HYUNDAI MOTOR COMPANY
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2017 AND 2016
ATTACHMENT: INDEPENDENT AUDITORS’ REPORT
HYUNDAI MOTOR COMPANY
Contents
INDEPENDENT AUDITORS’ REPORT ------------------------------------------------------------------------
1
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION -----------------------------------
4
CONSOLIDATED STATEMENTS OF INCOME ------------------------------------------------------
6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ---------------------------
7
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ------------------------------------ 8
CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------- 12
Deloitte Anjin LLC
9F., One IFC,
10, Gukjegeumyung-ro,
Youngdeungpo-gu, Seoul
07326, Korea
Tel: +82 (2) 6676 1000
Fax: +82 (2) 6674 2114
www.deloitteanjin.co.kr
INDEPENDENT AUDITORS’ REPORT
English Translation of Independent Auditors’ Report Originally Issued in Korean on February 28, 2018
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 subsidiaries, which comprise the consolidated statements of financial position as of December
31, 2017 and December 31, 2016, respectively, 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, whether due to fraud or error.
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 misstatement. 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.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their
related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not
provide services to clients. Please see www.deloitte.com/kr/about for a more detailed description of DTTL and its member firms.
©
2018.
For information, contact Deloitte Anjin LLC
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company and its subsidiaries as of December 31, 2017 and December 31, 2016, respectively, and its financial
performance and its cash flows for the years then ended in accordance with K-IFRS.
February 28, 2018
Notice to Readers
This report is effective as of February 28, 2018, 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 significantly affect the financial statements and may result in
modifications to the auditors’ report.
HYUNDAI MOTOR COMPANY (the “Company”)
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2017 AND 2016
The accompanying consolidated financial statements, including all footnote disclosures, were
prepared by, and are the responsibility of, the Company.
Lee, Won Hee
Chief Executive Officer
HYUNDAI MOTOR COMPANY
Main Office Address: (Road Name Address) 12, Heolleung-ro, Seocho-gu, Seoul
(Phone Number) 02-3464-1114
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2017 AND 2016
ASSETS
NOTES
December 31, 2017
December 31, 2016
(In millions of Korean Won)
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 (“PP&E”)
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
￦
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
8,821,529 ￦
7,745,829
12,886,769
3,838,043
3,007,869
10,279,904
91,263
25,536,188
29,068
1,739,452
73,975,914
145,277
2,512,409
123,933
1,227,602
29,827,142
199,498
4,809,336
17,252,338
1,123,902
25,631,830
20,727,950
642,323
104,223,540
7,890,089
7,361,735
12,723,993
4,437,552
3,181,030
10,523,812
46,924
24,865,594
29,068
1,389,803
72,449,600
99,484
2,560,550
138,105
1,301,059
29,405,716
211,671
4,586,172
18,070,121
1,116,774
26,918,009
21,317,260
661,407
106,386,328
Total assets
￦
178,199,454 ￦
178,835,928
(Continued)
- 4 -
- 4 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2017 AND 2016 (CONTINUED)
LIABILITIES AND EQUITY
NOTES
December 31, 2017 December 31, 2016
(In millions of Korean Won)
Current liabilities:
Trade notes and accounts payable
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
Accumulated other comprehensive loss
Retained earnings
Equity attributable to the owners of the
Company
Non-controlling interests
Total equity
￦
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
6,483,875 ￦
5,040,057
9,959,654
13,098,547
151,525
1,809,978
25,652
6,591,421
43,160,709
19,189
36,454,192
12,488,137
157,213
4,844,463
438,070
3,234,707
2,645,420
60,281,391
6,985,942
4,946,723
8,760,678
14,836,967
540,909
1,925,562
138,106
5,474,906
43,609,793
22,586
36,456,392
13,389,983
492,173
5,047,078
23,454
4,622,226
2,827,665
62,881,557
103,442,100
106,491,350
1,488,993
4,201,214
(1,640,096)
(2,278,955)
67,332,328
1,488,993
4,202,597
(1,640,096)
(1,223,244)
64,361,408
69,103,484
67,189,658
5,653,870
74,757,354
5,154,920
72,344,578
Total liabilities and equity
￦
178,199,454 ￦
178,835,928
(Concluded)
See accompanying notes to consolidated financial statements
- 5 -
- 5 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
NOTES
2017
2016
25,38 ￦
(In millions of Korean Won, except per share amounts)
93,649,024
96,376,079 ￦
30
Sales
Cost of sales
Gross profit
Selling and administrative expenses
26,30
Operating income
Gain on investments in joint ventures and
27
28
28
29
29,30
32
31
associates, net
Finance income
Finance expenses
Other income
Other expenses
Income before income tax
Income tax expense (benefit)
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
Earnings per share attributable to the owners
of the Company:
Basic earnings per share:
Common stock
1st preferred stock
Diluted earnings per share:
Common stock
1st preferred stock
78,798,172
17,577,907
13,003,240
4,574,667
225,053
972,943
1,120,386
1,153,744
1,367,471
4,438,550
(107,850)
￦
4,546,400 ￦
4,032,824
513,576
14,993 ￦
15,043 ￦
14,993 ￦
15,043 ￦
￦
￦
￦
￦
75,959,720
17,689,304
12,495,804
5,193,500
1,729,447
1,111,238
678,037
1,177,887
1,226,963
7,307,072
1,587,419
5,719,653
5,406,435
313,218
20,118
20,156
20,118
20,156
See accompanying notes to consolidated financial statements
- 6 -
- 6 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
Profit for the year
Other comprehensive income :
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:
Gain (loss) on available-for-sale (“AFS”)
financial assets, net
Gain 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 income (loss)
2016
2017
(In millions of Korean Won)
￦
4,546,400 ￦
5,719,653
29,698
(4,451)
25,247
(2,601)
12,433
9,832
191,861
(152,755)
26,868
37,066
(288,883)
(1,069,341)
(1,139,495)
(1,114,248)
(114,037)
475,636
245,910
255,742
Total comprehensive income
￦
3,432,152 ￦
5,975,395
Comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income
￦
2,994,783
437,369
3,432,152 ￦
5,614,509
360,886
5,975,395
See accompanying notes to consolidated financial statements
- 7 -
- 7 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
Capital
stock
Capital
surplus
Other
capital
items
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total equity
attributable to
the owners of
the Company
Non-
controlling
interests
Total
equity
(In millions of Korean Won)
￦ 1,488,993 ￦ 3,520,395 ￦ (1,588,697) ￦ (1,431,821) ￦ 60,035,088 ￦ 62,023,958 ￦ 4,857,443 ￦ 66,881,401
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(684)
15,273
1,438
621,267
-
-
-
-
-
-
-
-
-
-
-
-
-
(261,552)
44,908
-
210,153
-
682,202
(51,399)
-
5,406,435
5,406,435
313,218
5,719,653
(150,181)
34,725
-
-
(150,181)
(2,574)
(152,755)
34,725
2,341
37,066
(108,205)
12,390
(95,815)
(5,789)
(101,604)
-
(12,893)
(12,893)
10,292
(2,601)
432,238
-
432,238
43,398
475,636
208,577
5,405,932
5,614,509
360,886
5,975,395
-
-
-
-
-
-
-
-
-
(1,079,544)
(1,079,544)
(5,002)
(1,084,546)
-
-
-
-
-
-
(68)
(684)
26,721
26,037
15,273
(111,868)
(96,595)
1,438
26,785
28,223
621,267
(261,552)
255,061
(68)
-
-
-
(45)
621,267
(261,552)
255,061
(113)
(1,079,612)
(448,809)
(63,409)
(512,218)
Balance at
January 1, 2016
Comprehensive
income:
Profit for the year
Loss on AFS financial
assets, net
Gain on valuation of
cash flow hedge
derivatives, net
Changes in valuation
of equity-accounted
investees, net
Remeasurements of
defined benefit plans
Gain on foreign
operations
translation, net
Total comprehensive
income
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
Disposals of
treasury stock
Others
Total transactions with
owners, recorded
directly in equity
Balance at
December 31, 2016
￦ 1,488,993 ￦ 4,202,597 ￦ (1,640,096) ￦ (1,223,244) ￦ 64,361,408 ￦ 67,189,658 ￦ 5,154,920 ￦ 72,344,578
(Continued)
- 8 -
- 8 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (CONTINUED)
Capital
stock
Capital
surplus
Other
capital
items
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total equity
attributable to
the owners of
the Company
Non-
controlling
interests
Total
equity
(In millions of Korean Won)
￦ 1,488,993 ￦ 4,202,597 ￦ (1,640,096) ￦ (1,223,244) ￦ 64,361,408 ￦ 67,189,658 ￦ 5,154,920 ￦ 72,344,578
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,383)
-
-
-
(1,383)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,032,824
4,032,824
513,576
4,546,400
190,717
3,221
-
-
190,717
1,144
191,861
3,221
23,647
26,868
(281,652)
(4,435)
(286,087)
(7,247)
(293,334)
-
22,105
22,105
7,593
29,698
(967,997)
-
(967,997)
(101,344)
(1,069,341)
(1,055,711)
4,050,494
2,994,783
437,369
3,432,152
-
-
-
-
-
-
(1,079,504)
(1,079,504)
(59,166)
(1,138,670)
-
-
-
(70)
(1,383)
76,832
-
43,976
-
(70)
(17)
(44)
75,449
43,976
(17)
(114)
(1,079,574)
(1,080,957)
61,581
(1,019,376)
Balance at
January 1, 2017
Comprehensive
income:
Profit for the year
Gain on AFS financial
assets, net
Gain 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
Others
Total transactions with
owners, recorded
directly in equity
Balance at
December 31, 2017
￦ 1,488,993 ￦ 4,201,214 ￦ (1,640,096) ￦ (2,278,955) ￦ 67,332,328 ￦ 69,103,484 ￦ 5,653,870 ￦ 74,757,354
(Concluded)
See accompanying notes to consolidated financial statements
- 9 -
- 9 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
NOTES
2016
2017
(In millions of Korean Won)
Cash flows from operating activities:
Cash generated from operations:
Profit for the year
Adjustments
Changes in operating assets and liabilities
34
￦
Interest received
Interest paid
Dividend received
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from purchases of short-term
financial instruments, net
Proceeds from disposal (purchase) 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
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, net
Acquisitions of investments in joint ventures and
associates
Other cash receipts from investing activities, net
Net cash used in investing activities
(Continued)
4,546,400 ￦
12,781,081
(11,384,252)
5,943,229
517,453
(1,746,629)
852,820
(1,644,452)
3,922,421
5,719,653
11,165,345
(13,565,128)
3,319,870
486,709
(1,670,859)
932,038
(2,070,794)
996,964
(253,493)
(419,325)
64,513
(1,580,624)
85,667
210,881
26
118,138
2,231
-
(177,382)
(218,411)
(20,627)
(3,055,023)
(1,463,103)
(1,784)
(80,144)
44,098
(4,744,413)
595,927
147,797
14
133,286
10,613
12,477
(244,563)
(168,083)
(11,146)
(2,971,161)
(1,406,352)
(2,370)
(431,517)
23,277
(6,311,750)
- 10 -
- 10 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (CONTINUED)
Cash flows from financing activities:
Proceeds from (repayment of) 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 receipts (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
NOTES
2016
2017
(In millions of Korean Won)
￦
1,345,789 ￦
28,134,152
75,449
-
-
(26,264,109)
-
(1,138,661)
28,571
2,181,191
(427,759)
931,440
(1,369,186)
27,509,144
25,536
(96,595)
34,206
(19,015,198)
(261,552)
(1,084,546)
(50,391)
5,691,418
181,994
558,626
Cash and cash equivalents, beginning of the year
7,890,089
7,331,463
Cash and cash equivalents, end of the year
￦
8,821,529 ￦
7,890,089
(Concluded)
See accompanying notes to consolidated financial statements
- 11 -
- 11 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
1. GENERAL:
Hyundai Motor Company (the “Company” or “Parent Company”) was incorporated in December 1967, under the
laws of the Republic 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, 2017, 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, 2017 are as follows:
Name of subsidiaries
Hyundai Capital Services, Inc.
Hyundai Card Co., Ltd. (*1)
Hyundai Rotem Company (Hyundai
Rotem) (*1)
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)
Hyundai Motor Manufacturing
Alabama, LLC (HMMA)
Hyundai Translead, Inc. (HT)
Stamped Metal American Research
Technology, Inc. (SMARTI)
Stamped Metal American Research
Technology LLC
Hyundai America Technical Center,
Inc. (HATCI)
Genesis Motor America LLC
Hyundai Rotem USA Corporation
Hyundai Rio Vista, Inc.
Hyundai Auto Canada Corp. (HACC)
Hyundai Auto Canada Captive
Insurance Inc. (HACCI)
Hyundai Capital Canada Inc. (HCCA)
Hyundai Capital Lease Inc. (HCLI)
HK Lease Funding LP
HCCA Funding Inc.
Hyundai Motor India Limited (HMI)
Hyundai Motor India Engineering
Nature of
business
Financing
˝
Location
Korea
˝
Ownership
percentage
59.68%
36.96%
Manufacturing
˝
43.36%
Indirect ownership
˝
˝
R&D
Manufacturing
Engineering
Services
Football club
Sales
Financing
Manufacturing
˝
Holding company
Manufacturing
R&D
Sales
Manufacturing
Real estate
development
Sales
Insurance
Financing
˝
˝
˝
Manufacturing
˝
˝
˝
˝
˝
˝
˝
USA
˝
˝
˝
˝
˝
˝
˝
˝
100.00%
51.00%
60.00%
56.00%
53.66%
80.00%
100.00%
100.00%
80.00%
100.00%
100.00%
Hyundai Rotem 51.00%
Hyundai Rotem 80.00%
HMA 80.00%
HMA 100.00%
72.45%
HMA 72.45%
100.00%
SMARTI 100.00%
100.00%
100.00%
100.00%
HMA 100.00%
Hyundai Rotem 100.00%
˝
Canada
100.00%
100.00%
HT 100.00%
HMA 100.00%
˝
˝
˝
˝
˝
India
100.00%
70.00%
100.00%
100.00%
100.00%
100.00%
˝
Hyundai Capital Services 20.00%
HCCA 100.00%
HCLI 99.99%,
HCCA Funding Inc. 0.01%
HCLI 100.00%
Private Limited (HMIE)
R&D
˝
100.00%
HMI 100.00%
- 12 -
- 12 -
Name of subsidiaries
Hyundai Capital India Private Limited
(HCI)
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.
Hyundai Millennium (Beijing) Real Estate
Development Co., Ltd.
Rotem equipments (Beijing) Co., Ltd.
KEFICO Automotive Systems
(Beijing) Co., Ltd.
KEFICO Automotive Systems
(Chongqing) Co., Ltd.
KEFICO VIETNAM COMPANY
LIMITED
HYUNDAI THANH CONG VIETNAM
AUTO MANUFACTURING
CORPORATION (HTMV) (*1)
Hyundai Thanh cong Commercial Vehicle
Joint Stock Company (HTCV) (*1)
Hyundai Motor Company Australia
Pty Limited (HMCA)
Hyundai Capital Australia Pty Limited
HR Mechanical Services Limited
Hyundai Motor Manufacturing Czech,
s.r.o. (HMMC)
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
Hyundai Capital Bank Europe GmbH
Hyundai Motor Commonwealth of
Independent States B.V
(HMCIS B.V)
Hyundai Motor Netherlands B.V.
(HMNL)
Hyundai Motor Manufacturing Rus
LLC (HMMR)
Hyundai Motor Commonwealth of
Independent States (HMCIS)
Hyundai Capital Services Limited
Liability Company
Hyundai Truck And Bus Rus LLC
(HTBR)
Hyundai Assan Otomotiv Sanayi Ve
Nature of
business
Location
Ownership
percentage
Indirect ownership
Financing
Sales
R&D
Sales
˝
Real estate
development
Sales
Manufacturing
˝
˝
˝
˝
Hyundai Capital Services 100.00%
India
Japan
100.00%
100.00%
˝
100.00%
China
100.00%
˝
˝
˝
˝
˝
100.00% BJMSS 100.00%
99.00%
CMEs 99.00%
100.00% Hyundai Rotem 100.00%
100.00% Hyundai KEFICO 100.00%
90.00%
Hyundai KEFICO 90.00%
Vietnam
100.00% Hyundai KEFICO 100.00%
˝
˝
50.00%
50.00%
Sales
Financing
Services
Australia
˝
New Zealand
100.00%
100.00% Hyundai Capital Services 100.00%
100.00% Hyundai Rotem 100.00%
Manufacturing
Sales
Marketing and
sales
Czech
˝
100.00%
100.00%
Germany
100.00%
Sales
R&D
Marketing
Financing
˝
Holding
company
˝
˝
˝
˝
˝
100.00%
100.00%
100.00% HME 100.00%
100.00% Hyundai Capital Services 100.00%
85.00%
Hyundai Capital Services 65.00%
Netherlands
100.00% HMMR 1.40%
Sales
˝
100.00%
Manufacturing
Russia
70.00%
Sales
Financing
Sales
˝
˝
˝
100.00% HMCIS B.V 100.00%
100.00% Hyundai Capital Europe 100.00%
100.00%
Ticaret A.S. (HAOSVT)
Manufacturing
Turkey
70.00%
Hyundai EURotem Demiryolu Araclari
Sanayi ve Ticaret A.S
Hyundai Rotem Company – Hyundai
EURotem Demiryolu Araclari
SAN. VE TIC. A.S ORTAK GIRISIMI
Hyundai Rotem Company – Hyundai
EUrotem Mahmutbey Projesi ORTAK
GIRISIMI
Hyundai Motor UK Limited (HMUK)
Hyundai Motor Company Italy S.r.l
(HMCI)
Hyundai Motor Espana. S.L.U. (HMES)
Hyundai Motor France SAS (HMF)
Sales
˝
˝
˝
˝
˝
˝
˝
˝
˝
UK
Italy
Spain
France
- 13 -
50.50%
Hyundai Rotem 50.50%
100.00%
Hyundai Rotem 65.00%,
Hyundai EURotem A.S. 35.00%
Hyundai Rotem 85.00%,
Hyundai EURotem A.S. 15.00%
100.00%
100.00%
100.00%
100.00%
100.00%
- 13 -
Name of subsidiaries
Hyundai Motor Poland Sp. Zo. O (HMP)
Hyundai Motor DE Mexico S DE RL
DE CV (HMM)
Hyundai de Mexico, SA DE C.V.,
Nature of
business
Sales
Location
Poland
Ownership
percentage
100.00%
Indirect ownership
˝
Mexico
100.00% HT 0.01%
(HYMEX)
Manufacturing
HYUNDAI KEFICO MEXICO S DE RL
˝
˝
Financing
Manufacturing
Holding
company
˝
˝
˝
99.99%
HT 99.99%
100.00% Hyundai KEFICO 100.00%
Brazil
100.00%
˝
˝
˝
Cayman
Islands
100.00% Hyundai Capital Services 100.00%
100.00%
Hyundai Rotem 100.00%
99.99%
HMB 99.99%
59.60%
Investment
Korea
100.00%
Specialty Company (*1)
Financing
DE CV
Hyundai Motor Brasil Montadora de
Automoveis LTDA (HMB)
Hyundai Capital Brasil Servicos De
Assistencia Financeira Ltda
Hyundai Rotem Brasil Industria E
Comercio De Trens Ltda.
HMB Holding Participacoes
Financeiras Ltda.
China Millennium Corporations (CMEs)
KyoboAXA Private Tomorrow Securities
Investment Trust No.12
Shinhan BNPP Private Corporate
Security Investment Trust No.34
Shinhan BNPP Private Corporate
Security Investment Trust No.36 (*2)
Miraeasset Triumph Private Equity
Security Investment Trust No.15
Autopia Fifty-Second Asset Securitization
Autopia Fifty-Fourth ~ Sixty-Fourth
Asset Securitization Specialty
Company (*1)
Privia the Fourth ~ Fifth Securitization
Specialty Co., Ltd. (*1)
Super Series First ~ Fifth Securitization
Specialty Co., Ltd. (*1)
Bluewalnut 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 HK Funding Four, LLC
Hyundai ABS Funding, LLC
HK Real Properties, LLC
Hyundai Auto Lease Offering, LLC
Hyundai HK Lease, LLC
Extended Term Amortizing Program, LLC
Hyundai Asset Backed Lease, 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,
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
Insurance
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
USA
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
100.00%
100.00%
100.00%
0.50%
Hyundai Capital Services 0.50%
0.50%
˝
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%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
˝
Hyundai Card 100.00%
HCA 100.00%
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
Inc.
˝
˝
100.00%
(*1) 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) Name of company has been changed due to change of fund management company for the year ended December 31,
2017.
