Eng fy2013 3_q_20131126_final

Hyundai Commercial, Inc. and Subsidiaries
Condensed Consolidated Interim Financial Statements
(Unaudited)
September 30, 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

7

Condensed Consolidated Interim Statements of Cash Flows

8

Notes to the Condensed Consolidated Interim Financial Statements

9

KPMG Samjong Accounting Corp.
10th Floor, Gangnam Finance Center,
737 Yeoksam-dong,
Gangnam-ku, Seoul 135-984,
Republic of Korea

Tel
+82 (2) 2112 0100
Fax +82 (2) 2112 0101
www.kr.kpmg.com

Independent Auditors’ Review Report
Based on a report originally issued in Korean
The Board of Directors and Shareholders
Hyundai Commercial, Inc.:
Reviewed Financial Statements
We have reviewed the accompanying condensed consolidated interim financial statements of Hyundai
Commercial, Inc. and its subsidiaries (the “Group”), which comprise the condensed consolidated interim
statement of financial position as of September 30, 2013, the condensed consolidated interim statements of
comprehensive income for the three-month and nine-month periods ended September 30, 2013, changes in
equity and cash flows for the nine-month period ended September 30, 2013, and notes, comprising a
summary of significant accounting policies and other explanatory information.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of these condensed consolidated
interim financial statements in accordance with Korean International Financial Reporting Standards (“KIFRS”) No. 1034, ‘Interim Financial Reporting’, and for such internal control as management determines is
necessary to enable the preparation of condensed consolidated interim financial statements that are free
from material misstatement, whether due to fraud or error.
Auditors’ Review Responsibility
Our responsibility is to issue a report on these condensed consolidated interim financial statements based
on our review.
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
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 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
condensed consolidated interim financial statements referred to above are not prepared, in all material
respects, in accordance with K-IFRS No. 1034, ‘Interim Financial Reporting’.

ABCD

Other Matters
The condensed consolidated interim statements of comprehensive income for the three-month and ninemonth periods ended September 30, 2012, and changes in equity and cash flows for the nine-month period
ended September 30, 2012, presented for comparative purposes, were reviewed by Samil Accounting Corp.
and their review report thereon, dated November 27, 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 and nine-month periods ended September 30, 2012 were not prepared, in all
material respects, in accordance with K-IFRS No. 1034, ‘Interim Financial Reporting’. However, as
discussed in note 3 to the condensed consolidated interim financial statements, the Group adopted the
amendment to K-IFRS No.1001, ‘Presentation of Financial Statements.’ The Group applied this change in
accounting policies retrospectively, and accordingly restated the comparative information of the statement
of comprehensive income for the three-month and nine-month periods ended September 30, 2012.
The condensed consolidated statement of financial position of the Group as of December 31, 2012, and the
related condensed 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 Samil Accounting Corp. 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 condensed consolidated
statement of financial position of the Group as of December 31, 2012, presented for comparative purposes,
is not different from that audited by Samil Accounting Corp. in all material respects, except for the effects of
changes in accounting policies discussed in note 3 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 and the condensed
consolidated statements of comprehensive income for the three-month and nine-month periods ended
September 30, 2012, including changes in accounting policies described in note 3, 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 is for use by those knowledgeable about Korean review standards and their
application in practice.

KPMG Samjong Accounting Corp.
Seoul, Korea
November 13, 2013

This report is effective as of November 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 condensed 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.

2

Condensed Consolidated Interim Statements of Financial Position
As of September 30, 2013 and December 31, 2012
(Unaudited)
September 30,
2013

Notes

(In Korean won)

Assets
Cash and due from bank
Cash and cash equivalents
Due from banks

9
24
4

Securities
Available-for-sale securities
Investments in associates

5,9
6

282,825,795,422
9,000,000
282,834,795,422

49,111,105,063
264,333,008,478
313,444,113,541

26,984,327,193
285,401,945,483
312,386,272,676
108,000,000
(270,108)
2,800,613,129,940
(19,258,899,976)
2,781,461,959,856

294,982,265,107
(1,805,335,877)
18,096,794,054
(123,232,454)
311,150,490,830

333,721,265,726
(2,351,089,917)
25,624,608,935
(176,228,378)
356,818,556,366

187,148,406,539
(1,606,732,143)
185,541,674,396

132,356,464,281
(1,026,910,813)
131,329,553,468

42,847,918
3,174,606,600
410,999,664
3,628,454,182

69,799,497
2,701,927,277
410,999,664
3,182,726,438

3,463,921,048
8,860,367,508
(46,486,875)
17,697,493,082
(104,104,532)
7,258,368,189
4,273,994,956
2,114,730,221
141,834,064
3,885,995,860
47,546,113,521

3,453,010,248
15,919,893,264
(106,582,840)
16,979,241,639
(120,891,875)
1,157,855,722
3,258,141,295
11,083,913,915
137,774,538
3,885,995,860
55,648,351,766

4,139,744,959,654

3,923,662,215,992

7
,8,9,10

Installment financial assets
Auto installment financial receivables
Allowance for doubtful accounts
Durable goods installment financing receivables

290,522,965,693
9,000,000
290,531,965,693

3,152,027,337
(14,452,046)
3,002,475,950,426
(17,711,378,226)
2,987,902,147,491

Loans receivables
Factoring
Loans

W

December 31,
2012 (Restated)

7
,8,9,10

Lease receivables
Financial lease receivables

7
,8,9
11

Property and equipments
Vehicles
Fixtures and furniture
Others

12

Other assets
Intangible assets
Account receivables
Accrued revenues
Advanced payments
Prepaid expenses
Leasehold deposits
Derivative assets
Other investment assets

8
13
9
9

9
9,18

W

Total assets

See accompanying notes to the condensed consolidated interim financial statements.
3

Condensed Consolidated Interim Statements of Financial Position, Continued
As of September 30, 2013 and December 31, 2012
(Unaudited)
September 30,
2013

713,160,297
3,811,298,060
(1,670,150,616)
939,485,760
4,000,000,000
3,457,191,901
130,082,243,227

