HYUNDAI MOTOR COMPANY
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2018 AND 2017
ATTACHMENT: INDEPENDENT AUDITORS’ AUDIT REPORT
HYUNDAI MOTOR COMPANY
Contents
INDEPENDENT AUDITORS’ AUDIT REPORT ----------------------------------------------------
1
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION -----------------------------------
6
CONSOLIDATED STATEMENTS OF INCOME ------------------------------------------------------- 8
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ---------------------------- 9
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ------------------------------------ 10
CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --------------------------------------- 14
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 March 6, 2019
To the Shareholders and the Board of Directors of
Hyundai Motor Company:
Our Opinion
We have audited the accompanying consolidated financial statements of Hyundai Motor and its subsidiaries(“the
Group”), which comprise the consolidated statements of financial position as of December 31, 2018 and December
31, 2017, 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.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Group as of December 31, 2018 and December 31, 2017, respectively, and its financial performance and its
cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-
IFRS”).
Basis for Audit Opinion
We conducted our audits in accordance with the Korean Standards on Auditing (“KSAs”). Our responsibilities
under those standards are further described in the Our Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Group in accordance with the ethical requirements, including those
related to independence, that are relevant to our audit of the consolidated financial statements in the Republic of
Korea as required by prevailing audit regulations. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Our Key Audit Matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our audit opinion thereon, and we do not
provide a separate opinion on these matters.
1) Valuation of the warranty provision
Consolidated financial statement risk
Please refer with regard to the accounting policies to Notes 2.(20). The Group provides customers with the free
warranty services for guaranteed period and recognizes warranty provision which is expected to be incurred by
management assumption. The Group aggregates sales volume by vehicle model and estimates warranty expenses
which is expected to be incurred based on historical data of the actual warranty expenses. The Group applies
discount rate to recognize warranty provision. In order to measure and recognize warranty provision, management
applies assumption to expected warranty expenses by vehicle model and discount rate. Management uses historical
data of the actual warranty expenses to estimate expected warranty expense. We decided to choose the valuation of
warranty provision as one of Key Audit Matters since the impact on the consolidated financial statements would be
significant if the error on aggregation of sales volume by vehicle and estimation of expected warranty expenses is
occurred.
Our audit approach
For the purpose of audit on valuation of the warranty provision, we obtained the understanding of the process to
measure and recognize the warranty provision and perform design & implementation test on key control identified
in the process. In addition, we used IT specialist to perform design & implementation testing over general IT
system and automated control related to collecting data of warranty expenses incurred in domestic and abroad
In order to confirm the appropriateness of assumption applied to expected warranty expenses by vehicle model, we
compared the actual warranty expenses in the current year with expected warranty expenses which were estimated
at the end of prior year and we verified discount rate used from external institute data. In addition, we performed
sampling audit procedure on actual warranty expenses to verify accuracy of data for estimating expected warranty
expenses, and we performed audit procedure to test completeness of vehicle sold to use estimation.
2) Valuation of Financial services receivables
Consolidated financial statement risk
Please refer with regard to the accounting policies to Notes 2.(8). As described in Note 13, the financial service
receivables consist of loan obligations, card receivable, financial lease receivables and others. As of December 31,
2018, the balance of financial receivable is ￦56,019,424 million, approximate 31% of the Group’s total asset. The
Group recognized the loss allowance of financial service receivables in the amount of ￦1,368,759 million as of
December 31, 2018 and the impairment loss is recognized in the amount of ￦720,160 million for the year ended
December 31, 2018. The Group measures expected credit loss on financial services receivables in accordance with
K-IFRS 1109 ‘Financial Instruments’ which have been applied from the year beginning on January 1, 2018.
Judgement of the management is required to determine the certain level of significant decline on credit rating and
assumptions applied to the expected credit loss model including credit rating and macroeconomic variables. In
addition, the Group uses historical transaction data such as overdue, bankruptcy and collection in assumptions.
Since the impact on the consolidated financial statements due to errors in the assumptions applied to the expected
credit loss model is significant, we selected valuation of financial services receivables as a key audit matters.
Our audit approach
For the purpose of audit on the appropriateness of valuation of financial services receivables, we obtained the
understanding of the process to recognize the loss allowance on financial services receivables and confirmed
process to accord with requirements in K-IFRS 1109 ‘Financial Instruments’. We performed design &
implementation and operating effectiveness testing on key control identified in the process. We used IT specialist to
perform design & implementation and operating effectiveness testing over general IT system related to the loss
allowance on financial services receivables, and on automated control related to historical transaction data
processing.
Furthermore, we performed sampling audit procedures to evaluate the appropriateness of credit rating and
classification of stage including significant increase in the credit risk. We performed recalculation to confirm the
appropriateness of calculation method related to estimation on risk factors.
Responsibilities of Management and the Directors for the Financial Statements
Management is responsible for the preparation of the accompanying consolidated financial statements in
accordance with K-IFRS, and for such internal control as they determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management of the Group is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
The directors’ responsibilities include overseeing the Group’s financial reporting process.
Our Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with prevailing audit regulations in the Republic of Korea will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance with prevailing audit regulations in the Republic of Korea, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
Conclude on the appropriateness of the management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the group audit. We are solely
responsible for our audit opinion.
We communicate with the directors of the Group regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors of the Group with a statement that we have complied with relevant ethical
requirements, including those related to independence, and to communicate with them all matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.
The engagement partner on the audit resulting in this independent auditor’s report is, Hwang, Seunghee.
March 6, 2019
Notice to Readers
This report is effective as of March 6, 2019, 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, 2018 AND 2017
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, 2018 AND 2017
ASSETS
NOTES December 31, 2018
December 31, 2017
(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
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
33
13,19
14
7,19
9,113,625 ￦
7,936,319
9,755,725
3,595,993
3,291,847
10,714,858
97,271
25,864,589
867,192
1,770,682
73,008,101
112,394
2,223,358
136,777
755,088
30,545,608
189,334
4,921,383
17,143,239
1,846,330
28,637,075
20,425,766
711,299
107,647,651
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
Total assets
￦
180,655,752 ￦
178,199,454
(Continued)
- 6 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2018 AND 2017
LIABILITIES AND EQUITY
NOTES December 31, 2018 December 31, 2017
(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
Non-current liabilities classified as held for sale
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 related to assets classified as held for sale
Equity attributable to the owners of the
Company
Non-controlling interests
Total equity
￦
19
19
15,19
15,19
16
17,19
8
18,19
19
15,19
15,19
34
16
17,19
33
18,19
20
21
22
23
24
8,23
7,655,630 ￦
5,425,460
12,249,850
14,104,927
150,802
3,291,868
44,288
719,396
5,796,193
49,438,414
20,319
36,956,114
9,985,250
433,247
3,508,036
297,506
3,320,346
2,800,510
57,321,328
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
106,759,742
103,442,100
1,488,993
4,201,214
(1,155,244)
(3,052,198)
66,490,082
1,122
1,488,993
4,201,214
(1,640,096)
(2,278,955)
67,332,328
-
67,973,969
69,103,484
5,922,041
73,896,010
5,653,870
74,757,354
Total liabilities and equity
￦
180,655,752 ￦
178,199,454
(Concluded)
See accompanying notes to consolidated financial statements
- 7 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
NOTES
2018
2017
Sales
Cost of sales
Gross profit
26,39
31
Selling and administrative expenses
27,31
Operating income
Gain on investments in joint ventures and
(In millions of Korean Won, except per share amounts)
￦
96,376,079
96,812,609 ￦
81,670,479
78,798,172
15,142,130
12,719,965
17,577,907
13,003,240
2,422,165
4,574,667
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
28
29
29
20
30,31
33
404,541
823,499
600,867
967,281
1,487,037
2,529,582
884,563
￦
1,645,019 ￦
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
32
￦
￦
￦
￦
1,508,084
136,935
5,632 ￦
5,681 ￦
5,632 ￦
5,681 ￦
See accompanying notes to consolidated financial statements
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
- 8 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
Profit for the year
Other comprehensive income :
Items that will not be reclassified subsequently to
profit or loss:
Gain(loss) on financial assets measured at FVOCI, net
Remeasurements of defined benefit plans
Changes in retained earnings of equity-accounted
investees, net
Changes in share of earnings of equity-accounted
investees, net
Items that may be reclassified subsequently to
profit or loss:
Gain (loss) on financial assets measured at FVOCI, net
Gain (loss) on available-for-sale (“AFS”)
financial assets, net
Gain (loss) on valuation of cash flow hedge
derivatives, net
Changes in share of earnings of equity-accounted
investees, net
Gain (loss) on foreign operations translation, net
Total other comprehensive income (loss)
2017
2018
(In millions of Korean Won)
￦
1,645,019 ￦
4,546,400
(99,125)
(439,508)
(67,347)
(25,826)
(631,806)
(6,534)
-
(124,121)
(237,547)
3,626
(364,576)
(996,382)
-
29,698
(4,451)
-
25,247
-
191,861
26,868
(288,883)
(1,069,341)
(1,139,495)
(1,114,248)
Total comprehensive income
￦
648,637 ￦
3,432,152
Comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income
￦
553,869
94,768
648,637 ￦
2,994,783
437,369
3,432,152
See accompanying notes to consolidated financial statements
- 9 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
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)
- 10 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
Capital
stock
Capital
surplus
Other
capital
items
Accumulated
other
comprehensive
income (loss)
Equity
related to
assets
classified
as held for
sale
(In millions of Korean Won)
Retained
earnings
Total equity
attributable to
the owners of
the Company
Non-
controlling
interest
Total
equity
Balance at
January 1, 2018
￦ 1,488,993 ￦ 4,201,214 ￦ (1,640,096) ￦ (2,278,955)
￦
- ￦ 67,332,328
￦ 69,103,484
￦ 5,653,870
￦ 74,757,354
-
-
-
(340,268)
-
188,665
(151,603)
(71,337)
(222,940)
1,488,993
4,201,214
(1,640,096)
(2,619,223)
-
67,520,993
68,951,881
5,582,533
74,534,414
Changes in
accounting
standards
Balances after
adjustments
Comprehensive
income:
Profit for the period
Loss on
financial assets
measured at
FVOCI, net
Loss on
valuation of
cash flow hedge
derivatives, net
Changes in valuation
of equity-
accounted
investees, net
Remeasurements of
defined benefit
plans
Loss on foreign
operations
translation, net
Total
comprehensive
income (loss)
Transactions with
owners, recorded
directly in equity:
Payment of cash
dividends
Increase in
subsidiaries’stock
Purchases of
subsidiaries’stock
Purchases of
treasury stocks
Retirement of
treasury stocks
Issue of
hybrid bond
Others
Total transactions
with owners,
recorded directly
in equity
Transfer to equity
related to the
disposal group as
held for sale
Balance at
December 31,
2018
(Concluded)
-
-
-
1,508,084
1,508,084
136,935
1,645,019
-
(93,248)
-
(11,510)
(104,758)
(901)
(105,659)
-
(69,896)
-
-
(69,896)
(54,225)
(124,121)
-
(261,658)
-
(67,347)
(329,005)
(1,715)
(330,720)
-
-
(443,505)
(443,505)
3,997
(439,508)
-
-
-
(7,051)
10,677
3,626
985,722
553,869
94,768
648,637
-
(1,076,734)
(1,076,734)
(50,727)
(1,127,461)
-
-
10
10
3,181
3,181
-
-
-
-
-
-
-
-
-
(454,734)
(939,586)
-
-
-
(454,734)
-
-
(313)
-
(313)
299,240
(6,964)
299,240
(7,277)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7,051)
-
(431,853)
-
-
-
(454,734)
939,586
-
-
-
-
-
-
-
-
-
-
-
484,852
-
(2,016,633)
(1,531,781)
244,740
(1,287,041)
-
-
(1,122)
1,122
-
-
-
-
￦ 1,488,993 ￦ 4,201,214 ￦ (1,155,244) ￦ (3,052,198)
￦ 1,122 ￦ 66,490,082
￦ 67,973,969
￦ 5,922,041 ￦ 73,896,010
See accompanying notes to consolidated financial statements
- 11 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
NOTES
2018
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
Interest received
Interest paid
Dividend received
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities:
Decrease from purchase of short-term financial
instruments, net
Proceeds from disposals 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
Acquisitions of subsidiaries, net of cash acquired
Acquisitions of other financial assets (non-current)
Increases in other receivables
Purchases of long-term financial instruments
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Cash outflows from business combinations
Acquisitions of investments in joint ventures and
Associates
Other cash receipts from investing activities, net
Net cash used in investing activities
(Continued)
35
￦
1,645,019 ￦
14,036,476
(9,592,809)
6,088,686
696,134
(1,950,392)
206,323
(1,276,486)
3,764,265
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
(232,528)
(253,493)
2,596,564
141,979
79,241
47
105,116
4,714
5,271
(125,123)
(56,755)
(16,691)
(3,226,486)
(1,632,711)
-
(61,772)
4,070
(2,415,064)
64,513
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)
- 12 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
Cash flows from financing activities:
Proceeds from short-term borrowings, net
Proceeds from long-term debt and debentures
Proceeds form capital increase of subsidiaries
Repayment of long-term debt and debentures
Purchases of treasury stocks
Dividends paid
Issue of hybrid bond
Other cash receipts (payments) from financing
activities, net
Net cash used in financing activities
NOTES
2017
2018
(In millions of Korean Won)
￦
2,167,765 ￦
18,561,982
10
(20,228,806)
(454,734)
(1,127,452)
299,240
(98,787)
(880,782)
1,345,789
28,134,152
75,449
(26,264,109)
-
(1,138,661)
-
28,571
2,181,191
Transfer to assets classified as held for sale
(97,050)
-
Effect of exchange rate changes on cash and
cash equivalents
(79,273)
(427,759)
Net increase in cash and cash equivalents
292,096
931,440
Cash and cash equivalents, beginning of the period
8,821,529
7,890,089
Cash and cash equivalents, end of the period
￦
9,113,625 ￦
8,821,529
(Concluded)
See accompanying notes to consolidated financial statements
- 13 -
HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
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, 2018, the major shareholders of the Company are Hyundai MOBIS (45,782,023 shares,
21.43%) and Chung, Mong Koo (11,395,859 shares, 5.33%).
(1) The Company’s consolidated subsidiaries as of December 31, 2018, are as follows:
Nature of
business
Financing
˝
Location
Korea
˝
Ownership
percentage
59.68%
36.96%
Manufacturing
˝
43.36%
Indirect ownership
Name of subsidiaries
Hyundai Capital Services, Inc.
Hyundai Card Co., Ltd. (*1)
Hyundai Rotem Company (Hyundai
Rotem) (*2)
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 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
˝
˝
R&D
Manufacturing
Engineering
Services
Football club
Sales
Financing
Manufacturing
˝
Holding company
Manufacturing
R&D
Sales
Manufacturing
Sales
Insurance
Financing
˝
˝
˝
Manufacturing
Private Limited (HMIE)
R&D
Hyundai Capital India Private Limited
(HCI)
Financing
˝
˝
˝
˝
˝
˝
˝
USA
˝
˝
˝
˝
˝
˝
˝
˝
Canada
˝
˝
˝
˝
˝
India
˝
˝
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%
100.00%
100.00%
70.00%
100.00%
100.00%
100.00%
100.00%
HMA 100.00%
Hyundai Rotem 100.00%
HMA 100.00%
˝
Hyundai Capital Services 20.00%
HCCA 100.00%
HCLI 99.99%,
HCCA Funding Inc. 0.01%
HCLI 100.00%
100.00%
HMI 100.00%
100.00%
Hyundai Capital Services 100.00%
- 14 -
Name of subsidiaries
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.
Genesis Motor Sales(Shanghai) 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,
Nature of
business
Sales
R&D
Sales
˝
˝
Real estate
development
Sales
Manufacturing
˝
˝
˝
˝
Sales
Financing
Services
Location
Japan
Ownership
percentage
100.00%
˝
100.00%
China
100.00%
Indirect ownership
˝
˝
˝
˝
˝
˝
100.00%
100.00%
BJMSS 100.00%
99.00%
100.00%
CMEs 99.00%
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%
Australia
100.00%
100.00%
New Zealand 100.00%
˝
Hyundai Capital Services 100.00%
Hyundai Rotem 100.00%
s.r.o. (HMMC)
Hyundai Motor Czech s.r.o (HMCZ)
Hyundai Motor Europe GmbH (HME)
Manufacturing
Sales
Marketing and
Czech
˝
100.00%
100.00%
sales
Germany
100.00%
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
Sales
R&D
Marketing
Financing
˝
˝
˝
˝
˝
˝
100.00%
100.00%
100.00%
100.00%
85.00%
HME 100.00%
Hyundai Capital Services 100.00%
Hyundai Capital Services 65.00%
Independent States B.V (HMCIS B.V)
Holding company
Netherlands
100.00%
HMMR 1.40%
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
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%
Sales
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 Rotem Malaysia SDN BHD
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)
Hyundai Motor Poland Sp. Zo. O (HMP)
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
Malaysia
UK
Italy
Spain
France
Poland
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%
Hyundai Rotem 100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
- 15 -
Name of subsidiaries
Hyundai Motor DE Mexico S DE RL
DE CV (HMM)
Hyundai de Mexico, SA DE C.V.,
Nature of
business
Location
Ownership
percentage
Indirect ownership
Sales
Mexico
100.00%
HT 0.01%
(HYMEX)
Manufacturing
HYUNDAI KEFICO MEXICO S DE RL
DE CV
Hyundai Rio Vista, Inc.
˝
Real estate
˝
˝
99.99%
HT 99.99%
100.00%
Hyundai KEFICO 100.00%
development
USA
100.00%
HT 100.00%
Hyundai Motor Brasil Montadora de
Automoveis LTDA (HMB)
Manufacturing
Brazil
100.00%
Financing
Manufacturing
Holding company
˝
Investment
˝
˝
˝
Cayman
Islands
˝
100.00%
Hyundai Capital Services 100.00%
100.00%
Hyundai Rotem 100.00%
99.99%
HMB 99.99%
59.60%
72.00%
Korea
100.00%
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)
China Mobility Fund, L.P.
