Hyundai Motor Company
Annual Report 2022

Plain-text annual report

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 ATTACHMENT: INDEPENDENT AUDITORS’ REPORT HYUNDAI MOTOR COMPANY ContentsINDEPENDENT AUDITORS’ 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 THE CONSOLIDATED FINANCIAL STATEMENTS --------------------------------- 14 152, Teheran-ro, Gangnam-gu, Seoul 06236 (Yeoksam-dong, Gangnam Finance Center 27th Floor) Republic of Korea Independent Auditors’ Report Based on a report originally issued in Korean To the Board of Directors and Shareholders Hyundai Motor Company: Opinion We have audited the consolidated financial statements of Hyundai Motor Company and its subsidiaries (“the Group”), which comprise the consolidated statements of financial position as of December 31, 2022 and 2021, the consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”). Basis for Opinion We conducted our audits in accordance with Korean Standards on Auditing (KSAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters 1) Valuation of warranty provisions As described in Note 2 (20) and Note 17 to the consolidated financial statements, the Group recognized warranty provision of ￦ 10,339,527 million as of December 31, 2022. The Group offers its customers free warranty services during the guaranteed period and free repair services in the event of recall or campaign. To estimate the expected warranty expenditures, the Group aggregates sales volume by vehicle model and uses historical data of the actual warranty costs. Warranty provisions are measured at the present value based on the expected warranty expenditures and discount rates. To measure and recognize warranty provisions, management applies assumptions to estimate expected warranty cost per unit by vehicle model and expected number of repair cases and applies discount rates to measure the present value of provisions. Management uses historical data of the actual warranty costs to estimate expected warranty cost per unit by vehicle model and expected number of repair cases. We identified the valuation of warranty provision as a key audit matter because errors in aggregation of actual warranty costs and sales volume by vehicle models or in assumptions used to estimate future warranty expenditures and discount rates would have a significant impact on the consolidated financial statements. The primary procedures we performed to address this key audit matter included the following: - Understanding the process to measure and recognize warranty provision and testing relevant controls. - Testing completeness and accuracy of vehicles sold used for estimation through inspection of related documents. - Evaluating reasonableness of assumptions applied for expected warranty cost per unit by vehicle model by comparing warranty costs incurred in the current period to the corresponding warranty costs estimated in the prior period. - Evaluating reasonableness of assumptions applied for expected number of repair cases - through historical data analysis. Testing accuracy of warranty provision balance by inspecting documents related to historical data of the actual warranty expenses on a sample basis and testing of recalculation. - Testing discount rates by comparing to external sources of information. 2) Valuation of financial services receivables As described in Note 2.(8) and Note 14 to the consolidated financial statements, as of December 31, 2022, the Group recognized financial services receivables, net and loss allowance of ￦ 92,398,410 million and ￦ 1,726,916 million, respectively. In accordance with K-IFRS 1109 ‘Financial Instruments’, the Group recognizes allowance for credit loss for financial services receivables using the expected credit loss (ECL) model. The ECL model requires management judgment to assess whether the receivable has undergone a significant increase in credit risk, as well as other assumptions, such as credit rating and macroeconomic variables. In addition, the Group also considers historical transaction data, such as delinquency days, bankruptcy, and collection, to determine assumptions used in the ECL model. As errors in the assumptions applied to the ECL model could have a significant impact on the consolidated financial statements, we identified the valuation of financial services receivables as a key audit matter. The primary procedures we performed to address this key audit matter included the following: - Assessing whether the Group’s accounting policies comply with the requirements in K-IFRS 1109 ‘Financial Instruments’. - Understanding the process over the measurement of credit loss allowance on financial services receivables and testing relevant controls. - On a sample basis, assessing the credit rating and classification of credit quality, including the identification of significant increase credit risk, through inspection of related documents. - On a sample basis, checking the source data for probability of default and loss given default and testing appropriateness of calculation methods used for the estimation through recalculation. Other matter The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management 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. Those charged with governance are responsible for overseeing the Group’s financial reporting process. ssssssssssssssssssssssssssss Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 KSAs 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 KSAs, 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, whether due to fraud or error, 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 in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of 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 auditors’ 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 auditors’ 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 remain solely responsible for our audit opinion. We communicate with those charged with governance 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 those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. ssssssssssssssssssssssssssss From the matters communicated with those charged with governance, 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 auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditors’ report is Jae-Yeon Kim. Seoul, Korea March 8, 2023 This report is effective as of March 8, 2023, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.  5 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 The accompanying consolidated financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the Company. Chang, Jae Hoon Chief Executive Officer HYUNDAI MOTOR COMPANY Main Office Address: (Road Name Address) 12, Heolleung-ro, Seocho-gu, Seoul (Phone Number) 02-3464-1114  6 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2022 AND DECEMBER 31, 2021 ASSETS NOTES December 31, 2022 December 31, 2021 (In millions of Korean Won) Current assets: Cash and cash equivalents 20 ￦ 20,864,879 ￦ 12,795,554 Short-term financial instruments 20 5,774,597 6,949,333 Other financial assets 5,20 5,934,745 12,396,646 Trade notes and accounts receivable 3,20 4,279,057 3,147,296 Other receivables 4,20 4,458,689 4,220,970 Inventories 6 14,291,216 11,645,641 Current tax assets 85,867 47,346 Financial services receivables 14,20 38,037,368 35,252,606 Non-current assets classified as held for sale 8 22,302 28,121 Other assets 7,20 2,640,553 2,081,853 Total current assets 96,389,273 88,565,366 Non-current assets: Long-term financial instruments 20 112,557 306,410 Other financial assets 5,20 3,889,776 3,539,286 Long-term trade notes and accounts receivable 3,20 179,781 137,157 Other receivables 4,20 821,050 741,168 Property, plant and equipment 9,40 36,153,190 35,543,083 Investment property 10,40 144,450 156,656 Intangible assets 11,40 6,102,377 5,846,986 Investments in joint ventures and associates 13 25,199,437 22,429,117 Net defined benefit assets 35 837,502 219,721 Deferred tax assets 34 3,237,309 2,224,833 Financial services receivables 14,20 52,326,478 45,776,526 Investments in operating leases 15 27,681,534 26,327,996 Right-of-use assets 12 1,117,293 940,826 Other assets 7,20 1,550,455 1,191,284 Total non-current assets 159,353,189 145,381,049 Total assets ￦ 255,742,462 ￦ 233,946,415 (Continued)  7 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2022 AND DECEMBER 31, 2021 LIABILITIES AND EQUITY NOTES December 31, 2022 December 31, 2021 (In millions of Korean Won) Current liabilities: Trade notes and accounts payable 20 ￦ 10,797,065 ￦ 9,155,255 Other payables 20,39 8,277,891 6,335,645 Short-term borrowings 16,20,40 11,366,480 13,087,836 Current portion of long-term debt and debentures 16,20,40 25,574,131 20,578,902 Income tax payable 1,008,506 751,929 Provisions 17 8,102,596 6,664,647 Other financial liabilities 18,20 99,144 55,187 Lease liabilities 12,20 405,053 167,266 Non-current liabilities classified as held for sale 8 5,365 - Other liabilities 19,20,27 8,600,241 7,440,120 Total current liabilities 74,236,472 64,236,787 Non-current liabilities: Long-term other payables 20,39 726,115 769,487 Debentures 16,20,40 62,960,060 63,458,809 Long-term debt 16,20,40 12,285,149 10,667,731 Net defined benefit liabilities 35 61,861 79,165 Provisions 17 4,327,985 4,214,137 Other financial liabilities 18,20 262,518 87,258 Deferred tax liabilities 34 5,027,741 3,689,328 Lease liabilities 12,20 705,751 783,306 Other liabilities 19,20,27 4,252,265 3,344,618 Total non-current liabilities 90,609,445 87,093,839 Total liabilities 164,845,917 151,330,626 Equity: Capital stock 21 1,488,993 1,488,993 Capital surplus 22 4,241,303 4,070,260 Other capital items 23 (1,713,928) (1,968,385) Accumulated other comprehensive loss 24 (1,620,682) (1,772,601) Retained earnings 25 79,953,601 73,167,855 Equity attributable to the owners of the Company 82,349,287 74,986,122 Non-controlling interests 8,547,258 7,629,667 Total equity 90,896,545 82,615,789 Total liabilities and equity ￦ 255,742,462 ￦ 233,946,415 (Concluded) See accompanying notes to the consolidated financial statements.  8 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 NOTES 2022 2021 (In millions of Korean Won, except per share amounts) Sales 27,40 ￦ 142,527,535 ￦ 117,610,626 Cost of sales 32 114,209,483 95,680,131 Gross profit 28,318,052 21,930,495 Selling and administrative expenses 28,32 18,498,283 15,251,546 Operating profit 9,819,769 6,678,949 Gain on investments in joint ventures and associates, net 29 1,556,583 1,303,365 Finance income 30 1,218,813 912,802 Finance expenses 30 1,054,228 548,410 Other income 31 2,257,113 1,447,261 Other expenses 31,32 2,850,107 1,834,405 Profit before income tax 10,947,943 7,959,562 Income tax expense 34 2,964,329 2,266,485 Profit for the year ￦ 7,983,614 ￦ 5,693,077 Profit attributable to: Owners of the Company 7,364,364 4,942,356 Non-controlling interests 619,250 750,721 Earnings per share attributable to the owners of the Company: 33 Basic earnings per share: Common stock ￦ 28,521 ￦ 18,979 1st preferred stock ￦ 28,207 ￦ 19,002 Diluted earnings per share: Common stock ￦ 28,521 ￦ 18,979 1st preferred stock ￦ 28,207 ￦ 19,002 See accompanying notes to the consolidated financial statements.  9 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 2022 2021 (In millions of Korean Won) Profit for the year ￦ 7,983,614 ￦ 5,693,077 Other comprehensive income (loss) : Items that will not be reclassified subsequently to profit or loss: Profit (loss) on financial assets measured at FVOCI, net (223,420) 102,137 Remeasurements of defined benefit plans 391,308 175,392 Changes in retained earnings of equity-accounted investees, net 164,475 77,482 Changes in share of OCI of equity-accounted investees, net (175,059) 21,803 157,304 376,814 Items that may be reclassified subsequently to profit or loss: Loss on financial assets measured at FVOCI, net (36,545) (6,448) Gain on valuation of cash flow hedge derivatives, net 218,377 5,015 Changes in share of OCI of equity-accounted investees, net 10,008 546,504 Gain on foreign operations translation, net 701,718 1,246,177 893,558 1,791,248 Total other comprehensive income 1,050,862 2,168,062 Total comprehensive income ￦ 9,034,476 ￦ 7,861,139 Comprehensive income attributable to: Shareholders of the Company 8,234,396 6,938,637 Non-controlling interests 800,080 922,502 Total comprehensive income ￦ 9,034,476 ￦ 7,861,139 See accompanying notes to the consolidated financial statements.  10 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 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) Balance at January 1, 2021 ￦ 1,488,993 ￦ 4,190,093 ￦ (1,700,592) ￦ (3,409,661) ￦ 68,911,800 ￦ 69,480,633 ￦ 6,860,337 ￦ 76,340,970 Comprehensive income: Profit for the period - - - - 4,942,356 4,942,356 750,721 5,693,077 Gain (loss) on financial assets measured at FVOCI, net - - - (21,021) 114,718 93,697 1,992 95,689 Gain (loss) on valuation of cash flow hedge derivatives, net - - - (47,902) - (47,902) 52,917 5,015 Changes in valuation of equity-accounted investees, net - - - 544,170 77,482 621,652 24,137 645,789 Remeasurements of defined benefit plans - - - - 167,021 167,021 8,371 175,392 Gain on foreign operations translation, net - - - 1,161,813 - 1,161,813 84,364 1,246,177 Total comprehensive income - - - 1,637,060 5,301,577 6,938,637 922,502 7,861,139 Transactions with owners, recorded directly in equity: Payment of cash dividends - - - - (1,045,775) (1,045,775) (140,854) (1,186,629) Increase in paid-in capital of subsidiaries by issuing stock - 19,819 - - - 19,819 165,311 185,130 Acquisition of investment of subsidiaries - (164,567) - - - (164,567) 65,966 (98,601) Disposals of investment of subsidiaries - - - - - - (71,634) (71,634) Purchases of treasury stocks - - (305,337) - - (305,337) - (305,337) Disposals of treasury stocks - 24,915 37,544 - - 62,459 - 62,459 Repayment of hybrid bonds - - - - - - (150,323) (150,323) Others - - - - 253 253 (21,638) (21,385) Total transactions with owners, recorded directly in equity - (119,833) (267,793) - (1,045,522) (1,433,148) (153,172) (1,586,320) Balance at December 31, 2021 ￦ 1,488,993 ￦ 4,070,260 ￦ (1,968,385) ￦ (1,772,601) ￦ 73,167,855 ￦ 74,986,122 ￦ 7,629,667 ￦ 82,615,789 (Continued)  11 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (Concluded) See accompanying notes to the consolidated financial statements. 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) Balance at January 1, 2022 ￦ 1,488,993 ￦ 4,070,260 ￦ (1,968,385) ￦ (1,772,601) ￦ 73,167,855 ￦ 74,986,122 ￦ 7,629,667 ￦ 82,615,789 Comprehensive income: Profit for the period - - - - 7,364,364 7,364,364 619,250 7,983,614 Gain (loss) on financial assets measured at FVOCI, net - - - (430,012) 174,758 (255,254) (4,711) (259,965) Gain on valuation of cash flow hedge derivatives, net - - - 169,796 - 169,796 48,581 218,377 Changes in valuation of equity-accounted investees, net - - - (160,325) 164,475 4,150 (4,726) (576) Remeasurements of defined benefit plans - - - - 378,880 378,880 12,428 391,308 Gain on foreign operations translation, net - - - 572,460 - 572,460 129,258 701,718 Total comprehensive income - - - 151,919 8,082,477 8,234,396 800,080 9,034,476 Transactions with owners, recorded directly in equity: Payment of cash dividends - - - - (1,298,212) (1,298,212) (56,800) (1,355,012) Increase in paid-in capital of subsidiaries by issuing stock - - - - - - 560 560 Acquisition of investment of subsidiaries - - - - - - 273,271 273,271 Disposals of investment of subsidiaries - - - - - - (83,094) (83,094) Purchases of treasury stocks - - (193,452) - - (193,452) - (193,452) Disposals of treasury stocks - 174,346 447,909 - - 622,255 - 622,255 Others - (3,303) - - 1,481 (1,822) (16,426) (18,248) Total transactions with owners, recorded directly in equity - 171,043 254,457 - (1,296,731) (871,231) 117,511 (753,720) Balance at December 31, 2022 ￦ 1,488,993 ￦ 4,241,303 ￦ (1,713,928) ￦ (1,620,682) ￦ 79,953,601 ￦ 82,349,287 ￦ 8,547,258 ￦ 90,896,545  12 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 NOTES 2022 2021 (In millions of Korean Won) Cash flows from operating activities: Cash generated from operations: 36 Profit for the year ￦ 7,983,614 ￦ 5,693,077 Adjustments 20,255,938 15,777,589 Changes in operating assets and liabilities (13,922,657) (20,287,776) 14,316,895 1,182,890 Interest received 867,192 449,789 Interest paid (2,695,029) (1,905,945) Dividend received 531,902 213,735 Income tax paid (2,393,649) (1,116,885) Net cash provided by (used in) operating activities 10,627,311 (1,176,416) Cash flows from investing activities: Changes in short-term financial instruments, net 1,082,254 1,326,872 Changes in other financial assets (current), net 5,452,691 225,974 Decrease in other financial assets (non-current) 41,521 259,202 Collection of other receivables 60,779 67,437 Disposals of long-term financial instruments 122,124 35,183 Proceeds from disposals of property, plant and equipment 136,870 113,008 Proceeds from disposals of intangible assets 7,357 20,261 Proceeds from disposals of investment in joint ventures and associates 19,115 8,873 Acquisitions of subsidiaries, net of cash acquired (89,167) (294,210) Increases in other financial assets (non-current) (276,728) (212,964) Increases in other receivables (80,170) (69,563) Purchases of long-term financial instruments (63,612) (279,471) Acquisitions of property, plant and equipment (4,014,969) (4,304,334) Acquisitions of intangible assets (1,718,733) (1,556,993) Acquisitions of investments in joint ventures and associates (1,696,266) (565,528) Cash outflows from changes in consolidation (197,188) (125,611) Others 10,627 169,285 Net cash used in investing activities (1,203,495) (5,182,579) (Continued)  13 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 NOTES 2022 2021 (In millions of Korean Won) Cash flows from financing activities: Proceeds from short-term borrowings ￦ 3,388,510 ￦ 3,769,996 Proceeds from long-term debt and debentures 30,089,495 40,688,506 Proceeds from capital contribution from non-controlling interest 341,864 165,311 Acquisitions of subsidiaries - (300,670) Repayment of short-term borrowings (6,070,109) (4,390,047) Repayment of long-term debt and debentures (27,086,324) (29,164,478) Repayment of lease liabilities (195,245) (185,158) Purchases of treasury stocks (193,451) (305,337) Dividends paid (1,354,996) (1,186,800) Repayment of hybrid bonds - (150,323) Others (244,243) (148,714) Net cash provided by (used in) financing activities (1,324,499) 8,792,286 Effect of exchange rate changes on cash and cash equivalents (29,992) 500,127 Net increase in cash and cash equivalents 8,069,325 2,933,418 Cash and cash equivalents, beginning of the year 12,795,554 9,862,136 Cash and cash equivalents, end of the year ￦ 20,864,879 ￦ 12,795,554 (Concluded) See accompanying notes to the consolidated financial statements.  