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Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Financial Statements (Unaudited) March 31, 2013
(With Independent Auditors’ Review Report Thereon)
Contents
Page
Independent Auditors’ Review Report 1
Condensed Consolidated Interim Statements of Financial Position 3
Condensed Consolidated Interim Statements of Comprehensive Income 5
Condensed Consolidated Interim Statements of Changes in Equity 8
Condensed Consolidated Interim Statements of Cash Flows 10
Notes to the Condensed Consolidated Interim Financial Statements 11
(Based on a report originally issued in Korean)
The Board of Directors and ShareholdersHyundai Capital Services, Inc.: Reviewed Financial Statements We have reviewed the accompanying Services, Inc. and its subsidiariesfinancial position as of March 31, 2013, the changes in equity and cash flows for the threesummary of significant accounting policies and other explanatory information. Management’s Responsibility Management is responsible for the preparation and fair presentation of these financial statements in accordance with Korean International Financial ReInterim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of condensed consolidated whether due to fraud or error. Auditors’ Review Responsibility Our responsibility is to issue a report on these review. We conducted our review in accordance with the Review Standards for Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accountinmatters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting
KPMG Samjong Accounting Corp. 10th Floor, Gangnam Finance Center, 737 Yeoksam-dong, Gangnam-ku, Seoul 135-984, Republic of Korea
TelFax www.kr.kpmg.com
Independent Auditors’ Review Report
(Based on a report originally issued in Korean)
The Board of Directors and Shareholders
We have reviewed the accompanying condensed consolidated interim financial statements of Hyundai Capitaland its subsidiaries (the “Group”), which comprise the condensed consolidated
financial position as of March 31, 2013, the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2013 and notes, comprising a
policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these condensedfinancial statements in accordance with Korean International Financial Reporting Standards (“K
, and for such internal control as management determines is necessary to enable the consolidated interim financial statements that are free from material misstatement,
Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our
We conducted our review in accordance with the Review Standards for Quarterly & Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accountinmatters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea and consequently
assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance
im Financial Reporting.
Tel +82 (2) 2112 0100 Fax +82 (2) 2112 0101 www.kr.kpmg.com
consolidated interim financial statements of Hyundai Capital consolidated statement of
consolidated statements of comprehensive income, month period ended March 31, 2013 and notes, comprising a
condensed consolidated interim porting Standards (“K-IFRS”) No.1034
, and for such internal control as management determines is necessary to enable the financial statements that are free from material misstatement,
consolidated interim financial statements based on our
Quarterly & Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of Korea and consequently
assurance that we would become aware of all significant matters that might be
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance
ABCD
2
Other Matters The condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2012, presented for comparative purposes, were reviewed by other auditors and their review report thereon, dated May 11, 2012, expressed that nothing had come to their attention that caused them to believe that the condensed consolidated interim financial statements as of and for the three-month period ended March 31, 2012 were not prepared, in all material respects, in accordance with K-IFRS. However, as discussed in note 2 to the condensed consolidated interim financial statements, from the annual period from for the year ended December 31, 2012, the Group adopted the amendment to K-IFRS No.1001, ‘Presentation of Financial Statement.’ The Group applied this change in accounting policies retrospectively, and accordingly restated the comparative information of the condensed consolidated interim statement of comprehensive income for the three-month period ended March 31, 2012. The consolidated statement of financial position of the Group as of December 31, 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors in accordance with auditing standards generally accepted in the Republic of Korea and their report thereon, dated March 19, 2013, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2012, presented for comparative purposes, is not different from that audited by other auditors in all material respects, except for the effects of changes in accounting policies discussed in note 2 to the condensed consolidated interim financial statements. We have not performed a review, audit or any other attestation on the accompanying condensed consolidated statement of financial position of the Group as of December 31, 2012, including changes in accounting policies described in note 2, and accordingly it is not included in the scope of our review. The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying condensed consolidated interim financial statements are for use by those knowledgeable about Korean review standards and their application in practice.
KPMG Samjong Accounting Corp. Seoul, Korea May 13, 2013
This report is effective as of May 13, 2013, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above report has not been updated to reflect the impact of such subsequent events or circumstances, if any.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Financial Position As of March 31, 2013 and December 31, 2012 (Unaudited)
3
(In millions of won)
Notes
March 31, 2013
December 31, 2012
Assets Cash and due from banks 21 Cash and cash equivalents W 1,132,498 1,302,161 Due from banks 12 12
1,132,510 1,302,173 Securities 3 Available-for-sale securities 7 21,807 20,283 Investments in associates 103,471 98,797
125,278 119,080 Loans receivable Loans receivable 4,5,7 12,833,496 12,381,225 Allowance for loan loss (326,103) (312,829)
12,507,393 12,068,396 Installment financial assets 4,5,7 Auto installment financing receivables 3,195,464 3,755,497 Allowance for loan loss (29,447) (33,207) Mortgage installment financing receivables
14,920 16,517
Allowance for loan loss (293) (277) 3,180,644 3,738,530 Lease receivables 4,5,7 Finance lease receivables 2,881,127 2,804,928 Cancelled lease receivables 569 493
2,881,696 2,805,421 Leased assets Operating leased assets 1,108,704 1,123,049 Cancelled leased assets 3,174 4,230
1,111,878 1,127,279 Property and equipment, net 8 222,215 320,738 Other assets 5 Intangible assets 9 64,180 64,163 Non-trade receivables 7 126,428 117,836 Allowance for loan loss (4,498) (3,889) Accrued revenues 122,196 116,330 Allowance for loan loss (14,788) (14,850) Advance payments 11 33,261 22,585 Prepaid expenses 91,261 57,439 Leasehold deposits 33,882 31,118 Derivative assets 7,13 45,852 34,915 497,774 425,647