- 14 -
- 14 -
(2) Summarized financial position and results of operations of the Company’s major consolidated subsidiaries
as of and for the year ended December 31, 2017 are as follows:
Name of subsidiaries
Assets
Liabilities
(In millions of Korean Won)
Sales
Profit (loss)
for the year
Hyundai Capital Services, Inc. (*)
Hyundai Card Co., Ltd. (*)
Hyundai Rotem Company (*)
Hyundai KEFICO Corporation (*)
HCA (*)
HMA
HMMA
HMMC
HMI (*)
HAOSVT
HME (*)
HMMR
HACC (*)
HMB
HMCA
￦ 27,608,147 ￦ 23,538,668 ￦ 3,243,544 ￦
12,546,121
2,665,613
1,036,019
35,001,114
5,455,661
1,480,249
1,519,402
1,497,283
1,243,789
1,585,184
793,189
632,036
706,262
528,378
3,020,772
2,725,658
1,786,039
9,123,763
16,082,850
7,049,070
6,631,281
6,346,672
3,175,821
8,818,566
2,938,098
2,720,971
2,353,343
1,950,766
15,416,497
4,083,912
1,621,607
39,109,088
6,991,716
3,991,788
3,656,291
3,291,954
1,616,576
1,607,499
1,316,285
1,122,543
1,106,169
690,611
299,903
191,565
(46,259)
44,586
1,208,108
(868,115)
115,048
394,078
349,862
40,053
5,803
145,460
(2,414)
78,539
(6,871)
(*) Based on the subsidiary’s consolidated financial statements.
Summarized financial position and results of operations of the Company’s major consolidated subsidiaries
as of and for the year ended December 31, 2016 are as follows:
Name of subsidiaries
Assets
Liabilities
(In millions of Korean Won)
Sales
Profit (loss)
for the year
Hyundai Capital Services, Inc. (*)
Hyundai Card Co., Ltd. (*)
Hyundai Rotem Company (*)
Hyundai KEFICO Corporation (*)
HCA (*)
HMA
HMMA
HMMC
HMI (*)
HAOSVT
HME (*)
HMMR
HACC (*)
HMB
HMCA
￦ 25,157,406 ￦ 21,371,809 ￦ 2,781,848 ￦
11,903,178
3,005,993
815,468
40,108,057
6,277,835
1,803,552
1,534,684
1,300,333
1,230,706
1,428,705
900,607
652,995
725,411
498,955
2,754,223
2,984,783
2,011,606
8,632,667
17,322,391
8,217,390
6,786,623
5,981,155
3,319,664
8,419,927
2,041,115
2,721,444
1,635,641
1,895,400
14,596,987
4,473,160
1,408,766
43,204,606
8,742,487
4,513,528
3,260,750
2,851,771
1,561,301
1,445,054
1,312,789
1,170,157
1,128,327
675,267
300,702
189,966
23,144
143,692
89,208
(341,860)
294,350
389,376
330,280
18,165
6,218
81,480
26,878
(8,076)
(46,232)
(*) Based on the subsidiary’s consolidated financial statements.
(3) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial
statements, are prepared for the same reporting periods as the Company’s.
- 15 -
- 15 -
(4) Summarized cash flows of non-wholly owned subsidiaries that have material non-controlling interests to the
Group for the year ended December 31, 2017 are as follows:
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
Net increase (decrease) in cash and cash
equivalents
Hyundai Capital
Services, Inc.
Hyundai Card
Co., Ltd.
(In millions of Korean Won)
(161,413) ￦
(63,608)
334,639
(83,265)
2,382,540
￦ (2,208,619) ￦
Hyundai Rotem
Company
219,226
31,239
(391,780)
-
-
(3,108)
￦
90,656 ￦
109,618 ￦
(144,423)
Summarized cash flows of non-wholly owned subsidiaries that had material non-controlling interests to the
Group for the year ended December 31, 2016 are as follows:
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
Net increase (decrease) in cash and cash
equivalents
Hyundai Capital
Services, Inc.
Hyundai Card
Co., Ltd.
(In millions of Korean Won)
(666,946) ￦
(72,361)
778,359
(517,926) ￦
(342,741)
516,661
￦
Hyundai Rotem
Company
611,077
55,617
(343,474)
(3)
-
3,710
￦
(344,009) ￦
39,052 ￦
326,930
(5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of
December 31, 2017 are as follows:
Description
Ownership percentage of non-controlling
interests
Non-controlling interests
Profit (loss) attributable to non-controlling
interests
Dividends paid to non-controlling interests
Hyundai Capital
Services, Inc.
Hyundai Card
Co., Ltd.
(In millions of Korean Won)
Hyundai Rotem
Company
￦
40.32%
1,641,343 ￦
63.04%
1,809,592 ￦
119,873
33,438
120,770
23,571
56.64%
870,219
(36,761)
2,110
Details of non-wholly owned subsidiaries of the Company that had material non-controlling interests as of
December 31, 2016 are as follows:
Description
Ownership percentage of non-controlling
interests
Non-controlling interests
Profit attributable to non-controlling
interests
Dividends paid to non-controlling interests
Hyundai Capital
Services, Inc.
Hyundai Card
Co., Ltd.
(In millions of Korean Won)
Hyundai Rotem
Company
￦
40.32%
1,530,795 ￦
63.04%
1,698,277 ￦
117,348
-
119,762
-
56.64%
909,309
21,782
4,955
- 16 -
- 16 -
(6) Financial support provided to consolidated structured entities
As of December 31, 2017, Hyundai Card Co., Ltd. and Hyundai Capital Services, Inc., subsidiaries of the
Company, have agreements that 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 Fifty-Second, Fifty-Seventh, Fifty-Ninth and Sixtyth Asset Securitization Specialty Company,
Super Series First, Third, Fourth and Fifth Securitization 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 of the Group as of December 31, 2017 is as
follows:
Description
Purpose
Asset
securitization SPC
Fund raising
through asset-
securitization
Investment fund
Investment in
Nature of business
(In millions of Korean Won)
Method of
funding
Total assets
Fund
collection
Corporate
bond and others ￦
1,318,767
beneficiary certificate
and others,
Development trust,
Unspecified
monetary trust,
Principal
unsecured trust,
Operation
of trust
investment
Fund raising
through project
financing
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
3,619,909
Project financing
and others
8,285,718
Structured Finance
Nature of interests in an unconsolidated structured entity of the Group as of December 31, 2016 is as
follows:
Description
Purpose
Asset
securitization SPC
Fund raising
through asset-
securitization
Investment fund
Investment in
Nature of business
(In millions of Korean Won)
Method of
funding
Total assets
Fund
collection
Corporate
bond and others ￦
827,967
beneficiary certificate
and others,
Development trust,
Unspecified
monetary trust,
Principal
unsecured trust,
Operation
of trust
investment
Fund raising
through project
financing
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
8,564,510
Project financing
and others
6,656,185
Structured Finance
- 17 -
- 17 -
2) Risks associated with interests in an unconsolidated structured entity of the Group as of December 31, 2017
are as follows:
Description
Book value in the
structured entity (*)
Asset
securitization SPC
Investment fund
Structured Finance
￦
78,932
193,739
432,193
Financial support provided
to the structured entity
Method
Purpose
(In millions of Korean Won)
Maximum amount
of exposure to loss
of the structured
entity
Loan
obligation
Beneficiary
certificates,
Investment trust
Loan
obligation
Loan agreement
(Credit line)
￦
Invest
agreement
Loan agreement
(Credit line)
152,964
193,739
954,450
(*)
Interest in structured entities is recognized as AFS financial assets and others according to K-IFRS 1039.
Risks associated with interests in an unconsolidated structured entity of the Group as of December 31, 2016
are as follows:
Description
Book value in the
structured entity (*)
Asset
securitization SPC
Investment fund
Structured Finance
￦
94,307
194,705
314,065
Financial support
provided to the
structured entity
Method
Purpose
(In millions of Korean Won)
Mezzanine
debt and others
Beneficiary
certificates,
Investment trust
Loan
obligation
Credit facility,
Loan agreement
(Credit line)
Invest
agreement
Loan agreement
(Credit line)
Maximum amount
of exposure to loss
of the structured
entity
￦
121,965
194,705
475,100
(*)
Interest in structured entities is recognized as AFS financial assets and others according to K-IFRS 1039.
(8) Significant restrictions of the subsidiaries
1) As of December 31, 2017, Hyundai Card Co., Ltd., subsidiary of the Company, has significant restrictions
that require it to obtain consent from directors appointed by non- controlling shareholders in the event of
acquiring a company, entry into new business, guarantee, investment in stocks or contracts beyond a certain
amount.
2) As of December 31, 2017, 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.
- 18 -
- 18 -
(9) Changes in consolidated subsidiaries
Subsidiaries newly included in or excluded from consolidation for the year ended December 31, 2017 are as
follows:
Changes
Included
˝
˝
˝
˝
˝
˝
˝
Name of subsidiaries
HR Mechanical Services Limited
Super Series Fourth Securitization Specialty Co., Ltd.
Super Series Fifth Securitization Specialty Co., Ltd.
Autopia Sixty-Fourth Asset Securitization Specialty Company
Hyundai HK Funding Four, LLC
Hyundai Asset Backed Lease, LLC
HMB Holding Participacoes Financeiras Ltda.
Genesis Motor America LLC
HYUNDAI THANH CONG VIETNAM AUTO MANUFACTURING
˝
CORPORATION (HTMV)
˝
Excluded
˝
˝
˝
˝
˝
Hyundai Thanh cong Commercial Vehicle Joint Stock
Company (HTCV)
Autopia Forty-Sixth Asset Securitization Specialty Company
Autopia Forty-Ninth Asset Securitization Specialty Company
Autopia Fiftieth Asset Securitization Specialty Company
Autopia Fifty-First Asset Securitization Specialty Company
Hyundai Rotem First Co., Ltd.
Beijing Xinhuaxiaqiyuetong Motor Chain Co., Ltd.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(1) Basis of consolidated financial statements preparation
Description
Acquisition
˝
˝
˝
˝
˝
˝
˝
˝
˝
Liquidation
˝
˝
˝
˝
˝
The Group has prepared the consolidated financial 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, 2016, except for the adoption effect of the new accounting standards
and interpretations described below.
1) New and revised standards that have been applied from the year beginning on January 1, 2017 are as follows:
- K-IFRS 1007 (Amendment): ‘Statement of Cash Flows’
The amendment requires to disclose changes in liabilities arising from financial activities. Additional disclosure
required related to the first time application of these amendments in the current year are in note 34. Consistent
with the transition provisions of the amendments, the Group has not disclosed comparative information for the
prior period.
- K-IFRS 1012 (Amendment): ‘Income Taxes’
The amendment clarifies that in evaluating the deferred tax assets arising from deductible temporary difference
of debt instruments measured at fair value, the carrying amount of an asset does not limit the estimation of
probable future taxable profits.
- Annual Improvements to K-IFRS 2014-2016 Cycle
The Group has applied the amendments to K-IFRS 1112 ‘Share-based Payment included in the Annual
Improvements’ to K-IFRS 2014-2016 Cycle for the first time in the current year. The amendments state that an
entity need not provide summarized financial information for interests in subsidiaries, associates or joint ventures
that are classified (or included in a disposal group that is classified) as held for sale.
The above changes in accounting policies did not have any material impact on the Group’s consolidated financial
statements.
- 19 -
- 19 -
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:
- K-IFRS 1109 (Enactment): ‘Financial Instruments’
The enactment to K-IFRS 1109 contains the requirements for the classification and measurement of financial
assets and financial liabilities based on a business model whose objective is achieved both by collecting
contractual cash flows and selling financial assets and based on the contractual terms that give rise on specified
dates to cash flows, impairment methodology based on the expected credit losses, and broadened types of
instruments that qualify as hedging instruments and the types of risk components of non-financial items that are
eligible for hedge accounting and the change of the hedge effectiveness test. The amendments are effective for
annual periods beginning on or after January 1, 2018.
The Group has finalized analysis for assessing financial impact of adoption of K-IFRS 1109 based on the
information available at the end of current period. The expected financial impact of the new standard on the
consolidated financial statements are as follows:
A. Classification and measurement of financial assets
When the Group adopts new standard of K-IFRS 1109, the Group classifies financial assets as seen in the table
below based on the entity’s business model for managing the financial assets and the contractual cash flows
characteristics of the financial assets as measured at amortised cost, fair value through other comprehensive
income (“FVOCI”) or fair value through profit or loss (“FVTPL”). If the host contract is determined in a hybrid
contract, an entity may classify the entire hybrid contract as a financial asset rather than separating the embedded
derivative from the host contract.
Business model
Financial assets for contractual
cash inflows
Financial assets for contractual
cash inflows and for sale
Financial assets for sale and
others
Contractual cash flows characteristic
Principal and Interest
Measured at amortised cost (*1)
Otherwise
FVOCI (*1)
FVTPL
FVTPL (*2)
(*1) An entity may measure at FVTPL to eliminate or reduce accounting mismatch (irrevocable).
(*2) An entity may measure at FVOCI for investments in equity instruments that are not held for trading
(irrevocable).
The Group has loans and receivables of ￦75,485,673 million, AFS financial assets of ￦2,308,955 million and
financial assets at FVTPL of ￦12,964,437 million in the consolidated statements of financial position as of
December 31, 2017.
The objective of financial assets such as loans and receivables held is to collect contractual cash flows and they
have the sole purpose of collecting principal and interest of outstanding amounts on a specified date. Therefore,
loans and receivables are classified as Measured at amortised cost. The Group anticipates that this does not have
any significant impact on the Group’s consolidated financial statements.
K- IFRS 1109 permits an entity to make an irrevocable election to present in other comprehensive income for
changes in the fair value of an investment in an equity instrument that is not held for trading. Gains and losses
presented in other comprehensive income cannot be subsequently transferred to profit or loss (i.e. there is no
recycling).
The Group holds AFS financial assets as long-term investments and plans to measure at FVOCI in accordance
with K-IFRS 1109. The Group anticipates that opening retained earnings as of January 1, 2018 increases
￦293,309 million due to retrospective adjustment of impairment in AFS financial asset in accordance with K-
IFRS 1109.
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The Group has plans to change it’s measurement of financial assets from FVTPL in K-IFRS 1039 to FVTPL in
K-IFRS 1109. Therefore, the Group anticipates that this does not have any significant impact on the Group’s
consolidated financial statements.
B. Classification and measurement of financial liabilities.
For financial liabilities measured at FVTPL using the fair value option, K-IFRS 1109 requires the effects of
changes in fair value attributable to an entity’s credit risk to be recognised in other comprehensive income. The
amounts presented in other comprehensive income are not subsequently transferred to profit or loss unless this
treatment of the credit risk component creates or enlarges a measurement mismatch.
As of December 31, 2017, the Group has financial liabilities measured at amortised cost of ￦87,380,799 million
and financial liabilities with changes in fair value recognised in profit or loss of ￦555 million.
In accordance with analysis for assessing financial impact of adoption of K-IFRS 1109, the Group anticipates
that it does not have any significant impact on the Group’s consolidated financial statements as the effects of
changes in financial liabilities credit risk is not material.
C. Impairment: Financial assets and contract assets
Under K-IFRS 1039, the impairment is recognised only when there is an objective evidence of impairment based
on incurred loss model, but under K-IFRS 1109, impairment is recognised based on expected credit loss model
for debt instrument, lease receivables, contract assets, loan contracts and financial guarantee contracts that are
measured at amortised cost or fair value through other comprehensive income.
Under K-IFRS 1109, financial assets are classified into three stages depending on the extent of increase in the
credit risk on financial instruments since initial recognition. The loss allowance is measured at an amount equal
to twelve months expected credit losses or the lifetime expected credit losses and therefore credit losses will be
recognised earlier than under the incurred loss model of K-IFRS 1039.
Case
Allowance
Stage 1
Non-significant increase in credit risk
since initial recognition
Stage 2
Significant increase in credit risk since
initial recognition
Stage 3
Credit-impaired financial assets
Twelve months expected credit losses : The portion of
lifetime expected credit losses that represent the
expected credit losses that result from default events
on a financial instrument that are possible within the
twelve months after the reporting date.
Lifetime expected credit losses: The expected credit
losses that result from all possible default events over
the expected life of a financial instrument.
Under K-IFRS 1109, an entity shall recognise the cumulative changes of lifetime expected credit losses since the
initial recognition as a loss allowance for any purchased or originated credit-impaired financial assets.
The Group has net of loans and receivables with an allowance of ￦1,227,745 million.
The Group has plan to recognise allowance of trade notes, accounts receivable, financial services receivables and
contract assets that have a significant financing component for lifetime expected credit losses from initial
recognition until derecognition (the simplified approach) for low credit risk.
The Group anticipates recognise ￦1,399,357 million credit losses in accordance with analysis for assessing
financial impact of adoption of K-IFRS 1109.
D. Hedge Accounting
The new standard, K-IFRS 1109, retains the mechanics of hedge accounting in K-IFRS 1039. Under the new
model, it is possible for an entity to reflect its risk management activities on the financial statements by focusing
on principle-based hedge effectiveness assessment instead of simply complying with a rule-based approach under
the K-IFRS 1039. The new model introduced greater flexibility to the types of transactions eligible for hedge
accounting, specifically broadening the types of instruments that qualify as hedging instruments and overhauling
the quantitative hedge effectiveness (80 – 125%) test.
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In accordance with the transition requirements, entities with initial application may continue to retain the existing
requirements under K-IFRS 1039 as their accounting policy.
As of December 31, 2017, the Group applies hedge accounting and has a deferred net profit of ￦6,943 million in
accumulated other comprehensive income in relation to cash flow hedging instruments.
The Group analyzes financial impact assuming to apply hedge accounting in accordance with K-IFRS 1109. The
Group anticipates that variability of profit or loss would be reduced as the Group qualifies risk management
criterias for hedge accounting in accordance with K-IFRS 1109
- K-IFRS 1115 (Enactment): ‘Revenue from Contracts with Customers’
The core principle under K-IFRS 1115 is that an entity should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard introduces a 5-step approach to revenue
recognition and measurement: 1) Identify the contract with a customer, 2) Identify the performance obligations in
the contract, 3) Determine the transaction price, 4) Allocate the transaction price to the performance obligations
in the contract, 5) Recognize revenue when (or as) the entity satisfies a performance obligation. This standard
will supersede K-IFRS 1011 - Construction Contracts, K-IFRS 1018 - Revenue, K-IFRS 2113 - Customer
Loyalty Programmes, K-IFRS 2115 - Agreements for the Construction of Real Estate, K-IFRS 2118 - Transfers
of Assets from Customers, and K-IFRS 2031 - Revenue-Barter Transactions Involving Advertising Services.
The Enactments are effective for annual periods beginning on or after January 1, 2018. Under this transition
method, the Group will apply this standard retrospectively with the cumulative effect of initially applying this
Standard recognised at January 1, 2018, only to contracts that are not completed contracts at the date of initial
application.
The Group has finalized analysis for assessing financial impact of adoption of K-IFRS 1115 based on the
information available at the end of current period. The expected financial impact of the new standard on the
consolidated financial statements are as follows:
A. Identify the performance obligations in the contract
The Group manufactures and distributes motor vehicles, trains and parts, and operates vehicle financing and
credit card processing. In 2017, vehicle operating segment sales were ￦74,490,230 million which is
approximately 77% of the Group’s total sales.
Upon application of K-IFRS 1115, the Group identifies the performance obligation in the contract with
customers which are (1) Vehicle sales, (2) Additional service, (3) Additional warranty and (4) Other services.
Timing of the revenue recognition may change depending on when the performance obligation is satisfied, either
at a point in time or over time.
B. Allocation of the transaction price
Upon application of K-IFRS 1115, the Group allocates the transaction price of multiple performance obligation
identified in one contract based on relative standalone selling price. The Group plans to use an expected cost
plus margin approach by estimating the expected costs for each transaction and adding an appropriate profit
margin.
C. Variable consideration
Upon application of K-IFRS 1115, the Group estimates the amount of consideration depending on which method
the entity expects to better predict the amount of consideration to which it will be entitled—the expected value or
the most likely amount. Variable consideration is included in the transaction price only to the extent that it is
probable or highly probable that a significant reversal in the cumulative amount of revenue recognized will not
occur in the future periods.
As of January 1, 2018, the effect of adjustments on retained earnings as a result of the retrospective application
of K-IFRS 1115 for contracts that are not completed is not expected to be significant on consolidated financial
statements.
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- K-IFRS 1040 (Amendment): ‘Investment Property’
The amendments clarify that a transfer to, or from, investment property necessitates an assessment of whether a
property meets, or has ceased to meet, the definition of investment property, supported by observable evidence
that a change in use has occurred. The amendments further clarify that situations other than the ones listed in K-
IFRS 1040 may evidence a change in use, and that a change in use is possible for properties under construction
(i.e. a change in use is not limited to completed properties). The amendments are effective for annual periods
beginning on or after January 1, 2018.