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
Miraeasset Triumph Private Equity
Security Investment Trust No.15
ZER01NE Accelerator
Investment Fund No.1
Autopia Fifty-fifth ~ Sixty-fifth
Asset Securitization Specialty
Company (*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
HCA Exchange, 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,
˝
˝
˝
˝
˝
Financing
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
Insurance
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
USA
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
˝
100.00%
100.00%
100.00%
99.00%
0.50%
Hyundai Capital Services 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%
100.00%
Hyundai Card 0.50%
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) Even though the shareholding ratio of ownership is less than half, the Group has de facto control over the entity due to
the relative size of the voting rights held and the degree of share dispersion of other voting rights holders.
- 16 -
(2) Summarized financial position and results of operations of the Company’s major consolidated subsidiaries
as of and for the year ended December 31, 2018 are as follows:
Name of subsidiaries
Assets
Liabilities
Sales
(In millions of Korean Won)
Profit (loss)
for the period
Hyundai Capital Services, Inc. (*)
Hyundai Card Co., Ltd. (*)
Hyundai Rotem Company (*)
Hyundai KEFICO Corporation (*)
HCA(*)
HMA
HMMA
HMMC
HMI(*)
HME(*)
HAOSVT
HMMR
HACC(*)
HMB
HMCA
￦ 30,528,329 ￦ 26,371,459 ￦ 3,087,935 ￦
12,754,672
2,894,156
1,161,039
32,982,390
5,223,678
1,878,332
1,637,592
1,395,005
1,798,150
1,057,673
852,727
678,219
641,020
524,866
2,035,229
2,411,924
1,963,196
9,737,579
15,292,851
6,861,578
6,560,181
6,791,938
9,627,777
2,893,867
2,954,780
2,700,501
2,151,032
1,837,191
15,945,780
4,002,150
1,772,026
37,413,803
6,480,063
4,511,215
3,744,766
3,516,547
1,825,365
1,441,908
1,415,554
1,187,865
1,063,211
671,059
311,281
149,822
(308,035)
52,890
162,842
(330,134)
11,682
359,575
408,097
4,975
11,361
120,979
39,059
92,994
(7,141)
(*) 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, 2017 are as follows:
Name of subsidiaries
Assets
Liabilities
Sales
(In millions of Korean Won)
Profit (loss)
for the period
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.
(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 same reporting periods.
- 17 -
(4) Summarized cash flows of non-wholly owned subsidiaries and financial companies that have material non-
controlling interests to the Group for the year ended December 31, 2018 are as follows:
Description
Hyundai Capital
Services, Inc
Hyundai Card Co.,
Ltd.
HCA
HCCA
(In millions of Korean Won)
Hyundai
Rotem
Company
Cash flows
from operating activities ￦
Cash flows
from investing activities
Cash flows
from financing activities
Effect of exchange rate
changes on cash and
cash equivalent
Transfer to assets
classified as held for sale
Net increase in cash
and cash equivalents
Beginning balance of
Cash and equivalents
Ending balance of cash
and Cash equivalents
￦
(2,197,722) ￦
(284,813) ￦
1,373,846 ￦
(67,908) ￦
(14,193)
(51,442)
(65,961)
819,600
(1,991)
(38,098)
2,609,745
562,818
(3,480,444)
(18,560)
(19,499)
-
(97,050)
-
-
40,584
(1,934)
3,899
-
-
263,531
212,044
(1,246,414)
(90,393)
(67,891)
609,510
654,412
1,408,652
129,586
435,786
873,041 ￦
866,456 ￦
162,238 ￦
39,193 ￦
367,895
Summarized cash flows of non-wholly owned subsidiaries and financial companies that had material non-
controlling interests to the Group for the year ended December 31, 2017 are as follows:
Description
Hyundai Capital
Services, Inc
Hyundai Card Co.,
Ltd.
HCA
HCCA
(In millions of Korean Won)
Hyundai
Rotem
Company
Cash flows
from operating activities ￦
Cash flows
from investing activities
Cash flows
from financing activities
Effect of exchange rate
changes on cash and
cash equivalent
Net increase in cash
and cash equivalents
Beginning balance of
Cash and equivalents
Ending balance of cash
and Cash equivalents
￦
(2,208,619) ￦
(161,413) ￦
26,488 ￦
(238,934) ￦
219,226
(83,265)
(63,608)
(542,761)
(2,701)
31,239
2,382,540
334,639
541,661
257,986
(391,780)
-
-
(178,513)
(3,108)
(5,954)
90,656
109,618
(153,125)
10,397
(144,423)
518,854
544,794
1,561,777
119,189
580,209
609,510 ￦
654,412 ￦
1,408,652 ￦
129,586 ￦
435,786
- 18 -
(5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of
December 31, 2018 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%
1,676,205 ￦
63.04%
2,119,846 ￦
56.64%
689,977
124,719
34,319
94,454
19,099
(177,600)
4,120
Details of non-wholly owned subsidiaries of the Company that had 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
(6) Financial support provided to consolidated structured entities
As of December 31, 2018, 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-
Seventh, Fifty-Ninth and Sixtyth Asset Securitization Specialty Company, Super Series First, Third, Fourth and
Fifth Securitization Specialty Co., Ltd.
- 19 -
(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, 2018 is as
follows:
Description
Purpose
Nature of business
Method of
funding
Total assets
Asset
securitization SPC
Fund raising
through asset-
securitization
Investment fund
Investment in
beneficiary certificate
and others,
Development trust,
Unspecified
monetary trust,
Principal
unsecured trust,
Operation
of trust
investment
Fund raising
through project
financing
Structured finance
(In millions of Korean Won)
Fund collection
Corporate
bond and others
￦
2,579,738
Sales of
beneficiary
certificates,
Sales of trust
investment
product
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
Project financing
and others
6,925,448
6,657,283
Nature of interests in an unconsolidated structured entity of the Group as of December 31, 2017 is as
follows:
Description
Purpose
Nature of business
Method of
funding
Total assets
Asset
securitization SPC
Fund raising
Fund
Corporate
(In millions of Korean Won)
through asset-
securitization
collection
bond and others
￦
1,318,767
Investment fund
Investment in
beneficiary certificate
and others,
Development trust,
Unspecified
monetary trust,
Principal
unsecured trust,
Operation
of trust
investment
Fund raising
through project
financing
Structured finance
Fund management
and operation
and others,
Trust management
and operation,
Payment of
trust fee,
Distribution of
trust benefit
Project financing
for construction
project and
ship investment
Sales of
beneficiary
certificates,
Sales of trust
investment
product
Project financing
and others
3,619,909
8,285,718
- 20 -
2) Risks associated with interests in an unconsolidated structured entity of the Group as of December 31, 2018
are as follows:
Description
Book value in the
structured entity (*)
Asset
securitization SPC
Investment fund
Structured finance
￦
64,867
248,254
525,929
Financial support provided
to the structured entity
Purpose
Method
(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)
￦
Investment
agreement
Loan agreement
(Credit line)
124,550
248,254
908,750
(*)
Interest in structured entities is recognized as Financial assets at FVPL and others according to K-IFRS 1109.
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
￦
78,933
Investment fund
Structured Finance
193,739
432,191
Financial support
provided to the
structured entity
Purpose
Method
(In millions of Korean Won)
Mezzanine
debt and others
Beneficiary
certificates,
Investment trust
Loan
obligation
Credit facility,
Loan agreement
(Credit line)
Investment
agreement
Loan agreement
(Credit line)
Maximum amount
of exposure to loss
of the structured
entity
￦
152,964
193,739
954,450
(*)
Interest in structured entities is recognized as AFS financial assets and others according to K-IFRS 1039.
(8) Significant restrictions of the subsidiaries
As of December 31, 2018, 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.
(9) Changes in consolidated subsidiaries
Subsidiaries newly included in or excluded from consolidation for the year ended December 31, 2018 are as
follows:
Changes
Included
˝
˝
˝
˝
˝
Excluded
˝
˝
˝
Name of subsidiaries
HCA Exchange, LLC
Hyundai Rotem Malaysia SDN BHD
ZER01NE Accelerator Investment Fund No.1
Genesis Motor Sales(Shanghai) Co. Ltd.
China Mobility Fund, L.P..
Autopia Sixty-Fifth Asset Securitization Specialty Company
Privia the Fourth Securitization Specialty Co., Ltd.
Privia the Fifth Securitization Specialty Co., Ltd.
Autopia Fifty-Second Asset Securitization Specialty Company
Autopia Fifty-Fourth Asset Securitization Specialty Company
Description
Acquisition
˝
˝
˝
˝
˝
Liquidation
˝
˝
˝
- 21 -
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(1) Basis of consolidated financial statements preparation
The Group has prepared the consolidated financial statements in accordance with Korean International Financial
Reporting Standards (“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, 2017, 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, 2018 are as follows:
- K-IFRS 1109 (Enactment): ‘Financial Instruments’
The enactments to K-IFRS 1109 contain 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. This enactment supersedes K-IFRS
1039 - Financial Instruments: Recognition and Measurement.
The Group elected not to restate comparative information for the prior period when applying this enactment for
the first time.
The main contents of this enactment and impacts on the Group’s consolidated financial statements are as follows:
A. Classification and measurement of financial assets
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 flow characteristics of the financial asset: as measured at
amortized cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss
(“FVPL”). 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
Otherwise
Measured at amortized cost (*1)
FVOCI (*1)
FVPL
FVPL (*2)
(*1) An entity may measure at FVPL 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 evaluated and reviewed financial assets held in relation to classification and measurement based
on the information available at the date of initial application, and financial impacts on financial assets are as
follows:
The objective of financial assets held that are recognized as measured at amortized cost under K-IFRS 1039, such
as held-to-maturity or loans and receivables is to collect contractual cash flows and the nature of their cash flows
are solely payments of principal and interest on the principal amount outstanding. Therefore, loans and
receivables are classified as financial assets measured at amortized cost under K-IFRS 1109, and there is no
significant impact on the Group’s consolidated financial statements.
- 22 -
The Group holds debt instruments recognized as AFS financial assets under K-IFRS 1039 for contractual cash
inflows and for sale. The Group classified those debt instruments as financial assets measured at FVOCI only
when cash flows are solely payments of principal and interest on the principal amount outstanding; otherwise, as
financial assets measured at FVPL. The fair value change of debt instruments measured at FVOCI is
cumulatively recognized in other comprehensive income, until derecognised or reclassified. The fair value
change of debt instruments measured at FVPL is recognized in profit or loss. The Group deems above impact is
not material.
K- IFRS 1109 permits an entity to make an irrevocable election to designate at 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 recycled to profit or loss.
The Group designated AFS financial assets held for long-term investments as financial assets measured at
FVOCI. Therefore, the opening retained earnings as of January 1, 2018 increased by \340,268 million due to
retrospective adjustment of impairment in AFS financial asset.
Financial assets at FVPL under K-IFRS 1039 are classified as financial assets measured at FVPL under K-IFRS
1109. Therefore, there is no significant impact on the Group’s consolidated financial statements.
B. Classification and measurement of financial liabilities.
For financial liabilities designated as at FVPL using the fair value option, K-IFRS 1109 requires the effects of
changes in fair value attributable to the Group’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.
Except for the above-mentioned changes, there is no significant impact on the Group’s classification and
measurement of financial liabilities.
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 an 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 amortized cost or FVOCI.
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
Stage 1
Stage 2
Non-significant increase in credit risk
since initial recognition
Significant increase in credit risk since
initial recognition
Stage 3
Credit-impaired financial assets
Allowance
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
within the expected life of a financial instrument.
Under K-IFRS 1109, the Group 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 recognises allowance of trade notes, accounts receivable 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.
- 23 -
The Group assessed the impairment of the financial assets held at the date of initial application using reasonable
and supportable information that is available without undue cost or effort to determine the credit risk at the date
that a financial instrument was initially recognised and to compare that to the credit risk at the date of initial
application.
Due to application of this enactment, the Group recognised additional impairment at the date of initial
application. The impact is described in the Note E.
D. Hedge Accounting
Although this enactment retains the mechanics of hedge accounting (fair value hedges, cash flow hedges, hedges
of a net investment in a foreign operation) in K-IFRS 1039, the Group eliminated the complex and rule-based
requirements for hedge accounting in K-IFRS 1039 and changed to principle-based approach focusing on risk
management activities. This new approach broadened the types of hedging instrument and hedged items, and it
provided relief for the Group by eliminating consequent assessment to evaluate hedge effectiveness (80 – 125%)
test and quantitative assessment.
The Group applies the hedge accounting requirements of this enactment prospectively from the date of initial
application in accordance with transition. As of date of initial application, the Group evaluated that hedging
relationship in accordance with K-IFRS 1039 is still eligible under K-IFRS 1109 and therefore noted the hedging
relationship is continuous.
The above-mentioned the hedge accounting requirements of this standard did not have any significant effect on
the Group’s consolidated financial statements.
E. The effects that are attributable to this enactment on equity as of the date of initial application are as follows:
Description
December 31, 2017
(Reported amounts)
Initial application of K-IFRS 1109:
Effect by Classification and
Measurement (*1)
Effect by impairment (*2)
January 1, 2018
(The date of initial application)
The Group's ownership interests
Accumulated other
comprehensive loss
Retained earnings
(In millions of Korean Won)
Non-controlling
interests
￦
(2,278,955) ￦
67,332,328 ￦
5,653,870
(340,268)
-
340,268
(97,266)
-
(71,398)
￦
(2,619,223) ￦
67,575,330 ￦
5,582,472
(*1) Adjustment of retained earnings related to impairment recognition in the past as designating AFS equity instruments to
measure at FVOCI in accordance with K-IFRS 1109.
(*2) Adjustment of retained earnings by additional impairment recognition on financial assets such as financial services
receivables.
- 24 -
F. Classification and measurement of financial assets and liabilities as of the date of initial date of application
according to K-IFRS 1109 and K-IFRS 1039 are as follows.
Description
K-IFRS 1039
K-IFRS 1109
K-IFRS 1039
K-IFRS 1109
Categories
Book Value
Financial
Assets
Loans and receivable
Loans and receivable
Cash and cash
equivalents
Short-term and
long-term
financial
instruments
Trade notes and
accounts
receivable
Other receivables Loans and receivable
Loans and receivable
Financial assets measured
at amortized cost
Financial assets measured
at amortized cost
Financial assets measured
at amortized cost
Financial assets measured
at amortized cost
Financial assets at FVPL Financial assets measured
Other financial
assets
Loans and receivable
AFS financial assets
Derivative assets that are
effective hedging
instruments
Loans and receivable
Other assets
Financial services
receivables
Trade notes and
accounts payable
Financial
Liability
Loans and receivable
Financial liabilities
carried at amortized cost
Other payables
Financial liabilities
carried at amortized cost
Borrowings and
debentures
Financial liabilities
carried at amortized cost
Other financial
liabilities
Other liabilities
Financial liabilities at
FVPL
Derivative liabilities that
are effective hedging
instruments
Financial liabilities
carried at amortized cost
at fair value through
profit or loss
Financial assets measured
at amortized cost
Financial assets measured
at fair value through other
comprehensive income
Financial assets measured
at fair value through
profit or loss
Derivative assets that are
effective hedging
instruments
Financial assets measured
at amortized cost
Financial assets measured
at amortized cost
Financial liabilities
measured at amortized
cost
Financial liabilities
measured at amortized
cost
Financial liabilities
measured at amortized
cost
Financial liabilities
measured at FVPL
Derivative liabilities that
are effective hedging
instruments
Financial liabilities
measured at amortized
cost
(In millions of Korean Won)
￦
8,821,529 ￦
8,821,529
7,891,106
7,891,106
3,961,976
3,961,976
3,195,513
3,195,513
12,964,437
12,964,437
87,589
87,589
2,247,022
2,308,955
61,933
38,197
359,942
38,197
358,927
51,168,018
50,999,145
6,483,875
6,483,875
5,059,246
5,059,246
72,000,530
72,000,530
555
555
463,167
463,167
3,837,148
3,837,148
- 25 -
- 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
supersedes 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 main contents of this enactment and the Group’s accounting policies are as follows:
A. Identify the performance obligations in the contract
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
The Group allocates the transaction price to performance obligations identified in a contract based on relative
standalone selling price. The Group uses an expected cost plus margin approach by estimating the expected costs
for each transaction and adding an appropriate profit margin.
C. Variable consideration
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 highly probable that a significant
reversal in the cumulative amount of revenue recognized will not occur in the future periods.
In accordance with transition in this enactment, the Group applies this enactment retrospectively with the
cumulative effect of initially applying this standard as of January 1, 2018. The Group elects to apply this
standard retrospectively only to contracts that are not completed at the date of initial application. The Group
does not restate all contract modifications that occurred before the date of initial application in accordance with
the following practical expedients. The effect of a \54,337 million reduction in the opening balance of retained
earnings at the date of initial application is not significant on consolidated financial statements.
The effects of the application of this enactment on the consolidated financial statements for the year ended
December 31, 2018 are as follows:
Description
Previous Revenue
Recognition Standard
Adjustments
K-IFRS 1115
December 31, 2018
￦
Assets (*1,6)
Liabilities (*2,6)
Equity (*3)
Revenue (*4)
Cost of sales (*4,5)
Selling and administrative
expenses (*5)
(In millions of Korean Won)
180,517,355 ￦
106,563,459
73,953,896
97,954,821
81,737,163
138,397 ￦
196,283
(57,886)
(1,142,212)
(66,684)
180,655,752
106,759,742
73,896,010
96,812,609
81,670,479
13,795,962
(1,075,997)
12,719,965
(*1) The effect of expenses recognition on costs to fulfil a contract that do not meet the asset recognition, and the effect of the
amount paid to the supplier among cost of sales of additional services, and others.
(*2) The effect of deferred revenue that is attributable to performance obligations of additional services, additional warranties
which are not satisfied yet, and others.