14 HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 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”) manufacture and distribute motor vehicles and parts, operate vehicle financing and credit card processing, and manufacture trains. The shares of the Company have been listed on the Korea Exchange since June 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, 2022, the major shareholders of the Company are Hyundai MOBIS (45,782,023 shares, 21.43%) and Mr. Chung, Mong Koo (11,395,859 shares, 5.33%). (1) The Group’s consolidated subsidiaries as of December 31, 2022 are as follows. Name of subsidiaries Nature of business Location Ownership percentage Indirect ownership HYUNDAI CAPITAL SERVICES, INC. Financing Korea 59.68% HYUNDAI CARD CO., LTD. (*1) ˝ ˝ 36.96% HYUNDAI ROTEM COMPANY (*2) Manufacturing ˝ 33.77% HYUNDAI KEFICO CORPORATION ˝ ˝ 100.00% HYUNDAI PARTECS ˝ ˝ 56.00% Hyundai NGV Engineering ˝ 53.66% MAINtrans company Services ˝ 100.00% HYUNDAI ROTEM COMPANY 100.00% Rotem SRS Co., Ltd. ˝ ˝ 100.00% ˝ JEONBUK HYUNDAI MOTORS FC CO., LTD Football club ˝ 100.00% AirPlug Inc. R&D and Sales ˝ 99.32% 42dot Inc. (*5) ˝ ˝ 66.08% Movia Inc. Transporting ˝ 100.00% 42dot 100.00% Hyundai Motor America (HMA) Sales USA 100.00% Hyundai Capital America (HCA) Financing ˝ 80.00% HMA 80.00% Hyundai Motor Manufacturing Alabama, LLC (HMMA) Manufacturing ˝ 100.00% HMA 100.00% Hyundai Motor Group Metaplant America, LLC (HMGMA) ˝ ˝ 60.00% HMA 60.00% Hyundai Translead (HT) ˝ ˝ 100.00% Stamped Metal American Research Technology, Inc. (SMARTI) Holding company ˝ 72.45% HMA 72.45% SMART Alabama, LLC (SMART) Manufacturing ˝ 100.00% SMARTI 100.00% Hyundai America Technical Center, Inc. (HATCI) R&D ˝ 100.00% Genesis Motor America LLC Sales ˝ 100.00% HMA 100.00% Hyundai Rotem USA Corporation Manufacturing ˝ 100.00% HYUNDAI ROTEM COMPANY 100.00% Hyundai Motor Investment, Inc. Investment ˝ 100.00% 42 Air, Inc R&D and Sales ˝ 100.00% 42dot 100.00% HYUNDAI AUTO CANADA CORP. (HACC) Sales Canada 100.00% HMA 100.00% HYUNDAI AUTO CANADA CAPTIVE INSURANCE INC. (HACCI) Insurance ˝ 100.00% ˝ Hyundai Capital Canada Inc. (HCCA) Financing ˝ 70.00% HYUNDAI CAPITAL SERVICES, INC. 20.00% Hyundai Capital Lease Inc. (HCLI) ˝ ˝ 100.00% HCCA 100.00% HK Lease Funding LP ˝ ˝ 100.00% HCLI 99.99%, HCCA Funding Inc. 0.01% HCCA Funding Inc. ˝ ˝ 100.00% HCLI 100.00% HCCA Funding Two Inc. ˝ ˝ 100.00% HCCA 100.00%  15 Name of subsidiaries Nature of business Location Ownership percentage Indirect ownership HK Retail Funding LP Financing Canada 100.00% HCCA 99.99%, HCCA Funding Two Inc 0.01% HYUNDAI MOTOR INDIA LIMITED (HMI) Manufacturing India 100.00% HYUNDAI MOTOR INDIA ENGINEERING PRIVATE LIMITED (HMIE) R&D ˝ 100.00% HMI 100.00% HYUNDAI INDIA INSURANCE BROKING PRIVATE LIMITED (HIIB) Insurance ˝ 100.00% ˝ HYUNDAI CAPITAL INDIA PRIVATE LIMITED (HCI) Financing ˝ 100.00% HYUNDAI CAPITAL SERVICES, INC. 100.00% Hyundai Mobility Japan Co., Ltd. (HMJ) (*3) Sales Japan 100.00% Hyundai Mobility Japan R&D Center Co., Ltd. (HMJ R&D) (*3) R&D ˝ 100.00% Beijing Jingxian Motor Safeguard Service Co., Ltd. (BJMSS) Sales China 100.00% Beijing Jingxianronghua Motor Sale Co., Ltd. ˝ ˝ 100.00% BJMSS 100.00% Genesis Motor Sales (Shanghai) Co., LTD. ˝ ˝ 100.00% Hyundai Millennium (Beijing) Real Estate Development Co., Ltd. Real estate development ˝ 99.00% CMEs 99.00% Rotem Equipments (Beijing) Co., Ltd. Sales ˝ 100.00% HYUNDAI ROTEM COMPANY 100.00% KEFICO Automotive Systems(Beijing) Co., Ltd. Manufacturing ˝ 100.00% HYUNDAI KEFICO CORPORATION 100.00% KEFICO Automotive Systems(Chongqing) Co., Ltd. ˝ ˝ 90.00% HYUNDAI KEFICO CORPORATION 90.00% Hyundai Truck & Bus (China) Co., Ltd. (HTBC) ˝ ˝ 100.00% HYUNDAI THANH CONG VIETNAM AUTO MANUFACTURING CORPORATION (HTMV)(*1) ˝ Vietnam 50.00% HYUNDAI THANH CONG COMMERCIAL VEHICLE JOINT STOCK COMPANY (HTCV)(*1) Sales ˝ 50.00% HYUNDAI THANH CONG VIET NAM AUTO JOINT VENTURE JOINT STOCK COMPANY (HTV)(*1) ˝ ˝ 50.00% HYUNDAI KEFICO VIETNAM COMPANY LIMITED Manufacturing ˝ 100.00% HYUNDAI KEFICO CORPORATION 100.00% HYUNDAI MOTOR COMPANY AUSTRALIA PTY LIMITED (HMCA) Sales Australia 100.00% HYUNDAI MOTOR PHILIPPINES, INC. (HMPH) ˝ Philippines 99.99% HYUNDAI MOBILITY (THAILAND) CO., LTD. (HMT) ˝ Thailand 100.00% PT HYUNDAI MOTOR MANUFACTURING INDONESIA (HMMI) Manufacturing Indonesia 99.99% PT HYUNDAI MOTORS INDONESIA (HMID) Sales ˝ 100.00% HMMI 0.01% PT Hyundai Solusi Mobilitas (HSM) ˝ ˝ 99.99% HMID 99.99% PT. HYUNDAI CAPITAL INDONESIA (HCID) Financing ˝ 100.00% HYUNDAI CAPITAL SERVICES, INC. 100.00% Hyundai Capital Australia Pty Limited ˝ Australia 100.00% ˝ HR MECHANICAL SERVICES LIMITED Services New Zealand 100.00% HYUNDAI ROTEM COMPANY 100.00% Hyundai Motor Manufacturing Czech s.r.o. (HMMC) Manufacturing Czech 100.00% Hyundai Motor Czech s.r.o. (HMCZ) Sales ˝ 100.00% Hyundai Motor Europe GmbH (HME) Marketing and Sales Germany 100.00% Hyundai Motor Deutschland GmbH (HMD) Sales ˝ 100.00%  16 Name of subsidiaries Nature of business Location Ownership percentage Indirect ownership Hyundai Motor Europe Technical Center GmbH (HMETC) R&D Germany 100.00% Hyundai Motorsport GmbH (HMSG) Marketing ˝ 100.00% HME 100.00% Hyundai Capital Europe GmbH. Financing ˝ 100.00% HYUNDAI CAPITAL SERVICES, INC. 100.00% HMCIS B.V. Holding company Netherlands 100.00% HMMR 1.65% Hyundai Motor Netherlands B.V. (HMNL) Sales ˝ 100.00% Hyundai Motor Manufacturing Rus LLC (HMMR) Manufacturing Russia 70.00% Hyundai Motor CIS Limited Liability Company (HMCIS) Sales ˝ 100.00% HMCIS B.V. 100.00% Hyundai Mobility Lab Limited Liability Company. (HML) R&D ˝ 100.00% HMCIS 99.00%, HMMR 1.00% HYUNDAI CAPITAL SERVICES LIMITED LIABILITY COMPANY Financing ˝ 100.00% Hyundai Capital Europe 100.00% Limited liability company Hyundai Truck & Bus Rus (HTBR) Sales ˝ 100.00% Hyundai Assan Otomotiv Sanayi Ve Ticaret Anonim Sirketi (HAOSVT) Manufacturing Turkiye 97.00% Hyundai EURotem Demiryolu Araclari Sanayi ve Ticaret A.S ˝ ˝ 50.50% HYUNDAI ROTEM COMPANY 50.50% Hyundai Rotem Company – Hyundai EUROTEM Demiryolu Araclari SAN. VE TIC. A.S ORTAK GIRISIMI Sales ˝ 100.00% HYUNDAI ROTEM COMPANY 65.00%, Hyundai EURotem A.S. 35.00% Hyundai Rotem Company - Hyundai EUROTEM Mahmutbey Projesi ORTAK GIRISIMI ˝ ˝ 100.00% HYUNDAI ROTEM COMPANY 85.00%, Hyundai EURotem A.S. 15.00% Rotem SRS Ukraine LLC. Services Ukraine 100.00% Rotem SRS Co., Ltd. 100.00% Rotem SRS Egypt LLC. ˝ Egypt 98.00% Rotem SRS Co., Ltd. 98.00% HYUNDAI MOTOR UK LIMITED (HMUK) Sales UK 100.00% HYUNDAI MOTOR COMPANY ITALY S.R.L. (HMCI) ˝ Italy 100.00% HYUNDAI MOTOR ESPANA, S.L.U. (HMES) ˝ Spain 100.00% HYUNDAI MOTOR FRANCE (HMF) ˝ France 100.00% Hyundai Motor Poland sp. z o.o. (HMP) ˝ Poland 100.00% GENESIS MOTOR EUROPE GmbH (GME) ˝ Germany 100.00% GENESIS MOTOR UK LIMITED (GMUK) ˝ UK 100.00% GME 100.00% GENESIS MOTOR SWITZERLAND AG (GMCH) ˝ Switzerland 100.00% ˝ GENESIS MOTOR DEUTSCHLAND GmbH (GMD) ˝ Germany 100.00% ˝ Hyundai Hydrogen Mobility AG (HHM) ˝ Switzerland 75.00% Hyundai Hydrogen Mobility Germany GmbH (HHMG) ˝ Germany 100.00% HHM 100.00% HYUNDAI MOTOR DE MEXICO S DE RL DE CV (HMM) ˝ Mexico 100.00% HT 0.01% Hyundai de Mexico, SA DE C.V., (HYMEX) Manufacturing ˝ 99.99% HT 99.99% HYUNDAI KEFICO MEXICO, S. DE R.L. DE C.V. ˝ ˝ 100.00% HYUNDAI KEFICO CORPORATION 100.00% Hyundai Rio Vista, Inc. Real estate development USA 100.00% HT 100.00% HYUNDAI MOTOR BRASIL MONTADORA DE AUTOMOVEIS LTDA (HMB) Manufacturing Brazil 100.00% Hyundai Capital Brasil Servicos De Assistencia Financeira Ltda. Financing ˝ 100.00% HYUNDAI CAPITAL SERVICES, INC. 100.00% Hyundai Rotem Brasil Industria E Comercio De Trens Ltda. Manufacturing ˝ 100.00% HYUNDAI ROTEM COMPANY 100.00%  17 Name of subsidiaries Nature of business Location Ownership percentage Indirect ownership HMS SERVICOS DE MOBILIDADE LTDA. (*4) Holding company Brazil 99.99% HMB 99.99% China Millennium Corporations (CMEs) ˝ Cayman Islands 59.60% China Mobility Fund, L.P. Investment ˝ 72.00% ZER01NE Accelerator Investment Fund No.1 ˝ ˝ 99.00% Autopia Sixty-fifth ~ Seventy-Fifth Asset Securitization Specialty Company (*1) Financing ˝ 0.50% HYUNDAI CAPITAL SERVICES, INC. 0.50% Zavurov First Co., Ltd. (*1) ˝ ˝ 0.00% HYUNDAI CAPITAL SERVICES, INC. 0.00% Super Series Sixth ~ Fourteenth Securitization Specialty Co., Ltd. (*1) ˝ ˝ 0.50% HYUNDAI CARD CO., LTD. 0.50% Bluewalnut Co., Ltd. ˝ ˝ 100.00% HYUNDAI CARD CO., LTD. 100.00% MOCEAN Co.,Ltd Mobility Service ˝ 80.00% Hyundai Cha Funding, LLC Financing USA 100.00% HCA 100.00% Hyundai Lease Titling Trust ˝ ˝ 100.00% ˝ Hyundai HK Funding, LLC ˝ ˝ 100.00% ˝ Hyundai HK Funding Two, LLC ˝ ˝ 100.00% ˝ Hyundai HK Funding Three, LLC ˝ ˝ 100.00% ˝ Hyundai HK Funding Four, LLC ˝ ˝ 100.00% ˝ Hyundai ABS Funding, LLC ˝ ˝ 100.00% ˝ HK Real Properties, LLC ˝ ˝ 100.00% ˝ Hyundai Auto Lease Offering, LLC ˝ ˝ 100.00% ˝ Hyundai HK Lease, LLC ˝ ˝ 100.00% ˝ Extended Term Amortizing Program, LLC ˝ ˝ 100.00% ˝ Hyundai Asset Backed Lease, LLC ˝ ˝ 100.00% ˝ HCA Exchange, LLC ˝ ˝ 100.00% ˝ Hyundai Protection Plan, Inc. Insurance ˝ 100.00% ˝ Hyundai Protection Plan Florida, Inc. ˝ ˝ 100.00% ˝ Hyundai Capital Insurance Services, LLC ˝ ˝ 100.00% ˝ Hyundai Capital Insurance Company ˝ ˝ 100.00% ˝ Power Protect Extended Services, Inc. ˝ ˝ 100.00% ˝ Power Protect Extended Services Florida, Inc. ˝ ˝ 100.00% ˝ (*1) The Group is considered to have substantive control over the entities by virtue of an agreement or relationship 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. (*3) During the year ended December 31, 2022, the names of companies were changed from Hyundai Motor Japan Co., Ltd. and Hyundai Motor Japan R&D Center Inc. to Hyundai Mobility Japan Co., Ltd. and Hyundai Mobility Japan R&D Center Co., Ltd., respectively. (*4) The name of company was changed from HMB Holding Participacoes Financeiras Ltda. to HMS SERVICOS DE MOBILIDADE LTDA. (*5) During the year ended December 31, 2022, the Group acquired additional shares of 42dot Inc. and reclassified its shares to a subsidiary. Although the shareholding ratio of common stock is 66.08%, the shareholding ratio with voting rights is 55.90% considering the redeemable convertible preference share with voting rights issued.  18 (2) Summarized financial position and results of operations of major consolidated subsidiaries as of and for the year ended December 31, 2022 are as follows. Name of subsidiaries Assets Liabilities Sales Profit (loss) for the period (In millions of Korean Won) HYUNDAI CAPITAL SERVICES, INC. (*) ￦ 38,647,454 ￦ 33,017,783 ￦ 4,436,122 ￦ 437,087 HYUNDAI CARD CO., LTD. (*) 25,102,360 21,256,797 3,015,376 253,957 HYUNDAI ROTEM COMPANY (*) 4,823,870 3,332,399 3,163,344 194,534 HYUNDAI KEFICO CORPORATION (*) 2,118,244 1,151,710 2,255,354 86,781 HCA (*) 65,174,141 57,784,155 12,392,502 416,542 HMA 13,534,367 8,484,603 33,684,033 2,549,423 HMMA 4,974,559 3,863,001 11,399,961 (807,997) HMI (*) 4,932,560 2,071,012 9,230,238 710,908 HMMC 4,554,767 1,724,596 9,291,193 680,064 HME (*) 2,604,267 2,528,135 14,302,787 12,792 HACC (*) 1,811,550 1,003,562 4,146,159 102,258 HMB 1,801,019 1,195,946 3,314,994 97,250 HAOSVT 1,733,527 867,053 3,625,354 288,338 HMMR 1,242,120 406,509 965,782 (230,103) HMCA 1,074,603 874,474 2,371,422 45,739 (*) Based on the subsidiary’s consolidated financial statements Summarized financial position and results of operations of major consolidated subsidiaries as of and for the year ended December 31, 2021 are as follows. Name of subsidiaries Assets Liabilities Sales Profit (loss) for the period (In millions of Korean Won) HYUNDAI CAPITAL SERVICES, INC. (*) ￦ 34,917,071 ￦ 29,710,340 ￦ 3,485,601 ￦ 432,055 HYUNDAI CARD CO., LTD. (*) 21,654,608 18,026,253 2,744,902 314,139 HYUNDAI ROTEM COMPANY (*) 4,107,183 2,838,938 2,872,512 51,412 HYUNDAI KEFICO CORPORATION (*) 2,038,940 1,187,748 2,029,003 60,512 HCA (*) 59,230,349 52,672,107 10,686,865 1,050,250 HMA 8,578,534 5,929,588 22,883,130 1,028,470 HMMA 4,522,540 2,741,306 8,088,117 236,955 HMMC 4,406,392 1,852,526 7,426,329 417,537 HMI (*) 4,310,031 1,782,415 7,339,424 437,395 HME (*) 2,107,163 2,044,181 11,846,977 11,410 HACC (*) 1,946,770 1,119,224 3,582,216 117,911 HMMR 1,931,470 959,020 3,178,717 172,149 HAOSVT 1,469,527 887,896 3,021,886 198,490 HMB 1,387,554 913,764 2,074,018 41,020 HMCA 911,712 716,694 1,938,967 28,116 (*) Based on the subsidiary’s consolidated financial statements (3) The financial statements of all subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting periods as the Company’s.  19 (4) Summarized cash flows of non-wholly owned subsidiaries that have material non-controlling interests to the Group and subsidiaries of finance segment for the year ended December 31, 2022 are as follows. Description HYUNDAI CAPITAL SERVICES, INC. HYUNDAI CARD CO., LTD. HCA HCCA HYUNDAI ROTEM COMPANY (In millions of Korean Won) Provided by (used in) operating activities ￦ (1,111,074) ￦ (618,906) ￦ (254,261) ￦ (1,257,295) ￦ 716,229 Provided by (used in) investing activities (223,067) (70,359) 28,172 (1,741) (429,045) Provided by (used in) financing activities 2,572,598 2,379,211 389,229 1,274,970 (97,120) Effect of exchange rate changes on cash and cash equivalent - - 22,292 (542) (3,784) Net increase (decrease) in cash and cash equivalents 1,238,457 1,689,946 185,432 15,392 186,280 Beginning balance of cash and cash equivalents 509,170 579,444 368,191 72,402 319,728 Ending balance of cash and cash equivalents ￦ 1,747,627 ￦ 2,269,390 ￦ 553,623 ￦ 87,794 ￦ 506,008 Summarized cash flows of non-wholly owned subsidiaries that had material non-controlling interests to the Group and subsidiaries of finance segment for the year ended December 31, 2021 are as follows. Description HYUNDAI CAPITAL SERVICES, INC. HYUNDAI CARD CO., LTD. HCA HCCA HYUNDAI ROTEM COMPANY (In millions of Korean Won) Provided by (used in) operating activities ￦ (367,733) ￦ (1,400,073) ￦ (7,321,554) ￦ (1,558,760) ￦ (62,714) Provided by (used in) investing activities (40,360) (105,567) (955,140) (642) 146,142 Provided by (used in) financing activities 510,859 1,310,731 8,132,339 1,549,724 (99,586) Effect of exchange rate changes on cash and cash equivalent 339 - 37,398 6,651 (2,842) Net increase (decrease) in cash and cash equivalents 103,105 (194,909) (106,957) (3,027) (19,000) Beginning balance of cash and cash equivalents 406,065 774,353 475,148 75,429 338,728 Ending balance of cash and cash equivalents ￦ 509,170 ￦ 579,444 ￦ 368,191 ￦ 72,402 ￦ 319,728  20 (5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of and for the year ended December 31, 2022 are as follows. Description HYUNDAI CAPITAL SERVICES, INC. HYUNDAI CARD CO., LTD. HYUNDAI ROTEM COMPANY (In millions of Korean Won) Ownership percentage of non-controlling interests 40.32% 63.04% 66.23% Accumulated non-controlling interests ￦ 2,263,283 ￦ 2,511,596 ￦ 845,085 Profit attributable to non-controlling interests 171,675 160,104 127,747 Dividends paid to non-controlling interests - 56,753 - Details of non-wholly owned subsidiaries of the Company that had material non-controlling interests as of and for the year ended December 31, 2021 are as follows. Description HYUNDAI CAPITAL SERVICES, INC. HYUNDAI CARD CO., LTD. HYUNDAI ROTEM COMPANY (In millions of Korean Won) Ownership percentage of non-controlling interests 40.32% 63.04% 66.23% Accumulated non-controlling interests ￦ 2,097,956 ￦ 2,379,871 ￦ 702,366 Profit attributable to non-controlling interests 170,930 198,059 28,968 Dividends paid to non-controlling interests 37,002 92,463 - (6) Financial support provided to consolidated structured entities As of December 31, 2022, HYUNDAI CARD CO., LTD. and HYUNDAI CAPITAL SERVICES, INC., subsidiaries of the Company, have agreements that provide counterparties with rights of recourse in the event of default on the derivatives relating to asset-backed securities issued by consolidated structured entities, Autopia Sixty-Eighth and Sixty-Ninth Asset Securitization Specialty Company, Super Series Sixth, Eighth, Ninth, Twelfth and Fourteenth Securitization Specialty Co., Ltd.. (7) Nature and risks associated with interests in unconsolidated structured entities 1) Nature of interests in unconsolidated structured entities of the Group as of December 31, 2022 is as follows. Description Purpose Nature of business Method of funding Total assets (*) (In millions of Korean Won) Asset securitization SPC Fund raising through asset-securitization Fund collection Asset Backed Securities and others ￦ 711,575 Investment fund Investment trust and others Fund management and operation, distribution of operating profit and others Beneficiary (Investment) certificates 6,877,841 Structured Finance Fund raising through project financing Project financing for construction project and ship investment Project financing and others 24,128,653 (*) The financial information of unconsolidated structured entity includes unaudited amounts.  21 Nature of interests in unconsolidated structured entities of the Group as of December 31, 2021 is as follows. Description Purpose Nature of business Method of funding Total assets (*) (In millions of Korean Won) Asset securitization SPC Fund raising through asset-securitization Fund collection Asset Backed Securities and others ￦ 138,514 Investment fund Investment trust and others Fund management and operation, distribution of operating profit and others Beneficiary (Investment) certificates 9,874,543 Structured Finance Fund raising through project financing Project financing for construction project and ship investment Project financing and others 19,487,943 (*) The financial information of unconsolidated structured entity includes unaudited amounts. 2) Risks associated with interests in unconsolidated structured entities of the Group as of December 31, 2022 are as follows. Description Financial support provided to the structured entity Maximum amount of exposure to loss of the structured entity Book value in the structured entity Method Purpose (In millions of Korean Won) Asset securitization SPC ￦ 70,208 Loan obligations Loan agreement (Credit line) ￦ 77,000 Investment fund 238,424 Beneficiary certificates, Investment trust Invest agreement 238,424 Structured Finance 1,585,070 Loan obligations Loan agreement (Credit line) 2,089,900 Risks associated with interests in unconsolidated structured entities of the Group as of December 31, 2021 are as follows. Description Financial support provided to the structured entity Maximum amount of exposure to loss of the structured entity Book value in the structured entity Method Purpose (In millions of Korean Won) Asset securitization SPC ￦ 18,797 Loan obligations Loan agreement (Credit line) ￦ 24,000 Investment fund 178,552 Beneficiary certificates, Investment trust Invest agreement 178,552 Structured Finance 826,220 Loan obligations Loan agreement (Credit line) 1,117,599 (8) Significant restrictions on the subsidiaries As of December 31, 2022, HYUNDAI CARD CO., LTD., a subsidiary of the Company, is subject to significant restrictions that require it to obtain consent from a nominated outside director recommended by non-controlling shareholders in the events of acquiring a company, entering into new business, providing guarantees, making investments in stocks or contracts beyond a certain amount and others.  22 (9) Changes in consolidated subsidiaries Subsidiaries newly included in or excluded from consolidation during the year ended December 31, 2022 are as follows. Changes Name of subsidiaries Description Included Autopia Seventy-Third Asset Securitization Specialty Company Establishment ˝ Autopia Seventy-Fourth Asset Securitization Specialty Company ˝ ˝ Autopia Seventy-Fifth Asset Securitization Specialty Company ˝ ˝ Super Series Twelfth Securitization Specialty Co., Ltd. ˝ ˝ Super Series Thirteenth Securitization Specialty Co., Ltd. ˝ ˝ Super Series Fourteenth Securitization Specialty Co., Ltd. ˝ ˝ Hyundai Motor Group Metaplant America, LLC (HMGMA) ˝ ˝ Hyundai Hydrogen Mobility Germany GmbH (HHMG) ˝ ˝ HYUNDAI MOBILITY (THAILAND) CO., LTD. (HMT) ˝ ˝ PT Hyundai Solusi Mobilitas (HSM) ˝ ˝ 42dot Inc. Acquisition ˝ 42 Air, Inc ˝ ˝ Movia Inc. ˝ Excluded supernal, LLC Changed to equity method ˝ Super Series Fifth Securitization Specialty Co., Ltd. Liquidation ˝ Autopia Sixty-fourth Asset Securitization Specialty Company ˝ ˝ KyoboAXA Private Tomorrow Securities Investment Trust No.12 ˝ ˝ Shinhan BNPP Private Corporate Security Investment Trust No.34 ˝ ˝ KB Leaders Private Securities Fund1(Bond Mixed) ˝ ˝ Samsung ETF rotation Private Investment Trust 1 ˝ ˝ MoceanLab, Inc. ˝ ˝ HYUNDAI ROTEM MALAYSIA SDN BHD ˝  23 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (1) Basis of consolidated financial statements preparation The consolidated financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audit of Stock Companies, Etc in the Republic of Korea. 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 as of and for the year ended December 31, 2021, except for the new or amended accounting standards and interpretations described below. 1) New and amended standards that have been applied from the year beginning on January 1, 2022 are as follows. The Group applied Proceeds before Intended Use(Amendments to K-IFRS 1016 ‘Property, Plant and Equipment’), Cost of Fulfilling a Contract(Amendments to K-IFRS 1037 ‘Provisions, Contingent Liabilities and Contingent Assets’), Annual Improvements to IFRS Standards 2018-2020, Reference to the Conceptual Framework(Amendments to K-IFRS 1103 ‘Business Combinations’) and Covid-19-Related Rent Concessions beyond 30 June 2021(Amendments to K-IFRS 1116 ‘Leases’) for the first time on January 1, 2022. These standards and other new accounting standards effective from January 1, 2022 do not have a material impact on the Group's consolidated financial statements. 2) A number of new standards are effective for annual periods beginning after January 1, 2022 and earlier application is permitted; however, the Group has not early adopted them in preparing these consolidated financial statements. The Group is currently evaluating the effect of the following new or amended standards and interpretations, if any, to the consolidated financial statements, however, those standards are not expected to have a significant impact on the Group’s consolidated financial statements. - Classification of Liabilities as Current or Non-current (K-IFRS 1001 ‘Presentation of Financial Statements’) - K-IFRS 1117 ‘Insurance Contracts’ and its amendments - Disclosure of Accounting policies (K-IFRS 1001 ‘Presentation of Financial Statements’) - Definition of Accounting estimate (K-IFRS 1008 ‘Accounting Policies, Changes in Accounting Estimates and Errors’) - Deferred Tax related to Assets and Liabilities arising from a Single Transaction (K-IFRS 1012 ‘Income Taxes’) - Disclosure of Gains and Losses on Valuation of Financial Liabilities with Conditions for Adjustment of Exercise Price (K-IFRS 1001 ‘Presentation of Financial Statements’) The consolidated financial statements were approved by the Board of Directors on January 26, 2023 and are expected to be submitted for the Company's annual general meeting of shareholders. (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 consolidations 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; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns. 