- K-IFRS 2122 (Enactment): ‘Foreign Currency Transactions and Advance Consideration’
The enactment addresses how to determine the ‘date of transaction’ for the purpose of determining the exchange
rate to use on initial recognition of an asset, expense or income, when consideration for that item has been paid or
received in advance in a foreign currency which resulted in the recognition of a non-monetary asset or non-
monetary liability. The enactment specifies that the date of transaction is the date on which the entity initially
recognizes the non-monetary asset on non-monetary liability arising from the payment or receipt of advance
consideration. If there are multiple payments or receipts in advance, the enactment requires an entity to
determine the date of transaction for each payment or receipt of advance consideration. The Enactment is
effective for annual periods beginning on or after January 1, 2018.
- Annual Improvements to K-IFRS 2014-2016 cycle
The Annual Improvements include amendments to K-IFRS 1101 - First-time Adoption and K-IFRS 1028 -
Investment in Associates and Joint Ventures. The amendments to K-IFRS 1028 clarify that the option for a
venture capital organization and other similar entities to measure investments in associates and joint ventures at
FVTPL is available separately for each associate or joint venture, and that election should be made at initial
recognition of the associate or joint venture. In respect of the option for an entity that is not an investment
entity(IE) to retain the fair value measurement applied by its associates and joint ventures that are IEs when
applying the equity method, the amendments make a similar clarification that this choice is available for each IE
associate or IE joint venture. Both the amendments to K-IFRS 1101 and 1028 are effective for annual periods
beginning on or after January 1, 2018.
- K-IFRS 1116 (Enactment) : ‘Leases’
This enactment provides a single lessee accounting model that operating leasee recognises a right-of-use asset
and a lease liability. This enactment will supersede K-IFRS 1017 - Leases, K-IFRS 2104 - Determining whether
an Arrangement contains a Lease, K-IFRS 2015 - Operating Leases— Incentives, K-IFRS 2027 - Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. The enactment are effective for annual periods
beginning on or after January 1, 2019 with early adoption permitted.
At inception of a contract, the entity assesses whether the contract is, or contains, a lease. The entity also
assesses it at the date of initial application. However, the entity is not required to reassess whether a contract
before at the date of initial application is, or contains if the entity adopts a practical expedient.
For a contract that is, or contains, a lease, an entity accounts for each lease component within the contract as a
lease separately from non-lease components of the contract.
At the commencement date, a lessee recognises a right-of-use asset and a lease liability. A lessee may elect not
to apply the requirements to short-term leases that, at the commencement date, has a maximum possible term of
12 months or less and leases for which the underlying asset is of low value (e.g below USD 5,000). As a
practical expedient, a lessee may elect, by class of underlying asset, not to separate non-lease components from
lease components, and instead account for each lease component and any associated non-lease components as a
single lease component.
In lessor accounting, this standard is not significantly changed from K-IFRS 1017 - Leases.
As at 31 December 2017, the Group has operating lease contracts and the Group is currently assessing its
potential impact on financial statement. However, the Group has practical difficulties to provide expected impact
unless preliminary assessment is complete.
The Group is currently evaluating the impacts of above mentioned enactments and amendments on the Group’s
consolidated financial statements.
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The consolidated financial statements as of and for the year ended on December 31, 2017, to be submitted at the
ordinary shareholders’ meeting were authorized for issuance at the board of directors’ meeting on February 20,
2018.
(2) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except as otherwise stated
in the accounting policies below. Historical cost is usually measured at the fair value of the consideration given
to acquire the assets.
(3) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including
structured entities) controlled by the Company (or its subsidiaries). Control is achieved when the Company:
has power over the investee;
has the ability to use its power to affect its returns.
is exposed, or has rights, to variable returns from its involvement with the investee; and
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are sufficient to give it power, including:
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
potential voting rights held by the Company, other vote holders or other parties;
any additional facts and circumstances that indicate that the Company has, or does not have, the current
rights arising from other contractual arrangements; and
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders’ meetings.
Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated
statements of comprehensive income from the effective date of acquisition and up to the effective date of
disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by the Company. All intragroup transactions, balances,
income and expenses are eliminated in full on consolidation. Non-controlling interests are presented in the
consolidated statement of financial position within equity, separately from the equity of the owners of the
Company. The carrying amount of non-controlling interests consists of the amount of those non-controlling
interests at the initial recognition and the changes in shares of the non-controlling interests in equity since the
date of the acquisition. Total comprehensive income is attributed to the owners of the Company and to the non-
controlling interests even if the non-controlling interest has a deficit balance.
Changes in the Group's ownership interests in subsidiaries, without a loss of control, are accounted for as equity
transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized
directly in equity and attributed to owners of the Group.
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When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest
and (ii) the previous carrying amount of the assets (including goodwill), liabilities of the subsidiary and any non-
controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related
cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the
amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if
the Group had directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to
retained earnings as specified by applicable K-IFRS). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent
accounting under K-IFRS 1039 Financial Instruments: Recognition and Measurement or, when applicable, the
cost on initial recognition of an investment in an associate or a jointly controlled entity.
(4) Business combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values
of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and
the equity interests 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 fair value.
Acquisition-related costs are recognized in profit or loss as incurred. When a business combination is achieved
in stages, the Group's previously held equity interest in the acquiree is remeasured at its fair value at the
acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized
in profit or loss. Prior to the acquisition date, the amount resulting from changes in the value of its equity interest
in the acquiree that have previously been recognized in other comprehensive income are reclassified to profit or
loss where such treatment would be appropriate if that interest were directly disposed of.
(5) Revenue recognition
1) Sale of goods
The Group recognizes revenue from sale of goods when all of the following conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the
amount of revenue can be measured reliably
it is probable that the economic benefits associated with the transaction will flow to the Group
The Group grants award credits, which the customers can redeem for awards such as free or discounted goods or
services. The fair value of the award credits are estimated by considering the fair value of the goods granted, the
expected rate and period of collection. The fair value of the consideration received or receivable from the
customer is allocated to award credits and sales transaction. The consideration allocated to the award credits is
deferred and recognized as revenue when the award credits are redeemed and the Group's obligations have been
fulfilled.
2) Rendering of services
The Group recognizes revenue from rendering of services based on the percentage of completion when the
amount of revenue can be measured reliably and it is probable that the economic benefits associated with the
transaction will flow to the Group.
3) Royalties
The Group recognizes revenue from royalties on an accrual basis in accordance with the substance of the relevant
agreement.
4) Dividend and interest income
Revenues arising from dividends are recognized when the right to receive payment is established. Interest
income is recognized using the effective interest method as time passes.
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5) Construction contracts
Where the outcome of a construction contract can be estimated reliably, the contract revenue and contract costs
associated with the construction contract are recognized as revenue and expenses, respectively, by reference to
the stage of completion of the contract activity at the end of reporting period.
The percentage of completion of a contract activity is reliably measured based on the proportion of contract costs
incurred for work performed to date relative to the estimated total contract costs, by surveys of work performed
or by completion of a physical proportion of the contract work. Variations in contract work, claim and incentive
payments are included to the extent that the amount can be measured reliably and its receipt is considered
probable. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are
recognized as expenses in the period in which they are incurred. When it is probable that total contract costs will
exceed total contract revenue, the expected loss is recognized as an expense immediately.
(6) Foreign currency translation
The individual financial statements of each entity in the Group are measured and presented in the currency of the
primary economic environment in which the entity operates (its functional currency).
In preparing the financial statements of the individual entities, transactions occurring in currencies other than
their functional currency (foreign currencies) are recorded using 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 the reporting period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-
monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Exchange differences resulting from settlement of assets or liabilities
and translation of monetary items denominated in foreign currencies are recognized in profit or loss in the period
in which they arise except for some exceptions.
For the purpose of presenting the consolidated financial statements, assets and liabilities in the Group’s foreign
operations are translated into Won, using the exchange rates at the end of reporting period. Income and expense
items are translated at the average exchange rate for the period, unless the exchange rate during the period has
significantly fluctuated, in which case the exchange rates at the dates of the transactions are used. The exchange
differences arising, if any, are recognized in equity as other comprehensive income. On the disposal of a foreign
operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified
from equity to profit or loss when the gain or loss on disposal is recognized. Any goodwill arising on the
acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation and
translated at the exchange rate at the end of reporting period.
Foreign exchange gains or losses are classified in finance income (expenses) or other income (expenses) by the
nature of the transaction or event.
(7) Financial assets
The Group classifies financial assets into the following specified categories: financial assets at fair value through
profit or loss (“FVTPL”), held-to-maturity (“HTM”) financial assets, loans and receivables and available-for-sale
(“AFS”) financial assets. The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
1) Financial assets at FVTPL
Financial instruments classified as financial assets at FVTPL include contingent consideration that may be paid
by an acquirer as part of business combination to which K-IFRS 1103 applies or financial assets classified as
held for trading or designated as FVTPL upon initial recognition. A financial asset is classified as FVTPL, if it
has been acquired principally for the purpose of selling or repurchasing in near term. All derivative assets,
except for derivatives that are designated and effective hedging instruments, are classified as held for trading
financial assets which are measured at FVTPL. Financial assets at FVTPL are measured at fair value, with any
gains or losses arising on remeasurement recognized in profit or loss.
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2) HTM financial assets
HTM financial assets are non-derivative financial instruments with fixed or determinable payments and fixed
maturity that the Group has the positive intent and ability to hold to maturity. HTM financial assets are presented
at amortized cost using the effective interest rate, less accumulated impairment loss, and interest income is
recognized using the effective interest rate method.
3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and measured at amortized cost. Interest income is recognized using the effective interest
rate method, except for short-term receivables for which the discount effect is not material.
4) AFS financial assets
AFS financial assets are those non-derivative financial assets that are designated as AFS or are not classified as
loans and receivables, HTM financial assets nor financial assets at FVTPL. AFS financial assets are measured at
fair value. However, investments in equity instruments that do not have a quoted market price in an active
market and whose fair value cannot be reliably measured are measured at cost.
A gain or loss on changes in fair value of AFS financial assets is recognized in other comprehensive income,
except for impairment loss, interest calculated using the effective interest method and foreign exchange gains and
losses on monetary assets. Accumulated other comprehensive income is reclassified to profit or loss from equity
at the time of impairment recognition or elimination of related financial assets. Dividends on an AFS equity
instrument are recognized in profit or loss when the Group’s right to receive payment is established.
(8)
Impairment of financial assets
1) Financial assets carried at amortized cost
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. If any such evidence exists, the Group determines the amount of
any impairment loss. The amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows, excluding future credit losses that have not been incurred,
discounted at the financial asset’s original effective interest rate computed at initial recognition. The carrying
amount of the asset is reduced either directly or through use of an allowance account, and the amount of the loss
is recognized in profit or loss.
Certain financial assets, such as trade receivables and financial services receivables that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. The objective evidence of
impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an
increase in the number of delayed payments in the portfolio past the average credit period, as well as observable
changes in national or local economic conditions that correlate with default on receivables.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized impairment
loss is reversed and recognized in profit or loss. The reversal shall not result in a carrying amount of the
financial asset that exceeds what the amortized cost would have been had the impairment not been recognized at
the date the impairment is reversed.
2) Financial assets carried at cost
The amount of the impairment loss on financial assets that are carried at cost because their fair value cannot be
reliably measured is measured as the difference between the carrying amount of the financial asset and the
present value of estimated future cash flows discounted at the current market rate of return for a similar financial
asset. Such impairment losses are not reversed.
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3) AFS financial assets
If there is objective evidence of impairment on AFS financial assets, the cumulative loss that has been recognized
in other comprehensive income, less any impairment loss previously recognized in profit or loss is reclassified
from equity to profit or loss. In the case of equity instruments, objective evidence of impairment is taken to exist
if there is a significant or prolonged decline in the fair value of each investment below its cost. Impairment
losses recognized in profit or loss for investments in equity instruments classified as AFS are not reversed
through profit or loss. Meanwhile, if, in a subsequent period, the fair value of a debt instrument classified as
AFS increases and the increase can be objectively related to an event occurring after the impairment loss was
recognized in profit or loss, the impairment loss is reversed through profit or loss.
(9) Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and, substantially, all the risks and rewards of ownership of the asset to
another entity. If the Group neither retains substantially all the risks and rewards of ownership nor transfers and
continues to control the transferred asset, the Group recognizes its retained interest in the asset and associated
liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a
collateralized borrowing for the proceeds received.
(10) Inventory
Inventory is measured at the lower of cost or net realizable value. Inventory cost, including the fixed and
variable manufacturing overhead cost, is calculated, using the moving average method, except for the cost for
inventory in transit, which is determined by the identified cost method.
(11) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies.
A joint venture is a joint arrangement, whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
The investment in an associate or a joint venture is initially recognized at cost and accounted for using the equity
method. Under the equity method, an investment in an associate or a joint venture is initially recognized in the
consolidated statement of financial position at cost and adjusted thereafter to recognize the Group's share of the
profit or loss and other comprehensive income of the associate or the joint venture. When the Group's share of
losses of an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which
includes any long-term interests that, in substance, form part of the Group's net investment in the associate or the
joint venture), the Group discontinues recognizing its share of further losses. Additional losses are recognized
only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the
associate or the joint venture.
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets,
liabilities and contingent liabilities of an associate or a joint venture recognized at the date of acquisition is
recognized as goodwill, which is included within the carrying amount of the investment. The entire carrying
amount of the investment, including 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, after reassessment, is recognized immediately in
profit or loss.
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Upon disposal of an associate or a joint venture that results in the Group losing significant influence over that
associate or joint venture, any retained investment is measured at fair value at that date and the fair value is
regarded as its fair value on initial recognition as a financial asset in accordance with K-IFRS 1039. The
difference between the previous carrying amount of the associate or joint venture attributable to the retained
interest and its fair value is included in the determination of the gain or loss on disposal of the associate or joint
venture. In addition, the Group accounts for all amounts previously recognized in other comprehensive income
in relation to that associate or joint venture on the same basis we would be required if that associate or joint
venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized
in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the
disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as
reclassification adjustment) when it loses significant influence over that associate or joint venture.
When the Group reduces its ownership interest in an associate or a joint venture, but the Group continues to use
the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously
been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or
loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. In addition, the
Group applies K-IFRS 1105 to a portion of investment in an associate or a joint venture that meets the criteria to
be classified as held for sale.
The Group continues to use the equity method when an investment in an associate becomes an investment in a
joint venture or an investment in a joint venture becomes an investment in an associate. There is no
remeasurement to fair value upon such changes in ownership interests.
Unrealized gains from transactions between the Group and its associates or joint ventures are eliminated up to the
shares in associate (joint venture) stocks. Unrealized losses are also eliminated, unless evidence of impairment in
assets transferred is produced. If the accounting policy of associates or joint ventures differs from the Group,
financial statements are adjusted accordingly before applying equity method of accounting. If the Group’s
ownership interest in an associate or a joint venture is reduced, but the significant influence is continued, the
Group reclassifies to profit or loss only a proportionate amount of the gain or loss previously recognized in other
comprehensive income.
(12) Property, plant and equipment
Property, plant and equipment is to be recognized if, and only if it is probable that future economic benefits
associated with the asset will flow to the Group, and the cost of the asset can be measured reliably. After the
initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and accumulated
impairment losses. The cost includes any cost directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management and the initial
estimate of the costs of dismantling and removing the item and restoring the site on which it is located. In
addition, in case the recognition criteria are met, the subsequent costs will be added to the carrying amount of the
asset or recognized as a separate asset, and the carrying amount of what was replaced is derecognized.
Depreciation is computed using the straight-line method based on the estimated useful lives of the assets. The
representative useful lives are as follows:
Buildings and structures
Machinery and equipment
Vehicles
Dies, molds and tools
Office equipment
Other
Representative useful lives (years)
12 – 50
6 – 15
6 – 15
4 – 6
3 – 15
2 – 30
The Group reviews the depreciation method, the estimated useful lives and residual values of property, plant and
equipment at the end of each annual reporting period. If expectations differ from previous estimates, the changes
are accounted for as a change in accounting estimate.
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(13) Investment property
Investment property is property held to earn rentals or for capital appreciation or both. An investment property is
measured initially at its cost and transaction costs are included in the initial measurement. After initial
recognition, the book value of investment property is presented at the cost less accumulated depreciation and
accumulated impairment losses.
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 Group, and the cost of the asset can be
measured reliably, or recognized as a separate asset if appropriate. The carrying amount of what was replaced is
derecognized.
Land is not depreciated, and other investment properties are depreciated using the straight-line method over the
period from 20 to 50 years. The Group reviews the depreciation method, the estimated useful lives and residual
values at the end of each annual reporting period. If expectations differ from previous estimates, the changes are
accounted for as a change in accounting estimate.
(14) Intangible assets
1) Goodwill
Goodwill arising from a business combination is recognized as an asset at the time of obtaining control (the
acquisition date). Goodwill is measured as the excess of the aggregate of the consideration transferred, the
amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the Group’s
previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed.
If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed exceeds the aggregate of the consideration transferred, the amount of any non-controlling interest in the
acquiree, and the acquisition-date fair value of the Group’s previously held equity interest in the acquiree, the
excess is recognized immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortized, but tested for impairment at least annually. For purposes of impairment tests,
goodwill is allocated to those cash-generating units (“CGU”) of the Group expected to have synergies from the
business combination. CGU that goodwill has been allocated is tested for impairment every year or when an
event occurs that indicates impairment. If the recoverable amount of a CGU is less than its carrying amount, the
impairment will first decrease the goodwill 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 in gain or loss from disposal.
2) Development costs
The expenditure on research is recognized as an expense when it is incurred. The expenditure on development is
recognized as an intangible asset, and amortization is computed using the straight-line method based on the
estimated useful lives of the assets since the asset is available for use or sale.
Research and development activities are conducted in phases of preceding research, development approval,
product development and mass production. The Group generally recognizes intangible assets as development
activities after the development approval phases which product specification, release schedule, and sales plan are
established. Expenditure incurred at the previous phase is recognised as an expense considered as research
activities when it is incurred.
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3) Intangible assets acquired separately
Intangible assets are measured initially at cost, and are subsequently measured at cost less accumulated
amortization and accumulated impairment losses.
Intangible assets are amortized by the straight-line method based on estimated useful lives from the date of
availability. The Group reviews the estimated useful life and amortization method at the end of each annual
reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in
accounting estimate. Intangible assets assessed as having indefinite useful life such as club membership are
subjected to annual impairment test without amortization.
The representative useful lives are as follows:
Development costs
Industrial property rights
Software
Other
Representative useful lives (years)
3, 7
5 – 10
3 – 7
5 – 40
(15) Impairment of tangible and intangible assets
The Group assesses at the end of each reporting period whether there is any indication that an asset may be
impaired. If any such indication exists, the Group estimates the recoverable amount of the asset to determine the
extent of the impairment loss. Recoverable amount is the higher of fair value, less costs to sell and value in use.
If the cash inflow of individual asset occurs separately from other assets or group of assets, the recoverable
amount is measured for that individual asset; otherwise, it is measured for each CGU to which the asset belongs.
Except for goodwill, all non-financial assets that have incurred impairment are tested for reversal of impairment
at the end of each reporting period.
Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized, but
tested for impairment at least annually.
(16) Non-current assets classified as held for sale
The Group classifies a non-current asset (or disposal group) as held for sale, if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal
group) must be available for immediate sale in its present condition subject only to terms that are usual and customary
for sales of such assets (or disposal groups) and its sale must be highly probable. The management must be
committed to a plan to sell the asset (or disposal group), and the sale should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
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.
(17) Lease
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
1) The Group as lessor
Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net
investment in the leases. Finance lease interest income is allocated to accounting periods so as to reflect an
effective interest rate on the Group’s net investment outstanding in respect of the leases. Rental income from
operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognized as expense on a straight-line basis over the lease term.
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2) The Group as lessee
Assets held under finance leases are initially recognized as assets and liabilities of the Group at their fair value at
the inception of the lease or, if lower, at the present value of the minimum lease payments. Minimum lease
payments are apportioned between the finance expenses and the reduction of the outstanding liability. The
finance expenses are allocated to each period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability. Contingent rents are recognized as expenses in the periods in
which they are incurred.
Operating lease payments are recognized as expense on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased
asset are consumed. Contingent rents for operating lease are recognized as expenses in the periods in which they
are incurred.
(18) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are
capitalized to the cost of those assets, until they are ready for their intended use or sale. A qualifying asset is an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Investment
income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized
in profit or loss in the period in which they are incurred.
(19) Retirement benefit plans
Contributions to defined contribution retirement benefit plans are recognized as an expense when employees have
rendered service entitling them to the contributions.
The retirement benefit obligation recognized in the consolidated statements of financial position represents the
present value of the defined benefit obligation, less the fair value of plan assets. Defined benefit obligations are
calculated by an actuary using the Projected Unit Credit Method.
The present value of the defined benefit obligations is measured by discounting estimated future cash outflows
by the interest rate of high-quality corporate bonds, with similar maturity as the expected post-employment
benefit payment date. In countries where there is no deep market in such bonds, the market yields at the end of
the reporting period on government bonds are used.
