locally structural improvement, development of special ‘Easy Move’ focused programs such as the ‘Children’s Safety Quiz Contest’ vehicles for the people with disabilities, construction of special and ‘Children Safety First Experience Fair’. playgrounds for disabled children and provision of vehicles for In addition, we have been providing traffic safety education related NGOs. We also established a social enterprise, materials through our Kids’ Hyundai web pages and blogs. Easy Move, Inc. which manufactures various support products We are also working with the Ministry of Public Safety and for the physically disabled. In 2015, we opened the Security and the local Citizen’s Coalition for Safety to host the ‘Chaka Chaka Playground’ which was specially designed children’s safety experience center exhibition. Over 1.25 million for children who have impaired vision to enable them to children have participated in the campaign activities so far. experience the joy of driving using autonomous vehicles. Recently, we began to provide services and facilities to help We plan to increase the scope of our beneficiaries to include address taxi drivers fatigue-related problems, which are children and senior citizens in order to help more people enjoy leading to an increasing number of traffic accidents. The the benefits of mobility. support programs include health check-ups and the provision of rest areas, to enable them to take a break. The ‘Safe Move’ program is expanding its scope to include non-traffic related issues including disaster response. Moving the world Together Moving the world Together Moving the world Moving the world Together Together Hyundai Motor CSR 72 73 SOCIAL CONTRIBUTION SYMBOL AND SLOGAN ‘Moving the World Together’ expresses the Hyundai Motor’s desire to make changes for the better together with its neighbors through care and actions. ‘Moving’ represents the desire for continuous change and development, ‘World’ represents the hopes and dreams of the world, and ‘Together’ represents the harmonious partnership with society. HYUNDAI MOTOR COMPANY Annual Report 2015 GREEN MOVE : FOR THE PROTECTION OF NATURE AND TACKLING CLIMATE CHANGE Hyundai Motor started its second ‘Hyundai Green Zone’ project in China to help reverse desertification in 2008. The project succeeded in transforming 50 million m2 of inner Mongolia’s Kunshantag Desert into green land. As a result of this project, Hyundai Motor has been selected as ‘The Most Responsible Company in China’ for six consecutive years since 2010. The second project will be in the northern part of China, in the Zhenglan Qi district, covering 40 million m2 of land, and will run for five years starting in 2018. To reduce roadkill and thereby the number of resultant traffic accidents, Hyundai Motor supported the establishment of Korea’s first roadkill prevention association. Hyundai Motor is also contributing to other environmental protection programs such as the restoration and preservation of the Taehwa River, the habitat of the tailed silk butterfly. We will continue to launch a number of new programs to help protect the environment and tackle climate change. HAPPY MOVE : HELPING OUR NEIGHBORS WITH CARE Hyundai Motor organized 134 volunteer groups through- out its operation sites and is providing volunteer services in partnership with 168 welfare centers. In 2015, a total of 9,000 employees participated in volunteer services helping under- privileged people, especially before traditional holidays and during the end of year holiday season. A total of 70 volunteer groups lent their support to nearby farming towns, during the busy seasons in spring and autumn. We are also supporting the ‘H-Family Volunteer’ program which is a weekend volunteer program for Hyundai Motor’s employees’ family members and the ‘H-Family Workcamp’ which is similar to the ‘H-Family Volunteer’ but with inter- national university students. There is also the ‘H-Volunteer Designer’ program which provides grants to employees who design an original program. The ‘Happy Move Global Youth Volunteer’s Corps’ is a program which started in 2008 and is actively engaged in com- munity services in China, India and Vietnam. More than 7,510 volunteers have visited 20 countries over the last eight years. We plan to invite Hyundai Motor customers to participate in our ‘Happy Move’ programs in the future. DREAM MOVE : PROVIDING CAREER GUIDANCE AND NURTURING SOCIAL INNOVATORS ‘Looking for Three-Leaf Clovers’ is a program created to provide one-to-one mentoring from college students to children who have suffered a loss as a result of a traffic accident. The program began as the ‘Make-a-wish’ program in 2005 before it changed into the current program in 2013. Nearly 1,400 young children have received support over the past ten years. In 2015, the mentoring program doubled in size providing opportunities for 80 mentors to meet with 80 mentees once a month. Funding support was also provided to allow young students to explore topics they were interested in. Hyundai Motor’s employees also participated in the program as mentors. In 2016, we signed a partnership agreement with leading companies and institutions to provide more hands-on experience for participants. In 2015, Hyundai Motor also launched a new initiative ‘H-Social Creator’ which aims to cultivate young social innovators. The program selected 20 college students and provided them with an in-depth regular workshop on Creating Shared Value (CSV) over six months. Participants discussions covered a wide variety of issues including our aging society, pollution, urbanization, slow economic growth and brainstormed ideas. NEXT MOVE : CREATING A BETTER FUTURE WITH TECHNOLOGIES AND SERVICES ‘Next Move’ CSR programs aim to create benefits for society and the company by utilizing Hyundai Motor’s expertise and service infrastructure. Most recently, Hyundai Motor celebrated the opening of the ‘Hyundai-KOICA Dream Center’ at the Hanoi Industrial Vocational College in Vietnam. The center is a vocational school jointly established with the Hyundai Motor Group, Hyundai E&C, the Korea International Cooperation Agency (KOICA) and Plan International to train students, in Vietnam, in automobile repair and construction and then to help them get jobs. Following the openings of centers in Ghana, Indonesia and Cambodia, this is the fourth Dream Center. The new center is the first center created in partnership with a non-automotive company within the Hyundai Motor Group. Hyundai Motor handed over the first bobsleigh built by its in-house engineers to the national bobsleigh team of South Korea. Hyundai Motor built a brand new bobsleigh for the team to help them with the upcoming 2018 Winter Olympics. Hyundai Motor’s engineers worked with the Korean national bobsleigh team to develop bobsleighs tailored to the individual athletes. New advanced engineering methods were developed and technologies used in advanced automobile development were applied to develop this bobsleigh. 74 75 HYUNDAI MOTOR COMPANY Annual Report 2015 HMC NETWORK HYUNDAI MOTOR HAS A COMPREHENSIVE WORLDWIDE BUSINESS NETWORK WHICH CONSISTS OF MANUFACTURING PLANTS, R&D CENTERS AND DESIGN CENTERS. HYUNDAI MOTOR HAS OVER 6,200 DEALERSHIPS IN NEARLY 200 COUNTRIES WORLDWIDE, WHICH NOT ONLY SERVE AS SALES OUTLETS BUT WHERE WE COLLECT INFORMATION ON LOCAL MARKET NEEDS AND PROVIDE HIGH QUALITY SERVICE FOR CUSTOMERS. ASIA NORTH AMERICA MIDDLE EAST & AFRICA + HYUNDAI MIDDLE EAST & AFRICA REGIONAL HQ + HYUNDAI ASSAN OTOMOTIV SANAYI (HAOS) + HYUNDAI MIDDLE EAST & AFRICA REGIONAL HQ (COMMERCIAL VEHICLE) SOUTH AMERICA EUROPE NORTH AMERICA · CENTRAL & SOUTH AMERICA + HYUNDAI AUTO CANADA (HAC) + HYUNDAI AMERICA TECHNICAL CENTER INC. (HATCI) + HYUNDAI MOTOR MANUFACTURING ALABAMA (HMMA) + HYUNDAI CENTRAL & SOUTH AMERICA REGIONAL HEADQUARTER + HYUNDAI CENTRAL & SOUTH AMERICA REGIONAL HEADQUARTER (COMMERCIAL VEHICLES) + HYUNDAI MOTOR MEXICO (HMM) + HYUNDAI DE MEXICO (HYMEX) + HYUNDAI TRANSLEAD, INC. (HT) + CALIFORNIA PROVING GROUNDS + HYUNDAI MOTOR AMERICA (HMA) + HYUNDAI AMERICA DESIGN CENTER + HYUNDAI MOTOR MANUFACTURING BRAZIL (HMB) EUROPE ASIA & PACIFIC + HYUNDAI MOTOR MANUFACTURING CZECH (HMMC) + HYUNDAI MOTOR COMPANY HQ (SOUTH KOREA) + HYUNDAI MOTOR CZECH (HMCZ) + HYUNDAI MOTORSPORT GMBH (HMSG) + HYUNDAI EASTERN EUROPE REGIONAL HQ (COMMERCIAL VEHICLE) + HYUNDAI EASTERN EUROPE REGIONAL HQ + HYUNDAI MOTOR COMPANY ITALY (HMCI) + ULSAN PLANT (SOUTH KOREA) + ASAN PLANT (SOUTH KOREA) + JEONJU PLANT (SOUTH KOREA) + SICHUAN HYUNDAI MOTOR COMPANY (CHMC) + HYUNDAI MOTOR GROUP CHINA (HMGC) + HYUNDAI MOTOR DEUTSCHLAND GMBH (HMD) + HYUNDAI MOTOR CHINA R&D CENTER + HYUNDAI MOTOR UNITED KINGDOM. LTD. (HMUK) + GLOBAL SERVICE SUPPORT CENTER (CHINA) + HYUNDAI MOTOR FRANCE (HMF) + BEIJING HYUNDAI MOTOR COMPANY (BHMC) + HYUNDAI MOTOR EUROPE TECHNICAL CENTER GMBH + HYUNDAI MOTOR JAPAN R&D CENTER (HMETC) / DESIGN CENTER + HYUNDAI MOTOR EUROPE GMBH (HME) + HYUNDAI MOTOR POLAND (HMP) + HYUNDAI MOTOR ESPANA, S.L. (HMES) + HYUNDAI MOTOR JAPAN (HMJ) + HYUNDAI MOTOR INDIA (HMI) + HYUNDAI MOTOR INDIA ENGINEERING PVT. LTD. (HMIE) + HYUNDAI ASIA & PACIFIC REGIONAL HQ + HYUNDAI MOTOR NETHERLANDS B.V. (HMNL) (COMMERCIAL VEHICLE) + HYUNDAI MOTOR CIS (HMCIS) + HYUNDAI ASIA & PACIFIC REGIONAL HQ + HYUNDAI MOTOR MANUFACTURING RUSSIA (HMMR) + HYUNDAI MOTOR COMPANY AUSTRALIA (HMCA) 76 77 HYUNDAI MOTOR COMPANY Annual Report 2015 CORPORATE GOVERNANCE AND BOARD OF DIRECTORS HYUNDAI MOTOR HAS BOARD OF DIRECTORS AND THREE SUBCOMMITTEES INCLUDING AUDIT COM- MITTEE, EXTERNAL DIRECTOR CANDIDATE RECOMMENDATION COMMITTEE AND CORPORATE GOVER- NANCE & COMMUNICATION COMMITTEE UNDER THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS (BOD) The BOD makes decisions on matters stipulated by law and the Articles of Incorporation, as well as issues delegated to it through shareholders’ meetings. The BOD sets guidelines for the company’s management and makes important decisions related to the execution of projects. The BOD supervises the work of executives and management. The BOD consists of four internal and five external directors. The BOD convenes regular board meetings as well as extraordinary meetings whenever necessary. Meetings 1st General Extraordinary Extraordinary 2nd General Extraordinary 3rd General 4th General Extraordinary Date Jan. 22, 2015 Feb. 12, 2015 Mar. 13, 2015 Apr. 23, 2015 Jun. 12, 2015 Jul. 23, 2015 Oct. 22, 2015 Dec. 22, 2015 Key Activities of the BOD in 2015 Agenda Approval of agenda of the 47th General Meeting of Shareholders and 1 other item Approval of 47th Financial Statement and 6 other items Appointment of CEO and 4 other items Approval of transaction with company owned by major shareholders and 6 other items Approval of the closure date for shareholder̓s list Approval of transaction with company owned by major shareholders and 3 other items Approval of transaction with company owned by major shareholders and 3 other items Approval of insurance transaction with affilliates and 1 other item * Detailed information can be found at Hyundai Motor’s homepage (http://pr.hyundai.com) or the FSS ’s electronic disclosure system (http://dart.fss.or.kr). BOARD OF DIRECTORS THE AUDIT COMMITTEE AND THE EXTERNAL DIRECTOR CANDIDATE RECOMMENDATION COMMITTEE AUDIT COMMITTEE EXTERNAL DIRECTOR CANDIDATE RECOMMENDATION COMMITTEE CORPORATE GOVERNANCE & COMMUNICATION COMMITTEE The Audit Committee consists of four external directors. Its duties include auditing the company’s management and accounting, requesting business reports from executives, and monitoring the company’s financial status. The Audit Committee can raise dis- cussions on matters related to general shareholders̓ meetings, directors and the BOD, and auditing issues. Internal systems to enable members’ access to management information necessary for proper auditing are in place. The External Director Candidate Recommendation Committee consists of two internal directors and three external directors. All external directors are appointed after being recommended by the Recommendation Committee. Compensation for directors was capped at KRW 15 billion at the 2015 General Shareholders̓ Meeting. Total compensation for internal and external directors from January 1 to December 31, 2015 amounted to KRW 12 billion. Average compensation for internal directors was KRW 2.9 billion and BOD Members (as of end May 2016) KRW 91 million for external directors. Joint Positions Held External Director Candidate Recommendation Committee Corporate Governance & Communication Committee Audit Committee Title/Affiliation Name Internal Chung Mong-koo Chairman & CEO Chung Eui-sun Vice Chairman Lee Won-hee President & CEO Yoon Gap-han President & CEO Oh Se-bin Lawyer, Dongin Law Nam Sung-il Professor of Economics, Sogang University External Yi You-jae Professor of Business Administration, Seoul National University Lee Dong-kyu Advisor of Kim and Chang Law Group Lee Byung-kook Chairman of e-Chon Tax Accounting Corp. o - o - o o o - - - - - - o o - o o - - - - o - o o o THE CORPORATE GOVERNANCE & COMMUNICATION COMMITTEE Hyundai Motor changed the name of the committee from ETHICS COMMITTEE to CORPORATE GOVERNANCE & COMMUNICATION COMMITTEE and reorganized the committee to promote shareholders’ rights in April, 2015. The Ethics Committee was established in 2007 to improve transparency of internal transactions and to ensure ethical management of the company. Ethical management and internal transaction restriction were further reinforced in 2012 when the Committee was reorganized as a subcommittee of the BOD. The Corporate Governance & Comminication Committee consists of four external directors. * Detailed information on the directors can be found at Hyundai Motor’s homepage (Korean: http://pr.hyundai.com; English: http://worldwide.hyundai.com/worldwide_index. html) or the Financial Supervisory Service (FSS )’s electronic disclosure system (http://dart.fss.or.kr). 78 79 HYUNDAI MOTOR COMPANY Annual Report 2015 FINANCIAL STATEMENTS HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES INDEPENDENT AUDITORS’ REPORT CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 81 82 84 85 86 88 90 INDEPENDENT AUDITORS’ REPORT English Translation of Independent Auditors’ Report Originally Issued in Korean on February 25, 2016 To the Shareholders and the Board of Directors of Hyundai Motor Company: We have audited the accompanying consolidated financial statements of Hyundai Motor Company (the “Company”) and its sub- sidiaries, which comprise the consolidated statements of financial position as of December 31, 2015 and December 31, 2014, re- spectively, and the consolidated statements of income, comprehensive income, statements of changes in equity and statements of cash flows, all expressed in Korean won, for the years then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement. Auditors’ Responsibility Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audits in accordance with Korean Standards on Auditing (“KSAs”). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis- statement, whether due to fraud or error. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Compa- ny and its subsidiaries as of December 31, 2015 and December 31, 2014, respectively, and its financial performance and its cash flows for the years then ended in accordance with K-IFRS. February 25, 2016 80 81 Notice to Readers This report is effective as of February 25, 2016, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could signifi- cantly affect the financial statements and may result in modifications to the auditors’ report. HYUNDAI MOTOR COMPANY Annual Report 2015 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2015 AND 2014 AS OF DECEMBER 31, 2015 AND 2014 (CONTINUED) ASSETS Current assets: Cash and cash equivalents Short-term financial instruments Other financial assets Trade notes and accounts receivable Other receivables Inventories Current tax assets Financial services receivables Non-current assets classified as held for sale Other assets Total current assets Non-current assets: Long-term financial instruments Other financial assets Long-term trade notes and accounts receivable Other receivables Property, plant and equipment Investment property Intangible assets Investments in joint ventures and associates Deferred tax assets Financial services receivables Operating lease assets Other assets Total non-current assets Total assets (Continued) In millions of Korean Won In millions of Korean Won NOTES December 31, 2015 December 31, 2014 LIABILITIES AND EQUITY Current liabilities: NOTES December 31, 2015 December 31, 2014 19 19 5,19 3,19 4,19 6 13,19 8 7,19 19 5,19 3,19 4,19 9 10 11 12 32 13,19 14 7,19 ￦ 7,331,463 ￦ 7,096,513 Trade notes and accounts payable 6,904,917 10,334,803 4,468,351 3,846,104 9,198,999 57,022 23,777,277 47,643 1,562,631 67,529,210 71,545 2,804,842 67,591 1,163,566 28,698,927 291,424 4,298,088 16,909,943 764,733 24,559,123 17,719,606 489,348 97,838,736 4,002,506 14,884,434 3,750,092 3,722,109 7,417,239 32,869 22,498,584 47,643 1,573,695 65,025,684 99,044 2,520,119 51,534 1,039,157 22,542,259 322,207 3,821,656 16,157,334 649,850 21,496,004 13,265,616 234,653 82,199,433 Other payables Short-term borrowings Current portion of long-term debt and debentures Income tax payable Provisions Other financial liabilities Other liabilities Total current liabilities Non-current liabilities: Long-term other payables Debentures Long-term debt Net defined benefit liabilities Provisions Other financial liabilities Deferred tax liabilities Other liabilities Total non-current liabilities Total liabilities Equity: Capital stock Capital surplus Other capital items ￦ 165,367,946 ￦ 147,225,117 Retained earnings Accumulated other comprehensive loss Equity attributable to the owners of the Company Non-controlling interests Total equity Total liabilities and equity (Concluded) See accompanying notes to consolidated financial statements. 19 19 15,19 15,19 16 17,19 18,19 19 15,19 15,19 33 16 17,19 32 18,19 20 21 22 23 24 ￦ 7,081,124 ￦ 7,041,529 4,711,494 9,384,165 10,788,049 1,000,763 1,710,342 675,437 5,862,146 4,686,473 6,845,920 9,679,498 656,201 1,844,780 223,303 4,201,969 41,213,520 35,179,673 2,054 36,207,504 8,552,622 604,433 5,031,558 145,282 4,257,834 2,471,738 57,273,025 98,486,545 1,488,993 3,520,395 (1,588,697) (1,431,821) 60,035,088 62,023,958 4,857,443 66,881,401 2,339 30,302,085 7,430,429 594,058 4,882,090 210,528 4,051,203 1,952,147 49,424,879 84,604,552 1,488,993 4,134,550 (1,273,752) (1,344,826) 54,649,863 57,654,828 4,965,737 62,620,565 ￦ 165,367,946 ￦ 147,225,117 82 83 HYUNDAI MOTOR COMPANY Annual Report 2015 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (In millions of Korean Won, except per share amounts) 2015 2014 ￦ 91,958,736 ￦ 89,256,319 Profit for the year Sales Cost of sales Gross profit Selling and administrative expenses Operating income Gain on investments in joint ventures and associates, net Finance income Finance expenses Other income Other expenses Income before income tax Income tax expense Profit for the year Profit attributable to: Owners of the Company Non-controlling interests NOTES 25,38 30 26,30 27 28 28 29 29,30 32 Earnings per share attributable to the owners of the Company: 31 Basic earnings per share: Common stock 1st preferred stock Diluted earnings per share: Common stock 1st preferred stock See accompanying notes to consolidated financial statements. 73,701,296 18,257,440 11,899,534 6,357,906 1,930,675 831,376 713,452 1,255,105 1,202,237 8,459,373 1,950,208 70,126,276 19,130,043 11,580,057 7,549,986 2,388,658 881,883 601,019 1,039,865 1,308,099 9,951,274 2,301,806 ￦ 6,509,165 ￦ 7,649,468 6,417,303 91,862 ￦ 23,861 ￦ 23,909 ￦ 23,861 ￦ 23,909 7,346,807 302,661 ￦ 27,037 ￦ 27,122 ￦ 27,037 ￦ 27,122 Other comprehensive income (loss): Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Changes in retained earnings of equity-accounted investees, net Items that may be reclassified subsequently to profit or loss: Loss on available-for-sale (“AFS”) financial assets, net Gain (loss) on valuation of cash flow hedge derivatives, net Changes in share of earnings of equity-accounted investees, net Gain (loss) on foreign operations translation, net Total other comprehensive loss Total comprehensive income Comprehensive income attributable to: Owners of the Company Non-controlling interests In millions of Korean Won 2015 2014 ￦ 6,509,165 ￦ 7,649,468 68,670 (15,571) 53,099 (59,422) 8,297 (11,585) 630 (62,080) (8,981) ￦ 6,500,184 (379,062) (82,187) (461,249) (225,611) (62,752) 80,382 (379,757) (587,738) (1,048,987) ￦ 6,600,481 6,384,881 115,303 6,405,423 195,058 Total comprehensive income ￦ 6,500,184 ￦ 6,600,481 See accompanying notes to consolidated financial statements. 84 85 HYUNDAI MOTOR COMPANY Annual Report 2015 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (CONTINUED) In millions of Korean Won In millions of Korean Won Capital stock Capital surplus Accumulated other comprehensive income (loss) Other capital items Total equity attributable to the owners of the Company Retained earnings Non- controlling interests Total equity ￦ 1,488,993 ￦ 4,130,668 ￦ (1,128,779) ￦ (834,036) ￦ 48,274,239 ￦ 51,931,085 ￦ 4,651,704 ￦ 56,582,789 - - - - - - - - - - - - - - - - - - - - - - (952) - 4,834 - - - - - - - - - - - - - (144,973) - 3,882 (144,973) - 7,346,807 7,346,807 302,661 7,649,468 (227,394) (31,570) - - (227,394) 1,783 (225,611) (31,570) (31,182) (62,752) 80,124 (82,103) (1,979) 174 (1,805) - (348,491) (348,491) (30,571) (379,062) (331,950) - (331,950) (47,807) (379,757) (510,790) 6,916,213 6,405,423 195,058 6,600,481 - - - - - - - (534,409) (534,409) (52,519) (586,928) - - - - (952) 148,659 147,707 - 5,649 5,649 4,834 16,909 21,743 (144,973) - (144,973) (6,180) (6,180) 277 (5,903) (540,589) (681,680) 118,975 (562,705) ￦ 1,488,993 ￦ 4,134,550 ￦ (1,273,752) ￦ (1,344,826) ￦ 54,649,863 ￦ 57,654,828 ￦ 4,965,737 ￦ 62,620,565 Balance at January 1, 2014 Comprehensive income: Profit for the year Gain (loss) on AFS financial assets, net Loss on valuation of cash flow hedge derivatives, net Changes in valuation of equity-accounted investees, net Remeasurements of defined benefit plans Loss on foreign operations translation, net Total comprehensive income (loss) Transactions with owners, recorded directly in equity: Payment of cash dividends Increase in subsidiaries’ stock Purchases of subsidiaries’ stock Disposals of subsidiaries’ stock Purchases of treasury stock Others Total transactions with owners, recorded directly in equity Balance at December 31, 2014 (Continued) Capital stock Capital surplus Accumulated other comprehensive loss Other capital items Total equity attributable to the owners of the Company Retained earnings Non- controlling interests Total equity ￦ 1,488,993 ￦ 4,134,550 ￦ (1,273,752) ￦ (1,344,826) ￦ 54,649,863 ￦ 57,654,828 ￦ 4,965,737 ￦ 62,620,565 - - - - - - - - - - - - - - - - - - - - - - - - - 7,067 (621,267) - - - - - - - - - - - - - 45 (314,945) - (614,155) (314,945) - 6,417,303 6,417,303 91,862 6,509,165 (62,845) (640) - - (62,845) 3,423 (59,422) (640) 8,937 8,297 (12,967) (15,552) (28,519) 1,363 (27,156) - 70,125 70,125 (1,455) 68,670 (10,543) - (10,543) 11,173 630 (86,995) 6,471,876 6,384,881 115,303 6,500,184 - - - - - - - - (1,085,983) (1,085,983) (266,583) (1,352,566) - - - - - - - 15,646 15,646 11,104 11,104 7,067 17,065 24,132 (621,267) (314,945) - - (621,267) (314,945) (668) (623) (829) (1,452) (1,086,651) (2,015,751) (223,597) (2,239,348) ￦ 1,488,993 ￦ 3,520,395 ￦ (1,588,697) ￦ (1,431,821) ￦ 60,035,088 ￦ 62,023,958 ￦ 4,857,443 ￦ 66,881,401 Balance at January 1, 2015 Comprehensive income: Profit for the year Gain (loss) on AFS financial assets, net Gain (loss) on valuation of cash flow hedge derivatives, net Changes in valuation of equity-accounted investees, net Remeasurements of defined benefit plans Gain (loss) on foreign operations translation, net Total comprehensive income (loss) Transactions with owners, recorded directly in equity: Payment of cash dividends Increase in subsidiaries’ stock Purchases of subsidiaries’ stock Disposals of subsidiaries’ stock Reclassification to other financial liabilities Purchases of treasury stock Others Total transactions with owners, recorded directly in equity Balance at December 31, 2015 86 87 (Concluded) See accompanying notes to consolidated financial statements. HYUNDAI MOTOR COMPANY Annual Report 2015 CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (CONTINUED) Cash flows from operating activities: Cash generated from operations: Profit for the year Adjustments Changes in operating assets and liabilities Interest received Interest paid Dividend received Income tax paid Net cash provided by operating activities Cash flows from investing activities: Proceeds from disposals (purchases) of short-term financial instruments, net Proceeds from disposals (purchases) of other financial assets (Current), net Proceeds from disposals of other financial assets (Non-current) Receipts from other receivables Disposals of long-term financial instruments Proceeds from disposals of property, plant and equipment Proceeds from disposals of intangible assets Proceeds from disposals of investments in subsidiaries Proceeds from disposals of investments in joint ventures and associates Acquisitions of other financial assets (Non-current) Increases in other receivables Purchases of long-term financial instruments Acquisitions of property, plant and equipment Acquisitions of intangible assets Cash outflows from business combinations Acquisitions of investments in joint ventures and associates Other cash receipts from investing activities, net In millions of Korean Won 2015 2014 NOTES 34 ￦ 6,509,165 9,495,809 (13,497,418) 2,507,556 712,853 (1,458,498) 1,149,100 (1,662,596) 1,248,415 (2,874,548) 4,340,226 171,985 63,025 383 62,698 15,165 99,013 - (156,792) (78,076) (30,811) (8,141,729) (1,218,136) (86,613) (256,624) 30,546 ￦ 7,649,468 8,369,656 (12,421,149) 3,597,975 704,872 (1,393,607) 1,030,074 (1,818,469) 2,120,845 10,877,563 (12,735,214) 184,805 48,493 - 47,045 8,130 453,215 23,811 (239,953) (50,971) (32,143) (3,353,809) (1,372,086) - (130,417) 76,521 Net cash used in investing activities (8,060,288) (6,195,010) (Continued) Cash flows from financing activities: Proceeds from short-term borrowings, net Proceeds from long-term debt and debentures Paid-in capital increase of subsidiaries Purchases of subsidiaries’ stock Disposals of subsidiaries’ stock Repayment of long-term debt and debentures Purchases of treasury stock Dividends paid Other cash payments from financing activities, net Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents, beginning of the year In millions of Korean Won 2015 2014 ￦ 1,887,238 28,132,100 15,646 11,104 27,153 (21,142,350) (314,945) (1,352,510) (49,769) 7,213,667 (166,844) 234,950 7,096,513 ￦ 1,412,120 19,001,138 147,707 5,649 23,678 (15,120,767) (144,973) (586,928) (30,647) 4,706,977 (408,729) 224,083 6,872,430 Cash and cash equivalents, end of the year ￦ 7,331,463 ￦ 7,096,513 (Concluded) See accompanying notes to consolidated financial statements. 