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. 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  24 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; • potential voting rights held by the Group, other vote holders or other parties; • rights arising from other contractual arrangements; and • 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. 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 joint venture. (4) Business combination Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. The consideration includes any asset or liability resulting from a contingent consideration arrangement and is measured at fair value. Acquisition-related costs are recognized in profit or loss as incurred. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured at its fair value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss. Prior to the acquisition date, the amount resulting from changes in the value of its equity interest in the acquiree that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were directly disposed of. (5) Revenue recognition 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 satisfied.  25 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 separately identified as performance obligations. 2) Performance obligations satisfied at a point in time Revenue is recognized when the performance obligations under the terms of a contract with the Group’s customer are satisfied, which generally occurs with the transfer of control of goods or services. 3) Performance obligations satisfied over time In assessing whether the control over goods or services is transferred over time, the Group evaluates whether the customer simultaneously obtains and consumes the benefits provided by the Group’s performance, whether the assets are controlled by the customer, and whether the assets created by the Group have no substitute purpose, and whether the Group is entitled to reimbursement of costs incurred to date, including a reasonable margin. 4) Allocation of transaction price The Group allocates the transaction price to each of the performance obligations identified in a single contract in proportion to its stand-alone selling price. When the stand-alone selling price is not directly observable, the Group estimates the stand-alone selling price using the adjusted market assessment approach, or the expected cost plus a margin approach. 5) Variable consideration The Group estimates the amount of consideration it will be entitled to receive using the method (either the expected value method or the most likely amount method) that provides the most accurate prediction. 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 future periods. 6) Significant financing element If the period between the transfer of the goods or services promised to the customer and the payment from the customer is within one year, the Group does not adjust the promised amount of consideration for the effects of a significant financing component, as a practical expedient. 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. (6) Foreign currency translation The individual financial statements of each entity in the Group are prepared and presented in the currency of the primary economic environment in which the entity operates (its functional currency).  26 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. Foreign exchange gains or losses are classified in finance income (expenses) or other income (expenses) by the nature of the transaction or event. 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. Upon 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. (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 a financial asset at initial recognition. All recognized financial assets are measured subsequently in their entirety at either 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. 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 amortized cost or FVOCI criteria as measured at FVPL if doing so eliminates or significantly reduces an accounting mismatch  27 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 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 in 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 will not be reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings. 1-4) Financial assets measured 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 designated as a foreign currency is determined in foreign currencies and is translated at the spot exchange rate at the end of the reporting period. (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 ECLs on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience and valuation of individual assets, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of forecast on present and future conditions reflecting time value of money where appropriate. For all other financial instruments, the Group recognizes lifetime ECLs 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 ECLs.  28 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; • other significant increases in credit risk; 2) Definition of default The Group believes that, based on past experience, if the debtor violates the terms of the contract, it is considered to constitute a default event for internal credit risk management purposes. 3) Credit-impaired financial assets 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 the following observable data: (a) significant financial difficulty of the issuer or the borrower; (b) a breach of contract, such as a default or past due event as defined by the Group’s internal policy; 4) Measurements and recognition of expected credit losses The measurement of ECLs 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 ECLs are 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. If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECLs in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECLs are no longer met, the Group measures the loss allowance at an amount equal to 12-month ECLs at the current reporting date, except for financial assets for which a simplified approach is 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.  29 (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 collateralized 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 specific identification method. (11) Investments in associates and joint ventures An associate is an entity over which the Group has significant influence, but not a joint venture or a subsidiary. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. A joint venture is a joint arrangement, whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The investment in an associate or a joint venture is initially recognized at cost and accounted for using the equity method. Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of the associate or the joint venture. When the Group's share of losses of an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate or the joint venture), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or the joint venture. 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. 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 there is any indication of impairment, 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.  30 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. (12) Property, plant and equipment Property, plant and equipment is 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. Representative useful lives (years) Buildings and structures 12 – 50 Machinery and equipment 6 – 15 Vehicles 6 – 15 Dies, mold and tools 4 – 6 Office equipment 3 – 15 Other 2 – 20 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 properties Investment properties are property held to earn rentals or for capital appreciation or both. Investment properties are measured initially at its cost and transaction costs are included in the initial measurement. After initial recognition, the book value of investment properties 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.  31 Land is not depreciated, and other investment properties are depreciated using the straight-line method over the period from 20 to 50 years. The Group reviews the depreciation method, the estimated useful lives and residual values at the end of each annual reporting period. If expectations differ from previous estimates, the changes are accounted for as a change in accounting estimate. (14) Intangible assets 1) Goodwill Goodwill arising from a business combination is recognized as an asset at the time of obtaining control (the acquisition date). Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the Group’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed exceeds the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition-date fair value of the Group’s previously held equity interest in the acquiree, the excess is recognized immediately in profit or loss as a bargain purchase gain. Goodwill is not amortized, but tested for impairment at least annually. For purposes of impairment tests, goodwill is allocated to those cash-generating units (“CGU”) of the Group expected to have synergies from the business combination. CGU that goodwill has been allocated is tested for impairment every year or when an event occurs that indicates impairment. If the recoverable amount of a CGU is less than its carrying amount, the impairment will first decrease the goodwill allocated to that CGU and the remaining impairment will be allocated among other assets relative to its carrying value. Impairment recognized for goodwill may not be reversed. When disposing a subsidiary, related goodwill will be included in gain or loss from disposal. 2) Development costs The expenditure on research is recognized as an expense when it is incurred. The expenditure on development is recognized as an intangible asset, and amortization is computed using the straight-line method based on the estimated useful lives of the assets since the asset is available for use or sale. Research and development activities are conducted in phases of preceding research, development approval, product development and mass production. The Group generally recognizes intangible assets as development activities after the development approval phases which product specification, release schedule, and sales plan are established. Expenditure incurred at the previous phase is recognised as an expense as it is 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 impairment test at least once a year without amortization. The representative useful lives are as follows. Representative useful lives (years) Development costs 3, 7 Industrial property rights 5 – 10 Software 3 – 7 Other 5 – 40  32 (15) Impairment of non-financial 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 inflows of an individual asset are largely independent from other assets or group of assets, the recoverable amount is measured for that individual asset; otherwise, it is measured for the cash generating unit (CGU) to which the asset belongs. An impairment loss in respect of goodwill is not reversed. For other assets, impairment loss is reversed if the recoverable amount increases in subsequent years, but only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized, but tested for impairment annually. (16) Non-current assets classified as held for sale The Group classifies a non-current asset (or disposal group) as held for sale, if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. The management must be committed to a plan to sell the asset (or disposal group), and the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets (or disposal group) classified as held for sale are measured at the lower of their carrying amount and fair value, less costs to sell. (17) Lease At contract inception, the Group assesses whether a contract is or contains a lease. A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. When assessing whether the contract conveys a right to control the use of an identified asset, definition of a lease under K-IFRS 1116 has been applied. 1) As a lessee At inception or effective date of change, the Group allocates the consideration in the contract to each lease on the basis of their relative stand-alone prices. However, for leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and will instead account for the lease and non-lease components as a single lease component. The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentive received. The right-of use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.  33 The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. 2) As a lessor The accounting policies applicable in the same period to the Group as a lessor are not different from those under K-IFRS 1116. When the Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an operating lease. To classify each lease, the Group made an overall assessment of whether the lease transferred substantially all of the risks and rewards incidental to ownership of the underlying asset. If this was the case, then the lease was a finance lease; if not, then it was an operating lease. 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 carrying amount of investments in operating leases and recognized as expense on a straight-line basis over the lease term. (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 The retirement benefit obligation recognized in the consolidated statements of financial position represents the present value of the defined benefit obligation, less the fair value of plan assets. Defined benefit obligations are calculated by an actuary using the Projected Unit Credit Method. The present value of the defined benefit obligations is measured by discounting estimated future cash outflows by the interest rate of high-quality corporate bonds, with similar maturity as the expected post-employment benefit payment date. In countries where there is no deep market in such bonds, the market yields at the end of the reporting period on government bonds are used. The remeasurements of the net defined benefit liabilities (assets) comprising actuarial gain or loss from changes in actuarial assumptions or differences between actuarial assumptions and actual results, the effect of the changes to the asset ceiling and return on plan assets, excluding amounts included in net interest on the net defined benefit liabilities (assets), are recognized in other comprehensive income of the consolidated statements of comprehensive income, which is immediately recognized as retained earnings. Those recognized in retained earnings will not be reclassified in profit or loss. Past service costs are recognized in profit and loss when the plan amendment occurs, and net interest is calculated by applying the discount rate determined at the beginning of the annual reporting period to the net defined benefit liabilities (assets). Defined benefit costs are composed of service cost (including current service cost, past service cost, as well as gains and losses on settlements), net interest expense (income), and remeasurements. The retirement benefit obligation recognized in the consolidated statements of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. Contributions to defined contribution retirement benefit plans are recognized as expenses when employees provide services eligible for payment.  34 (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, pre-contract 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 long-term employees. 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 profit 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 current tax liability is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. 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.  35 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) Recognition of current and deferred taxes Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, or items arising from initial accounting treatments of a business combination. The tax effect arising from a business combination is included in the accounting for the business combination. (22) Treasury stock When the Group repurchases its equity instruments (treasury stock), the incremental costs and net of tax effect are deducted from equity and recognized as other capital item deducted from the total equity in the consolidated statements of financial position. In addition, profits or losses from purchase, sale or retirement of treasury stocks are directly recognized in equity and not in current profit or loss. (23) Financial liabilities and equity instruments Debt instruments and equity instruments issued by the Group are recognized as financial liabilities or equity depending on the contract and the definitions of financial liability and equity instrument. 1) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at 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 • The amount recognized less the accumulated profits recognized in accordance with K-IFRS 1115 3) Financial liabilities measured 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.  36 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. (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 1116 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.  37 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 20. (26) Accounting Treatment related to the Emission Rights Cap and Trade Scheme The Group classifies the emission rights as intangible assets. The emission rights allowances received from the government free of charge are measured at zero, while purchased emission rights allowances are measured at cost. No emission liability is recognized if the expected quantity of emission for the performing period does not exceed the emission allowance in possession. If the expected emissions exceed the emission allowances held, the emission liability is measured and recognized based on the expected excess quantity of emissions and the market unit price of the emission rights at the end of the reporting period. (27) Significant accounting estimates and key sources of estimation uncertainties In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that cannot be identified from other sources. The estimation and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may be different from those estimations. The estimates and underlying assumptions are continually evaluated. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Information about assumptions and estimation uncertainties at December 31, 2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is as follows. 1) Impairment test for goodwill and non-financial assets Determining whether goodwill and non-financial asset is impaired requires an estimation of the value in use of the CGU to which goodwill has been allocated and value in use of non-financial assets. The value in use calculation requires the management to estimate the future cash flows expected to arise from the CGU 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.  38 6) Measurement and useful lives of property, plant, equipment or intangible assets When the Group acquires property, plant, equipment or intangible assets from a 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. 7) Credit loss allowance The Group sets credit loss allowance upon evaluation of impairment relating to account receivables and financial services receivables as described in Note 2.(8). The precision in loss allowance is based on the estimation of expected cash flow and assumptions and variables of risk measurement model used for the estimation. 3. TRADE NOTES AND ACCOUNTS RECEIVABLE: (1) Trade notes and accounts receivable as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Current Non-current Current Non-current (In millions of Korean Won) Trade notes and accounts receivable ￦ 4,298,915 ￦ 200,400 ￦ 3,190,030 ￦ 145,648 Loss allowance (19,858) (5,028) (42,734) (773) Present value discount accounts - (15,591) - (7,718) ￦ 4,279,057 ￦ 179,781 ￦ 3,147,296 ￦ 137,157 (2) Aging analysis of trade notes and accounts receivable As of December 31, 2022, aging analysis of total trade notes and accounts receivable that are past due, but not impaired are as follows. Description Not due Overdue Within 90days Overdue Within 180days More than 91days Overdue More than 181 days Total amounts Amount of impaired receivables (In millions of Korean Won) Total trade note and accounts receivable ￦ 4,225,436 ￦ 192,913 ￦ 7,766 ￦ 73,200 ￦ 4,499,315 ￦ 24,886 As of December 31, 2021, aging analysis of total trade notes and accounts receivable that are past due, but not impaired are as follows. Description Not due Overdue Within 90days Overdue Within 180days More than 91days Overdue More than 181 days Total amounts Amount of impaired receivables (In millions of Korean Won) Total trade note and accounts receivable ￦ 2,998,927 ￦ 249,201 ￦ 5,437 ￦ 82,113 ￦ 3,335,678 ￦ 43,507 (3) Transferred trade notes and accounts receivable that are not derecognized As of December 31, 2022 and December 31, 2021, 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 ￦2,123,379 million and ￦3,059,551 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.  