The remeasurements of the net defined benefit liabilities (assets) comprising actuarial gain or loss from changes
in actuarial assumptions or differences between actuarial assumptions and actual results, the effect of the changes
to the asset ceiling and return on plan assets, excluding amounts included in net interest on the net defined benefit
liabilities (assets), are recognized in other comprehensive income of the consolidated statements of
comprehensive income, which is immediately recognized as retained earnings. Those recognized in retained
earnings will not be reclassified in profit or loss. Past service costs are recognized in profit and loss when the
plan 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). Defined benefit costs are composed
of service cost (including current service cost, past service cost, as well as gains and losses on settlements), net
interest expense (income), and remeasurements.
The retirement benefit obligation recognized in the consolidated statements of financial position represents the actual
deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the
present value of any economic benefits available in the form of refunds from the plans or reductions in future
contributions to the plans.
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(20) Provisions
A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a
provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. A provision is
measured using the present value of the cash flows estimated to settle the present obligation. The increase in
provision due to passage of time is recognized as interest expense.
The Group generally provides a warranty to the ultimate consumer for each product sold and accrues warranty
expense at the time of sale based on actual claims history. Also, the Group accrues probable expenses, which
may occur due to product liability suit, voluntary recall campaign and other obligations at the end of the
reporting period. In addition, the Group recognizes provisions for the probable losses of unused loan
commitment, construction contracts, precontract sale or service contract due to legal or constructive obligations.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
(21) Taxation
Income tax expense is composed of current and deferred tax.
1) Current tax
The current tax is computed based on the taxable profit for the current year. The taxable profit differs from the
income before income tax as reported in the consolidated statements of income because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes 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 of the reporting period.
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets shall
be generally recognized for all deductible temporary differences to the extent that it is probable that taxable
profits will be available against which those deductible temporary differences can be utilized. Such deferred tax
assets and liabilities shall not be recognized if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates and interests in joint ventures, except when the Group is able to control the timing of
the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognized to the extent that taxable profit will be available against which the
temporary difference can be utilized and they are expected to be reversed in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax 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 enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities
reflects the tax consequences that would follow from the manner in which the Group expects to recover or settle
the carrying amount of its assets and liabilities at the end of the reporting period.
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Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income tax levied by the same taxation authority. Also,
they are offset when different taxable entities that intend either to settle current tax liabilities and assets on a net
basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled or recovered.
3) Current and deferred taxes for the year
Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in
other comprehensive income or directly in equity, or items arising from initial accounting treatments of a
business combination. The tax effect arising from a business combination is included in the accounting for the
business combination.
(22) Treasury stock
When the Group repurchases its equity instruments (treasury stock), the incremental costs and net of tax effect
are deducted from equity and recognized as other capital item deducted from the total equity in the consolidated
statements of financial position. In addition, profits or losses from purchase, sale or retirement of treasury stocks
are directly recognized in equity and not in current profit or loss.
(23) Financial liabilities and equity instruments
Debt instruments and equity instruments issued by the Group are recognized as financial liabilities or equity
depending on the contract and the definitions of financial liability and equity instrument.
1) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities. Equity instruments issued by the Group are recognized at issuance amount, net of direct
issuance costs.
2) Financial guarantee liabilities
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument.
Financial guarantee contract liabilities are initially measured at their fair values and, if not designated as at
FVTPL, are subsequently measured at the higher of:
the amount of the obligation under the contract, as determined in accordance with K-IFRS 1037 Provisions,
Contingent Liabilities and Contingent Assets; and
the amount initially recognized less, cumulative amortization recognized in accordance with the K-IFRS
1018 Revenue
3) Financial liabilities at FVTPL
Financial instruments classified as financial liabilities at FVTPL include contingent consideration that may be
paid by an acquirer as part of a business combination to which K-IFRS 1103 applies or financial liability
classified as held for trading or designated as FVTPL upon initial recognition. FVTPL is stated at fair value, and
the gains and losses arising on remeasurement and the interest expenses paid in financial liabilities are
recognized in profit and loss.
4) Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs. Other financial liabilities
are subsequently measured at amortized cost using the effective interest method, with interest expense
recognized on an effective yield basis.
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5) Derecognition of financial liabilities
The Group derecognizes financial liabilities only when the Group’s obligations are discharged, cancelled or they
expire.
(24) Derivative financial instruments
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognized in profit or loss immediately, unless the derivative is designated and effective as a hedging instrument,
in such case, the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a
recognized asset or liability or an unrecognized firm commitment (fair value hedges) and the risk of changes in
cash flow of a highly probable forecast transaction and the risk of changes in foreign currency exchange rates of
firm commitment (cash flow hedges).
1) Fair value hedges
The Group recognizes the changes in the fair value of derivatives that are designated and qualified as fair value
hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk. Hedge accounting is discontinued when the Group
revokes the hedging relationship, when the hedging instrument expires or is sold, terminated or exercised, or
when it is no longer qualified for hedge accounting. 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.
2) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow
hedges is 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 comprehensive income and
accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.
If the forecast transaction results in the recognition of a non-financial asset or liability, the related gain and loss
recognized in other comprehensive income and accumulated in equity are transferred from equity to the initial
cost of related non-financial asset or liability.
Cash flow hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging
instrument expires or is sold, terminated or exercised, or it no longer qualifies for the criteria of hedging. Any
gain or loss accumulated in equity at that time remains in equity, and is recognized as profit or loss when the
forecast transaction occurs. When the forecast transaction is no longer expected to occur, the gain or loss
accumulated in equity is recognized immediately in profit or loss.
(25) Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group
takes into account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis,
except for leasing transactions that are within the scope of K-IFRS 1017 Leases, and measurements that have
some similarities to 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 Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2 or 3, based
on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs
to the fair value measurement in its entirety, which are described in Note 19.
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(26) Accounting Treatment related to the Emission Rights Cap and Trade Scheme
The Group classifies the emission rights as intangible assets. Emission rights allowance the government
allocated free of charge are measured at nil, and emission rights allowance purchased are measured at cost, which
the Group paid to 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 liabilities are measured
at nil. However, for the emissions liabilities that exceed the allowances allocated free of charge, the shortfall is
measured at best estimate at the end of the reporting period.
(27) Significant accounting estimates and key sources of estimation uncertainties
In the application of the Group’s accounting policies, management is required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that cannot be identified from other sources. The
estimation and assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may be different from those estimations. The estimates and underlying assumptions are
continually evaluated. Revisions to accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future periods if the revision
affects both current and future periods.
The main accounting estimates and assumptions related to the significant risks that may make significant changes
to the carrying amounts of assets and liabilities after the reporting period are as follows:
1) Goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the CGU to which
goodwill has been allocated. The value in use calculation requires the management to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present
value.
2) Warranty provision
The Group recognizes provisions for the warranties of its products as described in Note 2.(20). The amounts are
recognized based on the best estimate of amounts necessary to settle the present and future warranty obligation.
3) Defined benefit plans
The Group operates defined retirement benefit plans. Defined benefit obligations are determined at the end of
each reporting period using an actuarial valuation method that requires management assumptions on discount
rates, rates of expected future salary increases and mortality rates. The characteristic of post-employment benefit
plan that serves for the long term period causes significant uncertainties when the post-employment benefit
obligation is estimated.
4) Taxation
The Group recognizes current tax and deferred tax based on the best estimates of income tax effect to be charged
in the future as the result of operating activities until the end of the reporting period. However, actual final
income tax to be charged in the future may differ from the relevant assets and liabilities recognized at the end of
the reporting period and the difference may affect income tax charged or credited, or deferred tax assets and
liabilities in the period in which the final income tax determined.
5) Fair value of financial instruments
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 and assumptions based on the condition of the principal market at the end of the reporting
period.
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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 determine the useful lives of such assets for
depreciation and amortization.
3. TRADE NOTES AND ACCOUNTS RECEIVABLE:
(1) Trade notes and accounts receivable as of December 31, 2017 and 2016 consist of the following:
December 31, 2017
December 31, 2016
Description
Current
Non-current
(In millions of Korean Won)
Current
Non-current
Trade notes and accounts receivable
Allowance for doubtful accounts
Present value discount accounts
￦ 3,903,210 ￦ 129,739 ￦ 4,487,352 ￦
(65,167)
-
-
(5,806)
(49,800)
-
￦ 3,838,043 ￦ 123,933 ￦ 4,437,552 ￦
146,262
-
(8,157)
138,105
(2) Aging analysis of trade notes and accounts receivable
As of December 31, 2017 and 2016, total trade notes and accounts receivable that are past due, but not impaired,
amount to ￦246,961 million and ￦335,516 million, respectively; of which ￦187,740 million and ￦298,775
million, respectively, are past due less than 90 days, but not impaired. As of December 31, 2017 and 2016, the
impaired trade notes and accounts receivable amount to ￦65,167 million and ￦49,800 million, respectively.
(3) Transferred trade notes and accounts receivable that are not derecognized
As of December 31, 2017 and 2016, 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 ￦1,338,160 million and ￦1,472,786 million, respectively. Cash and cash equivalents
received as consideration for the transfer are recognized as short-term borrowings due to the fact that the risks
and rewards were not transferred substantially.
(4) The changes in allowance for doubtful accounts for the years ended December 31, 2017 and 2016 are as
follows:
Description
2017
(In millions of Korean Won)
2016
Beginning of the year
Impairment loss (gain)
Write-off
Effect of foreign exchange differences
End of the year
￦
￦
49,800 ￦
19,211
(4,336)
492
65,167 ￦
59,530
(5,197)
(4,649)
116
49,800
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4. OTHER RECEIVABLES:
Other receivables as of December 31, 2017 and 2016 consist of the following:
Description
Current
Non-current
(In millions of Korean Won)
Current
Non-current
December 31, 2017
December 31, 2016
Accounts receivable – others
Due from customers for contract work
Lease and rental deposits
Deposits
Others
Allowance for doubtful accounts
-
￦ 1,952,871 ￦ 841,803 ￦ 1,939,269 ￦
1,024,899
34,953
2,368
3,906
925,524
-
335,870
35,770
3,895
-
-
￦ 3,007,869 ￦ 1,227,602 ￦ 3,181,030 ￦ 1,301,059
1,220,582
27,957
3,366
557
(10,701)
335,918
34,822
15,059
(11,128)
5. OTHER FINANCIAL ASSETS:
(1) Other financial assets as of December 31, 2017 and 2016 consist of the following:
Description
Current
Non-current
(In millions of Korean Won)
Current
Non-current
December 31, 2017
December 31, 2016
Financial assets at fair value
through profit or loss (“FVTPL”)
Derivative assets that are effective hedging
instruments
AFS financial assets
Loans
￦ 12,770,096 ￦ 194,341 ￦ 12,454,530 ￦
104,499
23,411
11,833
81,429
14,786
2,297,122
6,160
185,114
3,911
80,438
￦ 12,886,769 ￦ 2,512,409 ￦ 12,723,993 ￦
142,107
2,308,822
5,122
2,560,550
(2) AFS financial assets that are measured at fair value as of December 31, 2017 and 2016 consist of the following:
December 31,
2017
December 31,
2016
Description
Debt instruments
Equity instruments
Acquisition
cost
Book value
(In millions of Korean Won)
Book value
￦
310,234 ￦ 309,969 ￦
1,730,202
2,040,436 ￦ 2,308,955 ￦
1,998,986
￦
266,800
2,045,933
2,312,733
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(3) Equity instruments classified into AFS financial assets as of December 31, 2017 and 2016 consist of the
following:
Name of the company
Hyundai Steel Company (*1)
Hyundai Glovis Co., Ltd.
Korea Aerospace Industries, Ltd. (*2)
Hyundai Heavy Industries
Co., Ltd. (*3)
Hyundai Oilbank Co., Ltd.
Hyundai Robotics Co., Ltd. (*3)
Hyundai Green Food Co., Ltd.
Hyundai Electric & Energy Systems
Co., Ltd. (*3)
Hyundai Development Company
Hyundai M Partners Co., Ltd.
NICE Information Service Co., Ltd.
KT Corporation
NICE Holdings Co., Ltd.
Hyundai Asan Corporation
Hyundai Merchant Marine Company
Others
Ownership
percentage
(%)
6.87
4.88
-
2.88
4.35
2.13
2.36
2.10
0.60
9.29
2.25
0.09
1.30
1.88
0.03
December 31,
2017
December 31,
2016
Acquisition
cost
Book value
Book value
(In millions of Korean Won)
￦ 1,110,704 ￦ 821,266 ￦
210,688
73,331
249,008
224,487
42,443
53,734
9,018
15,005
164,102
147,930
132,189
34,500
798,843
282,880
316,979
318,645
143,957
-
35,539
2,779
9,025
9,888
3,312
8,655
3,491
22,500
9,161
146,468
-
20,228
11,470
9,466
7,059
8,653
2,117
669
89,428
￦ 1,730,202 ￦ 1,998,986 ￦ 2,045,933
22,997
17,348
12,153
11,870
7,263
7,202
2,117
444
144,110
(*1) The Group entered into a total return swap agreement to transfer 5,745,741 shares out of total 14,919,336 shares to a
third party and partial shares have been disposed of for the year ended December 31, 2016.
(*2) The Group entered into a total return swap agreement to transfer total shares to a third party for the year ended
December 31, 2016.
(*3) Hyundai Heavy Industries Co., Ltd. was spun off into Hyundai Heavy Industries Co., Ltd., Hyundai Robotics Co., Ltd.,
Hyundai Construction Equipment Co., Ltd., and Hyundai Electric & Energy Systems Co., Ltd. for the year ended
December 31, 2017.
6.
INVENTORIES:
Inventories as of December 31, 2017 and 2016 consist of the following:
Description
December 31, 2017
December 31, 2016
(In millions of Korean Won)
Finished goods
Merchandise
Semifinished goods
Work in progress
Raw materials
Supplies
Materials in transit
Others
Total (*)
￦
￦
6,065,752 ￦
50,575
638,802
387,816
1,314,902
285,264
583,055
953,738
10,279,904 ￦
6,692,155
52,133
401,279
350,295
1,300,218
267,073
613,134
847,525
10,523,812
(*) As of December 31, 2017 and 2016, the Group recognized a valuation allowance in amount of ￦88,945 million and
￦135,789 million, respectively.
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- 39 -
7. OTHER ASSETS:
Other assets as of December 31, 2017 and 2016 consist of the following:
Description
Current
Non-current
(In millions of Korean Won)
Current
Non-current
December 31, 2017
December 31, 2016
Accrued income
Advanced payments
Prepaid expenses
Prepaid value-added tax and others
￦ 357,228 ￦
535,677
472,732
373,815
2,714 ￦ 315,132 ￦
-
609,958
29,651
444,872
402,565
227,234
￦ 1,739,452 ￦ 642,323 ￦ 1,389,803 ￦
4,798
566
641,132
14,911
661,407
8. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE:
Non-current assets classified as held for sale as of December 31, 2017 and 2016 consist of the following:
Description
Vehicles
￦
December 31,
2017
December 31,
2016
(In millions of Korean Won)
29,068 ￦
29,068
The Group has committed to a plan to sell vehicles that were classified as held for sale as of December 31, 2017
and has initiated active programs to complete the plan. The assets will be disposed within 12 months.
9. PROPERTY, PLANT AND EQUIPMENT:
(1) Property, plant and equipment (“PP&E”) as of December 31, 2017 and 2016 consist of the following:
Description
Acquisition
cost
December 31, 2017
Accumulated
depreciation (*)
Acquisition
cost
Book value
(In millions of Korean Won)
- ￦ 11,794,842 ￦ 11,787,909 ￦
December 31, 2016
Accumulated
depreciation (*)
Book value
Land
Buildings
Structures
Machinery and equipment
Vehicles
Dies, molds and tools
Office equipment
Others
Construction in progress
￦ 11,794,842 ￦
- ￦ 11,787,909
5,777,272
662,326
6,273,286
186,969
2,201,525
437,751
43,653
2,035,025
￦ 49,596,458 ￦ (19,769,316) ￦ 29,827,142 ￦ 48,273,395 ￦ (18,867,679) ￦ 29,405,716
8,468,976
1,232,479
14,518,954
324,984
8,264,752
1,548,768
91,548
2,035,025
8,872,257
1,270,122
14,541,693
338,166
9,016,755
1,603,205
82,512
2,076,906
5,979,344
655,732
6,092,817
190,756
2,516,521
473,001
47,223
2,076,906
(2,892,913)
(614,390)
(8,448,876)
(147,410)
(6,500,234)
(1,130,204)
(35,289)
-
(2,691,704)
(570,153)
(8,245,668)
(138,015)
(6,063,227)
(1,111,017)
(47,895)
-
(*) Accumulated impairment is included.
- 40 -
- 40 -
(2) The changes in PP&E for the year ended December 31, 2017 are as follows:
Description
Land
Buildings
Structures
Machinery and
equipment
Vehicles
Dies, molds
and tools
Office equipment
Others
Construction in
Beginning
of the year
Acquisitions
Transfers
within PP&E
Depreciation
Others (*)
End of
the year
￦ 11,787,909 ￦
5,777,272
662,326
38,739 ￦
11,687
5,892
Disposals
(In millions of Korean Won)
62,485 ￦ (48,592) ￦
593,014
65,626
(12,750)
(3,296)
- ￦
(45,699) ￦ 11,794,842
5,979,344
(120,432)
655,732
(8,858)
(269,447)
(65,958)
6,273,286
186,969
21,421
33,586
1,041,344
76,996
(165,065)
(38,948)
(922,957)
(51,303)
(155,212)
(16,544)
6,092,817
190,756
2,201,525
437,751
43,653
12,372
53,343
5,390
1,120,233
168,248
12,880
(10,062)
(1,268)
(63)
(745,951)
(175,899)
(12,224)
(61,596)
(9,174)
(2,413)
2,516,521
473,001
47,223
progress
2,035,025
3,097,987
￦ 29,405,716 ￦ 3,280,417 ￦
(3,140,826)
2,076,906
-
- ￦ (280,924) ￦ (2,243,739) ￦ (334,328) ￦ 29,827,142
85,600
(880)
(*) Others include the effect of foreign exchange differences, transfers from or to other accounts and acquisitions due to
business combination.
The changes in PP&E for the year ended December 31, 2016 are as follows:
Beginning
of the year
Acquisitions
Transfers
within PP&E
Depreciation
Others (*)
End of
the year
￦ 11,774,629 ￦
5,495,276
612,748
2,234 ￦
11,992
7,705
Disposals
(In millions of Korean Won)
57,472 ￦ (26,517) ￦
526,342
102,629
(107,649)
(3,514)
- ￦
(278,475)
(58,886)
6,150,584
174,243
18,609
42,537
1,019,539
75,165
(28,246)
(53,441)
1,988,557
432,738
33,627
6,402
56,604
4,344
861,267
103,133
11,224
(3,094)
(2,178)
(229)
(914,321)
(45,633)
(690,211)
(157,398)
(8,248)
(19,909) ￦ 11,787,909
5,777,272
129,786
662,326
1,644
27,121
(5,902)
6,273,286
186,969
38,604
4,852
2,935
2,201,525
437,751
43,653
Description
Land
Buildings
Structures
Machinery and
equipment
Vehicles
Dies, molds
and tools
Office equipment
Others
Construction in
progress
2,036,525
2,700,889
￦ 28,698,927 ￦ 2,851,316 ￦
(2,756,771)
(14,883)
2,035,025
-
- ￦ (239,751) ￦ (2,153,172) ￦ 248,396 ￦ 29,405,716
69,265
(*) Others include the effect of foreign exchange differences, transfers from or to other accounts and acquisitions due to
business combination.
10. INVESTMENT PROPERTY:
(1) Investment property as of December 31, 2017 and 2016 consist of the following:
Description
Land
Buildings
Structures
Acquisition
cost
December 31, 2017
Accumulated
depreciation
Acquisition
cost
Book value
(In millions of Korean Won)
December 31, 2016
Accumulated
depreciation
Book value
￦
￦
58,669 ￦
303,162
18,630
380,461 ￦
- ￦ 58,669 ￦
(174,477)
(6,486)
128,685
12,144
(180,963) ￦ 199,498 ￦ 386,850 ￦
58,669 ￦
309,551
18,630
- ￦
(169,101)
(6,078)
58,669
140,450
12,552
(175,179) ￦ 211,671
- 41 -
- 41 -
(2) The changes in investment property for the year ended December 31, 2017 are as follows:
Description
Beginning
of the year
Transfers
Land
Buildings
Structures
￦ 58,669 ￦
140,450
12,552
￦ 211,671 ￦
Depreciation
Disposals
(In millions of Korean Won)
- ￦
- ￦
-
-
- ￦ (10,813) ￦
(10,405)
(408)
- ￦
392
-
392 ￦
Effect of foreign
exchange
differences
End of
the year
(1,752)
-
- ￦ 58,669
128,685
12,144
(1,752) ￦ 199,498
The changes in investment property for the year ended December 31, 2016 are as follows:
Description
Beginning
of the year
Transfers
Land
Buildings
Structures
￦ 59,631 ￦
218,833
12,960
Depreciation
Disposals
(In millions of Korean Won)
- ￦
- ￦ (962) ￦
(66,181)
-
-
-
(11,055)
(408)
￦ 291,424 ￦ (66,181) ￦ (962) ￦ (11,463) ￦
Effect of foreign
exchange
differences
End of
the year
(1,147)
-
- ￦ 58,669
140,450
12,552
(1,147) ￦ 211,671
(3) The fair value of investment property as of December 31, 2017 and 2016 consist of the following:
Description
December 31, 2017
December 31, 2016
(In millions of Korean Won)
Land
Buildings
Structures
￦
￦
58,669 ￦
316,534
15,496
390,699 ￦
58,669
326,692
15,496
400,857
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 material.