88 89 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 1. GENERAL: Hyundai Motor Company (the “Company” or “Parent Company”) was incorporated in December 1967, under the laws of the Re- public of Korea. The Company and its subsidiaries (the “Group”) manufactures and distributes motor vehicles and parts, operates vehicle financing and credit card processing, and manufactures trains. The shares of the Company have been listed on the Korea Exchange since 1974, and the Global Depositary Receipts issued by the Company have been listed on the London Stock Exchange and Luxembourg Stock Exchange. As of December 31, 2015, the major shareholders of the Company are Hyundai MOBIS (45,782,023 shares, 20.78%) and Chung, Mong Koo (11,395,859 shares, 5.17%). (1) The Company’s consolidated subsidiaries as of December 31, 2015 are as follows: Subsidiaries Hyundai Capital Services, Inc. Hyundai Card Co., Ltd. (*) Nature of business Financing ˝ Hyundai Rotem Company (Hyundai Rotem) (*) Manufacturing Hyundai KEFICO Corporation (Hyundai KEFICO) Green Air Co., Ltd. Hyundai Auto Electronics Company Ltd. Hyundai Partecs Co., Ltd. Hyundai NGV Tech Co., Ltd. Maintrans Company Jeonbuk Hyundai Motors FC Co., Ltd. Hyundai Motor America (HMA) Hyundai Capital America (HCA) ˝ ˝ R&D Manufacturing Engineering Services Football club Sales Financing Hyundai Motor Manufacturing Alabama, LLC (HMMA) Manufacturing Hyundai Translead, Inc. (HT) Stamped Metal American Research Technology, Inc. (SMARTI) ˝ Holding company Stamped Metal American Research Technology LLC Manufacturing Hyundai America Technical Center, Inc. (HATCI) Rotem USA Corporation R&D Manufacturing Location Korea ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ USA ˝ ˝ ˝ ˝ ˝ ˝ ˝ Hyundai Auto Canada Corp. (HACC) Sales Canada Hyundai Auto Canada Captive Insurance Inc. (HACCI) Hyundai Capital Canada Inc. (HCCA) Hyundai Capital Lease Inc. (HCLI) HK Lease Funding LP HCCA Funding Inc. ˝ ˝ ˝ ˝ ˝ Insurance Financing ˝ ˝ ˝ 90 Ownership percentage Indirect ownership 56.47% 36.96% 43.36% 100.00% 51.00% 60.00% 56.00% 53.66% 80.00% 100.00% 100.00% 80.00% 100.00% 100.00% 72.45% 100.00% 100.00% Hyundai Rotem 51.00% Hyundai Rotem 80.00% HMA 80.00% HMA 100.00% HMA 72.45% SMARTI 100.00% 100.00% Hyundai Rotem 100.00% 100.00% 100.00% 60.00% 100.00% 100.00% 100.00% HMA 100.00% ˝ HCCA 100.00% HCLI 99.99%, HCCA Funding Inc. 0.01% HCLI 100.00% Subsidiaries Hyundai Motor India Limited (HMI) Nature of business Manufacturing Hyundai Motor India Engineering Private Limited (HMIE) R&D Hyundai Capital India Private Limited (HCI) Financing Hyundai Motor Japan Co., Ltd. (HMJ) Hyundai Motor Japan R&D Center Inc. (HMJ R&D) Beijing Jingxian Motor Safeguard Service Co., Ltd. (BJMSS) Beijing Jingxianronghua Motor Sale Co., Ltd. Beijing Xinhuaxiaqiyuetong Motor Chain Co., Ltd. Hyundai Millennium (Beijing) Real Estate Development Co., Ltd. Rotem equipments (Beijing) Co., Ltd. Sales R&D Sales ˝ ˝ Real estate development Sales KEFICO Automotive Systems (Beijing) Co., Ltd. Manufacturing KEFICO Automotive Systems (Chongqing) Co., Ltd. KEFICO VIETNAM COMPANY LIMITED ˝ ˝ Hyundai Motor Company Australia Pty Limited (HMCA) Sales Hyundai Motor Manufacturing Czech, s.r.o. (HMMC) Manufacturing Hyundai Motor Czech s.r.o (HMCZ) Hyundai Motor Europe GmbH (HME) Hyundai Motor Deutschland GmbH (HMD) Hyundai Motor Europe Technical Center GmbH (HMETC) Hyundai Motor Sport GmbH (HMSG) Hyundai Capital Europe GmbH Sales Marketing and sales Sales R&D Marketing Financing Hyundai Capital Services Deutschland GmbH ˝ Location India ˝ ˝ Japan ˝ China ˝ ˝ ˝ ˝ ˝ ˝ Vietnam Australia Czech ˝ Ownership percentage Indirect ownership 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.00% HMI 100.00% Hyundai Capital Services 100.00% BJMSS 100.00% ˝ CMEs 99.00% 100.00% Hyundai Rotem 100.00% 100.00% Hyundai KEFICO 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% ˝ ˝ Germany 100.00% ˝ ˝ ˝ ˝ ˝ 100.00% 100.00% 100.00% 100.00% 80.00% HME 100.00% Hyundai Capital Services 100.00% Hyundai Capital Services 80.00% Hyundai Motor Manufacturing Rus LLC (HMMR) Manufacturing Russia 70.00% Hyundai Motor Commonwealth of Independent States B.V (HMCIS B.V) Hyundai Motor Netherlands B.V. (HMNL) Holding company Sales Netherlands 100.00% HMMR 1.40% ˝ 100.00% Hyundai Motor Commonwealth of Independent States (HMCIS) Hyundai Capital Services Limited Liability Company Hyundai Assan Otomotiv Sanayi Ve Ticaret A.S. (HAOSVT) Hyundai EURotem Demiryolu Araclarive Ticaret A.S. Hyundai Motor UK Limited (HMUK) Hyundai Motor Company Italy S.r.l (HMCI) ˝ Russia 100.00% HMCIS B.V 100.00% Financing ˝ 100.00% Hyundai Capital Europe 100.00% Manufacturing Turkey 78.54% ˝ UK Italy 50.50% Hyundai Rotem 50.50% 100.00% 100.00% ˝ Sales ˝ 91 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Subsidiaries Hyundai Motor Espana. S.L.U. (HMES) Hyundai Motor France SAS (HMF) Hyundai Motor Poland Sp. Zo. O (HMP) Hyundai Motor DE Mexico S DE RL DE CV (HMM) Hyundai de Mexico, SA DE C.V., (HYMEX) Hyundai Rio Vista, Inc. Hyundai Motor Brasil Montadora de Automoveis LTDA (HMB) Hyundai Capital Brasil Servicos De Assistencia Financeira Ltda Hyundai Rotem Brasil Servicos de Engenharia Ltda. China Millennium Corporations (CMEs) KyoboAXA Private Tomorrow Securities Investment Trust No.12 UBS Hana Dynamic Balance Private Investment Trust 1 Shinhan BNPP Private Corporate Security Investment Trust No.34 Miraeasset Triumph Private Equity Security Investment Trust No.15 Autopia Forty-Fourth ~ Forty-Seventh Asset Securitization Specialty Company (*) Autopia Forty-Ninth ~ Fifty-Second Asset Securitization Specialty Company (*) Autopia Fifty-Fourth ~ Fifty-Ninth Asset Securitization Specialty Company (*) HB the Fourth Securitization Specialty Company (*) Privia the Fourth ~ Fifth Securitization Specialty Co., Ltd. (*) Super Series First Securitization Specialty Co., Ltd. (*) Hyundai CHA Funding, LLC Hyundai Lease Titling Trust Hyundai HK Funding, LLC Hyundai HK Funding Two, LLC Hyundai HK Funding Three, LLC Hyundai ABS Funding, LLC HK Real Properties, LLC Hyundai Auto Lease Offering, LLC Hyundai HK Lease, LLC Nature of business Sales ˝ ˝ ˝ Manufacturing Real estate development Location Spain France Poland Mexico ˝ Ownership percentage 100.00% 100.00% 100.00% 100.00% 99.99% Indirect ownership HT 0.01% HT 99.99% USA 100.00% HT 100.00% Manufacturing Brazil 100.00% Financing Sales Holding company ˝ ˝ Cayman Islands 100.00% Hyundai Capital Services 100.00% 100.00% Hyundai Rotem 100.00% 59.60% Investment Korea 100.00% ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ USA ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ 100.00% 100.00% 100.00% 0.90% 0.50% 0.50% 0.31% Hyundai Capital Services 0.90% Hyundai Capital Services 0.50% ˝ Hyundai Capital Services 0.31% 0.50% Hyundai Card 0.50% 0.50% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% ˝ HCA 100.00% ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ Financing ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ 92 Subsidiaries Extended Term Amortizing Program, LLC Hyundai Protection Plan, Inc. Hyundai Protection Plan Florida, Inc. Hyundai Capital Insurance Services, LLC Hyundai Capital Insurance Company Power Protect Extended Services, Inc. Power Protect Extended Services Florida, Inc. Nature of business Financing Insurance ˝ ˝ ˝ ˝ ˝ Location USA ˝ ˝ ˝ ˝ ˝ ˝ Ownership percentage Indirect ownership 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% ˝ ˝ ˝ ˝ ˝ ˝ ˝ (*) The Group is considered to have substantial control over the entities by virtue of an agreement with other investors or relationship with structured entities. (2) Summarized financial position and results of operations of the Company’s major consolidated subsidiaries as of and for the yearended December 31, 2015 are as follows: Name of subsidiaries Assets Liabilities Sales In millions of Korean Won Profit (loss) for the year Hyundai Capital Services, Inc. (*) ￦ 24,307,583 ￦ 20,812,697 ￦ 2,939,138 ￦ 276,714 Hyundai Card Co., Ltd. (*) Hyundai Rotem Company (*) Hyundai KEFICO Corporation (*) HCA (*) HMA HMMA HMMC HMI (*) HME (*) HACC (*) HMMR HMCA (*) Based on the subsidiary’s consolidated financial statements. 13,351,438 10,857,406 5,043,947 1,275,832 3,606,282 754,598 37,447,867 34,533,886 7,800,728 3,675,429 3,157,780 2,334,518 1,540,119 1,033,652 958,083 778,638 5,065,377 1,344,568 1,357,009 1,133,387 1,529,807 571,390 703,679 560,469 2,652,891 3,309,109 1,805,984 7,012,831 17,079,229 7,509,545 5,793,632 5,403,944 7,334,788 2,809,899 1,930,074 1,903,433 186,762 (304,495) 24,298 214,868 (162,823) 282,045 267,587 190,455 4,406 54,326 (17,626) 30,695 93 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Summarized financial position and results of operations of the Company’s major consolidated subsidiaries as of and for the year Summarized cash flows of non-wholly owned subsidiaries that had material non-controlling interests to the Group as of Decem- ended December 31, 2014 are as follows: ber 31, 2014 are as follows: Name of subsidiaries Assets Liabilities Sales In millions of Korean Won Profit (loss) for the year Hyundai Capital Services, Inc. (*) ￦ 22,538,708 ￦ 19,101,141 ￦ 3,011,804 ￦ 237,705 Hyundai Card Co., Ltd. (*) Hyundai Rotem Company (*) Hyundai KEFICO Corporation (*) HCA (*) HMA HMMA HMMC HMI (*) HME (*) HACC (*) HMMR HMCA (*) Based on the subsidiary’s consolidated financial statements. 12,397,420 4,400,828 1,054,525 9,842,039 2,662,157 557,785 30,361,736 27,835,212 6,516,465 3,306,417 3,241,318 2,115,173 1,298,995 998,306 884,601 696,189 3,795,729 1,394,335 1,646,741 1,029,825 1,292,923 538,314 550,768 498,732 2,617,995 3,191,088 1,741,520 5,342,308 16,812,738 7,436,941 5,397,857 4,636,707 6,734,387 2,939,635 2,384,202 1,972,615 223,514 (15,109) 81,572 266,867 378,405 362,485 440,955 200,999 (38,666) 67,576 22,464 61,715 Description Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Hyundai Capital Services, Inc. ￦ (976,758) (64,890) 147,298 (43) Hyundai Card Co., Ltd. ￦ (1,351,845) (141,427) 695,513 - Net increase in cash and cash equivalents ￦ (894,393) ￦ (797,759) In millions of Korean Won Hyundai Rotem Company ￦ (188,798) (57,753) 245,511 119 ￦ (921) (5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of Decem- ber 31, 2015 are as follows: Description Ownership percentage of non-controlling interests Hyundai Capital Services, Inc. 43.53% Hyundai Card Co., Ltd. 63.04% Non-controlling interests ￦ 1,525,106 ￦ 1,572,331 In millions of Korean Won Hyundai Rotem Company 56.64% ￦ 886,119 (171,742) 230 (3) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial state- Dividends paid to non-controlling interests ments, are prepared for the same reporting periods as the Company’s. Profit (loss) attributable to non-controlling interests 117,536 108,794 117,742 157,511 (4) Summarized cash flows of non-wholly owned subsidiaries that have material non-controlling interests to the Group are as follows: as of December 31, 2015 are as follows: Details of non-wholly owned subsidiaries of the Company that had material non-controlling interests as of December 31, 2014 Description Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Hyundai Capital Services, Inc. ￦ (1,211,629) (27,584) 1,493,870 - Hyundai Card Co., Ltd. ￦ (491,197) (65,691) 894,933 - In millions of Korean Won Hyundai Rotem Company ￦ (564,482) (55,275) 764,150 (6,827) Net increase in cash and cash equivalents ￦ 254,657 ￦ 338,045 ￦ 137,566 Description Ownership percentage of non-controlling interests Hyundai Capital Services, Inc. 43.53% Hyundai Card Co., Ltd. 63.04% Non-controlling interests ￦ 1,496,716 ￦ 1,611,007 Profit (loss) attributable to non-controlling interests Dividends paid to non-controlling interests 104,053 - 140,912 - In millions of Korean Won Hyundai Rotem Company 56.64% ￦ 1,056,862 (11,870) 6,984 94 95 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (6) Financial support provided to consolidated structured entities 2) Risks associated with interests in an unconsolidated structured entity, which belongs to Group as of December 31, 2015 are as follows: As of December 31, 2015, Hyundai Card Co., Ltd. and Hyundai Capital Services, Inc., subsidiaries of the Company, have agreements which provide counterparties with rights to claim themselves in the event of default on the derivatives relating to asset-backed securities issued by consolidated structured entities, Autopia Forty-Fifth, Forty-Sixth, Forty-Ninth, Fifty-Second, Fifty-Seventh and Fifty-Ninth Asset Securitization Specialty Company, Privia the Fourth Securitization Specialty Co., Ltd., Super Series First Se- curitization Specialty Co., Ltd.. (7) The nature and the risks associated with interests in unconsolidated structured entities 1) Nature of interests in an unconsolidated structured entity, which belongs to the Group as of December 31, 2015 is as follows: Description Asset securitization SPC Purpose Fund raising through asset securitization Investment fund Investment in beneficiary certificate and others, Development trust, Unspecified monetary trust, Principal unsecured trust, Operation of trust investment Structured Finance Fund raising through project financing In millions of Korean Won Nature of business Fund collection Method of funding Total assets Corporate bond and others ￦ 325,752 Fund management and operation and others, Trust management and operation, Payment of trust fee, Distribution of trust benefit Project financing for construction project and ship investment Sales of beneficiary certificates, Sales of trust investment product Project financing and others 8,823,385 2,800,091 Nature of interests in an unconsolidated structured entity, which belongs to the Group as of December 31, 2014 is as follows: Description Asset securitization SPC Purpose Fund raising through asset securitization Investment fund Investment in beneficiary certificate Investment trust Development trust, Unspecified monetary trust, Principal unsecured trust, Operation of trust investment Trust management and operation, Payment of trust fee, Distribution of trust benefit Sales of trust investment product Nature of business Fund collection In millions of Korean Won Method of funding Total assets Corporate bond and others Fund management and operation Sales of beneficiary certificates ￦ 305,457 13,207,887 34,442 Description Book value in the structured entity (*) Financial support provided to the structured entity Method Purpose Asset securitization SPC ￦ 54,880 Investment fund Structured Finance 178,582 225,897 Mezzanine debt and others Beneficiary certificates, Investment trust Credit facility, Loan agreement (Credit line) Invest agreement Loan obligation Loan agreement (Credit line) (*) Interest in structured entities is recognized as AFS financial assets and others according to K-IFRS 1039. In millions of Korean Won Maximum amount of exposure to loss of the structured entity ￦ 59,897 178,582 336,500 Risks associated with interests in an unconsolidated structured entity, which belongs to Group as of December 31, 2014 are as follows: Description Book value in the structured entity (*) Financial support provided to the structured entity Method Purpose Asset securitization SPC ￦ 31,209 Mezzanine debt Credit facility Investment fund Investment trust 210,023 Beneficiary certificates Invest agreement 26,491 Investment trust ˝ (*) Interest in structured entities is recognized as AFS financial assets and others according to K-IFRS 1039. In millions of Korean Won Maximum amount of exposure to loss of the structured entit ￦ 31,209 210,023 26,491 (8) Significant restrictions of the subsidiaries 1) As of December 31, 2015, Hyundai Card Co., Ltd. and Hyundai Capital Services, Inc., subsidiaries of the Compa- ny have significant restrictions that require them to obtain consent from directors appointed by non-controlling shareholders in the event of merger, investment in stocks, transfer of the whole or a significant part of assets, borrowing, guarantee or disposal of assets beyond a certain amount, acquisition of treasury stock, payment of dividend and so on. 2) As of December 31, 2015, Hyundai Rotem Company, subsidiary of the Company, is required to obtain consent from directors appointed by non-controlling shareholders in the event of significant change in the capital structure of the entity, excluding transactions according to the business plan or the regulation of the Board of Directors, such as issue, disposal, repurchase or retirement of stocks or options, increase or decrease of capital, and so on. 96 97 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (9) Changes in consolidated subsidiaries Subsidiaries newly included in or excluded from consolidation for the year ended December 31, 2015 are as follows: Changes Included ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ Name of subsidiaries HK Lease Funding LP HCCA Funding Inc. KEFICO Automotive Systems (Chongqing) Co., Ltd. Hyundai Capital Services Deutschland GmbH Autopia Fifty-Sixth Asset Securitization Specialty Company Autopia Fifty-Seventh Asset Securitization Specialty Company Autopia Fifty-Eighth Asset Securitization Specialty Company Autopia Fifty-Ninth Asset Securitization Specialty Company Super Series First Securitization Specialty Co., Ltd. Extended Term Amortizing Program, LLC Description Acquisition ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ Excluded Shinyoung Private Securities Investment Trust WB-1 Liquidation ˝ ˝ ˝ Autopia Forty-Third Asset Securitization Specialty Company HB the Third Securitization Specialty Company Privia the Third Securitization Specialty Co., Ltd. ˝ ˝ ˝ (10) Decrease in the Group's ownership interests in one of its subsidiary and the consequent effects on the equity at- tributable to the owners of the Company for the year ended December 31, 2015 is as follows: Description Ownership percentage before transaction Ownership percentage after transaction Increase in paid-in capital Changes in non-controlling interests Changes in capital surplus (*) The ownership percentage of the Group decreased as the Group disposed its shares partially during the year ended December 31, 2015. In millions of Korean Won HAOSVT (*) 83.91% 78.54% ￦ 27,153 17,065 7,067 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: tion’ which were previously included within the definition of ‘vesting condition’. The amendments to K-IFRS 1103 clarify the classification and measurement of the contingent The Company maintains its official accounting records in Ko- consideration in business combination. The amendments to rean Won and prepares its consolidated financial statements K-IFRS 1108 clarify that a reconciliation of the total of the in conformity with Korean International Financial Reporting reportable segments’ assets should only be provided if the Standards (“K-IFRS”), in Korean language (Hangul). Accord- segment assets are regularly provided to the chief operating ingly, these consolidated financial statements are intended decision maker. for use by those who are informed about K-IFRS and Korean practices. The accompanying consolidated financial statements - Annual Improvements to K-IFRS 2011-2013 Cycle have been condensed, restructured and translated into English The amendments to K-IFRS 1103 clarify the scope of the with certain expanded descriptions from Korean language portfolio exception for measuring the fair values of the consolidated financial statements. Certain information included group of financial assets and financial liabilities on a net in Korean language consolidated financial statements, but not basis includes all contracts that are within the scope the required for a fair presentation of the Group’s consolidated standard does not apply to the accounting for the formation statements of financial position, income, comprehensive in- of all types of joint arrangement in the financial statements come, changes in equity or cash flows, is not presented in the of the joint arrangement itself. The amendments to K-IFRS accompanying consolidated financial statements. 1113 ‘Fair Value Measurement’ and K-IFRS 1040 ‘Investment Property’ exist. (1) Basis of consolidated financial statements preparation The above mentioned changes in accounting policies did not have any significant effect on the Group’s consolidated finan- The Group has prepared the consolidated financial statements cial statements. in accordance with K-IFRS. The significant accounting policies used for the preparation of the consolidated financial statements are summarized below. These accounting policies are consistent with those applied to the consolidated financial statements for the year ended December 31, 2014, except for the adoption effect of the new 2) New and revised standards that have been issued but are not yet effective as of the authorization date for issue of financial statements, and that have not been applied earlier by the Group are as follows: accounting standards and interpretations described below. - K-IFRS 1001 (Amendment): ‘Presentation of Financial State- 1) New and revised standards that have been applied from the year beginning on January 1, 2015 are as follows: ments’ The amendments to K-IFRS 1001 clarify the concept of ap- plying materiality in practice and restrict an entity reducing the understandability of its financial statements by obscur- ing material information with immaterial information or by aggregating material items that have different nautres or - K-IFRS 1019 (Amendment): ‘Employee Benefits’ functions. The amendments also require separate disclosure The amendments to K-IFRS 1019 permit to recognize amount of the share of other comprehensive income of associates of contributions as a reduction in the service cost in which and joint ventures accounted for using that equity method the related service is rendered if the amount of the contri- that will or will not be reclassified subsequently to profit or butions are independent of the number of years of service. loss. The amendments to K-IFRS 1001 are effective for an- nual periods beginning on or after 1 January 2016. - Annual Improvements to K-IFRS 2010-2012 Cycle The amendments to K-IFRS 1002 (i) change the definitions - K-IFRS 1016 (Amendment): ‘Property, Plant and Equipment’ of ‘vesting condition’ and ‘market condition’; and (ii) add The amendments to K-IFRS 1016 prohibit from using a reve- definition for ‘performance condition’ and ‘service condi- nue-based depreciation method for items of property, plant 98 99 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 and equipment. The amendments are effective for the an- in exchange for those goods or services. The amendments (3) Basis of consolidation nual periods beginning on or after January 1, 2016. introduces a 5-step approach to revenue recognition and The carrying amount of non-controlling interests consists of the amount of those non-controlling interests at the ini- measurement: 1) Identify the contract with a customer, 2) The consolidated financial statements incorporate the finan- tial recognition and the changes in shares of the non-con- - K-IFRS 1038 (Amendment): ‘Intangible Assets’ Identify the performance obligations in the contract, 3) cial statements of the Company and entities (including struc- trolling interests in equity since the date of the acquisition. The amendments to K-IFRS 1038 rebut presumption that Determine the transaction price, 4) Allocate the transac- tured entities) controlled by the Company (or its subsidiaries). Total comprehensive income is attributed to the owners of revenue is not an appropriate basis for the amortization of tion price to the performance obligations in the contract, Control is achieved when the Company: the Company and to the non-controlling interests even if the intangible assets, which the presumption can only be re- 5) Recognize revenue when (or as) the entity satisfies a non-controlling interest has a deficit balance. butted when the intangible asset expressed as a measure of performance obligation. This standard will supersede K-IF- ● has power over the investee; revenue or when it can be demonstrated that revenue and RS 1011 ‘Construction Contracts’, K-IFRS 1018 ‘Revenue’, ● is exposed, or has rights, to variable returns from its in- Changes in the Group’s ownership interests in subsidiar- consumption of the economic benefits of the intangible as- K-IFRS 2113 ‘Customer Loyalty Programmes’, K-IFRS 2115 volvement with the investee; and ies, without a loss of control, are accounted for as equity set are highly correlated. The amendments to K-IFRS 1038 ‘Agreements for the Construction of Real Estate’, K-IFRS ● has the ability to use its power to affect its returns. transactions. The carrying amounts of the Group’s interests apply prospectively for annual periods beginning on or after 2118 ‘Transfers of Assets from Customers’, and K-IFRS and the non-controlling interests are adjusted to reflect the January 1, 2016. 