39 (4) Changes in loss allowance for the years ended December 31, 2022 and December 31, 2021 are as follows Description 2022 2021 (In millions of Korean Won) Beginning of the year ￦ 43,507 ￦ 55,210 Impairment loss (reversal) (940) 2,204 Write-off (20,769) (14,307) Effect of foreign exchange differences and others 3,088 400 End of the year ￦ 24,886 ￦ 43,507 4. OTHER RECEIVABLES: (1) Other receivables as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Current Non-current Current Non-current (In millions of Korean Won) Accounts receivable – others (*) ￦ 3,143,232 ￦ 418,541 ￦ 2,785,799 ￦ 373,569 Due from customers for contract work 1,413,886 - 1,421,108 - Lease and rental deposits 17,471 323,362 24,105 310,536 Deposits 12,854 40,740 7,289 33,469 Others 5,631 38,407 3,546 23,594 Loss allowance (134,385) - (20,877) - ￦ 4,458,689 ￦ 821,050 ￦ 4,220,970 ￦ 741,168 (*) As of December 31, 2022 and December 31, 2021, the Group recognized the reimbursement related to the warranty provisions as a separate asset in the amount of ￦1,045,159 million and ￦1,091,859 million, respectively. (2) Changes in other allowance for the years ended December 31, 2022 and December 31, 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Beginning of the year ￦ 20,877 ￦ 18,169 Impairment loss 130,650 517 Write-off (971) (871) Effect of foreign exchange differences (16,171) 3,062 End of the year ￦ 134,385 ￦ 20,877 5. OTHER FINANCIAL ASSETS: (1) Other financial assets as of December 31, 2022 are as follows. December 31, 2022 Description Current Non-current (In millions of Korean Won) Financial assets measured at FVPL ￦ 5,366,752 ￦ 343,594 Financial assets measured at FVOCI 66,044 2,773,537 Financial assets measured at amortized cost 25,404 12,494 Derivative assets that are effective hedging instruments 476,545 760,151 ￦ 5,934,745 ￦ 3,889,776  40 Other financial assets as of December 31, 2021 are as follows. December 31, 2021 Description Current Non-current (In millions of Korean Won) Financial assets measured at FVPL ￦ 12,249,980 ￦ 222,120 Financial assets measured at FVOCI 25,150 2,886,373 Financial assets measured at amortized cost 18,466 8,729 Derivative assets that are effective hedging instruments 103,050 422,064 ￦ 12,396,646 ￦ 3,539,286 (2) Financial assets measured at FVOCI as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Acquisition cost Book value Book value (In millions of Korean Won) Debt instruments ￦ 532,805 ￦ 499,193 ￦ 450,711 Equity instruments (*) 2,769,268 2,340,388 2,460,812 ￦ 3,302,073 ￦ 2,839,581 ￦ 2,911,523 (*) 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 recognition. (3) Equity instruments classified into financial assets measured at FVOCI as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Name of the company Ownership percentage Acquisition cost Book value Book value (%) (In millions of Korean Won) KT Corporation (*4) 4.69 ￦ 458,793 ￦ 414,412 ￦ 7,443 Hyundai Steel Company (*1) 6.87 835,375 322,546 434,277 Hyundai Glovis Co., Ltd. 4.88 210,688 299,359 314,922 ANI Technologies Private Limited (OLA) 3.38 278,955 278,825 290,116 Hyundai Oilbank Co., Ltd. 4.35 53,734 270,911 230,812 Grab Holdings Limited 1.11 442,922 175,010 362,508 HD Hyundai (*3) 2.20 9,018 99,055 94,892 Hyundai M Partners Co., Ltd. 9.29 9,888 17,151 13,954 NICE Information Service Co., Ltd. 2.25 3,312 16,664 24,587 Hyundai Green Food Co., Ltd. 2.36 15,005 15,531 20,077 NICE Holdings Co., Ltd. 1.30 3,491 6,342 7,866 Hyundai Asan Corporation 1.40 22,500 2,117 2,117 Korea Aerospace Industries, Ltd. (*2) - - - 153,522 Others 425,587 422,465 503,719 ￦ 2,769,268 ￦ 2,340,388 ￦ 2,460,812 (*1) The Group entered into a total return swap agreement to transfer 1,367,114 shares out of total 10,540,709 shares with a third party. (*2) The Group entered into a total return swap agreement to transfer total shares with a third party. The Group has disposed of all of its shares during the year ended December 31, 2022. (*3) During the year ended December 31, 2022, the name of company has been changed from Hyundai Heavy Industries Holdings Co., Ltd. to HD Hyundai. (*4) During the year ended December 31, 2022, the Group acquired 12,011,143 shares in KT Corporation shares by exchange of treasury stocks for the purpose of strengthening its business partnership with KT Corporation, and the shares acquired by the Group are restricted from disposal for a certain period of time.  41 6. INVENTORIES: Inventories as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Finished goods ￦ 7,824,079 ￦ 5,987,233 Merchandise 100,075 59,518 Semifinished goods 666,083 711,155 Work in progress 578,404 692,832 Raw materials 3,460,781 2,536,671 Supplies 351,994 315,871 Materials in transit 576,321 730,970 Others (*1) 733,479 611,391 Total (*2) ￦ 14,291,216 ￦ 11,645,641 (*1) As of December 31, 2022 and December 31, 2021, others include inventories provided by operating lease with repurchase agreement in the amount of ￦163,268 million and ￦143,641 million, respectively. (*2) As of December 31, 2022 and December 31, 2021, the Group recognized a valuation allowance in the amount of ￦177,907 million and ￦167,888 million, respectively. 7. OTHER ASSETS: Other assets as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Current Non-current Current Non-current (In millions of Korean Won) Accrued income ￦ 460,921 ￦ 531 ￦ 353,643 ￦ 716 Advanced payments 882,136 130,743 662,919 - Prepaid expenses 782,749 1,332,807 558,336 1,108,621 Prepaid value-added tax and others 514,747 86,374 506,955 81,947 ￦ 2,640,553 ￦ 1,550,455 ￦ 2,081,853 ￦ 1,191,284 8. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE: Non-current assets classified as held for sale and non-current liabilities classified as held for sale as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Land ￦ 6,676 ￦ - Building and others 15,626 28,121 Total ￦ 22,302 ￦ 28,121 Non-current liabilities classified as held for sale ￦ 5,365 ￦ -  42 9. PROPERTY, PLANT AND EQUIPMENT: (1) Property, plant and equipment (“PP&E”) as of December 31, 2022 and 2021 are as follows. December 31, 2022 December 31, 2021 Description Acquisition cost Accumulated depreciation (*) Book value Acquisition cost Accumulated depreciation (*) Book value (In millions of Korean Won) Land ￦ 12,180,112 ￦ - ￦ 12,180,112 ￦ 12,130,094 ￦ - ￦ 12,130,094 Buildings 11,620,590 (4,489,885) 7,130,705 10,872,099 (4,108,392) 6,763,707 Structures 1,762,100 (911,214) 850,886 1,634,658 (820,896) 813,762 Machinery and equipment 18,215,786 (11,632,625) 6,583,161 17,542,258 (10,884,908) 6,657,350 Vehicles 615,152 (252,906) 362,246 473,053 (219,202) 253,851 Dies, molds and tools 15,387,346 (11,258,981) 4,128,365 14,310,816 (9,899,714) 4,411,102 Office equipment 2,090,753 (1,601,189) 489,564 1,926,607 (1,502,058) 424,549 Others 272,101 (114,293) 157,808 309,479 (102,861) 206,618 Construction in progress 4,270,343 - 4,270,343 3,882,050 - 3,882,050 ￦ 66,414,283 ￦ (30,261,093) ￦ 36,153,190 ￦ 63,081,114 ￦ (27,538,031) ￦ 35,543,083 (*) Accumulated impairment losses are included. (2) The changes in PP&E for the year ended December 31, 2022 are as follows. Description Beginning of the year Acquisitions Transfers within PP&E Disposals Depreciation Others (*) End of the year (In millions of Korean Won) Land ￦ 12,130,094 ￦ - ￦ 56,663 ￦ (9,874) ￦ - ￦ 3,229 ￦ 12,180,112 Buildings 6,763,707 6,946 703,192 (28,181) (357,212) 42,253 7,130,705 Structures 813,762 18,900 90,828 (5,258) (77,357) 10,011 850,886 Machinery and equipment 6,657,350 32,604 986,035 (91,333) (1,064,339) 62,844 6,583,161 Vehicles 253,851 109,262 137,739 (59,329) (81,904) 2,627 362,246 Dies, molds and tools 4,411,102 19,799 1,284,698 (65,801) (1,403,168) (118,265) 4,128,365 Office equipment 424,549 55,507 187,658 (3,303) (173,658) (1,189) 489,564 Others 206,618 3,577 79,172 (288) (17,647) (113,624) 157,808 Construction-in -progress 3,882,050 4,110,106 (3,525,985) (1,192) - (194,636) 4,270,343 ￦ 35,543,083 ￦ 4,356,701 ￦ - ￦ (264,559) ￦ (3,175,285) ￦ (306,750) ￦ 36,153,190 (*) Others include the effect of foreign exchange differences, transfers from or to other accounts, impairment loss of ￦172,769 million for the CGU attributable to Hyundai Motor Manufacturing Rus LLC and others. The impairment test regarding CGU attributable to Hyundai Motor Manufacturing Rus LLC was conducted due to continued suspension of production, and the recoverable amount was based on its fair value less costs to sell (net fair value). The changes in PP&E for the year ended December 31, 2021 are as follows. Description Beginning of the year Acquisitions Transfers within PP&E Disposals Depreciation Others (*) End of the year (In millions of Korean Won) Land ￦ 12,047,003 ￦ 68,990 ￦ 39,283 ￦ (1,303) ￦ - ￦ (23,879) ￦ 12,130,094 Buildings 6,355,852 39,130 626,269 (3,460) (328,580) 74,496 6,763,707 Structures 762,248 27,774 103,295 (14,823) (68,500) 3,768 813,762 Machinery and equipment 6,668,945 28,839 922,091 (31,931) (1,010,082) 79,488 6,657,350 Vehicles 205,102 84,104 82,730 (51,161) (61,111) (5,813) 253,851 Dies, molds and tools 3,837,278 27,708 1,792,988 (18,308) (1,292,982) 64,418 4,411,102 Office equipment 385,763 61,338 130,049 (1,919) (157,611) 6,929 424,549 Others 75,623 8,451 147,235 (23,572) (13,650) 12,531 206,618 Construction-in -progress 3,754,415 4,036,440 (3,843,940) (451) - (64,414) 3,882,050 ￦ 34,092,229 ￦ 4,382,774 ￦ - ￦ (146,928) ￦ (2,932,516) ￦ 147,524 ￦ 35,543,083 (*) Others include the effect of foreign exchange differences, transfers from or to other accounts, impairment loss of ￦44,499 million allocated from the impairment of CGU attributable to Hyundai Truck & Bus(China) Co., Ltd. and others. The recoverable amount of CGU attributable to Hyundai Truck & Bus(China) Co., Ltd. was based on its value in use or fair value less costs to disposal(net fair value), and the discount rate applied to the measurement of value in use is 8.7%.  43 10. INVESTMENT PROPERTY: (1) Investment property as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Acquisition cost Accumulated depreciation Book value Acquisition cost Accumulated depreciation Book value (In millions of Korean Won) Land ￦ 47,608 ￦ - ￦ 47,608 ￦ 54,284 ￦ - ￦ 54,284 Buildings 310,589 (223,852) 86,737 313,777 (221,919) 91,858 Structures 18,630 (8,525) 10,105 18,630 (8,116) 10,514 ￦ 376,827 ￦ (232,377) ￦ 144,450 ￦ 386,691 ￦ (230,035) ￦ 156,656 (2) The changes in investment property for the year ended December 31, 2022 are as follows: Description Beginning of the year Transfers(*) Depreciation Effect of foreign exchange differences End of the year (In millions of Korean Won) Land ￦ 54,284 ￦ (6,676) ￦ - ￦ - ￦ 47,608 Buildings 91,858 201 (4,994) (328) 86,737 Structures 10,514 - (408) (1) 10,105 ￦ 156,656 ￦ (6,475) ￦ (5,402) ￦ (329) ￦ 144,450 (*) Transferred amount from Construction-in-progress. The changes in Investment properties for the year ended December 31, 2021 are as follows. Description Beginning of the year Disposals Transfers(*) Depreciation Effect of foreign exchange differences End of the year (In millions of Korean Won) Land ￦ 56,046 ￦ (1,762) ￦ - ￦ - ￦ - ￦ 54,284 Buildings 94,000 - 1,537 (4,990) 1,311 91,858 Structures 10,921 - - (408) 1 10,514 ￦ 160,967 ￦ (1,762) ￦ 1,537 ￦ (5,398) ￦ 1,312 ￦ 156,656 (*) Transferred amount from Construction-in-progress. (3) The fair value of Investment properties as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Land ￦ 47,608 ￦ 54,284 Buildings 333,488 338,579 Structures 15,496 15,496 ￦ 396,592 ￦ 408,359 The fair value measurement of the Investment properties 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 properties is not material. The fair value of the Investment properties 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 measures fair value as current replacement cost considering building structures and design, supplementary installation, depreciation period.  44 (4) Income and expenses related to Investment properties for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Rental income ￦ 43,967 ￦ 47,710 Operating and maintenance expenses 13,201 13,265 11. INTANGIBLE ASSETS: (1) Intangible assets as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Acquisition cost Accumulated amortization (*) Book value Acquisition cost Accumulated amortization (*) Book value (In millions of Korean Won) Goodwill ￦ 728,644 ￦ (35,927) ￦ 692,717 ￦ 409,570 ￦ (35,807) ￦ 373,763 Development costs 10,679,258 (7,124,833) 3,554,425 10,374,450 (6,331,957) 4,042,493 Industrial property rights 515,017 (366,666) 148,351 477,280 (338,071) 139,209 Software 1,935,307 (1,280,424) 654,883 1,567,846 (1,089,990) 477,856 Others 874,134 (216,651) 657,483 821,000 (189,077) 631,923 Construction in progress 415,983 (21,465) 394,518 197,278 (15,536) 181,742 ￦ 15,148,343 ￦ (9,045,966) ￦ 6,102,377 ￦ 13,847,424 ￦ (8,000,438) ￦ 5,846,986 (*) Accumulated impairment losses are included. (2) The changes in intangible assets for the year ended December 31, 2022 are as follows. Description Beginning of the year Internal developments External acquisition Transfers within intangible assets Disposals (In millions of Korean Won) Goodwill ￦ 373,763 ￦ - ￦ - ￦ - ￦ - Development Costs 4,042,493 1,176,423 26,653 45,890 (3,755) Industrial property rights 139,209 93 505 33,875 (85) Software 477,856 540 62,745 60,924 (23) Others 631,923 - 40,277 45,521 (30,387) Construction in progress 181,742 18,941 388,696 (186,210) - ￦ 5,846,986 ￦ 1,195,997 ￦ 518,876 ￦ - ￦ (34,250) (*1) Impairment losses include impairment of development costs due to the discontinued sales and development projects and others for the year ended December 31, 2022. Description Amortization Impairment loss /reversal (*1) Others (*2) End of the year (In millions of Korean Won) Goodwill ￦ - ￦ - ￦ 318,954 ￦ 692,717 Development Costs (1,596,985) (159,009) 22,715 3,554,425 Industrial property rights (29,057) - 3,811 148,351 Software (188,800) (7,426) 249,067 654,883 Others (52,093) (1,841) 24,083 657,483 Construction in progress - (502) (8,149) 394,518 ￦ (1,866,935) ￦ (168,778) ￦ 610,481 ￦ 6,102,377  45 (*2) Others include the effect of foreign exchange differences, transfers from or to other accounts, changes in the scope of consolidation and others. The changes in intangible assets for the year ended December 31, 2021 are as follows. Description Beginning of the year Internal developments External acquisition Transfers within intangible assets Disposals (In millions of Korean Won) Goodwill ￦ 341,476 ￦ - ￦ - ￦ - ￦ - Development Costs 4,277,671 1,291,676 31,287 41,147 (417) Industrial property rights 245,400 64 951 28,076 (152) Software 419,101 8,531 41,316 32,113 (110) Others 251,263 - 1,150 21,771 (18,662) Construction in progress 142,656 11,124 171,226 (123,107) - ￦ 5,677,567 ￦ 1,311,395 ￦ 245,930 ￦ - ￦ (19,341) Description Amortization Impairment loss /reversal (*1) Transfer to Non-current assets classified as held for sale Others (*2) End of the year (In millions of Korean Won) Goodwill ￦ - ￦ (76,805) ￦ - ￦ 109,092 ￦ 373,763 Development Costs (1,406,713) (192,213) (3,496) 3,551 4,042,493 Industrial property rights (24,076) (112,278) - 1,224 139,209 Software (158,353) (4) - 135,262 477,856 Others (28,681) 6 (162) 405,238 631,923 Construction in progress - (12,853) - (7,304) 181,742 ￦ (1,617,823) ￦ (394,147) ￦ (3,658) ￦ 647,063 ￦ 5,846,986 (*1) Impairment losses include impairment of development costs due to the discontinued sales and development projects, impairment loss of ￦246,707 million allocated from the impairment of CGU attributable to Hyundai Truck & Bus(China) Co., Ltd. and others. (*2) Others include the effect of foreign exchange differences, transfers from or to other accounts, changes in the scope of consolidation and others. (3) Development costs of intangible assets as of December 31, 2022 consist of as follows. Description Book value Remaining amortization period (*) (In millions of Korean Won) Automobile Developing ￦ 944,149 - ˝ Amortizing 2,163,052 30 months Powertrain Developing 106,894 - ˝ Amortizing 153,676 24 months Others Developing - - ˝ Amortizing 186,654 46 months ￦ 3,554,425 (*) Since the remaining amortization period differs for each project, the weighted average remaining useful lives of the development costs at the end of reporting period are disclosed.  46 Development costs of intangible assets as of December 31, 2021 consist of as follows. Description Book value Remaining amortization period (*) (In millions of Korean Won) Automobile Developing ￦ 1,176,530 - ˝ Amortizing 2,378,965 32 months Powertrain Developing 142,567 - ˝ Amortizing 171,828 25 months Others Developing 54 - ˝ Amortizing 172,549 46 months ￦ 4,042,493 (*) Since the remaining amortization period differs for each project, the weighted average remaining useful lives of the development costs at the end of reporting period are disclosed. (4) Research and development expenditures for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Development costs (intangible assets) ￦ 1,203,076 ￦ 1,322,963 Research and development costs (*1) 2,133,497 1,774,934 Total (*2) ￦ 3,336,573 ￦ 3,097,897 (*1) Presented in manufacturing costs, administrative expenses. (*2) Amortization of development costs is not included. (5) Impairment test of goodwill The allocation of goodwill amongst the Group’s CGUs as of December 31, 2022 and December 31, 2021 are as follows. Segment December 31, 2022 December 31, 2021 (In millions of Korean Won) Vehicle ￦ 256,508 ￦ 253,204 Finance 482 482 Others 435,727 120,077 ￦ 692,717 ￦ 373,763 The recoverable amounts of the Group’s CGUs are measured as their value-in-use calculated based on cash flow projections of financial budgets for the next five years approved by management. The pre-tax discount rate applied to the cash flow projections for the years ended December 31, 2022 and 2021, are 12.7% and 8.7% respectively. Cash flow projections beyond the five-year period are extrapolated by using the estimated growth rate which does not exceed the long-term average growth rate of the region and industry to which the CGU belongs. No impairment loss had been recognized for the year ended December 31, 2022. An impairment loss on goodwill of ￦76,805 million was recognized with respect to the impairment of CGU attributable to Hyundai Truck & Bus(China) Co., Ltd. for the year ended December 31, 2021.  47 12. LEASES (AS A LESSEE): (1) The changes in right-of-use assets for the year ended December 31, 2022 are as follows. Description Beginning of the year Acquisitions Disposals Depreciation Others(*) End of the year (In millions of Korean Won) Land ￦ 83,604 ￦ 175,406 ￦ (392) ￦ (6,097) ￦ (623) ￦ 251,898 Buildings 754,149 330,661 (59,061) (197,807) (8,589) 819,353 Vehicles 2,370 34,238 (507) (6,258) (3,250) 26,593 Others 100,703 18,482 - (6,323) (93,413) 19,449 ￦ 940,826 ￦ 558,787 ￦ (59,960) ￦ (216,485) ￦ (105,875) ￦ 1,117,293 (*) Others include the effect of foreign exchange differences, changes in the scope of consolidation and others. The changes in right-of-use assets for the year ended December 31, 2021 are as follows. Description Beginning of the year Acquisitions Disposals Depreciation Others(*) End of the year (In millions of Korean Won) Land ￦ 143,679 ￦ 13,863 ￦ (457) ￦ (6,686) ￦ (66,795) ￦ 83,604 Buildings 681,335 249,691 (22,786) (184,173) 30,082 754,149 Vehicles 2,672 1,566 (78) (1,845) 55 2,370 Others 8,638 97,885 (854) (8,722) 3,756 100,703 ￦ 836,324 ￦ 363,005 ￦ (24,175) ￦ (201,426) ￦ (32,902) ￦ 940,826 (*) Others include the effect of foreign exchange differences, changes in the scope of consolidation, impairment loss of ￦46,910 million allocated from the impairment of CGU attributable to Hyundai Truck & Bus(China) Co., Ltd. and others. (2) Lease liabilities as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Undiscounted lease liabilities ￦ 1,303,067 ￦ 1,150,757 Discounted lease liabilities 1,110,804 950,572 Current 405,053 167,266 Non-current 705,751 783,306 (3) Expenses recognized in relation to leases for the years ended December 31, 2022 and 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Interest on lease liabilities ￦ 33,993 ￦ 25,126 Expenses in relation to leases of short-term and low-value assets 20,174 20,907  48 13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES: (1) Investments in joint ventures and associates as of December 31, 2022 are as follows. Name of the company Nature of business Location Ownership percentage Book value (%) (In millions of Korean Won) Beijing Hyundai Qiche Financing Company (BHAF) (*1,3) Financing China 53.00 ￦ 759,766 Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing China 50.00 525,250 Hyundai WIA Automotive Engine (Shandong) Company (WAE) Manufacturing China 31.40 215,786 Motional AD LLC (*1) R&D USA 25.92 907,061 HMG Global LLC (*4) New business Investment & management USA 49.50 608,223 Boston Dynamics AI Institute, LLC R&D USA 47.50 266,357 supernal, LLC (*1,5) R&D USA 44.44 178,564 Hyundai Capital Bank Europe GmbH (HCBE) Financing Germany 49.00 508,110 HYUNDAI MOTOR GROUP INNOVATION CENTER IN SINGAPORE PTE. LTD.