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 current replacement cost considering supplementary installation, depreciation
period, structure and design.
(4) Income and expenses related to investment property for the years ended December 31, 2017 and 2016 are as
follows:
Description
2016
2017
(In millions of Korean Won)
Rental income
Operating and maintenance expenses
￦
46,020 ￦
16,410
49,596
15,521
- 42 -
- 42 -
11. INTANGIBLE ASSETS:
(1) Intangible assets as of December 31, 2017 and 2016 consist of the following:
Description
Goodwill
Development
costs
Industrial
property rights
Software
Others
Construction in
progress
Acquisition
cost
December 31, 2017
Accumulated
amortization (*)
Acquisition
cost
Book value
(In millions of Korean Won)
December 31, 2016
Accumulated
amortization (*)
Book value
￦
293,452 ￦
(2,023) ￦ 291,429 ￦ 292,373 ￦
(2,080) ￦
290,293
8,125,215
(4,543,101)
3,582,114
7,356,890
(4,025,900)
3,330,990
246,884
1,025,083
498,257
(133,484)
(678,150)
(222,182)
113,400
346,933
276,075
225,286
984,113
499,410
(116,123)
(625,832)
(205,995)
109,163
358,281
293,415
239,151
204,030
￦ 10,428,042 ￦ (5,618,706) ￦ 4,809,336 ￦ 9,603,706 ￦ (5,017,534) ￦ 4,586,172
(39,766)
(41,604)
199,385
245,634
(*) Accumulated impairment is included.
(2) The changes in intangible assets for the year ended December 31, 2017 are as follows:
Description
Beginning
of the year
Internal
developments
and separate
acquisitions
Transfers
within
intangible
assets
￦ 290,293 ￦
- ￦
Disposals
Amortization
(In millions of Korean Won)
- ￦
- ￦
Impairment
gain (loss)
(*1)
Others (*2)
End of
the year
- ￦
- ￦
1,136 ￦ 291,429
3,330,990
1,307,849
41,584
-
(1,096,567)
(12,592)
10,850
3,582,114
109,163
358,281
293,415
1,938
36,944
9,659
18,613
24,341
10,399
-
(51)
(2,372)
(17,240)
(133,546)
(27,489)
-
(517)
37
926
61,481
(7,574)
113,400
346,933
276,075
204,030
98,175
￦ 4,586,172 ￦ 1,454,565 ￦
(94,937)
199,385
- ￦ (2,423) ￦ (1,274,842) ￦ (13,102) ￦ 58,966 ￦ 4,809,336
(7,853)
(30)
-
-
(*1) The development costs related to the discontinued sales and development projects that were recognized as impairment losses
for the year end December 31, 2017.
(*2) Others include the effect of foreign exchange differences, transfer from or to other accounts and acquisitions due to
business combination and others.
The changes in intangible assets for the year ended December 31, 2016 are as follows:
Description
Beginning
of the year
Internal
developments
and separate
acquisitions
Transfers
within
intangible
assets
￦ 292,078 ￦
- ￦
Disposals
Amortization
(In millions of Korean Won)
- ￦
- ￦
Impairment
gain (loss) Others (*)
End of
the year
- ￦
- ￦
(1,785) ￦ 290,293
3,015,782
1,224,743
99,265
(34)
(1,022,841)
4,446
9,629
3,330,990
97,212
330,531
292,203
1,545
24,152
18,028
25,430
38,056
5,956
(43)
(234)
(13,003)
(15,602)
(129,929)
(25,819)
-
(205)
15
621
95,910
16,035
109,163
358,281
293,415
270,282
105,695
(168,707)
(49)
-
￦ 4,298,088 ￦ 1,374,163 ￦
- ￦ (13,363) ￦ (1,194,191) ￦
(2,461)
204,030
(730)
1,795 ￦ 119,680 ￦ 4,586,172
(*) Others include the effect of foreign exchange differences and transfer from or to other accounts.
- 43 -
Goodwill
Development
costs
Industrial
property
rights
Software
Others
Construction
in progress
Goodwill
Development
costs
Industrial
property
rights
Software
Others
Construction
in progress
- 43 -
(3) Development costs of intangible assets as of December 31, 2017 consist of the following:
Description
Book value
(In millions of
Korean Won)
Residual useful lives (*)
Automobile
˝
Powertrain
˝
Others
˝
Developing
Amortizing
Developing
Amortizing
Developing
Amortizing
￦
￦
1,161,212
1,862,297
195,865
109,202
1,487
252,051
3,582,114
-
38 months
-
32 months
-
37 months
(*) Since the residual amortization period differs for each project, the residual useful lives of the development cost is weighted
averaged at the end of reporting period.
(4) Research and development expenditures for the years ended December 31, 2017 and 2016 are as follows:
Description
Development costs (intangible assets)
Research and development costs (*1)
Total (*2)
2017
(In millions of Korean Won)
2016
￦
￦
1,307,849 ￦
1,179,922
2,487,771 ￦
1,224,743
1,127,486
2,352,229
(*1) Manufacturing costs, administrative expenses and other expenses are included.
(*2) Amortization of development costs are not included.
(5)
Impairment test of goodwill
The allocation of goodwill amongst the Group’s CGU as of December 31, 2017 and 2016 is as follows:
Description
Vehicle
Finance
Others
December 31,
2017
(In millions of Korean Won)
December 31,
2016
￦
￦
190,977 ￦
482
99,970
291,429 ￦
189,841
482
99,970
290,293
The recoverable amounts of the Group’s CGU are measured at their value-in-use calculated based on cash flow
projections of financial budgets for the next five years approved by management.The pretax discount rate applied to
the cash flow projections for the years ended December 31, 2017 and 2016, are 12.8% and 11.0% respectively. 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 years ended December 31, 2017 and 2016.
- 44 -
- 44 -
12. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:
(1) Investments in joint ventures and associates as of December 31, 2017 consist of the following:
Name of the company
Nature of
business
Location
Ownership
percentage
Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing
Beijing Hyundai Qiche Financing
China
(%)
50.00
Book value
(In millions of
Korean Won)
￦
1,456,579
Company (BHAF) (*1,3)
Financing
China
53.00
480,353
Hyundai WIA Automotive Engine (Shandong)
Company (WAE)
Hyundai Powertech (Shandong) Co., Ltd (PTS)
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. (*2)
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd.
Others (*4)
Manufacturing
Manufacturing
Manufacturing
Construction
Manufacturing
Manufacturing
Manufacturing
Financing
Securities
brokerage
Transportation
IT Service
Hotelkeeping
China
China
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
22.00
30.00
33.88
20.95
25.35
37.58
47.27
50.00
27.49
12.00
28.96
41.90
167,805
120,256
8,882,325
2,959,910
794,150
547,295
399,724
373,797
254,766
160,255
119,162
106,531
429,430
17,252,338
￦
(*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) 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) For the year ended December 31, 2017, the Group has stopped recognizing its share of losses of the Sichuan Hyundai
Motor Company (CHMC) and unrecognized share of losses of a joint venture, both for the reporting period and
cumulatively are ￦20,437 million.
- 45 -
- 45 -
Investments in joint ventures and associates as of December 31, 2016 consist of the following:
Name of the company
Nature of
business
Location
Ownership
percentage
Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing
Beijing Hyundai Qiche Financing
China
(%)
50.00
Book value
(In millions of
Korean Won)
￦
2,225,824
Company (BHAF) (*1,3)
Financing
China
53.00
445,735
Hyundai WIA Automotive Engine (Shandong)
Company (WAE)
Hyundai Powertech (Shandong) Co., Ltd (PTS)
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. (*2)
Haevichi Hotels & Resorts Co., Ltd.
Hyundai Autoever Corp.
Others
Manufacturing
Manufacturing
Manufacturing
Construction
Manufacturing
Manufacturing
Manufacturing
Financing
Securities
brokerage
Transportation
Hotelkeeping
IT Service
China
China
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Korea
22.00
30.00
33.88
20.95
25.35
37.58
47.27
50.00
27.49
12.00
41.90
28.96
186,929
111,997
8,811,840
3,267,243
821,861
502,891
371,499
256,078
245,501
174,100
108,082
107,382
433,159
18,070,121
￦
(*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) 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.
- 46 -
- 46 -
(2) The changes in investments in joint ventures and associates for the year ended December 31, 2017 are as
follows:
Name of the company
Beginning of
the year
Acquisitions
(disposals)
Share of
profits (losses)
for the year
(In millions of Korean Won)
Dividends
Others (*1)
End of
the year
￦ 2,225,824 ￦
BHMC
BHAF
WAE
PTS
Kia Motors Corporation
Hyundai Engineering &
Construction Co., Ltd. (*2)
Hyundai WIA Corporation
Hyundai Powertech Co., Ltd.
Hyundai Dymos Inc.
Hyundai Commercial Inc.
HMC Investment Securities
Co., Ltd.
Eukor Car Carriers Inc.
Hyundai Autoever Corp
Haevichi Hotels & Resorts
445,735
186,929
111,997
8,811,840
3,267,243
821,861
502,891
371,499
256,078
245,501
174,100
107,382
- ￦ (74,456) ￦ (592,318) ￦ (102,471) ￦ 1,456,579
480,353
-
167,805
4,721
120,256
18,023
8,882,325
-
(3,440)
(5,268)
(18,930)
(151,050)
(26,062)
(10,154)
(6,840)
(87,288)
64,120
(8,423)
16,006
308,823
-
-
-
-
-
-
-
-
15,479
(14,781)
52,349
31,512
136,510
13,906
7,470
15,576
(11,664)
(7,583)
-
-
(15,000)
(3,226)
-
(4,126)
(311,148)
(5,347)
(7,945)
(3,287)
(3,791)
(1,415)
(21,315)
330
2,959,910
794,150
547,295
399,724
373,797
254,766
160,255
119,162
Co., Ltd.
Others
108,082
433,159
106,531
429,430
￦ 18,070,121 ￦ 80,144 ￦ 527,589 ￦ (822,965) ￦ (602,551) ￦ 17,252,338
-
(10,360)
(1,784)
(34,718)
233
(16,051)
-
57,400
(*1) Others consist of changes in impairment loss, accumulated other comprehensive income/(loss) and others.
(*2) As recoverable amount of the Hyundai Engineering & Construction Co., Ltd. is less than its carrying amount, ￦302,536
million of impairment loss is recognized. The recoverable amount are measured at their value-in-use and the discount
rate applied to the calculation is 8%.
The changes in investments in joint ventures and associates for the year ended December 31, 2016 are as
follows:
Name of the company
BHMC
BHAF
WAE
PTS
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.
Hyundai Autoever Corp.
Others
Acquisitions
(disposals)
Beginning of
the year
Share of
profits (losses)
for the year
(In millions of Korean Won)
￦ 2,189,321 ￦ 242,434 ￦ 559,793 ￦ (666,208) ￦ (99,516) ￦ 2,225,824
445,735
186,929
111,997
8,811,840
-
-
-
(151,050)
220,475
184,255
93,998
8,047,548
(13,269)
(5,480)
(2,885)
11,275
188,014
-
-
-
50,515
8,154
20,884
904,067
End of
the year
Others (*)
Dividends
3,180,493
814,413
433,088
326,439
242,507
238,001
191,468
-
-
-
-
-
-
-
79,434
16,655
68,441
47,852
32,245
10,990
(14,425)
(11,664)
(7,583)
-
-
(8,950)
(3,630)
(14,520)
18,980
(1,624)
1,362
(2,792)
(9,724)
140
11,577
3,267,243
821,861
502,891
371,499
256,078
245,501
174,100
110,312
91,701
545,924
108,082
107,382
433,159
￦ 16,909,943 ￦ 420,061 ￦ 1,728,427 ￦ (881,272) ￦ (107,038) ￦ 18,070,121
-
(4,126)
(13,541)
(2,289)
18,769
(72,658)
-
-
(10,387)
59
1,038
(16,179)
(*) Others consist of changes in accumulated other comprehensive income (loss), changes in ownership percentage and others.
- 47 -
- 47 -
(3) Summarized financial information of the Group’s major joint ventures and associates as of and for the year
ended December 31, 2017 is as follows:
Name of the company
BHMC
BHAF (*)
WAE
PTS
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 Autoever Corp
Haevichi Hotels & Resorts Co., Ltd.
Current
assets
Non-current
assets
Current
liabilities
(In millions of Korean Won)
Non-current
liabilities
￦ 6,748,910 ￦ 4,132,036 ￦ 7,495,325 ￦
4,961,986
753,485
853,846
21,642,079
13,227,409
3,859,385
1,054,803
1,419,940
7,748,768
7,025,157
493,721
681,216
19,128
-
760,642
216,947
30,652,359
5,199,636
3,334,297
1,648,206
1,026,734
-
-
2,542,164
122,740
433,933
4,055,661
318,440
577,765
15,323,019
7,291,215
1,727,926
925,897
1,052,358
6,902,931
6,179,803
458,070
380,035
193,290
355,758
-
432,938
92,174
10,110,242
2,741,133
2,325,658
285,796
522,381
-
-
1,244,540
8,164
84,626
Name of the company
Sales
Profit (loss) for
the year from
Other
continuing
comprehensive
operations
income (loss)
(In millions of Korean Won)
Total
comprehensive
income (loss)
BHMC
BHAF (*)
WAE
PTS
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 Autoever Corp
Haevichi Hotels & Resorts Co., Ltd.
￦ 12,149,126 ￦ (159,438) ￦
298,296
1,058,952
1,361,845
53,535,680
16,854,433
7,487,392
3,065,579
4,006,243
429,370
521,346
1,799,182
1,473,376
121,452
120,980
(38,293)
53,353
968,018
374,321
(63,004)
172,575
69,837
272,413
50,204
57,618
55,179
2,407
- ￦
-
(45,997)
-
(245,241)
(8,417)
(26,269)
-
(1,938)
7,364
(9,324)
(170,493)
1,188
584
(159,438)
120,980
(84,290)
53,353
722,777
365,904
(89,273)
172,575
67,899
279,776
40,880
(112,875)
56,367
2,991
(*) 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.
- 48 -
- 48 -
Summarized financial information of the Group’s major joint ventures and associates as of and for the year
ended December 31, 2016 is as follows:
Name of the company
BHMC
BHAF (*)
WAE
PTS
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.
Hyundai Autoever Corp.
Current
Assets
Non-current
assets
Current
liabilities
(In millions of Korean Won)
Non-current
liabilities
￦ 6,571,169 ￦ 4,084,409 ￦ 5,780,436 ￦
5,362,202
799,333
739,315
20,912,221
14,949,282
3,743,344
1,250,565
1,341,859
6,017,380
5,887,084
393,017
28,337
687,569
-
901,220
229,686
29,977,039
4,934,177
3,278,735
1,539,496
1,049,604
-
-
3,056,960
433,187
108,493
4,521,193
279,757
474,965
16,246,900
8,746,584
1,698,890
1,008,026
1,132,962
5,400,892
5,070,875
486,687
148,142
418,494
295,508
-
571,118
120,713
8,062,936
2,994,568
2,064,600
442,156
450,616
-
-
1,514,638
141,229
3,927
Name of the company
Sales
Profit (loss) for
the year from
Other
continuing
comprehensive
operations
income (loss)
(In millions of Korean Won)
Total
comprehensive
income (loss)
BHMC
BHAF (*)
WAE
PTS
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.
Hyundai Autoever Corp.
￦ 20,128,709 ￦ 1,171,934 ￦
481,778
1,452,939
2,159,373
52,712,906
18,744,454
7,589,447
3,600,725
4,339,633
386,377
563,354
1,679,763
106,243
1,335,966
95,309
27,719
69,615
2,754,640
650,376
130,727
180,276
131,465
71,334
39,787
(114,524)
2,305
64,707
- ￦
-
-
-
63,186
1,171,934
95,309
27,719
69,615
2,817,826
109,075
(6,106)
3,631
(5,472)
(9,673)
69,612
90,912
129
3,500
759,451
124,621
183,907
125,993
61,661
109,399
(23,612)
2,434
68,207
(*) 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.
- 49 -
- 49 -
(4) Summarized additional financial information of the Group’s major joint ventures as of and for the year ended
December 31, 2017 is as follows:
Name of the
company
Cash and
cash equivalents
Current
financial
liabilities
Non-current
financial
liabilities
(In millions of Korean Won)
Depreciation
and
amortization
Interest
income
Interest
expenses
Income tax
expense
(benefit)
BHMC
BHAF (*)
￦
329,263 ￦ 1,080,090 ￦
782,333
3,429,969
- ￦ 373,222 ￦ 26,106 ￦123,581 ￦ (14,897)
40,680
-
470,763
180,523
4,219
(*) 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, 2016 is as follows:
Name of the
company
Cash and
cash equivalents
Current
financial
liabilities
Non-current
financial
liabilities
(In millions of Korean Won)
Depreciation
and
amortization
Interest
income
Interest
expenses
Income tax
expense
BHMC
BHAF (*)
￦
132,608 ￦
875,763
3,847,839
- ￦
242,564 ￦ 352,770 ￦ 11,234 ￦112,057 ￦ 388,926
34,265
463,498
156,979
3,164
-
(*) 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
material, loss and comprehensive loss for the years ended December 31, 2017 and 2016 are as follows:
Description
Loss for the year
Other comprehensive loss
Total comprehensive loss
December 31,
2017
(In millions of Korean Won)
December 31,
2016
￦
￦
(34,718) ￦
(16,051)
(50,769) ￦
(72,658)
(16,179)
(88,837)
- 50 -
- 50 -
(6) Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their
carrying amounts as of December 31, 2017 is as follows:
Name of the company
BHMC
BHAF
WAE
PTS
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 Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd. (*)
Group’s
share of
net assets
Unrealized
profit (loss)
and others
(In millions of Korean Won)
Goodwill
Carrying
amounts
￦ 1,514,932 ￦
480,353
167,805
120,256
8,749,248
- ￦ (58,353) ￦ 1,456,579
480,353
-
167,805
-
120,256
-
8,882,325
197,089
-
-
-
(64,012)
2,125,080
797,455
548,330
401,195
373,797
214,714
159,993
119,162
102,955
834,821
-
-
-
-
40,052
-
-
3,576
9
(3,305)
(1,035)
(1,471)
-
-
262
-
-
2,959,910
794,150
547,295
399,724
373,797
254,766
160,255
119,162
106,531
(*) 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.
Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their
carrying amounts as of December 31, 2016 is as follows:
Name of the company
BHMC
BHAF
WAE
PTS
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. (*)
Hyundai Autoever Corp.
Group’s
share of
net assets
Unrealized
profit (loss)
and others
(In millions of Korean Won)
Goodwill
Carrying
amounts
￦ 2,289,817 ￦
445,735
186,929
111,997
8,667,785
- ￦ (63,993) ￦ 2,225,824
445,735
-
186,929
-
111,997
-
8,811,840
197,089
-
-
-
(53,034)
2,129,886
825,700
504,501
373,593
256,078
205,449
173,838
104,506
107,382
1,137,357
-
-
-
-
40,052
-
3,576
-
-
(3,839)
(1,610)
(2,094)
-
-
262
-
-
3,267,243
821,861
502,891
371,499
256,078
245,501
174,100
108,082
107,382
(*) 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.
(7) The market price of listed equity securities as of December 31, 2017 is as follows:
Name of the company
Price per share
Total number of
Market value
shares
(In millions of Korean Won, except price per share)
Kia Motors Corporation
Hyundai Engineering & Construction Co., Ltd.
Hyundai WIA Corporation
HMC Investment Securities Co., Ltd.
