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  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Financial Statements(Unaudited)March 31, 2013(With Independent Auditors’ Review Report Thereon)
  • ContentsPageIndependent Auditors’ Review Report 1Condensed Consolidated Interim Statements of Financial Position 3Condensed Consolidated Interim Statements of Comprehensive Income 5Condensed Consolidated Interim Statements of Changes in Equity 8Condensed Consolidated Interim Statements of Cash Flows 10Notes 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 StatementsWe have reviewed the accompanyingServices, Inc. and its subsidiariesfinancial position as of March 31, 2013, thechanges in equity and cash flows for the threesummary of significant accounting policies and other explanatory information.Management’s ResponsibilityManagement is responsible for the preparation and fair presentation of thesefinancial statements in accordance with Korean International Financial ReInterim Financial Reporting, and for such internal control as management determines is necessary to enable thepreparation of condensed consolidatedwhether due to fraud or error.Auditors’ Review ResponsibilityOur responsibility is to issue a report on thesereview.We conducted our review in accordance with the Review Standards forStatements established by the Securities and Futures Commission of the Republic of Korea. A review of interimfinancial 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 auditconducted in accordance with auditing standards generally accepted in the Republic of Korea and consequentlydoes not enable us to obtain assurance that we would become aware of all significant matters that might beidentified in an audit. Accordingly, we do not express an audit opinion.ConclusionBased on our review, nothing has come to our attention that causes us to believe that the accompanyingconsolidated interim financial statements referred to above are not prepared, in all material respects, in accordancewith K-IFRS No.1034 Interim Financial ReportingKPMG Samjong Accounting Corp.10th Floor, Gangnam Finance Center,737 Yeoksam-dong,Gangnam-ku, Seoul 135-984,Republic of KoreaTelFaxwww.kr.kpmg.comIndependent Auditors’ Review Report(Based on a report originally issued in Korean)The Board of Directors and ShareholdersWe have reviewed the accompanying condensed consolidated interim financial statements of Hyundai Capitaland its subsidiaries (the “Group”), which comprise the condensed consolidatedfinancial 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 apolicies 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 theconsolidated 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 ourWe conducted our review in accordance with the Review Standards for Quarterly & Semiannual FinancialStatements established by the Securities and Futures Commission of the Republic of Korea. A review of interimfinancial 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 auditconducted in accordance with auditing standards generally accepted in the Republic of Korea and consequentlyassurance that we would become aware of all significant matters that might beidentified 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 accompanyingconsolidated interim financial statements referred to above are not prepared, in all material respects, in accordanceim Financial Reporting.Tel +82 (2) 2112 0100Fax +82 (2) 2112 0101www.kr.kpmg.comconsolidated interim financial statements of Hyundai Capitalconsolidated statement ofconsolidated statements of comprehensive income,month period ended March 31, 2013 and notes, comprising acondensed consolidated interimporting Standards (“K-IFRS”) No.1034, and for such internal control as management determines is necessary to enable thefinancial statements that are free from material misstatement,consolidated interim financial statements based on ourQuarterly & Semiannual FinancialStatements established by the Securities and Futures Commission of the Republic of Korea. A review of interimfinancial information consists of making inquiries, primarily of persons responsible for financial and accountingmatters, and applying analytical and other review procedures. A review is substantially less in scope than an auditconducted in accordance with auditing standards generally accepted in the Republic of Korea and consequentlyassurance that we would become aware of all significant matters that might beBased on our review, nothing has come to our attention that causes us to believe that the accompanying condensedconsolidated interim financial statements referred to above are not prepared, in all material respects, in accordance
  • ABCD2Other MattersThe condensed consolidated interim statements of comprehensive income, changes in equity and cash flows forthe three-month period ended March 31, 2012, presented for comparative purposes, were reviewed by otherauditors and their review report thereon, dated May 11, 2012, expressed that nothing had come to their attentionthat 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 annualperiod 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, andaccordingly restated the comparative information of the condensed consolidated interim statement ofcomprehensive 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 relatedconsolidated 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 standardsgenerally accepted in the Republic of Korea and their report thereon, dated March 19, 2013, expressed anunqualified opinion. The accompanying consolidated statement of financial position of the Group as of December31, 2012, presented for comparative purposes, is not different from that audited by other auditors in all materialrespects, except for the effects of changes in accounting policies discussed in note 2 to the condensed consolidatedinterim financial statements.We have not performed a review, audit or any other attestation on the accompanying condensed consolidatedstatement of financial position of the Group as of December 31, 2012, including changes in accounting policiesdescribed 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 interimfinancial statements may differ from those generally accepted and applied in other countries. Accordingly, thisreport and the accompanying condensed consolidated interim financial statements are for use by thoseknowledgeable about Korean review standards and their application in practice.KPMG Samjong Accounting Corp.Seoul, KoreaMay 13, 2013This 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 materialimpact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, thereaders of the review report should understand that the above report has not been updated to reflect the impactof such subsequent events or circumstances, if any.