(HMGICS) Manufacturing Singapore 40.00 104,556 Kia Corporation Manufacturing Korea 33.88 13,251,475 Hyundai Engineering & Construction Co., Ltd. Construction Korea 20.95 3,033,945 Hyundai Transys Inc. Manufacturing Korea 41.13 1,157,462 Hyundai WIA Corporation Manufacturing Korea 25.35 759,270 Hyundai Autoever Corp. IT service Korea 31.59 449,994 Hyundai Commercial Inc. Financing Korea 37.50 374,970 Hyundai Motor Securities Co., Ltd. Securities Brokerage Korea 25.43 332,624 Eukor Car Carriers Inc. (*2) Transportation Korea 12.00 269,261 Haevichi Hotels & Resorts Co., Ltd. Hotelkeeping Korea 41.90 96,303 Others 1,400,460 ￦ 25,199,437 (*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) During the year ended December 31, 2022, the Group completed the establishment of HMG Global LLC by Contributing cash and all of Group’s interests in Boston Dynamics, Inc. to HMG Global LLC. (*5) During the year ended December 31, 2022, the classification of supernal, LLC was changed from a subsidiary to investment in an associate due to loss of control. In addition, during the year ended December 31, 2021, the name of company was changed from Genesis Air Mobility LLC to supernal, LLC.  49 Investments in joint ventures and associates as of December 31, 2021 are as follows. Name of the company Nature of business Location Ownership percentage Book value (%) (In millions of Korean Won) Beijing Hyundai Qiche Financing Company (BHAF) (*1,3) Financing China 53.00 ￦ 736,704 Beijing-Hyundai Motor Company (BHMC) (*1) Manufacturing China 50.00 345,950 Hyundai WIA Automotive Engine (Shandong) Company (WAE) Manufacturing China 31.40 245,868 Motional AD LLC (*1) R&D USA 25.97 1,025,263 Boston Dynamics, Inc. R&D USA 30.00 414,634 Hyundai Capital Bank Europe GmbH (HCBE) Financing Germany 49.00 498,050 Hyundai Motor Group INNOVATION CENTER IN SINGAPORE PTE. LTD.(HMGICS) (*6) Manufacturing Singapore 40.00 78,316 Kia Corporation (*4) Manufacturing Korea 33.88 11,620,132 Hyundai Engineering & Construction Co., Ltd. Construction Korea 20.95 2,935,786 Hyundai Transys Inc. Manufacturing Korea 41.13 1,085,858 Hyundai WIA Corporation Manufacturing Korea 25.35 729,053 Hyundai Autoever Corp. (*5) IT service Korea 31.59 410,935 Hyundai Commercial Inc. Financing Korea 37.50 339,300 Hyundai Motor Securities Co., Ltd. Securities Brokerage Korea 25.43 314,532 Eukor Car Carriers Inc. (*2) Transportation Korea 12.00 186,489 Haevichi Hotels & Resorts Co., Ltd. Hotelkeeping Korea 41.90 98,894 Others 1,363,353 ￦ 22,429,117 (*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) During the year ended December 31, 2021, the name of the company was changed from Kia Motors Corporation to Kia Corporation. (*5) During the year ended December 31, 2021, as the merger with Hyundai Autron Company Ltd., the subsidiary of the Company, and HYUNDAI MNSOFT, Inc., the associate of the Company, was completed, the Group’s ownership percentage was changed from 28.48% to 31.59%. (*6) During the year ended December 31, 2021, the name of the company was changed from HYUNDAI MOTOR SINGAPORE PTE. LTD. (HMS) to Hyundai Motor Group Innovation Center in Singapore Pte. Ltd. (HMGICS).  50 (2) The changes in investments in joint ventures and associates for the year ended December 31, 2022 are as follows. Name of the company Beginning of the year Acquisitions (disposals) Share of profits (losses) for the period Dividends Others (*) End of the year (In millions of Korean Won) BHAF ￦ 736,704 ￦ - ￦ 44,478 ￦ - ￦ (21,416) ￦ 759,766 BHMC 345,950 597,979 (394,495) - (24,184) 525,250 WAE 245,868 - (25,336) - (4,746) 215,786 Motional AD LLC 1,025,263 - (189,135) - 70,933 907,061 HMG Global LLC - 743,062 (5,483) - (129,356) 608,223 Boston Dynamics AI Institute, LLC - 283,366 (2,308) - (14,701) 266,357 supernal, LLC - 194,596 (87,946) - 71,914 178,564 Boston Dynamics, Inc. 414,634 - (37,483) - (377,151) - HCBE 498,050 - 15,337 - (5,277) 508,110 HMGICS 78,316 29,528 (8,067) - 4,779 104,556 Kia Corporation 11,620,132 - 1,906,772 (411,955) 136,526 13,251,475 Hyundai Engineering & Construction Co., Ltd. 2,935,786 - 89,636 (13,996) 22,519 3,033,945 Hyundai Transys Inc. 1,085,858 - 47,166 - 24,438 1,157,462 Hyundai WIA Corporation 729,053 - 31,439 (4,826) 3,604 759,270 Hyundai Autoever Corp. 410,935 - 39,961 (6,065) 5,163 449,994 Hyundai Commercial Inc. 339,300 - 100,212 (20,000) (44,542) 374,970 Hyundai Motor Securities Co., Ltd. 314,532 - 22,153 (6,453) 2,392 332,624 Eukor Car Carriers Inc. 186,489 - 82,923 (7,392) 7,241 269,261 Haevichi Hotels & Resorts Co., Ltd. 98,894 - (2,601) - 10 96,303 Others 1,363,353 152,952 8,554 (16,349) (108,050) 1,400,460 ￦ 22,429,117 ￦ 2,001,483 ￦ 1,635,777 ￦ (487,036) ￦ (379,904) ￦ 25,199,437 (*) Others consist of changes in accumulated other comprehensive income (loss) and others.  51 The changes in investments in joint ventures and associates for the year ended December 31, 2021 are as follows. Name of the company Beginning of the year Acquisitions (disposals) Share of profits (losses) for the period Dividends Others (*1) End of the year (In millions of Korean Won) BHAF ￦ 627,895 ￦ - ￦ 50,724 ￦ (15,880) ￦ 73,965 ￦ 736,704 BHMC 779,958 - (502,344) - 68,336 345,950 WAE 224,979 - (3,432) - 24,321 245,868 Motional AD LLC 1,053,282 - (122,871) - 94,852 1,025,263 Boston Dynamics, Inc. (*2) - 431,882 (36,010) - 18,762 414,634 HCBE 495,999 - (99) - 2,150 498,050 HMGICS 51,766 26,202 (3,300) - 3,648 78,316 Kia Corporation 9,972,824 - 1,601,473 (137,318) 183,153 11,620,132 Hyundai Engineering & Construction Co., Ltd. 2,835,399 - 82,421 (13,996) 31,962 2,935,786 Hyundai Transys Inc. 1,017,906 - 39,223 - 28,729 1,085,858 Hyundai WIA Corporation 694,991 - 16,637 (4,826) 22,251 729,053 Hyundai Autoever Corp. 158,073 - 24,876 (4,485) 232,471 410,935 Hyundai Commercial Inc. 261,601 - 67,187 (3,750) 14,262 339,300 Hyundai Motor Securities Co., Ltd. 310,472 - 23,027 (5,444) (13,523) 314,532 Eukor Car Carriers Inc. 150,503 - 22,457 - 13,529 186,489 Haevichi Hotels & Resorts Co., Ltd. 97,655 - 980 - 259 98,894 Others 1,191,957 182,786 17,642 (12,344) (16,688) 1,363,353 ￦ 19,925,260 ￦ 640,870 ￦ 1,278,591 ￦ (198,043) ￦ 782,439 ￦ 22,429,117 (*1) Others consist of changes in accumulated other comprehensive income (loss) and others. (*2) Share acquisition has been completed in the year ended December 31, 2021, and the acquisition cost is measured as the cash paid during the years ended December 31, 2022 and 2021, and the value of put option owned by other investors. (3) Summarized financial information of the Group’s major joint ventures and associates as of and for the year ended December 31, 2022 is as follows. Name of the company Current assets Non-current assets Current liabilities Non-current liabilities (In millions of Korean Won) BHAF (*) ￦ 4,044,066 ￦ - ￦ 2,610,546 ￦ - BHMC 3,042,267 3,120,431 4,715,086 399,063 WAE 537,909 457,303 338,319 5,551 Motional AD LLC 646,160 3,187,411 142,518 89,824 HMG Global LLC 799,047 1,384,220 88,391 320,996 Boston Dynamics AI Institute, LLC 556,273 53,152 9,072 39,876 supernal, LLC 338,831 216,123 42,290 108,565 HCBE (*) 9,448,406 - 8,405,237 - HMGICS 118,876 370,889 18,593 216,915 Kia Corporation 34,147,147 39,563,818 25,377,803 8,990,081 Hyundai Engineering & Construction Co., Ltd. 15,516,745 5,394,963 8,757,397 2,230,034 Hyundai Transys Inc. 4,311,914 3,209,159 3,147,190 1,499,678 Hyundai WIA Corporation 4,267,463 3,278,988 2,410,435 1,402,365 Hyundai Autoever Corp. 1,695,856 923,580 883,698 245,358 Hyundai Commercial Inc. (*) 11,170,366 - 9,774,127 - Hyundai Motor Securities Co., Ltd. (*) 10,233,054 - 9,008,411 - Eukor Car Carriers Inc. 1,026,513 3,312,611 609,827 1,505,122 Haevichi Hotels & Resorts Co., Ltd. 43,919 412,477 253,312 34,862  52 Name of the company Sales Profit (loss) for the period from continuing operations Other comprehensive income (loss) Total comprehensive income (loss) (In millions of Korean Won) BHAF (*) ￦ 362,978 ￦ 83,920 ￦ - ￦ 83,920 BHMC 4,900,315 (821,204) - (821,204)) WAE 501,436 (71,164) - (71,164) Motional AD LLC 1,207 (751,726) (6,314) (758,040) HMG Global LLC 21,388 (63,993) - (63,993) Boston Dynamics AI Institute, LLC - (4,858) - (4,858) supernal, LLC - (195,567) - (195,567) HCBE (*) 971,654 32,144 16,302 48,446 HMGICS 12,190 (20,168) - (20,168) Kia Corporation 86,559,029 5,408,976 227,095 5,636,071 Hyundai Engineering & Construction Co., Ltd. 21,239,082 470,876 144,153 615,029 Hyundai Transys Inc. 10,256,254 123,483 64,705 188,188 Hyundai WIA Corporation 8,207,614 43,482 9,136 52,618 Hyundai Autoever Corp. 2,754,508 116,170 17,586 133,756 Hyundai Commercial Inc. (*) 588,167 266,640 (116,056) 150,584 Hyundai Motor Securities Co., Ltd. (*) 1,186,029 87,102 5,147 92,249 Eukor Car Carriers Inc. 2,865,427 668,062 43,489 711,551 Haevichi Hotels & Resorts Co., Ltd. 152,860 (5,485) 9 (5,476) (*) 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. Summarized financial information of the Group’s major joint ventures and associates as of and for the year ended December 31, 2021 is as follows. Name of the company Current assets Non-current assets Current liabilities Non-current liabilities (In millions of Korean Won) BHAF (*) ￦ 5,648,345 ￦ - ￦ 4,258,337 ￦ - BHMC 2,877,226 3,897,225 5,047,580 984,476 WAE 648,858 530,099 185,159 255,961 Motional AD LLC 630,770 3,603,314 97,631 105,139 Boston Dynamics, Inc. 117,854 250,999 55,254 79,823 HCBE (*) 6,910,165 - 5,916,354 - HMGICS 23,970 166,297 1,612 - Kia Corporation 29,205,483 37,644,514 21,562,636 10,374,805 Hyundai Engineering & Construction Co., Ltd. 14,555,535 5,091,172 7,616,041 2,594,756 Hyundai Transys Inc. 3,592,986 3,043,732 2,164,191 1,786,510 Hyundai WIA Corporation 4,156,485 3,593,022 2,126,275 1,927,968 Hyundai Autoever Corp. 1,471,052 875,071 721,374 248,927 Hyundai Commercial Inc. (*) 10,001,066 - 8,699,018 - Hyundai Motor Securities Co., Ltd. (*) 8,806,128 - 7,645,418 - Eukor Car Carriers Inc. 534,016 3,169,325 654,912 1,467,448 Haevichi Hotels & Resorts Co., Ltd. 44,922 409,187 235,954 44,458  53 Name of the company Sales Profit (loss) for the period from continuing operations Other comprehensive income (loss) Total comprehensive income (loss) (In millions of Korean Won) BHAF (*) ￦ 423,416 ￦ 95,703 ￦ - ￦ 95,703 BHMC 6,240,989 (1,012,933) - (1,012,933) WAE 797,685 (4,226) - (4,226) Motional AD LLC 949 (516,204) (5,025) (521,229) Boston Dynamics, Inc. 66,779 (196,950) - (196,950) HCBE (*) 711,616 (325) 4,241 3,916 HMGICS - (8,251) - (8,251) Kia Corporation 69,862,366 4,760,311 664,223 5,424,534 Hyundai Engineering & Construction Co., Ltd. 18,065,534 549,501 168,103 717,604 Hyundai Transys Inc. 8,143,951 90,623 66,409 157,032 Hyundai WIA Corporation 7,527,739 56,071 131,926 187,997 Hyundai Autoever Corp. 2,070,382 71,368 13,648 85,016 Hyundai Commercial Inc. (*) 482,087 185,303 (31,808) 153,495 Hyundai Motor Securities Co., Ltd. (*) 853,770 117,749 913 118,662 Eukor Car Carriers Inc. 1,894,623 192,229 137,672 329,901 Haevichi Hotels & Resorts Co., Ltd. 116,466 2,063 16 2,079 (*) 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. (4) Summarized additional financial information of the Group’s major joint ventures as of and for the year ended December 31, 2022 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 (In millions of Korean Won) BHAF(*) ￦ 1,023,368 ￦ 2,385,681 ￦ - ￦ 13,926 ￦ 341,357 ￦ 128,264 ￦ 32,245 BHMC 1,887,932 606,105 161,500 570,749 18,263 51,436 60,112 Motional AD LLC 71,075 16,062 62,753 87,887 5,760 - 6,027 supernal, LLC 333,184 - - 8,305 589 5,983 - (*) 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 its separate financial statements. Summarized additional financial information of the Group’s major joint ventures as of and for the year ended December 31, 2021 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 (In millions of Korean Won) BHAF(*) ￦ 860,234 ￦ 3,993,580 ￦ - ￦ 8,155 ￦ 419,195 ￦ 175,403 ￦ 32,648 BHMC 975,177 379,970 723,688 481,351 11,599 81,288 2,665 Motional AD LLC 188,571 14,407 71,982 73,807 3,642 - (7,875) (*) 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 its separate financial statements.  54 (5) 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, 2022 is as follows. Name of the company Group’s share of net assets Goodwill Unrealized profit (loss) and others Carrying amounts (In millions of Korean Won) BHAF ￦ 759,766 ￦ - ￦ - ￦ 759,766 BHMC 551,378 - (26,128) 525,250 WAE (*) 207,938 7,809 39 215,786 Motional AD LLC 922,942 - (15,881) 907,061 HMG Global LLC 608,223 - - 608,223 Boston Dynamics AI Institute, LLC 266,227 - 130 266,357 supernal, LLC 178,571 - (7) 178,564 HCBE 497,892 22,341 (12,123) 508,110 HMGICS 101,702 2,854 - 104,556 Kia Corporation 13,124,472 197,089 (70,086) 13,251,475 Hyundai Engineering & Construction Co., Ltd. (*) 2,302,451 731,362 132 3,033,945 Hyundai Transys Inc. 1,142,960 - 14,502 1,157,462 Hyundai WIA Corporation 854,377 - (95,107) 759,270 Hyundai Autoever Corp. (*) 391,073 58,822 99 449,994 Hyundai Commercial Inc. 374,970 - - 374,970 Hyundai Motor Securities Co., Ltd. 291,823 40,052 749 332,624 Eukor Car Carriers Inc. 268,999 - 262 269,261 Haevichi Hotels & Resorts Co., Ltd. (*) 92,727 3,576 - 96,303 (*) 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, 2021 is as follows. Name of the company Group’s share of net assets Goodwill Unrealized profit (loss) and others Carrying amounts (In millions of Korean Won) BHAF ￦ 736,704 ￦ - ￦ - ￦ 736,704 BHMC 371,198 - (25,248) 345,950 WAE (*) 238,021 7,809 38 245,868 Motional AD LLC 1,047,834 - (22,571) 1,025,263 Boston Dynamics, Inc. (*) 199,325 209,428 5,881 414,634 HCBE 474,523 22,341 1,186 498,050 HMGICS 75,462 2,854 - 78,316 Kia Corporation 11,505,153 197,089 (82,110) 11,620,132 Hyundai Engineering & Construction Co., Ltd. (*) 2,204,424 731,362 - 2,935,786 Hyundai Transys Inc. 1,070,931 - 14,927 1,085,858 Hyundai WIA Corporation 823,381 - (94,328) 729,053 Hyundai Autoever Corp. (*) 352,013 58,822 100 410,935 Hyundai Commercial Inc. 339,300 - - 339,300 Hyundai Motor Securities Co., Ltd. 275,563 40,052 (1,083) 314,532 Eukor Car Carriers Inc. 186,227 - 262 186,489 Haevichi Hotels & Resorts Co., Ltd. (*) 95,318 3,576 - 98,894 (*) 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.  55 (6) The market price of major listed equity securities as of December 31, 2022 is as follows. Name of the company Price per share Total number of shares Market value (In millions of Korean Won, except price per share) Kia Corporation ￦ 59,300 137,318,251 ￦ 8,142,972 Hyundai Autoever Corp. 95,500 8,664,334 827,444 Hyundai Engineering & Construction Co., Ltd. 34,900 23,327,400 814,126 Hyundai WIA Corporation 49,450 6,893,596 340,888 Hyundai Motor Securities Co., Ltd. 9,090 8,065,595 73,316 14. FINANCIAL SERVICES RECEIVABLES: (1) Financial services receivables as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Loans ￦ 69,298,391 ￦ 61,959,509 Card receivables 21,018,287 18,728,408 Financial lease receivables 2,060,971 2,123,472 Others 20,761 35,291 92,398,410 82,846,680 Loss allowance (1,726,916) (1,551,987) Loan origination fee (261,084) (231,762) Present value discount accounts (46,564) (33,799) ￦ 90,363,846 ￦ 81,029,132 (2) Transfer of financial services receivables As of December 31, 2022 and 2021, the Group has issued asset-backed securities with loan receivables and credit card receivables as underlying assets and related asset-backed securities have the right of recourse. As of December 31, 2022, the carrying amount of financial assets that were transferred but not derecognized (including inter-company bonds) amounted to ￦31,838,127 million and its fair value is ￦30,847,083 million. The carrying amount of related liabilities is ￦22,795,844 million and its fair value is ￦22,263,492 million. As a result, the fair value of net position is ￦8,583,591 million. As of December 31, 2021, the carrying amount of financial assets that were transferred but not derecognized (including inter-company bonds) amounted to ￦26,292,997 million and its fair value is ￦26,213,213 million. The carrying amount of related liabilities is ￦19,352,363 million and its fair value is ￦19,225,190 million. As a result, the fair value of net position is ￦6,988,023 million.  56 (3) The changes in loss allowance of financial services receivables for the year ended December 31, 2022 are as follows. Loan Obligations 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total loan obligations (In millions of Korean Won) Beginning of the year ￦ 449,207 ￦ 316,425 ￦ 204,034 ￦ 969,666 Transfer to 12-Month expected credit losses 69,360 (65,956) (3,404) - Transfer to lifetime expected credit losses (54,196) 58,198 (4,002) - Transfer to credit-impaired financial assets (2,434) (7,225) 9,659 - Impairment loss (reversal) (139,481) 435,731 164,836 461,086 Collection (write-off) (169) (241,816) (132,234) (374,219) Disposals and others (2) - (4,794) (4,796) Effect of foreign exchange differences 22,750 6,062 62 28,874 End of the year ￦ 345,035 ￦ 501,419 ￦ 234,157 ￦ 1,080,611 Card receivables 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total card receivables (In millions of Korean Won) Beginning of the year ￦ 195,709 ￦ 163,391 ￦ 154,600 ￦ 513,700 Transfer to 12-Month expected credit losses 49,247 (49,118) (129) - Transfer to lifetime expected credit losses (26,980) 27,145 (165) - Transfer to credit-impaired financial assets (93,623) (70,901) 164,524 - Impairment loss (reversal) 65,488 149,053 217,342 431,883 Collection (write-off) - - (342,013) (342,013) Disposals and others - 1 (15,368) (15,367) Effect of foreign exchange differences - - - - End of the year ￦ 189,841 ￦ 219,571 ￦ 178,791 ￦ 588,203 Others Total Allowances 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total others (In millions of Korean Won) Beginning of the year ￦ 14,299 ￦ 8,119 ￦ 46,203 ￦ 68,621 ￦ 1,551,987 Transfer to 12-Month expected credit losses 4,326 (1,737) (2,590) (1) (1) Transfer to lifetime expected credit losses (1,550) 1,974 (424) - - Transfer to credit-impaired financial assets (100) (237) 337 - - Impairment loss (reversal) (3,639) 855 8,315 5,531 898,500 Collection (write-off) - - (16,049) (16,049) (732,281) Disposals and others - - - - (20,163) Effect of foreign exchange differences - - - - 28,874 End of the year ￦ 13,336 ￦ 8,974 ￦ 35,792 ￦ 58,102 ￦ 1,726,916  57 The changes in allowance for doubtful accounts of financial services receivables for the year ended December 31, 2021 are as follows. Loan Obligations 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total loan obligations (In millions of Korean Won) Beginning of the year ￦ 441,192 ￦ 300,082 ￦ 315,136 ￦ 1,056,410 Transfer to 12-Month expected credit losses 71,703 (67,049) (4,654) - Transfer to lifetime expected credit losses (57,656) 61,633 (3,977) - Transfer to credit-impaired financial assets (2,773) (5,866) 8,639 - Impairment loss (reversal) (27,338) 128,769 135,156 236,587 Collection (write-off) 50 (114,436) (246,714) (361,100) Disposals and others - - 234 234 Effect of foreign exchange differences 24,029 13,292 214 37,535 End of the year ￦ 449,207 ￦ 316,425 ￦ 204,034 ￦ 969,666 Card receivables 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total card receivables (In millions of Korean Won) Beginning of the year ￦ 186,440 ￦ 142,390 ￦ 225,298 ￦ 554,128 Transfer to 12-Month expected credit losses 49,439 (49,287) (152) - Transfer to lifetime expected credit losses (14,871) 15,045 (174) - Transfer to credit-impaired financial assets (117,994) (56,471) 174,465 - Impairment loss (reversal) 120,496 111,716 99,160 331,372 Collection (write-off) - - (332,434) (332,434) Disposals and others (27,801) (2) (11,563) (39,366) Effect of foreign exchange differences - - - - End of the year ￦ 195,709 ￦ 163,391 ￦ 154,600 ￦ 513,700 Others Total Allowances 12-Month expected credit losses Lifetime expected credit losses Description Not Impaired Impaired Total others (In millions of Korean Won) Beginning of the year ￦ 18,032 ￦ 6,368 ￦ 50,291 ￦ 74,691 ￦ 1,685,229 Transfer to 12-Month expected credit losses 3,649 (1,461) (2,188) - - Transfer to lifetime expected credit losses (1,879) 2,388 (509) - - Transfer to credit-impaired financial assets (144) (233) 377 - - Impairment loss (reversal) (5,359) 1,057 (1,449) (5,751) 562,208 Collection (write-off) - - (319) (319) (693,853) Disposals and others - - - - (39,132) Effect of foreign exchange differences - - - - 37,535 End of the year ￦ 14,299 ￦ 8,119 ￦ 46,203 ￦ 68,621 ￦ 1,551,987  58 (4) Gross investments in financial leases and their present value of minimum lease receipts as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Gross investments in financial leases Present value of minimum lease payment receivable Gross investments in financial leases Present value of minimum lease payment receivable (In millions of Korean Won) Not later than one year ￦ 868,890 ￦ 758,724 ￦ 888,358 ￦ 788,739 Later than one year and not later than five years 1,423,828 1,293,495 1,421,468 1,324,645 Later than five years 5,215 4,988 6,475 