Total assets W 21,659,388 21,907,264 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. Condensed Consolidated Interim Statements of Financial Position, Continued As of March 31, 2013 and December 31, 2012 (Unaudited)
4
(In millions of won)
Notes March 31,
2013 December 31,
2012 Liabilities Borrowings 7,10 Borrowings W 2,020,331 2,213,252 Bonds 14,756,034 14,802,391 16,776,365 17,015,643
Other liabilities Non-trade payables 7 344,875 340,436 Accrued expenses 7 152,316 159,742 Unearned revenue 48,613 51,832 Withholdings 7 30,676 38,342 Income Taxes Payable 88,787 70,888 Defined benefit liability 11 16,128 12,989 Leasehold deposits received 7 781,018 812,975 Deferred income tax liabilities 56,157 59,899 Provisions 12 2,002 2,017 Derivative liabilities 7,13 189,584 302,750
1,710,156 1,851,870 Total liabilities W 18,486,521 18,867,513
Equity Issued capital W 496,537 496,537 Capital surplus Paid-in capital in excess of par value 369,339 369,339 Other share premium 38,200 38,200
407,539 407,539 Accumulated other comprehensive income and loss
20
Unrealized gain on valuation of available- for-sale securities
1,245 1,002
Accumulated comprehensive loss of equity method investees
(1,401) (2,540)
Unrealized gain (loss) on valuation of derivatives
13
(17,613) 2,125
Cumulative effect of overseas operation translations
(780) (872)
Loss on actuarial valuation (14,607) (13,147) (33,155) (13,432)
Retained earnings 14 2,301,847 2,148,998 Total equity attributable to owners of the
Company
3,172,768 3,039,642
Non-controlling interests 99 109 Total equity 3,172,867 3,039,751 Total liabilities and equity W 21,659,388 21,907,264 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Comprehensive Income For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
5
(In millions of won, except earnings per share information) Notes 2013 2012 Operating revenue Interest income 15 Interest on bank deposits W 7,765 12,602 Other interest income 363 44
8,128 12,646 Gain on valuation and disposal of securities 921 1,348
Income on loans 15,16 376,043 373,411 Income on installment financial receivables 15,16 66,648 101,825 Income on leases 15,16 228,029 221,253 Gain on disposal of loans 3,138 24,812 Gain on foreign currency transactions
Gain on foreign exchanges translation 22,251 85,926 Gain on foreign currency transactions 726 12,214
22,977 98,140 Dividend income 2,357 2,831 Other operating income Gain on valuation of derivatives 173,836 48,874 Gain on derivatives transactions 2,136 - Others 36,810 30,228
212,782 79,102
Total operating revenue W 921,023 915,368 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Comprehensive Income, Continued For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
6
(In millions of won, except earnings per share information) Notes 2013 2012 Operating expenses Interest expenses 15 W (204,013) (229,454) Lease expenses 16 (127,829) (123,967) Provision for loss 5 (100,930) (82,996) Loss on foreign currency transactions Loss on foreign exchange translation (174,040) (48,876) Loss on foreign currency transactions (1,929) -
(175,969) (48,876) General and administrative expenses 17 (154,280) (136,408) Other operating expenses Loss on valuation of derivatives (21,861) (85,929) Loss on derivatives transactions (954) (12,222) Others (16,399) (14,664)
(39,214) (112,815)
Total operating expenses (802,235) (734,516) Operating income 118,788 180,852 Non-operating income 90,443 3,128 Non-operating expenses (3,150) (839) Profit before income taxes 206,081 183,141 Income tax expense 18 (53,231) (54,267) Profit for the period W 152,850 128,874 Profit for the period attributable to:
Owners of the Company W 152,850 128,874 Non-controlling interests - - W 152,850 128,874
See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Comprehensive Income, Continued For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
7
(In millions of won, except earnings per share information) Notes 2013 2012
Other comprehensive income, net of income taxes 20 Items that will not be reclassified to profit or loss:
Gain (loss) on actuarial valuation W (1,459) 196 Items that are or may be reclassified subsequently to profit or loss:
Net change in unrealized fair value of available-for-sale financial securities 242 644
Other comprehensive expense of equity method investees 1,139 (22)
Net change in unrealized fair value of derivatives (19,737) 26,732
Effect of overseas operation translations 92 (150)
(19,723) 27,400 Total comprehensive income for the period W 133,126 156,274 Total comprehensive income attributable to:
Owners of the Company W 133,126 156,274 Non-controlling interests - - W 133,126 156,274
Earnings per share 19 Basic and diluted earnings per share W 1,539 1,298
See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Changes in Equity For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
8
(In millions of won)
Issued capital
Capital surplus
Accumulated other
comprehensive loss
Retained earnings
Total Attributable
to Equity holders of the
Company
Non-controlling
interests Total equity
Balances as of January 1, 2012 W 496,537 407,539 (59,338) 1,811,642 2,656,380 109 2,656,489 Total comprehensive income
Profit for the period - - - 128,874 128,874 - 128,874 Other comprehensive income Net change in unrealized fair value of available-for-sale securities - - 644 - 644 - 644 Other comprehensive income of equity method investees - - (22) - (22) - (22) Net change in unrealized fair value derivatives - - 26,733 - 26,733 - 26,733 Effect of overseas operation translations - - (150) - (150) - (150) Gain on actuarial valuation - - 196 - 196 - 196
Total comprehensive income for the period - - 27,401 128,874 156,275 - 156,275
Balances as of March 31, 2012 W 496,537 407,539 (31,937) 1,940,516 2,812,655 109 2,812,764 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Changes in Equity, Continued For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
9
(In millions of won)
Issued capital
Capital surplus
Accumulated other
comprehensive loss
Retained earnings
Total Attributable
to Equity holders of the
Company
Non-controlling
interests Total equity
Balances as of January 1, 2013 W 496,537 407,539 (13,432) 2,148,997 3,039,641 109 3,039,750 Total comprehensive income
Profit for the period - - - 152,850 152,850 - 152,850 Other comprehensive income Net change in unrealized fair value of available-for-sale securities - - 242 - 242 - 242 Other comprehensive income of equity method investees - - 1,139 - 1,139 - 1,139 Net change in unrealized fair value derivatives - - (19,737) - (19,737) - (19,737) Effect of overseas operation translations - - 92 - 92 - 92 Loss on actuarial valuation - - (1,459) - (1,459) - (1,459)
Total comprehensive income for the period - - (19,723) 152,850 133,127 - 133,127
Transactions with owners Liquidation of special purpose entity - - - - - (10) (10)
Balances as of March 31, 2013 W 496,537 407,539 (33,155) 2,301,847 3,172,768 99 3,172,867 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Condensed Consolidated Interim Statements of Cash Flows For the three-month periods ended March 31, 2013 and 2012 (Unaudited)
10
(In millions of won) Notes 2013 2012
Cash flows from operating activities Cash generated from (used in) operations 21 W (211,620) 506,496 Interest received 496,404 15,143 Interest paid (201,362) (217,975) Dividends received 2,357 2,831 Income taxes paid (33,067) (1,451)