(*3) The cumulative effect of an adjustment to the opening balance of retained earnings in accordance with initially applying K-
IFRS 1115, and others.
(*4) The effect of deducting the consideration payable to a customer from revenue in relation to the card reward, and others.
(*5) The effect of reclassification from selling and administrative expenses to cost of sales related to performance obligations of
additional services, additional warranties, and others.
(*6) The effect of reclassifying provision for construction loss which belonged to ‘due from customers for contract work’ (‘due to
customers for contract work’) to other provisions as separate account is included.
- 26 -
The application of this enactment did not have any significant effect on the consolidated cash flow statement for
the year ended December 31, 2018.
- 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 above-mentioned change in amendment did not have any significant effect on the Group’s interim
consolidated financial statements.
- 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 above-mentioned change in enactment did not have any significant effect on the Group’s consolidated
financial statements.
- 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
FVPL 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.
The above-mentioned changes in amendment did not have any significant effect on the Group’s consolidated
financial statements.
2)
New and revised standards that have been issued but are not yet effective as of December 31, 2018, and that
have not been applied earlier by the Group are as follows:
- K-IFRS 1116 (Enactment): ‘Leases’
This enactment provides a single lessee accounting model that operating lease 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 is effective for annual periods
beginning on or after January 1, 2019.
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.
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 (i.e. below USD 5,000). As a practical
expedient, The Group is not going 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.
- 27 -
As a result of the specific analysis of the effect on the financial statements, the Group expects the right-of-use
assets and lease liabilities to be pledged as of December 31, 2018 to increase by ￦652,311million and lease
liabilities by ￦663,769 million, respectively. For the year ended December 31, 2019, operating lease expenses
are expected to decrease by ￦149,766 million and depreciation expense for right of use assets and interest
expense for lease liabilities are expected to increase of ￦137,172 million and ￦27,891 million, respectively.
However, the financial impact assessment may change depending on additional information available in the
future and any new leases entered into after December 31, 2018.
In lessor accounting, this standard is not significantly changed from K-IFRS 1017 - Leases.
- K-IFRS 1109(Amendment): ‘Prepayment Features with Negative Compensation’
The amendments to K-IFRS 1109 clarify that for the purpose of assessing whether a prepayment feature meets
the SPPI condition, the party exercising the option may pay or receive reasonable compensation for the
prepayment irrespective of the reason for prepayment. In other words, prepayment features with negative
compensation do not automatically fail SPPI. The amendment applies to annual periods beginning on or after
January 1, 2019.
- K-IFRS 1028 (Amendment): ‘Long-term Interests in Associates and Joint Ventures (Amendment)’
The amendment to K-IFRS 1028 clarifies that K-IFRS 1109, including its impairment requirements, applies to
long-term interests. urthermore, in applying K-IFRS 1109 to long-term interests, an entity does not take into
account adjustments to their carrying amount required by K-IFRS 1028 (i.e., adjustments to the carrying amount
of long-term interests arising from the allocation of losses of the investee or assessment of impairment in
accordance with K-IFRS 1028). The amendments apply retrospectively to annual reporting periods beginning on
or after January 1, 2019.
- Annual Improvements to K-IFRS Standards 2015–2017 Cycle
The Annual Improvements include amendments to four Standards such as K-IFRS 1012 Income Taxes, K-IFRS
1023 Borrowing Costs, K-IFRS 1103 Business Combinations, and K-IFRS 1111 Joint Arrangements.
a. K-IFRS 1012 : ‘Income Taxes’
The amendments clarify that an entity should recognize the income tax consequences of dividends in profit or
loss, other comprehensive income or equity according to where the entity originally recognized the transactions
that generated the distributable profits. This is the case irrespective of whether different tax rates apply to
distributed and undistributed profits.
b. K-IFRS 1023 : ‘Borrowing Costs’
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its
intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating
the capitalisation rate on general borrowings.
c. K-IFRS 1103 : ‘Business Combination’
The amendments to K-IFRS 1103 clarify that when an entity obtains control of a business that is a joint
operation, the entity applies the requirements for a business combination achieved in stages, including
remeasuring its previously held interest (PHI) in the joint operation at fair value. The PHI to be remeasured
includes any unrecognized assets, liabilities and goodwill relating to the joint operation.
d. K-IFRS 1111 : ‘Joint Arrangements’
The amendments to K-IFRS 1111 clarify that when a party that participates in, but does not have joint control of,
a joint operation that is a business obtains joint control of such a joint operation, the entity does not remeasure its
PHI in the joint operation.
All the amendments are effective for annual periods beginning on or after January 1, 2019 and generally require
prospective application.
K-IFRS 1019(Amendment): Employee Benefits Plan Amendment, Curtailment or Settlement
-
The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by measuring
the defined benefit liability (asset) using updated assumptions and comparing benefits offered and plan assets
before and after the plan amendment (or curtailment or settlement) but ignoring the effect of the asset ceiling
(that may arise when the defined benefit plan is in a surplus position). K-IFRS 1019 is now clear that the change
in the effect of the asset ceiling that may result from the plan amendment (or curtailment or settlement) is
determined in a second step and is recognized in the normal manner in other comprehensive income.
- 28 -
The paragraphs that relate to measuring the current service cost and the net interest on the net defined benefit
liability (asset) have also been amended. An entity will now be required to use the updated assumptions from this
remeasurement to determine current service cost and net interest for the remainder of the reporting period after
the change to the plan. In the case of the net interest, the amendments make it clear that for the period post plan
amendment, the net interest is calculated by multiplying the net defined benefit liability (asset) as remeasured
under paragraph 99 with the discount rate used in the remeasurement (also taking into account the effect of
contributions and benefit payments on the net defined benefit liability (asset)).
The amendments are applied prospectively. They apply only to plan amendments, curtailments or settlements
that occur on or after the beginning of the annual period in which the amendments to K-IFRS 1019 are first
applied. The amendments to K-IFRS 1019 is effective for annual periods beginning on or after January 1, 2019.
- K-IFRS 1115(Amendment): Revenue from Contracts with Customers
This amendment relates to prevent the revision of meaning 'contract' referred in K-IFRS 1115 paragraph 129.1 to
'individual contract' in relation to 'additional disclosure of contracts based on contract costs incurred to date', so
that even if application of K-IFRS 1115 is adopted, the range of disclosure has not been reduced. In addition, K-
IFRS 1115 does not distinguish the types of contracts that the service contracts that did not qualify for the
application of K-IFRS 1011 in paragraph 45.1 can be qualified in K-IFRS 1115 paragraph 129.1 and it is to
clarify that the range of the contracts subject to make disclosure in accordance with paragraph 129.1 can be
expanded compared to the previous standard. This amendment is effective for annual periods beginning on or
after January 1, 2019.
- K-IFRS 2123(Amendment): Interpretation Uncertainty over Income Tax Treatments
K-IFRS 2123 Interpretation sets out how to determine the accounting tax position when there is uncertainty over
income tax treatments. The Interpretation requires an entity to:
a. determine whether uncertain tax positions are assessed separately or as a group; and
b. assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to
be used, by an entity in its income tax filings:
- If yes, the entity should determine its accounting tax position consistently with the tax treatment used or
planned to be used in its income tax filings.
- If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.
The Interpretation is effective for annual periods beginning on or after January 1, 2019. Entities can apply the
Interpretation with either full retrospective application or modified retrospective application without restatement
of comparatives retrospectively or prospectively.
The Group is currently evaluating the impacts of above mentioned enactments and amendments on the Group’s
consolidated financial statements.
The consolidated financial statements for the Company's annual general meeting of shareholders were approved
by the Board of Directors on February 26, 2019.
(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 Group 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.
- 29 -
When the Group 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 Group considers all relevant facts and circumstances in assessing whether or not the Group’s
voting rights in an investee are sufficient to give it power, including:
the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
rights arising from other contractual arrangements; and
potential voting rights held by the Group, other vote holders or other parties;
any additional facts and circumstances that indicate that the Group has, or does not have, the current 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 Group. 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 Group.
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 Group 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.
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 1109 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.
- 30 -
(5) Revenue recognition
The Group has applied K-IFRS 1115, 'Revenue from contracts with customers', effective from January 1, 2018.
In accordance with K-IFRS 1115, all types of contracts recognize revenues by the 5-step revenue recognition
model (1) identification of contract → (2) identification of performance obligations → (3) calculation of
transaction price → (4) allocation of transaction price to performance obligations → (5) recognition of revenue
when performance obligation is implemented
1) Identification of performance obligations
The Group operates businesses such as the manufacture and sale of automobiles and auto parts. In the automobile
sales contracts with customers, services other than automobile sales are separated from contracts to identify
performance obligations.
2) Obligation to perform at a point in time
The Group recognizes revenue from goods or services sales when the goods or services are transferred to the
customers and fulfills the performance obligations.
3) Obligation to perform over the time
The contracts that the entity provides under its contract with the customer relate to the service over time and are
expected to be carried out over a period of time and recognize revenue over a period of time. In order to
determine whether the control over goods or services is transferred over time, the Group determines whether the
customer simultaneously obtains and consumes the benefits provided by the Group’s performance and whether
the assets controlled by the customer, and whether the assets created by the Group have no substitute purpose,
and whether the Group has the right to make executable claims for the portion that has been completed so far.
4) Allocation of the transaction price
The Group allocates transaction prices based on the relative individual selling prices to the various performance
obligations identified in a single contract, and uses an anticipated cost-benefit appraisal approach, such as
anticipating the expected costs for each transaction and adding appropriate profits.
5) Variable consideration
The Group estimates the amounts 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 highly probable that a
significant reversal in the cumulative amount of revenue recognized will not occur in the future periods.
6) Significant financing component
If the period between the transfer of the goods or services promised to the customer and the payment of the
customer is within one year, a practical simple method that does not adjust the promised price for a significant
financing component is used.
7) 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.
- 31 -
(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 as financial assets measured at fair value through profit or loss, financial
assets measured at amortized cost or financial assets measured at fair value through other comprehensive income
according to the terms and purpose of acquisition. The Group determines the classification of this financial asset
at initial recognition.
All recognized financial assets are measured subsequently at amortized cost or fair value, depending on the
classification of the financial assets.
1) Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortized cost:
The financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other
comprehensive income (FVOCI):
The financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
- 32 -
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVPL).
Despite the foregoing, the Group may make the following irrevocable election / designation at initial recognition
of a financial asset:
The Group may irrevocably elect to present subsequent changes in fair value of an equity investment in
other comprehensive income if certain criteria are met; and
The Group may irrevocably designate a debt investment that meets the criteria of amortized cost or
FVOCI as measured at FVPL if doing so eliminates or significantly reduces an accounting mismatch
1-1) Amortization cost and effective interest rate method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating
interest income over the relevant period. The amortized cost of a financial asset is the amount at which the
financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation
using the effective interest method of any difference between that initial amount and the maturity amount,
adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortized cost of a
financial asset before adjusting for any loss allowance. Interest income is recognized using the effective interest
method for debt instruments measured subsequently at amortized cost and at FVOCI.
1-2) Debt instruments classified as at FVOCI
The corporate bonds are initially measured at fair value plus transaction costs. Subsequently, changes in the
carrying amount of these corporate bonds as a result of foreign exchange gains and losses, impairment gains or
losses, and interest income calculated using the effective interest method are recognized in profit or loss. The
amounts that are recognized in profit or loss are the same as the amounts that would have been recognized in
profit or loss if these corporate bonds had been measured at amortized cost. All other changes in the carrying
amount of these corporate bonds are recognized in other comprehensive income and accumulated under the
heading of investments revaluation reserve. When these corporate bonds are derecognized, the cumulative gains
or losses previously recognized in other comprehensive income are reclassified to profit or loss.
1-3) Equity instruments designated as at FVOCI
On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to
designate investments in equity instruments as at FVOCI. Designation at FVOCI is not permitted if the equity
investment is held for trading or if it is contingent consideration recognized by an acquirer in a business
combination.
Investments in equity instruments at FVOCI are initially measured at fair value plus transaction costs.
Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized
in other comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or
loss is not reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained
earnings.
1-4) Financial assets at FVPL
Financial assets that do not meet the criteria for being measured at amortized cost or FVOCI are measured at
FVPL. Gains or losses arising from changes in the fair value of FVPL, dividends and interest income from the
financial assets are recognized in profit or loss.
2) Foreign exchange gain / loss
The carrying amount of a financial asset denominated in a foreign currency is determined by translating at the
spot exchange rate at the end of the reporting period.
- 33 -
(8)
Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortized cost or at FVOCI, lease receivables, trade receivables and contract assets, as well as on
financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognizes lifetime expected credit losses(ECL) for trade receivables, contract assets and lease
receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on
the Group’s historical credit loss experience and valuation of indivisual assets, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase
in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an
amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the
expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is
expected to result from default events on a financial instrument that are possible within 12 months after the
reporting date.
1) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition,
the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk
of a default occurring on the financial instrument at the date of initial recognition.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly since initial recognition:
an actual or expected significant deterioration in the financial instrument’s external (if available) or
internal credit rating;
significant increases in credit risk of others;
2) Definition of default
The Group believes that, in past experience, if the borrower violates the terms of the contract, it is considered to
constitute a default event for internal credit risk management purposes.
3) Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes
observable data about the following events:
(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
4) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of
default and loss given default is based on historical data adjusted by forward-looking information as described
above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount
at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that
are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate.
- 34 -
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the
previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no
longer met, the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting
date, except for assets for which simplified approach was used.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a
corresponding adjustment to their carrying amount through a loss allowance account, except for investments in
debt instruments that are measured at FVOCI, for which the loss allowance is recognized in other comprehensive
income and accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the
financial asset in the statement of financial position.
(9) Derecognition of financial assets
The Group derecognizes a financial asset only 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 transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Group recognizes its retained interest in the asset and an 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
collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable is recognized in profit or loss. In addition, on
derecognition of an investment in a debt instrument classified as at FVOCI, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on
derecognition of an investment in equity instrument which the Group has elected on initial recognition to
measure at FVOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is
not reclassified to profit or loss, but is transferred to retained earnings.
(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.
- 35 -
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.
Investment in associate or joint venture is accounted for using the equity method from the date that the investee
becomes the associate or 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.
The requirements of K-IFRS 1028 are applied to determine whether it is necessary to recognize any impairment
loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying
amount of the investment (including goodwill) is tested for impairment in accordance with K-IFRS 1036 as a
single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill that
forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in
accordance with K-IFRS 1036 to the extent that the recoverable amount of the investment subsequently
increases.
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 1109. 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.
- 36 -
(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.
(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.
- 37 -
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.
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.
- 38 -
(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.
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.
- 39 -
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.
Contributions to defined contribution retirement benefit plans are recognized as expenses when employees provide
services eligible for payment.
(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 recognizes provisions for costs expected to be incurred in the future for the repair of regular parts
within the warranty period based on historical experience and compensation for accidents caused by defects in
the exported products or parts of the product when such amounts are probable of payment. Also, 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. In addition, the Company recognizes provisions
expected to be paid in the future with regard to long-term employee benefits payable to employees who have
been in long-term care for more than 10 years.
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.
- 40 -
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.
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.
- 41 -
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 the proceeds received, net of direct
issue costs.
Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or
loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity
instruments.
2) Financial guarantee liability
A financial guarantee contract is a contract that the issuer must pay a certain amount of money to compensate for
losses incurred by the holder due to the failure of a specific debtor to pay the due date on the original contract or
modified terms of the debt instrument. Financial guarantee liabilities are measured initially at fair value and
subsequently measured at the greater of the following, unless they are designated as at fair value through profit or
loss or arising from the transfer of assets.
Loss provision calculated in accordance with K-IFRS 1109 (see 'Financial assets' above)
The amount recognized less the accumulated profits recognized in accordance with K-IFRS 1115
3) Financial liabilities at FVPL
Financial liabilities are classified as at FVPL when the financial liability is (i) contingent consideration of an
acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVPL as of the date of initial
recognition.
However, for financial liabilities that are designated as at FVPL, the amount of change in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability is recognized in other
comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount
of change in the fair value of liability is recognized in profit or loss. Changes in fair value attributable to a
financial liability’s credit risk that are recognized in other comprehensive income are not subsequently
reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the financial
liability. Gains or losses on financial guarantee contracts issued by the Group that are designated by the Group as
at FVPL are recognized in profit or loss.
4) Financial liabilities measured subsequently at amortized cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-
for-trading, or (iii) designated as at FVPL as of the date of initial recognition, are measured subsequently at
amortized cost using the effective interest method. The effective interest method is a method of calculating the
amortized cost of a financial liability and of allocating interest expense over the relevant period.
5) Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and
the consideration paid and payable is recognized in profit or loss.
- 42 -
(24) Derivatives
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.
(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.
- 43 -
(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.
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.