2031 ‘Revenue-Barter Transactions Involving Advertising Services’. The amendments are effective for annual periods The Company reassesses whether or not it controls an invest- changes in their relative interests in the subsidiaries. Any ee if facts and circumstances indicate that there are changes difference between the amount by which the non-controlling - K-IFRS 1111 (Amendment): ‘Joint Arrangements’ beginning on or after January 1, 2018. to one or more of the three elements of control listed above. interests are adjusted and the fair value of the consideration The amendments to K-IFRS 1111 provide guidance on how paid or received is recognized directly in equity and attributed to account for the acquisition of joint operation that con- - Annual Improvements to K-IFRS 2012-2014 cycle When the Company has less than a majority of the voting to owners of the Group. stitues a business as defined in K-IFRS 1103 ‘Business The Annual Improvements include amendments to a number rights of an investee, it has power over the investee when Combinations’. A joint operator is also required to disclose of K-IFRSs. The amendments introduce specific guidance in the voting rights are sufficient to give it the practical ability When the Group loses control of a subsidiary, the profit or the relevant information required by K-IFRS 1103 and other K-IFRS 1105 ‘Non-current Assets Held for Sale and Discon- to direct the relevant activities of the investee unilaterally. loss on disposal is calculated as the difference between (i) the standards for business combinations. The amendments to tinued Operations’ for when an entity reclassifies an asset The Company considers all relevant facts and circumstances aggregate of the fair value of the consideration received and K-IFRS 1111 are effective for the annual periods beginning (or disposal group) from held for sale to held for distribu- in assessing whether or not the Company’s voting rights in an the fair value of any retained interest and (ii) the previous on or after January 1, 2016. tion to owners (or vice versa), such a change is considered as a continuation of the original plan of disposal not as a investee are sufficient to give it power, including: carrying amount of the assets (including goodwill), liabilities of the subsidiary and any noncontrolling interests. When - K-IFRS 1109 (Enactment): ‘Financial Instruments’ change to a plan of sale. Other amendments in the Annual ● the size of the Company’s holding of voting rights relative assets of the subsidiary are carried at revalued amounts or K-IFRS 1109 contains the requirements for a) the classi- Improvements include K-IFRS 1107 ‘Financial Instruments: to the size and dispersion of holdings of the other vote fair values and the related cumulative gain or loss has been fication and measurement of financial assets and finan- Disclosures’, K-IFRS 1019 ‘Employee Benefits’, and K-IFRS holders; recognized in other comprehensive income and accumulated cial liabilities based on a business model whose objective 1034 ‘Interim Financial Reporting’. ● potential voting rights held by the Company, other vote in equity, the amounts previously recognized in other compre- is achieved both by collecting contractual cash flows and holders or other parties; hensive income and accumulated in equity are accounted for selling financial assets and based on the contractural terms The Group is under consideration for the effects of above ● rights arising from other contractual arrangements; and as if the Group had directly disposed of the relevant assets (i.e. that give rise on specified dates to cash flows, b) impair- mentioned enactments and amendments on the Group’s con- ● any additional facts and circumstances that indicate that reclassified to profit or loss or transferred directly to retained ment methodology based on the expected credit losses, and solidated financial statements. c) broadened types of instruments that qualify as hedging the Company has, or does not have, the current ability to earnings as specified by applicable K-IFRSs). The fair value direct the relevant activities at the time that decisions need of any investment retained in the former subsidiary at the instruments and the types of risk components of non-fi- The consolidated financial statements as of and for the year to be made, including voting patterns at previous share- date when control is lost is regarded as the fair value on ini- nancial items that are eligible for hedge accounting and the ended on December 31, 2015, to be submitted at the ordinary holders’ meetings. change of the hedge effectiveness test. K-IFRS 1109 will shareholders’ meeting were authorized for issuance at the tial recognition for subsequent accounting under K-IFRS 1039 Financial Instruments: Recognition and Measurement or, when supersede K-IFRS 1039 ‘Financial Instruments: Recognition board of directors’ meeting on February 18, 2016. Income and expenses of subsidiaries acquired or disposed of applicable, the cost on initial recognition of an investment in and Measurement’ upon its effective date and the amend- ments are effective for annual periods beginning on or after January 1, 2018 (2) Basis of measurement during the period are included in the consolidated statement an associate or a jointly controlled entity. of comprehensive income from the effective date of acquisi- tion and up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial state- (4) Business combination - K-IFRS 1115 (Enactment): ‘Revenue from Contracts with The consolidated financial statements have been prepared on ments of subsidiaries to bring their accounting policies into Customers’ the historical cost basis except as otherwise stated in the ac- line with those used by the Company. All intra-group trans- Acquisitions of businesses are accounted for using the ac- The core principle under K-IFRS 1115 is that an entity counting policies below. Historical cost is usually measured at actions, balances, income and expenses are eliminated in full quisition method. The consideration transferred in a business should recognise revenue to depict the transfer of promised the fair value of the consideration given to acquire the assets. on consolidation. Non-controlling interests are presented in combination is measured at fair value, which is calculated goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled the consolidated statement of financial position within equity, as the sum of the acquisition-date fair values of the assets separately from the equity of the owners of the Company. transferred by the Group, liabilities incurred by the Group to 100 101 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 the former owners of the acquiree and the equity interests benefits associated with the transaction will flow to the Group. economic environment in which the entity operates (its func- ified categories: financial assets at fair value through profit issued by the Group in exchange for control of the acquiree. The consideration includes any asset or liability resulting from a contingent consideration arrangement and is measured at 3) Royalties fair value. Acquisition-related costs are recognized in profit tional currency). or loss (“FVTPL”), held-to-maturity (“HTM”) financial assets, loans and receivables and available-for-sale (“AFS”) financial In preparing the financial statements of the individual en- assets. The classification depends on the nature and purpose tities, transactions occurring in currencies other than their of the financial assets and is determined at the time of initial or loss as incurred. When a business combination is achieved The Group recognizes revenue from royalties on an accrual functional currency (foreign currencies) are recorded using recognition. in stages, the Group’s previously held equity interest in the basis in accordance with the substance of the relevant agree- acquiree is remeasured at its fair value at the acquisition date ment. (i.e. the date when the Group obtains control) and the result- ing gain or loss, if any, is recognized in profit or loss. Prior the exchange rate on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using the exchange rate at 1) Financial assets at FVTPL the reporting period. Non-monetary items that are measured to the acquisition date, the amount resulting from changes in 4) Dividend and interest income the value of its equity interest in the acquiree that have pre- in terms of historical cost in a foreign currency are translated Financial instruments classified as financial assets at FVTPL using the exchange rate at the date of the transaction. Non- include contingent consideration that may be paid by an ac- viously been recognized in other comprehensive income are Revenues arising from dividends are recognized when the monetary items that are measured at fair value in a foreign quirer as part of business combination to which K-IFRS 1103 reclassified to profit or loss where such treatment would be right to receive payment is established. Interest income is rec- currency are translated using the exchange rates at the date applies or financial assets classified as held for trading or appropriate if that interest were directly disposed of. ognized using the effective interest method as time passes. when the fair value was determined. Exchange differences designated as FVTPL upon initial recognition. A financial asset (5) Revenue recognition 5) Construction contracts 1) Sale of goods Where the outcome of a construction contract can be es- resulting from settlement of assets or liabilities and transla- is classified as FVTPL, if it has been acquired principally for tion of monetary items denominated in foreign currencies are the purpose of selling or repurchasing in near term. All de- recognized in profit or loss in the period in which they arise rivative assets, except for derivatives that are designated and except for some exceptions. effective hedging instruments, are classified as held for trad- ing financial assets which are measured at fair value through The Group recognizes revenue from sale of goods when all of associated with the construction contract are recognized as statements, assets and liabilities in the Group’s foreign opera- value, with any gains or losses arising on remeasurement rec- the following conditions are satisfied: revenue and expenses, respectively by reference to the stage tions are translated into Won, using the exchange rates at the ognized in profit or loss. timated reliably, the contract revenue and contract costs For the purpose of presenting the consolidated financial profit or loss. Financial assets at FVTPL are measured at fair of completion of the contract activity at the end of reporting end of reporting period. Income and expense items are trans- ● the Group has transferred to the buyer the significant risks period. and rewards of ownership of the goods; the amount of lated at the average exchange rate for the period, unless the exchange rate during the period has significantly fluctuated, 2) HTM financial assets revenue can be measured reliably; The percentage of completion of a contract activity is reliably in which case the exchange rates at the dates of the trans- ● it is probable that the economic benefits associated with measured based on the proportion of contract costs incurred actions are used. The exchange differences arising, if any, HTM financial assets are non-derivative financial instruments the transaction will flow to the Group for work performed to date relative to the estimated total are recognized in equity as other comprehensive income. On with fixed or determinable payments and fixed maturity that contract costs, by surveys of work performed or by comple- the disposal of a foreign operation, the cumulative amount of the Group has the positive intent and ability to hold to maturi- The Group grants award credits which the customers can tion of a physical proportion of the contract work. Variations the exchange differences relating to that foreign operation is ty. HTM financial assets are presented at amortized cost using redeem for awards such as free or discounted goods or ser- in contract work, claim and incentive payments are included reclassified from equity to profit or loss when the gain or loss the effective interest rate less accumulated impairment loss, vices. The fair value of the award credits is estimated by con- to the extent that the amount can be measured reliably and on disposal is recognized. Any goodwill arising on the acqui- and interest income is recognized using the effective interest sidering the fair value of the goods granted, the expected rate its receipt is considered probable. Where the outcome of a sition of a foreign operation and any fair value adjustments rate method. and period of collection. The fair value of the consideration construction contract cannot be estimated reliably, contract received or receivable from the customer is allocated to award revenue is recognized to the extent of contract costs incurred to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and credits and sales transaction. The consideration allocated to that it is probable will be recoverable. Contract costs are rec- liabilities of the foreign operation and translated at the ex- 3) Loans and receivables the award credits is deferred and recognized as revenue when ognized as expenses in the period in which they are incurred. change rate at the end of reporting period. the award credits are redeemed and the Group’s obligations When it is probable that total contract costs will exceed total Loans and receivables are non-derivative financial assets with have been fulfilled. contract revenue, the expected loss is recognized as an ex- Foreign exchange gains or losses are classified in finance in- fixed or determinable payments that are not quoted in an ac- pense immediately. come (expenses) or other income (expenses) by the nature of tive market, and measured at amortized cost. Interest income 2) Rendering of services The Group recognizes revenue from rendering of services based on the percentage of completion when theamount of revenue The individual financial statements of each entity in the Group (6) Foreign currency translation the transaction or event. (7) Financial assets is recognized using the effective interest rate method except for short-term receivables for which the discount effect is not material. can be measured reliably and it is probable that the economic are measured and presented in the currency of the primary The Group classifies financial assets into the following spec- 102 103 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 4) AFS financial assets AFS financial assets are those non-derivative financial assets If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively ferred asset, the Group recognizes its retained interest in the Any excess of the cost of acquisition over the Group’s share asset and associated liability for amounts it may have to pay. of the net fair value of the identifiable assets, liabilities and that are designated as AFS or are not classified as loans and to an event occurring after the impairment was recognized, If the Group retains substantially all the risks and rewards of contingent liabilities of an associate or a joint venture rec- receivables, HTM financial assets nor financial assets at FVT- the previously recognized impairment loss is reversed and ownership of a transferred financial asset, the Group con- ognized at the date of acquisition is recognized as goodwill, PL. AFS financial assets are measured at fair value. However, recognized in profit or loss. The reversal shall not result in a tinues to recognize the financial asset and also recognizes a which is included within the carrying amount of the invest- investments in equity instruments that do not have a quoted carrying amount of the financial asset that exceeds what the collateralized borrowing for the proceeds received. ment. The entire carrying amount of the investment including market price in an active market and whose fair value cannot amortized cost would have been had the impairment not been be reliably measured are measured at cost. recognized at the date the impairment is reversed. A gain or loss on changes in fair value of AFS financial assets (10) Inventory goodwill is tested for impairment and presented at the amount less accumulated impairment losses. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, is recognized in other comprehensive income, except for im- 2) Financial assets carried at cost Inventory is measured at the lower of cost or net realizable after reassessment, is recognized immediately in profit or loss. pairment loss, interest calculated using the effective interest value. Inventory cost including the fixed and variable manu- method and foreign exchange gains and losses on monetary The amount of the impairment loss on financial assets that facturing overhead cost, is calculated, using the moving aver- Upon disposal of an associate or a joint venture that results assets. Accumulated other comprehensive income is reclas- are carried at cost because their fair value cannot be reliably age method except for the cost for inventory in transit which in the Group losing significant influence over that associate or sified to profit or loss from equity at the time of impairment measured is measured as the difference between the carrying is determined by the identified cost method. joint venture, any retained investment is measured at fair val- recognition or elimination of related financial assets. Divi- amount of the financial asset and the present value of esti- dends on an AFS equity instrument are recognized in profit or mated future cash flows discounted at the current market rate ue at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with loss when the Group’s right to receive payment is established. of return for a similar financial asset. Such impairment losses (11) Investments in associates and joint ventures K-IFRS 1039. The difference between the previous carrying (8) Impairment of financial assets 1) Financial assets carried at amortized cost are not reversed. 3) AFS financial assets An associate is an entity over which the Group has significant retained interest and its fair value is included in the determi- influence. Significant influence is the power to participate in nation of the gain or loss on disposal of the associate or joint the financial and operating policy decisions of the investee venture. In addition, the Group accounts for all amounts pre- but is not control or joint control over those policies. viously recognized in other comprehensive income in relation amount of the associate or joint venture attributable to the If there is objective evidence of impairment on AFS financial to that associate or joint venture on the same basis we would The Group assesses at the end of each reporting period assets, the cumulative loss that has been recognized in other A joint venture is a joint arrangement whereby the parties be required if that associate or joint venture had directly dis- whether there is any objective evidence that a financial asset comprehensive income less any impairment loss previously that have joint control of the arrangement have rights to the posed of the related assets or liabilities. Therefore, if a gain or group of financial assets is impaired. If any such evidence recognized in profit or loss is reclassified from equity to profit net assets of the joint arrangement. Joint control is the con- or loss previously recognized in other comprehensive income exists, the Group determines the amount of any impairment or loss. In the case of equity instruments, objective evidence tractually agreed sharing of control of an arrangement, which by that associate or joint venture would be reclassified to loss. The amount of the loss is measured as the difference of impairment is taken to exist if there is a significant or pro- exists only when decisions about the relevant activities require profit or loss on the disposal of the related assets or liabilities, between the asset’s carrying amount and the present value longed decline in the fair value of each investment below its unanimous consent of the parties sharing control. the Group reclassifies the gain or loss from equity to profit or of estimated future cash flows, excluding future credit loss- cost. Impairment losses recognized in profit or loss for invest- loss (as reclassification adjustment) when it loses significant es that have not been incurred, discounted at the financial ments in equity instruments classified as AFS are not reversed The investment in an associate or a joint venture is initially influence over that associate or joint venture. asset’s original effective interest rate computed at initial through profit or loss. Meanwhile, if, in a subsequent period, recognized at cost and accounted for using the equity meth- recognition. The carrying amount of the asset is reduced ei- the fair value of a debt instrument classified as AFS increases od. Under the equity method, an investment in an associate When the Group reduces its ownership interest in an associate ther directly or through use of an allowance account and the and the increase can be objectively related to an event occur- or a joint venture is initially recognized in the consolidated or a joint venture but the Group continues to use the equity amount of the loss is recognized in profit or loss. ring after the impairment loss was recognized in profit or loss, statement of financial position at cost and adjusted thereafter method, the Group reclassifies to profit or loss the propor- the impairment loss is reversed through profit or loss. to recognize the Group’s share of the profit or loss and other tion of the gain or loss that had previously been recognized Certain financial assets such as trade receivables and finan- cial services receivables that are assessed not to be impaired individually are, in addition, assessed for impairment on a col- (9) Derecognition of financial assets lective basis. The objective evidence of impairment for a port- comprehensive income of the associate or the joint venture. in other comprehensive income relating to that reduction in When the Group’s share of losses of an associate or a joint ownership interest if that gain or loss would be reclassified to venture exceeds the Group’s interest in that associate or joint profit or loss on the disposal of the related assets or liabili- venture (which includes any long-term interests that, in sub- ties. In addition, the Group applies K-IFRS 1105 to a portion of folio of receivables could include the Group’s past experience The Group derecognizes a financial asset when the contrac- stance, form part of the Group’s net investment in the asso- investment in an associate or a joint venture that meets the of collecting payments, an increase in the number of delayed tual rights to the cash flows from the asset expire, or when it ciate or the joint venture), the Group discontinues recognizing criteria to be classified as held for sale. payments in the portfolio past the average credit period, as transfers the financial asset and substantially all the risks and its share of further losses. Additional losses are recognized well as observable changes in national or local economic con- rewards of ownership of the asset to another entity. If the only to the extent that the Group has incurred legal or con- The Group continues to use the equity method when an in- ditions that correlate with default on receivables. Group neither retains substantially all the risks and rewards of structive obligations or made payments on behalf of the asso- vestment in an associate becomes an investment in a joint ownership nor transfers and continues to control the trans- ciate or the joint venture. venture or an investment in a joint venture becomes an 104 105 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 investment in an associate. There is no remeasurement to fair The Group reviews the depreciation method, the estimated exceeds the aggregate of the consideration transferred, the 3) Intangible assets acquired separately value upon such changes in ownership interests. useful lives and residual values of property, plant and equip- amount of any non-controlling interest in the acquiree, and Unrealized gains from transactions between the Group and its tations differ from previous estimates, the changes are ac- equity interest in the acquiree, the excess is recognized imme- cost less accumulated amortization and accumulated impair- associates or joint ventures are eliminated up to the shares counted for as a change in accounting estimate. diately in profit or loss as a bargain purchase gain. ment losses. Amortization is recognized using the straight-line ment at the end of each annual reporting period. If expec- the acquisition-date fair value of the Group’s previously held Intangible assets that are acquired separately are carried at in associate (joint venture) stocks. Unrealized losses are also eliminated unless evidence of impairment in assets trans- ferred is produced. If the accounting policy of associates or (13) Investment property joint ventures differs from the Group, financial statements Goodwill is not amortized but tested for impairment at least The Group reviews the estimated useful life and amortization annually. For purposes of impairment tests, goodwill is allo- method at the end of each annual reporting period. cated to those cash generating units (“CGU”) of the Group If expectations differ from previous estimates, the changes method based on the estimated useful lives. are adjusted accordingly before applying equity method of Investment property is property held to earn rentals or for expected to have synergy effect from the business combi- are accounted for as a change in accounting estimate. accounting. If the Group’s ownership interest in an associate capital appreciation or both. An investment property is mea- nation. CGU that goodwill has been allocated is tested for or a joint venture is reduced, but the significant influence is sured initially at its cost and transaction costs are included impairment every year or when an event occurs that indicates Amortization is computed using the straight line method based continued, the Group reclassifies to profit or loss only a pro- in the initial measurement. After initial recognition, the book impairment. If recoverable amount of a CGU is less than its on the estimated useful lives of the assets. The representative portionate amount of the gain or loss previously recognized in value of investment property is presented at the cost less ac- carrying amount, the impairment will first decrease the good- useful lives are as follows: other comprehensive income. cumulated depreciation and accumulated impairment losses. (12) Property, plant and equipment Subsequent costs are recognized as the carrying amount of the asset when, and only when it is probable that future economic benefits associated with the asset will flow to the Property, plant and equipment is to be recognized if, and only if Group, and the cost of the asset can be measured reliably, or it is probable that future economic benefits associated with the recognized as a separate asset if appropriate. The carrying will allocated to that CGU and the remaining impairment will be allocated among other assets relative to its carrying value. Impairment recognized for goodwill may not be reversed. When disposing a subsidiary, related goodwill will be included Development costs in gain or loss from disposal. Industrial property rights Software Other Representative useful lives (years) 3 - 6 4 - 13 2 - 20 2 - 40 asset will flow to the Group, and the cost of the asset can be amount of what was replaced is derecognized. 