Net cash provided by operating activities 52,712 305,044 Cash flows from investing activities
Liquidation of special purpose entity (10) - Dividends from associates 533 733 Acquisition of investments in associates - (535) Acquisition of land - (34,165) Proceeds from disposal of land 114,486 - Acquisition of building - (22,053) Proceeds from disposal of building 60,946 - Proceeds from disposal of structures 2,469 - Proceeds from disposal of vehicles 98 - Acquisition of vehicles (155) (2,055) Proceeds from disposal of fixtures and furniture 47 - Acquisition of fixtures and furniture (1,057) (2,640) Acquisition of other tangible assets (48) - Increase in construction in progress (4,262) (847) Proceeds from disposal of intangible assets (162) (796) Decrease in leasehold deposits - 2,622 Increase in leasehold deposits (2,765) (251)
Net cash provided by (used in) investing activities 170,120 (59,987) Cash flows from financing activities
Proceeds from borrowings 460,000 530,000 Repayments of borrowings (654,970) (655,000) Issuance of bonds 748,190 1,494,933 Repayments of bonds (945,730) (1,318,635)
Net cash provided by (used in) financing activities (392,509) 51,298 Effect of exchange rate fluctuations on cash and cash equivalents held
14
(2)
Decrease in other cash and cash equivalents - (150) Net increase (decrease) in cash and cash equivalents (169,663) 296,203 Cash and cash equivalents at beginning of period 1,302,161 1,455,433 Cash and cash equivalents at end of period W 1,132,498 1,751,636 See accompanying notes to the condensed consolidated interim financial statements.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
11
1. Reporting Entity Hyundai Capital Services, Inc. (the “Company”) was established on December 22, 1993, to engage in installment financing, facilities leasing and new technology financing. The Company changed its trade name from Hyundai Auto Finance Co., Ltd. to Hyundai Financial Services Co. on April 21, 1995, and changed its trade name once again to Hyundai Capital Services, Inc. on December 30, 1998. In accordance with the Monopoly Regulation and Fair Trade Act, the Company is incorporated into Hyundai Motor Company Group. As of March 31, 2013, the Company’s operations are headquartered in Yeouido, Seoul. Its major shareholders are Hyundai Motor Company and GE International Holdings Corporation with 56.47% and 43.30% ownership, respectively. The condensed consolidated interim financial statements included the accounts of the Company, as the parent company, certain Autopia SPC trusts and other subsidiaries (collectively, the “Group”), while HK Mutual Savings Bank and five other entities are associates. Subsidiaries as of March 31, 2013 and December 31, 2012, are as follows. The Group has the substantial power over the subsidiaries established as special purpose entities for asset securitization even though its ownership interests over the subsidiaries do not exceed 50%.
Location
Ratio of
ownership March 31, 2013 December 31, 2012
Special
Purpose
Entities
Korea 0.9% Autopia Thirty-fifth SPC (trust) Autopia Thirty-fifth SPC (trust)
Autopia Thirty-sixth SPC (trust) Autopia Thirty-sixth SPC (trust)
- Autopia Thirty-seventh SPC (trust)
Autopia Thirty-ninth SPC (trust) Autopia Thirty-ninth SPC (trust)
Autopia Fortieth SPC (trust) Autopia Fortieth SPC (trust)
Autopia Forty-second SPC (trust) Autopia Forty-second SPC (trust)
Autopia Forty-third SPC (trust) Autopia Forty-third SPC (trust)
Autopia Forty-fourth SPC (trust) Autopia Forty-fourth SPC (trust)
Autopia Forty-fifth SPC (trust) Autopia Forty-fifth SPC (trust)
Autopia Forty-sixth SPC (trust) Autopia Forty-sixth SPC (trust)
Autopia Forty-seventh SPC (trust) Autopia Forty-seventh SPC (trust)
Autopia Forty-ninth SPC (trust) Autopia Forty-ninth SPC (trust)
HB third SPC HB third SPC
Stock
Company
Germany 100% Hyundai Capital Europe GmbH (*) Hyundai Capital Europe GmbH (*)
India Hyundai Capital India Private
Limited
Hyundai Capital India Private
Limited
(*) It holds 100% shares of Hyundai Capital Services Limited Liability Company.
A subsidiary that is excluded from the Group’s consolidated interim financial statement is as follows:
Reason Subsidiaries
Liquidation Autopia Thirty-seventh SPC (trust) 2. Accounting Policies
2.1 Basis of Preparation
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
12
(1) Statement of compliance These condensed consolidated interim financial statements were prepared in accordance with K-IFRS (No. 1034 Interim Financial Reporting) as part of the period covered by the Group’s K-IFRS consolidated annual financial statements, and do not include all of the disclosures required for full consolidated annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements were prepared as of and for the year ended December 31, 2012. These condensed consolidated interim financial statements have been prepared in accordance with the Korean IFRS standards and interpretations issued and effective or issued and early adopted as of March 31, 2013.
(2) Use of estimates and judgements The preparation of the financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the consolidated financial statements as of and for the year ended December 31, 2012.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
13
2. Accounting Policies, Continued
2.2 Significant Accounting Policies (1) Changes in accounting policies Except as described below, the accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in its consolidated financial statements
as of and for the year ended December 31, 2012. The following changes in accounting policies are also
expected to be reflected in the Group’s consolidated financial statements as at and for the year ending December
31, 2013. (i) Amendments to K-IFRS No. 1001 Presentation of Financial Statements
The amendments require presenting items in other comprehensive income on the basis of whether they are
potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The standards are
effective for annual periods beginning on or after January 1, 2013.
(ii) K-IFRS No. 1110 Consolidated Financial Statements
The standard outlines the requirements for the preparation and presentation of consolidated financial
statements, requiring entities to consolidate entities it controls. Control requires exposure or rights to
variable returns and the ability to affect those returns through power over an investee. The standards are
effective for annual periods beginning on or after January 1, 2013.
(iii) K-IFRS No. 1112 Disclosure of Interests in Other Entites
The standard brings together into a single standard for all the disclosure requirements about an entity’s
interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The standard
requires the disclosure of information about the nature, risks and financial effects of these interests. The
standards are effective for annual periods beginning on or after January 1, 2013.
(iv) Amendments to K-IFRS No. 1019 Employee Benefits
The standard requires recognition of actuarial gains and losses immediately in other comprehensive income
and to calculate expected return on plan assets based on the rate used to discount the defined benefit
obligation. The standard will be applied retrospectively for the Group’s annual periods beginning on or after
January 1, 2013.