- 44 -
3. TRADE NOTES AND ACCOUNTS RECEIVABLE:
(1) Trade notes and accounts receivable as of December 31, 2018 and 2017 consist of the following:
Description
Trade notes and accounts receivable
Loss allowance
Present value discount accounts
December 31, 2018
December 31, 2017
Current
Non-current Current
(In millions of Korean Won)
Non-current
￦ 3,665,356 ￦ 143,496 ￦ 3,903,210 ￦
(69,363)
-
-
(6,719)
(65,167)
-
￦ 3,595,993 ￦ 136,777 ￦ 3,838,043 ￦
129,739
-
(5,806)
123,933
(2) Aging analysis of trade notes and accounts receivable
As of December 31, 2018 aging analysis of total trade notes and accounts receivable are as follows:
Description
Not
overdue
Overdue
Within 90 days
Overdue
Within 180 days
More than 90 days
(In millions of Korean Won)
Overdue
More than
180 days
Total
amounts
Amount of
impaired
receivables
Total trade note and
Accounts receivable
￦ 3,460,604 ￦
219,070 ￦
41,207 ￦
87,971 ￦ 3,808,852 ￦
69,363
As of December 31, 2017 aging analysis of total trade notes and accounts receivable are as follows:
Description
Not
overdue
Overdue
Within 90 days
Overdue
Within 180 days
More than 90 days
(In millions of Korean Won)
Overdue
More than
181 days
Total
amounts
Amount of
impaired
receivsables
Total trade note and
Accounts receivable
￦ 3,720,821 ￦
201,964 ￦
11,029 ￦
99,135 ￦ 4,032,949 ￦
65,167
(3) Transferred trade notes and accounts receivable that are not derecognized
As of December 31, 2018 and 2017, 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 ￦2,169,253 million and ￦1,338,160 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 loss allowance for the year ended December 31, 2018 and 2017 are as follows:
Description
2018
(In millions of Korean Won)
2017
Beginning of the year
Impairment loss
Write-off
Effect of foreign exchange differences
End of the year
￦
￦
65,167 ￦
4,453
(205)
(52)
69,363 ￦
49,800
19,211
(4,336)
492
65,167
- 45 -
4. OTHER RECEIVABLES:
(1) Other receivables as of December 31, 2018 and 2017 consist of the following:
Description
December 31, 2018
December 31, 2017
Current
Non-current
Current
Non-current
(In millions of Korean Won)
Accounts receivable – others
Due from customers for contract work
Lease and rental deposits
Deposits
Others
Loss allowance
￦ 2,161,565 ￦
1,110,972
28,826
2,591
1,719
(13,826)
￦ 3,291,847 ￦
392,400 ￦ 1,952,871 ￦
-
310,194
42,381
10,113
-
841,803
-
1,024,899
335,918
34,953
34,822
2,368
15,059
3,906
-
(11,128)
755,088 ￦ 3,007,869 ￦ 1,227,602
(2) The changes in allowance for other receivables for the year ended December 31, 2018 and 2017 are as
follows:
Description
2018
(In millions of Korean Won)
2017
Beginning of the year
Impairment loss
Write-off
Effect of foreign exchange differences
End of the year
￦
￦
11,128 ￦
3,567
(853)
(16)
13,826 ￦
10,701
1,470
(1,042)
(1)
11,128
5. OTHER FINANCIAL ASSETS:
(1) Other financial assets as of December 31, 2018 consist of the following:
Description
Financial assets measured at fair value
through profit or loss (“FVPL”)
Derivative assets that are effective hedging instruments
Financial assets measured at fair value
through other comprehensive income (“FVOCI”)
Financial assets measured at amortized cost
December 31, 2018
Current
(In millions of Korean Won)
Non-current
￦
￦
9,644,865 ￦
4,855
9,683
96,322
9,755,725 ￦
286,286
27,393
1,901,038
8,641
2,223,358
Other financial assets as of December 31, 2017 consist of the following:
Description
Financial assets at FVPL
Derivative assets that are effective hedging instruments
Available-for-sale (“AFS”) financial assets
Loans
December 31, 2017
Current
Non-current
(In millions of Korean Won)
12,770,096 ￦
23,411
11,833
81,429
12,886,769 ￦
194,341
14,786
2,297,122
6,160
2,512,409
￦
￦
- 46 -
(2) Financial assets measured at FVOCI as of December 31, 2018 (AFS financial assets that are measured at fair
value as of December 31, 2017) consist of the following:
December 31,
2018
December 31,
2017
Description
Acquisition
cost
Book value
Book value
Debt instruments
Equity instruments (*)
￦
￦
(In millions of Korean Won)
￦
￦
241,858
1,533,139
1,774,997
￦
236,031
1,674,690
1,910,721
￦
309,969
1,998,986
2,308,955
(*) The Group makes an irrevocable election to present in other comprehensive income subsequent changes in the fair
value of an investment in an equity instrument that is not held for trading at the date of initial application.
(3) Equity instruments classified into financial assets measured at FVOCI as of December 31, 2018 (AFS
financial assets as of December 31, 2017) consist of the following:
Name of the company
Hyundai Steel Company (*1)
Hyundai Glovis Co., Ltd.
Hyundai Heavy Industries
Co., Ltd. (*2)
Hyundai Oilbank Co., Ltd.
Korea Aerospace Industries, Ltd. (*3)
Hyundai Heavy Industries
Holdings Co., Ltd. (*2)
Hyundai Green Food Co., Ltd.
NICE Information Service Co., Ltd.
Hyundai M Partners Co., Ltd.
NICE Holdings Co., Ltd.
KT Corporation
Hyundai Asan Corporation
Hyundai Merchant Marine Company
Hyundai Electric & Energy Systems
Co., Ltd. (*2)
HDC Holdings Co., Ltd. (*4)
Others
December 31,
2018
December 31,
2017
Ownership
percentage
(%)
6.87
4.88
Acquisition
cost
Book value
Book value
(In millions of Korean Won)
￦ 903,897 ￦
210,688
516,090 ￦
236,191
821,266
249,008
2.36
4.35
-
2.13
2.36
2.25
9.29
1.30
0.09
1.88
0.03
-
-
42,443
53,734
73,331
9,018
15,005
3,312
9,888
3,491
8,655
22,500
9,161
209,823
204,392
150,920
120,046
33,000
14,957
12,119
8,825
7,155
2,117
366
164,102
147,930
224,487
132,189
34,500
11,870
12,153
7,202
7,263
2,117
444
-
-
168,016
22,997
17,348
144,110
￦ 1,533,139 ￦ 1,674,690 ￦ 1,998,986
-
-
158,689
(*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.
(*2) 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. Name of the company has been changed from Hyundai Robotics Co., Ltd. to Hyundai Heavy
Industries Holdings Co., Ltd. and the Group fully disposed the shares of Hyundai Electric & Energy Systems Co., Ltd.
for the year ended December 31, 2018.
(*3) The Group entered into a total return swap agreement to transfer total shares to a third party.
(*4) Hyundai Development Company was spun off into HDC Holdings Co., Ltd. and Hyundai Development Company and
the Group fully disposed the shares for the year ended December 31, 2018.
- 47 -
6.
INVENTORIES:
Inventories as of December 31, 2018 and 2017 consist of the following:
Description
December 31, 2018
December 31, 2017
(In millions of Korean Won)
￦
Finished goods
Merchandise
Semifinished goods
Work in progress
Raw materials
Supplies
Materials in transit
Others
Total (*)
￦
6,486,616 ￦
52,717
515,084
400,850
1,363,298
306,670
665,246
924,377
10,714,858 ￦
6,065,752
50,575
638,802
387,816
1,314,902
285,264
583,055
953,738
10,279,904
(*) As of December 31, 2018 and 2017, the Group recognized a valuation allowance in amount of ￦130,989 million and
￦88,945 million, respectively.
7. OTHER ASSETS:
Other assets as of December 31, 2018 and 2017 consist of the following:
Description
Accrued income
Advance payments
Prepaid expenses
Prepaid value-added tax and others
December 31, 2018
December 31, 2017
Current
Non-current
Current
Non-current
(In millions of Korean Won)
￦
318,306 ￦
658,460
445,601
348,315
￦ 1,770,682 ￦
1,293 ￦
-
672,814
37,192
711,299 ￦ 1,739,452 ￦
357,228 ￦
535,677
472,732
373,815
2,714
-
609,958
29,651
642,323
8. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE:
(1) Non-current assets classified as held for sale as of December 31, 2018 and 2017 consist of the following:
Description
December 31, 2018
December 31, 2017
Land
Building
Vehicles (*1)
Subsidiary (*2)
Total
Non-current liabilities classified
as held for sale
￦
￦
￦
(In millions of Korean Won)
3,454 ￦
7,963
16,023
839,752
867,192 ￦
719,396 ￦
-
-
29,068
-
29,068
-
(*1) The Group enters into a disposal contract for the vehicles and the process of disposal is under way. The Group
recognised an impairment loss of ￦13,045 million, for the difference between the expected sale price and the book
value.
(*2) The Company and Hyundai Capital Services, Inc., the subsidiary of the Company, enter into a disposal contract for a
portion of Hyundai Capital Bank Europe GmbH 's shares in August, 2018. The process of disposal is underway.
Accordingly, the Group classified the assets and liabilities related to Hyundai Capital Bank Europe GmbH to the
disposal group as held for sale.
- 48 -
(2) Main assets and liabilities classified as held for sale as of December 31, 2018 consist of the following:
Description
December 31, 2018
(In millions of Korean Won)
￦
The disposal group as held for sale
Cash and cash equivalents
Financial assets measured at FVOCI
Loan obligations
Lease receivables
Property, plant and equipment
Intangible assets
Accounts receivable – others
Accrued income
Advanced payments
Prepaid expenses
Deposits
Total assets
￦
Liabilities directly related to the disposal
group as held for sale
Borrowings
Other payables
Withholdings
Accrued expenses
Total liabilities
￦
97,050
69
610,418
93,969
2,299
10,683
212
2,541
17,346
5,064
101
839,752
652,362
31,523
15,097
20,414
719,396
The Group measured at the lower between book value and fair value less costs to sell, and accumulated other
comprehensive income (loss) transferred to equity related to assets classified as held for sale is ￦1,122 million,
as of December 31, 2018.
9. PROPERTY, PLANT AND EQUIPMENT:
(1) Property, plant and equipment (“PP&E”) as of December 31, 2018 and 2017 consist of the following:
Description
Land
Buildings
Structures
Machinery and equipment
Vehicles
Dies, molds and tools
Office equipment
Others
Construction in progress
Acquisition
cost
December 31, 2018
Accumulated
depreciation (*)
Book value
Acquisition
cost
December 31, 2017
Accumulated
depreciation (*)
Book value
(In millions of Korean Won)
- ￦ 11,802,601 ￦ 11,794,842 ￦
￦ 11,802,601 ￦
- ￦ 11,794,842
5,979,344
655,732
6,092,817
190,756
2,516,521
473,001
47,223
2,076,906
￦ 52,115,269 ￦ (21,569,661) ￦ 30,545,608 ￦ 49,596,458 ￦ (19,769,316) ￦ 29,827,142
(3,151,813)
(662,606)
(9,088,703)
(169,354)
(7,227,150)
(1,218,195)
(51,840)
-
(2,892,913)
(614,390)
(8,448,876)
(147,410)
(6,500,234)
(1,130,204)
(35,289)
-
8,872,257
1,270,122
14,541,693
338,166
9,016,755
1,603,205
82,512
2,076,906
9,289,171
1,389,627
15,558,786
363,338
9,820,613
1,655,978
97,266
2,137,889
6,137,358
727,021
6,470,083
193,984
2,593,463
437,783
45,426
2,137,889
(*) Accumulated impairment is included.
- 49 -
(2) The changes in PP&E for the year ended December 31, 2018 are as follows:
Beginning
of the year
Acquisitions
Transfers
within PP&E
Disposals
Depreciation
Transfer to
the non-
current
assets
classified as
held for sale
Others (*)
End of
the year
￦ 11,794,842 ￦
536 ￦
5,979,344
655,732
10,957
6,513
43,888 ￦
466,495
125,295
(In millions of Korean Won)
(35,186) ￦
- ￦
(27,764)
(4,360)
(277,115)
(62,303)
6,092,817
190,756
12,221
35,005
1,393,296
79,676
(60,561)
(48,019)
(924,923)
(52,324)
2,516,521
473,001
47,223
512
59,875
4,639
1,020,614
82,898
11,914
(65,972)
(1,422)
(141)
(837,721)
(175,959)
(16,750)
(3,454) ￦
(7,963)
-
1,975 ￦ 11,802,601
6,137,358
727,021
(6,596)
6,144
-
-
-
(2,299)
-
(42,767)
(11,110)
6,470,083
193,984
(40,491)
1,689
(1,459)
2,593,463
437,783
45,426
Description
Land
Buildings
Structures
Machinery and
equipment
Vehicles
Dies, molds
and tools
Office equipment
Others
Construction in
progress
2,076,906
3,201,634
(3,224,076)
(6,015)
-
￦ 29,827,142 ￦ 3,331,892 ￦
- ￦ (249,440) ￦ (2,347,095) ￦
-
(13,716) ￦
89,440
2,137,889
(3,175) ￦ 30,545,608
(*) Others include the effect of foreign exchange difference, transfers from or to other accounts and others.
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
within PP&E Disposals
Depreciation
Others (*)
Transfers
End of
the year
￦ 11,787,909 ￦
5,777,272
662,326
38,739 ￦
11,687
5,892
(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, acquisitions due to
business combination and others.
10. INVESTMENT PROPERTY:
(1) Investment property as of December 31, 2018 and 2017 consist of the following:
Description
Land
Buildings
Structures
Acquisition
cost
December 31, 2018
Accumulated
depreciation
Book value
Acquisition
cost
December 31, 2017
Accumulated
depreciation
Book value
(In millions of Korean Won)
￦
￦
58,669 ￦
303,191
18,630
380,490 ￦
- ￦
(184,262)
(6,894)
(191,156) ￦
58,669 ￦
118,929
11,736
189,334 ￦
58,669 ￦
303,162
18,630
380,461 ￦
- ￦
(174,477)
(6,486)
(180,963) ￦
58,669
128,685
12,144
199,498
- 50 -
(2) The changes in investment property for the year ended December 31, 2018 are as follows:
Description
Beginning
of the year
Transfers
Disposals
Depreciation
Effect of foreign
exchange
differences
End of
the year
Land
Buildings
Structures
(In millions of Korean Won)
￦
58,669 ￦
128,685
12,144
￦ 199,498 ￦
- ￦
657
-
657 ￦
- ￦
-
-
- ￦
- ￦
(10,384)
(408)
(10,792) ￦
- ￦
(29)
-
58,669
118,929
11,736
(29) ￦ 189,334
The changes in investment property for the year ended December 31, 2017 are as follows:
Description
Beginning
of the year
Transfers
Disposals
Depreciation
Effect of foreign
exchange
differences
End of
the year
Land
Buildings
Structures
(In millions of Korean Won)
￦
58,669 ￦
140,450
12,552
￦ 211,671 ￦
- ￦
392
-
392 ￦
- ￦
-
-
- ￦
- ￦
(10,405)
(408)
(10,813) ￦
- ￦
(1,752)
-
58,669
128,685
12,144
(1,752) ￦ 199,498
(3) The fair value of investment property as of December 31, 2018 and 2017 consist of the following:
Description
December 31, 2018 December 31, 2017
(In millions of Korean Won)
Land
Buildings
Structures
￦
￦
58,669 ￦
316,215
15,496
390,380 ￦
58,669
316,534
15,496
390,699
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, 2018 and 2017 are as
follows:
Description
2017
2018
(In millions of Korean Won)
Rental income
Operating and maintenance expenses
￦
47,907 ￦
17,091
46,020
16,410
- 51 -
11. INTANGIBLE ASSETS:
(1) Intangible assets as of December 31, 2018 and 2017 consist of the following:
Description
Acquisition
cost
December 31, 2018
Accumulated
amortization (*)
Book value
Acquisition
cost
December 31, 2017
Accumulated
amortization (*)
Book value
Goodwill
Development
costs
Industrial
property rights
Software
Others
Construction in
progress
￦
293,382 ￦
(33,975) ￦
259,407 ￦
293,452 ￦
(2,023) ￦
291,429
(In millions of Korean Won)
8,256,046
(4,471,703)
3,784,343
8,125,215
(4,543,101)
3,582,114
283,056
1,105,754
483,323
(154,193)
(786,766)
(237,692)
128,863
318,988
245,631
246,884
1,025,083
498,257
(133,484)
(678,150)
(222,182)
212,933
(28,782)
184,151
239,151
(39,766)
￦ 10,634,494 ￦ (5,713,111) ￦ 4,921,383 ￦ 10,428,042 ￦ (5,618,706) ￦
113,400
346,933
276,075
199,385
4,809,336
(*) Accumulated impairment is included.
(2) The changes in intangible assets for the year ended December 31, 2018 are as follows:
Description
Beginning
of the year
Internal
developments
Seperate
acquisitions
(In millions of Korean Won)
Transfers
within
intangible
assets
Disposals
￦
Goodwill
Development Costs
Industrial property rights
Software
Others
Construction in progress
￦
291,429 ￦
3,582,114
113,400
346,933
276,075
199,385
4,809,336 ￦
- ￦
1,455,817
57
-
-
7,423
1,463,297 ￦
- ￦
19,234
2,268
25,912
3,679
108,712
159,805 ￦
- ￦
73,977
33,115
31,015
2,798
(140,905)
-
(4,688)
(12)
(818)
(2,146)
-
- ￦
(7,664)
Description
Amortization
Impairment loss
(gain)(*1)
Transfer to the
disposal group as
held for sale
Others (*2)
End of
the year
￦
Goodwill
Development Costs
Industrial property rights
Software
Others
Construction in progress
- ￦
(1,225,225)
(20,846)
(134,905)
(22,606)
-
￦
(1,403,582) ￦
(143,720) ￦
(In millions of Korean Won)
(32,125) ￦
(109,977)
-
(1,687)
69
-
- ￦
-
-
-
(8,696)
(1,987)
(10,683) ￦
103 ￦
259,407
3,784,343
(6,909)
128,863
881
318,988
52,538
245,631
(3,542)
11,523
184,151
54,594 ￦ 4,921,383
(*1) The development costs related to the discontinued sales and development projects that were recognized as impairment losses
for the year end December 31, 2018.
(*2) Others include the effect of foreign exchange differences, transfer from or to other accounts and others.