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Financial PositionAs of March 31, 2013 and December 31, 2012(Unaudited)3(In millions of won) NotesMarch 31,2013December 31,2012AssetsCash and due from banks 21Cash and cash equivalents W 1,132,498 1,302,161Due from banks 12 121,132,510 1,302,173Securities 3Available-for-sale securities 7 21,807 20,283Investments in associates 103,471 98,797125,278 119,080Loans receivableLoans receivable 4,5,7 12,833,496 12,381,225Allowance for loan loss (326,103) (312,829)12,507,393 12,068,396Installment financial assets 4,5,7Auto installment financing receivables 3,195,464 3,755,497Allowance for loan loss (29,447) (33,207)Mortgage installment financingreceivables14,920 16,517Allowance for loan loss (293) (277)3,180,644 3,738,530Lease receivables 4,5,7Finance lease receivables 2,881,127 2,804,928Cancelled lease receivables 569 4932,881,696 2,805,421Leased assetsOperating leased assets 1,108,704 1,123,049Cancelled leased assets 3,174 4,2301,111,878 1,127,279Property and equipment, net 8 222,215 320,738Other assets 5Intangible assets 9 64,180 64,163Non-trade receivables 7 126,428 117,836Allowance for loan loss (4,498) (3,889)Accrued revenues 122,196 116,330Allowance for loan loss (14,788) (14,850)Advance payments 11 33,261 22,585Prepaid expenses 91,261 57,439Leasehold deposits 33,882 31,118Derivative assets 7,13 45,852 34,915497,774 425,647Total assets W 21,659,388 21,907,264See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc.Condensed Consolidated Interim Statements of Financial Position, ContinuedAs of March 31, 2013 and December 31, 2012(Unaudited)4(In millions of won) NotesMarch 31,2013December 31,2012LiabilitiesBorrowings 7,10Borrowings W 2,020,331 2,213,252Bonds 14,756,034 14,802,39116,776,365 17,015,643Other liabilitiesNon-trade payables 7 344,875 340,436Accrued expenses 7 152,316 159,742Unearned revenue 48,613 51,832Withholdings 7 30,676 38,342Income Taxes Payable 88,787 70,888Defined benefit liability 11 16,128 12,989Leasehold deposits received 7 781,018 812,975Deferred income tax liabilities 56,157 59,899Provisions 12 2,002 2,017Derivative liabilities 7,13 189,584 302,7501,710,156 1,851,870Total liabilities W 18,486,521 18,867,513EquityIssued capital W 496,537 496,537Capital surplusPaid-in capital in excess of par value 369,339 369,339Other share premium 38,200 38,200407,539 407,539Accumulated other comprehensive incomeand loss20Unrealized gain on valuation of available-for-sale securities1,245 1,002Accumulated comprehensive loss of equitymethod investees(1,401) (2,540)Unrealized gain (loss) on valuation ofderivatives13 (17,613) 2,125Cumulative effect of overseas operationtranslations(780) (872)Loss on actuarial valuation (14,607) (13,147)(33,155) (13,432)Retained earnings 14 2,301,847 2,148,998Total equity attributable to owners of theCompany 3,172,768 3,039,642Non-controlling interests 99 109Total equity 3,172,867 3,039,751Total liabilities and equity W 21,659,388 21,907,264See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Comprehensive IncomeFor the three-month periods ended March 31, 2013 and 2012(Unaudited)5(In millions of won, except earnings per share information) Notes 2013 2012Operating revenueInterest income 15Interest on bank deposits W 7,765 12,602Other interest income 363 448,128 12,646Gain on valuation and disposal of securities 921 1,348Income on loans 15,16 376,043 373,411Income on installment financial receivables 15,16 66,648 101,825Income on leases 15,16 228,029 221,253Gain on disposal of loans 3,138 24,812Gain on foreign currency transactionsGain on foreign exchanges translation 22,251 85,926Gain on foreign currency transactions 726 12,21422,977 98,140Dividend income 2,357 2,831Other operating incomeGain on valuation of derivatives 173,836 48,874Gain on derivatives transactions 2,136 -Others 36,810 30,228212,782 79,102Total operating revenue W 921,023 915,368See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Comprehensive Income, ContinuedFor the three-month periods ended March 31, 2013 and 2012(Unaudited)6(In millions of won, except earnings per share information) Notes 2013 2012Operating expensesInterest 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 transactionsLoss 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 expensesLoss 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 118,788 180,852Non-operating income 90,443 3,128Non-operating expenses (3,150) (839)Profit before income taxes 206,081 183,141Income tax expense 18 (53,231) (54,267)Profit for the period W 152,850 128,874Profit for the period attributable to:Owners of the Company W 152,850 128,874Non-controlling interests - -W 152,850 128,874See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Comprehensive Income, ContinuedFor the three-month periods ended March 31, 2013 and 2012(Unaudited)7(In millions of won, except earnings per share information) Notes 2013 2012Other comprehensive income,net of income taxes 20Items that will not be reclassified to profit orloss:Gain (loss) on actuarial valuation W (1,459) 196Items that are or may be reclassifiedsubsequently to profit or loss:Net change in unrealized fair value ofavailable-for-sale financial securities 242 644Other comprehensive expense of equity methodinvestees 1,139 (22)Net change in unrealized fair value ofderivatives (19,737) 26,732Effect of overseas operationtranslations 92 (150)(19,723) 27,400Total comprehensive income for the period W 133,126 156,274Total comprehensive income attributable to:Owners of the Company W 133,126 156,274Non-controlling interests - -W 133,126 156,274Earnings per share 19Basic and diluted earnings per share W 1,539 1,298See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Changes in EquityFor the three-month periods ended March 31, 2013 and 2012(Unaudited)8(In millions of won)IssuedcapitalCapitalsurplusAccumulatedothercomprehensivelossRetainedearningsTotalAttributableto