160,738,031,822

137,539,435,128

353,166,511,075
19,820,000

338,086,980,425
19,820,000

353,186,331,075

Equity
Capital stock
Common stock
Preferred stock

(1,914,821,981)

7,100,000,000
15,389,637,505
138,248,394,317

Total liabilities

74,608,059,537

(3,776,735,788)
(1,708,212,564)
(7,179,580,284)

9,18

100,000,000,000
25,000,000,000
125,000,000,000

(626,970,675)

9
17
9

3,585,555,415,567

74,608,059,537

9
9

15,199,624,950
27,995,752,026
4,660,074,481
245,291,834
3,470,180,556
2,056,215,563
33,014,098,305
9,539,343,812
20,052,096,124
7,505,990,273
123,738,667,924

(1,067,661,257)

Other liabilities
Account payables
Accrued expenses
Unearned revenue
Advances
Withholdings
Defined benefit liabilities
Leasehold deposits received
Current income tax liabilities
Deferred income tax liabilities
Derivative liabilities

W

723,883,961,368
2,428,295,638,414
309,637,147,861
3,461,816,747,643

100,000,000,000
25,000,000,000
125,000,000,000

9,14
9,15
9,10,16

703,154,996,064
2,663,886,918,271
289,802,483,701
3,656,844,398,036

3,786,558,628,579

Liabilities
Borrowings and debt securities issued
Borrowings
Debentures
Securitized debts

December 31,
2012 (Restated)

11,949,377,655
22,250,132,426
5,340,629,542
228,777,637
3,922,817,042
3,852,014,692
48,707,968,488
8,705,251,115
23,092,151,832
1,665,110,114
129,714,230,543

Notes

(In Korean won)

338,106,800,425

4,139,744,959,654

3,923,662,215,992

1,19

Capital surplus
Paid-in capital in excess of par value

19

Accumulated other comprehensive income (loss)
Unrealized loss on valuation of derivatives
Unrealized gain (loss) on valuation of available-forsale securities
Accumulated comprehensive income (loss) of equity
method investee
Remeasurement of defined benefit plans

23

3

Retained earnings
Legal reserve
Voluntary reserve
Unappropriated retained earnings
(Appropriated regulatory reserve for credit losses (W15,289,637,505) and (W3,357
,191,901),
respectively)
(Estimated provision (reversal) of regulatory reserve
for credit losses - (W3,686,307,413) and
(W11,932,445,604), respectively)

20
3

Total equity attributable to owners of the Controlling
Company
Non-controlling interests
Total equity
W

Total liabilities and equity

4

Condensed Consolidated Interim Statements of Comprehensive Income
For the three-month and nine-month periods ended September 30, 2013 and 2012
(Unaudited)
2013
Three-month
period ended

Nine-month
period ended

2,415,138,307
73,009,333,728

2012
Three-month
Nine-month
period ended
period ended

(Restated)

7,021,317,747
213,855,804,900

3,332,853,322
70,404,077,267

8,905,239,442
203,717,582,659

6,952,103,467
2,983,330,279
1,137,224,979
4,233,000,000
1,563,991,099

22,410,676,017
8,139,463,268
3,385,075,574
200,000,000
90,000,000
2,284,969,718

10,178,561,477
2,155,841,557
689,998,753
1,936,000,000
776,500,402

33,219,384,010
5,730,504,856
2,419,575,793
1,908,500,000
250,000,000
1,138,302,325

257,387,307,224

89,473,832,778

257,289,089,085

39,555,848,726
5,871,818,797
1,818,388,340
389
17,909,655,745
4,232,427,150
2,203,095,873

118,568,968,231
18,775,273,064
5,104,035,793
90,000,389
50,979,890,535
73,686,600
5,468,545,445

42,130,758,142
5,154,175,230
868,126,232
17,169,883,854
2,054,899,540
1,353,779,670

122,681,641,658
13,851,987,244
1,947,628,238
47,036,836,940
2,300,353,520
2,872,888,913

71,591,235,020

199,060,400,057

68,731,622,668

190,691,336,513

20,702,886,839

58,326,907,167

20,742,210,110

66,597,752,572

2,431,294,617

7,046,939,634

3,138,429,404

8,994,853,145

137,999,529

41,633,144
477,083,344

49,401,100

1,660,733
287,108,823

2,569,294,146

Operating expenses
Interest expense
Bad debt expense
Loss on disposal of loans
Loss on foreign transactions
General and administrative expenses
Loss on valuation of derivatives
Other operating expenses

(Restated)

92,294,121,859

(In Korean won)
Operating revenue
Interest income
Income on loans
Income on installment financial
receivables
Income on leases
Gain on disposal of loans
Gain on foreign transactions
Dividend income
Gain on valuation of derivatives
Other operating income

7,565,656,122

3,187,830,504

9,283,622,701

3
6

8,284,642,285

20,596,770,698

4,513,627,024

12,496,030,959

6

123,472,416
-

1,000,000
326,685,269
-

50,000,000
133,493,412
-

87,386,150
50,000,000
381,808,160
8,582,824,000

Notes
W

8

21

Operating income
Non-operating income
Gain on equity method valuation
Gain on disposal of property
and equipment
Miscellaneous income

Non-operating expenses
Loss on equity method valuation
Loss on disposal of property
and equipment
Donation
Miscellaneous losses
Other non-operating expenses

3
6

8,408,114,701

20,924,455,967

4,697,120,436

21,598,049,269

14,864,066,284

44,968,107,322

19,232,920,178

54,283,326,004

22

5,800,726,420

15,769,510,628

5,778,851,657

16,169,942,741

20,24 W

9,063,339,864

29,198,596,694

13,454,068,521

38,113,383,263

Profit attributable to:
Owners of the Controlling Company

W

9,063,339,864
-

29,198,596,694
-

13,454,068,521
-

38,113,383,263
-

Profit for the period

W

9,063,339,864

29,198,596,694

13,454,068,521

38,113,383,263

Profit before income taxes
Income tax expenses
(Profit adjusted by regulatory reserve
for credit losses amounted to
W9,063,339,864 and W12,499,033,858
for the three-month, and
W25,512,289,281 and
W27,475,802,027 for the nine-month
periods ended September 30, 2013 and
2012)