- 52 -
The changes in intangible assets for the year ended December 31, 2017 are as follows:
Description
Beginning
of the year
Internal
Developments
Seperate
acquisitions
(In millions of Korean Won)
Transfers
within
intangible
assets
Disposals
￦
Goodwill
Development Costs
Industrial property rights
Software
Others
Construction in progress
￦
290,293 ￦
3,330,990
109,163
358,281
293,415
204,030
4,586,172 ￦
- ￦
1,282,296
74
1,281
-
12,757
1,296,408 ￦
- ￦
25,553
1,864
35,663
9,659
85,418
158,157 ￦
- ￦
41,584
18,613
24,341
10,399
(94,937)
-
-
-
(51)
(2,372)
-
- ￦
(2,423)
Description
Amortization
Impairment loss
(gain) (*1)
Others (*2)
(In millions of Korean Won)
End of
the year
￦
Goodwill
Development Costs
Industrial property rights
Software
Others
Construction in progress
- ￦
(1,096,567)
(17,240)
(133,546)
(27,489)
-
￦
(1,274,842) ￦
- ￦
(12,592)
-
(517)
37
(30)
(13,102) ￦
1,136 ￦
291,429
3,582,114
10,850
113,400
926
346,933
61,481
276,075
(7,574)
(7,853)
199,385
58,966 ￦ 4,809,336
(*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.
(3) Development costs of intangible assets as of December 31, 2018 consist of the following:
Description
Book value
(In millions of
Korean Won)
Residual useful lives (*)
Automobile
˝
Powertrain
˝
Others
˝
Developing
Amortizing
Developing
Amortizing
Developing
Amortizing
￦
￦
1,314,742
1,851,453
195,715
188,215
3,190
231,028
3,784,343
-
38 months
-
33 months
-
40 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.
- 53 -
Development costs of intangible assets as of December 31, 2017 are as follows:
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, 2018 and 2017 are as follows:
Description
Development costs (intangible assets)
Research and development costs (*1)
Total (*2)
2018
(In millions of Korean Won)
2017
￦
￦
1,475,051 ￦
1,267,327
2,742,378 ￦
1,307,849
1,179,922
2,487,771
(*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, 2018 and 2017 is as follows:
Description
Vehicle
Finance
Others
December 31,
2018
(In millions of Korean Won)
December 31,
2017
￦
￦
158,955 ￦
482
99,970
259,407 ￦
190,977
482
99,970
291,429
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, 2018 and 2017, are 13.8% and 12.8% 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. The impairment loss
has been recognized in amount of ￦32,125 million for the year ended December 31, 2018 and no amounts for the
year ended December 31, 2017.
- 54 -
12. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:
(1) Investments in joint ventures and associates as of December 31, 2018 and 2017 consist of the following:
Name of the company
Beijing-Hyundai Motor Company
(BHMC) (*1)
Beijing Hyundai Qiche Financing
Company (BHAF) (*1,3)
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.(*6)
Hyundai Dymos Inc.(*6)
HYUNDAI MOTOR SECURITIES
Co., Ltd. (*4)
Hyundai Commercial Inc.
Eukor Car Carriers Inc. (*2)
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd
Others (*5)
December 31,
2018
December 31,
2017
Nature of
business
Location
Ownership
percentage
(%)
Book value
Book value
(In millions of Korean Won)
Manufacturing China
50.00% ￦
1,484,794 ￦ 1,456,579
Financing
China
53.00%
530,161
480,353
Manufacturing
China
22.00%
151,248
167,805
Manufacturing
China
Manufacturing Korea
Construction
Korea
Manufacturing Korea
Manufacturing Korea
Manufacturing Korea
Securities
Korea
brokerage
Financing
Korea
Transportation Korea
Korea
IT service
Korea
Hotelkeeping
30.00%
33.88%
20.95%
25.35%
37.58%
47.27%
27.49%
37.50%
12.00%
28.96%
41.90%
￦
100,754
9,001,505
120,256
8,882,325
2,801,084
674,651
561,688
430,571
2,959,910
794,150
547,295
399,724
265,711
218,983
159,699
129,173
104,009
529,208
254,766
373,797
160,255
119,162
106,531
429,430
17,143,239 ￦ 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) Name of the company has been changed from HMC Securities Co., Ltd. to HYUNDAI MOTOR SECURITIES Co.,
Ltd. as of July 1, 2018.
(*5) For the year ended December 31, 2017, the Group has stopped recognising its share of losses of the Sichuan Hyundai
Motor Company (CHMC) and unrecognised share of losses of a joint venture, for the year ended December 31, 2018
and 2017, cumulatively are ￦ 94,175 million and ￦20,437 million, respectively.
(*6) As of January 1, 2019, Hyundai DYMOS Inc. merged with Hyundai Powertech Co., Ltd. to become Hyundai TranSys
Co., Ltd.
- 55 -
(2) The changes in investments in joint ventures and associates for the year ended December 31, 2018 are as follows:
Name of the company
BHMC
BHAF
WAE
PTS
Kia Motors Corporation
Hyundai Engineering &
Beginning of
the period
Acquisitions
(disposals)
Share of
profits (losses)
for the period Dividends
Others (*1)
End of the
period
(In millions of Korean Won)
￦ 1,456,579 ￦
480,353
167,805
120,256
8,882,325
- ￦
-
-
-
-
37,495 ￦
50,461
(15,994)
(19,270)
365,561
- ￦
(6,211)
-
-
(109,855)
(9,280) ￦ 1,484,794
530,161
151,248
100,754
9,001,505
5,558
(563)
(232)
(136,526)
Construction Co., Ltd.(*2)
2,959,910
Hyundai WIA
Corporation(*3)
Hyundai Powertech Co., Ltd.
Hyundai Dymos Inc.
HYUNDAI MOTOR
SECURITIES Co., Ltd.
Hyundai Commercial Inc.
Eukor Car Carriers Inc.
Hyundai Autoever Corp.
Haevichi Hotels & Resorts
Co., Ltd.
Others
794,150
547,295
399,724
254,766
373,797
160,255
119,162
106,531
429,430
￦ 17,252,338 ￦
-
-
-
-
-
-
-
58,357
(11,664)
(205,519)
2,801,084
(16,133)
15,021
25,951
13,422
35,302
3,010
15,634
(4,136)
-
-
(99,230)
(628)
4,896
(3,226)
(10,000)
(8,976)
(4,126)
749
(180,116)
5,410
(1,497)
674,651
561,688
430,571
265,711
218,983
159,699
129,173
-
61,772
61,772 ￦
(2,435)
33,140
599,522 ￦
-
(12,009)
(170,203) ￦
(87)
16,875
104,009
529,208
(600,190) ￦ 17,143,239
(*1) Others consist of changes in accumulated other comprehensive income and others.
(*2) The recoverable amount was less than the carrying amount and the impairment loss amounting to ₩ 103,459 million was
recognized. The recoverable amount is determined based on the value of use, and the discount rate applied to measure the
value of use is 8% per annum.
(*3) The recoverable amount was less than the carrying amount and the impairment loss amounting to ₩ 90,031 million was
recognized. The recoverable amount is determined based on the value of use, and the discount rate applied to measure the
value of use is 7.95% per annum.
- 56 -
The changes in investments in joint ventures and associates for the year ended December 31, 2017 are as follows:
Beginning of
the period
Acquisitions
(disposals)
Share of
profits (losses)
for the period
Dividends
Others (*1)
End of the
period
(In millions of Korean Won)
￦ 2,225,824 ￦
Name of the company
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.
HYUNDAI MOTOR
SECURITIES Co., Ltd.
Eukor Car Carriers Inc.
Haevichi Hotels & Resorts
Co., Ltd.
Hyundai Autoever Corp.
Others
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
108,082
433,159
￦ 18,070,121 ￦
- ￦
-
4,721
18,023
-
-
-
-
-
-
-
-
-
-
57,400
80,144 ￦
(74,456) ￦
64,120
(8,423)
16,006
308,823
(592,318) ￦
(3,440)
(5,268)
(18,930)
(151,050)
(102,471) ￦ 1,456,579
480,353
(26,062)
167,805
(10,154)
120,256
(6,840)
8,882,325
(87,288)
15,479
(14,781)
52,349
31,512
136,510
(11,664)
(7,583)
-
-
(15,000)
(311,148)
(5,347)
(7,945)
(3,287)
(3,791)
2,959,910
794,150
547,295
399,724
373,797
13,906
7,470
(3,226)
-
(1,415)
(21,315)
254,766
160,255
15,576
(1,784)
(34,718)
527,589 ￦
(4,126)
-
(10,360)
(822,965) ￦
119,162
330
106,531
233
429,430
(16,051)
(602,551) ￦ 17,252,338
(*1) Others consist of changes in accumulated other comprehensive income and others.
(*2) The recoverable amount was less than the carrying amount and the impairment loss amounting to ￦302,536 million was
recognized. The recoverable amount is determined based on the value of use, and the discount rate applied to measure the
value of use is 8% per annum.
- 57 -
(3) Summarized financial information of the Group’s major joint ventures and associates as of and for the year
ended December 31, 2018 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 MOTOR SECURITIES
Co., Ltd. (*)
Hyundai Commercial Inc. (*)
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
5,203,650 ￦
5,143,183
731,486
621,193
19,711,791
4,024,905 ￦
-
689,637
358,711
32,074,814
5,787,864 ￦
4,142,880
347,052
368,791
14,834,739
13,336,768
3,890,796
1,238,501
1,484,098
6,686,423
8,544,662
341,809
689,504
28,328
4,717,841
3,216,651
1,666,490
1,095,745
-
-
2,574,091
139,568
425,126
6,860,875
1,862,772
905,338
1,058,852
5,799,504
7,362,296
462,933
367,985
213,245
376,529
-
386,581
275,267
9,708,402
2,901,878
2,207,744
500,382
616,655
-
-
1,124,327
9,498
64,093
Name of the company
Sales
Profit (loss) for
Other
the period from
comprehensive
continuing
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 MOTOR SECURITIES
Co., Ltd. (*)
Hyundai Commercial Inc. (*)
Eukor Car Carriers Inc.
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd.
￦ 11,043,756 ￦
238,694
1,346,039
1,108,875
54,169,813
16,730,894
7,880,481
2,953,249
4,266,845
618,986
466,766
1,736,826
1,424,859
117,067
12,315 ￦
95,210
(72,700)
(64,233)
1,155,943
- ￦
-
(48,319)
-
(452,911)
535,303
(55,561)
30,704
52,914
50,572
68,648
19,412
55,228
1,711
(207,137)
(31,669)
(1,627)
(7,436)
3,137
8,497
49,850
(4,956)
(357)
12,315
95,210
(121,019)
(64,233)
703,032
328,166
(87,230)
29,077
45,478
53,709
77,145
69,262
50,272
1,354
(*) 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.
- 58 -
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. (*)
HYUNDAI MOTOR 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
4,132,036 ￦
6,748,910 ￦
4,961,986
753,485
853,846
21,642,079
-
760,642
216,947
30,652,359
7,495,325 ￦
4,055,661
318,440
577,765
15,323,019
355,758
-
432,938
92,174
10,110,242
13,227,409
3,859,385
1,054,803
1,419,940
7,748,768
7,025,157
493,721
681,216
19,128
5,199,636
3,334,297
1,648,206
1,026,734
-
-
2,542,164
122,740
433,933
7,291,215
1,727,926
925,897
1,052,358
6,902,931
6,179,803
458,070
380,035
193,290
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
Other
the period from
comprehensive
continuing
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. (*)
HYUNDAI MOTOR SECURITIES
Co., Ltd. (*)
Eukor Car Carriers Inc.
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd.
￦ 12,149,126 ￦
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
(159,438) ￦
120,980
(38,293)
53,353
968,018
- ￦
-
(45,997)
-
(245,241)
374,321
(63,004)
172,575
69,837
272,413
50,204
57,618
55,179
2,407
(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.
- 59 -
(4) Summarized additional financial information of the Group’s major joint ventures as of and for the year
ended December 31, 2018 is as follows:
Name of the
company
Cash and
cash
equivalents
Current
financial
liabilities
Non-current
financial
liabilities
Depreciation
and
amortization
Interest
income
Interest
expenses
Income tax
expense
(benefit)
BHMC
BHAF (*)
￦ 534,602 ￦ 1,009,469 ￦
56,966 ￦
423,303 ￦ 18,851 ￦ 108,913 ￦
834,118
3,674,564
-
4,948
427,317
190,968
(2,025)
30,963
(In millions of Korean Won)
(*) 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, 2017 is as follows:
Name of the
company
Cash and
cash
equivalents
Current
financial
liabilities
Non-current
financial
liabilities
Depreciation
and
amortization
Interest
income
Interest
expenses
Income tax
expense
(benefit)
(In millions of Korean Won)
BHMC
BHAF (*)
￦ 329,263 ￦ 1,080,090 ￦
782,333
3,429,969
- ￦
-
373,222 ￦ 26,106 ￦ 123,581 ￦ (14,897)
40,680
180,523
470,763
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.
(5) The aggregate amounts of the Group’s share of the joint ventures and associates, that are not individually
material, profit (loss) and comprehensive income (loss) for the year ended December 31, 2018 and 2017 are as
follows:
Description
Nine months ended December 31,
2018
(In millions of Korean Won)
2017
Profit (loss) for the period
Other comprehensive income (loss)
Total comprehensive income (loss)
￦
￦
33,140 ￦
(1,892)
31,248 ￦
(34,718)
(16,051)
(50,769)
- 60 -
(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, 2018 is as follows:
Name of the company
BHMC
BHAF
WAE
PTS
Kia Motors Corporation
Hyundai Engineering & Construction
Co., Ltd. (*)
Hyundai WIA Corporation
Group’s
share of
net assets
Carrying
amounts
Goodwill
Unrealized
profit (loss)
and others
(In millions of Korean Won)
- ￦
-
-
-
197,089
(46,248) ￦ 1,484,794
530,161
151,248
100,754
9,001,505
-
-
-
(69,963)
￦ 1,531,042 ￦
530,161
151,248
100,754
8,874,379
2,069,714
731,362
8
2,801,084
Hyundai Powertech Co., Ltd.
Hyundai Dymos Inc.
HYUNDAI MOTOR SECURITIES
Co., Ltd.
Hyundai Commercial Inc.
Eukor Car Carriers Inc.
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd. (*)
767,679
562,551
432,944
225,659
218,983
159,437
129,173
100,433
-
-
-
(93,028)
(863)
(2,373)
40,052
-
-
-
3,576
-
-
262
-
-
674,651
561,688
430,571
265,711
218,983
159,699
129,173
104,009
(*) 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, 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.
HYUNDAI MOTOR SECURITIES
Co., Ltd.
Eukor Car Carriers Inc.
Hyundai Autoever Corp.
Haevichi Hotels & Resorts Co., Ltd. (*)
Goodwill
Unrealized
profit (loss)
and others
(In millions of Korean Won)
- ￦
-
-
-
￦ 1,514,932 ￦
Group’s
share of
net assets
480,353
167,805
120,256
8,749,248
2,125,080
797,455
548,330
401,195
373,797
197,089
834,821
-
-
-
-
Carrying
amounts
(58,353) ￦ 1,456,579
480,353
167,805
120,256
8,882,325
-
-
-
(64,012)
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
214,714
159,993
119,162
102,955
40,052
-
-
3,576
(*) 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.
- 61 -
(7) The market price of listed equity securities as of December 31, 2018 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
HYUNDAI MOTOR SECURITIES Co., Ltd.
￦
33,700
54,600
36,250
8,630
137,318,251 ￦
23,327,400
6,893,596
8,065,595
4,627,625
1,273,676
249,893
69,606
13. FINANCIAL SERVICES RECEIVABLES:
(1) Financial services receivables as of December 31, 2018 and 2017 consist of the following:
Description
Loan obligations
Card receivables
Financial lease receivables
Others
Loss allowance
Loan origination fee
Present value discount accounts
December 31,
2017
December 31,
2018
(In millions of Korean Won)
40,075,564 ￦
13,311,195
2,588,890
43,775
56,019,424
(1,368,759)
(133,394)
(15,607)
54,501,664 ￦
36,848,028
12,979,942
2,437,466
36,668
52,302,104
(1,133,967)
13,182
(13,301)
51,168,018
￦
￦
(2) Transferred financial services receivables that are not derecognized
As of December 31, 2018 and 2017, the Group issued asset-backed securities, which have recourse to the
underlying assets, based on loans, card receivables and others. As of December 31, 2018, the carrying amounts
(including intercompany receivables within the Group) and fair values of the transferred financial assets that are
not derecognized are ￦17,252,202 million and ￦17,146,156 million, respectively. The carrying amounts and
fair values of the associated liabilities are ￦11,064,518 million and ￦10,871,371 million, respectively, and the
net position is ￦6,274,785 million. 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.