Equityholders of theCompanyNon-controllinginterestsTotalequityBalances as of January 1, 2012 W 496,537 407,539 (59,338) 1,811,642 2,656,380 109 2,656,489Total comprehensive incomeProfit for the period - - - 128,874 128,874 - 128,874Other comprehensive incomeNet change in unrealized fairvalue of available-for-salesecurities - - 644 - 644 - 644Other comprehensive incomeof equity method investees - - (22) - (22) - (22)Net change in unrealized fairvalue derivatives - - 26,733 - 26,733 - 26,733Effect of overseas operationtranslations - - (150) - (150) - (150)Gain on actuarial valuation - - 196 - 196 - 196Total comprehensive income forthe period - - 27,401 128,874 156,275 - 156,275Balances as of March 31, 2012 W 496,537 407,539 (31,937) 1,940,516 2,812,655 109 2,812,764See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Changes in Equity, ContinuedFor the three-month periods ended March 31, 2013 and 2012(Unaudited)9(In millions of won)IssuedcapitalCapitalsurplusAccumulatedothercomprehensivelossRetainedearningsTotalAttributableto Equityholders of theCompanyNon-controllinginterestsTotalequityBalances as of January 1, 2013 W 496,537 407,539 (13,432) 2,148,997 3,039,641 109 3,039,750Total comprehensive incomeProfit for the period - - - 152,850 152,850 - 152,850Other comprehensive incomeNet change in unrealized fairvalue of available-for-salesecurities - - 242 - 242 - 242Other comprehensive incomeof equity method investees - - 1,139 - 1,139 - 1,139Net change in unrealized fairvalue derivatives - - (19,737) - (19,737) - (19,737)Effect of overseas operationtranslations - - 92 - 92 - 92Loss on actuarial valuation - - (1,459) - (1,459) - (1,459)Total comprehensive income for theperiod - - (19,723) 152,850 133,127 - 133,127Transactions with ownersLiquidation of special purposeentity - - - - - (10) (10)Balances as of March 31, 2013 W 496,537 407,539 (33,155) 2,301,847 3,172,768 99 3,172,867See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesCondensed Consolidated Interim Statements of Cash FlowsFor the three-month periods ended March 31, 2013 and 2012(Unaudited)10(In millions of won) Notes 2013 2012Cash flows from operating activitiesCash generated from (used in) operations 21 W (211,620) 506,496Interest received 496,404 15,143Interest paid (201,362) (217,975)Dividends received 2,357 2,831Income taxes paid (33,067) (1,451)Net cash provided by operating activities 52,712 305,044Cash flows from investing activitiesLiquidation of special purpose entity (10) -Dividends from associates 533 733Acquisition 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 - 2,622Increase in leasehold deposits (2,765) (251)Net cash provided by (used in) investing activities 170,120 (59,987)Cash flows from financing activitiesProceeds from borrowings 460,000 530,000Repayments of borrowings (654,970) (655,000)Issuance of bonds 748,190 1,494,933Repayments of bonds (945,730) (1,318,635)Net cash provided by (used in) financing activities (392,509) 51,298Effect of exchange rate fluctuations on cash and cashequivalents held 14 (2)Decrease in other cash and cash equivalents - (150)Net increase (decrease) in cash and cash equivalents (169,663) 296,203Cash and cash equivalents at beginning of period 1,302,161 1,455,433Cash and cash equivalents at end of period W 1,132,498 1,751,636See accompanying notes to the condensed consolidated interim financial statements.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)111. Reporting EntityHyundai Capital Services, Inc. (the “Company”) was established on December 22, 1993, to engage in installmentfinancing, facilities leasing and new technology financing. The Company changed its trade name from HyundaiAuto Finance Co., Ltd. to Hyundai Financial Services Co. on April 21, 1995, and changed its trade name onceagain to Hyundai Capital Services, Inc. on December 30, 1998. In accordance with the Monopoly Regulation andFair Trade Act, the Company is incorporated into Hyundai Motor Company Group. As of March 31, 2013, theCompany’s operations are headquartered in Yeouido, Seoul. Its major shareholders are Hyundai MotorCompany 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 parentcompany, certain Autopia SPC trusts and other subsidiaries (collectively, the “Group”), while HK MutualSavings 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 powerover the subsidiaries established as special purpose entities for asset securitization even though its ownershipinterests over the subsidiaries do not exceed 50%.LocationRatio ofownership March 31, 2013 December 31, 2012SpecialPurposeEntitiesKorea 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 SPCStockCompanyGermany 100% Hyundai Capital Europe GmbH (*) Hyundai Capital Europe GmbH (*)India Hyundai Capital India PrivateLimitedHyundai Capital India PrivateLimited(*) 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 SubsidiariesLiquidation Autopia Thirty-seventh SPC (trust)2. Accounting Policies2.1 Basis of Preparation
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)12(1) Statement of complianceThese condensed consolidated interim financial statements were prepared in accordance with K-IFRS (No. 1034Interim Financial Reporting) as part of the period covered by the Group’s K-IFRS consolidated annual financialstatements, 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 understandingof the changes in financial position and performance of the Group since the last annual consolidated financialstatements 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 KoreanIFRS standards and interpretations issued and effective or issued and early adopted as of March 31, 2013.(2) Use of estimates and judgementsThe 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 bymanagement in applying the Group’s accounting policies and the key sources of estimation uncertainty were thesame as those that were applied to the consolidated financial statements as of and for the year ended December31, 2012.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)132. Accounting Policies, Continued2.2 Significant Accounting Policies(1) Changes in accounting policiesExcept as described below, the accounting policies applied by the Group in these condensed consolidatedinterim financial statements are the same as those applied by the Group in its consolidated financial statementsas of and for the year ended December 31, 2012. The following changes in accounting policies are alsoexpected to be reflected in the Group’s consolidated financial statements as at and for the year ending December31, 2013.