(v) K-IFRS No. 1113 Fair Value Measurement
The standard defines fair value and a single framework for fair value, and requires disclosures about fair
value measurements. The standard will be applied prospectively for the Group’s annual periods beginning
on or after January 1, 2013.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
14
2. Accounting Policies, Continued
(2) Impact of change in accounting policies
(i) Amendments to K-IFRS No. 1019 Employee Benefits The impact of amendments to K-IFRS No. 1019 Employee Benefits is as follows:
March 31,
2013 March 31,
2012
Increase (decrease) in general and administrative expenses W (1,926) 259
Increase (decrease) in income taxes 466 (63)
Increase (decrease) in other comprehensive income W (1,460) 196
(ii) Amendments to K-IFRS No. 1001 Presentation of Financial Statements
The Group retrospectively applied the amendment to K-IFRS No. 1001 Presentation of Financial Statements, for which the impact is as follows:
March 31, 2012
Decrease in operating income W (146) Increase in non-operating income 869 Increase in miscellaneous revenues 869
Increase in non-operating expenses 723 Increase in loss on disposal of property and equipment 351 Increase in donation 236 Increase in miscellaneous losses 136
(3) New standards and interpretations not yet adopted The following new standards, interpretations and amendments to existing standards have been published that are
mandatory for the Group for annual periods beginning after January 1, 2013, and the Group has not early adopted
them.
(i) K-IFRS No. 1032 Financial Instruments: Presentation
The amendments address inconsistencies in current practice when applying the offsetting criteria in K-IFRS No. 1032 Financial Instrument: Presentation. The amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ The amendments are effective for annual periods beginning on or after January 1, 2014 and are required to be applied retrospectively.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
15
3. Securities Securities as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012 Available-for-sale securities Equity securities Marketable equity securities W 7,510 6,856 Unlisted equity securities 10,790 11,165 18,300 18,021 Debt securities Government and public bonds 3,507 2,262 21,807 20,283 Investments in associates 103,471 98,796 W 125,278 119,079
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
16
3. Securities, Continued
3.1 Available-for-sale securities Available-for-sale securities as of March 31, 2013 and December 31, 2012, are as follows: (1) Marketable equity securities
Book value
Number of
shares Ownership
(%) Acquisition
cost 2013 2012 Marketable equity securities
NICE Information Service 682,965 2.25 W 3,312 3,538 3,729 NICE Holdings 49,162 1.42 3,491 3,972 3,127
Unlisted equity securities Hyundai Finance Corp. (*) 1,700,000 9.29 9,888 10,630 11,065 Korean Egloan, Inc. 4,000 3.12 100 100 100 Golfclub Lich AG 14 0.59 60 60 -
W 16,851 18,300 18,021
(*) The fair value for Hyundai Finance Corp. was valued as the average of valuation prices provided by two external appraisers, KIS Pricing Inc. and Korea Asset Pricing, using the discounted cash flow model. The five-year financial statements, projected based on past performance, were used in measuring the fair value assuming that the operational structure will remain as is for the next five years. Operating income and expenses were estimated based on the past performance, business plan and expected market conditions.
(2) Debt securities
Book value
Issuer Interest rate
(%) Acquisition
cost 2013 2012
Government and public bonds Metropolitan Rapid Transit and others 2.5 W 3 ,313 3,507 2,262
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
17
3. Securities, Continued
3.2 Investments in associates (1) Details of investments in associates as of March 31, 2013 and December 31, 2012, are as follows:
2013
Number of
shares
Ownership (%)
Acquisition
cost
Net asset value
Book value
HK Mutual Savings Bank (*) 4,990,438 19.99 W 45,719 40,807 53,055 HI Network, Inc.(*) 13,332 19.99 76 898 898 Korea Credit Bureau(*) 140,000 7.00 3,800 2,842 3,879 Hyundai capital Germany GmbH 600,200 30.01 1,065 1,341 1,341 Hyundai Capital UK Ltd. 1,000,000 29.99 10,850 6,338 6,338 Beijing Hyundai Auto
Finance Co., Ltd.
- 46.00 41,085 37,960 37,960 W 102,595 90,186 103,471
2012
Number of
shares
Ownership (%)
Acquisition
cost
Net asset value
Book value
HK Mutual Savings Bank (*) 4,990,438 19.99 W 45,719 38,922 51,170 HI Network, Inc.(*) 13,332 19.99 76 861 861 Korea Credit Bureau(*) 140,000 7.00 3,800 2,948 3,985 Hyundai capital Germany GmbH 600,200 30.01 1,065 1,183 1,183 Hyundai Capital UK Ltd. 1,000,000 29.99 10,850 6,197 6,197 Beijing Hyundai Auto
Finance Co., Ltd.
- 46.00 41,085 35,400 35,400 W 102,595 85,511 98,796
(*) The Group’s shareholdings are less than 20%. However, the Group is able to significantly exert influence
through its involvement in the financial and operating processes, and thus the equity method is applied.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
18
3. Securities, Continued (2) Changes of investments in associates for the three-month periods ended March 31, 2013 and 2012 are as
follows:
2013
Beginning balance
Acquisi -tion
Gain on valuation
Changes in accumulated
other comprehen
-sive Gain(loss) Dividends
Ending balance
HK Mutual Savings Bank W 51,170 - 2,066 (181) - 53,055
HI Network, Inc. 861 - 570 - (533) 898
Korea Credit Bureau 3,985 - (106) - - 3,879 Hyundai Capital
Germany GmbH 1,183 - 152 6 - 1,341 Hyundai Capital UK
Ltd. 6,197 - 286 (145) - 6,338 Beijing Hyundai Auto
Finance Co., Ltd. 35,400 - 1,101 1,459 - 37,960 W 98,796 - 4,069 1,139 (533) 103,471
2012
Beginning balance
Acquisi -tion
Gain on valuation
Changes in accumulated
other comprehen -sive Loss Dividends
Ending balance
HK Mutual Savings Bank W 45,735 - 2,158 (22) - 47,871
HI Network, Inc. 1,003 - 100 - (733) 370
Korea Credit Bureau 3,965 - (115) - - 3,850 Hyundai Capital
Germany GmbH 1,065 - - - - 1,065 Hyundai Capital UK
Ltd. - 535 - - - 535 W 51,768 535 2,143 (22) (733) 53,691
(3) Goodwill related to associates as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012
HK Mutual Savings Bank W 12,248 12,248 Korea Credit Bureau 1,037 1,037 W 13,285 13,285
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
19
3. Securities, Continued (4) Summary of financial information of investees as of March 31, 2013 and December 31, 2012, for assets and
liabilities, and for the three-month periods ended March 31, 2013 and 2012, for revenue and income, follows:
2013
Assets Liabilities
Operating revenue
Profit (loss) for the period
HK Mutual Savings Bank(*) W 2,719,757 2,515,725 99,293 10,331 HI Network, Inc. 7,731 3,239 3,133 324 Korea Credit Bureau 52,160 11,563 8,729 (995)
Hyundai Capital Germany GmbH 4,917 448 710 342 Hyundai Capital UK Ltd. 802,163 781,027 10,109 954 Beijing Hyundai Auto Finance Co., Ltd. 184,399 101,878 2,164 85
(*) Although HK Mutual Savings Bank’s fiscal year is from July 2012 to June 2013, the asset and liability
amounts are as of March 31, 2013, and its operating revenue and profit for the period amounts are from January 1, 2013 to March 31, 2013.