- 62 -
(3) The changes in allowance for doubtful accounts of financial services receivables for the year ended December
31, 2018 are as follows
Description
Beginning of the period
Changes in accounting standards (IFRS 9)
Balances after adjustments
Transfer to 12-Months expected credit losses
Transfer to lifetime expected credit losses
Transfer to credit-impaired financial assets
Impairment loss
Collect(Writeoff)
Transfer to the disposal group as held for sale
Disposals and others
Effect of foreign exchange Differences
End of the period
Description
Beginning of the period
Changes in accounting standards (IFRS 9)
Balances after adjustments
Transfer to 12-Months expected credit losses
Transfer to lifetime expected credit losses
Transfer to credit-impaired financial assets
Impairment loss
Collect(Writeoff)
Disposals and others
End of the period
Description
Beginning of the period
Changes in accounting standards (IFRS 9)
Balances after adjustments
Transfer to 12-Months expected credit losses
Transfer to lifetime expected credit losses
Transfer to credit-impaired financial assets
Impairment loss
Collect(Writeoff)
Transfer to the disposal group as held for sale
Disposals and others
Effect of foreign exchange differences
End of the period
12-Months
expected
credit losses
Loan obligations
Lifetime expected credit losses
Impaired
Not Impaired
(In millions of Korean Won)
￦
￦
￦
335,232
45,247
(23,692)
(4,544)
21,247
19,231
(3,143)
(35,867)
5,465
￦ 359,176
￦
267,893
(43,458)
26,100
(7,526)
329,125
(303,200)
-
(49,095)
6,142
225,981 ￦
Total loan
obligations
-
-
-
￦ 765,008
84,519
849,527
246,402
(1,789)
(2,408)
12,070
255,393
(79,605)
-
(117,688)
118
605,765
(363,574)
(3,143)
(202,650)
11,725
312,493 ￦ 897,650
12-Months
expected
credit losses
Card receivables
Lifetime expected credit losses
Not Impaired
Impaired
(In millions of Korean Won)
Total card
receivables
￦
￦
￦
138,377
46,624
(13,622)
(436)
34,650
(8,440)
(52,597)
￦ 144,556
￦
156,080
(46,467)
13,776
(803)
44,855
(3,933)
(21,018)
142,490 ￦
￦ 297,155
81,069
378,224
83,767
-
-
-
(157)
(154)
1,239
116,300
36,795
(14,392)
(2,019)
(7,226)
(80,841)
112,245 ￦ 399,291
12-Months
expected
credit losses
Others
Lifetime expected credit losses
Not Impaired
Impaired
Total others
Total
Allowances
￦
￦
(In millions of Korean Won)
￦
￦
22,188
7,571
(2,059)
(227)
(9,716)
(60)
(757)
(37)
-
￦
16,903
￦
8,625
(3,349)
2,332
(819)
2,294
(319)
-
-
-
8,764 ￦
44,276
(4,222)
(273)
1,046
5,517
(182)
-
(11)
-
46,151 ￦
-
-
-
71,804 ￦ 1,133,967
168,873
3,285
75,089
1,302,840
-
-
-
(1,905)
(561)
(757)
(48)
-
720,160
(378,527)
(3,900)
(283,539)
11,725
71,818 ￦ 1,368,759
The changes in allowance for doubtful accounts of financial services receivables for the year ended December
31, 2017 are as follows:
Description
Beginning of the period
Impairment loss
Write-off
Disposals and others
Effect of foreign exchange
End of the period
December 31, 2017
(In millions of Korean Won)
￦
1,078,002
753,514
(443,008)
(222,842)
(31,699)
1,133,967
￦
- 63 -
(4) Gross investments in financial leases and their present value of minimum lease payments receivable as of
December 31, 2018 and December 31, 2017 are as follows:
December 31, 2018
December 31, 2017
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)
￦ 1,182,648 ￦ 1,055,082 ￦ 1,173,541 ￦ 1,050,165
Present value
of minimum
lease payment
receivable
Gross
investments
in financial
leases
1,648,493
3,045
1,384,980
277
￦ 2,834,186 ￦ 2,586,272 ￦ 2,663,486 ￦ 2,435,422
1,489,664
281
1,528,204
2,986
(5) Unearned interest income of financial leases as of December 31, 2018 and 2017 is as follows:
Description
December 31, 2018 December 31, 2017
(In millions of Korean Won)
￦
2,834,186 ￦
2,663,486
Gross investments in financial lease
Net lease investments:
Present value of minimum lease payments
Receivable
Present value of unguaranteed residual value
Unearned interest income
￦
245,296 ￦
2,586,272
2,618
2,588,890
2,435,422
2,044
2,437,466
226,020
14. OPERATING LEASE ASSETS:
(1) Operating lease assets as of December 31, 2018 and 2017 consist of the following:
Description
December 31, 2018 December 31, 2017
Acquisition cost
Accumulated depreciation
Accumulated impairment loss
(In millions of Korean Won)
￦
￦
24,686,189 ￦
(4,126,513)
(133,910)
20,425,766 ￦
24,345,256
(3,517,368)
(99,938)
20,727,950
(2) Future minimum lease payments receivable related to operating lease assets as of December 31, 2018 and
2017 are as follows:
Description
December 31, 2018 December 31, 2017
Not later than one year
Later than one year and not later
than five years
Later than five years
(In millions of Korean Won)
￦
3,801,164 ￦
3,765,437
3,574,970
8
￦
7,376,142 ￦
3,869,709
7
7,635,153
- 64 -
15. BORROWINGS AND DEBENTURES:
(1) Short-term borrowings as of December 31, 2018 and 2017 consist of the following:
Annual
interest rate
December 31,
2018
(%)
0.10~3.22
0.78~5.30
LIBOR + 0.16~0.30
December 31,
2018
December 31,
2017
(In millions of Korean Won)
￦
271,814 ￦
4,687,667
317,189
3,727,189
Description
Lender
Citi Bank and others
Woori Bank and others
Overdrafts
General loans
Loans on trade receivables
collateral
Banker’s Usance
Short-term debentures
Commercial paper
Asset-backed securities
KEB Hana Bank and others
KEB Hana Bank and others
LIBOR + 0.25~0.40
Shinhan Bank and others
RBC and others
2.02~3.05
2.09~2.16
2,169,253
210,398
-
4,332,409
578,309
￦ 12,249,850 ￦
1,338,160
376,547
69,993
3,570,389
560,187
9,959,654
(2) Long-term debt as of December 31, 2018 and 2017 consists of the following:
Description
Lender
General loans
Facility loan
SC Bank and others
NH 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,
2018
(%)
0.41~15.40
December 31,
2018
December 31,
2017
(In millions of Korean Won)
￦
5,814,705 ￦
6,368,138
0.70~8.73
215,052
255,281
1.62~2.55
2.90~3.39
2,620,000
4,337,962
2,070,000
6,782,232
435,607
13,423,326
(112,977)
(3,325,099)
567,125
16,042,776
(107,752)
(3,446,887)
9,985,250 ￦ 12,488,137
￦
(*) Although the Group transferred a portion of its shares with voting rights to a third party through the total revenue swap
agreement, the Group recognizes the financial asset as collateral due to the fact that the risks and rewards were not
transferred substantially.
(3) Debentures as of December 31, 2018 and 2017 consist of the following:
Description
Latest
maturity date
Non-guaranteed public debentures
Non-guaranteed private debentures
Asset-backed securities
October 26, 2028
September 27, 2026
January 15, 2025
Less: discount on debentures
Less: current maturities
Annual
interest rate
December 31,
2018
(%)
1.44~4.72
1.75~4.13
1.29~3.31
December 31,
2018
December 31,
2017
(In millions of Korean Won)
￦ 25,853,095 ￦ 22,956,764
10,107,160
13,140,350
46,204,274
(98,422)
(9,651,660)
￦ 36,956,114 ￦ 36,454,192
10,901,475
11,070,462
47,825,032
(89,090)
(10,779,828)
- 65 -
16. PROVISIONS:
(1) Provisions as of December 31, 2018 and 2017 consist of the following:
Description
Warranty
Other long-term employee benefits
Others
December 31,
2018
(In millions of Korean Won)
December 31,
2017
￦
￦
5,177,128 ￦
703,526
919,250
6,799,904 ￦
5,226,297
636,380
791,764
6,654,441
(2) The changes in provisions for the year ended December 31, 2018 are as follows:
Description
Warranty
Beginning of the period
Changes in accounting standards (*)
Charged
Utilized
Effect of foreign exchange differences
End of the year
￦
￦
Description
Warranty
Beginning of the period
Charged
Utilized
Effect of foreign exchange differences
End of the year
￦
￦
Other long-term
employee benefits
(In millions of Korean Won)
636,380 ￦
5,226,297 ￦
-
1,703,173
(1,765,815)
13,473
5,177,128 ￦
-
129,038
(61,827)
(65)
703,526 ￦
Other long-term
employee benefits
(In millions of Korean Won)
641,193 ￦
53,107
(57,930)
10
636,380 ￦
5,612,978 ￦
1,473,098
(1,743,049)
(116,730)
5,226,297 ￦
Others
791,764
128,266
535,054
(539,716)
3,882
919,250
Others
718,469
728,683
(619,102)
(36,286)
791,764
The changes in provisions for the year ended December 31, 2017 are as follows:
(*) Due to adoption of K-IFRS 1115, the effect of reclassifying provision for construction loss which belonged to ‘due from
customers for contract work’ (‘due to customers for contract work’) to other provisions as separate account is included.
17. OTHER FINANCIAL LIABILITIES:
(1) Other financial liabilities as of December 31, 2018 consist of the following:
December 31, 2018
Description
Financial liabilities measured at FVPL
Derivative liabilities that are effective
hedging instruments
Current
Non-current
(In millions of Korean Won)
151 ￦
9,060
￦
288,446
44,137
44,288 ￦ 297,506
￦
(2) Other financial liabilities as of December 31, 2017 consist of the following:
December 31, 2017
Description
Financial liabilities at FVPL
Derivative liabilities that are effective
hedging instruments
Current
Non-current
(In millions of Korean Won)
555 ￦
-
￦
￦
25,097
438,070
25,652 ￦ 438,070
- 66 -
18. OTHER LIABILITIES:
Other liabilities as of December 31, 2018 and 2017 consist of the following:
Description
Advances received
Withholdings
Accrued expenses
Unearned income
Due to customers for contract work
Others
December 31, 2018
December 31, 2017
Current
Non-current
Current
Non-current
(In millions of Korean Won)
￦
796,552 ￦
86,359
301,247
-
1,075,434
-
1,182,380
￦ 5,796,193 ￦ 2,800,510 ￦ 6,591,421 ￦ 2,645,420
125,269 ￦
233,297
-
1,280,571
-
1,161,373
746,977 ￦
964,884
3,830,729
315,035
438,977
294,819
1,005,768
2,669,315
393,405
546,256
384,897
19. FINANCIAL INSTRUMENTS:
(1) Financial assets by categories as of December 31, 2018 are as follows:
Financial assets
measured at
FVPL
Financial
assets
measured at
amortized cost
Description
Financial
assets
measured at
FVOCI
Derivative
assets that are
effective
hedging
instruments
(In millions of Korean Won)
Book value
Fair value
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
- ￦ 9,113,625 ￦
- ￦
- ￦ 9,113,625 ￦ 9,113,625
-
8,048,713
-
-
8,048,713
8,048,713
-
-
9,931,151
-
3,732,770
2,925,850
104,963
319,599
-
-
1,910,721
-
-
-
32,248
-
3,732,770
2,925,850
11,979,083
319,599
3,732,770
2,925,850
11,979,083
319,599
-
54,501,664
-
￦
9,931,151 ￦ 78,747,184 ￦ 1,910,721 ￦
Financial assets by categories as of December 31, 2017 are as follows:
-
54,800,473
32,248 ￦ 90,621,304 ￦ 90,920,113
54,501,664
Description
Financial
assets
at FVPL
Loans
and
receivables
Derivative
assets that are
effective
hedging
instruments
(In millions of Korean Won)
AFS
financial
assets
Book value
Fair value
Cash and
cash equivalents
Short-term and long-
￦
- ￦ 8,821,529 ￦
- ￦
- ￦ 8,821,529 ￦ 8,821,529
term financial
instruments
Trade notes and
accounts receivable
Other receivables
Other financial assets
Other assets
Financial services
receivables
-
7,891,106
-
-
7,891,106
7,891,106
-
-
12,964,437
-
3,961,976
3,195,513
87,589
359,942
-
-
2,308,955
-
-
-
38,197
-
3,961,976
3,195,513
15,399,178
359,942
3,961,976
3,195,513
15,399,178
359,942
-
51,168,018
-
￦ 12,964,437 ￦ 75,485,673 ￦ 2,308,955 ￦
-
51,287,698
38,197 ￦ 90,797,262 ￦ 90,916,942
51,168,018
- 67 -
(2) Financial liabilities by categories as of December 31, 2018 are as follows:
Description
Financial liabilities
measured at FVPL
Financial liabilities
measured 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
￦
￦
- ￦
-
7,655,630 ￦
5,445,779
- ￦ 7,655,630 ￦ 7,655,630
5,445,779
-
5,445,779
-
73,296,141
9,211
-
9,211 ￦
-
2,723,827
89,121,377 ￦
-
332,583
73,296,748
341,794
2,723,827
332,583 ￦ 89,463,171 ￦ 89,463,778
73,296,141
341,794
2,723,827
-
Financial liabilities by categories as of December 31, 2017 are as follows:
Description
Financial liabilities
at FVPL
Financial liabilities
carried at
amortized cost
Derivative liabilities
that are effective
hedging instruments
(In millions of Korean Won)
Book value
Fair value
￦
- ￦
-
6,483,875 ￦
5,059,246
- ￦ 6,483,875 ￦ 6,483,875
5,059,246
-
5,059,246
-
555
-
555 ￦
72,000,530
-
3,837,148
87,380,799 ￦
-
463,167
71,987,443
463,722
3,837,148
463,167 ￦ 87,844,521 ￦ 87,831,434
72,000,530
463,722
3,837,148
-
Trade notes and
accounts payable
Other payables
Borrowings and
debentures
Other financial liabilities
Other liabilities
￦
(3) Fair value estimation
The Group categorizes the assets and liabilities measured at fair value into the following three-level fair value
hierarchy in 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).
- 68 -
Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2018 are as
follows:
Description
Level 1
December 31, 2018
Level 2
Level 3
(In millions of Korean Won)
Total
Financial assets:
Financial assets measured
at FVPL
Derivative assets that are
effective hedging
instruments
Financial assets measured
at FVOCI
Financial liabilities:
Financial liabilities measured
at FVPL
Derivative liabilities that are
effective hedging
instruments
￦
90,292 ￦ 9,612,287 ￦ 228,572 ￦
9,931,151
-
32,248
-
32,248
1,306,912
1,910,721
￦ 1,397,204 ￦ 9,871,358 ￦ 605,558 ￦ 11,874,120
376,986
226,823
￦
- ￦
9,211 ￦
- ￦
9,211
￦
-
- ￦
332,583
341,794 ￦
-
- ￦
332,583
341,794
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 FVPL
Derivative assets that are
effective hedging
instruments
AFS financial assets
Financial liabilities:
Financial liabilities at FVPL
Derivative liabilities that are
effective hedging
instruments
￦
111,654 ￦ 12,704,257 ￦ 148,526 ￦
12,964,437
-
1,708,825
38,197
264,611
-
335,519
￦ 1,820,479 ￦ 13,007,065 ￦ 484,045 ￦
38,197
2,308,955
15,311,589
￦
- ￦
555 ￦
- ￦
555
￦
-
- ￦
463,167
463,722 ￦
-
- ￦
463,167
463,722
The changes in financial instruments classified as Level 3 for the year ended December 31, 2018 are as follows:
Beginning
of the
period (*)
Description
Financial assets measured
Purchases Disposals
Valuation Transfers
(In millions of Korean Won)
Transfer to
disposal
group as held
for sale
End of
the period
at FVPL
￦ 210,162 ￦ 11,884 ￦ (13,009) ￦ 19,535 ￦
- ￦
- ￦
228,572
Financial assets measured
at FVOCI
273,883
77,044
(8,880)
35,008
-
(69)
376,986
(*) The beginning amount consists of AFS financial assets and financial assets at FVPL due to the change in accounting
standards.
- 69 -
The changes in financial instruments classified as Level 3 for the year ended December 31, 2017 are as follows:
Description
Beginning
of the
period
Purchases Disposals
Valuation Transfers
(In millions of Korean Won)
End of
the period
AFS financial assets
Financial assets at FVPL
￦ 258,160 ￦ 77,177 ￦
(3,999) ￦
71,838
-
-
4,681 ￦
76,688
(500) ￦ 335,519
148,526
-
(4)
Interest income, dividend income and interest expenses by categories of financial instruments for the year
ended December 31, 2018 are as follows:
Description
Non-financial services:
Financial assets measured
at amortized cost
Financial assets (liabilities)
measured at FVPL
Financial assets measured at FVOCI
Financial liabilities measured
at amortized cost
Financial services:
Financial assets measured
at amortized cost
Financial assets measured at FVPL
Financial assets measured at FVOCI
Financial liabilities measured
at amortized cost
Interest
income
2018
Dividend
income
(In millions of Korean Won)
Interest
expenses
￦
339,182 ￦
- ￦
-
175,921
-
-
-
29,065
18,497
-
￦
515,103 ￦
29,065 ￦
-
236,817
255,314
￦ 3,614,502 ￦
32,886
2,310
-
￦ 3,649,698 ￦
- ￦
7,949
-
-
-
-
-
1,587,053
7,949 ￦ 1,587,053
Interest income, dividend income and interest expenses by categories of financial instruments for the year
ended December 31, 2017 are as follows:
Description
Non-financial services:
Loans and receivables
Financial assets (liabilities) at FVPL
AFS financial assets
Financial liabilities
carried at amortized cost
Financial services:
Loans and receivables
Financial assets at FVPL
AFS financial assets
Financial liabilities
carried at amortized cost
Interest
Income
2017
Dividend
income
(In millions of Korean Won)
Interest
expenses
￦
272,106 ￦
168,614
-
- ￦
-
29,734
-
17,408
-
-
-
￦
440,720 ￦
29,734 ￦
221,010
238,418
￦
3,434,974 ￦
25,436
1,136
- ￦
1,499
3,098
-
-
-
-
￦
3,461,546 ￦
-
1,432,527
4,597 ￦ 1,432,527
- 70 -
(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, 2018 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
￦ 3,892,885 ￦
3,118,981
160,115 ￦ 3,732,770 ￦
193,131
2,925,850
204,576
-
-
204,576
32,248
￦ 7,248,690 ￦
353,246 ￦ 6,895,444 ￦
￦ 7,862,431 ￦
5,592,224
206,801 ￦ 7,655,630 ￦
146,445
5,445,779
9,211
-
-
9,211
332,583
￦ 13,796,449 ￦
353,246 ￦ 13,443,203 ￦
- ￦
-
-
22,431
22,431 ￦
- ￦
-
-
22,431
22,431 ￦
- ￦ 3,732,770
2,925,850
-
-
204,576
-
9,817
- ￦ 6,873,013
- ￦ 7,655,630
5,445,779
-
-
9,211
-
310,152
- ￦ 13,420,772
Description
Financial assets:
Trade notes and accounts
receivable
Other receivables
Financial assets measured at
FVPL
Derivative assets that are
Financial liabilities:
Trade notes and accounts
payable
Other payables
Financial liabilities measured at
FVPL
Derivative liabilities that are
effective hedging instruments (*)
32,248
effective hedging instruments (*)
332,583
(*) 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.