2) Development costs measured reliably. After the initial recognition, property, plant and equipment is stated at cost less accumulated depreciation Land is not depreciated, and other investment properties are The expenditure on research is recognized as an expense Club membership included in other intangible assets is deemed and accumulated impairment losses. The cost includes any cost depreciated using the straight-line method over the peri- when it is incurred. The expenditure on development is recog- to have an indefinite useful life as there is no foreseeable directly attributable to bringing the asset to the location and od from 20 to 50 years. The Group reviews the depreciation nized as an intangible asset if, and only if, all of the following limit on the period over which the membership is expected to condition necessary for it to be capable of operating in the method, the estimated useful lives and residual values at the can be demonstrated: generate economic benefit for the Group, therefore the Group manner intended by management and the initial estimate of the end of each annual reporting period. If expectations differ does not amortize it. costs of dismantling and removing the item and restoring the from previous estimates, the changes are accounted for as a ● the technical feasibility of completing the intangible asset site on which it is located. In addition, in case the recognition change in accounting estimate. so that it will be available for use or sale; criteria are met, the subsequent costs will be added to the car- rying amount of the asset or recognized as a separate asset, and the carrying amount of what was replaced is derecognized. (14) Intangible assets Depreciation is computed using the straight-line method based 1) Goodwill on the estimated useful lives of the assets. The representative useful lives are as follows: Goodwill arising from a business combination is recognized as an asset at the time of obtaining control (the acquisition-date). ● the intention to complete the intangible asset and use or (15) Impairment of tangible and intangible assets sell it; ● the ability to use or sell the intangible asset; The Group assesses at the end of each reporting period ● how the intangible asset will generate probable future eco- whether there is any indication that an asset may be impaired. nomic benefits; If any such indication exists, the Group estimates the recov- ● the availability of adequate technical, financial and other erable amount of the asset to determine the extent of the im- resources to complete the development and to use or sell pairment loss. Recoverable amount is the higher of fair value the intangible asset; and less costs to sell and value in use. Representative useful lives (years) consideration transferred, the amount of any non-controlling to the intangible asset during its development. If the cash inflow of individual asset occurs separately from Goodwill is measured as the excess of the aggregate of the ● the ability to measure reliably the expenditure attributable Buildings and structures Machinery and equipment Vehicles Dies, molds and tools Office equipment Other 2 - 50 2 - 30 2 - 20 2 - 20 2 - 15 2 - 30 106 interest in the acquiree, and the acquisition-date fair value of other assets or group of assets, the recoverable amount is the Group’s previously held equity interest in the acquiree over The cost of an internally generated intangible asset is the sum measured for that individual asset; otherwise, it is measured the net of the acquisition-date amounts of the identifiable as- of the expenditure incurred from the date when the intangible for each CGU to which the asset belongs. sets acquired and the liabilities assumed. asset first meets the recognition criteria above and the carry- Except for goodwill, all non-financial assets that have in- ing amount of intangible assets is presented as the acquisition curred impairment are tested for reversal of impairment at the If, after reassessment, the net of the acquisition-date amounts cost less accumulated amortization and accumulated impair- end of each reporting period. of the identifiable assets acquired and the liabilities assumed ment losses. 107 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Intangible assets with indefinite useful lives or intangible as- 2) The Group as lessee sets not yet available for use are not amortized but tested for The present value of the defined benefit obligations is mea- sured using the present value of the cash flows estimated to sured by discounting estimated future cash outflows by the settle the present obligation. The increase in provision due to impairment at least annually. Assets held under finance leases are initially recognized as interest rate of high-quality corporate bonds with similar passage of time is recognized as interest expense. assets and liabilities of the Group at their fair value at the maturity as the expected post-employment benefit payment inception of the lease or, if lower, at the present value of the date. In countries where there is no deep market in such The Group generally provides a warranty to the ultimate con- (16) Non-current assets classified as held for sale minimum lease payments. Minimum lease payments are ap- bonds, the market yields at the end of the reporting period on sumer for each product sold and accrues warranty expense The Group classifies a non-current asset (or disposal group) the outstanding liability. The finance expenses are allocated portioned between the finance expenses and the reduction of government bonds are used. at the time of sale based on actual claims history. Also, the Group accrues probable expenses, which may occur due to as held for sale if its carrying amount will be recovered princi- to each period during the lease term so as to produce a con- The remeasurements of the net defined benefit liabilities product liability suit, voluntary recall campaign and other ob- pally through a sale transaction rather than through continu- stant periodic rate of interest on the remaining balance of the (assets) comprising actuarial gain or loss from changes in ac- ligations at the end of the reporting period. In addition, the ing use. For this to be the case, the asset (or disposal group) liability. Contingent rents are recognized as expenses in the tuarial assumptions or differences between actuarial assump- Group recognizes provisions for the probable losses of unused must be available for immediate sale in its present condition periods in which they are incurred. tions and actual results, the effect of the changes to the asset loan commitment, construction contracts, pre-contract sale or subject only to terms that are usual and customary for sales ceiling and return on plan assets, excluding amounts included service contract due to legal or constructive obligations. of such assets (or disposal groups) and its sale must be highly Operating lease payments are recognized as expense on a in net interest on the net defined benefit liabilities (assets) are probable. The management must be committed to a plan to sell straight-line basis over the lease term, except where another recognized in other comprehensive income of the consolidat- When some or all of the economic benefits required to settle the asset (or disposal group), and the sale should be expected systematic basis is more representative of the time pattern in ed statements of comprehensive income, which is immediately a provision are expected to be recovered from a third party, to qualify for recognition as a completed sale within one year which economic benefits from the leased asset are consumed. recognized as retained earnings. Those recognized in retained a receivable is recognized as an asset if it is virtually certain from the date of classification. Contingent rents for operating lease are recognized as ex- earnings will not be reclassified in profit or loss. Past ser- that reimbursement will be received and the amount of the penses in the periods in which they are incurred. vice costs are recognized in profit and loss when the plan receivable can be measured reliably. Non-current assets (or disposal group) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. (18) Borrowing costs amendment occurs and net interest is calculated by applying the discount rate determined at the beginning of the annual reporting period to the net defined benefit liabilities (assets). (21) Taxation Defined benefit costs are composed of service cost (including Borrowing costs directly attributable to the acquisition, con- current service cost, past service cost, as well as gains and Income tax expense is composed of current and deferred tax. (17) Lease struction or production of qualifying assets are capitalized to losses on settlements), net interest expense (income), and the cost of those assets, until they are ready for their intend- remeasurements. Leases are classified as finance leases when the terms of the ed use or sale. A qualifying asset is an asset that necessarily 1) Current tax lease transfer substantially all the risks and rewards of own- takes a substantial period of time to get ready for its intended The retirement benefit obligation recognized in the consol- ership to the lessee. All other leases are classified as operat- use or sale. Investment income earned on the temporary in- idated statement of financial position represents the actual The current tax is computed based on the taxable profit for ing leases. 1) The Group as lessor vestment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. deficit or surplus in the Group’s defined benefit plans. Any the current year. The taxable profit differs from the income surplus resulting from this calculation is limited to the present before income tax as reported in the consolidated statements value of any economic benefits available in the form of re- of income because it excludes items of income or expense funds from the plans or reductions in future contributions to that are taxable or deductible in other years and it further ex- Amounts due from lessees under finance leases are recog- nized as receivables at the amount of the Group’s net invest- (19) Retirement benefit plans ment in the leases. Finance lease interest income is allocated to accounting periods so as to reflect an effective interest Contributions to defined contribution retirement benefit plans the plans. cludes items that are never taxable or deductible. The Group’s liability for current tax expense is calculated using tax rates that have been enacted or substantively enacted by the end (20) Provisions of the reporting period. rate on the Group’s net investment outstanding in respect are recognized as an expense when employees have rendered A provision is recognized when the Group has a present obli- of the leases. Rental income from operating leases is recog- service entitling them to the contributions. nized on a straight-line basis over the term of the relevant gation (legal or constructive) as a result of a past event, it is 2) Deferred tax probable that an outflow of resources embodying economic lease. Initial direct costs incurred in negotiating and arranging The retirement benefit obligation recognized in the consoli- benefits will be required to settle the obligation, and a reliable Deferred tax is recognized on temporary differences between an operating lease are added to the carrying amount of the dated statements of financial position represents the present estimate can be made of the amount of the obligation. The the carrying amounts of assets and liabilities in the consoli- leased asset and recognized as expense on a straight-line ba- value of the defined benefit obligation, less the fair value of amount recognized as a provision is the best estimate of the dated financial statements and the corresponding tax bases sis over the lease term. plan assets. Defined benefit obligations are calculated by an consideration required to settle the present obligation at the used in the computation of taxable profit. actuary using the Projected Unit Credit Method. end of the reporting period, taking into account the risks and Deferred tax liabilities are generally recognized for all taxable uncertainties surrounding the obligation. A provision is mea- temporary differences. Deferred tax assets shall be generally 108 109 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 recognized for all deductible temporary differences to the 3) Current and deferred tax for the year sequently measured at the higher of: ments to hedge the risk of changes in fair value of a recog- extent that it is probable that taxable profits will be available nized asset or liability or an unrecognized firm commitment against which those deductible temporary differences can be Current and deferred tax are recognized in profit or loss, ex- ● the amount of the obligation under the contract, as deter- (fair value hedges) and the risk of changes in cash flow of a utilized. Such deferred tax assets and liabilities shall not be cept when they relate to items that are recognized in other mined in accordance with K-IFRS 1037 Provisions, Contin- highly probable forecast transaction and the risk of changes recognized if the temporary difference arises from goodwill comprehensive income or directly in equity, or items arising gent Liabilities and Contingent Assets; and in foreign currency exchange rates of firm commitment (cash or from the initial recognition (other than in a business com- from initial accounting treatments of a business combination. ● the amount initially recognized less, cumulative amortization flow hedges). bination) of other assets and liabilities in a transaction that The tax effect arising from a business combination is included recognized in accordance with the K-IFRS 1018 Revenue affects neither the taxable profit nor the accounting profit. in the accounting for the business combination. Deferred tax liabilities are recognized for taxable tempo- rary differences associated with investments in subsidiaries (22) Treasury stock and associates, and interests in joint ventures, except when 3) Financial liabilities at FVTPL Financial instruments classified as financial liabilities at FVTPL atives that are designated and qualified as fair value hedges The Group recognizes the changes in the fair value of deriv- 1) Fair value hedges the Group is able to control the timing of the reversal of the When the Group repurchases its equity instruments (treasury include contingent consideration that may be paid by an ac- are recognized in profit or loss immediately, together with any temporary difference and it is probable that the temporary stock), the incremental costs and net of tax effect are de- quirer as part of a business combination to which K-IFRS 1103 changes in the fair value of the hedged asset or liability that difference will not reverse in the foreseeable future. Deferred ducted from equity and recognized as other capital item de- applies or financial liability classified as held for trading or are attributable to the hedged risk. Hedge accounting is dis- tax assets arising from deductible temporary differences as- ducted from the total equity in the consolidated statements of designated as FVTPL upon initial recognition. FVTPL is stated continued when the Group revokes the hedging relationship, sociated with such investments and interests are only recog- financial position. In addition, profits or losses from purchase, at fair value and the gains and losses arising on remeasure- when the hedging instrument expires or is sold, terminated, nized to the extent that taxable profit will be available against sale or retirement of treasury stocks are directly recognized ment and the interest expenses paid in financial liabilities are or exercised, or when it is no longer qualified for hedge ac- which the temporary difference can be utilized and they are in equity and not in current profit or loss. recognized in profit and loss. expected to be reversed in the foreseeable future. counting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized to profit or loss from that date. The carrying amount of deferred tax assets is reviewed at the (23) Financial liabilities and equity instruments 4) Other financial liabilities end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be Debt instruments and equity instruments issued by the Group Other financial liabilities are initially measured at fair value, 2) Cash flow hedges available to allow all or part of the asset to be recovered. are recognized as financial liabilities or equity depending on net of transaction costs. Other financial liabilities are sub- the contract and the definitions of financial liability and equity sequently measured at amortized cost using the effective The effective portion of changes in the fair value of deriva- Deferred tax assets and liabilities are measured at the tax instrument. rates that are expected to be applied in the period in which the liability is settled or the asset is realized, based on tax rates and tax laws that have been enacted or substantively 1) Equity instruments enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax con- An equity instrument is any contract that evidences a residual interest method, with interest expense recognized on an ef- tives that are designated and qualified as cash flow hedges is fective-yield basis. 5) Derecognition of financial liabilities recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. Amounts previously recognized in other com- prehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects sequences that would follow from the manner in which the interest in the assets of an entity after deducting all of its lia- The Group derecognizes financial liabilities only when the profit or loss. Group expects to recover or settle the carrying amount of its bilities. Equity instruments issued by the Group are recognized Group’s obligations are discharged, cancelled or they expire. If the forecast transaction results in the recognition of a assets and liabilities at the end of the reporting period. at issuance amount net of direct issuance costs. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against 2) Financial guarantee liabilities current tax liabilities and when they relate to income tax lev- (24) Derivative financial instruments non-financial asset or liability, the related gain and loss rec- ognized in other comprehensive income and accumulated in equity is transferred from equity to the initial cost of related non-financial asset or liability. Derivatives are initially recognized at fair value at the date Cash flow hedge accounting is discontinued when the Group ied by the same taxation authority. Also, they are offset when A financial guarantee contract is a contract that requires the the derivative contracts are entered into and are subsequently revokes the hedging relationship, when the hedging instru- different taxable entities which intend either to settle current issuer to make specified payments to reimburse the holder remeasured to their fair value at the end of each reporting ment expires or is sold, terminated or exercised, or it no tax liabilities and assets on a net basis, or to realize the assets for a loss it incurs because a specified debtor fails to make period. The resulting gain or loss is recognized in profit or longer qualifies for the criteria of hedging. Any gain or loss and settle the liabilities simultaneously, in each future period payment when due in accordance with the original or modified loss immediately unless the derivative is designated and ef- accumulated in equity at that time remains in equity and is in which significant amounts of deferred tax liabilities or as- terms of a debt instrument. sets are expected to be settled or recovered. fective as a hedging instrument, in such case the timing of recognized as profit or loss when the forecast transaction the recognition in profit or loss depends on the nature of the occurs. When the forecast transaction is no longer expected Financial guarantee contract liabilities are initially measured at hedge relationship. to occur, the gain or loss accumulated in equity is recognized their fair values and, if not designated as at FVTPL, are sub- The Group designates certain derivatives as hedging instru- immediately in profit or loss. 110 111 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (25) Fair value sumptions about the carrying amounts of assets and liabilities that cannot be identified from other sources. The estimation 4) Taxation Fair value is the price that would be received to sell an asset and assumptions are based on historical experience and other The Group recognizes current tax and deferred tax based on or paid to transfer a liability in an orderly transaction between factors that are considered to be relevant. the best estimates of income tax effect to be charged in the market participants at the measurement date, regardless of Actual results may be different from those estimations. The future as the result of operating activities until the end of whether that price is directly observable or estimated us- estimates and underlying assumptions are continually evalu- the reporting period. However, actual final income tax to be ing another valuation technique. In estimating the fair value ated. Revisions to accounting estimates are recognized in the charged in the future may differ from the relevant assets and of an asset or a liability, the Group takes into account the period in which the estimate is revised if the revision affects liabilities recognized at the end of the reporting period and characteristics of the asset or liability if market participants only that period or in the period of the revision and future the difference may affect income tax charged or credited, or would take those characteristics into account when pricing periods if the revision affects both current and future periods. deferred tax assets and liabilities in the period in which the the asset or liability at the measurement date. Fair value for final income tax determined. measurement and/or disclosure purposes in these consolidat- The main accounting estimates and assumptions related to ed financial statements is determined on such a basis, except the significant risks that may make significant changes to the for leasing transactions that are within the scope of K-IFRS carrying amounts of assets and liabilities after the reporting 5) Fair value of financial instruments 1017 Leases, and measurements that have some similarities to period are as follows: fair value but are not fair value, such as net realisable value in K-IFRS 1002 Inventories or value in use in K-IFRS 1036 Im- pairment of Assets. 1) Goodwill The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain type of financial instruments. The Group makes judgements on the choice of various valuation methods In addition, for financial reporting purposes, fair value mea- Determining whether goodwill is impaired requires an estima- and assumptions based on the condition of the principal mar- surements are categorized into Level 1, 2 or 3 based on the tion of the value in use of the cash-generating units to which ket at the end of the reporting period. degree to which the inputs to the fair value measurements are goodwill has been allocated. The value in use calculation re- observable and the significance of the inputs to the fair value quires the management to estimate the future cash flows ex- measurement in its entirety, which are described in Note 19. pected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. (26) Accounting Treatment related to the Emission Rights Cap and Trade Scheme 2) Warranty provision 6) Measurement and useful lives of property, plant, equipment or intangible assets If the Group acquires property, plant, equipment or intangible assets from business combination, it is required to estimate the fair value of the assets at the acquisition date and de- The Group classifies the emission rights as intangible assets. The Group recognizes provisions for the warranties of its termine the useful lives of such assets for depreciation and Emission rights allowances the Government allocated free of products as described in Note 2.(20). The amounts are rec- amortization. charge are measured at nil, and emission rights allowances ognized based on the best estimate of amounts necessary to purchased are measured at cost, which the Group paid to settle the present and future warranty obligation. purchase the allowances. If emission rights the Government allocated free of charge are sufficient to settle the emission rights allowances allotted for vintage year, the emissions 3) Defined benefit plans liabilities are measured at nil. However, for the emissions li- abilities that exceed the allowances allocated free of charge, The Group operates defined retirement benefit plans. Defined the shortfall is measured at best estimate at the end of the benefit obligations are determined at the end of each report- reporting period. ing period using an actuarial valuation method that requires management assumptions on discount rates, rates of expected future salary increases and mortality rates. The character- (27) Significant accounting estimates and key sources of istic of post-employment benefit plan which serves for the estimation uncertainties long term period causes significant uncertainties when the post-employment benefit obligation is estimated. In the application of the Group’s accounting policies, man- agement is required to make judgments, estimates and as- 112 113 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 3. TRADE NOTES AND ACCOUNTS RECEIVABLE: 4. OTHER RECEIVABLES: (1) Trade notes and accounts receivable as of December 31, 2015 and 2014 consist of the following: Other receivables as of December 31, 2015 and 2014 consist of the following: Description Current Non-current Current Non-current Description Current Non-current Current Non-current Trade notes and accounts receivable ￦ 4,527,881 ￦ 73,500 ￦ 3,808,798 ￦ 57,100 Accounts receivable - others ￦ 1,978,471 ￦ 818,401 ￦ 2,083,571 ￦ 719,888 In millions of Korean Won In millions of Korean Won December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Due from customers for contract work 1,837,280 - 1,617,221 Allowance for doubtful accounts Present value discount accounts (59,530) - (58,706) - (5,909) - - (5,566) ￦ 4,468,351 ￦ 67,591 ￦ 3,750,092 ￦ 51,534 (2) Aging analysis of trade notes and accounts receivable As of December 31, 2015 and 2014, total trade notes and accounts receivable that are past due, but not impaired, amount to ￦ 415,702 million and ￦ 311,979 million, respectively; of which ￦ 370,450 million and ￦ 282,969 million, respectively, are past due less than 90 days, but not impaired. As of December 31, 2015 and 2014, the impaired trade notes and accounts receivable amount to ￦ 59,530 million and ￦ 58,706 million, respectively. (3) Transferred trade notes and accounts receivable that are not derecognized As of December 31, 2015 and 2014, total trade notes and accounts receivable (including inter-company receivables within the Group) which the Group transferred to financial institutions but did not qualify for derecognition, amount to ￦ 1,320,446 million and ￦ 1,100,610 million, respectively. Cash and cash equivalents received as consideration for the transfer are recognized as Lease and rental deposits Deposits Others Allowance for doubtful accounts Present value discount accounts 5. OTHER FINANCIAL ASSETS: 24,962 3,157 13,409 (11,175) 319,446 26,566 - - - (847) 28,119 2,820 93 (9,715) - - 298,401 23,998 119 - (3,249) ￦ 3,846,104 ￦ 1,163,566 ￦ 3,722,109 ￦ 1,039,157 (1) Other financial assets as of December 31, 2015 and 2014 consist of the following: Description Current Non-current Current Non-current In millions of Korean Won December 31, 2015 December 31, 2014 short-term borrowings due to the fact that the risks and rewards were not transferred substantially. Financial assets at fair value through profit or loss (“FVTPL”) ￦ 10,112,034 ￦ 23,194 ￦ 14,853,071 (4) The changes in allowance for doubtful accounts for the years ended December 31, 2015 and 2014 are as follows: Derivative assets that are effective hedging instruments AFS financial assets Loans 42,455 7,111 173,203 178,369 2,598,706 4,573 13,373 1,950 16,040 ￦ 4,652 25,629 2,264,116 225,722 Description Beginning of the year Impairment loss Write-off Effect of foreign exchange differences End of the year 2015 ￦ 58,706 3,572 (2,492) (256) ￦ 59,530 In millions of Korean Won 2014 ￦ 45,934 16,548 (2,757) (1,019) ￦ 58,706 ￦ 10,334,803 ￦ 2,804,842 ￦ 14,884,434 ￦ 2,520,119 114 115 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (2) AFS financial assets that are measured at fair value as of December 31, 2015 and 2014 consist of the following: 6. INVENTORIES: In millions of Korean Won Inventories as of December 31, 2015 and 2014 consist of the following: December 31, 2015 December 31, 2014 In millions of Korean Won Description Debt instruments Equity instruments Acquisition cost Book value Book value ￦ 187,298 1,857,357 ￦ 186,713 2,419,104 ￦ 159,347 2,106,719 ￦ 2,044,655 ￦ 2,605,817 ￦ 2,266,066 (3) Equity instruments classified into AFS financial assets as of December 31, 2015 and 2014 consist of the following: In millions of Korean Won December 31, 2015 December 31, 2014 Description Finished goods Merchandise Semi-finished goods Work in progress Raw materials Supplies Materials in transit Others December 31, 2015 December 31, 2014 ￦ 5,451,895 ￦ 4,178,587 60,890 448,870 450,444 1,268,217 252,282 499,559 766,842 108,428 428,282 360,888 1,232,731 236,715 437,564 434,044 ￦ 9,198,999 ￦ 7,417,239 Name of the company Ownership percentage Acquisition cost Book value Korea Aerospace Industries, Ltd. Hyundai Steel Company Hyundai Glovis Co., Ltd. Hyundai Heavy Industries Co., Ltd. Hyundai Oilbank Co., Ltd. Hyundai Green Food Co., Ltd. Hyundai Development Company NICE Information Service Co., Ltd. Hyundai Finance Corporation NICE Holdings Co., Ltd. KT Corporation Hyundai Merchant Marine Company Hyundai Asan Corporation Doosan Capital Corporation Nesscap Energy Inc. Others 10.00% 11.18% 4.88% 2.88% 4.35% 2.36% 0.60% 2.25% 9.29% 1.30% 0.09% 0.29% 1.88% 4.30% 3.53% ￦ 151,086 1,182,392 210,688 56,924 53,734 15,005 9,025 3,312 9,888 3,491 8,655 9,161 22,500 10,000 1,997 109,499 ￦ 761,281 745,221 353,371 192,282 137,266 57,231 17,460 14,001 11,487 10,693 6,783 2,862 2,117 1,944 599 104,506 101,913 Book value ￦ 387,951 582,523 533,719 251,850 138,289 43,731 17,415 6,461 10,365 7,497 7,503 6,930 2,117 7,256 1,199 (*) As of December 31, 2015 and 2014, the Group recognized a valuation allowance in amount of ￦ 92,552 million and ￦ 69,434 million, respectively. 