￦
33,500
36,300
65,000
10,900
137,318,251 ￦
23,327,400
6,893,596
8,065,595
4,600,161
846,785
448,084
87,915
- 51 -
- 51 -
13. FINANCIAL SERVICES RECEIVABLES:
(1) Financial services receivables as of December 31, 2017 and 2016 consist of the following:
Description
Loan obligations
Card receivables
Financial lease receivables
Others
Allowance for doubtful accounts
Loan origination fee
Present value discount accounts
December 31,
2017
(In millions of Korean Won)
December 31,
2016
￦ 36,848,028 ￦
12,979,942
2,437,466
36,668
52,302,104
(1,133,967)
13,182
(13,301)
￦ 51,168,018 ￦
38,156,062
12,223,581
2,422,222
29,061
52,830,926
(1,078,002)
40,628
(9,949)
51,783,603
(2) Aging analysis of financial services receivables
As of December 31, 2017 and 2016, total financial services receivables that are past due, but not impaired,
amount to ￦1,513,093 million and ￦1,421,906 million, respectively; among them, financial services
receivables past due less than 90 days are ￦1,512,976 million and ￦1,421,802 million, respectively. As of
December 31, 2017 and 2016, the impaired financial services receivables amount to ￦523,274 million and
￦538,961 million, respectively.
(3) Transferred financial services receivables that are not derecognized
As of December 31, 2017 and 2016, the Group issued asset-backed securities, which have recourse to the
underlying assets, based on loans, card receivables and others. As of December 31, 2017, the carrying amounts
(including intercompany receivables within the Group) and fair values of the transferred financial assets that are
not derecognized are ￦20,449,746 million and ￦20,452,768 million, respectively. The carrying amounts and
fair values of the associated liabilities are ￦13,129,165 million and ￦12,970,433 million, respectively, and the
net position is ￦7,482,335 million. As of December 31, 2016, the carrying amounts (including intercompany
receivables within the Group) and fair values of the transferred financial assets that are not derecognized are
￦20,674,676 million and ￦20,609,441 million, respectively, the carrying amounts and fair values of the
associated liabilities are ￦15,060,372 million and ￦14,946,084 million, respectively, and the net position is
￦5,663,357 million.
(4) The changes in allowance for doubtful accounts of financial services receivables for the years ended
December 31, 2017 and 2016 are as follows:
Description
December 31, 2017
December 31, 2016
(In millions of Korean Won)
Beginning of the year
Impairment loss
Write-off
Disposals and others
Effect of foreign exchange differences
End of the year
￦
￦
1,078,002 ￦
753,514
(443,008)
(222,842)
(31,699)
1,133,967 ￦
938,300
705,035
(465,067)
(108,659)
8,393
1,078,002
- 52 -
- 52 -
(5) Gross investments in financial leases and their present value of minimum lease receipts as of December 31,
2017 and 2016 are as follows:
December 31, 2017
December 31, 2016
Description
Not later than one year
Later than one year and not later
than five years
Later than five years
Gross
investments
in financial
leases
Present value
of minimum
lease payment
receivable
(In millions of Korean Won)
￦ 1,173,541 ￦ 1,050,165 ￦ 1,140,416 ￦ 1,029,983
Present value
of minimum
lease payment
receivable
Gross
investments
in financial
leases
1,489,664
281
1,390,070
80
￦ 2,663,486 ￦ 2,435,422 ￦ 2,632,501 ￦ 2,420,133
1,492,004
81
1,384,980
277
(6) Unearned interest income of financial leases as of December 31, 2017 and 2016 is as follows:
Description
Gross investments in financial lease
Net lease investments:
Present value of minimum lease payment
receivable
Present value of unguaranteed residual value
December 31,
2017
December 31,
2016
(In millions of Korean Won)
￦
2,663,486 ￦
2,632,501
2,435,422
2,044
2,437,466
2,420,133
2,089
2,422,222
210,279
Unearned interest income
￦
226,020 ￦
14. OPERATING LEASE ASSETS:
(1) Operating lease assets as of December 31, 2017 and 2016 consist of the following:
Description
December 31, 2017
December 31, 2016
Acquisition cost
Accumulated depreciation
Accumulated impairment loss
(In millions of Korean Won)
￦
￦
24,345,256 ￦
(3,517,368)
(99,938)
20,727,950 ￦
24,829,330
(3,360,559)
(151,511)
21,317,260
(2) Future minimum lease payment receivable related to operating lease assets as of December 31, 2017 and
2016 are as follows:
Description
December 31, 2017
December 31, 2016
Not later than one year
Later than one year and not later
than five years
Later than five years
(In millions of Korean Won)
￦
3,765,437 ￦
3,839,810
3,869,709
7
￦
7,635,153 ￦
4,246,435
7
8,086,252
- 53 -
- 53 -
15. BORROWINGS AND DEBENTURES:
(1) Short-term borrowings as of December 31, 2017 and 2016 consist of the following:
Description
Lender
Overdrafts
General loans
Loans on trade receivables
collateral
Banker’s Usance
Short-term debentures
Commercial paper
Asset-backed securities
Citi Bank and others
Woori Bank and others
KEB Hana Bank and others
KEB Hana Bank and others
Shinhan Bank and others
RBC and others
Annual
interest rate
December 31,
2017
(%)
0.10~1.30
0.40~7.46
December 31,
2017
December 31,
2016
(In millions of Korean Won)
￦ 317,189 ￦
3,727,189
223,992
2,949,149
LIBOR + 0.15~0.45
LIBOR + 0.25~0.40
1.63
1.44~2.21
1.92
1,338,160
376,547
69,993
3,570,389
560,187
1,472,786
429,493
159,890
3,007,411
517,957
￦ 9,959,654 ￦ 8,760,678
(2) Long-term debt as of December 31, 2017 and 2016 consists of the following:
Description
Lender
General loans
Facility loan
Mizuho Bank and others
Korea Development Bank
and others
Commercial paper
KTB Investment & Securities
Asset-backed securities
Others
JP Morgan and others
NH Investment & Securities
and others
and others
Less: present value discounts
Less: current maturities
Annual
interest rate
December 31,
2017
(%)
0.40~15.40
December 31,
2017
December 31,
2016
(In millions of Korean Won)
￦
6,368,138 ￦ 6,253,057
0.32~8.70
255,281
296,821
1.62~2.24
1.96~2.32
2,070,000
6,782,232
790,000
8,595,052
567,125
16,042,776
107,752
3,446,887
567,125
16,502,055
112,050
3,000,022
￦ 12,488,137 ￦ 13,389,983
(3) Debentures as of December 31, 2017 and 2016 consist of the following:
Description
Latest
maturity date
Annual
interest rate
December 31,
2017
(%)
Guaranteed public debentures
Non-guaranteed public debentures
Non-guaranteed private debentures
Asset-backed securities
Less: discount on debentures
Less: current maturities
September 19, 2027
August 29, 2027
May 15, 2024
1.44~6.53
1.45~3.25
1.05~3.12
- 54 -
December 31,
2017
December 31,
2016
￦
(In millions of Korean Won)
- ￦
604,250
22,685,513
10,027,427
15,074,314
48,391,504
98,167
11,836,945
￦ 36,454,192 ￦ 36,456,392
22,956,764
10,107,160
13,140,350
46,204,274
98,422
9,651,660
- 54 -
16. PROVISIONS:
(1) Provisions as of December 31, 2017 and 2016 consist of the following:
Description
Warranty
Other long-term employee benefits
Others
December 31,
2017
(In millions of Korean Won)
December 31,
2016
￦
￦
5,226,297 ￦
636,380
791,764
6,654,441 ￦
5,612,978
641,193
718,469
6,972,640
(2) The changes in provisions for the year ended December 31, 2017 are as follows:
Description
Warranty
Beginning of the year
Charged
Utilized
Amortization of present value discounts
Changes in expected reimbursements
by third parties
Effect of foreign exchange differences
End of the year
￦
￦
Description
Warranty
Beginning of the year
Charged
Utilized
Amortization of present value discounts
Changes in expected reimbursements
by third parties
Effect of foreign exchange differences
End of the year
￦
￦
Other long-term
employee benefits
(In millions of Korean Won)
641,193 ￦
53,107
(57,930)
-
5,612,978 ￦
1,392,351
(1,743,049)
92,718
(11,971)
(116,730)
5,226,297 ￦
-
10
636,380 ￦
Other long-term
employee benefits
(In millions of Korean Won)
643,274 ￦
77,753
(79,824)
-
5,639,595 ￦
1,194,945
(1,360,774)
96,113
3,087
40,012
5,612,978 ￦
-
(10)
641,193 ￦
Others
718,469
718,840
(619,102)
9,843
-
(36,286)
791,764
Others
459,031
452,471
(222,819)
2,026
-
27,760
718,469
The changes in provisions for the year ended December 31, 2016 are as follows:
17. OTHER FINANCIAL LIABILITIES:
Other financial liabilities as of December 31, 2017 and 2016 consist of the following:
December 31, 2017
December 31, 2016
Description
Current
Non-current
(In millions of Korean Won)
- ￦
Current
18,068 ￦
555 ￦
Non-current
Financial liabilities at FVTPL
Derivative liabilities that are effective
hedging instruments
￦
￦
21
23,433
23,454
25,097
25,652 ￦ 438,070 ￦ 138,106 ￦
120,038
438,070
- 55 -
- 55 -
18. OTHER LIABILITIES:
Other liabilities as of December 31, 2017 and 2016 consist of the following:
Description
Current
Non-current
(In millions of Korean Won)
Current
Non-current
December 31, 2017
December 31, 2016
Advances received
Withholdings
Accrued expenses
Unearned income
Due to customers for contract work
Others
￦ 746,977 ￦
86,359 ￦ 604,420 ￦ 123,424
337,667
1,240,641
301,247
2,752,047
-
-
1,114,407
299,916
1,075,434
319,801
-
-
1,252,167
258,081
1,182,380
￦ 6,591,421 ￦ 2,645,420 ￦ 5,474,906 ￦ 2,827,665
964,884
3,830,729
315,035
438,977
294,819
19. FINANCIAL INSTRUMENTS:
(1) Financial assets by categories as of December 31, 2017 are as follows:
Financial
assets
at FVTPL
Loans
and
receivables
Derivative
assets that are
effective
hedging
instruments
(In millions of Korean Won)
AFS
financial
assets
Book value
Fair value
- ￦ 8,821,529 ￦
- ￦
- ￦ 8,821,529 ￦ 8,821,529
Description
Cash and
cash equivalents
Short-term and long-
￦
term financial
instruments
Trade notes and
accounts receivable
Other receivables
Other financial assets
Other assets
Financial services
receivables
-
7,891,106
-
-
12,964,437
-
3,961,976
3,195,513
87,589
359,942
-
51,168,018
-
-
-
2,308,955
-
-
-
7,891,106
7,891,106
-
-
38,197
-
3,961,976
3,195,513
15,399,178
359,942
3,961,976
3,195,513
15,399,178
359,942
-
51,287,698
51,168,018
38,197 ￦ 90,797,262 ￦ 90,916,942
￦ 12,964,437 ￦ 75,485,673 ￦ 2,308,955 ￦
Financial assets by categories as of December 31, 2016 are as follows:
Financial
assets
at FVTPL
Loans
and
receivables
Derivative
assets that are
effective
hedging
instruments
(In millions of Korean Won)
AFS
financial
assets
Book value
Fair value
- ￦ 7,890,089 ￦
- ￦
- ￦ 7,890,089 ￦ 7,890,089
-
7,461,219
-
-
12,559,029
-
4,575,657
3,257,612
85,560
319,930
-
-
-
2,312,733
-
-
7,461,219
7,461,219
-
-
327,221
-
4,575,657
3,257,612
15,284,543
319,930
4,575,657
3,257,612
15,284,543
319,930
Description
Cash and
cash equivalents
Short-term and long-
￦
term financial
instruments
Trade notes and
accounts receivable
Other receivables
Other financial assets
Other assets
Financial services
receivables
52,203,515
-
￦ 12,559,029 ￦ 75,373,670 ￦ 2,312,733 ￦ 327,221 ￦ 90,572,653 ￦ 90,992,565
51,783,603
51,783,603
-
-
- 56 -
- 56 -
(2) Financial liabilities by categories as of December 31, 2017 are as follows:
Description
Financial liabilities
at FVTPL
Financial liabilities
carried at
amortized cost
Derivative liabilities
that are effective
hedging instruments
(In millions of Korean Won)
Book value
Fair value
Trade notes and
accounts payable
Other payables
Borrowings and
debentures
￦
Other financial liabilities
Other liabilities
￦
- ￦
-
-
555
-
555 ￦
6,483,875 ￦
5,059,246
72,000,530
-
3,837,148
87,380,799 ￦
- ￦ 6,483,875 ￦ 6,483,875
5,059,246
-
5,059,246
463,167
-
71,987,443
- 72,000,530
463,722
463,722
3,837,148
3,837,148
463,167 ￦ 87,844,521 ￦ 87,831,434
Financial liabilities by categories as of December 31, 2016 are as follows:
Description
Financial liabilities
at FVTPL
Financial liabilities
carried at
amortized cost
Derivative liabilities
that are effective
hedging instruments
(In millions of Korean Won)
Book value
Fair value
Trade notes and
accounts payable
Other payables
Borrowings and
debentures
Other financial liabilities
Other liabilities
￦
- ￦
-
6,985,942 ￦
4,969,309
- ￦ 6,985,942 ￦ 6,985,942
4,969,309
-
4,969,309
-
18,089
-
73,444,020
-
2,752,118
88,151,389 ￦
143,471
-
- 73,444,020
73,573,334
161,560
161,560
2,752,118
2,752,118
143,471 ￦ 88,312,949 ￦ 88,442,263
￦
18,089 ￦
(3) Fair value estimation
The Group categorizes the assets and liabilities measured at fair value into the following three-level fair value
hierarchy in accordance 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 liabilities.
Level 2: Fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable 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).
- 57 -
- 57 -
Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2017
are as follows:
Description
Level 1
December 31, 2017
Level 2
Level 3
(In millions of Korean Won)
Total
Financial assets:
Financial assets at FVTPL
Derivative assets that are
effective hedging
instruments
AFS financial assets
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities that are
effective hedging
instruments
￦
111,654 ￦ 12,852,783 ￦
- ￦
12,964,437
-
1,708,825
38,197
264,611
-
335,519
￦ 1,820,479 ￦ 13,155,591 ￦ 335,519 ￦
38,197
2,308,955
15,311,589
￦
- ￦
555 ￦
- ￦
555
￦
-
- ￦
463,167
463,722 ￦
-
- ￦
463,167
463,722
Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2016
are as follows:
Description
Level 1
December 31, 2016
Level 2
Level 3
(In millions of Korean Won)
Total
Financial assets:
Financial assets at FVTPL
Derivative assets that are
effective hedging
instruments
AFS financial assets
Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities that are
effective hedging
instruments
￦
82,512 ￦ 12,476,517 ￦
- ￦
12,559,029
-
1,810,323
327,221
244,250
-
258,160
￦ 1,892,835 ￦ 13,047,988 ￦ 258,160 ￦
327,221
2,312,733
15,198,983
￦
- ￦
18,089 ￦
- ￦
18,089
￦
-
- ￦
143,471
161,560 ￦
-
- ￦
143,471
161,560
The changes in financial instruments classified as Level 3 for the year ended December 31, 2017 are as follows:
Description
Beginning
of the year
Purchases Disposals
Valuation Transfers (*)
End of
the year
AFS financial assets
(In millions of Korean Won)
￦ 258,160 ￦ 77,177 ￦ (3,999) ￦ 4,681 ￦
(500) ￦ 335,519
(*) For the year ended December 31, 2017, due to MediaZen Inc. now being listed on the Korea New Exchange, the fair value
hierarchy level has transferred from Level 3 to Level 1.
The changes in financial instruments classified as Level 3 for the year ended December 31, 2016 are as follows:
Description
Beginning
of the year
Purchases Disposals
Valuation
Transfers
AFS financial assets
(In millions of Korean Won)
￦ 232,557 ￦ 22,795 ￦ (3,783) ￦ 6,591 ￦
End of
the year
- ￦ 258,160
- 58 -
- 58 -
(4)
Interest income, dividend income and interest expenses by categories of financial instruments for the years
ended December 31, 2017 and 2016 consist of the following:
Description
Non-financial services:
Loans and receivables
Financial assets
(liabilities) at FVTPL
AFS financial assets
Financial liabilities
carried at amortized cost
Financial services:
Interest
income
2017
Dividend
income
Interest
expenses
Interest
income
(In millions of Korean Won)
2016
Dividend
income
Interest
expenses
￦
272,106 ￦
- ￦
- ￦ 204,109 ￦
- ￦
-
168,614
-
-
17,408
29,734
-
173,485
-
-
35,135
8,572
-
-
-
221,010
-
￦
440,720 ￦ 29,734 ￦ 238,418 ￦ 377,594 ￦
-
209,312
35,135 ￦ 217,884
￦ 3,434,974 ￦
25,436
1,136
- ￦
1,499
3,098
- ￦ 2,977,629 ￦
-
-
25,371
1,202
- ￦
1,298
4,783
-
-
-
Loans and receivables
Financial assets at FVTPL
AFS financial assets
Financial liabilities
carried at amortized cost
-
-
1,432,527
-
￦ 3,461,546 ￦
4,597 ￦ 1,432,527 ￦ 3,004,202 ￦
-
1,382,775
6,081 ￦ 1,382,775
(5) Financial assets and liabilities subject to offsetting, and financial instruments subject to an enforceable
master netting arrangement or similar agreement as of December 31, 2017 consist of the following:
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
(In millions of Korean Won)
Related
amounts not
set off in the
statement of
financial
position -
collateral
received
(pledged)
Gross amounts
of recognized
financial assets
and liabilities
Net amounts
Description
Financial assets:
Trade notes and accounts
receivable
Other receivables
Financial assets at FVTPL
Derivative assets that are
effective hedging instruments (*)
￦
4,100,242 ￦ 138,266 ￦ 3,961,976 ￦
3,387,809
192,296
196,662
3,195,513
196,662
-
- ￦
-
-
38,197
-
38,197
￦
7,722,910 ￦ 330,562 ￦ 7,392,348 ￦
10,389
10,389 ￦
Financial liabilities:
Trade notes and accounts
payable
￦
Other payables
Financial liabilities at FVTPL
Derivative liabilities that are
effective hedging instruments (*)
6,683,461 ￦ 199,586 ￦ 6,483,875 ￦
5,190,222
130,976
555
5,059,246
555
-
- ￦
-
-
463,167
-
463,167
￦ 12,337,405 ￦ 330,562 ￦ 12,006,843 ￦
10,389
10,389 ￦
- ￦ 3,961,976
3,195,513
-
196,662
-
-
27,808
- ￦ 7,381,959
- ￦ 6,483,875
5,059,246
-
555
-
452,778
-
- ￦ 11,996,454
(*) 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 do not meet the criteria of offsetting under K-IFRS 1032.
- 59 -
- 59 -
Financial assets and liabilities, subject to offsetting, and financial instruments subject to an enforceable master
netting arrangement or similar agreement as of December 31, 2016 consist of the following:
Description
Gross amounts
of recognized
financial assets
and liabilities
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
(In millions of Korean Won)
Related
amounts not
set off in the
statement of
financial
position -
collateral
received
(pledged)
Net amounts
Financial assets:
Trade notes and accounts
receivable
￦
Other receivables
Financial assets at FVTPL (*)
Derivative assets that are
effective hedging instruments (*)
Financial liabilities:
Trade notes and accounts
payable
￦
Other payables
Financial liabilities at FVTPL (*)
Derivative liabilities that are
effective hedging instruments (*)
4,729,796 ￦ 154,139 ￦ 4,575,657 ￦
283,381
3,540,993
107,749
3,257,612
107,749
-
- ￦
-
683
327,221
-
327,221
￦ 8,705,759 ￦ 437,520 ￦ 8,268,239 ￦
92,656
93,339 ￦
7,280,018 ￦ 294,076 ￦ 6,985,942 ￦
5,112,753
143,444
18,089
4,969,309
18,089
-
143,471
-
143,471
￦ 12,554,331 ￦ 437,520 ￦ 12,116,811 ￦
- ￦
-
683
92,656
93,339 ￦
- ￦ 4,575,657
3,257,612
-
107,066
-
-
234,565
- ￦ 8,174,900
- ￦ 6,985,942
4,969,309
-
17,406
-
-
50,815
- ￦ 12,023,472
(*) 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 do not meet the criteria of offsetting under K-IFRS 1032.
(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, 2017 and 2016 are, ￦1,815,536
million and ￦1,773,305 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, 2017 and 2016, are ￦989,424 million and ￦923,515 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, 2017.
(8) Descriptions of the valuation techniques and the inputs used in the fair value measurements categorized
within Level 2 and Level 3 of the fair value hierarchy are as follows:
- Currency forwards, options and swaps
Fair value of currency forwards, options and swaps is measured based on forward exchange rate quoted in
the current market at the end of the reporting period, which has the same remaining period of derivatives to
be measured. If the forward exchange rate, which has the same remaining period of currency forwards,
options and swaps, is not quoted in the current market, fair value is measured using estimates of similar
period of forward exchange rate by applying interpolation method with quoted forward exchange rates.
As the inputs used to measure the fair value of currency forwards, options and swaps are supported by
observable market data, such as forward exchange rates, the Group classified the estimates of fair value
measurements of the currency forwards, options and swaps as Level 2 of the fair value hierarchy.