6,236 ￦ 2,297,933 ￦ 2,057,207 ￦ 2,316,301 ￦ 2,119,620 (5) Unearned interest income of financial leases as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Gross investments in financial lease ￦ 2,297,933 ￦ 2,316,301 Net lease investments: Present value of minimum lease payment receivable 2,057,207 2,119,620 Present value of unguaranteed residual value 3,764 3,852 2,060,971 2,123,472 Unearned interest income ￦ 236,962 ￦ 192,829 15. INVESTMENTS IN OPERATING LEASES (AS A LESSOR): (1) Investments in operating leases as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Acquisition cost ￦ 32,090,728 ￦ 29,980,884 Accumulated depreciation (4,262,026) (3,477,632) Accumulated impairment loss (147,168) (175,256) ￦ 27,681,534 ￦ 26,327,996 (2) Future minimum lease payment receivable related to investments in operating leases as of December 31, 2022 and December 31, 2021 is as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Not later than one year ￦ 5,001,104 ￦ 5,323,499 Later than one year and not later than five years 5,906,720 5,744,918 Later than five years 111 77 ￦ 10,907,935 ￦ 11,068,494  59 16. BORROWINGS AND DEBENTURES: (1) Short-term borrowings as of December 31, 2022 and December 31, 2021 are as follows. Description Lender Annual interest rate December 31, 2022 December 31, 2021 (%) (In millions of Korean Won) Overdrafts Citi Bank and others 1.75~3.98 ￦ 62,101 ￦ 456,044 General borrowings Korea Development Bank and others 1.93~14.60 5,277,609 3,994,073 Borrowings collateralized by trade receivables Hana Bank and others 0.00001~12.54 2,123,379 3,059,551 Banker’s Usance Hana Bank and others 0.15~9.20 705,155 786,755 Commercial paper Shinhan Bank and others 3.10~7.10 2,898,236 4,791,413 Credit facilities Korea Development Bank 2.54 300,000 - ￦ 11,366,480 ￦ 13,087,836 (2) Long-term debt as of December 31, 2022 and December 31, 2021 are as follows. Description Lender Annual interest rate December 31, 2022 December 31, 2021 (%) (In millions of Korean Won) General borrowings Mizuho Bank and others 0.12~16.80 ￦ 8,909,156 ￦ 9,738,949 Credit facilities NH Bank and others 5.85~9.13 40,200 540,600 Commercial paper BNK Investment & Securities and others 1.19~4.74 2,900,000 1,650,000 Asset-backed securities HSBC and others 1.65~5.20 6,377,616 4,136,643 Others(*) NH Investment & Securities and others 68,903 392,032 18,295,875 16,458,224 Less: present value discounts (77,686) (88,059) Less: current maturities (5,933,040) (5,702,434) ￦ 12,285,149 ￦ 10,667,731 (*) The Group transferred a portion of its voting shares to a third party with the total revenue swap agreement. However, the Group still recognizes it as the financial asset because the Group still owns the majority of the risks and rewards of ownership of the transferred shares. Also, the Group recognized the amount received from disposal as borrowings. (3) Debentures as of December 31, 2022 and December 31, 2021 are as follows. Description Latest maturity date Annual interest rate December 31, 2022 December 31, 2021 (%) (In millions of Korean Won) Non-guaranteed public debentures March 29, 2032 0.96~6.63 ￦ 33,979,495 ￦ 31,533,051 Non-guaranteed private debentures April 8, 2030 0.80~6.38 25,971,468 27,604,469 Asset-backed securities October 16, 2028 0.19~5.52 22,801,451 19,359,999 82,752,414 78,497,519 Less: discount on debentures (151,263) (162,242) Less: current maturities (19,641,091) (14,876,468) ￦ 62,960,060 ￦ 63,458,809  60 17. PROVISIONS: (1) Provisions as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Warranty ￦ 10,399,527 ￦ 9,048,185 Other long-term employee benefits 598,637 676,432 Others 1,432,417 1,154,167 ￦ 12,430,581 ￦ 10,878,784 (2) The changes in provisions for the year ended December 31, 2022 are as follows. Description Warranty (*) Other long-term employee benefits Others (In millions of Korean Won) Beginning of the year ￦ 9,048,185 ￦ 676,432 ￦ 1,154,167 Charged 4,347,523 3,900 953,430 Utilized (3,133,544) (83,682) (645,750) Effect of foreign exchange differences and others 137,363 1,987 (29,430) End of the year ￦ 10,399,527 ￦ 598,637 ￦ 1,432,417 (*) During the year ended December 31, 2022, the Group updated the measurement of warranty provisions related to the recall of theta 2 and other engines to reflect of new information and a longer period of historical claim data. The changes in provisions for the year ended December 31, 2021 are as follows. Description Warranty Other long-term employee benefits Others (In millions of Korean Won) Beginning of the year ￦ 8,514,173 ￦ 729,996 ￦ 1,126,719 Charged 2,900,638 42,595 680,707 Utilized (2,551,716) (96,713) (631,469) Effect of foreign exchange differences and others 185,090 554 (21,790) End of the year ￦ 9,048,185 ￦ 676,432 ￦ 1,154,167 18. OTHER FINANCIAL LIABILITIES: (1) Other financial liabilities as of December 31, 2022 are as follows. December 31, 2022 Description Current Non-current (In millions of Korean Won) Financial liabilities measured at FVPL ￦ 10,053 ￦ 174,386 Derivative liabilities that are effective hedging instruments 88,832 86,464 Financial Liabilities measured at amortized cost 259 1,668 ￦ 99,144 ￦ 262,518  61 (2) Other financial liabilities as of December 31, 2021 are as follows. December 31, 2021 Description Current Non-current (In millions of Korean Won) Financial liabilities measured at FVPL ￦ 674 ￦ 53,427 Derivative liabilities that are effective hedging instruments 54,365 32,705 Financial Liabilities measured at amortized cost 148 1,126 ￦ 55,187 ￦ 87,258 19. OTHER LIABILITIES: Other liabilities as of December 31, 2022 and December 31, 2021 are as follows. December 31, 2022 December 31, 2021 Description Current Non-current Current Non-current (In millions of Korean Won) Advances received ￦ 1,464,339 ￦ 67,776 ￦ 1,235,937 ￦ 42,482 Withholdings 1,056,483 223,568 968,318 197,714 Accrued expenses 3,351,822 - 2,851,174 - Unearned income 1,090,242 3,150,126 864,536 2,356,667 Due to customers for contract work 1,217,052 - 902,124 - Others 420,303 810,795 618,031 747,755 ￦ 8,600,241 ￦ 4,252,265 ￦ 7,440,120 ￦ 3,344,618 20. FINANCIAL INSTRUMENTS: (1) Financial assets by categories as of December 31, 2022 are as follows. Description Financial assets measured at FVPL Financial assets measured at amortized cost Financial assets measured at FVOCI Derivative assets that are effective hedging instruments Book value Fair value (In millions of Korean Won) Cash and cash equivalents ￦ - ￦ 20,864,879 ￦ - ￦ - ￦ 20,864,879 ￦ 20,864,879 Short-term and long- term financial instruments - 5,887,154 - - 5,887,154 5,887,154 Trade notes and accounts receivable - 4,458,838 - - 4,458,838 4,458,838 Other receivables - 2,378,968 - - 2,378,968 2,378,968 Other financial assets 5,710,346 37,898 2,839,581 1,236,696 9,824,521 9,824,521 Other assets 27,960 434,829 - - 462,789 462,789 Financial services receivables - 90,363,846 - - 90,363,846 86,705,579 ￦ 5,738,306 ￦ 124,426,412 ￦ 2,839,581 ￦ 1,236,696 ￦ 134,240,995 ￦ 130,582,728  62 Financial assets by categories as of December 31, 2021 are as follows. Description Financial assets measured at FVPL Financial assets measured at amortized cost Financial assets measured at FVOCI Derivative assets that are effective hedging instruments Book value Fair value (In millions of Korean Won) Cash and cash equivalents ￦ - ￦ 12,795,554 ￦ - ￦ - ￦ 12,795,554 ￦ 12,795,554 Short-term and long- term financial instruments - 7,255,743 - - 7,255,743 7,255,743 Trade notes and accounts receivable - 3,284,453 - - 3,284,453 3,284,453 Other receivables - 2,076,803 - - 2,076,803 2,076,803 Other financial assets 12,472,100 27,195 2,911,523 525,114 15,935,932 15,935,932 Other assets 23,568 331,353 - - 354,921 354,921 Financial services receivables - 81,029,132 - - 81,029,132 81,059,639 ￦ 12,495,668 ￦ 106,800,233 ￦ 2,911,523 ￦ 525,114 ￦ 122,732,538 ￦ 122,763,045 (2) Financial liabilities by categories as of December 31, 2022 are as follows. Description Financial liabilities measured at FVPL Financial liabilities measured at amortized cost Derivative liabilities that are effective hedging instruments Book value Fair value (In millions of Korean Won) Trade notes and accounts payable ￦ - ￦ 10,797,065 ￦ - ￦ 10,797,065 ￦ 10,797,065 Other payables - 7,292,508 - 7,292,508 7,292,508 Borrowings and debentures 27,239 112,158,581 - 112,185,820 108,603,134 Other financial liabilities 184,439 1,927 175,296 361,662 361,662 Lease liabilities - 1,110,804 - 1,110,804 1,110,804 Other liabilities - 2,960,053 - 2,960,053 2,960,053 ￦ 211,678 ￦ 134,320,938 ￦ 175,296 ￦ 134,707,912 ￦ 131,125,226 Financial liabilities by categories as of December 31, 2021 are as follows. Description Financial liabilities measured at FVPL Financial liabilities measured at amortized cost Derivative liabilities that are effective hedging instruments Book value Fair value (In millions of Korean Won) Trade notes and accounts payable ￦ - ￦ 9,155,255 ￦ - ￦ 9,155,255 ￦ 9,155,255 Other payables - 5,422,320 - 5,422,320 5,422,320 Borrowings and debentures - 107,793,278 - 107,793,278 108,112,411 Other financial liabilities 54,101 1,274 87,070 142,445 142,445 Lease liabilities - 950,572 - 950,572 950,572 Other liabilities - 2,415,891 - 2,415,891 2,415,891 ￦ 54,101 ￦ 125,738,590 ￦ 87,070 ￦ 125,879,761 ￦ 126,198,894  63 (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: Quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: 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: Inputs for the asset or liability that are not based on observable market data (unobservable inputs) Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2022 are as follows. December 31, 2022 Description Level 1 Level 2 Level 3 Total (In millions of Korean Won) Financial assets: Financial assets measured at FVPL ￦ 57,556 ￦ 5,412,130 ￦ 268,620 ￦ 5,738,306 Derivative assets that are effective hedging instruments - 1,236,696 - 1,236,696 Financial assets measured at FVOCI 1,493,627 451,990 893,964 2,839,581 ￦ 1,551,183 ￦ 7,100,816 ￦ 1,162,584 ￦ 9,814,583 Financial liabilities: Financial liabilities measured at FVPL ￦ - ￦ 11,451 ￦ 200,227 ￦ 211,678 Derivative liabilities that are effective hedging instruments - 173,361 1,935 175,296 ￦ - ￦ 184,812 ￦ 202,162 ￦ 386,974 Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2021 are as follows. December 31, 2021 Description Level 1 Level 2 Level 3 Total (In millions of Korean Won) Financial assets: Financial assets measured at FVPL ￦ 107,290 ￦ 12,226,048 ￦ 162,330 ￦ 12,495,668 Derivative assets that are effective hedging instruments - 525,114 - 525,114 Financial assets measured at FVOCI 1,561,959 435,797 913,767 2,911,523 ￦ 1,669,249 ￦ 13,186,959 ￦ 1,076,097 ￦ 15,932,305 Financial liabilities: Financial liabilities measured at FVPL ￦ - ￦ 962 ￦ 53,139 ￦ 54,101 Derivative liabilities that are effective hedging instruments - 87,070 - 87,070 ￦ - ￦ 88,032 ￦ 53,139 ￦ 141,171  64 The changes in financial instruments classified as Level 3 for the year ended December 31, 2022 are as follows. Description Beginning of the period Purchases Disposals Valuation Others End of the period (In millions of Korean Won) Financial assets measured at FVPL ￦ 162,330 ￦ 92,328 ￦ (6,107) ￦ 8,529 ￦ 11,540 ￦ 268,620 Financial assets measured at FVOCI 913,767 12,373 (874) 79,143 (110,445) 893,964 Financial liabilities measured at FVPL 53,139 29,884 - 2,169 115,035 200,227 Derivative liabilities that are effective hedging instruments - 1,935 - - - 1,935 The changes in financial instruments classified as Level 3 for the year ended December 31, 2021 are as follows. Description Beginning of the period Purchases Disposals Valuation Others End of the period (In millions of Korean Won) Financial assets measured at FVPL ￦ 515,020 ￦ 38,076 ￦ (411,334) ￦ 20,568 ￦ - ￦ 162,330 Financial assets measured at FVOCI 739,669 66,580 (2,579) 73,805 36,292 913,767 Financial liabilities measured at FVPL - 52,323 - 816 - 53,139 (4) Financial assets and liabilities subject to offsetting, and financial instruments subject to an enforceable master netting arrangement or similar agreement as of December 31, 2022 are as follows. Description Gross amounts of recognized financial assets and liabilities Gross amounts of recognized financial assets and liabilities set off in the consolidated statement of financial position Net amounts of financial assets and liabilities presented in the consolidated statement of financial position Related amounts not set off in the consolidated statement of financial position - financial instruments Related amounts not set off in the statement of financial position -collateral received (pledged) Net amounts (In millions of Korean Won) Financial assets: Trade notes and accounts receivable ￦ 4,731,300 ￦ 272,462 ￦ 4,458,838 ￦ - ￦ - ￦ 4,458,838 Other receivables 3,005,009 626,041 2,378,968 - - 2,378,968 Financial assets measured at FVPL 47,256 - 47,256 - - 47,256 Derivative assets that are effective hedging instruments (*) 1,236,696 - 1,236,696 93,233 - 1,143,463 ￦ 9,020,261 ￦ 898,503 ￦ 8,121,758 ￦ 93,233 ￦ - ￦ 8,028,525 Financial liabilities: Trade notes and accounts payable ￦ 11,418,549 ￦ 621,484 ￦ 10,797,065 ￦ - ￦ - ￦ 10,797,065 Other payables 7,569,527 277,019 7,292,508 - - 7,292,508 Financial liabilities measured at FVPL 211,678 - 211,678 - - 211,678 Derivative liabilities that are effective hedging instruments (*) 175,296 - 175,296 93,233 - 82,063 ￦ 19,375,050 ￦ 898,503 ￦ 18,476,547 ￦ 93,233 ￦ - ￦ 18,383,314 (*) 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.  65 Financial assets and liabilities, subject to offsetting, and financial instruments subject to an enforceable master netting arrangement or similar agreement as of December 31, 2021 are as follows. Description Gross amounts of recognized financial assets and liabilities Gross amounts of recognized financial assets and liabilities set off in the consolidated statement of financial position Net amounts of financial assets and liabilities presented in the consolidated statement of financial position Related amounts not set off in the consolidated statement of financial position - financial instruments Related amounts not set off in the statement of financial position -collateral received (pledged) Net amounts (In millions of Korean Won) Financial assets: Trade notes and accounts receivable ￦ 3,519,284 ￦ 234,831 ￦ 3,284,453 ￦ - ￦ - ￦ 3,284,453 Other receivables 2,573,976 497,173 2,076,803 - - 2,076,803 Financial assets measured at FVPL 14,534 - 14,534 21 - 14,513 Derivative assets that are effective hedging instruments (*) 525,114 - 525,114 18,204 - 506,910 ￦ 6,632,908 ￦ 732,004 ￦ 5,900,904 ￦ 18,225 ￦ - ￦ 5,882,679 Financial liabilities: Trade notes and accounts payable ￦ 9,640,133 ￦ 484,878 ￦ 9,155,255 ￦ - ￦ - ￦ 9,155,255 Other payables 5,669,446 247,126 5,422,320 - - 5,422,320 Financial liabilities measured at FVPL 54,101 - 54,101 21 - 54,080 Derivative liabilities that are effective hedging instruments (*) 87,070 - 87,070 18,204 - 68,866 ￦ 15,450,750 ￦ 732,004 ￦ 14,718,746 ￦ 18,225 ￦ - ￦ 14,700,521 (*) 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. (5) Interest income, dividend income and interest expenses by categories of financial instruments for the year ended December 31, 2022 are as follows. 2022 Description Interest income Dividend income Interest expenses (In millions of Korean Won) Non-financial services: Financial assets measured at amortized cost ￦ 489,133 ￦ - ￦ - Financial assets measured at FVPL 150,084 - - Financial assets measured at FVOCI - 44,533 - Financial liabilities measured at amortized cost - - 434,059 ￦ 639,217 ￦ 44,533 ￦ 434,059 Financial services: Financial assets measured at amortized cost ￦ 3,466,000 ￦ - ￦ - Financial assets measured at FVPL 5,825 1,300 - Financial assets measured at FVOCI 899 - - Financial liabilities measured at amortized cost - - 2,277,906 ￦ 3,472,724 ￦ 1,300 ￦ 2,277,906 Interest income, dividend income and interest expenses by categories of financial instruments for the year ended  66 December 31, 2021 are as follows. 2021 Description Interest income Dividend income Interest expenses (In millions of Korean Won) Non-financial services: Financial assets measured at amortized cost ￦ 248,198 ￦ - ￦ - Financial assets measured at FVPL 100,415 - - Financial assets measured at FVOCI - 28,419 - Financial liabilities measured at amortized cost - - 267,648 ￦ 348,613 ￦ 28,419 ￦ 267,648 Financial services: Financial assets measured at amortized cost ￦ 4,138,039 ￦ - ￦ - Financial assets measured at FVPL 4,040 1,721 - Financial assets measured at FVOCI 203 - - Financial liabilities measured at amortized cost - - 1,730,903 ￦ 4,142,282 ￦ 1,721 ￦ 1,730,903 (6) The commission income (financial services revenue) arising from financial assets or liabilities other than financial assets or liabilities measured at FVPL for the years ended December 31, 2022 and 2021 are ￦1,011,152 million and ￦923,656 million, respectively. In addition, the fee expenses (cost of sales from financial services) related to financial assets or liabilities other than financial assets or liabilities measured at FVPL for the years ended December 31, 2022 and 2021 are ￦427,606 million and ￦374,229 million, respectively. (7) The Group recognizes transfers between levels of the fair value hierarchy at the date of the event or change in circumstances that caused the transfer. There are no significant transfers between Level 1 and Level 2 for the year ended December 31, 2022. (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.  67 - Interest rate swap The discount rate and forward interest rate used to measure the fair value of interest rate swap 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 swap 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. - Unlisted equity securities Fair value of unlisted equity securities is measured using discounted cash flow projection and market approach, and as for discounted cash flow projections, 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, 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. - Redeemable convertible preference share The fair value of redeemable convertible preference share is measured based on the fair value, exercise price, maturity, and the stock price volatility up to the maturity of the underlying asset, using the binomial option pricing model. The discount rate used in the binomial option pricing model is applied by converting the rate of return on corporate bonds with equivalent credit rating corresponding to the remaining maturity into a continuous compounding discount rate, and the stock price volatility up to maturity uses historical volatility of proxy companies in similar industries in response to the remaining maturity. The fair value of the underlying asset is assumed to be maintained until the end of the current period after estimating the underlying asset value on the contracted date by inverting the underlying asset value inherent in the terms of the transaction on the premise that the acquisition transaction of related shares in the current period is an orderly transaction and traded at fair value. The group classifies the fair value measurement of redeemable convertible preference share as Level 3 in the fair value hierarchy based on the assumption that the effect of the above assumptions and estimates on the fair value of redeemable convertible preference share classified.  68 (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, 2022 Valuation techniques Unobservable inputs Range Description of relationship Financial assets Financial liabilities (In millions of Korean Won) Unlisted equity securities, redeemable convertible preference share and others ￦ 1,162,584 ￦ 202,162 Discounted cash flow and others Sales growth rate -8.8% ~ -2.6% If the sales growth rate, the pre-tax operating profit margin ratio and stock price volatility increases or the discount rate declines, the fair value increases. Pre-tax operating profit margin ratio 2.0% ~ 7.6% Discount rate 8.3% Stock price volatility 59.2% ~ 60.1% The Group does not expect changes in significant unobservable inputs would have a significant impact on the fair value, taking into account reasonable alternative assumptions. 21. CAPITAL STOCK: The Company’s number of shares authorized is 600,000,000 shares. Common stock and preferred stock as of December 31, 2022 and December 31, 2021 are as follows. (1) Common stock Description December 31, 2022 December 31, 2021 (In millions of Korean Won, except par value) Issued 213,668,187 shares 213,668,187 shares Par value ￦ 5,000 ￦ 5,000 Capital stock 1,157,982 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 Dividend rate (In millions of Korean Won) 1st preferred stock ￦ 5,000 24,356,685 shares ￦ 125,550 Dividend rate of common stock + 1% 2nd preferred stock ˝ 36,485,451 shares 193,069 The lowest stimulated dividend rate: 2% 3rd preferred stock ˝ 2,428,735 shares 12,392 The lowest stimulated dividend rate: 1% 63,270,871 shares ￦ 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.  