2012
Assets Liabilities
Operating revenue
Profit (loss) for the period
HK Mutual Savings Bank (*) W 2,655,804 2,461,195 96,428 10,791 HI Network, Inc.
7,629 3,322 3,555 624 Korea Credit Bureau
55,944 13,834 8,694 (1,152)
Hyundai Capital Germany GmbH 4,524 581 147 78 Hyundai Capital UK Ltd.
596,343 575,678 - -
(*) Although HK Mutual Savings Bank’s fiscal year is from July 2011 to June 2012, the asset and liability amounts are as of December 31, 2012, and its operating revenue and profit for the period amounts are from January 1, 2012 to March 31, 2012.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
20
4. Financial Receivables
Financial receivables as of March 31, 2013 and December 31, 2012, are as follows:
2013
Principal
Deferred loan origination fees
and costs (Direct profit for
leased assets)
Present value
discounts
Allowance for doubtful
accounts Carrying amount
Loans receivable
Loan W 12,935,552 (100,763) (1,293) (326,104) 12,507,392
Installment financial assets Auto 3,225,737 (30,273) - (29,447) 3,166,017 Durable goods 1 - - - 1 Mortgage 14,894 25 - (293) 14,626
3,240,632 (30,248) - (29,740) 3,180,644
Lease receivables Finance lease receivables 2,917,829 (824) - (35,878) 2,881,127
Cancelled lease receivables 7,960 - - (7,391) 569
2,925,789 (824) - (43,269) 2,881,696
W 19,101,973 (131,835) (1,293) (399,113) 18,569,732
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
21
4. Financial Receivables, Continued
2012
Principal
Deferred loan origination fees
and costs (Direct profit for
leased assets)
Present value
discounts
Allowance for doubtful
accounts Carrying amount
Loans receivable
Loan W 12,498,483 (115,800) (1,458) (312,829) 12,068,396
Installment financial assets Auto 3,798,433 (42,936) - (33,207) 3,722,290 Durable goods 1 - - - 1 Mortgage 16,486 30 - (277) 16,239
3,814,920 (42,906) - (33,484) 3,738,530
Lease receivables Finance lease receivables 2,838,134 (782) - (32,423) 2,804,929
Cancelled lease receivables 6,951 - - (6,458) 493
2,845,085 (782) - (38,881) 2,805,422
W 19,158,488 (159,488) (1,458) (385,194) 18,612,348
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
22
5. Allowance for Loan Loss
Changes in allowance for doubtful accounts for the three-month periods ended March 31, 2013 and 2012, are as follows:
2013
Loan receivables
Installment financial
assets Lease
receivables Other assets Total Beginning balance W 312,829 33,484 38,881 18,740 403,934 Amounts written off (99,255) (10,810) (41) (1,738) (111,844) Recoveries of amounts
previously written off 22,540 2,512 55 2,407 27,514 Unwinding of discount (1,923) (113) (64) - (2,100) Others 408 - (441) (1) (34) Additional (reversed)
allowance 91,505 4,667 4,879 (121) 100,930 Ending balance W 326,104 29,740 43,269 19,287 418,400
2012
Loan receivables
Installment financial
assets Lease
receivables Other assets Total Beginning balance W 281,184 38,130 25,563 17,284 362,161 Amounts written off (100,814) (12,139) (30) (1,854) (114,837) Recoveries of amounts
previously written off 20,299 2,648 85 1,958 24,990 Unwinding of discount (1,886) (70) (47) - (2,003) Additional allowance 76,919 2,947 3,020 86 82,972 Ending balance W 275,702 31,516 28,591 17,474 353,283
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
23
6. Financial Instruments
The fair values of financial instruments as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012 Book value Fair value Book value Fair value Assets Financial assets Cash and deposits W 1,132,510 1,132,510 1,302,173 1,302,173 Available-for-sale securities 21,807 21,807 20,283 20,283 Loans receivable 12,507,392 12,872,826 12,068,396 12,265,070 Installment financial assets 3,180,644 3,257,948 3,738,530 3,775,052 Lease receivables 2,881,696 2,852,644 2,805,422 2,781,545 Derivative assets 45,852 45,852 34,915 34,915 Non-trade receivables 121,930 121,930 113,947 113,947 Accrued revenues 107,408 107,408 101,480 101,480 Leasehold deposits 33,883 34,014 31,118 31,280 W 20,033,122 20,446,939 20,216,264 20,425,745
Liabilities Financial liabilities Borrowings W 2,020,331 2,040,818 2,213,252 2,232,707 Debentures 14,756,034 14,800,727 14,802,390 15,418,078 Derivative liabilities 189,584 189,584 302,750 302,750 Non-trade payables 344,866 344,866 321,373 321,373 Accrued expenses 152,316 152,316 159,742 159,742 Withholdings 16,254 16,254 17,546 17,546 Leasehold deposits received 781,018 792,750 812,975 822,193 W 18,260,403 18,337,315 18,630,028 19,274,389
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
24
6. Financial Instruments, Continued The fair value hierarchy of financial assets and liabilities carried at fair value as of March 31, 2013 and December 31, 2012, are as follows: 2013
2013
2012
Fair value hierarchy (*)
Level 1 Level2 Level 3
Financial assets
Available-for-sale securities W 21,807 21,807 7,510 3,507 10,790
Derivative assets 45,852 45,852 - 45,852 - 67,659 67,659 7,510 49,359 10,790 Financial liabilities
Derivative liabilities W 189,584 189,584 - 189,584 - 2012
2013
2012
Fair value hierarchy (*)
Level 1 Level2 Level 3
Financial assets
Available-for-sale securities W 20,283 20,283 6,856 2,262 11,165
Derivative assets 34,915 34,915 - 34,915 - 55,198 55,198 6,856 37,177 11,165 Financial liabilities
Derivative liabilities W 302,750 302,750 - 302,750 - (*) The levels of fair value hierarchy have been defined as follows:
- Level 1: Quoted prices in active markets for identical assets or liabilities. Listed stocks and derivatives - Level 2: Inputs for the asset or liability included within valuation techniques that are observable market data.