7. OTHER ASSETS: Other assets as of December 31, 2015 and 2014 consist of the following: Description Accrued income Advanced payments Prepaid expenses Prepaid value added tax and others In millions of Korean Won December 31, 2015 December 31, 2014 Current Non-current Current Non-current ￦ 300,415 ￦ 6,206 ￦ 424,478 ￦ 10,003 692,708 349,805 219,703 28 478,594 4,520 568,905 295,665 284,647 - 201,836 22,814 ￦ 1,562,631 ￦ 489,348 ￦ 1,573,695 ￦ 234,653 (*) On February 5, 2016, the Group entered into a total return swap agreement for the Group to transfer 5,745,741 shares out of total 14,919,336 shares, to a third party. ￦ 1,857,357 ￦ 2,419,104 ￦ 2,106,719 116 117 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 8. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE: (2) The changes in PP&E for the year ended December 31, 2015 are as follows: Non-current assets classified as held for sale as of December 31, 2015 and 2014 consist of the following: Description Vehicles In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 47,643 ￦ 47,643 The Group recognized a gain (other income) and a loss (other expenses) on disposals of non-current assets classified as held for sale for the years ended December 31, 2015 and 2014. The Group has committed to a plan to sell vehicles that were classified as held for sale as of December 31, 2015 and has initiated active programs to complete the plan. The assets will be disposed within 12 months. No impairment loss on the non-current as- sets classified as held for sale is recognized for the year ended December 31, 2015. 9. PROPERTY, PLANT AND EQUIPMENT: (1) Property, plant and equipment (“PP&E”) as of December 31, 2015 and 2014 consist of the following: Description Land Buildings Structures Machinery and equipment Vehicles Dies, molds and tools Office equipment Others Construction in progress Beginning of the year Acquisitions Transfers within PP&E Disposals Depreciation Others (*) In millions of Korean Won End of the year ￦ 5,801,178 ￦ 8,974 ￦ 5,989,994 ￦ (843) - ￦ (24,674) ￦ 11,774,629 5,237,492 597,439 15,649 9,071 575,353 76,059 (915) (1,934) (248,296) (51,662) (84,007) (16,225) 5,495,276 612,748 6,206,337 24,033 838,963 (21,917) (847,304) (49,528) 6,150,584 160,579 36,205 75,541 (46,331) (43,188) (8,563) 174,243 1,711,448 5,881 894,573 (3,891) (607,192) (12,262) 1,988,557 426,152 29,196 54,608 4,569 129,240 9,319 2,372,438 8,181,655 (8,589,042) (3,083) (172) (537) (153,237) (20,942) (8,582) (703) 432,738 33,627 - 72,011 2,036,525 ￦ 22,542,259 ￦ 8,340,645 - ￦ (79,623) ￦ (1,959,461) ￦ (144,893) ￦ 28,698,927 (*) Others include the effect of foreign exchange differences, transfers from or to other accounts and acquisitions due to business combination. In millions of Korean Won The changes in PP&E for the year ended December 31, 2014 are as follows: Description Land Buildings Structures December 31, 2015 December 31, 2014 Acquisition cost Accumulated depreciation(*) Book value Acquisition cost Accumulated depreciation(*) Book value ￦ 11,774,629 - ￦ 11,774,629 ￦ 5,801,178 - ￦ 5,801,178 7,918,086 (2,422,810) 5,495,276 7,443,871 (2,206,379) 1,119,659 (506,911) 612,748 1,066,962 (469,523) Machinery and equipment 13,659,985 (7,509,401) 6,150,584 13,019,812 (6,813,475) Vehicles 300,753 (126,510) 174,243 283,659 (123,080) Dies, molds and tools 7,423,039 (5,434,482) 1,988,557 6,689,376 (4,977,928) Office equipment 1,466,130 (1,033,392) Others 71,880 (38,253) 432,738 33,627 1,484,990 (1,058,838) 57,986 (28,790) Construction in progress 2,036,525 - 2,036,525 2,372,438 - 2,372,438 ￦ 45,770,686 ￦ (17,071,759) ￦ 28,698,927 ￦ 38,220,272 ￦ (15,678,013) ￦ 22,542,259 (*) Accumulated impairment is included. 5,237,492 597,439 6,206,337 160,579 1,711,448 426,152 29,196 Description Land Buildings Structures Machinery and equipment Vehicles Dies, molds and tools Office equipment Others Construction in progress Beginning of the year Acquisitions Transfers within PP&E Disposals Depreciation Others (*) In millions of Korean Won End of the year ￦ 5,770,486 ￦ 16,234 ￦ 18,404 ￦ (150) - ￦ (3,796) ￦ 5,801,178 4,695,460 588,690 11,752 13,825 889,295 91,233 (517) (3,665) (219,615) (138,883) 5,237,492 (54,307) (38,337) 597,439 6,021,766 12,398 1,113,839 (31,876) (796,113) (113,677) 6,206,337 149,832 38,323 91,388 (26,172) (36,229) (56,563) 160,579 1,429,156 12,565 865,295 (4,879) (559,748) (30,941) 1,711,448 362,269 30,636 54,447 5,996 161,101 1,038 2,414,292 3,177,138 (3,231,593) (1,234) (187) (820) (158,224) (8,436) 7,793 149 426,152 29,196 - 13,421 2,372,438 ￦ 21,462,587 ￦ 3,342,678 - ￦ (69,500) ￦ (1,832,672) ￦ (360,834) ￦ 22,542,259 (*) Others include the effect of foreign exchange differences and transfers from or to other accounts. 118 119 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 10. INVESTMENT PROPERTY: (3) The fair value of investment property as of December 31, 2015 and 2014 consist of the following: (1) Investment property as of December 31, 2015 and 2014 consist of the following: December 31, 2015 December 31, 2014 In millions of Korean Won Description Land Buildings Structures Acquisition cost Accumulated depreciation Book value Acquisition cost Accumulated depreciation Book value ￦ 59,631 400,602 18,630 - ￦ 59,631 ￦ 63,406 - ￦ 63,406 (181,769) (5,670) 218,833 12,960 398,626 18,630 (153,193) (5,262) 245,433 13,368 Description Land Buildings Structures In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 59,631 434,383 15,496 ￦ 64,783 436,271 15,514 ￦ 509,510 ￦ 516,568 The fair value measurement of the investment property was performed by an independent third party. The Group deems the change in fair value from the fair value measurement performed at the initial recognition of the investment property is not mate- ￦ 478,863 ￦ (187,439) ￦ 291,424 ￦ 480,662 ￦ (158,455) ￦ 322,207 rial. (2) The changes in investment property for the year ended December 31, 2015 are as follows: rent replacement cost considering supplementary installation, depreciation period, structure and design. The fair value of the investment property is classified as Level 3, based on the inputs used in the valuation techniques. The fair value has been determined based on the cost approach and the market approach. The cost approach measured fair value as cur- Description Land Buildings Structures Beginning of the year ￦ 63,406 245,433 13,368 Transfers ￦ (3,886) (16,275) - ￦ 322,207 ￦ (20,161) Disposals Depreciation Effect of foreign exchange differences - - - - - (12,858) (408) ￦ 111 2,533 - ￦ (13,266) ￦ 2,644 ￦ 291,424 In millions of Korean Won End of the year ￦ 59,631 218,833 12,960 (4) Income and expenses related to investment property for the years ended December 31, 2015 and 2014 are as follows: Description Rental income Operating and maintenance expenses 2015 ￦ 57,366 14,449 In millions of Korean Won 2014 ￦ 42,499 19,433 The changes in investment property for the year ended December 31, 2014 are as follows: Description Land Buildings Structures Beginning of the year ￦ 62,467 187,741 13,776 Transfers Disposals Depreciation ￦ 3,617 67,373 - ￦ (2,836) - - - (10,722) (408) In millions of Korean Won Effect of foreign exchange differences ￦ 158 1,041 - End of the year ￦ 63,406 245,433 13,368 ￦ 263,984 ￦ 70,990 ￦ (2,836) ￦ (11,130) ￦ 1,199 ￦ 322,207 120 121 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 11. INTANGIBLE ASSETS: The changes in intangible assets for the year ended December 31, 2014 are as follows: (1) Intangible assets as of December 31, 2015 and 2014 consist of the following: In millions of Korean Won December 31, 2015 December 31, 2014 In millions of Korean Won Description Goodwill Acquisition cost Accumulated amortization(*) Book value Acquisition cost Accumulated amortization(*) Book value ￦ 294,517 ￦ (2,439) ￦ 292,078 ￦ 288,882 ￦ (2,404) ￦ 286,478 Development costs 6,444,033 (3,428,251) 3,015,782 6,070,412 (3,515,429) 2,554,983 Industrial property rights Software Others Construction in progress 197,872 831,869 474,629 343,159 (100,660) (501,338) (182,426) (72,877) 97,212 330,531 292,203 270,282 169,976 684,882 488,116 278,381 (80,014) (369,901) (174,231) (17,014) 89,962 314,981 313,885 261,367 Description Beginning of the year Internal developments and separate acquisitions Transfers within intangible assets Disposals Amortization Impairment loss Others (*) End of the year Goodwill ￦ 299,352 - - - - ￦ (1,429) ￦ (11,445) ￦ 286,478 Development costs Industrial property rights Software Others Construction in progress 1,945,557 1,117,115 33,377 (4,386) (564,905) (9,391) 37,616 2,554,983 44,367 40,605 16,141 - (9,571) 273,421 291,903 14,811 6,977 45,800 27,749 (124) (103,560) (3,305) (28,059) (358) - - (1,580) 89,962 84,633 18,978 314,981 313,885 274,490 173,962 (123,067) - - (17,418) (46,600) 261,367 ￦ 8,586,079 ￦ (4,287,991) ￦ 4,298,088 ￦ 7,980,649 ￦ (4,158,993) ￦ 3,821,656 ￦ 3,129,090 ￦ 1,353,470 - ￦ (7,815) ￦ (706,095) ￦ (28,596) ￦ 81,602 ￦ 3,821,656 (*) Accumulated impairment is included. (*) Others included the effect of foreign exchange differences and transfer from or to other accounts. (2) The changes in intangible assets for the year ended December 31, 2015 are as follows: (3) Research and development expenditures for the years ended December 31, 2015 and 2014 are as follows: Description Beginning of the year Internal developments and separate acquisitions Transfers within intangible assets Disposals Amortization Impairment loss Others (*) End of the year Goodwill ￦ 286,478 - - - - - ￦ 5,600 ￦ 292,078 Description Development costs (intangible assets) Research and development (manufacturing cost and administrative expenses) In millions of Korean Won 2015 ￦ 1,098,176 1,074,230 In millions of Korean Won 2014 ￦ 1,117,115 1,011,789 Development costs Industrial property rights Software Others Construction in progress 2,554,983 1,098,176 3,796 (384) (669,682) (5,574) 34,467 3,015,782 Total (*) ￦ 2,172,406 ￦ 2,128,904 89,962 2,359 18,727 - (13,266) 314,981 313,885 14,612 1,841 31,034 7,549 (135) (114,747) (4,405) (23,612) (2,480) - - (570) 97,212 84,786 (575) 330,531 292,203 (*) Amortization of development costs is not included. 261,367 103,101 (61,106) - - (2,979) (30,101) 270,282 ￦ 3,821,656 ￦ 1,220,089 - ￦ (4,924) ￦ (821,307) ￦ (11,033) ￦ 93,607 ￦ 4,298,088 (*) Others include the effect of foreign exchange differences, transfer from or to other accounts and acquisitions due to business combination. 122 123 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (4) Impairment test of goodwill 12. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES: The allocation of goodwill amongst the Group’s cash-generating units as of December 31, 2015 and 2014 is as follows: (1) Investments in joint ventures and associates as of December 31, 2015 consist of the following: Description Vehicle Finance Others In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 191,626 482 99,970 ￦ 292,078 ￦ 186,026 482 99,970 ￦ 286,478 The recoverable amounts of the Group’s CGUs are measured at their value-in-use calculated based on cash flow projections of Name of the company Nature of business Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing Beijing Hyundai Qiche Financing Company (BHAF) (*1, 3) Hyundai WIA Automotive Engine (Shandong) Company (WAE) Financing Manufacturing Hyundai Motor Group China, Ltd. (HMGC) (*1) Investment Sichuan Hyundai Motor Company (CHMC) (*1) Manufacturing financial budgets for the next five years approved by management and the pre-tax discount rate applied to the cash flow pro- Kia Motors Corporation jections is 11.8%. Cash flow projections beyond the next five-year period are extrapolated by using the estimated growth rate which does not exceed the long-term average growth rate of the region and industry to which the CGU belongs. No impairment loss has been recognized for the year ended December 31, 2015. An impairment loss has been recognized for the Finance CGU in the amount of ￦ 1,429 million for the year ended December 31, 2014. Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. Manufacturing Construction Manufacturing Manufacturing Manufacturing Financing HMC Investment Securities Co., Ltd. Securities brokerage Eukor Car Carriers Inc. (*2) Haevichi Hotels & Resorts Co., Ltd. (*4) Hyundai HYSCO Co., Ltd. (*5) Others Transportation Hotelkeeping Manufacturing Location China ˝ ˝ ˝ ˝ Korea ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ Ownership Percentage 50.00% 53.00% 22.00% 50.00% 50.00% 33.88% 20.95% 25.35% 37.58% 47.27% 50.00% 27.49% 12.00% 41.90% In millions of Korean Won Book value ￦ 2,189,321 220,475 184,255 135,000 100,067 8,047,548 3,180,493 814,413 433,088 326,439 242,507 238,001 191,468 110,312 - 496,556 ￦ 16,909,943 (*1) Each of the joint arrangements in which the Group retains joint control is structured through a separate entity and there are no contractual terms stating that the parties retain rights to the assets and obligations for the liabilities relating to the joint arrangement or other relevant facts and circumstances. As a result, the Group considers that the parties that retain joint control in the arrangement have rights to the net assets and classifies the joint arrangements as joint ventures. Also, there are restrictions which require consent from the director who is designated by the other investors, for certain transactions such as payment of dividend. (*2) As the Group is considered to be able to exercise significant influence by representation on the board of directors of the investee and other reasons, although the total ownership percentage is less than 20%, the investment is accounted for using the equity method. (*3) As of December 31, 2015, the entity is categorized as a joint venture although the Group’s total ownership percentage is a majority share of 53%, because the Group does not have control over the entity by virtue of an agreement with the other investors. (*4) As of December 31, 2015, the investment is accounted for using the equity method as the ownership percentage is more than 20% due to the acquisition of shares through a contribution in kind. (*5) As of December 31, 2015, the investment is classified as AFS financial assets since the entity was merged into Hyundai Steel Company. 124 125 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Investments in joint ventures and associates as of December 31, 2014 consist of the following: (2) The changes in investments in joint ventures and associates for the year ended December 31, 2015 are as follows: Name of the company Nature of business Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing Beijing Hyundai Qiche Financing Company (BHAF) (*1, 3) Hyundai WIA Automotive Engine (Shandong) Company (WAE) Financing Manufacturing Hyundai Motor Group China, Ltd. (HMGC) (*1) Investment Sichuan Hyundai Motor Company (CHMC) (*1) Manufacturing Location China ˝ ˝ ˝ ˝ Kia Motors Corporation ˝ Korea Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. Construction Manufacturing ˝ ˝ Financing HMC Investment Securities Co., Ltd. Securities brokerage Eukor Car Carriers Inc. (*2) Hyundai HYSCO Co., Ltd. Others Transportation Manufacturing ˝ ˝ ˝ ˝ ˝ ˝ ˝ ˝ Ownership Percentage 50.00% 53.00% 22.00% 50.00% 50.00% 33.88% 20.95% 25.35% 37.58% 47.27% 50.00% 27.49% 12.00% 29.37% In millions of Korean Won Book value ￦ 2,179,636 193,624 164,090 158,287 155,573 7,482,972 3,130,886 707,713 380,815 289,369 196,471 225,332 170,132 302,058 420,376 Name of the company BHMC BHAF WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. HMC Investment Securities Co., Ltd. Eukor Car Carriers Inc. Hyundai HYSCO Co., Ltd. Beginning of the year Acquisitions / (disposals) Share of profits (losses) for the year Dividends Others (*) End of the year ￦ 2,179,636 ￦ 236,164 ￦ 676,922 ￦ (936,483) ￦ 33,082 ￦ 2,189,321 In millions of Korean Won 193,624 164,090 158,287 155,573 7,482,972 3,130,886 707,713 380,815 289,369 196,471 225,332 170,132 - 8,745 - - - - - - - - - - 302,058 420,376 (347,206) 11,070 23,017 11,465 (25,032) (57,269) - (1,447) - - 3,834 1,402 1,745 1,763 220,475 184,255 135,000 100,067 865,327 (137,318) (163,433) 8,047,548 47,690 (11,664) 13,581 3,180,493 107,273 (5,515) 54,060 36,186 23,968 13,845 19,472 (204) 14,033 76,590 - - (11,050) (1,210) (7,920) - (2,010) (15,275) 4,942 (1,787) 884 33,118 34 9,784 56 33,125 3,795 814,413 433,088 326,439 242,507 238,001 191,468 110,312 - 496,556 ￦ 16,157,334 Others Haevichi Hotels & Resorts Co., Ltd. - 110,460 (*1) Each of the joint arrangements in which the Group retains joint control is structured through a separate entity and there are no contractual terms stating that the parties retain rights to the assets and obligations for the liabilities relating to the joint arrangement or other relevant facts and circumstances. As a result, the Group considers that the parties that retain joint control in the arrangement have rights to the net assets and classifies the joint arrangements as joint ventures. Also, there are restrictions which require consent from the director who is designated by the other investors, for certain transactions such as payment of dividend. (*2) As the Group is considered to be able to exercise significant influence by representation on the board of directors of the investee and other reasons, although the total ownership percentage is less than 20%, the investment was accounted for using the equity method. (*3) As of December 31, 2014, the entity is categorized as a joint venture although the Group’s total ownership percentage is a majority share of 53%, because the Group does not have control over the entity by virtue of an agreement with the other investors. (*) Others consist of changes in accumulated other comprehensive income, changes in ownership percentage and others. ￦ 16,157,334 ￦ 19,233 ￦ 1,887,343 ￦ (1,129,892) ￦ (24,075) ￦ 16,909,943 126 127 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 The changes in investments in joint ventures and associates for the year ended December 31, 2014 are as follows: (3) Summarized financial information of the Group’s major joint ventures and associates as of and for the year ended In millions of Korean Won December 31, 2015 is as follows: Name of the company BHMC BHAF WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. HMC Investment Securities Co., Ltd. Eukor Car Carriers Inc. Hyundai HYSCO Co., Ltd. Others Beginning of the year Acquisitions / (disposals) Share of profits (losses) for the year Dividends Others (*) End of the year ￦ 2,026,337 - ￦ 963,152 ￦ (815,497) ￦ 5,644 ￦ 2,179,636 88,760 129,783 153,823 132,014 6,748,127 3,050,804 600,284 335,227 270,535 125,806 217,218 148,866 236,732 430,679 94,340 - - 25,557 - - - - - - 3,636 - - (10,482) 9,443 31,205 28,462 (4,858) 984,600 - - (25,590) - 1,081 3,102 1,592 2,860 193,624 164,090 158,287 155,573 (96,123) (153,632) 7,482,972 50,750 (11,664) 40,996 3,130,886 109,398 (3,447) 45,459 21,156 11,745 4,381 23,307 49,328 75,451 - - (5,650) - (7,920) (2,010) (27,172) (48,100) 1,478 129 (2,322) 64,570 97 5,879 18,008 707,713 380,815 289,369 196,471 225,332 170,132 302,058 420,376 (*) Others consist of changes in accumulated other comprehensive income, changes in ownership percentage, impairment loss on investments in associates and others. ￦ 14,694,995 ￦ 113,051 ￦ 2,402,979 ￦ (995.073) ￦ (58,618) ￦ 16,157,334 Name of the company BHMC BHAF (*) WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. (*) HMC Investment Securities Co., Ltd. (*) Eukor Car Carriers Inc. Haevichi Hotels & Resorts Co., Ltd. Name of the company BHMC BHAF (*) WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. (*) HMC Investment Securities Co., Ltd. (*) Eukor Car Carriers Inc. Haevichi Hotels & Resorts Co., Ltd. Current assets Non-current assets Current liabilities ￦ 6,891,440 ￦ 3,252,224 ￦ 5,371,335 Non-current liabilities ￦ 318,780 In millions of Korean Won 3,763,412 825,523 786,888 291,508 18,390,784 14,343,666 3,623,317 904,429 1,234,578 5,313,717 5,852,572 512,228 14,344 - 983,480 435,893 635,557 27,589,329 5,114,866 3,059,815 1,438,558 922,820 - - 3,014,823 431,178 3,351,566 343,081 678,202 179,168 14,579,485 8,582,804 1,843,110 723,394 929,625 4,725,593 5,132,570 362,480 117,265 Profit (loss) for the year from continuing operations Sales Other comprehensive Income (loss) ￦ 19,203,441 ￦ 1,382,176 348,766 1,694,841 1,039,247 273,455 49,521,447 19,122,053 7,884,188 3,452,813 3,199,821 369,057 555,575 2,275,852 69,973 43,307 61,554 (53,796) (106,100) 2,630,600 584,027 326,874 129,647 71,656 53,548 50,357 174,034 3,483 - - - - - (360,165) 38,809 7,784 (725) 3,862 (5,243) 124 95,817 52 - 619,014 249,273 547,763 7,196,597 3,384,463 1,676,837 463,549 545,181 - - 1,571,188 158,536 In millions of Korean Won Total comprehensive income (loss) ￦ 1,382,176 43,307 61,554 (53,796) (106,100) 2,270,435 622,836 334,658 128,922 75,518 48,305 50,481 269,851 3,535 (*) The companies operate financial business and their total assets (liabilities) are included in current assets (liabilities) as the companies do not distinguish current and non-current portion in their separate financial statements. 128 129 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Summarized financial information of the Group’s major joint ventures and associates as of and for the year ended December 31, (4) Summarized additional financial information of the Group’s major joint ventures as of and for the year ended 2014 is as follows: Name of the company BHMC BHAF (*) WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. (*) HMC Investment Securities Co., Ltd. (*) Eukor Car Carriers Inc. Hyundai HYSCO Co., Ltd. Name of the company BHMC BHAF (*) WAE HMGC CHMC Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. (*) HMC Investment Securities Co., Ltd. (*) Eukor Car Carriers Inc. Hyundai HYSCO Co., Ltd. In millions of Korean Won In millions of Korean Won December 31, 2015 is as follows: Current assets Non-current assets Current liabilities ￦ 8,017,912 ￦ 2,822,478 ￦ 6,104,511 Non-current liabilities ￦ 330,032 2,313,511 810,860 408,159 474,710 16,655,401 13,642,088 3,452,727 815,573 1,078,838 4,778,907 5,592,617 503,455 1,736,275 - 882,572 302,466 575,607 24,388,801 4,797,605 2,484,590 1,305,272 780,341 - - 2,541,803 805,183 1,948,183 396,641 244,695 239,165 11,974,338 8,256,605 1,830,980 752,801 662,110 4,284,158 4,918,694 316,999 1,032,851 Profit (loss) for the year from continuing operations Sales Other comprehensive Income (loss) ￦ 19,755,886 ￦ 1,925,153 181,756 1,778,572 1,543,128 362,750 47,097,049 17,386,959 7,595,606 3,253,110 2,550,730 350,831 515,456 2,487,114 4,214,317 17,817 138,819 59,947 (9,716) 2,993,593 586,697 439,189 103,744 31,068 24,711 6,610 196,984 164,826 - - - - - (416,539) (23,108) 6,214 104 (6,687) 19,521 317 60,726 (47,635) - 554,056 127,834 500,007 6,585,999 3,216,775 1,257,464 340,814 589,631 - - 1,312,677 576,592 In millions of Korean Won Total comprehensive income ￦ 1,925,153 17,817 138,819 59,947 (9,716) 2,577,054 563,589 445,403 103,848 24,381 44,232 6,927 257,710 117,191 Name of the company BHMC BHAF (*) HMGC CHMC Cash and cash equivalents ￦ 214,036 Current financial liabilities Non-current financial liabilities Depreciation and amortization Interest income Interest expenses Income tax expense - ￦ 249,872 ￦ 326,679 ￦ 34,905 ￦ 79,078 ￦ 460,725 410,959 3,024,580 27,027 17,231 229,704 60,431 - 170,057 547,763 2,382 12,200 27,459 337,084 128,132 421 1,483 19,538 25,241 14,626 1,536 - (*) Operating finance business of which total assets (liabilities) are included in current financial liabilities as BHAF does not distinguish current and non-current portion in separate financial statements. Summarized additional financial information of the Group’s major joint ventures as of and for the year ended December 31, 2014 is as follows: Name of the company BHMC BHAF (*) HMGC CHMC In millions of Korean Won Cash and cash equivalents ￦ 867,555 279,486 44,836 196,076 Current financial liabilities Non-current financial liabilities Depreciation and amortization Interest income Interest expenses Income tax expense - ￦ 247,534 ￦ 290,920 ￦ 29,076 ￦ 54,141 ￦ 641,753 1,948,183 49,153 44,285 - 127,834 500,007 1,278 4,369 4,049 177,122 1,146 2,492 84,809 6,912 7,210 5,973 16,832 - (*) Operating finance business of which total assets (liabilities) are included in current financial liabilities as BHAF does not distinguish current and non-current portion in separate financial statements. (5) The aggregate amounts of the Group’s share of the joint ventures’ and associates’, that are not individually materi- al, profit and comprehensive income for the years ended December 31, 2015 and 2014 are as follows: Description Profit for the year Other comprehensive income Total comprehensive income In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 76,590 3,967 ￦ 80,557 ￦ 75,451 890 ￦ 76,341 (*) The companies operate financial business and their total assets (liabilities) are included in current assets (liabilities) as the companies do not distinguish current and non-current portion in their separate financial statements. 