- 60 -
- 60 -
- 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 measured. The Group classifies fair value
measurements of debt instruments including corporate bonds as Level 2 of the fair value hierarchy since the
rate, which has significant effects on fair value of debt instruments including corporate bonds, is based on
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, pretax
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 discount the future cash flows, is calculated by
applying the Capital Asset Pricing Model, 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 hierarchy.
(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
Fair value at
December 31,
2017
(In millions of
Korean Won)
Valuation
techniques
Unobservable
inputs
Range
Description of
relationship
Unlisted equity
Securities
￦
289,948 Discounted
cash flow
and others
Sales growth rate
Pre-tax operating
income margin
2.9% ~ 3.0%
4.4%
Discount rate
11.23%
If the sales growth
rate and the pretax
operating income
ratio rise or the
discount rate
declines, the fair
value increases.
The Group does not expect the changes in unobservable inputs for alternative assumptions that can be applied
reasonably to have significant impact on the fair value measurements.
20. CAPITAL STOCK:
The Company’s number of shares authorized is 600,000,000 shares. Common stock and preferred stock as of
December 31, 2017 and 2016 consist of the following:
(1) Common stock
Description
Issued
Par value
Capital stock
December 31, 2017
December 31, 2016
(In millions of Korean Won, except par value)
￦
220,276,479 shares
5,000 ￦
1,157,982
220,276,479 shares
5,000
1,157,982
The Company completed stock retirement of 10,000,000 common shares and 1,320,000 common shares as of
March 5, 2001, and May 4, 2004, respectively. Due to these stock retirements, the total face value of outstanding
stock differs from the capital stock amount.
- 61 -
- 61 -
(2) Preferred stock
Description
Par value
Issued
Korean Won
(In millions of
Korean Won)
Dividend rate
1st preferred stock ￦ 5,000
2nd preferred stock
3rd preferred stock
˝
˝
25,109,982 shares ￦
37,613,865 shares
2,478,299 shares
65,202,146 shares ￦
125,550 Dividend rate of common stock + 1%
193,069 The lowest stimulated dividend rate : 2%
12,392 The lowest stimulated dividend rate : 1%
331,011
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.
21. CAPITAL SURPLUS:
Capital surplus as of December 31, 2017 and 2016 consists of the following:
Description
December 31, 2017
December 31, 2016
Stock paid-in capital in excess of par value ￦
Others
￦
(In millions of Korean Won)
3,321,334 ￦
879,880
4,201,214 ￦
3,321,334
881,263
4,202,597
22. OTHER CAPITAL ITEMS:
Other capital items consist of treasury stocks purchased for the stabilization of stock price. Number of treasury
stocks as of December 31, 2017 and 2016 are as follows:
Description
Common stock
1st preferred stock
2nd preferred stock
3rd preferred stock
December 31,
2017
December 31,
2016
(Number of shares)
13,222,514
2,202,059
1,376,138
24,782
13,222,514
2,202,059
1,376,138
24,782
23. ACCUMULATED OTHER COMPREHENSIVE LOSS:
Accumulated other comprehensive loss as of December 31, 2017 and 2016 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
December 31,
2017
December 31,
2016
(In millions of Korean Won)
￦
486,596 ￦
(1,915)
9,062
(2,119)
535,812
(241,848)
37,966
(34,244)
165,563
172,722
(814,987)
(2,121,155)
(540,494)
(1,153,158)
￦ (2,278,955) ￦ (1,223,244)
- 62 -
- 62 -
24. RETAINED EARNINGS AND DIVIDENDS:
(1) Retained earnings as of December 31, 2017 and 2016 consist of the following:
Description
Legal reserve (*)
Discretionary reserve
Unappropriated
December 31,
2017
December 31,
2016
(In millions of Korean Won)
￦
744,836 ￦
718,336
43,874,647
19,768,425
￦ 67,332,328 ￦ 64,361,408
46,848,647
19,738,845
(*) 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 accumulated deficit,
if any.
Appraisal gains, amounting to ￦1,852,871 million, derived from asset revaluation by the Asset Revaluation Law
of Korea are included in retained earnings. It may be only transferred to capital stock or used to reduce
accumulated deficit, if any.
(2) The computation of the interim dividends for the year ended December 31, 2017 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
1st Preferred
stock
2nd Preferred
stock
3rd Preferred
stock
(In millions of Korean Won, except per share amounts)
5,000 ￦
5,000 ￦
5,000 ￦
220,276,479
(13,222,514)
207,053,965
25,109,982
(2,202,059)
22,907,923
37,613,865
(1,376,138)
36,237,727
1,000 ￦
20%
207,054
1,000 ￦
20%
22,908
1,000 ￦
20%
36,238
5,000
2,478,299
(24,782)
2,453,517
1,000
20%
2,453
The computation of the interim dividends for the year ended December 31, 2016 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
1st Preferred
stock
2nd Preferred
stock
3rd Preferred
stock
(In millions of Korean Won, except per share amounts)
5,000 ￦
5,000 ￦
5,000 ￦
220,276,479
(13,222,314)
207,054,165
25,109,982
(2,202,059)
22,907,923
37,613,865
(1,376,138)
36,237,727
1,000 ￦
20%
207,054
1,000 ￦
20%
22,908
1,000 ￦
20%
36,238
5,000
2,478,299
(24,782)
2,453,517
1,000
20%
2,453
(3) The computation of the proposed dividends for the year ended December 31, 2017 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
1st Preferred
stock
2nd Preferred
stock
3rd Preferred
stock
(In millions of Korean Won, except per share amounts)
5,000 ￦
5,000 ￦
5,000 ￦
220,276,479
(13,222,514)
207,053,965
25,109,982
(2,202,059)
22,907,923
37,613,865
(1,376,138)
36,237,727
3,000 ￦
60%
621,162
3,050 ￦
61%
69,869
3,100 ￦
62%
112,337
5,000
2,478,299
(24,782)
2,453,517
3,050
61%
7,483
- 63 -
- 63 -
The computation of the dividends for the year ended December 31, 2016 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
1st Preferred
stock
2nd Preferred
stock
3rd Preferred
stock
(In millions of Korean Won, except per share amounts)
5,000 ￦
5,000 ￦
5,000 ￦
220,276,479
(13,222,514)
207,053,965
25,109,982
(2,202,059)
22,907,923
37,613,865
(1,376,138)
36,237,727
3,000 ￦
60%
621,162
3,050 ￦
61%
69,869
3,100 ￦
62%
112,337
5,000
2,478,299
(24,782)
2,453,517
3,050
61%
7,483
25. SALES:
Sales for the years ended December 31, 2017 and 2016 consist of the following:
Description
Sales of goods
Rendering of services
Royalties
Financial services revenue
Revenue related to construction contracts
Others
2016
2017
(In millions of Korean Won)
￦
￦
80,378,325 ￦
1,445,580
138,636
11,290,926
2,608,678
513,934
96,376,079 ￦
78,607,348
1,422,296
215,616
10,062,030
2,934,765
406,969
93,649,024
26. SELLING AND ADMINISTRATIVE EXPENSES:
Selling and administrative expenses for the years ended December 31, 2017 and 2016 consist of the following:
Description
2017
2016
(In millions of Korean Won)
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
￦
￦
736,167 ￦
301,445
2,460,378
667,945
1,553,626
270,333
5,989,894
2,529,852
171,406
422,126
1,275,158
1,039,260
1,575,544
7,013,346
13,003,240 ￦
726,124
422,993
2,233,095
625,620
1,419,579
245,741
5,673,152
2,558,476
174,834
414,757
1,231,608
1,019,188
1,423,789
6,822,652
12,495,804
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27. GAIN (LOSS) ON INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:
Gain (loss) on investments in joint ventures and associates for the years ended December 31, 2017 and 2016 consist of
the following:
Description
2017
2016
(In millions of Korean Won)
Gain on share of earnings of equity-accounted investees, net ￦
Gain on disposals of investments in associates, net
Impairment loss on investments in associates
527,589 ￦
-
(302,536)
￦
225,053 ￦
1,728,427
1,020
-
1,729,447
28. FINANCE INCOME AND EXPENSES:
(1) Finance income for the years ended December 31, 2017 and 2016 consists of the following:
Description
Interest income
Gain on foreign exchange transactions
Gain on foreign currency translation
Dividend income
Gain on valuation of derivatives
Gain on disposal of AFS financial assets and others
2017
(In millions of Korean Won)
2016
440,720 ￦
159,131
195,647
29,734
82,871
64,840
972,943 ￦
377,594
186,418
154,143
35,135
77,905
280,043
1,111,238
￦
￦
(2) Finance expenses for the years ended December 31, 2017 and 2016 consist of the following:
Description
Interest expenses
Loss on foreign exchange transactions
Loss on foreign currency translation
Loss on valuation of derivatives
Impairment loss on AFS financial assets
Loss on valuation of financial assets at FVTPL and others
2017
(In millions of Korean Won)
2016
￦
￦
333,034 ￦
180,322
145,619
249
373,440
87,722
1,120,386 ￦
272,133
172,918
134,088
60,420
7,629
30,849
678,037
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29. OTHER INCOME AND EXPENSES:
(1) Other income for the years ended December 31, 2017 and 2016 consists of the following:
Description
Gain on foreign exchange transactions
Gain on foreign currency translation
Gain on disposals of PP&E
Commission income
Rental income
Others
2016
2017
(In millions of Korean Won)
￦
￦
405,026 ￦
183,766
23,789
129,456
83,100
328,607
1,153,744 ￦
391,533
219,642
37,269
125,275
80,495
323,673
1,177,887
(2) Other expenses for the years ended December 31, 2017 and 2016 consist of the following:
Description
Loss on foreign exchange transactions
Loss on foreign currency translation
Loss on disposals of PP&E
Impairment loss on non-current assets classified as held for sale
Donations
Others
￦
￦
2017
2016
(In millions of Korean Won)
￦
437,602
282,699
186,575
-
68,843
391,752
1,367,471
￦
407,891
141,602
143,734
18,575
75,802
439,359
1,226,963
30. EXPENSES BY NATURE:
Expenses by nature for the years ended December 31, 2017 and 2016 consist of the following:
Description
2017
(In millions of Korean Won)
2016
Changes in inventories
Raw materials and merchandise used
Employee benefits
Depreciation
Amortization
Others
￦
351,359 ￦
53,039,414
8,920,952
2,254,552
1,274,842
27,327,764
Total (*)
￦ 93,168,883 ￦
(1,092,520)
52,101,673
8,877,589
2,164,635
1,194,191
26,436,919
89,682,487
(*) Sum of cost of sales, selling and administrative expenses and other expenses in the consolidated statements of income.
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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,
2017 and 2016, since there are no dilutive items during the years.
Basic earnings per common stock and preferred stock for the years ended December 31, 2017 and 2016 are
computed as follows:
December 31, 2017
Weighted-
average number
of shares
outstanding (*1)
Profit
available to
share
December 31, 2016
Basic
earnings
per share
Profit
available to
share
Weighted-
average number
of shares
outstanding (*1)
Basic
earnings
per share
Description
Common stock
1st Preferred stock (*2)
2nd Preferred stock
3rd Preferred stock
￦ 3,104,373
344,605
546,938
36,908
(In millions of Korean Won, except per share amounts)
207,053,965 ￦ 14,993 ￦ 4,163,029
461,733
15,043
22,907,923
732,220
15,093
36,237,727
49,453
15,043
2,453,517
206,935,279 ￦ 20,118
20,156
22,907,923
20,206
36,237,727
20,156
2,453,517
(*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.
32. INCOME TAX EXPENSE:
(1)
Income tax expense (benefit) for the years ended December 31, 2017 and 2016 consist of the following:
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
Income tax payable directly charged to equity
Effect of foreign exchange differences
Income tax expense (benefit)
2017
2016
(In millions of Korean Won)
￦
1,250,042 ￦
1,710,846
(44,320)
(96,908)
(2,071,031)
676,384
(96,821)
-
177,896
(107,850) ￦
￦
889,259
(876,908)
40,929
(14,337)
(65,462)
1,587,419
(2) The reconciliation from income before income tax to income tax expense (benefit) pursuant to Corporate
Income Tax Law of Korea for the years ended December 31, 2017 and 2016 is as follows:
Description
Income before income tax
Income tax expense calculated at current applicable
tax rates of 22.5% in 2017 and 25.9% in 2016
Adjustments:
Non-taxable income
Disallowed expenses
Tax credits
Impact of changes in tax rates
Others
Income tax expense (benefit)
Effective tax rate (*)
2017
2016
(In millions of Korean Won)
￦
4,438,550 ￦
7,307,072
999,530
1,896,019
(50,863)
77,793
(349,453)
(804,048)
19,191
(1,107,380)
￦
(107,850) ￦
-
(45,614)
104,221
(472,915)
-
105,708
(308,600)
1,587,419
21.7%
(*) The Group does not determine effective tax rate for the year ended December 31, 2017 as tax benefit is recognised.
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(3) The changes in deferred tax assets (liabilities) for the year ended December 31, 2017 are as follows:
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
Changes
(In millions of Korean Won)
End
of the year
￦
2,006,171 ￦
(186,583)
(1,494,267)
(80,858)
(12,146)
(6,757,297)
98,456
574
120,666
(6,305,284)
2,799,832
￦ (3,505,452) ￦
(129,994) ￦
(1,212)
(13,565)
50,270
(19,972)
2,254,086
(27,745)
(633)
(40,204)
2,071,031
(676,384)
1,394,647 ￦
1,876,177
(187,795)
(1,507,832)
(30,588)
(32,118)
(4,503,211)
70,711
(59)
80,462
(4,234,253)
2,123,448
(2,110,805)
The changes in deferred tax assets (liabilities) for the year ended December 31, 2016 are as follows:
Description
Beginning
of the year
End
of the year
￦
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
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
Changes
(In millions of Korean Won)
66,283 ￦
173,220
(187,705)
77,770
(24,593)
(961,620)
38,906
1,002
(72,522)
(889,259)
876,908
(12,351) ￦
2,006,171
(186,583)
(1,494,267)
(80,858)
(12,146)
(6,757,297)
98,456
574
120,666
(6,305,284)
2,799,832
(3,505,452)
￦ (3,493,101) ￦
(4) The components of items charged to equity for the years ended December 31, 2017 and 2016 are as follows:
Description
Income tax payable directly charged to equity:
Gain on disposals of treasury stock, net
Deferred tax charged or credited to:
Loss (gain) on valuation of AFS financial assets, net
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
2017
2016
(In millions of Korean Won)
￦
- ￦ (14,337)
(89,737)
(8,681)
(9,992)
11,589
-
￦ (96,821) ￦
47,822
(11,804)
407
(113)
4,617
40,929
(5) The temporary differences not recognized as deferred tax liabilities related to subsidiaries, associates and
joint ventures are ￦8,144,899 million and ￦8,324,109 million as of December 31, 2017 and 2016,
respectively.
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33. RETIREMENT BENEFIT PLAN:
(1) Expenses recognized in relation to defined contribution plans for the years ended December 31, 2017 and 2016
are as follows:
Description
Paid-in cash
Recognized liability
2016
2017
(In millions of Korean Won)
￦
￦
8,288 ￦
1,257
9,545 ￦
7,605
873
8,478
(2) The significant actuarial assumptions used by the Group as of December 31, 2017 and 2016 are as follows:
Description
Discount rate
Rate of expected future salary increase
December 31, 2017
4.41%
4.62%
December 31, 2016
3.42%
4.21%
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.
(3) The amounts recognized in the consolidated statements of financial position related to defined benefit plans
as of December 31, 2017 and 2016 consist of the following:
Description
December 31, 2017
December 31, 2016
Present value of defined benefit obligations ￦
Fair value of plan assets
￦
Net defined benefit liabilities
Net defined benefit assets
(In millions of Korean Won)
5,321,580 ￦
(5,179,426)
142,154 ￦
157,213
(15,059)
4,937,999
(4,449,721)
488,278
492,173
(3,895)
(4) Changes in net defined benefit assets and liabilities for the year ended December 31, 2017 are as follows:
Description
Present value of defined
benefit obligations
Fair value of
plan assets
Net defined benefit
liabilities
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
￦
4,937,999 ￦
(4,449,721) ￦
(In millions of Korean Won)
546,342
142,930
(48)
5,627,223
-
(130,600)
-
(4,580,321)
488,278
546,342
12,330
(48)
1,046,902
-
(6,042)
(6,042)
1,108
(86,192)
51,436
(33,648)
-
(250,000)
(149)
-
-
-
(6,042)
(814,443)
194,926
451
￦
(21,846)
5,321,580 ￦
26,003
(5,179,426) ￦
- 69 -
1,108
(86,192)
51,436
(39,690)
(814,443)
(55,074)
302
4,157
142,154
- 69 -
Changes in net defined benefit assets and liabilities for the year ended December 31, 2016 are as follows:
Description
Present value of defined
benefit obligations
Fair value of
plan assets
Net defined benefit
liabilities
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
(In millions of Korean Won)
4,464,399 ￦
543,176
123,981
5,131,556
(3,859,966) ￦
-
(113,943)
(3,973,909)
604,433
543,176
10,038
1,157,647
-
19,254
19,254
(16,177)
38,115
(37,219)
(15,281)
-
(197,888)
2,246
-
-
-
19,254
(646,097)
158,359
(844)
(16,177)
38,115
(37,219)
3,973
(646,097)
(39,529)
1,402
10,882
488,278
￦
17,366
4,937,999 ￦
(6,484)
(4,449,721) ￦
(5) The sensitivity analysis below has been determined based on reasonably possible changes of the significant
assumptions as of December 31, 2017 and 2016, while holding all other assumptions constant.
Effect on the net defined benefit liabilities
December 31, 2017
December 31, 2016
Description
Increase by 1% Decrease by 1% Increase by 1% Decrease by 1%
(In millions of Korean Won)
(In millions of Korean Won)
Discount rate
Rate of expected future salary increase
￦
(488,202) ￦
539,260
574,125 ￦
(470,246)
(638,427) ￦
730,367
763,768
(623,622)
(6) The fair value of the plan assets as of December 31, 2017 and 2016 consists of the following:
Description
December 31, 2017
December 31, 2016
(In millions of Korean Won)
Insurance instruments
Debt instruments
Others
￦
￦
4,873,665 ￦
120,277
185,484
5,179,426 ￦
4,192,438
111,003
146,280
4,449,721
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- 70 -
34. CASH FLOWS:
(1) Cash generated from operations for the years ended December 31, 2017 and 2016 are as follows:
Description
Profit for the year
Adjustments:
Post-employment benefits
Depreciation
Amortization of intangible assets
Provision for warranties
Income tax expense (benefit)
Loss (gain) on foreign currency translation, net
Loss on disposals of PP&E, net
Interest income, net
Gain on disposals of AFS financial assets, net
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
Impairment loss on investments in associates
Impairment loss on AFS financial assets
Others
Changes in operating assets and liabilities:
Decrease in trade notes and accounts receivable
Decrease in other receivables
Increase in other financial assets
Increase in inventories
Decrease (increase) in other assets
Increase (decrease) in trade notes and accounts payable
Increase 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
2017
2016
(In millions of Korean Won)
￦
4,546,400 ￦
5,719,653
559,881
2,254,552
1,274,842
1,392,351
(107,850)
48,905
162,786
(107,686)
(35,650)
(527,589)
-
6,305,394
302,536
373,440
885,169
12,781,081
425,448
142,656
(494,059)
(726,406)
(439,430)
40,271
109,302
1,350,891
(25,156)
(804,521)
(55,074)
(2,420,081)
(2,567,406)
(5,717,246)
(203,441)
(11,384,252)
554,087
2,164,635
1,194,191
1,194,945
1,587,419
(98,095)
106,465
(105,461)
(254,372)
(1,728,427)
(1,020)
5,816,431
-
7,629
726,918
11,165,345
199,488
438,498
(616,763)
(1,324,465)
109,288
(380,363)
680,435
82,012
(5,365)
(635,898)
(39,529)
(1,663,417)
(3,877,597)
(6,509,766)
(21,686)
(13,565,128)
3,319,870
Cash generated from operations
￦
5,943,229 ￦
(2) Major non-cash transactions not stated on the consolidated statements of cash flows from investing and
financing activities for the years ended December 31, 2017 and 2016 are as follows:
Description
2016
2017
(In millions of Korean Won)
Reclassification of the current portion of long-term debt
and debentures
Reclassification of construction-in-progress to PP&E
Reclassification of construction-in-progress to intangible assets
￦
14,335,321 ￦
3,140,826
94,937
14,836,967
2,756,771
168,707
- 71 -
- 71 -
(3) Changes in liabilities arising from financial activities for the year ended December 31, 2017 are as follows:
Changes from non-cash transactions
Beginning
of the year
Cash flows from
financing
activities
Reclassified as
current
Effect of
exchange rate
changes
Present
value
discounts
Others(*2)
End of
the year
(In millions of Korean Won)
￦ 23,597,645 ￦
(13,698,936) ￦ 14,335,321 ￦ (1,177,345) ￦ 48,714 ￦
(47,198) ￦ 23,058,201
13,389,983
36,456,392
4,220,938
12,693,831
(4,058,782)
(10,276,539)
(1,075,734)
(2,449,311)
1,869
29,819
9,863
-
12,488,137
36,454,192
Description
Short-term
borrowings
(*1)
Long-term
debts
Debentures
(*1) The current portion of long-term debts and debentures are included.