69 22. CAPITAL SURPLUS: Capital surplus as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Paid-in capital in excess of par value ￦ 3,321,334 ￦ 3,321,334 Others(*) 919,969 748,926 ￦ 4,241,303 ￦ 4,070,260 (*) During the year ended December 31, 2022, the Group disposed of 2,216,983 shares of treasury stocks through treasury stock exchange with KT Corporation, and recognized gain on disposal of treasury stocks in the amount of ￦118,686 million. 23. OTHER CAPITAL ITEMS: Other capital items consist of treasury stocks purchased for the stabilization of stock price. Number of treasury stocks as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (Number of shares) Common stock 11,408,711 14,048,242 1st preferred stock 2,430,559 2,333,133 2nd preferred stock 1,718,424 1,572,482 3rd preferred stock 72,861 63,146 24. ACCUMULATED OTHER COMPREHENSIVE LOSS: (1) Accumulated other comprehensive loss as of December 31, 2022 is as follows. Description December 31, 2022 (In millions of Korean Won) Gain on valuation of financial assets measured at FVOCI ￦ 418,986 Loss on valuation of financial assets measured at FVOCI (768,117) Gain on valuation of cash flow hedge derivatives 276,938 Loss on valuation of cash flow hedge derivatives (93,162) Gain on share of the other comprehensive income of equity-accounted investees 195,912 Loss on share of the other comprehensive income of equity-accounted investees (715,558) Loss on foreign operations translation, net (935,681) ￦ (1,620,682)  70 (2) Accumulated other comprehensive loss as of December 31, 2021 is as follows. Description December 31, 2021 (In millions of Korean Won) Gain on valuation of financial assets measured at FVOCI ￦ 451,693 Loss on valuation of financial assets measured at FVOCI (370,812) Gain on valuation of cash flow hedge derivatives 56,048 Loss on valuation of cash flow hedge derivatives (42,068) Gain on share of the other comprehensive income of equity-accounted investees 228,299 Loss on share of the other comprehensive income of equity-accounted investees (587,620) Loss on foreign operations translation, net (1,508,141) ￦ (1,772,601) 25. RETAINED EARNINGS: (1) Retained earnings as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31,2021 (In millions of Korean Won) Legal reserve (*) ￦ 744,836 ￦ 744,836 Discretionary reserve 47,307,996 47,701,296 Unappropriated 31,900,769 24,721,723 ￦ 79,953,601 ￦ 73,167,855 (*) 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 pursuant to the Asset Revaluation Law of Korea are included in retained earnings. It may be only transferred to capital stock or used to reduce accumulated deficit, if any. (2) The computation of the interim dividends for the year ended December 31, 2022 is as follows. Description Common stock 1st Preferred stock 2nd Preferred stock 3rd Preferred stock (In millions of Korean Won, except per share amounts) Par value per share ￦ 5,000 ￦ 5,000 ￦ 5,000 ￦ 5,000 Shares, net of treasury stocks 198,765,273 21,926,126 34,767,027 2,355,874 Dividends per share ￦ 1,000 ￦ 1,000 ￦ 1,000 ￦ 1,000 Dividend rate 20% 20% 20% 20% Dividends declared 198,764 21,926 34,767 2,356 The computation of the interim dividends for the year ended December 31, 2021 is as follows. Description Common stock 1st Preferred stock 2nd Preferred stock 3rd Preferred stock (In millions of Korean Won, except per share amounts) Par value per share ￦ 5,000 ￦ 5,000 ￦ 5,000 ￦ 5,000 Shares, net of treasury stocks 200,576,769 22,169,692 35,131,881 2,380,161 Dividends per share ￦ 1,000 ￦ 1,000 ￦ 1,000 ￦ 1,000 Dividend rate 20% 20% 20% 20% Dividends declared 200,577 22,170 35,132 2,380  71 (3) The computation of the proposed dividends for the year ended December 31, 2022 is as follows. Description Common stock 1st Preferred stock 2nd Preferred stock 3rd Preferred stock (In millions of Korean Won, except per share amounts) Par value per share ￦ 5,000 ￦ 5,000 ￦ 5,000 ￦ 5,000 Shares, net of treasury stocks 202,259,476 21,926,126 34,767,027 2,355,874 Dividends per share ￦ 6,000 ￦ 6,050 ￦ 6,100 ￦ 6,050 Dividend rate 120% 121% 122% 121% Dividends declared 1,213,557 132,653 212,079 14,253 The computation of the dividends for the year ended December 31, 2021 is as follows. Description Common stock 1st Preferred stock 2nd Preferred stock 3rd Preferred stock (In millions of Korean Won, except per share amounts) Par value per share ￦ 5,000 ￦ 5,000 ￦ 5,000 ￦ 5,000 Shares, net of treasury stocks 199,619,945 22,023,552 34,912,969 2,365,589 Dividends per share ￦ 4,000 ￦ 4,050 ￦ 4,100 ￦ 4,050 Dividend rate 80% 81% 82% 81% Dividends declared 798,480 89,195 143,143 9,581 26. 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, 2022, hybrid bond is as follows. Description Issue date Maturity date Annual interest rate December 31, 2022 (%) (In millions of Korean Won) The 731st Hybrid Tier 1 (Private) July 5, 2018 July 5, 2048 4.70 ￦ 300,000 Issue cost (760) ￦ 299,240 (2) As of December 31, 2022, the conditions of hybrid bond that HYUNDAI CARD CO., LTD., a subsidiary of the Company issued are as follows. Description Maturity Thirty years (Maturity extension is possible according to the issuer's decision upon maturity) Interest rate Issue date ~ July 5, 2023 : An annual fixed interest rate 4.7% Increase of 2% after five years which is limited to one time only in accordance with Step-up clause Interest payment condition Three months, optional postponement of payment Others Repayment before maturity by issuer is available after five years from issue date  72 27. SALES: (1) Sales for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Sales of goods ￦ 121,128,808 ￦ 99,722,885 Rendering of services 3,577,155 2,624,047 Royalties 252,904 276,564 Financial services revenue 13,764,122 11,536,970 Revenue related to construction contracts 3,099,326 2,814,036 Others 705,220 636,124 ￦ 142,527,535 ￦ 117,610,626 (2) As of December 31, 2022, the aggregate transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligation that is expected to be recognized as revenue in future periods is as follows. Description Within a year After a year (In millions of Korean Won) Deferred revenue and others ￦ 2,016,748 ￦ 3,079,984 28. SELLING AND ADMINISTRATIVE EXPENSES: Selling and administrative expenses for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Selling expenses: Export expenses ￦ 78,842 ￦ 46,057 Overseas market expenses 443,923 412,476 Advertisements and sales promotion 3,102,616 2,609,784 Sales commissions 909,093 983,949 Expenses for warranties 4,346,694 2,947,290 Transportation expenses 101,995 116,035 8,983,163 7,115,591 Administrative expenses: Payroll 3,265,946 2,882,164 Post-employment benefits 173,367 177,845 Welfare expenses 550,396 496,461 Service charges 1,682,831 1,529,151 Research 1,762,749 1,534,993 Others 2,079,831 1,515,341 9,515,120 8,135,955 ￦ 18,498,283 ￦ 15,251,546 29. GAIN(LOSS) ON INVESTMENTS IN JOINT VENTURES AND ASSOCIATES: Gain(loss) on investments in joint ventures and associates for the years ended December 31, 2022 and 2021 is as follows. Description 2022 2021 (In millions of Korean Won) Gain on share of earnings of equity-accounted investees, net ￦ 1,635,777 ￦ 1,278,591 Gain on disposals of investments in associates 63,992 38,106 Impairment loss on investments in associates (143,186) (13,332) ￦ 1,556,583 ￦ 1,303,365  73 30. FINANCE INCOME AND EXPENSES: (1) Finance income for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Interest income ￦ 639,217 ￦ 348,613 Gain on foreign exchange transactions 146,066 62,003 Gain on foreign currency translation 333,849 162,811 Dividend income 44,533 28,419 Gain on derivatives 18,689 89,522 Others 36,459 221,434 ￦ 1,218,813 ￦ 912,802 (2) Finance expenses for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Interest expenses ￦ 536,086 ￦ 304,542 Loss on foreign exchange transactions 77,799 54,622 Loss on foreign currency translation 416,846 182,233 Loss on derivatives and others 23,497 7,013 ￦ 1,054,228 ￦ 548,410 31. OTHER INCOME AND EXPENSES: (1) Other income for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Gain on foreign exchange transactions ￦ 827,960 ￦ 624,884 Gain on foreign currency translation 688,119 220,468 Gain on disposals of PP&E 49,442 23,978 Commission income 18,335 22,716 Rental income 97,905 94,528 Others 575,352 460,687 ￦ 2,257,113 ￦ 1,447,261 (2) Other expenses for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Loss on foreign exchange transactions ￦ 738,469 ￦ 527,878 Loss on foreign currency translation 814,458 231,859 Loss on disposals of PP&E 177,132 57,899 Donations 89,984 66,249 Others 1,030,064 950,520 ￦ 2,850,107 ￦ 1,834,405  74 32. EXPENSES BY NATURE: Expenses by nature for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Changes in inventories ￦ (1,677,346) ￦ 434,257 Raw materials and merchandise used 80,774,363 67,579,441 Employee benefits 10,667,028 9,613,599 Depreciation 3,180,687 2,937,914 Amortization 1,866,935 1,617,823 Others 40,746,206 30,583,048 Total (*) ￦ 135,557,873 ￦ 112,766,082 (*) Sum of cost of sales, selling and administrative expenses and other expenses in the consolidated statements of income. 33. 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, 2022 and 2021, since there are no dilutive items during the years. Basic earnings per common stock and preferred stock for the years ended December 31, 2022 and 2021 are computed as follows. For the year ended December 31, 2022 For the year ended December 31, 2021 Description Profit attributable to share Weighted-average number of shares outstanding (*1) Basic earnings per share Profit attributable to share Weighted-average number of shares outstanding (*1) Basic earnings per share (In millions of Korean Won, except per share amounts) Common stock ￦ 5,696,576 199,735,258 ￦ 28,521 ￦ 3,806,754 200,578,742 ￦ 18,979 1st Preferred stock (*2) 618,639 21,932,141 28,207 421,090 22,160,384 19,002 2nd Preferred stock 982,679 34,775,916 28,257 669,282 35,117,788 19,058 3rd Preferred stock 66,470 2,356,491 28,207 45,230 2,379,240 19,010 (*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’. 34. INCOME TAX EXPENSE: (1) The components of income tax expense for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Current tax expense ￦ 2,705,459 ￦ 1,816,699 Adjustments recognized in the current year in relation to the prior years 66,052 (274,525) Changes in deferred taxes relating to Temporary differences (623,348) 1,718,022 Tax losses and tax credits 949,285 (683,646) Items that are charged or credited directly to equity (186,176) (104,461) Effect of foreign exchange differences and others 53,057 (205,604) Income tax expense ￦ 2,964,329 ￦ 2,266,485  75 (2) The reconciliation from profit before income tax to income tax expense for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Profit before income tax ￦ 10,947,943 ￦ 7,959,562 Income tax expense calculated at the applicable tax rates of 27.2% in 2022 and 21.4% in 2021 2,973,667 1,699,706 Adjustments: Non-taxable income (91,601) (100,314) Non-deductible expenses 399,296 261,172 Tax credits (528,986) (429,012) Others 211,953 834,933 (9,338) 566,779 Income tax expense ￦ 2,964,329 ￦ 2,266,485 Effective tax rate 27.1% 28.5% (3) The changes in deferred tax assets (liabilities) for the year ended December 31, 2022 are as follows. Description Beginning of the year Changes End of the year (In millions of Korean Won) Provisions ￦ 2,824,209 ￦ 451,449 ￦ 3,275,658 Financial assets measured at FVPL 1,231 308 1,539 Financial assets measured at FVOCI (121,184) 113,194 (7,990) Investment of subsidiaries, associates and joint ventures (1,578,133) (418,369) (1,996,502) Derivatives (1,516) (93,536) (95,052) PP&E (5,861,743) 60,309 (5,801,434) Accrued income (15,840) (2,927) (18,767) Gain (loss) on foreign currency translation, net (136) (197) (333) Others (42,945) 513,117 470,172 (4,796,057) 623,348 (4,172,709) Carryforward of tax losses and tax credits 3,331,562 (949,285) 2,382,277 ￦ (1,464,495) ￦ (325,937) ￦ (1,790,432) The changes in deferred tax assets (liabilities) for the year ended December 31, 2021 are as follows. Description Beginning of the year Changes End of the year (In millions of Korean Won) Provisions ￦ 2,713,730 ￦ 110,479 ￦ 2,824,209 Financial assets measured at FVPL 1,795 (564) 1,231 Financial assets measured at FVOCI (137,271) 16,087 (121,184) Investment of subsidiaries, associates and joint ventures (1,516,729) (61,404) (1,578,133) Derivatives (45,697) 44,181 (1,516) PP&E (5,058,726) (803,017) (5,861,743) Accrued income 61,186 (77,026) (15,840) Gain (loss) on foreign currency translation, net 431 (567) (136) Others 903,246 (946,191) (42,945) (3,078,035) (1,718,022) (4,796,057) Carryforward of tax losses and tax credits 2,647,916 683,646 3,331,562 ￦ (430,119) ￦ (1,034,376) ￦ (1,464,495)  76 (4) Income taxes relating to items that are charged or credited directly to equity for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Gain on disposal of treasury stocks ￦ (66,131) ￦ (9,451) Loss (gain) on financial assets measured at FVOCI, net 97,671 (32,147) Loss (gain) on valuation of cash flow hedge derivatives, net (78,505) 5,848 Remeasurements of defined benefit plans (152,166) (64,906) Changes in retained earnings of equity-accounted investees, net 12,955 (3,805) ￦ (186,176) ￦ (104,461) (5) The amount of temporary differences associated with investments in subsidiaries, joint ventures and associates, for which deferred tax liabilities are not recognized, are ￦ 8,948,716 million and ￦ 5,644,375 million as of December 31, 2022 and 2021, respectively. 35. RETIREMENT BENEFIT PLAN: (1) Expenses recognized in relation to defined contribution plans for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Paid-in cash ￦ 14,377 ￦ 11,650 Recognized liability 4,754 3,320 ￦ 19,131 ￦ 14,970 (2) The significant actuarial assumptions used by the Group as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 Discount rate (*) 5.29% 3.84% Rate of expected future salary increase 4.05% 4.51% (*) The Group applied the market yields of high-quality corporate bonds (AA+) and others as the discount rate at December 31, 2022, to discount the defined benefit obligation to the present value, and the same discount rate was applied as the expected return rate when calculating interest income on plan assets. 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, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Present value of defined benefit obligations ￦ 6,033,698 ￦ 6,580,593 Fair value of plan assets (6,809,339) (6,721,149) ￦ (775,641) ￦ (140,556) Net defined benefit liabilities 61,861 79,165 Net defined benefit assets (837,502) (219,721)  77 (4) Changes in net defined benefit assets and liabilities for the year ended December 31, 2022 are as follows. Description Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities (In millions of Korean Won) Beginning of the year ￦ 6,580,593 ￦ (6,721,149) ￦ (140,556) Current service cost 575,608 - 575,608 Interest expenses (income) 173,934 (185,313) (11,379) Past service cost (33) - (33) 7,330,102 (6,906,462) 423,640 Remeasurements: Return on plan assets - 168,474 168,474 Actuarial gains and losses arising from changes in demographic assumptions 255,197 - 255,197 Actuarial gains and losses arising from changes in financial assumptions (1,002,183) - (1,002,183) Actuarial gains and losses arising from experience adjustments and others 35,038 - 35,038 (711,948) 168,474 (543,474) Contributions - (584,701) (584,701) Benefits paid (583,748) 483,747 (100,001) Transfers in (out) 1,946 (1,454) 492 Effect of foreign exchange differences and others (2,654) 31,057 28,403 End of the year ￦ 6,033,698 ￦ (6,809,339) ￦ (775,641) Changes in net defined benefit assets and liabilities for the year ended December 31, 2021 are as follows. Description Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities (In millions of Korean Won) Beginning of the year ￦ 6,490,583 ￦ (6,253,299) ￦ 237,284 Current service cost 598,231 - 598,231 Interest expenses (income) 140,222 (139,588) 634 Past service cost 221 - 221 7,229,257 (6,392,887) 836,370 Remeasurements: Return on plan assets - (1,247) (1,247) Actuarial gains and losses arising from changes in demographic assumptions 2,573 - 2,573 Actuarial gains and losses arising from changes in financial assumptions (259,343) - (259,343) Actuarial gains and losses arising from experience adjustments and others 17,719 - 17,719 (239,051) (1,247) (240,298) Contributions - (689,687) (689,687) Benefits paid (447,857) 367,927 (79,930) Transfers in (out) 2,721 (1,605) 1,116 Effect of foreign exchange differences and others 35,523 (3,650) 31,873 End of the year ￦ 6,580,593 ￦ (6,721,149) ￦ (140,556)  78 (5) The sensitivity analysis based on reasonably possible changes of the significant assumptions as of December 31, 2022 and December 31, 2021, while all the other assumptions are retained, are as follows. Effect on the net defined benefit liabilities December 31, 2022 December 31, 2021 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 ￦ (367,700) ￦ 419,353 ￦ (486,472) ￦ 542,497 Rate of expected future salary increase 400,804 (360,074) 492,651 (457,048) (6) The fair value of the plan assets as of December 31, 2022 and December 31, 2021 is as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Insurance instruments ￦ 6,806,690 ￦ 6,717,877 Others 2,649 3,272 ￦ 6,809,339 ￦ 6,721,149 (7) The Group expects to pay contribution of approximately ￦ 546,548 million to the plan in 2023 and the weighted average duration of the defined benefit obligation as of December 31, 2022 is 7.8 years.  79 36. CASH GENERATED FROM OPERATIONS: (1) Cash generated from operations for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Profit for the year ￦ 7,983,614 ￦ 5,693,077 Adjustments: Retirement benefit costs 568,950 602,406 Depreciation 3,180,687 2,937,914 Amortization of intangible assets 1,866,935 1,617,823 Provision for warranties 4,007,458 2,678,950 Income tax expense 2,964,329 2,266,485 Loss on foreign currency translation, net 249,758 30,813 Loss on disposals of PP&E, net 127,690 33,921 Interest income, net (103,131) (44,071) Gain on share of earnings of equity-accounted investees, net (1,635,777) (1,278,591) Cost of sales from financial services, net 7,439,938 6,229,723 Impairment loss on investments in associates 143,186 13,332 Others 1,445,915 688,884 20,255,938 15,777,589 Changes in operating assets and liabilities: Decrease (increase) in trade notes and accounts receivable (1,325,728) 280,750 Increase in other receivables 622,992 (161,098) Decrease (increase) in other financial assets 1,423,023 237,835 Decrease (increase) in inventories (2,721,100) 177,234 Increase in other assets (83,879) (381,923) Increase in trade notes and accounts payable 1,146,082 555,739 Increase in other payables 2,186,971 13,702 Increase in other liabilities 2,086,192 1,057,959 Decrease in other financial liabilities (1,597) (11,583) Decrease in net defined benefit liabilities (573,780) (678,416) Payment of severance benefits (100,001) (79,930) Decrease in provisions (3,796,018) (3,261,759) Changes in financial services receivables (8,457,539) (9,551,305) Investment in operating leases (4,689,798) (7,649,654) Others 361,523 (835,327) (13,922,657) (20,287,776) Cash generated from operations ￦ 14,316,895 ￦ 1,182,890 (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, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Reclassification of the current portion of long-term debt and debentures ￦ 24,891,478 ￦ 21,149,425 Reclassification of construction-in-progress to PP&E 3,525,985 3,843,940 Reclassification of construction-in-progress to intangible assets 186,210 123,107  80 (3) Changes in liabilities arising from financial activities for the year ended December 31, 2022 are as follows. Changes from non-cash transactions Description Beginning of the year Cash flows from financing activities Reclassified to current portion Effect of exchange rate changes Present value discounts Others(*) End of the year (In millions of Korean Won) Short-term borrowings (including current portion) ￦ 33,666,738 ￦ (22,985,947) ￦ 24,891,478 ￦ 684,515 ￦ 56,738 ￦ 627,089 ￦ 36,940,611 Long-term debts 10,667,731 6,925,739 (5,432,473) 115,999 7,656 497 12,285,149 Debentures 63,458,809 16,381,780 (19,459,005) 2,524,323 18,593 35,560 62,960,060 (*) Others include transfers from or to other accounts and others. Changes in liabilities arising from financial activities for the year ended December 31, 2021 are as follows. Changes from non-cash transactions Description Beginning of the year Cash flows from financing activities Reclassified to current portion Effect of exchange rate changes Present value discounts Others(*) End of the year (In millions of Korean Won) Short-term borrowings (including current portion) ￦ 29,884,675 ￦ (19,812,277) ￦ 21,149,425 ￦ 1,649,562 ￦ 18,765 ￦ 776,588 ￦ 33,666,738 Long-term debts 12,726,724 3,853,657 (6,285,807) 338,631 10,831 23,695 10,667,731 Debentures 48,795,361 26,862,597 (14,863,618) 2,536,702 23,103 104,664 63,458,809 (*) Others include transfers from or to other accounts and others. 37. 