130 131 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (6) Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their carrying amounts carrying amounts as of December 31, 2015 is as follows: as of December 31, 2014 is as follows: In millions of Korean Won In millions of Korean Won Unrealized profit (loss) and others Goodwill Carrying amounts Unrealized profit (loss) and others Goodwill Carrying amounts Name of the company BHMC BHAF WAE HMGC CHMC Group’s share of net assets ￦ 2,226,774 220,475 184,255 143,976 100,067 - - - - - Kia Motors Corporation 7,902,759 197,089 Hyundai Engineering & Construction Co., Ltd. (*) Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. HMC Investment Securities Co., Ltd. Eukor Car Carriers Inc. Haevichi Hotels & Resorts Co., Ltd. (*) 2,043,136 1,137,357 817,186 434,500 328,323 242,507 197,949 191,206 106,736 - - - - 40,052 - 3,576 ￦ (37,453) ￦ 2,189,321 - - (8,976) - (52,300) - (2,773) (1,412) (1,884) - - 262 - 220,475 184,255 135,000 100,067 8,047,548 3,180,493 814,413 433,088 326,439 242,507 238,001 191,468 110,312 Name of the company BHMC BHAF WAE HMGC CHMC Group’s share of net assets ￦ 2,202,923 193,624 164,090 169,048 155,573 - - - - - Kia Motors Corporation 7,328,393 197,089 Hyundai Engineering & Construction Co., Ltd. (*) Hyundai WIA Corporation Hyundai Powertech Co., Ltd. Hyundai Dymos Inc. Hyundai Commercial Inc. HMC Investment Securities Co., Ltd. Eukor Car Carriers Inc. Hyundai HYSCO Co., Ltd. 1,993,529 1,137,357 710,123 386,574 290,812 196,471 185,280 169,870 275,529 - - - - 40,052 - 27,172 ￦ (23,287) ￦ 2,179,636 - - (10,761) - (42,510) - (2,410) (5,759) (1,443) - - 262 (643) 193,624 164,090 158,287 155,573 7,482,972 3,130,886 707,713 380,815 289,369 196,471 225,332 170,132 302,058 (*) The difference between the carrying amount and the fair value of the investee’s identifiable assets and liabilities as of the acquisition date is included in the amount of net (*) The difference between the carrying amount and the fair value of the investee’s identifiable assets and liabilities as of the acquisition date is included in the amount of net assets. assets. (7) The market price of listed equity securities as of December 31, 2015 is as follows: Name of the company Kia Motors Corporation Hyundai Engineering & Construction Co., Ltd. Hyundai WIA Corporation HMC Investment Securities Co., Ltd. Price per share Total number of shares ￦ 52,600 28,550 112,000 10,000 137,318,251 23,327,400 6,893,596 8,065,595 Market value ￦ 7,222,940 665,997 772,083 80,656 In millions of Korean Won, except price per share 132 133 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 13. FINANCIAL SERVICES RECEIVABLES: (1) Financial services receivables as of December 31, 2015 and 2014 consist of the following: (4) The changes in allowance for doubtful accounts of financial services receivables for the years ended December 31, 2015 and 2014 are as follows: Description Loan obligations Card receivables Financial lease receivables Others Allowance for doubtful accounts Loan origination fee Present value discount accounts In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 35,018,152 ￦ 31,464,943 11,512,949 2,672,159 23,224 49,226,484 (938,300) 58,215 (9,999) 10,601,341 2,730,188 16,755 44,813,227 (845,566) 35,682 (8,755) Description Beginning of the year Impairment loss Write-off Disposals and others Effect of foreign exchange differences End of the year In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 845,566 598,110 (448,897) (68,954) 12,475 ￦ 938,300 ￦ 823,408 629,261 (527,556) (86,253) 6,706 ￦ 845,566 ￦ 48,336,400 ￦ 43,994,588 2014 are as follows: (5) Gross investments in financial leases and their present value of minimum lease receipts as of December 31, 2015 and (2) Aging analysis of financial services receivables As of December 31, 2015 and 2014, total financial services receivables that are past due, but not impaired, amount to ￦ 1,607,033 million and ￦ 1,751,712 million, respectively; among them, financial services receivables past due less than 90 days are ￦ 1,607,006 million and ￦ 1,751,712 million, respectively. As of December 31, 2015 and 2014, the impaired financial services receivables amount to ￦ 463,846 million and ￦ 513,128 million, respectively. Description Not later than one year In millions of Korean Won December 31, 2015 December 31, 2014 Gross investments in financial leases Present value of minimum lease receipts Gross investments in financial leases Present value of minimum lease receipts ￦ 1,261,488 ￦ 1,108,473 ￦ 1,284,279 ￦ 1,117,016 (3) Transferred financial services receivables that are not derecognized As of December 31, 2015 and 2014, the Group issued asset backed securities, which have recourse to the underlying assets, based on loans, card receivables and others. As of December 31, 2015, the carrying amounts (including inter-company receivables within the Group) and fair values of the transferred financial assets that are not derecognized are ￦ 18,226,295 million and ￦ 18,399,766 mil- Later than one year and not later than five years 1,680,201 1,560,693 1,743,890 1,609,391 Later than five years 409 407 229 227 ￦ 2,942,098 ￦ 2,669,573 ￦ 3,028,398 ￦ 2,726,634 lion, respectively, the carrying amounts and fair values of the associated liabilities are ￦ 13,267,613 million and ￦ 13,137,541 million, (6) Unearned interest income of financial leases as of December 31, 2015 and 2014 is as follows: respectively, and the net position is ￦ 5,262,225 million. As of December 31, 2014, the carrying amounts (including inter-company receivables within the Group) and fair values of the transferred financial assets that are not derecognized are ￦ 15,046,062 million and ￦ 15,220,978 million, respectively, the carrying amounts and fair values of the associated liabilities are ￦ 10,962,648 million and ￦ 10,927,013 million, respectively, and the net position is ￦ 4,293,965 million. Description Gross investments in financial lease Net lease investments: Present value of minimum lease receipts Present value of unguaranteed residual value In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 2,942,098 ￦ 3,028,398 2,669,573 2,586 2,672,159 2,726,634 3,554 2,730,188 Unearned interest income ￦ 269,939 ￦ 298,210 134 135 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 14. OPERATING LEASE ASSETS: (2) Long-term debt as of December 31, 2015 and 2014 consists of the following: (1) Operating lease assets as of December 31, 2015 and 2014 consist of the following: In millions of Korean Won Description Acquisition cost Accumulated depreciation Accumulated impairment loss In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 20,483,754 (2,692,378) (71,770) ￦ 15,136,720 (1,804,291) (66,813) ￦ 17,719,606 ￦ 13,265,616 Description General loans Facility loan Commercial paper Asset-backed securities Shinhan Bank and others Korea Development Bank and others Hana Daetoo Security JP Morgan and others 1.00~5.85% 0.55~1.53% (2) Future minimum lease receipts related to operating lease assets as of December 31, 2015 and 2014 are as follows: Description Not later than one year Later than one year and not later than five years Later than five years In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 3,097,758 3,636,986 2 ￦ 2,474,411 2,674,220 - Others Shinhan Bank 2.56% Less: present value discounts Less: current maturities ￦ 6,734,746 ￦ 5,148,631 (3) Debentures as of December 31, 2015 and 2014 consist of the following: 347,066 - 7,055,970 15,000 11,971,960 113,844 3,305,494 383,072 73,000 5,607,169 239,260 9,585,841 125,375 2,030,037 ￦ 8,552,622 ￦ 7,430,429 Annual interest rate Lender December 31, 2015 December 31, 2015 December 31, 2014 0.10~7.46% ￦ 4,553,924 ￦ 3,283,340 15. BORROWINGS AND DEBENTURES: (1) Short-term borrowings as of December 31, 2015 and 2014 consist of the following: Annual interest rate Lender December 31, 2015 December 31, 2015 December 31, 2014 In millions of Korean Won Description Overdrafts Citi Bank and others 0.10~3.37% General loans Kookmin Bank and others 0.56~7.46% Loans on trade receivables collateral Woori Bank and others LIBOR+0.20~0.40% Banker’s Usance Kookmin Bank and others LIBOR+0.31~0.40% Short-term debentures 1.80~2.04% Commercial paper Shinhan Bank and others 0.47~2.08% ￦ 74,365 3,685,555 1,320,446 400,341 439,557 3,463,901 ￦ 189,121 3,274,955 1,100,610 433,510 19,997 1,827,727 Latest maturity date Annual interest rate December 31, 2015 December 31, 2015 December 31, 2014 June 8, 2017 3.75~4.00% ￦ 1,172,000 ￦ 1,648,312 In millions of Korean Won Description Guaranteed public debentures Guaranteed private debentures Non-guaranteed public debentures Non-guaranteed private debentures December 22, 2023 0.00~6.53% 22,954,336 - October 30, 2020 1.45~4.65 Asset-backed securities July 15, 2022 0.38~3.32 Less: discount on debentures Less: current maturities 6,561,168 13,093,193 43,780,697 90,638 7,482,555 82,440 21,247,129 4,079,019 10,976,262 38,033,162 81,616 7,649,461 ￦ 9,384,165 ￦ 6,845,920 ￦ 36,207,504 ￦ 30,302,085 136 137 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 16. PROVISIONS: 17. OTHER FINANCIAL LIABILITIES: (1) Provisions as of December 31, 2015 and 2014 consist of the following: Other financial liabilities as of December 31, 2015 and 2014 consist of the following: In millions of Korean Won In millions of Korean Won Description Warranty Other long-term employee benefits Others December 31, 2015 December 31, 2014 ￦ 5,639,595 ￦ 5,613,785 643,274 459,031 674,397 438,688 ￦ 6,741,900 ￦ 6,726,870 Description Financial liabilities at FVTPL Derivative liabilities that are effective hedging instruments Financial lease liabilities Other (*) December 31, 2015 December 31, 2014 Current Non-current Current Non-current ￦ 37,276 ￦ 172 ￦ 10,139 16,180 714 621,267 145,110 204,438 - - 8,726 - ￦ 192 209,591 745 - ￦ 675,437 ￦ 145,282 ￦ 223,303 ￦ 210,528 (2) The changes in provisions for the year ended December 31, 2015 are as follows: Description Beginning of the year Charged Utilized Amortization of present value discounts Changes in expected reimbursements by third parties Effect of foreign exchange differences Warranty ￦ 5,613,785 998,395 (1,130,761) 110,134 40,644 7,398 Other long-term employee benefits ￦ 674,397 26,008 (57,101) - - (30) End of the year ￦ 5,639,595 ￦ 643,274 The changes in provisions for the year ended December 31, 2014 are as follows: Description Beginning of the year Charged Utilized Amortization of present value discounts Changes in expected reimbursements by third parties Effect of foreign exchange differences Warranty ￦ 5,871,332 866,416 (1,136,032) 138,039 (86,270) (39,700) Other long-term employee benefits ￦ 624,836 103,242 (53,599) - - (82) End of the year ￦ 5,613,785 ￦ 674,397 In millions of Korean Won shareholders equity in accordance with K-IFRS 1032. (*) During 2015, the Company recognized the gross obligation in respect of the agreements written over the shares of a subsidiary and corresponding entry is recorded within 18. OTHER LIABILITIES: Other liabilities as of December 31, 2015 and 2014 consist of the following: Description Advances received Withholdings Accrued expenses Unearned income Due to customers for contract work Others In millions of Korean Won December 31, 2015 December 31, 2014 Current Non-current Current Non-current ￦ 655,727 ￦ 103,059 ￦ 412,851 ￦ 87,526 417,223 994,554 460,593 1,153,527 3,051,435 - 1,954,263 404,359 821,813 462,675 134,423 - 1,129,643 402,145 290,827 147,329 - 640,578 - 763,450 ￦ 5,862,146 ￦ 2,471,738 ￦ 4,201,969 ￦ 1,952,147 Others ￦ 438,688 204,342 (166,450) 2,856 - (20,405) ￦ 459,031 In millions of Korean Won Others ￦ 409,751 189,247 (155,660) 3,555 - (8,205) ￦ 438,688 138 139 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 19. FINANCIAL INSTRUMENTS: (2) Financial liabilities by categories as of December 31, 2015 are as follows: (1) Financial assets by categories as of December 31, 2015 are as follows: Description Cash and cash equivalents Short-term and long-term financial instruments Trade notes and accounts receivable Other receivables Financial assets at FVTPL - - - - Other financial assets 10,135,228 Other assets Financial services receivables - - In millions of Korean Won AFS financial assets Derivatives designated as hedging instruments - - - - - - - - Book value Fair value ￦ 7,331,463 ￦ 7,331,463 6,976,462 6,976,462 4,535,942 4,535,942 3,172,390 3,172,390 2,605,817 220,824 13,139,645 13,139,645 - - - - 306,621 306,621 48,336,400 49,122,390 Loans and receivables ￦ 7,331,463 6,976,462 4,535,942 3,172,390 177,776 306,621 48,336,400 ￦ 10,135,228 ￦ 70,837,054 ￦ 2,605,817 ￦ 220,824 ￦ 83,798,923 ￦ 84,584,913 Financial assets by categories as of December 31, 2014 are as follows: Description Cash and cash equivalents Short-term and long-term financial instruments Trade notes and accounts receivable Other receivables Financial assets at FVTPL - - - - Other financial assets 14,857,723 Other assets Financial services receivables - - In millions of Korean Won AFS financial assets Derivatives designated as hedging instruments - - - - - - - - Book value Fair value ￦ 7,096,513 ￦ 7,096,513 4,101,550 4,101,550 3,801,626 3,801,626 3,143,926 3,143,926 2,266,066 39,002 17,404,553 17,404,553 - - - - 434,481 434,481 43,994,588 44,292,330 Loans and receivables ￦ 7,096,513 4,101,550 3,801,626 3,143,926 241,762 434,481 43,994,588 Description Trade notes and accounts payable Other payables Borrowings and debentures Other financial liabilities Other liabilities Financial liabilities at FVTPL - - - 37,448 - Financial liabilities carried at amortized cost ￦ 7,081,124 4,713,548 64,932,340 621,981 3,051,512 Derivatives designated as hedging instruments - - - 161,290 - In millions of Korean Won Book value Fair value ￦ 7,081,124 ￦ 7,081,124 4,713,548 64,932,340 820,719 3,051,512 4,713,548 65,419,089 820,719 3,051,512 ￦ 37,448 ￦ 80,400,505 ￦ 161,290 ￦ 80,599,243 ￦ 81,085,992 Financial liabilities by categories as of December 31, 2014 are as follows: Financial liabilities at FVTPL Financial liabilities carried at amortized cost Derivatives designated as hedging instruments - - - ￦ 7,041,529 4,688,812 54,257,932 - - - 10,331 9,471 414,029 - 1,954,335 - In millions of Korean Won Book value Fair value ￦ 7,041,529 ￦ 7,041,529 4,688,812 54,257,932 433,831 1,954,335 4,688,812 55,033,485 433,831 1,954,335 ￦ 10,331 ￦ 67,952,079 ￦ 414,029 ￦ 68,376,439 ￦ 69,151,992 Description Trade notes and accounts payable Other payables Borrowings and debentures Other financial liabilities Other liabilities (3) Fair value estimation The Group categorizes the assets and liabilities measured at fair value into the following three-level fair value hierarchy in ac- cordance with the inputs used for fair value measurement. ● Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or ￦ 14,857,723 ￦ 62,814,446 ￦ 2,266,066 ￦ 39,002 ￦ 79,977,237 ￦ 80,274,979 liabilities. ● Level 2: Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are ob- servable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). ● Level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). 140 141 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2015 are as follows: The changes in financial instruments classified as Level 3 for the year ended December 31, 2015 are as follows: Level 1 Level 2 Level 3 Total AFS financial assets ￦ 247,483 ￦ 5,840 ￦ (17,929) ￦ (2,837) - ￦ 232,557 In millions of Korean Won December 31, 2015 Description Beginning of the year Purchases Disposals Valuation Transfers End of the year In millions of Korean Won Description Financial assets: Financial assets at FVTPL Derivatives designated as hedging instruments AFS financial assets Financial liabilities: Financial liabilities at FVTPL Derivatives designated as hedging instruments ￦ 90,363 ￦ 10,044,865 - 2,202,249 220,824 171,011 - - ￦ 10,135,228 220,824 232,557 2,605,817 ￦ 2,292,612 ￦ 10,436,700 ￦ 232,557 ￦ 12,961,869 - - - ￦ 37,448 161,290 ￦ 198,738 - - - ￦ 37,448 161,290 ￦ 198,738 Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2014 are as follows: Description Financial assets: Financial assets at FVTPL Derivatives designated as hedging instruments AFS financial assets Financial liabilities: Financial liabilities at FVTPL Derivatives designated as hedging instruments In millions of Korean Won December 31, 2014 Level 1 Level 2 Level 3 Total ￦ 106,293 ￦ 14,751,430 - 1,877,566 39,002 141,017 - - ￦ 14,857,723 39,002 247,483 2,266,066 ￦ 1,983,859 ￦ 14,931,449 ￦ 247,483 ￦ 17,162,791 - - - ￦ 10,331 414,029 ￦ 424,360 - - - ￦ 10,331 414,029 ￦ 424,360 The changes in financial instruments classified as Level 3 for the year ended December 31, 2014 are as follows: Description Beginning of the year Purchases Disposals Valuation Transfers End of the year AFS financial assets ￦ 229,342 ￦ 12,547 ￦ (183) ￦ (9,428) ￦ 15,205 ￦ 247,483 In millions of Korean Won (4) Interest income, dividend income and interest expenses by categories of financial instruments for the years ended December 31, 2015 and 2014 consist of the following: 2015 2014 In millions of Korean Won Description Non-financial services: Interest income Dividend income Interest expenses Interest income Dividend income Interest expenses Loans and receivables ￦ 184,248 305,580 1,048 - - 13,783 - - - ￦ 235,429 415,673 1,321 - - 29,860 - - - - - 193,689 - - 198,501 ￦ 490,876 ￦ 13,783 ￦ 193,689 ￦ 652,423 ￦ 29,860 ￦ 198,501 Financial services: Loans and receivables ￦ 2,423,534 Financial assets at FVTPL AFS financial assets Financial liabilities carried at amortized cost 27,197 1,202 - - 1,370 5,533 - - - - 1,301,618 ￦ 2,467,008 28,807 1,197 - ￦ 2,451,933 ￦ 6,903 ￦ 1,301,618 ￦ 2,497,012 - - - - - - - - 1,340,995 ￦ 1,340,995 Financial assets at FVTPL AFS financial assets Financial liabilities carried at amortized cost 142 143 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (5) Financial assets and liabilities subject to offsetting, financial instruments subject to an enforceable master netting Financial assets and liabilities subject to offsetting, financial instruments subject to an enforceable master netting arrangement arrangement or similar agreement as of December 31, 2015 consist of the following: or similar agreement as of December 31, 2014 consist of the following: In millions of Korean Won In millions of Korean Won Gross amounts of recognized financial assets and liabilities set off in the consolidated statement of financial position Net amounts of financial assets and liabilities presented in the consolidated statement of financial position Related amounts not set off in the consolidated statement of financial position - financial instruments Related amounts not set off in the statement of financial position - collateral received (pledged) Gross amounts of recognized financial assets and liabilities Description Financial assets: Trade notes and accounts receivable ￦ 4,662,777 ￦ 126,835 ￦ 4,535,942 Other receivables 3,409,550 237,160 3,172,390 - - Financial assets at FVTPL (*) Derivative assets that are effective hedging instruments (*) 31,335 220,824 - - 31,335 8,142 220,824 94,642 ￦ 8,324,486 ￦ 363,995 ￦ 7,960,491 ￦ 102,784 Financial liabilities: Trade notes and accounts payable ￦ 7,433,110 ￦ 351,986 ￦ 7,081,124 Other payables 4,725,557 12,009 4,713,548 - - Financial liabilities at FVTPL (*) Derivative liabilities that are effective hedging instruments (*) 37,448 161,290 - - 37,448 8,142 161,290 94,642 ￦ 12,357,405 ￦ 363,995 ￦ 11,993,410 ￦ 102,784 - - - - - - - - - - Net amounts ￦ 4,535,942 3,172,390 23,193 126,182 ￦ 7,857,707 ￦ 7,081,124 4,713,548 29,306 66,648 ￦ 11,890,626 Gross amounts of recognized financial assets and liabilities set off in the consolidated statement of financial position Net amounts of financial assets and liabilities presented in the consolidated statement of financial position Related amounts not set off in the consolidated statement of financial position - financial instruments Related amounts not set off in the statement of financial position - collateral received (pledged) Gross amounts of recognized financial assets and liabilities Description Financial assets: Trade notes and accounts receivable ￦ 3,917,901 ￦ 116,275 ￦ 3,801,626 Other receivables 3,421,842 277,916 3,143,926 Financial assets at FVTPL (*) Derivative assets that are effective hedging instruments 66,947 39,002 - - 66,947 39,002 - - - 28,980 ￦ 7,445,692 ￦ 394,191 ￦ 7,051,501 ￦ 28,980 Financial liabilities: Trade notes and accounts payable ￦ 7,319,804 ￦ 278,275 ￦ 7,041,529 Other payables 4,804,728 115,916 4,688,812 Financial liabilities at FVTPL (*) Derivative liabilities that are effective hedging instruments 10,331 414,029 - - 10,331 414,029 28,980 ￦ 12,548,892 ￦ 394,191 ￦ 12,154,701 ￦ 28,980 - - - Net amounts ￦ 3,801,626 3,143,926 66,947 10,022 ￦ 7,022,521 ￦ 7,041,529 4,688,812 10,331 385,049 ￦ 12,125,721 - - - - - - - - - - (*) These are derivative assets and liabilities that the Group may have the right to offset in the event of default, insolvency or bankruptcy of the counterparty although these (*) There are no derivative assets and liabilities that can be offset as of December 31, 2014. Therefore, the derivative assets and liabilities do not meet the criteria for do not meet the criteria of offsetting under K-IFRS 1032. offsetting in K-IFRS 1032, but the Group has a right of offsetting them in the event of default, insolvency or bankruptcy of the counterparty. (6) The commission income (financial services revenue) arising from financial assets or liabilities other than financial assets or liabilities at FVTPL for the years ended December 31, 2015 and 2014 are ￦ 1,717,992 million and ￦ 1,646,656 million, respectively. In addition, the fee expenses (cost of sales from financial services) occurring from financial assets or liabilities other than financial assets or liabilities at FVTPL for the years ended December 31, 2015 and 2014 are ￦ 837,455 million and ￦ 787,994 million, respectively. (7) The Group recognizes transfers between levels of the fair value hierarchy at the date of the event or change in circumstances that caused the transfer. There are no significant transfers between Level 1 and Level 2 for the year ended December 31, 2015. 144 145 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (8) Descriptions of the valuation techniques and the inputs used in the fair value measurements categorized within Level The Group does not expect the changes in unobservable inputs for alternative assumptions that can be applied reasonably to 2 and Level 3 of the fair value hierarchy are as follows: have significant impact on the fair vale measurements. - Currency forwards and options Fair value of currency forwards and options is measured based on forward exchange rate quoted in the current market at the 20. CAPITAL STOCK: end of the reporting period, which has the same remaining period of derivatives to be measured. If the forward exchange rate, The Company’s number of shares authorized is 600,000,000 shares. Common stock and preferred stock as of December 31, 2015 which has the same remaining period of currency forward and option, is not quoted in the current market, fair value is mea- and 2014 consist of the following: sured using estimates of similar period of forward exchange rate by applying interpolation method with quoted forward ex- change rates. As the inputs used to measure fair value of currency forwards and options are supported by observable market data, such as forward exchange rates, the Group classified the estimates of fair value measurements of the currency forwards and options as Level 2 of the fair value hierarchy. - Debt instruments including corporate bonds Fair value of debt instruments including corporate bonds is measured applying discounted cash flow method. The rate used to discount cash flows is determined based on swap rate and credit spreads of debt instruments, which have the similar credit rating and period quoted in the current market with those of debt instruments including corporate bonds that should be mea- (1) Common stock Description Issued Par value Capital stock In millions of Korean Won, except par value December 31, 2015 December 31, 2014 220,276,479 shares 220,276,479 shares ￦ 5,000 1,157,982 ￦ 5,000 1,157,982 sured. The Group classifies fair value measurements of debt instruments including corporate bonds as Level 2 of the fair- value The Company completed stock retirement of 10,000,000 common shares and 1,320,000 common shares as of March 5, 2001 and hierarchy since the rate, which has significant effects on fair value of debt instruments including corporate bonds, is based on May 4, 2004, respectively. Due to these stock retirements, the total face value of outstanding stock differs from the capital stock observable market data. - Unlisted equity securities Fair value of unlisted equity securities is measured using discounted cash flow projection and others, and certain assumptions not based on observable market prices or rate, such as sales growth rate, pre-tax operating income ratio and discount rate based on business plan and circumstance of industry are used to estimate the future cash flow. The discount rate used to dis- count the future cash flows, is calculated by applying the Capital Asset Pricing Model (CAPM), using the data of similar listed companies. The Group determines that the effect of estimation and assumptions referred above affecting fair value of unlisted equity securities is significant and classifies fair value measurements of unlisted securities as Level 3 of the fair value hierar- chy. (9) The quantitative information about significant unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy and the description of relationships of significant unobservable inputs to the fair value are as follows: Description Unlisted equity securities Fair value at December 31, 2015 ￦ 225,050 Valuation Techniques Unobservable inputs Discounted cash flow and others Sales growth rate Pre-tax operating income ratio Discount rate Range 3.6% ~ 6.4% (-)1.5% ~ 3.2% 8.1% ~ 16.7% In millions of Korean Won Description of relationship If the sales growth rate and the pre-tax operating income ratio rise or the discount rate declines, the fair value increases. amount. (2) Preferred stock Description 1st preferred stock 2nd preferred stock 3rd preferred stock In millions of Korean Won Par value Issued Korean Won Dividend rate ￦ 5,000 25,109,982 shares ￦ 125,550 ˝ ˝ 37,613,865 shares 193,069 2,478,299 shares 12,392 65,202,146 shares ￦ 331,011 Dividend rate of common stock + 1% The lowest stimulated dividend rate : 2% The lowest stimulated dividend rate : 1% As of March 5, 2001, the Company retired 1,000,000 second preferred shares. Due to the stock retirement, the total face value of outstanding stock differs from the capital stock amount. The preferred shares are non-cumulative, participating and non-voting. 