5

Condensed Consolidated Interim Statements of Comprehensive Income, Continued
For the three-month and nine-month periods ended September 30, 2013 and 2012
(Unaudited)
2013
(In Korean won)

Three-month
period ended

Notes
Other comprehensive income (loss),
net of Income taxes
Items that are or may be reclassified to
profit or loss subsequently
Items that will not be reclassified to
profit or loss
Total comprehensive income
for the period
attributable to:
Owners of the Controlling Company
for the period

2012
Nine-month
period ended

Three-month
period ended

Nine-month
period ended

(Restated)

(Restated)

3,23
W

393,108,701

(8,081,004,096)

5,992,610,939

4,125,912,169

(13,081,028)
380,027,673

(38,061,948)
(8,119,066,044)

5,992,610,939

4,125,912,169

W

9,443,367,537

21,079,530,650

19,446,679,460

42,239,295,432

W

9,443,367,537
-

21,079,530,650
-

19,446,679,460
-

42,239,295,432
-

W

9,443,367,537

21,079,530,650

19,446,679,460

42,239,295,432

6

Condensed Consolidated Interim Statements of Changes in Equity
For the nine-month periods ended September 30, 2013 and 2012
(Unaudited)

Capital
stock

(In Korean won)

Accumulated
other
comprehensive
income (loss)

Capital
surplus

Retained earnings

Total
attributable
to owners of the
Controlling
Company

Non-controlling
interests

Total equity
349,356,817,326
349,356,817,326

-

-

38,113,383,263

38,113,383,263

-

38,113,383,263

-

(1,193,237,206)

-

(1,193,237,206)

-

(1,193,237,206)

-

(2,553,302,601)

-

(2,553,302,601)

-

(2,553,302,601)

-

7,872,451,976
4,125,912,169

1,482,519,831
39,595,903,094

9,354,971,807
43,721,815,263

-

9,354,971,807
43,721,815,263

125,000,000,000

74,608,059,537

6,447,632,025

(55,000,000,000)
132,003,121,027

(55,000,000,000)
338,058,812,589

19,820,000

(55,000,000,000)
338,078,632,589

125,000,000,000
125,000,000,000

74,608,059,537
74,608,059,537

2,609,636,376
(1,670,150,616)
939,485,760

135,869,284,512
1,670,150,616
137,539,435,128

338,086,980,425
338,086,980,425

19,820,000
19,820,000

338,106,800,425
338,106,800,425

-

-

29,198,596,694

29,198,596,694

-

29,198,596,694

-

847,160,724

-

847,160,724

-

847,160,724

-

-

(1,340,130,972)

-

(1,340,130,972)

-

(1,340,130,972)

-

W

19,820,000
19,820,000

-

Balance as of September 30, 2013

349,336,997,326
349,336,997,326

-

W

146,466,631,832
940,586,101
147,407,217,933

-

Balance as of January 1, 2013
Changes in accounting policy
Balance as of January 1, 2013 (Restated)
Total comprehensive income (loss)
Other comprehensive income (loss)
Net unrealized gain on valuation of derivatives
Net unrealized loss on valuation of available-forsale securities
Other comprehensive loss of equity method
Investees
Remeasurement of defined benefit plans
Total comprehensive income (loss) for the period
Transactions with owners
Dividends paid

3,262,305,957
(940,586,101)
2,321,719,856

-

W

74,608,059,537
74,608,059,537

-

W

125,000,000,000
125,000,000,000
-

Balance as of January 1, 2012
Changes in accounting policy
Balance as of January 1, 2012 (Restated)
Total comprehensive income (loss)
Other comprehensive income (loss)
Net unrealized loss on valuation of derivatives
Net unrealized loss on valuation of available-forsale securities
Other comprehensive income of equity method
investees
Total comprehensive income for the period
Transactions with owners
Dividends paid
Balance as of September 30, 2012

-

(7,588,033,848)
(38,061,948)
(8,119,066,044)

29,198,596,694

(7,588,033,848)
(38,061,948)
21,079,530,650

-

(7,588,033,848)
(38,061,948)
21,079,530,650

-

-

-

(6,000,000,000)

(6,000,000,000)

-

(6,000,000,000)

125,000,000,000

74,608,059,537

(7,179,580,284)

160,738,031,822

353,166,511,075

19,820,000

353,186,331,075

7

Condensed Consolidated Interim Statements of Cash Flows
For the nine-month periods ended September 30, 2013 and 2012
(Unaudited)
Notes

(In Korean won)

Cash flows from operating activities
Cash used in operations
Interest received
Interest paid
Dividend received
Income taxes paid
Net cash used in operating activities

24 W

2013

2012

508,690,000,000
(565,985,679,701)
899,089,156,160
(415,000,000,000)
(30,000,000,000)
(55,000,000,000)
341,793,476,459

7,697,170,271

Net cash increase (decrease) in cash and cash
equivalents

(98,969,780,000)
63,107,858
(76,172,300)
(1,075,495,388)
(637,334,104)
5,000,000
(908,722,500)
(101,599,396,434)

572,540,000,000
(593,268,965,304)
921,848,440,878
(687,398,500,000)
(19,834,664,160)
(4,711,000,000)
(6,000,000,000)
183,175,311,414

Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Issuance of debentures
Repayments of debentures
Repayments of securitized debts
Liquidation of derivatives
Payments of dividends
Net cash provided by financing activities

(113,475,492,585)
7,521,014,110
(117,067,771,780)
250,000,000
(17,588,100,850)
(240,360,351,105)

3,717,175,679
(26,873,441,598)
33,890,000
10,502,000
(1,392,630,598)
(123,111,013)
(6,859,044,802)
9,306,000,928
(289,147,437)
(22,469,806,841)

Cash flows from investing activities
Proceeds from sale of available-for-sale securities
Acquisition of available-for-sale securities
Acquisition of investments in associates
Proceeds from disposal of vehicles
Acquisition of vehicles
Proceeds from disposal of fixtures and furniture
Acquisition of fixtures and furniture
Acquisition of intangible assets
Increase in advanced payments
Decrease in leasehold deposits
Increase in leasehold deposits
Net cash used in investing activities

(30,067,670,981)
5,233,076,246
(114,695,825,147)
200,000,000
(13,677,914,420)
(153,008,334,302)

(166,271,080)

Cash and cash equivalents at beginning of period

24

282,825,795,422

276,009,118,714

Cash and cash equivalents at end of period

24 W

290,522,965,693

275,842,847,634

8

September 30, 2013
(Unaudited)
(In thousands of won)
1.