(i) Amendments to K-IFRS No. 1001 Presentation of Financial StatementsThe amendments require presenting items in other comprehensive income on the basis of whether they arepotentially reclassifiable to profit or loss subsequently (reclassification adjustments). The standards areeffective for annual periods beginning on or after January 1, 2013.(ii) K-IFRS No. 1110 Consolidated Financial StatementsThe standard outlines the requirements for the preparation and presentation of consolidated financialstatements, requiring entities to consolidate entities it controls. Control requires exposure or rights tovariable returns and the ability to affect those returns through power over an investee. The standards areeffective for annual periods beginning on or after January 1, 2013.(iii) K-IFRS No. 1112 Disclosure of Interests in Other EntitesThe standard brings together into a single standard for all the disclosure requirements about an entity’sinterests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The standardrequires the disclosure of information about the nature, risks and financial effects of these interests. Thestandards are effective for annual periods beginning on or after January 1, 2013.(iv) Amendments to K-IFRS No. 1019 Employee BenefitsThe standard requires recognition of actuarial gains and losses immediately in other comprehensive incomeand to calculate expected return on plan assets based on the rate used to discount the defined benefitobligation. The standard will be applied retrospectively for the Group’s annual periods beginning on or afterJanuary 1, 2013.(v) K-IFRS No. 1113 Fair Value MeasurementThe standard defines fair value and a single framework for fair value, and requires disclosures about fairvalue measurements. The standard will be applied prospectively for the Group’s annual periods beginningon or after January 1, 2013.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)142. Accounting Policies, Continued(2) Impact of change in accounting policies(i) Amendments to K-IFRS No. 1019 Employee BenefitsThe impact of amendments to K-IFRS No. 1019 Employee Benefits is as follows:March 31,2013March 31,2012Increase (decrease) in general andadministrative expenses W (1,926) 259Increase (decrease) in income taxes 466 (63)Increase (decrease) in othercomprehensive income W (1,460) 196(ii) Amendments to K-IFRS No. 1001 Presentation of Financial StatementsThe Group retrospectively applied the amendment to K-IFRS No. 1001 Presentation of FinancialStatements, for which the impact is as follows:March 31,2012Decrease in operating income W (146)Increase in non-operating income 869Increase in miscellaneous revenues 869Increase in non-operating expenses 723Increase in loss on disposal of property and equipment 351Increase in donation 236Increase in miscellaneous losses 136(3) New standards and interpretations not yet adoptedThe following new standards, interpretations and amendments to existing standards have been published that aremandatory for the Group for annual periods beginning after January 1, 2013, and the Group has not early adoptedthem.(i) K-IFRS No. 1032 Financial Instruments: PresentationThe amendments address inconsistencies in current practice when applying the offsetting criteria in K-IFRSNo. 1032 Financial Instrument: Presentation. The amendments clarify the meaning of ‘currently has alegally enforceable right of set-off’ The amendments are effective for annual periods beginning on or afterJanuary 1, 2014 and are required to be applied retrospectively.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)153. SecuritiesSecurities as of March 31, 2013 and December 31, 2012, are as follows:2013 2012Available-for-sale securitiesEquity securitiesMarketable equity securities W 7,510 6,856Unlisted equity securities 10,790 11,16518,300 18,021Debt securitiesGovernment and public bonds 3,507 2,26221,807 20,283Investments in associates 103,471 98,796W 125,278 119,079
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)163. Securities, Continued3.1 Available-for-sale securitiesAvailable-for-sale securities as of March 31, 2013 and December 31, 2012, are as follows:(1) Marketable equity securitiesBook valueNumber ofsharesOwnership(%)Acquisitioncost 2013 2012Marketable equity securitiesNICE Information Service 682,965 2.25 W 3,312 3,538 3,729NICE Holdings 49,162 1.42 3,491 3,972 3,127Unlisted equity securitiesHyundai Finance Corp. (*) 1,700,000 9.29 9,888 10,630 11,065Korean Egloan, Inc. 4,000 3.12 100 100 100Golfclub 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 twoexternal appraisers, KIS Pricing Inc. and Korea Asset Pricing, using the discounted cash flow model. Thefive-year financial statements, projected based on past performance, were used in measuring the fair valueassuming that the operational structure will remain as is for the next five years. Operating income andexpenses were estimated based on the past performance, business plan and expected market conditions.(2) Debt securitiesBook valueIssuerInterest rate(%)Acquisitioncost 2013 2012Government and public bondsMetropolitanRapid Transitand others 2.5 W 3 ,313 3,507 2,262
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)173. Securities, Continued3.2 Investments in associates(1) Details of investments in associates as of March 31, 2013 and December 31, 2012, are as follows:2013Number ofsharesOwnership(%)AcquisitioncostNet assetvalueBookvalueHK Mutual Savings Bank (*) 4,990,438 19.99 W 45,719 40,807 53,055HI Network, Inc.(*) 13,332 19.99 76 898 898Korea Credit Bureau(*) 140,000 7.00 3,800 2,842 3,879Hyundai capital Germany GmbH 600,200 30.01 1,065 1,341 1,341Hyundai Capital UK Ltd. 1,000,000 29.99 10,850 6,338 6,338Beijing Hyundai AutoFinance Co., Ltd. - 46.00 41,085 37,960 37,960W 102,595 90,186 103,4712012Number ofsharesOwnership(%)AcquisitioncostNet assetvalueBookvalueHK Mutual Savings Bank (*) 4,990,438 19.99 W 45,719 38,922 51,170HI Network, Inc.