146 147 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 21. CAPITAL SURPLUS: 24. RETAINED EARNINGS AND DIVIDENDS: Capital surplus as of December 31, 2015 and 2014 consists of the following: (1) Retained earnings as of December 31, 2015 and 2014 consist of the following: Description Stock paid-in capital in excess of par value Others 22. OTHER CAPITAL ITEMS: In millions of Korean Won In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 3,321,334 199,061 ￦ 3,321,334 813,216 ￦ 3,520,395 ￦ 4,134,550 Description Legal reserve (*) Discretionary reserve Unappropriated December 31, 2015 December 31, 2014 ￦ 610,380 39,550,647 19,874,061 ￦ 528,648 35,826,647 18,294,568 ￦ 60,035,088 ￦ 54,649,863 (*) The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve, a minimum of 10% of annual cash dividends declared, until such reserve equals 50% of its capital stock issued. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock or used to reduce Other capital items consist of treasury stocks purchased for the stabilization of stock price. Number of treasury stocks as of De- accumulated deficit, if any. cember 31, 2015 and 2014 are as follows: Number of shares cluded in retained earnings. It may be only transferred to capital stock or used to reduce accumulated deficit, if any. Appraisal gains, amounting to ￦ 1,852,871 million, derived from asset revaluation by the Asset Revaluation Law of Korea are in- Description Common stock 1st preferred stock 2nd preferred stock 3rd preferred stock December 31, 2015 December 31, 2014 13,209,474 2,202,059 1,376,138 24,782 11,632,277 1,993,081 1,053,727 5,660 23. ACCUMULATED OTHER COMPREHENSIVE LOSS: Accumulated other comprehensive loss as of December 31, 2015 and 2014 consists of the following: Description Gain on valuation of AFS financial assets Loss on valuation of AFS financial assets Gain on valuation of cash flow hedge derivatives Loss on valuation of cash flow hedge derivatives Gain on share of the other comprehensive income of equity-accounted investees Loss on share of the other comprehensive income of equity-accounted investees Loss on foreign operations translation, net In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 784,129 (339,984) 2,540 (33,543) 245,806 (505,373) (1,585,396) ￦ 670,781 (163,791) 15 (30,378) 148,672 (395,272) (1,574,853) ￦ (1,431,821) ￦ (1,344,826) (2) The computation of the interim dividends for the year ended December 31, 2015 is as follows: Description Par value per share Number of shares issued Treasury stocks Shares, net of treasury stocks Dividends per share Dividend rate Dividends declared Common stock ￦ 5,000 220,276,479 (13,209,474) 207,067,005 ￦ 1,000 20% 207,067 In millions of Korean Won, except per share amounts 1st Preferred stock 2nd Preferred stock 3rd Preferred stock ￦ 5,000 25,109,982 (2,202,059) 22,907,923 ￦ 1,000 20% 22,908 ￦ 5,000 37,613,865 (1,376,138) 36,237,727 ￦ 1,000 20% 36,238 ￦ 5,000 2,478,299 (24,782) 2,453,517 ￦ 1,000 20% 2,453 148 149 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (3) The computation of the proposed dividends for the year ended December 31, 2015 is as follows: 26. SELLING AND ADMINISTRATIVE EXPENSES: In millions of Korean Won, except per share amounts Selling and administrative expenses for the years ended December 31, 2015 and 2014 consist of the following: Description Par value per share Number of shares issued Treasury stocks Shares, net of treasury stocks Dividends per share Dividend rate Dividends declared Common stock ￦ 5,000 220,276,479 (13,209,474) 207,067,005 ￦ 3,000 60% 621,201 1st Preferred stock 2nd Preferred stock 3rd Preferred stock ￦ 5,000 25,109,982 (2,202,059) 22,907,923 ￦ 3,050 61% 69,869 ￦ 5,000 37,613,865 (1,376,138) 36,237,727 ￦ 3,100 62% 112,337 ￦ 5,000 2,478,299 (24,782) 2,453,517 ￦ 3,050 61% 7,483 The computation of the dividends for the year ended December 31, 2014 is as follows: Common stock ￦ 5,000 220,276,479 (11,632,277) 208,644,202 ￦ 3,000 60% ￦ 625,933 In millions of Korean Won, except per share amounts 1st Preferred stock 2nd Preferred stock 3rd Preferred stock ￦ 5,000 25,109,982 (1,993,081) 23,116,901 ￦ 3,050 61% ￦ 70,507 ￦ 5,000 37,613,865 (1,053,727) 36,560,138 ￦ 3,100 62% ￦ 113,336 ￦ 5,000 2,478,299 (5,660) 2,472,639 ￦ 3,050 61% ￦ 7,541 Description Par value per share Number of shares issued Treasury stocks Shares, net of treasury stocks Dividends per share Dividend rate Dividends declared 25. SALES: Sales for the years ended December 31, 2015 and 2014 consist of the following: Description Sales of goods Rendering of services Royalties Financial services revenue Others 2015 ￦ 80,780,723 1,342,227 211,991 9,311,399 312,396 In millions of Korean Won 2014 ￦ 79,111,075 1,207,996 209,129 8,455,068 273,051 ￦ 91,958,736 ￦ 89,256,319 Description Selling expenses: Export expenses Overseas market expenses Advertisements and sales promotion Sales commissions Expenses for warranties Transportation expenses Administrative expenses: Payroll Post-employment benefits Welfare expenses Service charges Research Others In millions of Korean Won 2015 2014 ￦ 857,364 299,338 2,071,836 664,345 1,223,492 254,468 5,370,843 2,558,891 188,998 409,205 1,183,696 929,280 1,258,621 6,528,691 ￦ 964,524 371,490 2,053,000 615,214 1,095,916 296,027 5,396,171 2,453,025 148,160 368,228 1,169,274 792,715 1,252,484 6,183,886 ￦ 11,899,534 ￦ 11,580,057 27. GAIN ON INVESTMENTS IN JOINT VENTURES AND ASSOCIATES: Gain on investments in joint ventures and associates for the years ended December 31, 2015 and 2014 consist of the following: Description Gain on share of earnings of equity-accounted investees, net Gain on disposals of investments in associates, net Impairment loss on investments in associates 2015 ￦ 1,887,343 43,332 - In millions of Korean Won 2014 ￦ 2,402,979 13,367 (27,688) ￦ 1,930,675 ￦ 2,388,658 150 151 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 28. FINANCE INCOME AND EXPENSES: 29. OTHER INCOME AND EXPENSES: (1) Finance income for the years ended December 31, 2015 and 2014 consists of the following: (1) Other income for the years ended December 31, 2015 and 2014 consists of the following: In millions of Korean Won In millions of Korean Won Description Interest income Gain on foreign exchange transactions Gain on foreign currency translation Dividend income Gain on valuation of derivatives Others 2015 ￦ 490,876 139,839 162,561 13,783 18,264 6,053 2014 ￦ 652,423 37,077 63,050 29,860 97,009 2,464 Description Gain on foreign exchange transactions Gain on foreign currency translation Gain on disposals of PP&E Gain on disposals of intangible assets Commission income Rental income ￦ 831,376 ￦ 881,883 Others Gain on disposals of non-current assets classified as held for sale 2015 ￦ 419,989 183,769 26,873 10,966 93,527 78,231 13,471 428,279 2014 ￦ 311,870 136,490 15,267 2,136 58,843 78,187 17,153 419,919 ￦ 1,255,105 ￦ 1,039,865 (2) Finance expenses for the years ended December 31, 2015 and 2014 consist of the following: In millions of Korean Won (2) Other expenses for the years ended December 31, 2015 and 2014 consist of the following: Description Interest expenses Loss on foreign exchange transactions Loss on foreign currency translation Loss on disposals of trade notes and accounts receivable Loss on valuation of derivatives Impairment loss on AFS financial assets Others 2015 ￦ 259,210 158,739 245,881 4,831 35,447 8,056 1,288 2014 ￦ 300,247 38,394 247,842 3,634 10,517 - 385 Description Loss on foreign exchange transactions Loss on foreign currency translation Loss on disposals of PP&E Impairment loss on intangible assets Loss on disposals of non-current assets classified as held for sale ￦ 713,452 ￦ 601,019 Donations Others 2015 ￦ 497,234 209,510 41,866 11,070 - 66,242 376,315 In millions of Korean Won 2014 ￦ 442,493 194,477 37,722 28,721 244 71,067 533,375 ￦ 1,202,237 ￦ 1,308,099 152 153 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 30. EXPENSES BY NATURE: 32. INCOME TAX EXPENSE: Expenses by nature for the years ended December 31, 2015 and 2014 consist of the following: (1) Income tax expense for the years ended December 31, 2015 and 2014 consist of the following: In millions of Korean Won In millions of Korean Won Description Changes in inventories Raw materials and merchandise used Employee benefits Depreciation Amortization Others Total (*) 2015 ￦ (1,383,452) 52,095,371 8,846,227 1,972,727 821,307 24,450,887 2014 ￦ (351,411) 49,677,376 8,537,685 1,843,802 706,095 22,600,885 ￦ 86,803,067 ￦ 83,014,432 (*) Sum of cost of sales, selling and administrative expenses and other expenses in the consolidated statements of income. 31. EARNINGS PER COMMON STOCK AND PREFERRED STOCK: Basic earnings per common stock and preferred stock are computed by dividing profit available to common stock and preferred stock by the weighted-average number of common stock and preferred stock outstanding during the year. The Group does not compute diluted earnings per common stock for the years ended December 31, 2015 and 2014, since there are no dilutive items during the years. Basic earnings per common stock and preferred stock for the years ended December 31, 2015 and 2014 are computed as follows: In millions of Korean Won, except per share amounts December 31, 2015 December 31, 2014 Weighted- average number of shares outstanding (*1) Profit available to share Basic earnings per share Profit available to share Weighted- average number of shares outstanding (*1) ￦ 4,942,188 207,125,425 ￦ 23,861 ￦ 5,656,688 209,221,204 547,902 868,531 58,682 22,916,252 36,249,753 2,454,252 23,909 23,960 23,910 628,018 994,937 67,164 23,155,054 36,608,682 2,477,823 Basic earnings per share ￦ 27,037 27,122 27,178 27,106 Description Common stock 1st Preferred stock (*2) 2nd Preferred stock 3rd Preferred stock (*1) Weighted-average number of shares outstanding includes the effects of treasury stock transactions. (*2) 1st preferred stock meets the definition of ‘ordinary shares’ as defined in K-IFRS 1033 ‘Earnings per Share’. Description Income tax currently payable Adjustments recognized in the current year in relation to the prior years Changes in deferred taxes due to: Temporary differences Tax credits and deficits Items directly charged to equity Effect of foreign exchange differences 2015 ￦ 1,935,345 65,177 781,973 (690,225) 3,874 (145,936) 2014 ￦ 1,643,888 (52,349) 818,276 (247,876) 231,519 (91,652) Income tax expense ￦ 1,950,208 ￦ 2,301,806 (2) The reconciliation from income before income tax to income tax expense pursuant to Corporate Income Tax Law of Korea for the years ended December 31, 2015 and 2014 are as follows: Description Income before income tax Income tax expense calculated at current applicable tax rates of 25.1% in 2015 and 27.2% in 2014 Adjustments: Non-taxable income Disallowed expenses Tax credits Others Income tax expense Effective tax rate 2015 ￦ 8,459,373 2,123,326 (69,066) 100,318 (513,593) 309,223 (173,118) In millions of Korean Won 2014 ￦ 9,951,274 2,708,321 (111,489) 139,304 (713,191) 278,861 (406,515) ￦ 1,950,208 ￦ 2,301,806 23.1% 23.1% 154 155 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (3) The changes in deferred tax assets (liabilities) for the year ended December 31, 2015 are as follows: (4) The components of items charged to equity for the years ended December 31, 2015 and 2014 are as follows: In millions of Korean Won In millions of Korean Won Description Provisions AFS financial assets Subsidiaries, associates and joint ventures Reserve for research and manpower development Derivatives PP&E Accrued income Gain (loss) on foreign currency translation Others Accumulated deficit and tax credit carryforward Beginning of the year ￦ 1,844,534 (307,575) (1,329,594) (233,309) 22,095 (4,750,382) (3,020) (2,547) 125,746 (4,634,052) 1,232,699 Changes ￦ 95,354 (52,228) 23,032 74,681 (9,648) (1,045,295) 62,570 2,119 67,442 (781,973) 690,225 End of the year ￦ 1,939,888 (359,803) (1,306,562) (158,628) 12,447 (5,795,677) 59,550 (428) 193,188 (5,416,025) 1,922,924 Description Deferred tax charged or credited to: Loss on valuation of AFS financial assets, net Loss (gain) on valuation of cash flow hedge derivatives, net Remeasurements of defined benefit plans Changes in retained earnings of equity-accounted investees Changes in share of the other comprehensive income of equity-accounted investees 2015 ￦ 19,484 (2,612) (12,988) 1,004 (1,014) 2014 ￦ 72,227 19,982 128,118 11,192 - ￦ 3,874 ￦ 231,519 (5) The temporary differences not recognized as deferred tax liabilities related to subsidiaries, associates and joint ventures are ￦ 7,629,969 million and ￦ 7,000,120 million as of December 31, 2015 and 2014, respectively. The changes in deferred tax assets (liabilities) for the year ended December 31, 2014 are as follows: (1) Expenses recognized in relation to defined contribution plans for the years ended December 31, 2015 and 2014 are ￦ (3,401,353) ￦ (91,748) ￦ (3,493,101) 33. RETIREMENT BENEFIT PLAN: Description Provisions AFS financial assets Subsidiaries, associates and joint ventures Reserve for research and manpower development Derivatives PP&E Accrued income Gain (loss) on foreign currency translation Others Accumulated deficit and tax credit carryforward Beginning of the year ￦ 1,737,352 (247,363) (1,172,789) (290,481) (52,121) (3,962,231) (7,509) 992 178,374 (3,815,776) 984,823 In millions of Korean Won End of the year ￦ 1,844,534 (307,575) (1,329,594) (233,309) 22,095 (4,750,382) (3,020) (2,547) 125,746 (4,634,052) 1,232,699 Changes ￦ 107,182 (60,212) (156,805) 57,172 74,216 (788,151) 4,489 (3,539) (52,628) (818,276) 247,876 ￦ (2,830,953) ￦ (570,400) ￦ (3,401,353) as follows: Description Paid in cash Recognized liability 2015 ￦ 6,716 643 ￦ 7,359 In millions of Korean Won 2014 ￦ 6,426 508 ￦ 6,934 (2) The significant actuarial assumptions used by the Group as of December 31, 2015 and 2014 are as follows: Description Discount rate Rate of expected future salary increase December 31, 2015 December 31, 2014 3.30% 4.34% 3.62% 5.01% Employee turnover and mortality assumptions used for actuarial valuation are based on the economic conditions and statistical data of each country where entities within the Group are located. 156 157 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (3) The amounts recognized in the consolidated statements of financial position related to defined benefit plans as of Changes in net defined benefit assets and liabilities for the year ended December 31, 2014 are as follows: December 31, 2015 and 2014 consist of the following: Description Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities Net defined benefit assets In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 4,464,399 (3,859,966) ￦ 604,433 604,433 - ￦ 4,065,742 (3,471,803) ￦ 593,939 594,058 (119) (4) Changes in net defined benefit assets and liabilities for the year ended December 31, 2015 are as follows: Description Beginning of the year Current service cost Interest expenses (income) Past service cost Remeasurements: Return on plan assets Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Actuarial gains and losses arising from experience adjustments and others Contributions Benefits paid Transfers in (out) Effect of foreign exchange differences and others End of the year Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities In millions of Korean Won ￦ 4,065,742 ￦ (3,471,803) 528,837 141,410 (10,878) 4,725,111 - (6,022) (104,927) (9,430) (120,379) - (167,146) 1,502 25,311 - (120,076) - (3,591,879) 38,721 - - - 38,721 (405,286) 111,192 (642) (12,072) ￦ 593,939 528,837 21,334 (10,878) 1,133,232 38,721 (6,022) (104,927) (9,430) (81,658) (405,286) (55,954) 860 13,239 ￦ 4,464,399 ￦ (3,859,966) ￦ 604,433 Description Beginning of the year Current service cost Interest expenses (income) Remeasurements: Return on plan assets Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Actuarial gains and losses arising from experience adjustments and others Contributions Benefits paid Transfers in (out) Effect of foreign exchange differences and others End of the year Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities ￦ 3,131,966 ￦ (2,749,943) ￦ 382,023 In millions of Korean Won 452,968 136,845 3,721,779 - 25,672 389,867 62,158 477,697 - (153,751) 514 19,503 - (119,797) (2,869,740) 28,274 - - - 28,274 (724,424) 101,627 106 (7,646) 452,968 17,048 852,039 28,274 25,672 389,867 62,158 505,971 (724,424) (52,124) 620 11,857 ￦ 4,065,742 ￦ (3,471,803) ￦ 593,939 158 159 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (5) The sensitivity analysis below have been determined based on reasonably possible changes of the significant as- 34. CASH GENERATED FROM OPERATIONS: sumptions as of December 31, 2015 and 2014, while holding all other assumptions constant. Cash generated from operations for the years ended December 31, 2015 and 2014 is as follows: In millions of Korean Won Effect on the net defined benefit liabilities December 31, 2015 December 31, 2014 Description Discount rate Rate of expected future salary increase Increase by 1% Decrease by 1% Increase by 1% Decrease by 1% ￦ (462,501) 516,496 ￦ 547,097 (445,322) ￦ (431,595) 501,421 ￦ 524,793 (423,593) Description Profit for the year Adjustments: Post-employment benefits Depreciation Amortization of intangible assets Provision for warranties Income tax expense Loss on foreign currency translation, net Loss on disposals of PP&E, net Interest income, net (6) The fair value of the plan assets as of December 31, 2015 and 2014 consists of the following: In millions of Korean Won Gain on share of earnings of equity-accounted investees, net Gain on disposals of investments in associates, net Cost of sales from financial services, net Description Insurance instruments Debt instruments Others December 31, 2015 December 31, 2014 Others ￦ 3,616,437 ￦ 3,230,405 98,586 144,943 102,734 138,664 ￦ 3,859,966 ￦ 3,471,803 Changes in operating assets and liabilities: Increase in trade notes and accounts receivable Increase in other receivables Decrease (increase) in other financial assets Increase in inventories Increase in other assets Increase in trade notes and accounts payable Decrease in other payables Increase in other liabilities Decrease in other financial liabilities Changes in net defined benefit liabilities Payment of severance benefits Decrease in provisions Changes in financial services receivables Increase in operating lease assets Others 2015 ￦ 6,509,165 539,936 1,972,727 821,307 998,395 1,950,208 109,061 14,993 (231,666) (1,887,343) (43,332) 4,841,387 410,136 9,495,809 (801,982) (12,056) 217,030 (1,999,181) (295,817) 240,497 (243,701) 1,806,477 (12,502) (394,928) (55,954) (1,354,312) (4,292,338) (6,314,151) 15,500 (13,497,418) In millions of Korean Won 2014 ￦ 7,649,468 470,016 1,843,802 706,095 866,416 2,301,806 242,779 22,455 (352,176) (2,402,979) (13,367) 4,338,252 346,557 8,369,656 (614,041) (213,459) (1,680,932) (804,120) (12,947) 824,354 (167,667) 227,641 (23,610) (723,804) (52,124) (1,345,291) (3,639,876) (4,267,094) 71,821 (12,421,149) 160 161 Cash generated from operations ￦ 2,507,556 ￦ 3,597,975 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 35. RISK MANAGEMENT: (1) Capital risk management The Group manages its capital to maintain an optimal capital structure for maximizing profit of its shareholder and reducing the cost of capital. Debt to equity ratio calculated as total liabilities divided by total equity is used as an index to manage the Group’s capital. The overall capital risk management policy is consistent with that of the prior year. Debt to equity ratios as of December 31, 2015 and 2014 are as follows: Description Total liabilities Total equity Debt-to-equity ratio (2) Financial risk management In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 98,486,545 66,881,401 147.3% ￦ 84,604,552 62,620,565 135.1% The Group’s sensitivity to a 5% change in exchange rate of the functional currency against each foreign currency on income be- fore income tax as of December 31, 2015 would be as follows: In millions of Korean Won Foreign Exchange Rate Sensitivity Foreign Currency Increase by 5% Decrease by 5% USD EUR JPY ￦ (51,895) 301 (34,872) ￦ 51,895 (301) 34,872 The sensitivity analysis includes the Group’s monetary assets, liabilities and derivative assets, liabilities but excludes items of in- come statements such as changes of sales and cost of sales due to exchange rate fluctuation. b) Interest rate risk management The Group has borrowings with fixed or variable interest rates. Also, the Group is exposed to interest rate risk arising from fi- nancial instruments with variable interest rates. To manage the interest rate risk, the Group maintains an appropriate balance The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and price risk), cred- between borrowings with fixed and variable interest rates for short-term borrowings and has a policy to borrow funds with fixed it risk and liquidity risk related to its financial instruments. The purpose of risk management of the Group is to identify potential interest rates to avoid the future cash flow fluctuation risk for long-term debt if possible. The Group manages its interest rate risks related to financial performance and reduce, eliminate and evade those risks to an acceptable level of risks to the Group. risk through regular assessments of the change in market conditions and the adjustments in nature of its interest rates. Overall, the Group’s financial risk management policy is consistent with the prior period policy. The Group’s sensitivity to a 1% change in interest rates on income before income tax as of December 31, 2015 would be as fol- lows: 1) Market risk The Group is mainly exposed to financial risks arising from changes in foreign exchange rates and interest rates. Accordingly, the Group uses financial derivative contracts to hedge and to manage its interest rate risk and foreign currency risk. a) Foreign exchange risk management The Group is exposed to various foreign exchange risks by making transactions in foreign currencies. The Group is mainly ex- posed to foreign exchange risk in USD, EUR and JPY. The Group manages foreign exchange risk by matching the inflow and the outflow of foreign currencies according to each cur- rency and maturity, and by adjusting the foreign currency settlement date based on its exchange rate forecast. The Group uses Accounts Cash and cash equivalents Financial assets at FVTPL Short-term and long-term financial instruments Borrowings and debentures Financial liabilities at FVTPL Increase by 1% ￦ 13,421 (5,748) 8,211 (115,450) 3,565 In millions of Korean Won Interest Rate Sensitivity Decrease by 1% ￦ (13,421) 5,958 (8,211) 115,450 (3,565) foreign exchange derivatives; such as currency forward, currency swap, and currency option; as hedging instruments. However, The Company’s subsidiaries, Hyundai Card Co., Ltd. and Hyundai Capital Services, Inc., that are operating financial business, are speculative foreign exchange trade on derivative financial instruments is prohibited. managing interest rate risk by utilizing value at risk (VaR). VaR is defined as a threshold value which is a statistical estimate of the maximum potential loss based on normal distribution. As of December 31, 2015 and 2014, the amounts of interest rate risk measured at VaR are ￦ 131,521 million and ￦ 119,847 million, respectively. 162 163 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 c) Equity price risk The Group is exposed to market price fluctuation risk arising from equity instruments. As of December 31, 2015, the amounts of held for trading equity instruments and AFS equity instruments measured at fair value are ￦ 90,363 million and ￦ 2,419,104 mil- lion, respectively. 