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 FVPL
Derivative assets that are
￦ 4,100,242 ￦
3,387,809
196,662
138,266 ￦ 3,961,976 ￦
192,296
-
3,195,513
196,662
effective hedging instruments (*)
38,197
-
38,197
￦ 7,722,910 ￦
330,562 ￦ 7,392,348 ￦
Financial liabilities:
Trade notes and accounts
payable
Other payables
Financial liabilities at FVPL
Derivative liabilities that are
￦ 6,683,461 ￦
5,190,222
555
199,586 ￦ 6,483,875 ￦
130,976
-
5,059,246
555
effective hedging instruments (*)
463,167
-
463,167
￦ 12,337,405 ￦
330,562 ￦ 12,006,843 ￦
- ￦
-
-
10,389
10,389 ￦
- ￦
-
-
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.
- 71 -
(6) The commission income (financial services revenue) arising from financial assets or liabilities other than
financial assets or liabilities measured at FVPL (financial assets or liabilities at FVPL as of December 31,
2017) for the year ended December 31, 2018 and 2017 are ￦893,473 million and ￦1,815,536 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 measured at FVPL (financial assets or liabilities
at FVPL as of December 31, 2017) for the year ended December 31, 2018 and 2017 are ￦365,790 million
and ￦989,424 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 were no significant transfers between Level 1 and Level 2
for the year ended December 31, 2018.
(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 swap
Fair value of currency forwards, options and swap 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 swap, 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 fair value of currency forwards, options and swap are supported by observable
market data, such as forward exchange rates, the Group classifies the estimates of fair value measurements of
the currency forwards, options and swap as Level 2 of the fair value hierarchy.
- Interest rate swap
The discount rate and forward interest rate used to measure the fair value of interest rate swaps are
determined based on an applicable yield curve derived from interest quoted in the current market at the end
of the reporting period. The fair value of interest rate swaps was measured as a discount on the estimated
future cash flows of interest rate swap based on forward interest rates derived from the above method at an
appropriate discount rate.
As the inputs used to measure fair value of interest rate swap are supported by observable market data, such
as yield curves, the Group classifies the estimates of fair value measurements of the interest rate swap as
Level 2 of the fair value hierarchy.
- Debt instruments including corporate bonds
Fair value of debt instruments including corporate bonds is measured applying discounted cash flow
method. The rate used to discount cash flows is determined based on swap rate and credit spreads of debt
instruments, which have the similar credit rating and period quoted in the current market with those of debt
instruments including corporate bonds that should be 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.
- 72 -
- Unlisted equity securities
Fair value of unlisted equity securities is measured using discounted cash flow projection and others, and
certain assumptions not based on observable market prices or rate, such as sales growth rate, pre-tax
operating income ratio and discount rate based on business plan and circumstance of industry are used to
estimate the future cash flow. The discount rate used to discount the future cash flows, is calculated by
applying the Capital Asset Pricing Model (CAPM), using the data of similar listed companies. The Group
determines that the effect of estimation and assumptions referred above affecting fair value of unlisted
equity securities is significant and classifies fair value measurements of unlisted securities as Level 3 of the
fair value hierarchy.
- Total return swap (Derivatives)
The fair value of total revenue swaps (derivatives) is measured based on the stock price volatility up to the
fair value, exercise price, maturity and maturity of the underlying asset, using the binomial option pricing
model. The discount rate used in the binomial option pricing model is based on the risk-free interest rate,
which corresponds to the remaining maturity, and the stock price volatility up to maturity uses the historical
volatility of the financial sector over the past two years. The fair value of the underlying assets is measured
using the cash flow discount model that is estimated based on assumptions and assumptions which are not
observable in the market such as sales growth rate, pre-tax profit margin, discount rate. The discount rate
used to discount future cash flows was calculated by applying the capital asset pricing model (CAPM) using
data from similar listed companies. The Group classifies the fair value measurement of total revenue swap
(derivatives) as Level 3 in the fair value hierarchy based on the significant effect of the above assumptions
and estimates on the fair value of the total revenue swap classified.
(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,
Total
return swap
561,708 Discounted
cash flow
and others
Sales growth rate
0.6% ~ 5.0%
Pre-tax operating
income margin
3.2% ~ 12.0%
Discount rate
5.92% ~ 9.27%
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.
- 73 -
20. CAPITAL STOCK:
The Company’s number of shares authorized is 600,000,000 shares. Common stock and preferred stock as of
December 31, 2018 and 2017 consist of the following:
(1) Common stock
Description
Issued
Par value
Capital stock
December 31, 2018
December 31, 2017
(In millions of Korean Won, except par value)
￦
213,668,187 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, 1,320,000 common shares and
6,608,292 common shares as of March 5, 2001, May 4, 2004 and July 27, 2018 respectively. Due to these stock
retirements, the total face value of outstanding stock differs from the capital stock amount.
(2) Preferred stock
Description
Par value
Issued
Korean Won
(In millions of
Korean Won)
Dividend rate
1st preferred stock ￦
2nd preferred stock
3rd preferred stock
5,000
˝
˝
24,356,685 shares ￦
36,485,451 shares
2,428,735 shares
63,270,871 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 and as of July 27, 2018, the
Company retired 753,297 first preferred shares, 1,128,414 second preferred shares and 49,564 third preferred
shares. Due to the stock retirement, the total face value of outstanding stock differs from the capital stock
amount. The preferred stocks are non-cumulative, participating and non-voting.
21. CAPITAL SURPLUS:
Capital surplus as of December 31, 2018 and 2017 consists of the following:
Description
December 31, 2018
December 31, 2017
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
879,880
4,201,214
22. OTHER CAPITAL ITEMS:
Other capital items consist of treasury stocks purchased for the stabilization of stock price. Numbers of treasury
stocks as of December 31, 2018 and 2017 are as follows:
Description
Common stock
1st preferred stock
2nd preferred stock
3rd preferred stock
December 31,
2018
December 31,
2017
(Number of shares)
9,387,581
1,759,942
696,445
9,050
13,222,514
2,202,059
1,376,138
24,782
- 74 -
23. ACCUMULATED OTHER COMPREHENSIVE LOSS:
(1) Accumulated other comprehensive loss as of December 31, 2018 consists of the following:
Description
December 31, 2018
(In millions of Korean Won)
Gain on valuation of financial assets measured at FVOCI (*) ￦
Loss on valuation of financial assets measured at FVOCI (*)
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
Transfer to equity related to the disposal group
as held for sale
Total
￦
406,191
(309,690)
3,153
(66,106)
22,632
(979,050)
(2,128,206)
(3,051,076)
(1,122)
(3,052,198)
(*) It is cumulative gain or loss excluding the amount reclassified to retained earnings at the time of disposal. In accordance
with initial application of K- IFRS 1109, it reflects ￦340,268 million won, the effect of adjustment in opening balance as
of January 1, 2018 including the reclassification of the impairment recognised in the past.
(2) Accumulated other comprehensive loss as of December 31, 2017 consists of the following:
Description
December 31,2017
(In millions of Korean Won)
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
￦
￦
486,596
(1,915)
9,062
(2,119)
165,563
(814,987)
(2,121,155)
(2,278,955)
24. RETAINED EARNINGS:
Retained earnings as of December 31, 2018 and 2017 consist of the following:
Description
Legal reserve (*)
Discretionary reserve
Unappropriated
December 31,
2018
(In millions of Korean Won)
December 31,
2017
￦
￦
744,836 ￦
48,328,847
17,416,399
66,490,082 ￦
744,836
46,848,647
19,738,845
67,332,328
(*) 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.
- 75 -
(2) The computation of the interim dividends for the year ended December 31, 2018 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
(15,359,818)
204,916,661
25,109,982
(2,445,984)
22,663,998
37,613,865
(1,740,855)
35,873,010
1,000 ￦
20%
204,917
1,000 ￦
20%
22,664
1,000 ￦
20%
35,873
5,000
2,478,299
(48,817)
2,429,482
1,000
20%
2,429
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
(3) The computation of the proposed dividends for the year ended December 31, 2018 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 ￦
213,668,187
(9,387,581)
204,280,606
24,356,685
(1,759,942)
22,596,743
36,485,451
(696,445)
35,789,006
3,000 ￦
60%
613,016
3,050 ￦
61%
68,929
3,100 ￦
62%
110,973
5,000
2,428,735
(9,050)
2,419,685
3,050
61%
7,383
The computation of the 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
- 76 -
25. HYBRID BOND:
(1) Hyundai Card Co., Ltd., a subsidiary of the Company, issued hybrid bond and the Group classified it as
equity (non-controlling interests). As of December 31, 2018, hybrid bond is as follows:
Description
Issue date
Maturity date
The 731st Hybrid Tier 1 (Private)
Issue cost
July 5, 2018
July 5, 2048
Annual
interest rate
(%)
4.70
December 31, 2018
(In millions of Korean Won)
￦
300,000
(760)
299,240
￦
(2) As of December 31, 2018, the condition of hybrid bond that Hyundai Card Co., Ltd., a subsidiary of the
Company issued, is as follows:
Maturity
Thirty years (Maturity extension is possible according to the issuer's decision
Description
upon maturity)
Issue date ~ July 5, 2023 : An annual fixed interest rate 4.7%
Increase 2% after five years in accordance with Step-up clause at a time only
Three months, optional postponement of payment
Repayment before maturity by issuer is available after five years from issue date
Interest rate
Interest payment
condition
Others
26. SALES:
(1) Sales for the years ended December 31, 2018 and 2017 consist of the following:
Description
Sales of goods
Rendering of services
Royalties
Financial services revenue
Revenue related to construction contracts
Others
2018
2017
(In millions of Korean Won)
￦
￦
81,502,831 ￦
2,223,538
104,813
10,236,363
2,360,807
384,257
96,812,609 ￦
80,378,325
1,445,580
138,636
11,290,926
2,608,678
513,934
96,376,079
(2) As of December 31, 2018, the aggregate transaction price allocated to the unrealized (or partially
unrealized) performance obligation is expected to be recognized as revenue in the future periods.
Description
Deferred revenue and others
Not later than
one year
Later than
one year
￦
695,607 ￦
1,043,224
- 77 -
27. SELLING AND ADMINISTRATIVE EXPENSES:
Selling and administrative expenses for the years ended December 31, 2018 and 2017 consist of the following:
Description
2018
2017
(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
￦
88,246 ￦
403,541
2,308,527
726,265
1,998,143
116,791
5,641,513
2,633,437
171,504
403,564
1,351,919
1,125,603
1,392,425
7,078,452
12,719,965 ￦
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
28. GAIN (LOSS) ON INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:
Gain (loss) on investments in joint ventures and associates for the years ended December 31, 2018 and 2017 consist of
the following:
Description
Gain on share of earnings of equity-accounted investees, net
Gain on disposals of investments in associates, net
Impairment loss on investments in associates
2018
2017
(In millions of Korean Won)
￦
￦
599,522 ￦
(1,491)
(193,490)
404,541 ￦
527,589
-
(302,536)
225,053
29. FINANCE INCOME AND EXPENSES:
(1) Finance income for the years ended December 31, 2018 and 2017 consists of the following:
Description
Interest income
Gain on foreign exchange transactions
Gain on foreign currency translation
Dividend income
Gain on derivatives
Others
2018
2017
(In millions of Korean Won)
￦
￦
515,103 ￦
86,033
105,060
29,065
69,227
19,011
823,499 ￦
440,720
159,131
195,647
29,734
97,459
50,252
972,943
- 78 -
(2) Finance expenses for the years ended December 31, 2018 and 2017 consist of the following:
Description
Interest expenses
Loss on foreign exchange transactions
Loss on foreign currency translation
Loss on derivatives
Impairment loss on AFS financial assets
Others
2018
2017
(In millions of Korean Won)
307,070 ￦
51,310
229,497
12,781
-
209
600,867 ￦
333,034
180,322
145,619
29,742
373,440
58,229
1,120,386
￦
￦
30. OTHER INCOME AND EXPENSES:
(1) Other income for the years ended December 31, 2018 and 2017 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
2018
2017
(In millions of Korean Won)
329,399 ￦
159,899
19,518
119,920
77,974
260,571
967,281 ￦
405,026
183,766
23,789
129,456
83,100
328,607
1,153,744
￦
￦
(2) Other expenses for the years ended December 31, 2018 and 2017 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
￦
￦
2018
2017
(In millions of Korean Won)
￦
433,694
203,994
163,594
13,045
85,482
587,228
1,487,037
437,602
282,699
186,575
-
68,843
391,752
1,367,471
￦
31. EXPENSES BY NATURE:
Expenses by nature for the years ended December 31, 2018 and 2017 consist of the following:
Description
Changes in inventories
Raw materials and merchandise used
Employee benefits
Depreciation
Amortization
Others
￦
Total (*)
￦
2018
(In millions of Korean Won)
2017
(310,180) ￦
56,845,459
8,893,878
2,357,887
1,403,582
26,686,855
95,877,481 ￦
351,359
53,039,414
8,920,952
2,254,552
1,274,842
27,327,764
93,168,883
(*) Sum of cost of sales, selling and administrative expenses and other expenses in the consolidated statements of income.
- 79 -
32. 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,
2018 and 2017, since there are no dilutive items during the years.
Basic earnings per common stock and preferred stock for the years ended December 31, 2018 and 2017 are
computed as follows:
December 31, 2018
Weighted-
average number
of shares
outstanding (*1)
Profit
available to
share
December 31, 2017
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
￦ 1,158,437
129,272
206,532
13,843
(In millions of Korean Won, except per share amounts)
205,697,075 ￦
22,753,974
36,008,052
2,438,169
5,632 ￦ 3,104,373
344,605
5,681
546,938
5,736
36,908
5,677
207,053,965 ￦ 14,993
15,043
22,907,923
15,093
36,237,727
15,043
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’.
33. INCOME TAX EXPENSE:
(1)
Income tax expense (benefit) for the years ended December 31, 2018 and 2017 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 recognized directly in equity
Effect of foreign exchange differences
Income tax expense (benefit)
2018
2017
(In millions of Korean Won)
￦
802,201 ￦
1,250,042
475,666
(44,320)
(506,925)
(129,864)
225,581
17,904
884,563 ￦
(2,071,031)
676,384
(96,821)
177,896
(107,850)
￦
(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, 2018 and 2017 is as follows:
Description
Income before income tax
Income tax expense calculated at current applicable
tax rates of 28% in 2018 and 22.5% in 2017
Adjustments:
Non-taxable income
Disallowed expenses
Tax credits
Impact of changes in tax rates
Others
Income tax expense (benefit)
Effective tax rate (*)
2018
2017
(In millions of Korean Won)
￦
2,529,582 ￦
4,438,550
707,993
999,530
(204,614)
150,243
(83,025)
-
313,966
176,570
884,563 ￦
35.0%
(50,863)
77,793
(349,453)
(804,048)
19,191
(1,107,380)
(107,850)
-
￦
(*) The Group does not determine effective tax rate for the year ended December 31, 2017 as tax benefit is recognized.
- 80 -
(3) The changes in deferred tax assets (liabilities) for the year ended December 31, 2018 are as follows:
Description
Beginning
of the year
End
of the year
￦
Provisions
Financial assets measured at FVPL
Financial assets measured at FVOCI
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
￦
1,876,177 ￦
Changes
(In millions of Korean Won)
18,555 ￦
3,287
(160,472)
187,795
(12,332)
30,588
20,509
(313,221)
17,607
55
714,554
506,925
129,864
636,789 ￦
-
-
(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) ￦
1,894,732
3,287
(160,472)
-
(1,520,164)
-
(11,609)
(4,816,432)
88,318
(4)
795,016
(3,727,328)
2,253,312
(1,474,016)
The changes in deferred tax assets (liabilities) for the year ended December 31, 2017 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
￦
Changes
(In millions of Korean Won)
(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 ￦
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) ￦
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)
(4) The components of items recognised directly in equity for the years ended December 31, 2018 and 2017 are
as follows:
Description
2018
2017
Gain on valuation of AFS financial assets, net
Loss on financial assets measured at FVOCI, net
Loss (gain) on valuation of cash flow hedge derivatives, net
Remeasurements of defined benefit plans
Changes in retained earnings of equity-accounted investees
(In millions of Korean Won)
- ￦
￦
43,432
39,557
155,777
(13,185)
225,581 ￦
￦
(89,737)
-
(8,681)
(9,992)
11,589
(96,821)
(5) The temporary differences not recognized as deferred tax liabilities related to subsidiaries, associates and
joint ventures are ￦8,328,950 million and ￦8,144,899 million as of December 31, 2018 and 2017,
respectively.
- 81 -
34. RETIREMENT BENEFIT PLAN:
(1) Expenses recognized in relation to defined contribution plans for the years ended December 31, 2018 and 2017
are as follows:
Description
Paid-in cash
Recognized liability
2017
2018
(In millions of Korean Won)
￦
￦
8,322 ￦
1,969
10,291 ￦
8,288
1,257
9,545
(2) The significant actuarial assumptions used by the Group as of December 31, 2018 and 2017 are as follows:
Description
December 31, 2018 December 31, 2017
Discount rate
Rate of expected future salary increase
3.39%
4.29%
4.41%
4.62%
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, 2018 and 2017 consist of the following:
Description
December 31, 2018
December 31, 2017
Present value of defined benefit obligations ￦
Fair value of plan assets
￦
Net defined benefit liabilities
Net defined benefit assets
(In millions of Korean Won)
5,931,464 ￦
(5,508,329)
423,135 ￦
433,247
(10,112)
5,321,580
(5,179,426)
142,154
157,213
(15,059)
(4) Changes in net defined benefit assets and liabilities for the year ended December 31, 2018 are as follows:
Description
Present value of defined
benefit obligations
Fair value of
plan assets
Total
￦
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
(In millions of Korean Won)
5,321,580 ￦
554,868
164,547
2,447
6,043,442
(5,179,426) ￦
-
(159,013)
-
(5,338,439)
-
119,254
95,599
200,651
179,780
476,030
-
(610,301)
5,099
-
-
-
119,254
(698,631)
418,485
(1,421)
142,154
554,868
5,534
2,447
705,003
119,254
95,599
200,651
179,780
595,284
(698,631)
(191,816)
3,678
9,617
423,135
￦
17,194
5,931,464 ￦
(7,577)
(5,508,329) ￦
- 82 -
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
Total
￦
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
(In millions of Korean Won)
4,937,999 ￦
546,342
142,930
(48)
5,627,223
(4,449,721) ￦
-
(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
1,108
(86,192)
51,436
(39,690)
(814,443)
(55,074)
302
4,157
142,154
￦
(21,846)
5,321,580 ￦
26,003
(5,179,426) ￦
(5) The sensitivity analysis below has been determined based on reasonably possible changes of the significant
assumptions as of December 31, 2018 and 2017, while holding all the other assumptions are constant.