Reporting Entity
Hyundai Commercial, Inc., the controlling company, and its subsidiaries (collectively, the “Group”)
included in consolidation are summarized as below.
(a) Controlling Company
Hyundai Commercial, Inc. (the “Controlling Company”) was established on March 27, 2007, by taking
over all the assets, liabilities, rights, and obligations related with the loans of the industrial product
division of Hyundai Capital Services, Inc. and its installment financing and lease financing division. It is
engaged in installment financing and leasing of facilities. The Group’s operations are headquartered in
Yeouido, Seoul. The common shareholders of the Group’s as of September 30, 2013 were as follows:

Hyundai Motor Company
Myung-yi Chung
Tae-young Chung

Number of shares
10,000,000
6,667,000
3,333,000
20,000,000

Percentage of ownership (%)
50.00
33.33
16.67
100.00

(b) The Group’s subsidiaries
Subsidiaries as of September 30, 2013 and December 31, 2012 were as follows. The Group has
control over the subsidiaries established as special purpose entities for asset securitization even
though its ownership interests over the subsidiaries do not exceed 50%.

Special Purpose Entities

2.

September 30, 2013
Commercial Auto First
SPC (trust)
Commercial Auto Second
SPC (trust)

December 31, 2012
Commercial Auto First
SPC (trust)
Commercial Auto Second
SPC (trust)

Basis of Preparation
(a) 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. Selected explanatory notes are included to explain events and
transactions that are significant to understanding of the changes in financial position and performance
of the Group since the last annual consolidated financial statements as of and for the year ended
December 31, 2012.
(b) Use of estimates and judgments
The preparation of the condensed consolidated interim 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.

9

September 30, 2013
(Unaudited)
3.

Significant Accounting Policies
(a) 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 the
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 of and for the year ended December 31, 2013.
1) New standards and interpretations
i)

Amendments to K-IFRS No. 1001 Presentation of Financial Statements
The Group applies the amendments from annual periods beginning at January 1, 2013. The
amendments require presenting items in other comprehensive income on the basis of whether
they are potentially reclassifiable to profit or loss in subsequent periods.

ii) Enactment of K-IFRS No. 1110 Consolidated Financial Statements
The Group applies the standard from annual periods beginning on January 1, 2013. The standard
outlines the requirements for the preparation and presentation of consolidated financial statements,
requiring the Group to consolidate entities it controls. An investor is considered to have control
over an investee when it has exposure or rights to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee.
iii) Enactment of K-IFRS No. 1112 Disclosure of Interests in Other Entities
requires a wide range of disclosures about an entity's interests in subsidiaries, joint arrangements,
associates and unconsolidated 'structured entities'. The standard requires the disclosure of
information that enables users of financial statements to evaluate the nature, and risks associated
with its interests in other entities and the effects of those interests on its financial position,
financial performance and cash flows.
iv) Amendments to K-IFRS No. 1019 Employee Benefits
The Group applies the amendments from annual periods beginning on January 1, 2013. The
amendments require recognition of actuarial gains and losses immediately in other comprehensive
income, and to calculate expected returns on plan assets based on the rate used to discount the
defined benefit obligation.
v) Enactment of K-IFRS No. 1113 Fair Value Measurement
provides a single framework for measuring fair value and requires disclosures about fair value
measurements.

10

September 30, 2013
(Unaudited)
3.

Significant Accounting Policies, Continued
(a) Changes in accounting policies, continued
2) Effects of changes in accounting policies
i)

Amendments to K-IFRS No. 1001 Presentation of Financial Statements
The Group applied the amendments to K-IFRS No. 1001 Presentation of Financial Statements
regarding presentation of operating income from the annual period ended December 31, 2012.
The Group applied the changes of accounting policy retrospectively and restated its comparative
interim financial statements. The following table summarizes the financial effects on the
statement of comprehensive income for the three-month and nine-month periods ended
September 30, 2012.
September 30, 2012
As previously reported
Three-month
Nine-month
period ended period ended
Operating income
Earnings per share (won)

W

Adjustments (*)
Three-month
Nine-month

As restated
Three-month
Nine-month

20,608,118

66,367,328

134,092

230,425

20,742,210

66,597,753

13,454,069

38,113,383

-

-

13,454,069

38,113,383

673

1,906

-

-

673

1,906

(*) The following items were classified as operating income before applying the amendments to KIFRS No. 1001 Presentation of Financial Statements. After the amendments, they were
excluded from operating income.
September 30, 2012
Nine-month
Three-month
period ended
period ended
Non-operating income
Gain on disposal of property and equipment W
(1,661)
Miscellaneous income
(49,401)
(287,108)
Non-operating expenses
Loss on disposal of property and equipment
87,386
Donations
50,000
50,000
Miscellaneous losses
133,493
381,808
134,092

230,425

ii) Amendments to K-IFRS No. 1019 Employee Benefits
The amendments to K-IFRS No. 1019 Employee Benefits are applied retrospectively, and the
Group reclassified accumulated actuarial gains and losses into other comprehensive income
accordingly. The following table summarizes the financial effects on the condensed consolidated
statement of financial position as of December 31, 2012. The Group applied the changes of
accounting policy retrospectively and restated its comparative financial statements.
December 31, 2012
As previously
reported
Accumulated other comprehensive income W
Retained earnings
11

Adjustments

As restated

2,609,636

(1,670,150)

939,486

135,869,285

1,670,150

137,539,435

September 30, 2013
(Unaudited)
3.