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, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Total liabilities ￦ 164,845,917 ￦ 151,330,626 Total equity 90,896,545 82,615,789 Debt-to-equity ratio 181.4% 183.2% (2) Financial risk management The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and 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.  81 1) Market risk The Group is mainly exposed to financial risks arising from changes in foreign exchange rates and interest rates. Accordingly, the Group uses financial derivative contracts to hedge and to manage its interest rate risk and foreign currency risk. a) Foreign exchange risk management The Group is exposed to various foreign exchange risks by making transactions in foreign currencies. The Group is mainly exposed to foreign exchange risk in USD, EUR, JPY and others. 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. Sensitivity analysis for a 5% change in exchange rate of the functional currency against each foreign currency on profit before income tax as of December 31, 2022 is as follows. Foreign Exchange Rate Sensitivity Foreign Currency Increase by 5% Decrease by 5% (In millions of Korean Won) USD ￦ 111,585 ￦ (111,585) EUR 20,435 (20,435) JPY (3,585) 3,585 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. Sensitivity analysis for a 1% change in interest rates on profit before income tax as of December 31, 2022 is as follows. Interest Rate Sensitivity Accounts Increase by 1% Decrease by 1% (In millions of Korean Won) Cash and cash equivalents ￦ 35,897 ￦ (35,897) Financial assets measured at FVPL 1,644 (1,644) Short-term and long-term financial instruments 15,584 (15,584) Borrowings and debentures (99,610) 99,610 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, 2022 and December 31, 2021, the amounts of interest rate risk measured at VaR are ￦135,241 million and ￦182,864 million, respectively. c) Price risk The Group is exposed to market price fluctuation risk arising from equity instruments. As of December 31, 2022, the amounts of financial assets measured at FVPL and financial assets measured at FVOCI are ￦57,556 million and ￦2,340,388 million, respectively.  82 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 39, the book value of financial assets in the consolidated financial statements represents the maximum amounts of exposure to credit risk. In addition, the Company’s subsidiaries, HYUNDAI CARD CO., LTD. and HYUNDAI CAPITAL SERVICES, INC., that are operating financial business, assesses their credit stability according to their internal credit ratings and manage credit risk concentrations by debtor. As of December 31, 2022, credit risk concentrations are 87% for households and 13% for companies. 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. The Group retains an appropriate level of deposit to cope with uncertainty caused by the inherent nature of the industry which is sensitive to economic fluctuation and to invest in R&D constantly. In addition, the Group has agreements with financial institutions related to trade financing and overdraft to mitigate any significant unexpected market deterioration. Also, the Group 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, 2022 is as follows. Remaining contract period Description Not later than one year Later than one year and not later than five years Later than five years Total (In millions of Korean Won) Non-interest-bearing liabilities ￦ 20,918,523 ￦ 57,047 ￦ - ￦ 20,975,570 Interest-bearing liabilities 40,215,791 72,730,956 7,184,077 120,130,824 Financial guarantee 270,448 62,968 88,284 421,700 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 currency forwards, currency options, currency swaps and interest swaps to hedge its exposure to changes in foreign exchange rate or interest rate. As of December 31, 2022 and December 31, 2021, the Group recognized an accumulative net profit of ￦183,776 million and net profit of ￦13,980 million, respectively, in accumulated other comprehensive profit or loss, for effective cash flow hedging instruments. The longest period in which the forecasted transactions are expected to occur is within 111 months as of December 31, 2022. For the years ended December 31, 2022 and 2021, the Group recognized a net profit of ￦391,801 million and net loss of ￦675,508 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 and others.  83 In addition, the Company’s subsidiaries, HYUNDAI CARD CO., LTD. and HYUNDAI CAPITAL SERVICES, INC., that are engaged in financial services business, use interest rate swaps and currency swaps to hedge the risks of future cash flows, which related to borrowings, debentures and others, due to market interest rate fluctuations and exchange rate fluctuations. As of December 31, 2022, the average hedge ratio is 100%. 38. RELATED-PARTY AND OTHER 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, 2022, significant transactions arising from operations between the Group and related parties or affiliates by the Monopoly Regulation and Fair Trade Act of the Republic of Korea (“the Act”) are as follows. Description Sales/proceeds Purchases/expenses Sales Others Purchases Others (In millions of Korean Won) Entity with significant influence over the Company and its subsidiaries Hyundai MOBIS Co., Ltd. ￦ 617,886 ￦ 15,569 ￦ 12,246,389 ￦ 74,457 Mobis Alabama, LLC 175,677 152 1,952,641 6,392 Mobis Automotive Czech s.r.o. 88 745 2,441,059 24,371 Mobis India, Ltd. 15,783 3,237 1,310,317 3,340 Mobis Parts America, LLC 173,649 4,140 1,528,014 825 Mobis Module CIS, LLC. 67 376 88,339 2,791 Mobis Parts Europe N.V. 18,037 1,993 622,583 1,064 Others 68,863 1,480 1,499,679 9,582 Joint ventures and associates Kia Corporation 1,344,334 781,710 576,677 749,322 Kia Russia & CIS, LLC 236,563 7 29 - Kia Slovakia s.r.o.. 106,675 338 706,944 1,751 Kia Georgia, Inc. 850,880 1,017 42 - BHMC 243,336 - 28,184 - HMGC 27,747 1,773 44,864 52,023 Hyundai WIA Corporation 119,339 913 1,039,973 10,837 Others 838,127 65,143 5,922,155 2,079,207 Other related parties 21,567 3,755 2,531 7 Affiliates by the Act 838,319 121,880 10,962,515 1,152,633  84 For the year ended December 31, 2021, significant transactions arising from operations between the Group and related parties or affiliates by the Act are as follows. Description Sales/proceeds Purchases/expenses Sales Others Purchases Others (In millions of Korean Won) Entity with significant influence over the Company and its subsidiaries Hyundai MOBIS Co., Ltd. ￦ 546,326 ￦ 141,828 ￦ 9,189,407 ￦ 80,346 Mobis Alabama, LLC 200,423 58 1,296,680 47,303 Mobis Automotive Czech s.r.o. 11 501 1,948,940 12,268 Mobis India, Ltd. 12,150 2,664 1,060,774 2,263 Mobis Parts America, LLC 111,115 3,564 1,067,076 1,140 Mobis Module CIS, LLC. 31 315 419,772 31 Mobis Parts Europe N.V. 16,986 1,450 473,989 746 Others 62,109 1,788 1,120,565 8,564 Joint ventures and associates Kia Corporation 1,167,895 726,215 732,297 786,682 Kia Russia & CIS, LLC 994,790 112 - - Kia Slovakia s.r.o.. 97,731 281 671,653 4 Kia Georgia, Inc. 617,122 1,518 292 - BHMC 321,700 - 115,309 18,080 HMGC 37,287 1,299 103,139 63,877 Hyundai WIA Corporation 135,431 1,605 1,280,719 14,515 Others 728,094 64,383 4,505,972 1,816,502 Other related parties 16,780 14,627 3,927 6 Affiliates by the Act 769,822 118,065 8,566,617 922,130 (2) As of December 31, 2022, 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 Trade notes and accounts payable Other payables and others (In millions of Korean Won) Entity with significant influence over the Company and its subsidiaries Hyundai MOBIS Co., Ltd. ￦ 112,072 ￦ 186,427 ￦ 2,631,460 ￦ 453,605 Mobis Alabama, LLC 22,829 - 148,988 411 Mobis Automotive Czech s.r.o. - 9,924 240,666 - Mobis India, Ltd. - 1,462 176,609 22 Mobis Parts America, LLC 19,635 95 113,577 - Mobis Module CIS, LLC - 71 804 - Mobis Parts Europe N.V. 359 1,328 49,254 - Others 21,772 949 115,791 6,847 Joint ventures and associates Kia Corporation 483,663 383,401 103,109 111,663 Kia Russia & CIS, LLC 4 24 - - Kia Slovakia s.r.o. 6,018 163 55,100 319 Kia Georgia, Inc. 59,925 33,682 - 30,404 Kia America, Inc. - 10,568 - 19,943 BHMC 272,134 14,411 - 57 HMGC 7,738 23,734 5,133 23,306 Hyundai WIA Corporation 33,157 7,449 171,098 28,850 Others 169,169 125,220 699,974 1,058,827 Other related parties 1,742 44 13 344 Affiliates by the Act 181,415 68,799 1,242,171 423,944 (*1) The Group has recognized the loss allowance for the related parties' receivables in the amount of ￦958 million as of December 31, 2022 and the impairment loss is recognized in the amount of ￦749 million for the year ended December 31, 2022. (*2) As of December 31, 2022, outstanding payment of ￦23,592 million of corporate purchase card agreement provided by HYUNDAI CARD CO., LTD. is included. For the year ended December 31, 2022, amount used and repayment of agreement are ￦426,510 million and ￦425,013 million, respectively.  85 As of December 31, 2021, 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 Trade notes and accounts payable Other payables and others (In millions of Korean Won) Entity with significant influence over the Company and its subsidiaries Hyundai MOBIS Co., Ltd. ￦ 92,116 ￦ 301,436 ￦ 1,687,603 ￦ 466,862 Mobis Alabama, LLC 14,344 - 108,355 - Mobis Automotive Czech s.r.o. - 901 194,217 - Mobis India, Ltd. 1,370 18 123,770 5 Mobis Parts America, LLC 31,309 62 101,750 - Mobis Module CIS, LLC 15 37 50,666 - Mobis Parts Europe N.V. 550 118 47,095 18 Others 11,339 491 101,671 6,947 Joint ventures and associates Kia Corporation 328,668 335,571 84,505 121,814 Kia Russia & CIS, LLC 134,733 48 - - Kia Slovakia s.r.o. 6,832 279 46,186 205 Kia Georgia, Inc. 91,109 64,378 11,120 96,639 Kia America, Inc. - 149,910 9 - BHMC 199,426 13,626 12,344 414 HMGC 6,019 21,752 4,479 37,996 Hyundai WIA Corporation 31,147 920 185,022 28,048 Others 209,556 69,666 679,046 920,138 Other related parties 80 710 52 - Affiliates by the Act 154,455 61,484 905,856 351,422 (*1) The Group has recognized the loss allowance for the related parties' receivables in the amount of ￦209 million as of December 31, 2021 and the reversal of impairment loss is recognized in the amount of ￦56 million for the year ended December 31, 2021. (*2) As of December 31, 2021, outstanding payment of ￦22,096 million of corporate purchase card agreement provided by HYUNDAI CARD CO., LTD. is included. For the year ended December 31, 2021, amount used and repayment of agreement are ￦383,299 million and ￦406,133 million, respectively. (3) Significant fund transactions and equity contribution transactions for the year ended December 31, 2022, between the Group and related parties are as follows. Loans Borrowings Equity Description Lending Collection Borrowing Repayment contribution (In thousands of USD Dollar and Chinese Yuan, In millions of Korean won) Joint ventures and associates ￥ 15,000 - $ 612,000 $ 600,000 ￦ 2,002,648 ￦ 520 ￦ 4,252 Significant fund transactions and equity contribution transactions for the year ended December 31, 2021, between the Group and related parties are as follows. Loans Borrowings Equity Description Lending Collection Borrowing Repayment contribution (In millions of Korean won) Joint ventures and associates - - ￦ 7,600 ￦ 313,720 For the years ended December 31, 2022 and 2021, the Group received dividends of ￦503,634 million and ￦209,957 million from related parties and affiliates by the Act, respectively and paid dividends of ￦349,958 million and ￦322,421 million to related parties, respectively. During 2022, the Group traded in other financial assets and others of ￦1,710,000 million with HYUNDAI MOTOR SECURITIES Co., Ltd., an associate of the Group. The Group has other financial assets of ￦315,000 million in the consolidated statement of financial position as of December 31, 2022.  86 For the year ended December 31, 2021, HYUNDAI MOTOR SECURITIES CO., Ltd., an associate of the Group, acquired bonds issued by the consolidated entities, HYUNDAI CAPITAL SERVICES, INC. and HYUNDAI CARD CO., LTD. in amount of ￦10,000 million and ￦20,000 million respectively, and there are no acquired bonds for the year ended December 31, 2022. (4) Compensation of registered and unregistered directors, who are considered to be the key management personnel for the years ended December 31, 2022 and 2021 are as follows. Description 2022 2021 (In millions of Korean Won) Short-term employee salaries ￦ 348,368 ￦ 296,733 Retirement benefit costs 53,146 48,906 Other long-term benefits 1,289 1,209 ￦ 402,803 ￦ 346,848 (5) For the year ended December 31, 2022, the Group offer payment guarantee to related parties and affiliates by the Act. 39. COMMITMENTS AND CONTINGENCIES: (1) As of December 31, 2022, the debt guarantees provided by the Group, excluding the ones provided to the Company’s subsidiaries are as follows. Description Domestic Overseas (*) (In millions of Korean Won) To associates ￦ 28,910 ￦ 211,491 To others 3,558 209,224 ￦ 32,468 ￦ 420,715 (*) 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, 2022. (2) As of December 31, 2022, 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. In addition, as of December 31, 2022, the Group is under investigation by related authorities in relation to the theta 2 engine recall and others, and its results and impacts are unpredictable. The Group is unable to estimate the outcome of the lawsuits and the amount and timing of outflows of resources are uncertain. The Group does not expect the impact on the consolidated financial statements to be significant. (3) As of December 31, 2022, a substantial portion of the Group’s PP&E is pledged as collateral for various loans and leasehold deposits up to ￦782,803 million. In addition, the Group pledged certain bank deposits, checks and promissory notes, including 213,466 shares of Kia 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, 2022, 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 30,000 million, and ￦5,985,200 million. (5) As of December 31, 2022, 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. (6) As of December 31, 2022, the Company has a shareholder agreement with investors of 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.  87 (7) In December 2019, the Company entered into an agreement to invest ￦1,408,220 million in the construction of new Global Business Centre (GBC). As of December 31, 2022, the Company has recognized relevant liability in the amount of ￦921,278 million in accordance with the agreement with the Seoul government to implement public contributions relating to the new construction project. (8) Financial instruments with restricted use for the years ended December 31, 2022 and 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Short-term and long-term financial instruments ￦ 1,464,888 ￦ 1,694,904 Cash and cash equivalents 631,954 225,731 Other financial assets 2 2 ￦ 2,096,844 ￦ 1,920,637 40. SEGMENT INFORMATION: (1) The Group operating segments include vehicle segment, finance segment and others segment. The vehicle segment is engaged in the manufacturing and sale of motor vehicles. The finance segment operates vehicle financing, credit card processing and other financing activities. Others segment includes the R&D, train manufacturing and other activities. (2) Sales and operating profit by operating segments for the years ended December 31, 2022 and 2021 are as follows. For the year ended December 31, 2022 (*1) Operating profit of the vehicle segment include internal transaction adjustments. (*2) Net sales represent sales from external customers. For the year ended December 31, 2021 Vehicle (*1) Finance Others Total (In millions of Korean Won) Net sales (*2) ￦ 94,143,019 ￦ 16,782,412 ￦ 6,685,195 ￦ 117,610,626 Operating profit 4,155,765 2,195,377 327,807 6,678,949 Inter-company sales (52,033,375) (318,479) (1,352,273) (53,704,127) (*1) Operating profit of the vehicle segment include internal transaction adjustments. (*2) Net sales represent sales from external customers. (3) Assets and liabilities by operating segments as of December 31, 2022 are as follows. December 31, 2022 Vehicle Finance Others Consolidation adjustments Total (In millions of Korean Won) Total assets ￦ 133,885,205 ￦ 135,124,336 ￦ 9,793,550 ￦ (23,060,629) ￦ 255,742,462 Total liabilities 58,838,578 117,649,362 5,910,506 (17,552,529) 164,845,917 Borrowings and debentures 9,983,190 107,328,133 2,225,394 (7,350,897) 112,185,820 Vehicle (*1) Finance Others Total (In millions of Korean Won) Net sales (*2) ￦ 113,718,058 ￦ 20,037,912 ￦ 8,771,565 ￦ 142,527,535 Operating profit 7,393,480 1,844,571 581,718 9,819,769 Inter-company sales (67,688,701) (268,245) (1,666,746) (69,623,692)  88 Assets and liabilities by operating segments as of December 31, 2021 are as follows. December 31, 2021 Vehicle Finance Others Consolidation adjustments Total (In millions of Korean Won) Total assets ￦ 121,826,011 ￦ 120,951,619 ￦ 8,836,191 ￦ (17,667,406) ￦ 233,946,415 Total liabilities 54,135,289 104,597,059 5,199,761 (12,601,483) 151,330,626 Borrowings and debentures 12,568,592 96,734,509 2,569,958 (4,079,781) 107,793,278 (4) Sales by region based on where the Group’s entities are located for the years ended December 31, 2022 and 2021 are as follows. For the year ended December 31, 2022 Korea North America Asia Europe Others Total (In millions of Korean Won) Net sales ￦ 44,725,966 ￦ 55,941,024 ￦ 15,594,336 ￦ 22,117,832 ￦ 4,148,377 ￦ 142,527,535 For the year ended December 31, 2021 Korea North America Asia Europe Others Total (In millions of Korean Won) Net sales ￦ 41,332,243 ￦ 40,750,484 ￦ 11,390,768 ￦ 21,508,735 ￦ 2,628,396 ￦ 117,610,626 (5) Non-current assets by region where the Group’s entities are located in as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Korea ￦ 33,935,698 ￦ 33,323,986 North America 3,211,607 2,967,662 Asia 2,835,528 2,781,728 Europe 2,012,856 2,254,395 Others 623,992 520,729 42,619,681 41,848,500 Consolidation adjustments (219,664) (301,775) Total (*) ￦ 42,400,017 ￦ 41,546,725 (*) Total amount is the same as summation of PP&E, intangible assets and investment properties. (6) There is no single external customer who represents 10% or more of the Group’s revenue for the years ended December 31, 2022 and 2021.  89 41. CONSTRUCTION CONTRACTS: (1) Cost, income and loss and claimed construction from construction in progress as of December 31, 2022 and December 31, 2021 are as follows. Description December 31, 2022 December 31, 2021 (In millions of Korean Won) Accumulated cost ￦ 14,866,771 ￦ 12,658,465 Accumulated income 336,083 146,975 Accumulated construction in process 15,202,854 12,805,440 Progress billing 15,006,020 12,286,456 Due from customers 1,413,886 1,421,108 Due to customers 1,217,052 902,124 Reserve (*) 77,915 79,161 (*) Reserve is recognized as long-term trade notes and accounts receivable in the consolidated financial statements. (2) Effects on profit or loss of current and future periods, due from customers related to changes in accounting estimates of total contract revenue and total contract costs of ongoing contracts of Hyundai Rotem, a subsidiary of the Company, as of December 31, 2022 are as follows. Description December 31, 2022 (In millions of Korean Won) Changes in accounting estimates of total contract revenue ￦ 493,798 Changes in accounting estimates of total contract costs 513,064 Effects on profit or loss of current period (14,707) Effects on profit or loss of future periods (4,559) Changes in due from customers (7,202) Provision for construction loss 38,417 Effects on profit or loss of current and future periods were calculated with estimated total contract costs and estimated total contract revenue based on factors that are considered to be relevant from commencement of the contract to December 31, 2022. Total contract revenue and costs may change in future periods. (3) There is no contract as of December 31, 2022, in which contract revenue is recognized using the percentage of completion method based on the input method, that accounted for more than 5% of the Group's revenue in the prior period.  90 42. BUSINESS COMBINATIONS: The Group acquired 46.97% of shares in 42dot, Inc. during the year ended December 31, 2022. The accounting for the business combination at the acquisition date is as follows. Description Amount (In millions of Korean Won) Total considerations transferred ￦ 180,380 Non-controlling interests (68,033) Assets and liabilities acquired: Current assets 41,468 Non-current assets 145,159 Current liabilities 5,180 Non-current liabilities 384,648 Fair value of identifiable net assets (203,201) Goodwill 315,548 The amounts of sales and net loss of the acquiree since the acquisition date included in the consolidated statement of income for the year ended December 31, 2022 are ￦1,226 million and ￦15,855 million, respectively. 43. SUBSEQUENT EVENT: The Group completed stock retirement of its treasury shares on February 3, 2023 as follows. Description Total number of shares December 31, 2022 (In millions of Korean Won) Common stock 2,136,681 ￦ 273,893 Preferred stock 632,707 41,518 

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