(*) 13,332 19.99 76 861 861Korea Credit Bureau(*) 140,000 7.00 3,800 2,948 3,985Hyundai capital Germany GmbH 600,200 30.01 1,065 1,183 1,183Hyundai Capital UK Ltd. 1,000,000 29.99 10,850 6,197 6,197Beijing Hyundai AutoFinance Co., Ltd. - 46.00 41,085 35,400 35,400W 102,595 85,511 98,796(*) The Group’s shareholdings are less than 20%. However, the Group is able to significantly exert influencethrough its involvement in the financial and operating processes, and thus the equity method is applied.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)183. Securities, Continued(2) Changes of investments in associates for the three-month periods ended March 31, 2013 and 2012 are asfollows:2013BeginningbalanceAcquisi-tionGain onvaluationChanges inaccumulatedothercomprehen-siveGain(loss) DividendsEndingbalanceHK Mutual SavingsBank W 51,170 - 2,066 (181) - 53,055HI Network, Inc. 861 - 570 - (533) 898Korea Credit Bureau 3,985 - (106) - - 3,879Hyundai CapitalGermany GmbH 1,183 - 152 6 - 1,341Hyundai Capital UKLtd. 6,197 - 286 (145) - 6,338Beijing Hyundai AutoFinance Co., Ltd. 35,400 - 1,101 1,459 - 37,960W 98,796 - 4,069 1,139 (533) 103,4712012BeginningbalanceAcquisi-tionGain onvaluationChanges inaccumulatedothercomprehen-sive Loss DividendsEndingbalanceHK Mutual SavingsBank W 45,735 - 2,158 (22) - 47,871HI Network, Inc. 1,003 - 100 - (733) 370Korea Credit Bureau 3,965 - (115) - - 3,850Hyundai CapitalGermany GmbH 1,065 - - - - 1,065Hyundai Capital UKLtd. - 535 - - - 535W 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 2012HK Mutual Savings Bank W 12,248 12,248Korea Credit Bureau 1,037 1,037W 13,285 13,285
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)193. Securities, Continued(4) Summary of financial information of investees as of March 31, 2013 and December 31, 2012, for assets andliabilities, and for the three-month periods ended March 31, 2013 and 2012, for revenue and income, follows:2013Assets LiabilitiesOperatingrevenueProfit (loss)for theperiodHK Mutual Savings Bank(*) W 2,719,757 2,515,725 99,293 10,331HI Network, Inc. 7,731 3,239 3,133 324Korea Credit Bureau 52,160 11,563 8,729 (995)Hyundai Capital Germany GmbH 4,917 448 710 342Hyundai Capital UK Ltd. 802,163 781,027 10,109 954Beijing 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 liabilityamounts are as of March 31, 2013, and its operating revenue and profit for the period amounts are fromJanuary 1, 2013 to March 31, 2013.2012Assets LiabilitiesOperatingrevenueProfit (loss)for theperiodHK Mutual Savings Bank (*) W 2,655,804 2,461,195 96,428 10,791HI Network, Inc. 7,629 3,322 3,555 624Korea Credit Bureau 55,944 13,834 8,694 (1,152)Hyundai Capital Germany GmbH 4,524 581 147 78Hyundai 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 liabilityamounts are as of December 31, 2012, and its operating revenue and profit for the period amounts are fromJanuary 1, 2012 to March 31, 2012.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)204. Financial ReceivablesFinancial receivables as of March 31, 2013 and December 31, 2012, are as follows:2013PrincipalDeferred loanorigination feesand costs(Direct profit forleased assets)PresentvaluediscountsAllowancefor doubtfulaccountsCarryingamountLoans receivableLoan W 12,935,552 (100,763) (1,293) (326,104) 12,507,392Installment financialassetsAuto 3,225,737 (30,273) - (29,447) 3,166,017Durable goods 1 - - - 1Mortgage 14,894 25 - (293) 14,6263,240,632 (30,248) - (29,740) 3,180,644Lease receivablesFinance leasereceivables 2,917,829 (824) - (35,878) 2,881,127Cancelled leasereceivables 7,960 - - (7,391) 5692,925,789 (824) - (43,269) 2,881,696W 19,101,973 (131,835) (1,293) (399,113) 18,569,732
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)214. Financial Receivables, Continued2012PrincipalDeferred loanorigination feesand costs(Direct profit forleased assets)PresentvaluediscountsAllowancefor doubtfulaccountsCarryingamountLoans receivableLoan W 12,498,483 (115,800) (1,458) (312,829) 12,068,396Installment financialassetsAuto 3,798,433 (42,936) - (33,207) 3,722,290Durable goods 1 - - - 1Mortgage 16,486 30 - (277) 16,2393,814,920 (42,906) - (33,484) 3,738,530Lease receivablesFinance leasereceivables 2,838,134 (782) - (32,423) 2,804,929Cancelled leasereceivables 6,951 - - (6,458) 4932,845,085 (782) - (38,881) 2,805,422W 19,158,488 (159,488) (1,458) (385,194) 18,612,348
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)225. Allowance for Loan LossChanges in allowance for doubtful accounts for the three-month periods ended March 31, 2013 and 2012, are asfollows:2013LoanreceivablesInstallmentfinancialassetsLeasereceivables Other assets TotalBeginning balance W 312,829 33,484 38,881 18,740 403,934Amounts written off (99,255) (10,810) (41) (1,738) (111,844)Recoveries of amountspreviously written off 22,540 2,512 55 2,407 27,514Unwinding of discount (1,923) (113) (64) - (2,100)Others 408 - (441) (1) (34)Additional (reversed)allowance 91,505 4,667 4,879 (121) 100,930Ending balance W 326,104 29,740 43,269 19,287 418,4002012LoanreceivablesInstallmentfinancialassetsLeasereceivables Other assets TotalBeginning balance W 281,184 38,130 25,563 17,284 362,161Amounts written off (100,814) (12,139) (30) (1,854) (114,837)Recoveries of amountspreviously written off 20,299 2,648 85 1,958 24,990Unwinding of discount (1,886) (70) (47) - (2,003)Additional allowance 76,919 2,947 3,020 86 82,972Ending balance W 275,702 31,516 28,591 17,474 353,283
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)236. Financial InstrumentsThe fair values of financial instruments as of March 31, 2013 and December 31, 2012, are as follows:2013 2012Book value Fair value Book value Fair valueAssetsFinancial assetsCash and deposits W 1,132,510 1,132,510 1,302,173 1,302,173Available-for-sale securities 21,807 21,807 20,283 20,283Loans receivable 12,507,392 12,872,826 12,068,396 12,265,070Installment financial assets 3,180,644 3,257,948 3,738,530 3,775,052Lease receivables 2,881,696 2,852,644 2,805,422 2,781,545Derivative assets 45,852 45,852 34,915 34,915Non-trade receivables 121,930 121,930 113,947 113,947Accrued revenues 107,408 107,408 101,480 101,480Leasehold deposits 33,883 34,014 31,118 31,280W 20,033,122 20,446,939 20,216,264 20,425,745LiabilitiesFinancial liabilitiesBorrowings W 2,020,331 2,040,818 2,213,252 2,232,707Debentures 14,756,034 14,800,727 14,802,390 15,418,078Derivative liabilities 189,584 189,584 302,750 302,750Non-trade payables 344,866 344,866 321,373 321,373Accrued expenses 152,316 152,316 159,742 159,742Withholdings 16,254 16,254 17,546 17,546Leasehold deposits received 781,018 792,750 812,975 822,193W 18,260,403 18,337,315 18,630,028 19,274,389