(a) Changes in accounting policies, continued
3) New standards and interpretations not yet adopted
The following new standards, interpretations and amendments to existing standards have been
published and are mandatory for the Group for annual periods beginning after January 1, 2013, and
the Group has not early adopted them. The financial impact of the adoption of these
amendments is currently under assessment.
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 a
legally enforceable right of set-off and that some gross settlement systems may be considered
equivalent to net settlement. The amendments are effective for annual periods beginning on or
after January 1, 2014 and are required to be applied retrospectively.
(b) Consolidation
i)

Subsidiaries
The Group controls subsidiaries when it is exposed, or has rights, to variable returns from its
involvement with the subsidiaries and has the ability to affect those returns through its power over
the subsidiaries. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. If a
subsidiary of the Group uses accounting policies other than those adopted in the consolidated
financial statements for like transactions and events in similar circumstances, appropriate
adjustments are made to its financial statements in preparing the consolidated financial
statements.

ii) Intra-group transactions
Intra-group balances and transactions, and any unrealized income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Intra-group
losses are recognized as expense if intra-group losses indicate an impairment that requires
recognition in the consolidated financial statements.
iii) Non-controlling interests
Non-controlling interests in a subsidiary are accounted for separately from the parent’s ownership
interests in a subsidiary. Each component of net profit or loss and other comprehensive income
is attributed to the owners of the parent and non-controlling interest holders, even when the
allocation reduces the non-controlling interest balance below zero.
iv) Changes in ownership interests in a subsidiary
Changes in ownership interests in a subsidiary that do not result in a loss of control, such as the
subsequent purchase or sale by a parent of a subsidiary’s equity instruments, are accounted for as
equity transactions in capital adjustments. Adjustments to non-controlling interests are based on
a proportionate amount of net asset of the subsidiary. No adjustments are made to goodwill and
no gain or loss is recognized in profit or loss. The difference between the consideration and the
adjustments made to non-controlling interest is recognized directly in equity attributable to the
owners of the Group.

12

September 30, 2013
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3.

(c) Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary
nor an interest in a joint venture. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but not have control or joint control over these policies.
Significant influence is generally presumed to exist when the Group holds 20% or more, but less than
50%, of the voting rights.
Under the equity method, an investment in an associate is initially recognized in the consolidated
statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the
profit or loss and other comprehensive income of the associate. When the Group’s share of losses of
an associate exceeds the Group’s interest in that associate (which includes any long-term interests
that, in substance, form part of the Group’s net investment in the associate), the Group discontinues
recognizing its share of further losses. Additional losses are recognized only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the associate.
If an associate uses accounting policies different from those of the Group for like transactions and
events in similar circumstances, appropriate adjustments are made to its financial statements in
applying the equity method.
When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying
amount of that interest, including any long-term investments, is reduced to nil and the recognition of
further losses is discontinued except to the extent that the Group has an obligation or has to make
payments on behalf of the investee for further losses.
(d) Cash and cash equivalents
The Group considers cash on hand, call deposits, and highly liquid financial assets which are subject to
insignificant risk of changes in their fair values to be cash and cash equivalents.
(e) Non-derivative financial assets
Non-derivative financial assets are classified into the following measurement categories: financial
assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and
available-for-sale financial assets, all of which are initially recognized on the date at which the Group
becomes a party to the contractual provisions of the instrument.
A financial asset is measured initially at its fair value plus, for an item not at fair value through profit or
loss, transaction costs that are directly attributable to its acquisition.
i)

Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset is either
held for trading or is designated at fair value through profit or loss. Financial assets at fair value
through profit or loss are measured at fair value upon initial recognition and changes therein are
recognized in profit or loss. Upon initial recognition, attributable transaction costs are recognized
in profit or loss as incurred.

13

September 30, 2013
(Unaudited)
3.

(e) Non-derivative financial assets, continued
ii) Held-to-maturity investments
If the non-derivative assets have a fixed maturity with fixed or determinable payments, and the
Group has the positive intent and ability to hold them until maturity, then such financial assets are
classified as held-to-maturity. Subsequent to initial recognition, held-to-maturity financial assets
are measured at amortized cost using the effective interest rate method.
iii) Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted
in an active market. Subsequent to initial recognition, loans and receivables are measured at
amortized cost using the effective interest method.
iv) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are designated as
available-for-sale or are not classified as financial assets at fair value through profit or loss, held-tomaturity investments or loans and receivables. Subsequent to initial recognition, they are
measured at fair value, with changes in fair value, net of any tax effect, recorded in other
comprehensive income in equity. Investments in equity instruments that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured and derivatives
those are linked to and must be settled by delivery of such unquoted equity instruments are
measured at cost.
v) Derecognition of financial assets
The Group de-recognizes a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows of the financial asset in
a transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. If the Group retains substantially all the risks and rewards of ownership of the
transferred financial assets, the Group continues to recognize the transferred financial assets and
recognizes financial liabilities for the consideration received.
vi) Offsetting between financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is presented in the
consolidated statement of financial position only when the Group currently has a legally enforceable
right to offset the recognized amounts, and there is the intention to settle on a net basis or to
realize the asset and settle the liability simultaneously.
(f) Derivative financial instruments
Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are accounted for as described below.
1) Hedge accounting
The Group holds various derivative financial instruments, such as currency swaps and interest rate
swaps, etc., to hedge its foreign currency and interest rate risk exposures.
On initial designation of the hedge, the Group formally documents the relationship between the
hedging instruments and hedged items, including the risk management objectives and strategy in
undertaking the hedge transaction, together with the methods that will be used to assess the
effectiveness of the hedging relationship.

14

September 30, 2013
(Unaudited)
3.