Effect on the net defined benefit liabilities
December 31, 2018
December 31, 2017
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
￦
(516,424) ￦
571,913
604,045 ￦
(500,355)
(488,202) ￦
539,260
574,125
(470,246)
(6) The fair value of the plan assets as of December 31, 2018 and 2017 consists of the following:
Description
December 31, 2018
December 31, 2017
Insurance instruments
Debt instruments
Others
￦
￦
(In millions of Korean Won)
￦
5,203,146
123,766
181,417
5,508,329
￦
4,873,665
120,277
185,484
5,179,426
(7) The Group expects to pay ￦587,216 million in contributions to the retirement benefit plan in 2019. In
addition, the weighted average maturity of the defined benefit liabilities as of December 31, 2018 is 9.98
years.
- 83 -
35. CASH FLOWS:
(1) Cash generated from operations for the years ended December 31, 2018 and 2017 are as follows:
Description
2018
(In millions of Korean Won)
2017
￦
1,645,019 ￦
4,546,400
Profit for the year
Adjustments:
Post-employment benefits
Depreciation
Amortization of intangible assets
Provision for warranties
Income tax expense (benefit)
Loss on foreign currency translation, net
Loss on disposals of PP&E, net
Interest income, net
Gain on share of earnings of equity-accounted
investees, 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 (increase) in other receivables
Decrease (increase) in other financial assets
Increase in inventories
Increase in other assets
Increase in trade notes and accounts payable
Increase in other payables
Increase (decrease) 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
564,830
2,357,887
1,403,582
1,805,607
884,563
168,532
144,076
(208,033)
(599,522)
6,623,857
193,490
-
697,607
14,036,476
144,965
(49,614)
582,163
(686,275)
(232,079)
1,250,595
371,821
(318,944)
(5,774)
(685,658)
(191,816)
(2,367,358)
(4,552,802)
(2,920,535)
68,502
(9,592,809)
Cash generated from operations
￦
6,088,686 ￦
559,881
2,254,552
1,274,842
1,392,351
(107,850)
48,905
162,786
(107,686)
(527,589)
6,305,394
302,536
373,440
849,519
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)
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, 2018 and 2017 are as follows:
Description
2018
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
13,198,648 ￦
3,224,076
140,905
14,335,321
3,140,826
94,937
- 84 -
(3) Changes in liabilities arising from financial activities for the year ended December 31, 2018 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)
￦ 23,058,201 ￦ (10,137,072) ￦
13,198,648 ￦
408,544 ￦ 82,553 ￦ (256,097) ￦ 26,354,777
12,488,137
36,454,192
439,697
10,198,316
(2,669,011)
(10,529,637)
237,897
794,741
(5,242)
38,502
(506,228)
-
9,985,250
36,956,114
Description
Short-term
borrowings
(*1)
Long-term
debts
Debentures
(*1) The current portion of long-term debts and debentures are included.
(*2) Others include liabilities classified as held for sale and others.
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.
36. 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 period. Debt to equity ratios as of December 31, 2018 and 2017 are as follows:
Description
December 31, 2018
December 31, 2017
Total liabilities
Total equity
Debt-to-equity ratio
(2) Financial risk management
￦
(In millions of Korean Won)
106,759,742 ￦
73,896,010
144.5%
103,442,100
74,757,354
138.4%
The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and
equity instrument 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.
- 85 -
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.
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, 2018 would be as follows:
Foreign Currency
Increase by 5%
Decrease by 5%
Foreign Exchange Rate Sensitivity
USD
EUR
JPY
￦
(In millions of Korean Won)
9,281 ￦
(13,525)
(3,867)
(9,281)
13,525
3,867
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. To manage the interest rate risk, the Group
maintains an appropriate balance between borrowings with fixed and variable interest rates for short-term
borrowings and has a policy to borrow funds with fixed interest rates to avoid the future cash flow fluctuation
risk for long-term debt if possible. 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, 2018
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 measured at FVPL
Short-term and long-term financial
Instruments
Borrowings and debentures
Financial liabilities measured at FVPL
15,472 ￦
1,715
5,043
(139,911)
(2,481)
(15,472)
(1,455)
(5,043)
139,911
2,481
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, 2018 and 2017, the amounts of interest rate risk measured at VaR are ￦134,366 million and
￦194,899 million, respectively.
c) Equity instruments price risk
The Group is exposed to market price fluctuation risk arising from equity instruments. As of December 31,
2018, the amounts of financial assets measured at FVPL and financial assets measured at FVOCI are ￦90,292
million and ￦1,674,690 million, respectively.
- 86 -
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 38, 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.
Due to the inherent nature of the industry, the Group requires continuous R&D investment and is sensitive to
economic fluctuations. The Group minimizes its credit risk in cash equivalents by investing in risk-free assets.
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, 2018 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
￦
15,804,917 ￦
27,914,039
946,190
21,011 ￦
46,450,499
21,039
- ￦
2,748,091
635
15,825,928
77,112,629
967,864
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 instruments
The Group enters into derivative instrument contracts such as forwards, currency options, currency swaps and
interest swaps to hedge its exposure to changes in foreign exchange rate.
As of December 31, 2018 and 2017, the Group deferred a net loss of ￦62,953 million and a net profit of ￦6,943
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 104 months as of
December 31, 2018.
For the year ended December 31, 2018 and 2017, the Group recognises a net profit of ￦206,019 million and a
net loss of ￦490,945 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.
- 87 -
37. RELATED-PARTY TRANSACTIONS:
The transactions and balances of receivables and payables within the Group are wholly eliminated in the
preparation of consolidated financial statements of the Group.
(1) For the year ended December 31, 2018, 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
Others
Purchases
(In millions of Korean Won)
Others
Sales/proceeds
Purchases/expenses
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
￦
855,899 ￦
150,932
-
9,309
36,758
16,954
11,882 ￦
-
650
2,547
3,091
882
5,779,338 ￦
1,170,562
1,595,879
1,089,584
784,401
400,752
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
7,301
-
18,518
1,232,262
394,601
1,064,764
119,781
461,444
3,032
265,199
503,428
2,454
948,967
-
332
1,991
648,081
953
-
79
46,526
-
2,622
54,601
6,307
162,448
234,990
413,903
718,445
179,658
342,964
-
563,662
36,535
12,886
1,368,294
3,740,640
114
7,017,992
63,730
11,510
12,925
5,076
647
33
-
-
17,171
505,812
2,932
-
-
-
14,654
3,870
1,772,692
5
1,357,505
For the year ended December 31, 2017, significant transactions arising from operations between the Group
and related parties or affiliates by the Act are as follows:
Description
Sales
Others
Purchases
(In millions of Korean Won)
Others
Sales/proceeds
Purchases/expenses
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 Brasil Fabricacao De
Auto Pecas Ltda
Mobis Module CIS, LLC
Others
Kia Motors Corporation
Kia Motors Manufacturing
Georgia, Inc.
Kia Motors Russia LLC
Kia Motors Slovakia s.r.o.
BHMC
HMGC
Hyundai WIA Corporation
Others
Other related parties
Affiliates by the Act
￦
851,971 ￦
152,716
-
25,209
33,173
16,595
11,641 ￦
218
520
2,933
3,092
1,601
4,712,207 ￦
1,175,462
1,576,856
1,085,635
773,394
357,531
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
-
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
- 88 -
(2) As of December 31, 2018, significant balances related to the transactions between the Group and related
parties or affiliates by the Act are as follows:
Description
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
￦
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
157,633 ￦
13,694
2
1,061
7,568
1,671
-
4,152
358,664
26,594
104,433
9,253
-
170,547
-
34,382
203,992
404
223,834
11,050 ￦ 1,161,047 ￦
-
210
3
93
3,317
33
143
313,353
11,698
103
131
77,713
62,236
13,021
17,306
108,678
558
25,370
97,661
128,210
148,002
64,274
42,412
39,281
61,323
36,681
7
-
20,711
1,212
-
8,716
189,044
517,426
9
928,550
279,775
33
-
15
-
-
-
4,770
178,582
-
-
282
19,478
30
6,619
71,059
739,730
2
333,227
(*1) The Group has recognised the loss allowance for the related parties' receivables in the amount of ￦24,993 million as of
December 31, 2018 and the impairment loss is recognised in the amount of ￦2,974 million for the year ended December 31,
2018.
(*2) As of December 31, 2018, outstanding payment of ￦18,013 million of corporate purchase card agreement provided by
Hyundai Card Co., Ltd. are included. For the year ended December 31, 2018, amount used and repayment of agreement are
￦283,929 million and ￦278,863 million, respectively.
- 89 -
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
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
￦
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
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
14,747
183
365
105,854
87,455
-
19,252
113,488
557
983,238
620,182 ￦
42,710
118,894
170,877
53,628
27,100
42,202
72,715
22,013
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 recognised the loss allowance for the related parties' receivables in the amount of ￦21,915 million as of
December 31, 2017 and the impairment loss is recognised 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.
(3) Significant fund transactions and equity contribution transactions for the year ended December 31, 2018,
between the Group and related parties are as follows:
Description
Lending
Collection
Loans
Borrowings
Borrowing Repayment
Joint ventures and associates
(In thousands of U.S. Dollars, Chinese Yuan)
-
￥ 80,000
-
Equity
contribution
(In millions of
Korean won)
- ￦
61,772
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
Loans
Borrowings
Borrowing Repayment
Equity
contribution
(In millions of
Korean won)
Joint ventures and associates
-
-
-
- ￦
80,144
For the year ended December 31, 2018 and 2017, the Group received dividends of ￦168,811million and
￦835,338 million from related parties and affiliates by the Act, respectively and paid dividends of
￦272,961 million and ￦278,995 million to related parties, respectively. During 2018, the Group traded in
other financial assets and others of ￦2,477,360 million with HYUNDAI MOTOR SECURITIES Co., Ltd.,
an associate of the Group. The Group has other financial assets of ￦1,413,700 million in the consolidated
statement of financial position as of December 31, 2018.
- 90 -
(4) Compensation of registered and unregistered directors, who are considered to be the key management
personnel for the year ended December 31, 2018 and 2017 are as follows:
Description
2018
2017
(In millions of Korean Won)
Short-term employee salaries
Post-employment benefits
Other long-term benefits
￦
￦
218,620 ￦
34,087
606
253,313 ￦
172,557
37,810
285
210,652
38. COMMITMENTS AND CONTINGENCIES:
(1) As of December 31, 2018, the debt guarantees provided by the Group, excluding the ones provided to the
Company’s subsidiaries are as follows:
Description
Domestic
Overseas (*)
To associates
To others
￦
￦
(In millions of Korean Won)
1,428 ￦
8,418
9,846 ￦
139,115
821,017
960,132
(*) 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, 2018.
(2) As of December 31, 2018, 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, 2018, 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. Also, the Group is being investigated
by the domestic and foreign authorities regarding the recall of Theta2 engines, and the consequences and
effects are unpredictable as of December 31, 2018.
(3) As of December 31, 2018, a substantial portion of the Group’s PP&E is pledged as collateral for various
loans and leasehold deposits up to ￦836,646 million. In addition, the Group pledged certain bank deposits,
checks and promissory notes, 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, 2018, 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 24,500
million, and ￦6,163,500 million.
(5) As of December 31, 2018, 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
credit rating of Hyundai Capital Services, Inc. and Hyundai Card Co., Ltd. falls below a certain level, this
may result in early repayment of the borrowings or termination of the contracts.
- 91 -
(6) As of December 31, 2018, Hyundai Capital Services, Inc. and Hyundai Card Co., Ltd, the subsidiaries of the
Company are able to exercise the priority purchasing rights for the leased office building when the lessor
wants to sell the building or after 4 years and 5 months from the lease contract commencement date.
(7) As of December 31, 2018, the Company entered into a total return swap contract for stocks of Hyundai
Capital Services, Inc., the subsidiary of the Company, held by other investors of a third parties.
(8) As of December 31, 2018, the Company has a shareholder agreements with investors of a third parties
regarding shares of Hyundai Card Co., Ltd and Hyundai Commercial Inc. This includes the Call options that
allow the Company to buy shares from the investors and the Put options that allow the investors to dispose
of the shares to the Company.
(9) Financial instruments with limited use as of December 2018 and 2017, are as follows:
Description
2018
2017
Short-term and long-term
financial instruments
Cash and cash equivalents
Other financial assets
￦
￦
(In millions of Korean Won)
￦
936,606
329,296
7,770
1,273,672 ￦
737,600
288,031
7,201
1,032,832
39. SEGMENT INFORMATION:
(1) The Group has a vehicle segment, a finance segment and other segments. The vehicle segment is engaged
in 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 year ended December 31, 2018 and 2017 are as
follows:
For the year ended December 31, 2018
Total sales
Inter-company sales(*)
Net sales
Operating income
Vehicle
Others
(In millions of Korean Won)
￦ 114,448,752 ￦ 15,284,427 ￦ 7,954,215 ￦ (40,874,785) ￦ 96,812,609
Finance
Total
(39,183,338)
75,265,414
1,062,241
(326,223)
14,958,204
746,612
(1,365,224)
6,588,991
105,295
40,874,785
-
508,017
-
96,812,609
2,422,165
Consolidation
adjustments
(*) Inter-company sales include intersegment sales in the Group.
For the year ended December 31, 2017
Total sales
Inter-company sales(*)
Net sales
Operating income
Vehicle
Others
(In millions of Korean Won)
￦ 111,479,729 ￦ 15,744,881 ￦ 7,741,527 ￦ (38,590,058) ￦ 96,376,079
Finance
Total
(36,989,499)
74,490,230
2,585,413
(330,291)
15,414,590
718,137
(1,270,268)
6,471,259
338,792
38,590,058
-
932,325
-
96,376,079
4,574,667
Consolidation
adjustments
(*) Inter-company sales include intersegment sales in the Group.
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(3) Assets and liabilities by operating segments as of December 31, 2018 and 2017 are as follows:
As of December 31, 2018
Total assets
Total liabilities
Borrowings and debentures
Total assets
Total liabilities
Borrowings and debentures
Vehicle
Finance
Others
(In millions of Korean Won)
￦ 100,302,183 ￦ 85,725,929 ￦ 7,930,963 ￦ (13,303,323) ￦ 180,655,752
106,759,742
73,296,141
(8,489,672)
(1,462,506)
5,041,081
2,547,523
73,323,028
65,215,856
36,885,305
6,995,268
Total
Consolidation
adjustments
As of December 31, 2017
Vehicle
Finance
Others
(In millions of Korean Won)
￦ 99,724,673 ￦ 84,016,995 ￦ 7,604,015 ￦ (13,146,229) ￦ 178,199,454
103,442,100
72,000,530
(8,430,611)
(2,619,343)
72,348,770
64,694,680
34,910,194
7,412,234
4,613,747
2,512,959
Total
Consolidation
adjustments
(4) Sales by region where the Group’s entities are located in for the year ended December 31, 2018 and 2017 are as
follows:
For the year ended December 31, 2018
Total sales
Inter-company sales
Net sales
Korea
Europe
(In millions of Korean Won)
￦ 53,587,031 ￦ 37,500,229 ￦ 9,787,259 ￦ 33,959,206 ￦ 2,853,669 ￦ (40,874,785) ￦ 96,812,609
Others
Total
Asia
(16,835,175)
36,751,856
(6,791,173)
30,709,056
(461,954)
9,325,305
(16,786,135)
17,173,071
(348)
2,853,321
40,874,785
-
-
96,812,609
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
Others
Total
Asia
(15,144,026)
38,082,750
(6,764,174)
(451,473)
30,804,468 8,193,449
(16,230,385)
16,250,468
-
3,044,944
38,590,058
-
- 96,376,079
Consolidation
adjustments
Consolidation
adjustments
North
America
North
America
(5) Non-current assets by region where the Group’s entities are located in as of December 31, 2018 and 2017 are as
follows:
Description
December 31, 2018
December 31, 2017
Korea
North America
Asia
Europe
Others
￦
Consolidation adjustments
Total (*)
￦
(In millions of Korean Won)
30,267,888 ￦
2,175,054
1,106,064
1,891,626
410,601
35,851,233
(194,908)
35,656,325 ￦
29,443,964
2,040,394
1,047,364
2,076,017
390,816
34,998,555
(162,579)
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 year ended
December 31, 2018 and 2017.
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40. CONSTRUCTION CONTRACTS:
(1) Cost, income and loss and claimed construction from construction in progress as of December 31, 2018 and
December 31, 2017 are as follows:
Description
December 31,
2018
(In millions of Korean Won)
December 31,
2017
￦
Accumulated accrual cost
Accumulated income
Accumulated construction in process
Progress billing
Due from customers for contract work
Due to customers for contract work
Reserve (*)
9,305,321 ￦
591,321
9,896,642
9,331,926
1,110,972
546,256
71,729
9,998,070
784,071
10,782,141
10,196,219
1,024,899
438,977
47,574
(*) 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, an other
operating segment of the Group, as of December 31, 2018 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 loss
￦
December 31, 2018
(In millions of Korean Won)
(45,768)
315,119
(168,963)
(191,924)
(158,741)
192,533
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, 2018 and the estimates of
contract revenue as of December 31, 2018. 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, 2018.
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