Most bonds issued in Korean won and foreign currency, general unlisted derivatives like swap, forward, option
- Level 3: Inputs for the asset or the liability that are not based on observable market data. Unlisted stocks, complicated structured bonds, complicated unlisted derivative
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
25
7. Derecognition of Financial Assets
The Group issued senior and subordinated asset-backed securities based on loans and the associated securitized debts have recourse only to the transferred assets. Details of financial assets transferred and not derecognized as of March 31, 2013 and December 31, 2012 are as follows:
2013 2012
Book value of assets Loans receivable W 2,145,730 2,279,886 Installment financial assets 955,978 1,329,882 3,101,708 3,609,768 Book value of related liabilities(*) (2,027,871) (2,255,036) Liabilities having right of resources on transferred Assets Fair value of assets 3,130,721 3,658,729 Fair value of related liabilities(*) (2,027,349) (2,307,077) Net position W 1,103,372 1,351,652
(*) Related liabilities aggregates senior and subordinated asset-backed securities with the related Derivative
assets.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
26
8. Property and Equipment
Changes in property and equipment for the three-month periods ended March 31, 2013 and 2012, are as follows: 2013
Beginning balance Acquisition Replacement Disposal Depreciation
Ending balance
Land W 143,729 - - (40,015) - 103,714 Buildings 116,655 - 277 (52,866) (901) 63,165 Structures 3,192 - - (2,469) (22) 701 Vehicles 2,478 155 - (44) (234) 2,355 Fixture and
furniture 45,054 1,057 - (6) (5,037) 41,068 Others 2,032 48 - - - 2,080 Construction in
progress 7,598 4,261 (2,727) - - 9,132 W 320,738 5,521 (2,450) (95,400) (6,194) 222,215 2012
Beginning balance Acquisition Replacement Disposal Depreciation
Ending balance
Land W 105,425 34,165 - - - 139,590 Buildings 97,939 22,053 - - (918) 119,074 Structures 2,558 - - - (18) 2,540 Vehicles 761 2,055 - - (148) 2,668 Fixture and
furniture 53,770 2,640 523 (351) (5,120) 51,462 Others 1,994 - (1) - (2) 1,991 Construction in
progress 2,986 847 (550) - - 3,283 W 265,433 61,760 (28) (351) (6,206) 320,608
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
27
9. Intangible Assets
Changes in intangible assets for the three-month periods ended March 31, 2013 and 2012, are as follows:
2013
Beginning balance Increase Replacement Disposal Amortization
Ending balance
Goodwill W 1,429 - - - - 1,429 Development costs 28,198 162 2,727 - (2,395) 28,692
Rights of trademark 16 - - - (3) 13
Other intangible assets 34,520 - - - (474) 34,046
W 64,163 162 2,727 - (2,872) 64,180
2012
Beginning balance Increase Replacement Disposal Amortization
Ending balance
Development costs W 28,635 797 - 30 (2,041) 27,421
Rights of trademark 30 - - - (3) 27
Other intangible assets 36,452 - - (2) (484) 35,966
W 65,117 797 - 28 (2,528) 63,414
10. Borrowings
Changes in borrowings for the three-month periods ended March 31, 2013 and 2012, are as follows:
2013 2012 Beginning balance W 17,015,642 17,772,368 Borrowing 1,208,191 2,024,933 Repayment (1,600,701) (1,973,635) Others 153,234 (226,455) Ending balance W 16,776,366 17,597,211
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
28
11. Defined Benefit Liability The amounts of defined benefit plans recognized in the statements of financial position as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012
Present value of funded obligations W 66,628 63,847
Fair value of plan assets (*) (50,501) (50,859) Defined benefit liability W 16,127 12,988
(*) As of March 31, 2013, contribution to the National Pension Fund of W 43 million is included.
Details of the amounts recognized in the comprehensive income statements for the three-month periods ended March 31, 2013 and 2012, are as follows :
2013 2012
Current service cost W 3,183 2,868 Interest cost 508 491 Expected return on plan assets (403) (290) W 3,288 3,069
12. Provisions for Unused Loan Commitments
Changes in provisions for unused loan commitments for the three-month periods ended March 31, 2013 and 2012, are as follows:
2013 2012
Beginning balance W 2,017 10,446 Reversals (15) (594) Ending balance W 2,002 9,852
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
29
13. Derivative Financial Instruments and Hedge Accounting Trading derivatives as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012 Assets Liabilities Assets Liabilities
Forward foreign exchange W 12 - 11 2
During the three-month periods ended March 31, 2013 and 2012, the Group recognized gain or loss on trading derivatives of W 3 million and W 3 million, respectively. Derivatives designated as cash flow hedges as of March 31, 2013 and December 2012, are as follows:
2013 2012
Assets
Liabilities
Notional Principal amounts Assets Liabilities
Notional Principal amounts
Exchange forward W 791 - (108) 2,312 - (199)
Interest rate swaps - 10,774 (8,167) 378 7,563 (5,446)
Currency swaps 45,049 178,810 (9,338) 32,214 295,185 7,770 W 45,840 189,584 (17,613) 34,904 302,748 2,125
The maximum period the Group is exposed to the variability in future cash flows arising from derivatives designated as cash flow hedges, is expected to be until September 20, 2017. There is no ineffective portion recognized related to cash flow hedge for the three-month periods ended March 31, 2013 and 2012.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
30
14. Equity Details of appropriated and expected reserves for bad loans as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012
Appropriated reserve for bad loans W 273,907 270,220 Expected reserve for bad loans (6,580) 3,687 W 267,327 273,907
Transfer to reserve for bad loans and profit for the period in consideration of effect of changes in reserve for bad loans for the three-month periods ended March 31, 2013 are as follows:
2013 Profit for the period W 152,850 Expected transfer to reserve for bad loans (*1) 6,580 Profit for the period in consideration of changes in reserve for bad loans (*2) W 159,430 Profit for the period per share in consideration of changes in reserve for bad loans(in Korean won) W 1,605
(*1) The amount transferred to reserve for bad loans for the three-month period ended March 31, 2013, is the
difference between the balance of reserve for bad loans as of March 31, 2013, and the balance as of December 31, 2012.
(*2) Profit for the period and earnings per share in consideration of changes in reserve for bad loans are not accordance with K-IFRS, and this amount is the sum of the expected transfer to reserve for bad loans before income tax and Profit for the period.