(f) Derivative financial instruments, continued
i)

Fair value hedge
Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are
recognized in profit or loss. The gain or loss from remeasuring the hedging instrument at fair
value for a derivative hedging instrument and the gain or loss on the hedged item attributable to
the hedged risk are recognized in profit or loss in the same line item of the consolidated
statement of comprehensive income.
The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold,
terminated or exercised, or if the hedge no longer meets the criteria for hedge accounting. Any
adjustment arising from gain or loss on the hedged item attributable to the hedged risk is
amortized to profit or loss from the date the hedge accounting is discontinued.

ii) Cash flow hedge
When a derivative is designated to hedge the variability in cash flows attributable to a particular
risk associated with a recognized asset or liability or a highly probable forecasted transaction that
could affect profit or loss, the effective portion of changes in the fair value of the derivative is
recognized in other comprehensive income, net of tax, and presented in the hedging reserve in
equity. Any ineffective portion of changes in the fair value of the derivative is recognized
immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold,
terminated, exercised, or the designation is revoked, then hedge accounting is discontinued
prospectively. The cumulative gain or loss on the hedging instrument that has been recognized
in other comprehensive income is reclassified to profit or loss in the periods during which the
forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then
the balance in other comprehensive income is recognized immediately in profit or loss.
2) Embedded derivative instruments
Embedded derivatives are separated from the host contract and accounted for separately only if the
following criteria has been met: (a) the economic characteristics and risks of the host contract and
the embedded derivatives are not clearly and closely related to a separate instrument with the
same terms as the embedded derivative that would meet the definition of a derivative, and (b) the
hybrid (combined) instrument is not measured at fair value through profit or loss. Changes in the
fair value of separable embedded derivatives are recognized immediately in profit or loss.
3) Other derivative instruments
Changes in the fair value of other derivative financial instrument not designated as a hedging
instrument are recognized immediately in profit or loss.

15

September 30, 2013
(Unaudited)
3.

(g) Impairment of financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and
that the loss event had a negative effect on the estimated future cash flows of that asset that can be
estimated reliably. However, losses expected as a result of future events, regardless of likelihood,
are not recognized.
Objective evidence that a financial asset is impaired includes, but not limited to, the following events:
i)

Assets carried at amortized cost
An impairment loss in respect of assets carried at amortized cost measured at amortized cost is
calculated as the difference between its carrying amount and the present value of the estimated
future cash flows discounted at the asset’s original effective interest rate and is recognized in
profit or loss. Interest on the impaired asset continues to be recognized through the unwinding
of the discount. When a subsequent event causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through profit or loss.

ii) Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognized in other
comprehensive income and there is objective evidence that the asset is impaired, the cumulative
loss that had been recognized in other comprehensive income is reclassified from equity to profit
or loss as a reclassification adjustment even though the financial asset has not been derecognized.
Impairment losses recognized in profit or loss for an investment in an equity instrument classified
as available-for-sale are not reversed through profit or loss. If, in a subsequent period, the fair
value of a debt instrument classified as available-for-sale increases and the increase can be
objectively related to an event occurring after the impairment loss was recognized in profit or loss,
the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.
(h) Revenue recognition
The Group recognizes capital lent to customers as loans receivables. Installment financial capital
paid by the Group to manufacturers or sellers on behalf of customers is recognized as installment
financial assets. Financial lease receivables classified as financial leases are recognized as lease
receivables.
The expected future cash flows from loans receivables, installment financial assets and lease
receivables (“financial receivables”) described above are amortized under the effective interest
method over the period of the financial receivables being used by customers.
(i) Deferral of loan origination fee and loan origination cost
Loan origination fee, which is processing fee in relation to the loan origination process such as
upfront fee, is deferred and deducted from the loan account, adjusted over the life of the loan
based on the effective interest rate method. Loan origination cost, which relates to activities
performed by the lender such as soliciting potential borrowers, is deferred and added to the loan
account, adjusted over the life of the loan based on the effective interest rate method when the
future economic benefit in connection with the cost incurred can be identified on a per loan basis.

16

September 30, 2013
(Unaudited)
3.

(j) Allowance for financial receivables
i)

Calculation of allowance for doubtful accounts
The Group recognizes the impairment of receivables as an allowance for doubtful accounts. It is
based on the impairment estimates made through impairment assessment of receivables carried
at amortized cost. Allowance for doubtful account consists of impairments related to individually
material financial receivables and collective assessment for impairment incurred in homogeneous
assets.
Individually material receivables undertake the individual assessment of the difference between
the assets’ carrying amount and the present value of estimated future cash flows. Unimpaired
assets from individual assessments and individually immaterial assets undertake the collective
assessment classified by asset groups that have analogous risk attributes. The Group uses
statistical model in the collective assessment based on the expected probability of default, periodic
collect amounts, loss-given default based on the past losses, loss emergence period, and
management’s decision about the current economy and credit circumstance. The material factors
used in statistical model for the collective assessment are evaluated to compare with actual data
regularly.
The amount of impairment loss is reflected in allowance for doubtful accounts as profit or loss.

ii)

Write-off policy
The Group writes off the doubtful receivables when the assets are deemed unrecoverable. This
decision considers the information about significant changes of financial position such that a
borrower or an obligor is in default, or the amount recoverable from security is not enough.
Write-off decision of standard small loan is generally made based on the delinquent status of loan.

(k) Leases
i)

Classification
The Group classifies and accounts for leases as either a finance or operating lease, depending on
the terms. Leases where the lessee assumes substantially all of the risks and rewards of
ownership are classified as finance leases. All other leases are classified as operating leases.
The lease arrangement classified as a finance lease is where: ① the lease transfers ownership of
the asset to the lessee by the end of the lease term, ② the lessee has the option to purchase the
asset at a price that is expected to be sufficiently lower than the fair value at the date the option
becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option
will be exercised, ③ the lease term is for the major part of the economic life of the asset even if
the title is not transferred, ④ at the inception of the lease the present value of the minimum lease
payments amounts to at least substantially all of the fair value of the leased asset, or ⑤ the leased
assets are of such a specialized nature that only the lessee can use them without major
modifications.
Minimum lease payments include that part of the residual value that is guaranteed by the lessee,
by a party related to the lessee or by a third party unrelated to the Group that is financially capable
of discharging the obligation under the guarantee.

17

September 30, 2013
(Unaudited)
3.