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)246. Financial Instruments, ContinuedThe fair value hierarchy of financial assets and liabilities carried at fair value as of March 31, 2013 andDecember 31, 2012, are as follows:20132013 2012Fair value hierarchy (*)Level 1 Level2 Level 3Financial assetsAvailable-for-sale securities W 21,807 21,807 7,510 3,507 10,790Derivative assets 45,852 45,852 - 45,852 -67,659 67,659 7,510 49,359 10,790Financial liabilitiesDerivative liabilities W 189,584 189,584 - 189,584 -20122013 2012Fair value hierarchy (*)Level 1 Level2 Level 3Financial assetsAvailable-for-sale securities W 20,283 20,283 6,856 2,262 11,165Derivative assets 34,915 34,915 - 34,915 -55,198 55,198 6,856 37,177 11,165Financial liabilitiesDerivative 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 SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)257. Derecognition of Financial AssetsThe Group issued senior and subordinated asset-backed securities based on loans and the associated securitizeddebts 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 asfollows:2013 2012Book value of assetsLoans receivable W 2,145,730 2,279,886Installment financial assets 955,978 1,329,8823,101,708 3,609,768Book value of related liabilities(*) (2,027,871) (2,255,036)Liabilities having right of resources on transferredAssetsFair value of assets 3,130,721 3,658,729Fair 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 Derivativeassets.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)268. Property and EquipmentChanges in property and equipment for the three-month periods ended March 31, 2013 and 2012, are as follows:2013Beginningbalance Acquisition Replacement Disposal DepreciationEndingbalanceLand W 143,729 - - (40,015) - 103,714Buildings 116,655 - 277 (52,866) (901) 63,165Structures 3,192 - - (2,469) (22) 701Vehicles 2,478 155 - (44) (234) 2,355Fixture andfurniture 45,054 1,057 - (6) (5,037) 41,068Others 2,032 48 - - - 2,080Construction inprogress 7,598 4,261 (2,727) - - 9,132W 320,738 5,521 (2,450) (95,400) (6,194) 222,2152012Beginningbalance Acquisition Replacement Disposal DepreciationEndingbalanceLand W 105,425 34,165 - - - 139,590Buildings 97,939 22,053 - - (918) 119,074Structures 2,558 - - - (18) 2,540Vehicles 761 2,055 - - (148) 2,668Fixture andfurniture 53,770 2,640 523 (351) (5,120) 51,462Others 1,994 - (1) - (2) 1,991Construction inprogress 2,986 847 (550) - - 3,283W 265,433 61,760 (28) (351) (6,206) 320,608
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)279. Intangible AssetsChanges in intangible assets for the three-month periods ended March 31, 2013 and 2012, are as follows:2013Beginningbalance Increase Replacement Disposal AmortizationEndingbalanceGoodwill W 1,429 - - - - 1,429Developmentcosts 28,198 162 2,727 - (2,395) 28,692Rights oftrademark 16 - - - (3) 13Other intangibleassets 34,520 - - - (474) 34,046W 64,163 162 2,727 - (2,872) 64,1802012Beginningbalance Increase Replacement Disposal AmortizationEndingbalanceDevelopmentcosts W 28,635 797 - 30 (2,041) 27,421Rights oftrademark 30 - - - (3) 27Other intangibleassets 36,452 - - (2) (484) 35,966W 65,117 797 - 28 (2,528) 63,41410. BorrowingsChanges in borrowings for the three-month periods ended March 31, 2013 and 2012, are as follows:2013 2012Beginning balance W 17,015,642 17,772,368Borrowing 1,208,191 2,024,933Repayment (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 SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)2811. Defined Benefit LiabilityThe amounts of defined benefit plans recognized in the statements of financial position as of March 31, 2013 andDecember 31, 2012, are as follows:2013 2012Present value of funded obligations W 66,628 63,847Fair 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 endedMarch 31, 2013 and 2012, are as follows :2013 2012Current service cost W 3,183 2,868Interest cost 508 491Expected return on plan assets (403) (290)W 3,288 3,06912. Provisions for Unused Loan CommitmentsChanges in provisions for unused loan commitments for the three-month periods ended March 31, 2013 and 2012,are as follows:2013 2012Beginning balance W 2,017 10,446Reversals (15) (594)Ending balance W 2,002 9,852
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)2913. Derivative Financial Instruments and Hedge AccountingTrading derivatives as of March 31, 2013 and December 31, 2012, are as follows:2013 2012Assets Liabilities Assets LiabilitiesForward foreign exchange W 12 - 11 2During the three-month periods ended March 31, 2013 and 2012, the Group recognized gain or loss on tradingderivatives 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 2012Assets LiabilitiesNotionalPrincipalamounts Assets LiabilitiesNotionalPrincipalamountsExchange 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 7,770W 45,840 189,584 (17,613) 34,904 302,748 2,125The maximum period the Group is exposed to the variability in future cash flows arising from derivativesdesignated 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 March31, 2013 and 2012.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3014. EquityDetails of appropriated and expected reserves for bad loans as of March 31, 2013 and December 31, 2012, are asfollows:2013 2012Appropriated reserve for bad loans W 273,907 270,220Expected reserve for bad loans (6,580) 3,687W 267,327 273,907Transfer to reserve for bad loans and profit for the period in consideration of effect of changes in reserve for badloans for the three-month periods ended March 31, 2013 are as follows:2013Profit for the period W 152,850Expected transfer to reserve for bad loans (*1) 6,580Profit for the period in consideration of changes in reserve for bad loans (*2) W 159,430Profit for the period per share in consideration of changes in reserve for bad loans(inKorean won) W 1,605(*1) The amount transferred to reserve for bad loans for the three-month period ended March 31, 2013, is thedifference between the balance of reserve for bad loans as of March 31, 2013, and the balance as ofDecember 31, 2012.(*2) Profit for the period and earnings per share in consideration of changes in reserve for bad loans are notaccordance with K-IFRS, and this amount is the sum of the expected transfer to reserve for bad loans beforeincome tax and Profit for the period.