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
31
15. Net Interest Income
Net interest income for the three-month periods ended March 31, 2013 and 2012, consists of:
2013 2012
Interest income: Due from Banks W 7,765 12,602 Loans receivable 364,617 361,736 Installment financial assets 65,649 100,189 Lease receivables (*1) 62,176 57,020 Other (*2) 363 44
500,570 531,591
Interest expense: Borrowings (22,517) (26,984) Bonds (171,831) (191,661) Other (*2) (9,665) (10,809)
(204,013) (229,454)
Net interest expense W 296,557 302,137
(*1) Includes amortization of present value discount for lease guarantee. (*2) Amortization of present value discount using the effective interest method.
16. Net Commission Income
Net commission income for the three-month periods ended March 31, 2013 and 2012, consists of:
2013 2012
Commission income Loans receivable W 11,426 11,674 Installment financial assets 999 1,636 Lease receivables 42,645 36,510 55,070 49,820
Commission expenses Lease expenses (16,523) (12,049)
Net Commission Income W 38,547 37,771
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
32
17. General and Administrative Expenses
General and administrative expenses for the three-month periods ended March 31, 2013 and 2012, are as follows:
18. Income Tax
Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year ended December 31, 2013, is 26% (the estimated average tax rate for the three-month period ended March 31, 2012, is 29.9%).
2013 2012 Payroll W 38,194 27,969 Severance benefits 3,308 3,070 Fringe benefits 11,053 10,552 Depreciation 6,194 6,206 Advertising 11,403 10,542 Travel and transportation 995 1,262 Communication 3,624 3,643 Water, lighting and heating 3,213 2,517 Commission 4,677 4,055 Sales commission 17,372 14,170 Amortization 2,872 2,528 Outsourcing service charges 15,754 15,438 Rent 10,090 8,830 Other expenses 25,531 25,626
W 154,280 136,408
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
33
19. Earnings Per Share
19.1 Basic earnings per share Basic earnings per share attributable to common stock for the three-month periods ended March 31, 2013 and 2012, is as follows:
19.2 Diluted earnings per share As there was no discontinued operation during the three-month periods ended March 31, 2013 and 2012, basic earnings per share is the same as basic earnings per share from continuing operations. There are no potential common stocks as of March 31, 2013 and 2012. Therefore, the diluted earnings per share is the same as basic earnings per share for the three-month periods ended March 31, 2013 and 2012.
2013 2012 Profit for the period attributable to common
stock (In Korean won) (A) W 152,849,504,648 128,874,697,114 Weighted average of number of outstanding
common shares (B)
99,307,435 99,307,435 Basic earnings per Share (In Korean won)
(A/B) W
1,539 1,298
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
34
20. Other Comprehensive Income
Other comprehensive income for the three-month periods ended March 31, 2013 and 2012, consists of:
2013
Beginning balance
Changes
Income tax effects
Ending balance
Reclassifi-
cation of profit or loss
Other changes
Unrealized gain on valuation of available-for-sale financial assets W 1,002 - 640 (397) 1,245
Accumulated comprehensive income of equity method investees (2,540) - 1,139 - (1,401)
Unrealized loss on valuation of derivatives 2,125 - (26,039) 6,301 (17,613)
Loss on exchange differences of foreign operations (872) - 93 - (779)
Gain (loss) on actuarial valuation (13,147) - (1,926) 466 (14,607)
W (13,432) - (26,093) 6,370 (33,155)
2012
Beginning balance
Changes
Income tax effects
Ending balance
Reclassifi-
cation of profit or loss
Other changes
Unrealized gain on valuation of available-for-sale financial assets W (388) - 793 (150) 255
Accumulated comprehensive income of equity method investees 47 - (22) - 25
Unrealized loss on valuation of derivatives (50,157) (522) 25,700 1,555 (23,424)
Loss on exchange differences of foreign
operations (343) - (150) - (493) Gain (loss) on actuarial valuation (8,498) - 259 (63) (8,302)
W (59,339) (522) 26,580 1,342 (31,939)
21. Supplemental Cash Flow Information
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
35
Cash and cash equivalents in cash flow statements consist of cash in hand, deposits and short-term money-market instruments. Cash and cash equivalents consisting of cash and financial instruments as of March 31, 2013 and December 31, 2012, are as follows:
Cash generated from operations for the three-month periods ended March 31, 2013 and 2012, is as follows:
21. Supplemental Cash Flow Information, Continued
2013 2012
Cash W 1 1
Ordinary deposits 123,089 194,944
Current deposits 3,708 3,416
Short-term financial instruments 1,005,700 1,103,800
W 1,132,498 1,302,161
2013 2012 Profit for the period W 152,849 128,874 Adjustments:
Net interest expenses (295,041) 216,806 Income tax 53,232 54,267 Gain on disposal of available-for-sale financial assets (921) (305) Income on loans (11,808) (8,842) Income on installment financial receivables (11,202) (20,341) Income on leases 14,163 (327) Gain on foreign exchanges translation (22,251) (85,926) Dividend income (2,357) (2,831) Gain on valuation of derivatives (173,836) (48,874) Gain on disposal of property and equipment (85,481) - Gain on equity method valuation (4,175) (2,259) Lease expenses 83,032 84,066 Provision for loss 100,930 82,996 Loss on foreign exchanges translation 174,039 48,876 Severance benefits 3,288 3,070 Depreciation 6,194 6,206 Amortization of intangible assets 2,872 2,528 Loss on valuation of derivatives 21,860 85,929 Loss on disposal of property and equipment 2,837 351 Loss on equity method valuation 106 116 Reversal of provisions (15) (594) Losses on Retirement of Bonds 51 -
W (144,483) 414,912
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
36
2013 2012 Changes in operating assets and liabilities
Increase in available-for-sale financial assets W (282) (898) (Increase) in loans receivable (519,136) (76,205) Decrease in installment financial assets 564,422 285,849 (Increase) in finance lease receivables (197,768) (155,379) Decrease in cancelled leased receivables 3,278 1,494 (Increase) in operating leased assets (68,688) (65,534) Decrease in cancelled leased assets 102,148 64,775 (Increase) in non-trade receivables (7,874) (7,400) Decrease in accrued revenues (5,865) 2,811 (Increase) in advance payments (10,954) (43,816) (Increase) in prepaid expenses (33,822) (23,082) Decrease in derivative assets 1,832 8 Increase (decrease) in non-trade Payables 4,439 (17,639) Increase (decrease) in accrued expenses (7,383) (39) (Decrease) in unearned revenue (3,219) (2,645) Increase (decrease) in withholdings (7,666) 4,773 (Decrease) in income taxes payable (2,267) - (Decrease) in leasehold deposits received (32,054) (3,412) Increase in deferred income tax liabilities 2,948 - Payment of severance benefits (2,628) (2,086) (Decrease) in plan assets 624 319 Transfer of severance benefits from (to) related parties (71) 816
(219,986) (37,290) W (211,620) 506,496
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
37
22. Commitments and Contingencies
22. 1 Credit Line Agreement Details of unused credit line agreements of the Group as of March 31, 2013 and December 31, 2012, are as follows:
Type Financial institutions 2013 2012
Limit of overdraft Shinhan Bank and 2 other banks W 41,500 41,500 Limit of daily loan SC Bank and 2 other banks 15,000 45,000
W 56,500 86,500
22. 2 Credit Facility Agreement
The Group has revolving credit facility agreements with several financial institutions as of March 31, 2013 and December 31, 2012. Details of credit facility agreements are as follows:
(*) Relative to the above credit facility agreement, Hyundai Motor Company shall pay GE Capital European
Funding & Co. any amount not paid by the Group, at such time multiplied by the shareholding ratio of
Hyundai Motor Company.