(*2) Others include acquisitions due to business combination and others.
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, 2017 and 2016 are as follows:
Description
December 31, 2017
December 31, 2016
Total liabilities
Total equity
Debt-to-equity ratio
(2) Financial risk management
￦
(In millions of Korean Won)
103,442,100 ￦
74,757,354
138.4%
106,491,350
72,344,578
147.2%
The Group is exposed to various financial risks, such as market risk (foreign exchange risk, interest rate risk and
equity price risk), credit risk and liquidity risk related to its financial instruments. The purpose of risk
management of the Group is to identify potential risks related to financial performance and reduce, eliminate and
evade those risks to an acceptable level of risks to the Group. Overall, the Group’s financial risk management
policy is consistent with the prior period policy.
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 exposed 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 currency and maturity, and by adjusting the foreign currency settlement date based on its
exchange rate forecast. The Group uses foreign exchange derivatives; such as currency forward, currency swap
and currency option; as hedging instruments. However, speculative foreign exchange trade on derivative
financial instruments is prohibited.
- 72 -
- 72 -
The Group’s sensitivity to a 5% change in exchange rate of the functional currency against each foreign currency
on income before income tax as of December 31, 2017 would be as follows:
Foreign Currency
Increase by 5%
Decrease by 5%
Foreign Exchange Rate Sensitivity
USD
EUR
JPY
(In millions of Korean Won)
￦
9,346 ￦
(23,839)
(7,460)
(9,346)
23,839
7,460
The sensitivity analysis includes the Group’s monetary assets, liabilities and derivative assets, liabilities but
excludes items of income 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 financial instruments with variable interest rates. The Group manages its interest rate risk through
regular assessments of the change in market conditions and the adjustments in nature of its interest rates.
The Group’s sensitivity to a 1% change in interest rates on income before income tax as of December 31, 2017
would be as follows:
Accounts
Interest Rate Sensitivity
Increase by 1%
Decrease by 1%
(In millions of Korean Won)
Cash and cash equivalents
Financial assets at FVTPL
Short-term and long-term financial
instruments
Borrowings and debentures
￦
16,657 ￦
352
4,706
(142,437)
(16,657)
(27)
(4,706)
142,437
The Company’s subsidiaries, Hyundai Card Co., Ltd. and Hyundai Capital Services, Inc., that are operating
financial business, are 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, 2017 and 2016, the amounts of interest rate risk measured at VaR are ￦194,899 million and
￦180,341 million, respectively.
c) Equity price risk
The Group is exposed to market price fluctuation risk arising from equity instruments. As of December 31, 2017,
the amounts of held for trading equity instruments and AFS equity instruments measured at fair value are
￦111,654 million and ￦1,998,986 million, respectively.
2) Credit risk
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 evaluated based on the counterparty’s financial conditions, default history, and
other factors. The credit risk in the liquid funds and 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 financial assets in the
consolidated financial statements represents the maximum amounts of exposure to credit risk.
3) Liquidity risk
The Group manages liquidity risk based on maturity profile of its funding. The Group analyses and reviews
actual cash outflow and its budget to match the maturity of its financial liabilities to that of its financial assets.
- 73 -
- 73 -
Due to the inherent nature of the industry, the Group requires continuous R&D investment and is sensitive to
economic fluctuations. Thus the Group possesses the appropriate amount of cash held and cash equivalents. In
addition, the Group has agreements in place with financial institutions with respect to trade financing and
overdraft to mitigate any significant unexpected market deterioration. The Group, also, continues to strengthen
its credit rates to secure a stable financing capability.
The Group’s maturity analysis of its non-derivative liabilities according to their remaining contract period before
expiration as of December 31, 2017 is as follows:
Description
Not later than
one year
Remaining contract period
Later than one year
and not later than
five years
Later than
five years
(In millions of Korean Won)
Total
Non interest-bearing
liabilities
Interest-bearing liabilities
Financial guarantee
￦
15,361,081 ￦
24,460,968
1,077,741
20,116 ￦
48,641,036
7,936
- ￦
2,405,613
19,664
15,381,197
75,507,617
1,105,341
The maturity analysis is based on the non-discounted cash flows and the earliest maturity date at which payments,
i.e., both principal and interest, should be made.
(3) Derivative instrument
The Group enters into derivative instrument contracts, such as currency forwards, currency options, currency
swaps and interest rate swaps to hedge its exposure to changes in foreign exchange rate.
As of December 31, 2017 and 2016, the Group deferred a net profit of ￦6,943 million and a ￦3,722 million,
respectively, in accumulated other comprehensive loss, on its effective cash flow hedging instruments.
The longest period in which the forecasted transactions are expected to occur is within 50 months as of
December 31, 2017.
For the years ended December 31, 2017 and 2016, the Group recognizes a net loss of ￦490,945 million and a
net profit of ￦214,125 million in profit or loss (before tax), respectively, which resulted from the ineffective
portion of its cash flow hedging instruments and changes in the valuation of its other non-hedging derivative
instruments.
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36. RELATED-PARTY TRANSACTIONS:
The transactions and balances of receivables and payables within the Group are wholly eliminated in the
preparation of the consolidated financial statements of the Group.
(1) For the year ended December 31, 2017, significant transactions arising from operations between the Group
and related parties or affiliates by the Monopoly Regulation and Fair Trade Act of the Republic of Korea
(“the Act”) are as follows:
Description
Sales/proceeds
Purchases/expenses
Sales
Others
Purchases
Others
Entity with
significant
influence over
the Company
and its
subsidiaries
Hyundai MOBIS Co., Ltd.
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
Joint ventures
and associates
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
Others
Other related parties
Affiliates by the Act
(In millions of Korean Won)
￦ 851,971 ￦
11,641 ￦ 4,712,207 ￦
152,716
-
25,209
33,173
16,595
4,554
-
14,173
1,019,330
564,105
1,127,755
111,606
680,745
3,343
278,107
394,212
2,518
816,290
218
520
2,933
3,092
1,601
1,175,462
1,576,856
1,085,635
773,394
357,531
-
332
8,760
649,567
1,677
149
2,015
69,248
-
7,904
69,433
6,693
138,163
254,642
407,778
748,265
132,123
1,839,684
622
624,525
317
2,631
1,229,744
2,799,431
961
6,170,011
53,726
5,211
13,200
125
571
4
-
48
5,898
349,113
11,479
-
-
-
6,198
2,769
2,132,879
-
1,822,825
For the year ended December 31, 2016, significant transactions arising from operations between the Group
and related parties or affiliates by the Act are as follows:
Description
Entity with
significant
influence over
the Company
and its
subsidiaries
Hyundai MOBIS Co., Ltd.
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
Joint ventures
and associates
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
Others
Other related parties
Affiliates by the Act
Sales/proceeds
Purchases/expenses
Sales
Others
Purchases
Others
(In millions of Korean Won)
￦ 924,980 ￦
54,191
3
47,765
35,198
13,448
4,160
314
34,058
978,230
738,506
883,858
111,846
1,454,281
12,300
203,546
452,843
2,055
790,839
- 75 -
9,051 ￦ 4,541,726 ￦
4,125
448
2,039
3,587
8,743
1,371,530
1,604,304
1,029,460
751,418
310,899
-
302
2,136
634,883
2,010
27
9,323
81,286
41
67,005
41,769
3,131
118,829
247,829
225,395
720,424
144,926
2,671,999
645
803,184
233
1,027
974,723
2,607,397
37
5,546,570
25,424
10,092
210
2,104
1,037
31
-
-
3,140
276,581
3,596
-
34
-
3,371
4,715
2,090,566
-
1,703,170
- 75 -
(2) As of December 31, 2017, significant balances related to the transactions between the Group and related
parties or affiliates by the Act are as follows:
Description
Entity with
significant
influence over
the Company
and its
subsidiaries
Joint ventures
and associates
Hyundai MOBIS Co., Ltd.
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
Other related parties
Affiliates by the Act
Receivables (*1,2)
Payables
Trade notes
and accounts
receivable
Other
receivables
and others
(In millions of Korean Won)
Trade notes
and accounts
payable
Other
payables
and others
￦ 150,640 ￦
9,514
-
939
2,134
1,886
-
8,576
235,557
24,547
84,934
5,085
-
286,916
-
69,426
182,346
236
204,869
12,322 ￦
765
259
10
40
85
42
1,054
326,585
620,182 ￦
42,710
118,894
170,877
53,628
27,100
42,202
72,715
22,013
14,747
183
365
105,854
87,455
-
19,252
113,488
557
983,238
176,080
1
27,702
64
-
44
148,572
405,009
184
689,203
209,749
-
-
11
1,483
-
-
5,667
127,920
10,047
-
50
18,400
582
3,977
96,067
634,076
-
324,512
(*1) The Group has recognized the allowance for doubtful accounts for the related parties' receivables in the amount of ￦21,915
million as of December 31, 2017 and the bad debt or doubt expenses is recognized in the amount of ￦21,872 million for the
year ended December 31, 2017.
(*2) As of December 31, 2017, outstanding payment of ￦12,947 million of corporate purchase card agreement provided by
Hyundai Card Co., Ltd. are included. For the year ended December 31, 2017, amount used and repayment of agreement are
￦251,676 million and ￦261,624 million respectively.
- 76 -
- 76 -
As of December 31, 2016, significant balances related to the transactions between the Group and related parties or
affiliates by the Act are as follows:
Description
Entity with
significant
influence over
the Company
and its
subsidiaries
Joint ventures
and associates
Hyundai MOBIS Co., Ltd.
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
Other related parties
Affiliates by the Act
Receivables
Payables
Trade notes
and accounts
receivable
Other
receivables
and others
(In millions of Korean Won)
Trade notes
and accounts
payable
Other
payables
and others
￦ 182,335 ￦
44
40
325
5,250
10,576
-
19,378
247,612
52,670
103,534
7,554
-
280,352
-
40,008
157,606
456
197,930
20,482 ￦
8,254
691
16,733
168
1,812
74
181
319,371
844,228 ￦
91,761
135,290
127,908
64,287
40,473
26,611
63,496
44,337
9,936
1
1,264
115,296
43,284
48
55,003
88,864
474
869,441
150,402
-
49,762
79
-
-
151,169
389,176
9
914,777
176,459
-
-
5
2,369
-
-
3,786
115,044
7,395
-
169
20,758
11,329
1,164
84,713
670,383
-
383,664
(3) Significant fund transactions and equity contribution transactions for the year ended December 31, 2017,
between the Group and related parties are as follows:
Description
Lending
Collection
Borrowing Repayment Acquisition
Loans
Borrowings
Equity
contribution
(In millions of
Korean Won)
Joint ventures and associates
-
-
-
-
- ￦
80,144
Significant fund transactions and equity contribution transactions for the year ended December 31, 2016,
between the Group and related parties are as follows:
Description
Lending
Collection
Borrowing Repayment Acquisition
Loans
Borrowings
(In thousands of U.S. Dollars, Chinese Yuan)
Equity
contribution
(In millions of
Korean Won)
Entities with significant
influence over the Company
and its subsidiaries
Joint ventures and associates
- $
￥ 350,000
140,000
-
-
-
-
- $
-
19,181 ￦
-
431,517
For the years ended December 31, 2017 and 2016, the Group received dividends of ￦835,338million and
￦897,954 million from related parties and affiliates by the Act, respectively and paid dividends of
￦278,995 million and ￦248,840 million to related parties, respectively. During 2017, the Group traded in
other financial assets and others of ￦2,379,920 million with HMC Investment Securities Co., Ltd., an
associate of the Group. The Group has other financial assets of ￦1,534,980 million in the consolidated
statements of financial position as of December 31, 2017.
- 77 -
- 77 -
(4) Compensation of registered and unregistered directors, who are considered to be the key management
personnel for the years ended December 31, 2017 and 2016 are as follows:
Description
2017
2016
(In millions of Korean Won)
Short-term employee salaries
Post-employment benefits
Other long-term benefits
￦
￦
172,557 ￦
37,810
285
210,652 ￦
190,413
37,820
490
228,723
37. COMMITMENTS AND CONTINGENCIES:
(1) As of December 31, 2017 the debt guarantees provided by the Group, excluding the ones provided to the
Company’s subsidiaries are as follows:
Description
To associates
To others
Domestic
Overseas (*)
(In millions of Korean Won)
￦
￦
1,327 ￦
9,934
11,261 ￦
8,992
1,107,788
1,116,780
(*) The guarantee amounts in foreign currencies are translated into Korean Won using the Base Rate announced by Seoul
Money Brokerage Services, Ltd. as of December 31, 2017.
(2) As of December 31, 2017, 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, 2017, the Group is currently involved in lawsuits for ordinary wage, which involves disputes
over whether certain elements of remuneration 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, 2017, a substantial portion of the Group’s PP&E is pledged as collateral for various
loans and leasehold deposits up to ￦840,374 million. In addition, the Group pledged certain bank deposits,
checks, promissory notes and others, 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 collateral for their borrowings.
(4) As of December 31, 2017, the Group has overdrafts, general loans, and trade-financing agreements with
numerous financial institutions, including Kookmin Bank, with a combined limit of up to USD 22,700
million, and ￦6,452,800 million of Korean Won.
(5) As of December 31, 2017, Hyundai Capital Services, Inc.and Hyundai Card Co., Ltd. have entered into
agreements for certain borrowings including trigger clauses for the purpose of credit enhancement. If the
Company’s credit rating falls below a certain level, this may result in early repayment of the borrowings or
termination of the contracts.
- 78 -
- 78 -
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 cannot be classified in the vehicle segment or in the finance segment.
(2) Sales and operating income by operating segments for the years ended December 31, 2017 and 2016 are as
follows:
For the year ended December 31, 2017
Vehicle
Finance
Others
(In millions of Korean Won)
￦ 111,479,729 ￦ 15,744,881 ￦ 7,741,527 ￦ (38,590,058) ￦ 96,376,079
-
96,376,079
(36,989,499)
74,490,230
38,590,058
-
(1,270,268)
6,471,259
(330,291)
15,414,590
Total
Consolidation
adjustments
Total sales
Inter-company sales(*)
Net sales
Operating income
2,585,413
718,137
338,792
932,325
4,574,667
(*) Inter-company sales include intersegment sales in the Group.
For the year ended December 31, 2016
Vehicle
Finance
Others
(In millions of Korean Won)
￦ 109,939,363 ￦ 14,338,675 ￦ 8,100,575 ￦ (38,729,589) ￦ 93,649,024
-
93,649,024
(37,255,793)
72,683,570
38,729,589
-
(1,186,953)
6,913,622
(286,843)
14,051,832
Total
Consolidation
adjustments
Total sales
Inter-company sales(*)
Net sales
Operating income
3,481,150
703,212
574,808
434,330
5,193,500
(*) Inter-company sales include intersegment sales in the Group.
(3) Assets and liabilities by operating segments as of December 31, 2017 and 2016 are as follows:
As of December 31, 2017
Vehicle
Finance
Others
(In millions of Korean Won)
Consolidation
adjustments
Total
Total assets
Total liabilities
Borrowings and debentures
￦
99,724,673 ￦ 84,016,995 ￦ 7,604,015 ￦ (13,146,229) ￦ 178,199,454
103,442,100
4,613,747
34,910,194
72,000,530
2,512,959
7,412,234
(8,430,611)
(2,619,343)
72,348,770
64,694,680
As of December 31, 2016
Total assets
Total liabilities
Borrowings and debentures
Vehicle
Finance
Others
(In millions of Korean Won)
￦ 100,011,029 ￦ 84,586,904 ￦ 7,882,397 ￦ (13,644,402) ￦ 178,835,928
106,491,350
73,444,020
(9,484,633)
(2,664,394)
4,877,520
2,856,737
36,631,454
7,244,070
74,467,009
66,007,607
Total
Consolidation
adjustments
- 79 -
- 79 -
(4) Sales by region where the Group’s entities are located in for the years ended December 31, 2017 and 2016 are
as follows:
For the year ended December 31, 2017
Total sales
Inter-company sales
Net sales
Korea
Europe
(In millions of Korean Won)
￦ 53,226,776 ￦ 37,568,642 ￦ 8,644,922 ￦ 32,480,853 ￦ 3,044,944 ￦ (38,590,058) ￦ 96,376,079
-
96,376,079
(6,764,174)
30,804,468 8,193,449
(15,144,026)
38,082,750
-
3,044,944
38,590,058
16,250,468
(16,230,385)
(451,473)
Others
Total
Asia
-
For the year ended December 31, 2017
Total sales
Inter-company sales
Net sales
Korea
Europe
(In millions of Korean Won)
￦ 53,122,501 ￦ 39,147,944 ￦ 8,017,997 ￦ 29,966,102 ￦ 2,124,069 ￦ (38,729,589) ￦ 93,649,024
-
93,649,024
(7,920,660)
31,227,284 7,616,754
(15,040,163)
38,082,338
(1,572)
2,122,497
38,729,589
14,600,151
(15,365,951)
(401,243)
Others
Total
Asia
-
(5) Non-current assets by region where the Group’s entities are located in as of December 31, 2017 and 2016 are
Consolidation
adjustments
Consolidation
adjustments
North
America
North
America
as follows:
Description
Korea
North America
Asia
Europe
Others
Consolidation adjustments
December 31,
2017
(In millions of Korean Won)
December 31,
2016
￦ 29,443,964 ￦
2,040,394
1,047,364
2,076,017
390,816
34,998,555
(162,579)
28,390,134
2,415,983
1,046,491
2,011,233
489,727
34,353,568
(150,009)
34,203,559
Total (*)
￦ 34,835,976 ￦
(*) Sum of PP&E, intangible assets and investment property.
(6) There is no single external customer who represents 10% or more of the Group’s revenue for the years ended
December 31, 2017 and 2016.
- 80 -
- 80 -
39. CONSTRUCTION CONTRACTS:
(1) Cost, income and loss and claimed construction from construction in progress as of December 31, 2017 and
2016 are as follows:
Description
December 31,
2017
(In millions of Korean Won)
December 31,
2016
Accumulated accrual cost
Accumulated income
Accumulated construction in process
Progress billing
Due from customers
Due to customers
Reserve (*)
￦
9,998,070 ￦
784,071
10,782,141
(10,196,219)
1,024,899
(438,977)
47,574
10,871,107
984,358
11,855,465
(10,954,684)
1,220,582
(319,801)
62,090
(*) Reserve is recognized as long-term trade notes and accounts receivable in the consolidated financial statements
(2) Effects on profit or loss of current and future periods, due from customers related to changes in accounting
estimates of total contract revenue and total contract costs of ongoing contracts of Hyundai Rotem, a
subsidiary of the Company, as of December 31, 2017 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
Provision for construction losses
December 31, 2017
(In millions of Korean Won)
￦
25,244
(22,045)
50,223
(2,934)
(18,596)
97,973
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, 2017, and the estimates of
contract revenue as of December 31, 2017. Total contract revenue and costs are subject to change in future
periods.
(3) There is no contract more than 5% of the Group’s revenue in the prior period that is recognized in the
current period by the stage of completion method for basis of the percentage of total costs incurred to date
bear to the estimated total contract costs instruments for the year ended December 31, 2017.
- 81 -
- 81 -
40. BUSINESS COMBINATIONS:
(1) The Company acquired 50% of the shares in HTMV from THANH CONG and obtained control over
HTMV on March 29, 2017.
Considerations for acquisition and the fair value of the assets acquired at the acquisition date are as follows:
Description
Amounts
(In millions of Korean Won)
Considerations transferred
Non-controlling interests
Assets and liabilities acquired:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Fair value of identifiable net assets
Goodwill
￦
￦
32,609
32,609
34,647
41,393
959
9,863
65,218
-
The Group recognized sales of ￦258,863 million and net income of ￦5,419 million arising from the acquisition
for the year ended December 31, 2017.
(2) The Company acquired 50% of the shares in HTCV from THANH CONG and obtained control over
HTCV on October 2, 2017.
Considerations for acquisition and the fair value of the assets acquired at the acquisition date are as follows:
Description
Amounts
(In millions of Korean Won)
Considerations transferred
Non-controlling interests
Assets and liabilities acquired:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Fair value of identifiable net assets
Goodwill
￦
￦
11,367
11,367
22,734
-
-
-
22,734
-
The Group recognized no sales and net loss of ￦57 million arising from the acquisition for the year ended
December 31, 2017.
- 82 -
- 82 -