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3115. Net Interest IncomeNet interest income for the three-month periods ended March 31, 2013 and 2012, consists of:2013 2012Interest income:Due from Banks W 7,765 12,602Loans receivable 364,617 361,736Installment financial assets 65,649 100,189Lease receivables (*1) 62,176 57,020Other (*2) 363 44500,570 531,591Interest 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 IncomeNet commission income for the three-month periods ended March 31, 2013 and 2012, consists of:2013 2012Commission incomeLoans receivable W 11,426 11,674Installment financial assets 999 1,636Lease receivables 42,645 36,51055,070 49,820Commission expensesLease expenses (16,523) (12,049)Net Commission Income W 38,547 37,771
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3217. General and Administrative ExpensesGeneral and administrative expenses for the three-month periods ended March 31, 2013 and 2012, are as follows:18. Income TaxIncome tax expense is recognized based on management’s best estimate of the weighted average annual incometax rate expected for the full financial year. The estimated average annual tax rate used for the year endedDecember 31, 2013, is 26% (the estimated average tax rate for the three-month period ended March 31, 2012, is29.9%).2013 2012Payroll W 38,194 27,969Severance benefits 3,308 3,070Fringe benefits 11,053 10,552Depreciation 6,194 6,206Advertising 11,403 10,542Travel and transportation 995 1,262Communication 3,624 3,643Water, lighting and heating 3,213 2,517Commission 4,677 4,055Sales commission 17,372 14,170Amortization 2,872 2,528Outsourcing service charges 15,754 15,438Rent 10,090 8,830Other expenses 25,531 25,626W 154,280 136,408
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3319. Earnings Per Share19.1 Basic earnings per shareBasic earnings per share attributable to common stock for the three-month periods ended March 31, 2013 and2012, is as follows:19.2 Diluted earnings per shareAs there was no discontinued operation during the three-month periods ended March 31, 2013 and 2012, basicearnings per share is the same as basic earnings per share from continuing operations. There are no potentialcommon stocks as of March 31, 2013 and 2012. Therefore, the diluted earnings per share is the same as basicearnings per share for the three-month periods ended March 31, 2013 and 2012.2013 2012Profit for the period attributable to commonstock (In Korean won) (A) W 152,849,504,648 128,874,697,114Weighted average of number of outstandingcommon shares (B) 99,307,435 99,307,435Basic earnings per Share (In Korean won)(A/B)W1,539 1,298
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3420. Other Comprehensive IncomeOther comprehensive income for the three-month periods ended March 31, 2013 and 2012, consists of:2013BeginningbalanceChangesIncome taxeffectsEndingbalanceReclassifi-cation of profitor lossOtherchangesUnrealized gain onvaluation of available-for-sale financial assets W 1,002 - 640 (397) 1,245Accumulatedcomprehensiveincome of equitymethod investees (2,540) - 1,139 - (1,401)Unrealized loss onvaluation of derivatives 2,125 - (26,039) 6,301 (17,613)Loss on exchangedifferences of foreignoperations (872) - 93 - (779)Gain (loss) onactuarial valuation (13,147) - (1,926) 466 (14,607)W (13,432) - (26,093) 6,370 (33,155)2012BeginningbalanceChangesIncome taxeffectsEndingbalanceReclassifi-cation of profitor lossOtherchangesUnrealized gain onvaluation of available-for-sale financial assets W (388) - 793 (150) 255Accumulatedcomprehensiveincome of equitymethod investees 47 - (22) - 25Unrealized loss onvaluation of derivatives (50,157) (522) 25,700 1,555 (23,424)Loss on exchangedifferences of foreignoperations (343) - (150) - (493)Gain (loss) onactuarial 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 SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)35Cash and cash equivalents in cash flow statements consist of cash in hand, deposits and short-term money-marketinstruments.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, Continued2013 2012Cash W 1 1Ordinary deposits 123,089 194,944Current deposits 3,708 3,416Short-term financial instruments 1,005,700 1,103,800W 1,132,498 1,302,1612013 2012Profit for the period W 152,849 128,874Adjustments:Net interest expenses (295,041) 216,806Income tax 53,232 54,267Gain 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 84,066Provision for loss 100,930 82,996Loss on foreign exchanges translation 174,039 48,876Severance benefits 3,288 3,070Depreciation 6,194 6,206Amortization of intangible assets 2,872 2,528Loss on valuation of derivatives 21,860 85,929Loss on disposal of property and equipment 2,837 351Loss on equity method valuation 106 116Reversal of provisions (15) (594)Losses on Retirement of Bonds 51 -W (144,483) 414,912
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)362013 2012Changes in operating assets and liabilitiesIncrease 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 8Increase (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 319Transfer of severance benefits from (to) related parties (71) 816(219,986) (37,290)W (211,620) 506,496