There has been no usage of the above credit facility agreements as of March 31, 2013.
Financial institutions 2013 2012
GE Capital European Funding & Co.(*)
Equivalent of USD 0.7 billion in
Euros
Equivalent of USD 1 billion in
Euros
MIZUHO CORPORATE BANK, LTD., SEOUL BRANCH W 65,000 65,000
JPMORGAN CHASE BANK, N.A., SEOUL BRANCH 110,000 110,000
CITIBANK KOREA INC. 50,000 50,000
Standard Chartered, Seoul Branch 50,000 50,000
SOCIETE GENERALE, SEOUL BRANCH 110,000 55,000
BANK OF CHINA, SEOUL BRANCH 30,000 30,000
DBS BANK LTD., SEOUL BRANCH 100,000 100,000
Credit Agricole Corporate and Investment Bank, SEOUL BRANCH 100,000 100,000
THE ROYAL BANK OF SCOTLAND N.V., SEOUL BRANCH 110,000 110,000
ING BANK N.V., SEOUL BRANCH 100,000 -
KDB Bank 60,000 60,000
Kyobo Life Insurance Co., Ltd. 50,000 50,000
Kookmin Bank 200,000 200,000
Suhyup Bank W 20,000 -
CITIBANK, N.A. USD 0.2 billion USD 0.2 billion
The Bank of TOKYO MITSUBISHI UFJ., Ltd. USD 0.2 billion USD 0.2 billion
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
38
22. Commitments and Contingencies, Continued 22.3 Guarantees
Details of guarantees involving third parties as of March 31, 2013 and December 31, 2012, are as follows:
Guarantor Details 2013 2012
Hyundai Motor Company
Joint liabilities on finance lease receivables (*) W - 15
Seoul Guarantee Insurance Co., Ltd.
Guarantee for debt collection deposit, others 150,631 154,394
(*)The amounts represent the guaranteed balances as of March 31, 2013 and December 31, 2012, as defined
under the joint liability agreement.
The Group carries residual value guarantee insurance with LIG Insurance Co., Ltd. against loss in case unredeemed mortgage loans exceed the recoverable amount from the collateral of the loans. The receivables balance carried insurance and residual value guaranteed by the insurance as of March 31, 2013 and December 31, 2012, are as follows:
22.4 Pending significant litigations
Details of pending significant litigations involving the Group as of March 31, 2013, are as follows:
In addition, the Group has filed lawsuits against a number of debtors to collect receivables. As of report date, no provisions have been recorded on the condensed consolidated interim financial statements of the Group as of March 31, 2013.
Type 2013 2012
Receivables balance W 787,034 795,982
The amount of residual value guaranteed by insurance 297,878 300,656
Type Number of litigations Amount of litigations
Plaintiff 16 W 580
Defendant 25 3,612
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
39
23. Related Party Transactions
23.1 Relationships between parents and subsidiaries
The parent company is Hyundai Motor Company. Related parties include associates, joint ventures, post-
employment benefit plans, members of key management personnel and entities which the Group controls directly
or indirectly, has joint control or significant influence over them.
23.2 Transactions between related parties
Significant transactions, which occurred in the normal course of business with related companies for the three-month periods ended March 31, 2013 and 2012, are as follows:
2013 2012 Purchases Disposal Purchases Disposal Parent Company W 223,572 - 204,079 - Others. 135,905 194,906 106,692 12,530
W 359,477 194,906 310,771 12,530
Revenue and expenses arising from transactions with related parties for the three-month periods ended March 31, 2013 and 2012, and receivables and payables as of March 31, 2013 and December 31, 2012, are as follows:
2013 2012 Receivables Payables Receivables Payables Parent Company W 2,193 720 4,463 4,440 Associates 370 - 819 - Others 57,759 155,236 45,126 149,055
W 60,322 155,956 50,408 153,495
2013 2012 Revenues Expenses Revenues Expenses Parent Company W 1,451 873 1,272 874 Associates 299 407 - 4 Others 32,344 23,936 13,585 18,751
W 34,094 25,216 14,857 19,629
Hyundai Capital Services, Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements March 31, 2013 (Unaudited) (In millions of won)
40
23. Related Party Transactions, Continued Details of credit granting activities with related parties as of March 31, 2013 are as follows:
Credit grantor Credit borrower Type Amount Period Hyundai Capital Services, Inc.
Hyundai Card Co., Ltd.
Call loan W 300,000
2012.11.1~ 2013.10.31
Hyundai Capital Services, Inc.
Hyundai Commercial Co., Ltd.
Call loan 100,000
2012.11.1~ 2013.10.31
Hyundai Card Co., Ltd.
Hyundai Capital Services, Inc.
Call loan 300,000
2012.11.1~ 2013.10.31
With the counterparty’s request, credit is granted when there is surplus fund. As of March 31, 2013, no balance is recognized relating to credit granting activities. The Group has been provided with a credit facility and payment guarantees by GE Capital European Funding & Co. and Hyundai Motor Company, respectively (Note 22).
23.3 Key management compensation
Compensation to key management for the three-month periods ended March 31, 2013 and 2012, consists of:
The key management above consists of directors (including non-permanent directors), who have significant authority and responsibilities for planning, operating and controlling the Group.
24. Financial Risk Management
The Group is exposed to credit risk, liquidity risk and market risk (exchange and rate risk). In order to manage these factors, the Group operates risk management policies and programs that monitor closely and respond to each of the risk factors. The Group uses derivatives to manage specific risks. There was no significant change in the Group's risk management division and policies after December 31, 2012.
Type 2013 2012 Short-term employee benefits W 1,445 360 Severance benefits 513 387