(k) Leases, continued
ii)

Finance leases
Where the Group has substantially all the risks and rewards of ownership, lease of property, and
equipment are classified as finance lease. An amount equal to the net investment in the lease is
presented as a receivable. Expenses that are incurred with regard to the lease contract made but
not executed at the date of the statement of financial position are accounted for as prepaid leased
assets and are classified as finance lease receivables at the inception of the lease. Lease
receivables include amounts such as commissions, legal fees, and internal costs that are
incremental and directly attributable to negotiation and arranging a lease. Each lease payment is
allocated between principal and finance income. Financial income on an uncollected part of net
investment shall be allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.

(l) Property and equipment
Property and equipment are initially measured at cost and after initial recognition, are carried at cost
less accumulated depreciation and accumulated impairment losses. The cost of property and
equipment includes expenditures arising directly from the construction or acquisition of the asset, any
costs directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management and the initial estimate of the costs of
dismantling and removing the item and restoring the site on which it is located.
The cost of replacing a part of an item of property or equipment is recognized in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the
Group and its cost can be measured reliably. The carrying amount of the replaced cost is
derecognized. The cost of the day to day servicing of property and equipment are recognized in profit
or loss as incurred.
Property and equipment are depreciated on a straight-line basis over the estimated useful lives, which
most closely reflect the expected pattern of consumption of the future economic benefits embodied in
the asset. The estimated useful lives for the current and comparative years are as follows:
Descriptions
Vehicles

Depreciation method
Straight-line
Straight-line

Useful lives
4 years
4 years

Works of art classified under other tangible assets are not amortized due to their indefinite useful life
in nature.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset’s carrying amount is written down immediately to its recoverable
amount if the carry amount is greater than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing the proceeds with the carrying amount, and recognized within
other operating income (expenses) in the consolidated statement of comprehensive income.

18

September 30, 2013
(Unaudited)
3.

(m) Intangible assets
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated
amortization and accumulated impairment losses.
Amortization of intangible assets is calculated on a straight-line basis over the estimated useful lives of
intangible assets from the date that they are available for use. The residual value of intangible assets
is zero.
Descriptions
Development
Software
Other intangible assets

Amortization method
Straight-line
Straight-line
Straight-line

Useful lives
5 years
4 years
5 years

i)

Research and development
Expenditures on research activities, undertaken with the prospect of gaining new scientific or
technical knowledge and understanding, are recognized in profit or loss as incurred.
Development expenditures are capitalized only if development costs can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable,
and the Group intends to and has sufficient resources to complete development and to use or sell
the asset. Other development expenditures are recognized in profit or loss as incurred.

ii)

Subsequent expenditures
Subsequent expenditures are capitalized only when they increase the future economic benefits
embodied in the specific asset to which it relates. All other expenditures, including expenditures
on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(n) Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortization and are tested annually for
impairment. Assets that are subject to amortization are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash generating units). Nonfinancial assets that are subject to amortization suffered impairment are viewed for possible
reversal of the impairment at each reporting date.
(o) Non-derivative financial liabilities
The Group classifies non-derivative financial liabilities into financial liabilities at fair value through
profit or loss or other financial liabilities in accordance with the substance of the contractual
arrangement and the definitions of financial liabilities. The Group recognizes financial liabilities in
the consolidated statement of financial position when the Group becomes a party to the
contractual provisions of the financial liability.
i)

Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or
designated as such upon initial recognition. Subsequent to initial recognition, financial liabilities at
fair value through profit or loss are measured at fair value, and changes therein are recognized in
profit or loss. Upon initial recognition, transaction costs that are directly attributable to the
acquisition are recognized in profit or loss as incurred.
19

September 30, 2013
(Unaudited)
3.

(o) Non-derivative financial liabilities, continued
ii)

Other financial liabilities
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are
classified as other financial liabilities. At the date of initial recognition, other financial liabilities are
measured at fair value minus transaction costs that are directly attributable to the acquisition.
Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the
effective interest method.
The Group derecognizes a financial liability from the consolidated statement of financial position
when it is extinguished (i.e., when the obligation specified in the contract is discharged, cancelled
or expires).

(p) Pension obligations
The Group operates a defined benefit plan. A defined benefit plan is a post-employment benefit plan
other than a defined contribution plan.
The liability recognized in the statement of financial position in respect of defined benefit pension plans
is the present value of the defined benefit obligation at the end of reporting period less the fair value of
plan assets, together with adjustments for unrecognized past-service costs. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are denominated in the currency in
which the benefits will be paid, and that have terms to maturity approximating to the terms of the
related pension obligation. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognized in other comprehensive income or loss in the period
in which they arise.
(q) Provisions and contingent liabilities
When there is a probability that an outflow of economic benefits will occur due to a present obligation
resulting from a present legal or as a result of past events, and whose amount is reasonably estimable,
a corresponding amount of provision is recognized in the consolidated financial statements.
Provisions are the best estimate of the expenditure required to settle the present obligation that
consider the risks and uncertainties inevitably surround many events and circumstances at the
reporting date. Where the effect of the time value of money is material, the amount of a provision is
the present value of the expenditure expected to be required to settle the obligation.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best
estimates. If it is no longer probable that an outflow of resources embodying economic benefits will
be required to settle the obligation, the provision is reversed.
A possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of uncertain future events, or a present obligation that arises from past
events but is not certain to occur, or cannot be reliably estimated, a disclosure regarding the contingent
liability is made in the notes to the consolidated financial statements.

20

September 30, 2013
(Unaudited)
3.