2) Credit risk Description Non interest-bearing liabilities Interest-bearing liabilities Financial guarantee Not later than one year ￦ 15,465,397 21,472,053 1,175,313 Later than one year and not later than five years ￦ 1,351 45,085,595 64,561 In millions of Korean Won Remaining contract period Later than five years ￦ 703 1,610,530 26,029 Total ￦ 15,467,451 68,168,178 1,265,903 The Group is exposed to credit risk when a counterparty defaults on its contractual obligation resulting in a financial loss for the Group. The Group operates a policy to transact with counterparties who only meet a certain level of credit rating which was eval- The maturity analysis is based on the non-discounted cash flows and the earliest maturity date at which payments, i.e. both prin- uated based on the counterparty’s financial conditions, default history, and other factors. The credit risk in the liquid funds and cipal and interest, should be made. derivative financial instruments is limited as the Group transacts only with financial institutions with high credit-ratings assigned by international credit-rating agencies. Except for the guarantee of indebtedness discussed in Note 37, the book value of finan- cial assets in the consolidated financial statements represents the maximum amounts of exposure to credit risk. 3) Liquidity risk (3) Derivative instrument The Group enters into derivative instrument contracts such as forwards, options and swaps to hedge its exposure to changes in The Group manages liquidity risk based on maturity profile of its funding. The Group analyses and reviews actual cash outflow foreign exchange rate. and its budget to match the maturity of its financial liabilities to that of its financial assets. Due to the inherent nature of the industry, the Group requires continuous R&D investment and is sensitive to economic fluctu- mulated other comprehensive loss, on its effective cash flow hedging instruments. ations. The Group minimizes its credit risk in cash equivalents by investing in risk-free assets. In addition, the Group has agree- ments in place with financial institutions with respect to trade financing and overdraft to mitigate any significant unexpected The longest period in which the forecasted transactions are expected to occur is within 74 months as of December 31, 2015. market deterioration. The Group, also, continues to strengthen its credit rates to secure a stable financing capability. For the years ended December 31, 2015 and 2014, the Group recognizes a net profit of ￦ 226,254 million and ￦ 178,547 million in profit or loss (before tax), respectively, which resulted from the ineffective portion of its cash flow hedging instruments and The Group’s maturity analysis of its non-derivative liabilities according to their remaining contract period before expiration as of changes in the valuation of its other non-hedging derivative instruments. As of December 31, 2015 and 2014, the Group deferred a net loss of ￦ 31,003 million and ￦ 30,363 million, respectively, in accu- December 31, 2015 is as follows: 164 165 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 36. RELATED-PARTY TRANSACTIONS: The transactions and balances of receivables and payables within the Group are wholly eliminated in the preparation of the con- solidated financial statements of the Group. For the year ended December 31, 2014, significant transactions arising from operations between the Group and related parties or affiliates by the Act are as follows: In millions of Korean Won Sales/proceeds Purchases/expenses (1) For the year ended December 31, 2015, significant transactions arising from operations between the Group and re- lated parties or affiliates by the Monopoly Regulation and Fair Trade Act of the Republic of Korea (“the Act”) are as follows: Description Entity with significant influence over the Company In millions of Korean Won Sales/proceeds Purchases/expenses Description Entity with significant influence over the Company Joint ventures and associates Other related parties Affiliates by the Act Hyundai MOBIS Co., Ltd. ￦ 873,125 ￦ 8,078 ￦ 4,727,243 Sales Others Purchases Mobis Alabama, LLC Mobis Automotive Czech s.r.o. Mobis India, Ltd. Mobis Parts America, LLC Mobis Parts Europe N.V. Mobis Brasil Fabricacao De Auto Pecas Ltda Mobis Module CIS, LLC Others Kia Motors Corporation Kia Motors Manufacturing Georgia, Inc. Kia Motors Russia LLC Kia Motors Slovakia s.r.o. BHMC HMGC Hyundai WIA Corporation Hyundai HYSCO Co., Ltd. Others 25,006 36 39,745 32,070 7,711 3,111 318 60,623 981,481 676,338 792,016 119,380 1,173,068 187,526 262,162 8,372 543,687 2,543 1,013,786 5,002 449 2,153 6,654 4,988 - 300 46,699 609,397 1,310,017 1,327,874 917,674 648,333 272,042 254,439 177,229 701,184 150,072 1,366 2,684,112 - 753,421 989 1,868 1,037,650 6,855 - 20,281 64,294 5 1,038 770 38,125 1,519 70,048 2,772,084 1,913,271 - - 5,065,433 1,748,507 Others ￦ 51,413 2,409 7,717 1,436 1,844 11 - 19 22,356 339,034 6,318 1 231 - 3,010 541 - Joint ventures and associates Other related parties Affiliates by the Act Hyundai MOBIS Co., Ltd. ￦ 855,186 ￦ 9,962 ￦ 4,834,975 Sales Others Purchases Mobis Alabama, LLC Mobis Automotive Czech s.r.o. Mobis India, Ltd. Mobis Parts America, LLC Mobis Parts Europe N.V. Mobis Brasil Fabricacao De Auto Pecas Ltda Mobis Module CIS, LLC Others Kia Motors Corporation Kia Motors Manufacturing Georgia, Inc. Kia Motors Russia LLC Kia Motors Slovakia s.r.o. BHMC HMGC Hyundai WIA Corporation Hyundai HYSCO Co., Ltd. Others 21,484 48 18,040 25,720 4,628 2,561 - 20,272 941,875 637,885 885,546 120,347 956,691 368,616 200,301 12,528 456,964 3,073 780,543 16,792 438 17,402 5,561 1,889 - 448 731 476,662 1,321,444 1,177,753 746,382 529,788 244,800 307,535 216,528 445,031 154,410 1,609 2,419,402 156 19,896 44,452 146 520 1,804 35,133 6,258 69,118 - 576,617 404 2,389 856,907 13,912 2,870,138 408,969 4,756,881 Others ￦ 39,486 23,419 578 650 1,616 - - 28 17,424 224,568 943 4,714 655 - 6,193 14,985 15 1,803,768 454,203 1,380,518 166 167 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (2) As of December 31, 2015, significant balances related to the transactions between the Group and related parties or As of December 31, 2014, significant balances related to the transactions between the Group and related parties or affiliates by affiliates by the Act are as follows: the Act are as follows: Receivables Trade notes and accounts receivable Other receivables and others Trade notes and accounts payable In millions of Korean Won Payables Other payables and others Hyundai MOBIS Co., Ltd. ￦ 133,440 ￦ 18,876 ￦ 793,887 ￦ 196,617 Mobis Alabama, LLC Mobis Automotive Czech s.r.o. Mobis India, Ltd. Mobis Parts America, LLC Mobis Parts Europe N.V. Mobis Module CIS, LLC Others Kia Motors Corporation Kia Motors Manufacturing Georgia, Inc. Kia Motors Russia LLC Kia Motors Slovakia s.r.o. Kia Motors America, Inc. BHMC HMGC Hyundai WIA Corporation Others 23 40 218 3,492 997 - 17,514 265,226 56,799 84,761 10,139 - 300,828 - 99,080 306,524 223 5,762 318 14,109 164,618 2,021 50 388 325,440 98,090 144,096 126,719 53,276 36,536 17,310 70,088 33,332 15,253 205,636 111 2,313 102,629 18,659 136 11,884 22,850 291 - 68,321 85 - - 143,774 324,016 - - - 65 - - - 4,999 119,272 1,045 - 1,116 - 4,505 693 89,589 588,537 - 315,440 710,805 793,969 372,458 Description Entity with significant influence over the Company Joint ventures and associates Other related parties Affiliates by the Act Description Entity with significant influence over the Company Joint ventures and associates Other related parties Affiliates by the Act Receivables Trade notes and accounts receivable Other receivables and others Trade notes and accounts payable In millions of Korean Won Payables Other payables and others Hyundai MOBIS Co., Ltd. ￦ 168,950 ￦ 29,282 ￦ 833,602 ￦ 173,338 Hyundai Life Insurance Co., Ltd. 1,950 115,470 Mobis Alabama, LLC Mobis Automotive Czech s.r.o. Mobis India, Ltd. Mobis Parts America, LLC Mobis Parts Europe N.V. Mobis Module CIS, LLC Others Kia Motors Corporation Kia Motors Manufacturing Georgia, Inc. Kia Motors Russia LLC Kia Motors Slovakia s.r.o. Kia Motors America, Inc. BHMC HMGC Hyundai WIA Corporation Hyundai HYSCO Co., Ltd. Others 48 41 402 1,920 349 - 6,993 242,152 41,110 67,015 6,827 - 196,521 30,573 71,864 5,799 212,461 1,218 153,052 1,762 283 11,457 220,276 513 31 325 246,721 67 102,683 93,474 95,819 45,899 32,315 17,969 68,526 32,124 13,442 239,148 23 3,057 105,747 27,554 304 13,978 2,109 31,943 6,468 6,101 1 44,177 91 1,056 - 163,315 8,617 397,362 14,610 674,701 175 - - - 139 - 19 2,726 90,703 516 328 9,490 20 16 1,718 47,409 4,587 487,761 149,694 188,167 168 169 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (3) Significant fund transactions and equity contribution transactions for the year ended December 31, 2015, between 37. COMMITMENTS AND CONTINGENCIES: the Group and related parties are as follows: In thousands of U.S. Dollars, In millions of Korean Won subsidiaries are as follows: (1) As of December 31, 2015 the debt guarantees provided by the Group, excluding the ones provided to the Company’s Description Lending Collection Borrowing Repayment Entity with significant influence over the Company Joint ventures and associates - - $ 60,000 - - - - - Equity contribution - 366,439 Loans Borrowings Description To associates To others Domestic - 11,627 ￦ 11,627 In millions of Korean Won Overseas (*) ￦ 64,561 1,201,736 ￦ 1,266,297 Significant fund transactions and equity contribution transactions for the year ended December 31, 2014, between the Group and (*) The guarantee amounts in foreign currency are translated into Korean Won using the Base Rate announced by Seoul Money Brokerage Services, Ltd. related parties are as follows: as of December 31, 2015. In thousands of U.S. Dollars, In millions of Korean Won Loans Borrowings Description Lending Collection Borrowing Repayment Equity contribution Joint ventures and associates - - - $ 362 ￦ 130,417 During 2015, the Group traded in other financial assets and others of ￦ 2,650,000 million with HMC Investment Securities Co., Ltd., an associate of the Group. The Group has other financial assets of ￦ 1,910,000 million in the consolidated statements of fi- nancial position as of December 31, 2015. (4) Compensation of registered and unregistered directors, who are considered to be the key management personnel for the years ended December 31, 2015 and 2014 are as follows: Description Short-term employee salaries Post-employment benefits Other long-term benefits 2015 ￦ 198,063 37,888 510 ￦ 236,461 In millions of Korean Won 2014 ￦ 178,844 33,179 623 ￦ 212,646 (2) As of December 31, 2015, the Group is involved in domestic and foreign lawsuits as a defendant. In addition, the Group is involved in lawsuits for product liabilities and others. The Group obtains insurance for potential losses which may result from product liabilities and other lawsuits. Meanwhile, as of December 31, 2015, the Group is cur- rently involved in lawsuits for ordinary wage, which involves disputes over whether certain elements of remunera- tion are included in the earnings used for the purposes of calculating overtime, allowances for unused annual paid leave and retirement benefits, and unable to estimate the outcome or the potential consolidated financial impact. (3) As of December 31, 2015, a substantial portion of the Group’s PP&E is pledged as collateral for various loans up to ￦ 962,290 million. In addition, the Group pledged certain bank deposits, checks, promissory notes and investment se- curities, including 213,466 shares of Kia Motors Corporation, as collateral to financial institutions and others. Certain receivables held by the Company’s foreign subsidiaries, such as financial services receivables are pledged as collat- eral for their borrowings. (4) Hyundai Capital Services, Inc., a subsidiary of the Company, has Revolving Credit Facility Agreements with the fol- lowing financial institutions. 1) Credit Facility Agreement Hyundai Capital Services, Inc. entered into a Credit Facility Agreement with GE Capital European Funding & CO (the “GE Capital”) on February 15, 2013 and the agreement had been renewed on January 9, 2015. The credit line of the agreement is Euro worth of USD 600 million as of December 31, 2015. The entity will be able to extend the agreement until January 5, 2018 annually. Other- wise, it will be automatically terminated. The agreement was expired at January 8, 2016. 2) Revolving Credit Facility Hyundai Capital Services, Inc. has a Revolving Credit Facility Agreement which credit line is USD 200 million, EUR 10 million and ￦ 1,775,000 million with Kookmin Bank and 21 other financial institutions, as of December 31, 2015. 170 171 HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (5) Hyundai Card Co., Ltd, a subsidiary of the Company, has a Revolving Credit Facility Agreement which credit line is ￦ 490,000 (3) Assets and liabilities by operating segments for the years ended December 31, 2015 and 2014 are as follows: million with Kookmin Bank and 8 other financial institutions, as of December 31, 2015. 38. SEGMENT INFORMATION: (1) The Group has a vehicle segment, a finance segment and other segments. The vehicle segment is engaged in the manufacturing and sale of motor vehicles. The finance segment operates vehicle financing, credit card processing and other financing activities. Other segments include the R&D, train manufacturing and other activities, which can- not be classified in the vehicle segment or in the finance segment. Total assets Total liabilities (2) Sales and operating income by operating segments for the years ended December 31, 2015 and 2014 are as follows: Borrowings and debentures 5,113,356 58,965,385 In millions of Korean Won As of December 31, 2015 Vehicle Finance Others Consolidation adjustments Total ￦ 93,570,094 ￦ 76,064,850 ￦ 8,081,961 ￦ (12,348,959) ￦ 165,367,946 33,640,160 66,658,218 5,367,418 3,076,764 (7,179,251) (2,223,165) 98,486,545 64,932,340 In millions of Korean Won As of December 31, 2014 Total assets Total liabilities Borrowings and debentures 4,393,547 49,644,731 30,424,220 56,783,188 4,162,456 2,142,616 (6,765,312) (1,922,962) 84,604,552 54,257,932 Vehicle Finance Others Consolidation adjustments Total ￦ 85,791,905 ￦ 65,894,361 ￦ 7,035,554 ￦ (11,496,703) ￦ 147,225,117 In millions of Korean Won For the year ended December 31, 2015 Vehicle Finance Others Consolidation adjustments Total ￦ 107,818,185 ￦ 12,685,655 ￦ 7,914,529 ￦ (36,459,633) ￦ 91,958,736 (35,138,507) (249,562) (1,071,564) 36,459,633 72,679,678 12,436,093 5,142,317 914,982 6,842,965 117,730 - 182,877 - 91,958,736 6,357,906 In millions of Korean Won (4) Sales by region where the Group’s entities are located in for the years ended December 31, 2015 and 2014 are as For the year ended December 31, 2014 follows: Vehicle Finance Others Consolidation adjustments Total ￦ 105,798,039 ￦ 10,997,532 ￦ 7,241,540 ￦ (34,780,792) ￦ 89,256,319 (33,489,970) (227,146) (1,063,676) 34,780,792 72,308,069 10,770,386 5,806,836 1,061,001 6,177,864 191,621 - 490,528 - 89,256,319 7,549,986 In millions of Korean Won For the year ended December 31, 2015 Korea North America Asia Europe Others Consolidation adjustments Total Total sales ￦ 55,909,081 ￦ 36,394,997 ￦ 7,434,827 ￦ 26,619,037 ￦ 2,060,427 ￦ (36,459,633) ￦ 91,958,736 Inter-company sales (15,241,648) (7,267,377) (348,372) (13,601,572) (664) 36,459,633 - Net sales 40,667,433 29,127,620 7,086,455 13,017,465 2,059,763 - 91,958,736 In millions of Korean Won For the year ended December 31, 2014 Korea North America Asia Europe Others Consolidation adjustments Total Total sales ￦ 54,344,055 ￦ 33,998,857 ￦ 6,732,058 ￦ 26,488,776 ￦ 2,473,365 ￦ (34,780,792) ￦ 89,256,319 Inter-company sales (14,443,717) (7,185,075) (562,985) (12,584,985) (4,030) 34,780,792 - Net sales 39,900,338 26,813,782 6,169,073 13,903,791 2,469,335 - 89,256,319 172 173 Total sales Inter-company sales Net sale Operating income Total sales Inter-company sales Net sale Operating income HYUNDAI MOTOR COMPANY Annual Report 2015 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (5) Non-current assets by region where the Group’s entities are located in as of December 31, 2015 and 2014 are as follows: Korea North America Asia Europe Others Consolidation adjustments Total (*) (*) Sum of PP&E, intangible assets and investment property. In millions of Korean Won December 31, 2015 December 31, 2014 ￦ 27,735,116 ￦ 21,109,314 2,358,588 1,153,577 1,864,713 294,438 33,406,432 (117,993) 2,174,461 1,129,741 1,952,153 399,453 26,765,122 (79,000) ￦ 33,288,439 ￦ 26,686,122 (2) Effects on profit or loss of current and future periods, due from customers related to changes in accounting esti- mates of total contract revenue and total contract costs of ongoing contracts of Hyundai Rotem, a subsidiary of the Company, as of December 31, 2015 are as follows: Description Changes in accounting estimates of total contract revenue Changes in accounting estimates of total contract costs Effects on profit or loss of current period Effects on profit or loss of future periods Changes in due from customers In millions of Korean Won December 31, 2015 ￦ 79,498 532,571 (406,706) (46,367) (108,863) Effects on profit or loss of current and future periods were calculated by total contract costs estimated based on the situation occurred since the commencement of the contract to December 31, 2015 and the estimates of contract revenue as of December 31, 2015. Total contract revenue and costs are subject to change in future periods. There are changes in accounting estimates of total contract revenue and total contract costs related to CPTM electric multiple unit project in Sao Paolo, Brazil, as the host of the consortium IESA filed for court receivership and withdrew from the consor- (6) There is no single external customer who represents 10% or more of the Group’s revenue for the years ended De- tium. In December, 2015, Hyundai Rotem, as the host of consortium, entered into a modified contract with the customers, and as cember 31, 2015 and 2014. a result, expected total losses has been recognized amounting at ￦ 157,575 million for the year ended December 31, 2015. 39. CONSTRUCTION CONTRACTS: 40. BUSINESS COMBINATIONS: (1) Cost, income and loss and claimed construction from construction in progress as of December 31, 2015 and 2014 are (1) HMNL, a subsidiary of the Company, acquired the business sector of Greenib Car B.V. on January 2, 2015. as follows: Description Accumulated accrual cost Accumulated income Accumulated construction in process Progress billing Due from customers Due to customers In millions of Korean Won date are as follows: 1) Considerations for acquisition and the fair value of the assets acquired and liabilities assumed at the acquisition December 31, 2015 December 31, 2014 In millions of Korean Won ￦ 9,774,231 961,631 10,735,862 (9,361,257) 1,837,280 (462,675) ￦ 7,427,961 1,071,348 8,499,309 (7,172,915) 1,617,221 (290,827) Description Considerations transferred Assets acquired and liabilities assumed: Current assets Non-current assets Current liabilities Non-current liabilities Fair value of identifiable net assets Goodwill Amounts ￦ 86,613 80,841 350 (4,283) (1,600) 75,308 ￦ 11,305 174 175 2) During 2015, arising from the acquisition, the Group recognized sales amount of ￦ 208,452 million and net gain of ￦ 1,602 million. The Group recognized receivables amount of ￦ 1,873 million at the time of acquisition and all amount is expected to be collected. HYUNDAI MOTOR COMPANY Annual Report 2015 HYUNDAI MOTOR COMPANY Annual Report 2015 MILESTONES OF HMC HYUNDAI MOTOR HAS CREATED A GLOBAL SUCCESS STORY AS A LEADING KOREAN AUTOMAKER 1990 + Launch of Elantra and Scoupe 1991 + Developed Alpha engine, the 1st engine created in Korea + Developed Sonata EV + Launch of Galloper 1992 + Unveiling of HCD-1, Korea’s 1st concept car + Cumulative production surpasses 5 million units 1993 + Launch of Sonata II 1994 + Launch of Accent (Verna) + Annual production surpasses 1 million units 1995 + Launch of Elantra + Completion of Jeonju commercial vehicle manufacturing plant + Hyundai Motor Europe Technical Center GmbH (HMETC) opens 1967 + Incorporation of Hyundai Motor Company 1968 + Completion of Ulsan assembly plant + Mass production of Cortina begins 1976 + Launch of Hyundai Pony, the first Korean passenger car + First export of Pony to Ecuador 1983 + Incorporation of the Canadian subsidiary HMC 1985 + Launch of Excel + Incorporation of the U.S. subsidiary HMA + Launch of 1st generation Sonata 1986 + Exports of Excel to the U.S. begin + Launch of Azera (Grandeur), Hyundai Motor’s large-size luxury car 1987 + Excel is the best selling imported compact car in the U.S. for 3 consecutive years 1988 + Launch of Sonata, Hyundai Motor’s midsize luxury sedan 1989 + Overseas exports of Excel surpass 1 million units 1996 + Inauguration of the Namyang Technology Research Center + Cumulative production surpasses 10 million units 1997 + Epsilon engine independently developed + Inauguration of the Turkey Plant / Asan Plant 1998 + Independently developed world-class, high performance V6 Delta engine + Launch of Azera (Grandeur) XG and EF Sonata + Inauguration of the India Plant + Acquisition of Kia Motors 1999 + Launch of Centennial (Equus) + Developed Korea’s 1st automotive fuel cell battery 176 177 HYUNDAI MOTOR COMPANY Annual Report 2015 2000 + Launch of Santa Fe and new Elantra + Developed Korea’s 1st passenger diesel engine and large commercial engine + Debut of the four mid-sized and large bus models 2001 + Production of Beta engine surpasses 1 million units + Unveiling of Korea’s 1st fuel cell electric vehicle, Santa Fe + Establishment of Hyundai European Design Center 2002 + Cumulative production at Asan Plant surpasses 1 million unit + Official sponsor of the 2002 FIFA World Cup Korea /Japan + Production of Sonata begins in China 2003 + Inauguration of the California Design & Technical Center + Production of Elantra surpasses 2 million units + Global Environmental Management proclamation + Inauguration of the Europe Technical Center + Inauguration of the Namyang Design Center + Annual exports surpass 1 million units 2004 + Launch of Hyundai Motor’s 1st compact SUV, ix35 (Tucson) 1 million units + Sonata places 1st in JD Power Initial Quality Study + Cumulative exports surpass 10 million units + Developed Theta engine and Lambda engine + Official sponsor of UEFA Euro 2004 + Production of Delta engine surpasses 1 million units 2007 + Launch of i30 for Europe + Cumulative sales in the U.S. surpass 5 million units + Unveiling of the 3rd generation fuel cell concept car i-Blue + Developed F, G, H diesel engines for commercial vehicle + Launch of the next-generation compact car i10 by HMI 2008 + Launch of Genesis, Genesis Coupe, and i30cw + Inauguration of the 2nd plant in India + Hyundai Beijing hits 1 million vehicle production milestone + Inauguration of the 2nd plant in Beijing + Sales of Elantra surpass 5 million unit + Launch of i20 for Europe + Developed next-generation clean diesel R engine + Launched Blue Drive brand for green models + Tau engine named Wards 10 Best Engines Winners + Developed front-wheel 6-speed automatic transmission 2010 + Cumulative sales of Sonata surpasses 5 million units + Official sponsor of the 2010 FIFA World Cup South Africa + Cumulative sales by HMI surpasses 3 million units + Inauguration of the Russia Plant + Launch of the eco-friendly electric car BlueOn + Unveiling of the independently-developed Nu·Tau GDi engines and RWD 8-speed automatic transmission + Tau engine named Wards 10 Best Engines Winners for a 3rd consecutive year + Annual sales in the U.S. surpass 500,000 units + Developed ix35 Fuel Cell (Tucson Fuel Cell) 2011 + Blue Link introduced at the 2011 CES in the U.S. + Unveiling of the new brand direction and slogan ‘New Thinking. New Possibilities.’ + Launch of the 5th generation Azera (Grandeur) and Veloster + Launch of Sonata Hybrid 2005 + Inauguration of the U.S. proving ground 2009 + Genesis named North American Car of the + Exports to Africa and the Middle East surpass Year + Inauguration of Alabama Plant + Developed clean Mu V6 engine + Debuted in Interbrand’s Best Global Brands + Inauguration of Environmental Technology Research Center + Main sponsor of the U.S. Super Bowl + Cumulative exports to Africa surpass 1 million units + No. 69 in Global Brand Value + Inauguration of the Czech Plant + Inauguration of Hyundai Motor India + Inauguration of Hyundai America Technical Engineering Pvt. Ltd. Center + Developed next generation high performance + Launch of Genesis Prada limited edition + Inauguration of the eco-friendly Vehicle Theta GDi + Sales of Santa Fe surpass 2 million units + Tau engine named Wards 10 Best Engines Winners for a 2nd consecutive year Recycling Center 2006 + Developed Gamma engine + No. 1 Non-Premium Nameplate in JD Power’s IQS + Launch of new Elantra + Exports to South America surpass 1 million units + Developed V6 diesel S engine + Inauguration of new Hyundai Motor Europe GmbH building + No. 61 in Global Brand Value + Launch of i40 wagon + Cumulative exports to Central and South America surpass 2 million units + Gamma engine named Wards 10 Best Engines Winners 178 179 2012 + Elantra awarded North American Car of the Year + Launch of New Santa Fe, i40 Saloon, and Veloster Turbo + No. 53 in Global Brand Value + Inauguration of the Brazil Plant + ix35 Fuel Cell ( Tucson Fuel Cell) supplied to Europe + Unveiling of the i-oniq electric concept car + Azera (Grandeur), Elantra, Santa Fe awarded the ALG Residual Value Award + Azera (Grandeur), Santa Fe, Veloster wins the GOOD DESIGN™ AWARD + Official sponsor of UEFA Euro 2012 2014 + Unveiling of HED-9 Intrado at the Geneva International Motor Show + Launch of the All-new Sonata + Inauguration of Hyundai Motorstudio Seoul + Official sponsor of the 2014 FIFA World Cup Brazil + Cumulative production by HAOS surpasses 1 million units + Participation of i20 in the WRC, placing first in the Germany Rally + Cumulative global sales of Elantra surpass 10 million units + Launch of Aslan + Launch of new Sonata Hybrid + Hyundai FCEV engine named to Wards 10 Best Engines 2015 + Unveiling of Sonata Plug-in Hybrid + Inauguration of Hyundai Motorstudio Moscow + Launch of All-new Tucson + Launch of mid-duty truck, All-new Mighty + Demonstration of zero emission fuel cell electric bus + Cumulative production by HMI surpasses 10 million units + Launch of All-new Elantra + Unveiling of High-Performance ‘N’ at Frankfurt Motor Show + Cumulative sales in the U.S. surpass 6 million units + Cumulative production in Russia surpasses 1 million units + Launch of global luxury brand ‘Genesis’ + Hyundai Sonata Plug-in Hybrid named to Wards 10 Best Engines + Launch of Genesis G90 2013 + World’s 1st mass production of ix35 Fuel Cell 2016 + Unveiling of Genesis G90 in North America (Tucson Fuel Cell) + Launch of Maxcruz + Launch of IONIQ, first dedicated eco-friendly model + Cumulative sales in the U.S. surpasses + Tucson and Elantra win 2016 8,000,000 units iF Design Awards + Launch of Hyundai Motorsport + Unveiling of all three versions (HEV, EV, + Unveiling of new i10 PHEV) of IONIQ at Geneva Motor Show + Hyundai selected as one of top 50 Global + Introduction of Project IONIQ for future Brands mobility innovation + Cumulative sales of Sonata in Korea surpass + Launch of Genesis G90 limousine 3 million unit + Announcement of next generation connected + Unveiling of electronically controlled AWD car strategy HTRAC + Cumulative production by HMI surpasses 5 million units + Launch of All-new Genesis + World Rally Championship (WRC) Team launched + Beijing Hyundai sales in China surpasses 1 million units / year PASSENGER CARS SUV MPV / BUS / TRUCK AZERA (GRANDEUR) ACCENT 5DR SONATA i40 ix20 i20 GRAND SANTA FE SANTA FE TUCSON i40 SEDAN i20 COUPE CRETA H-1 (GRAND STAREX) H350 UNIVERSE UNICITY XCIENT DUMP TRUCK XCIENT CARGO XCIENT TRACTOR XCIENT MIXER G90 G80 ELANTRA i20 ACTIVE NEW SUPER AERO CITY HEAVY DUTY TRUCK i30 ELITE i20 AEROTOWN MIGHTY ECO-FRIENDLY CARS i30 WAGON HB20 i30 3DR GRAND i10 4DR (XCENT) VELOSTER GRAND i10 VELOSTER TURBO ACCENT (VERNA) i10 EON 180 SONATA HYBRID SONATA PLUG-IN HYBRID IONIQ HYBRID IONIQ ELECTRIC ix35 FUEL CELL (TUCSON FUEL CELL) COUNTY H-100 181 PUBLISHER HYUNDAI MOTOR COMPANY www.hyundai.com worldwide.hyundai.com PUBLICATION Accounts Team PLANNING & DESIGN DEZIGN21 HYUNDAI MOTOR AIMS TO REDEFINE AUTOMOBILES WITH ITS PHILOSOPHY OF MODERN PREMIUM. When others just focused on how to advance automotive technology, Hyundai Motor searched for ways to make the automobiles improve our way of life. Our vision of Modern Premium is to provide a unique premium experience which delights and impresses customers. The future of the automobile holds many possibilities. Likewise, the meaning of automobiles will change with new possibilities. Making automobiles something much more than just a means of transport-that is our vision of Modern Premium. 182 HYUNDAI MOTOR COMPANY Annual Report 2015