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3722. Commitments and Contingencies22. 1 Credit Line AgreementDetails of unused credit line agreements of the Group as of March 31, 2013 and December 31, 2012, are asfollows:Type Financial institutions 2013 2012Limit of overdraft Shinhan Bank and 2 other banks W 41,500 41,500Limit of daily loan SC Bank and 2 other banks 15,000 45,000W 56,500 86,50022. 2 Credit Facility AgreementThe Group has revolving credit facility agreements with several financial institutions as of March 31, 2013 andDecember 31, 2012. Details of credit facility agreements are as follows:(*) Relative to the above credit facility agreement, Hyundai Motor Company shall pay GE Capital EuropeanFunding & Co. any amount not paid by the Group, at such time multiplied by the shareholding ratio ofHyundai Motor Company.There has been no usage of the above credit facility agreements as of March 31, 2013.Financial institutions 2013 2012GE Capital European Funding & Co.(*)Equivalent ofUSD 0.7 billion inEurosEquivalent ofUSD 1 billion inEurosMIZUHO CORPORATE BANK, LTD., SEOUL BRANCH W 65,000 65,000JPMORGAN CHASE BANK, N.A., SEOUL BRANCH 110,000 110,000CITIBANK KOREA INC. 50,000 50,000Standard Chartered, Seoul Branch 50,000 50,000SOCIETE GENERALE, SEOUL BRANCH 110,000 55,000BANK OF CHINA, SEOUL BRANCH 30,000 30,000DBS BANK LTD., SEOUL BRANCH 100,000 100,000Credit Agricole Corporate and Investment Bank, SEOUL BRANCH 100,000 100,000THE ROYAL BANK OF SCOTLAND N.V., SEOUL BRANCH 110,000 110,000ING BANK N.V., SEOUL BRANCH 100,000 -KDB Bank 60,000 60,000Kyobo Life Insurance Co., Ltd. 50,000 50,000Kookmin Bank 200,000 200,000Suhyup Bank W 20,000 -CITIBANK, N.A. USD 0.2 billion USD 0.2 billionThe Bank of TOKYO MITSUBISHI UFJ., Ltd. USD 0.2 billion USD 0.2 billion
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3822. Commitments and Contingencies, Continued22.3 GuaranteesDetails of guarantees involving third parties as of March 31, 2013 and December 31, 2012, are as follows:Guarantor Details 2013 2012Hyundai MotorCompanyJoint liabilities on finance leasereceivables (*) W - 15Seoul GuaranteeInsurance Co., Ltd.Guarantee for debt collectiondeposit, others 150,631 154,394(*)The amounts represent the guaranteed balances as of March 31, 2013 and December 31, 2012, as definedunder the joint liability agreement.The Group carries residual value guarantee insurance with LIG Insurance Co., Ltd. against loss in caseunredeemed mortgage loans exceed the recoverable amount from the collateral of the loans. The receivablesbalance 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 litigationsDetails 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, noprovisions have been recorded on the condensed consolidated interim financial statements of the Group as ofMarch 31, 2013.Type 2013 2012Receivables balance W 787,034 795,982The amount of residual value guaranteed by insurance 297,878 300,656Type Number of litigations Amount of litigationsPlaintiff 16 W 580Defendant 25 3,612
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)3923. Related Party Transactions23.1 Relationships between parents and subsidiariesThe 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 directlyor indirectly, has joint control or significant influence over them.23.2 Transactions between related partiesSignificant 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 2012Purchases Disposal Purchases DisposalParent Company W 223,572 - 204,079 -Others. 135,905 194,906 106,692 12,530W 359,477 194,906 310,771 12,530Revenue 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 2012Receivables Payables Receivables PayablesParent Company W 2,193 720 4,463 4,440Associates 370 - 819 -Others 57,759 155,236 45,126 149,055W 60,322 155,956 50,408 153,4952013 2012Revenues Expenses Revenues ExpensesParent Company W 1,451 873 1,272 874Associates 299 407 - 4Others 32,344 23,936 13,585 18,751W 34,094 25,216 14,857 19,629
  • Hyundai Capital Services, Inc. and SubsidiariesNotes to the Condensed Consolidated Interim Financial StatementsMarch 31, 2013(Unaudited)(In millions of won)4023. Related Party Transactions, ContinuedDetails of credit granting activities with related parties as of March 31, 2013 are as follows:Credit grantor Credit borrower Type Amount PeriodHyundai CapitalServices, Inc.Hyundai CardCo., Ltd.Call loan W 300,0002012.11.1~2013.10.31Hyundai CapitalServices, Inc.HyundaiCommercial Co., Ltd.Call loan 100,0002012.11.1~2013.10.31Hyundai CardCo., Ltd.Hyundai CapitalServices, Inc.Call loan 300,0002012.11.1~2013.10.31With the counterparty’s request, credit is granted when there is surplus fund. As of March 31, 2013, no balanceis 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 compensationCompensation 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 significantauthority and responsibilities for planning, operating and controlling the Group.24. Financial Risk ManagementThe Group is exposed to credit risk, liquidity risk and market risk (exchange and rate risk). In order to managethese factors, the Group operates risk management policies and programs that monitor closely and respond toeach of the risk factors. The Group uses derivatives to manage specific risks.There was no significant change in the Groups risk management division and policies after December 31, 2012.Type 2013 2012Short-term employee benefits W 1,445 360Severance benefits 513 387