(r) Foreign currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in Korean won, which is the Group’s
functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognized in the statement of comprehensive income, except when deferred in other comprehensive
income as qualifying cash flow hedges.
(s) Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of
ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the
Group’s option, and any dividends are discretionary.
Dividends thereon are recognized as
distributions within equity upon approval by the Group’s shareholders.
(t) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized
in profit or loss except to the extent that it relates to a business combination, or items recognized
directly in equity or in other comprehensive income.
i)

Current income tax
Current income tax is the expected tax payable or receivable on the taxable profit or loss for the
year, using tax rates enacted or substantively enacted at the end of the reporting period and any
adjustment to tax payable in respect of previous years. The taxable profit is different from the
accounting profit for the period since the taxable profit is calculated excluding the temporary
differences, which will be taxable or deductible in determining taxable profit (tax loss) of future
periods, and non-taxable or non-deductible items from the accounting profit.

ii)

Deferred income tax
Deferred income tax is recognized, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements.
However, deferred tax assets and liabilities are not recognized if they arise from initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates and laws that have been enacted or substantially enacted by the
statement of financial position date and are expected to apply when the related deferred income
tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are
recognized only to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilized.

21

September 30, 2013
(Unaudited)
3.

(t) Income tax, continued
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and
reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit
will be available to allow the benefit of part or all of that deferred tax asset to be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries,
associates and joint ventures except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.

4.

Restricted Financial Instruments
Restricted financial instruments as of September 30, 2013 and December 31, 2012 were as follows:
Type
Due from banks

5.

Depository
Kookmin Bank
and 2 others

September 30,
2013

December 31,
2012

9,000

W

9,000

Restriction
Guarantee deposit
for account opening

Available-for-sale Securities
Balances as of available-for-sale securities as of September 30, 2013 and December 31, 2012 were as
follows:
September 30, 2013
Equity securities
Marketable equity securities
Unlisted equity securities
Beneficiary certificates

W

December 31, 2012

8,290,000

10,650,000

6,072,629

5,607,645

23,179,733

22

10,726,682

49,111,105

W

16,257,645

11,568,743

Debt securities

-

37,542,362

26,984,327

September 30, 2013
(Unaudited)
5.

Available-for-sale Securities, Continued
Details of available-for-sale securities as of September 30, 2013 and December 31, 2012 were as
follows:
Book value
Acquisition
September
December 31,
Number
Ownership
cost
30, 2013
2012
of shares
(%)
Marketable equity
securities
JNK Heaters Co.,
Ltd.
Unlisted equity
securities
Leehan Corp. (*1)
Anyang KDC
Project Corp.
Anyang KDC Asset
Management
Corp.
Isung Eng, Corp.

1,000,000

12.50 W

10,126,881

8,290,000

10,650,000

136,000

12.30

3,199,762

3,769,920

3,304,936

389,999

15.00

2,293,275

2,293,275

2,293,275

1,499

15.00

8,814

8,814

8,814

24

-

Beneficiary
certificates
Hanjoo New Credit
private special
asset investment
trust
Yuniaedaebu
private special
asset investment
trust
Yuniaedaebu
private special
asset investment
2nd trust

620

620

620

5,502,471

6,072,629

5,607,645

N/A

73.70

5,491,196

5,514,663

-

N/A

-

8,243,070

8,243,070

-

N/A

-

9,422,000

9,422,000

-

23156266

23179733

-

7,152,626

7,551,321

6,726,682

Debt securities
Leehan Corp. (*2)
Commercial Auto
Third SPC

4,000,000

W

23

4,017,422

4,000,000

11,152,626

11,568,743

10,726,682

49,938,244

49,111,105

26,984,327

September 30, 2013
(Unaudited)
5.

Available-for-sale Securities, Continued
(*1) The fair value of the securities of Leehan Corp. is the valuation price provided by an external
appraiser, Korea Asset Pricing. The external appraiser valuated the fair value as the average of
valuation prices using the discounted cash flow model and the imputed market value model.
(*2) The debt security is a convertible bond issued by Leehan Corp. The fair value of the convertible
bond is provided by an external appraiser, Korea Asset Pricing. The difference between the fair
value and book value of the convertible bond is amortized using the effective interest rate
method and is recognized as a gain or loss on valuation of debt securities. The fluctuation of in
the fair value of the conversion right and the advanced redemption right is recognized in the gain
or loss on embedded derivatives.

24

September 30, 2013
(Unaudited)
6.

Investments in Associates
Details of investments in associates as of September 30, 2013 and December 31, 2012 were as
follows:

Number
of shares
September 30, 2013
Hyundai Card Co.,
Ltd. (*)
Hyundai Life
Insurance Co., Ltd.

Ownership
(%)

5.54

10,685,620

39.07

8,889,622

113,820,162

126,104,415

165,717,956

138,913,060

74,948,516

98,615,052

252,733,222

201,052,931

264,333,008

W

113,820,162

121,460,539

158,386,190

138,913,060

5.54

10,685,620

W

Book value

W
December 31, 2012
Hyundai Card Co.,
Ltd. (*)
Hyundai Life
Insurance Co., Ltd.

8,889,622

Acquisition
cost

Proportionate
net asset
value of
investee

102,391,658

127,015,755

252,733,222

223,852,197

285,401,945

39.07
W

(*) 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.

25

September 30, 2013
(Unaudited)
6.

Investments in Associates, Continued
Details of valuation of equity method investment and other changes as of September 30, 2013 and
December 31, 2012 were as follows:

Beginning
balance

Share of
profit(loss)

Acquisition

Changes in
accumulated
other
comprehensive income
(loss) (*)

Changes
in
retained
earning

Ending
balance

September 30, 2013
Hyundai Card Co.,
Ltd.
W 158,386,190
Hyundai Life
Insurance Co., Ltd.
127,015,755

-

7,046,940

284,826

-

165,717,956

-

(20,596,771)

(7,803,932)

-

98,615,052

W 285,401,945

-

(13,549,831)

(7,519,106)

-

264,333,008

W 147,539,965

-

10,609,150

237,075

-

158,386,190

-

138,913,060

(18,716,249)

5,334,179

1,484,765

127,015,755

W 147,539,965

138,913,060

(8,107,099)

5,571,254

1,484,765

285,401,945

December 31, 2012
Hyundai Card Co.,
Ltd.
Hyundai Life
Insurance Co., Ltd.
(**)

(*) Tax effects are not deducted
(**) The Group recognized W8,582,824 of imposition amount related to acquisition of Hyundai Life
Insurance Co., Ltd. as other non-operating expenses for the nine-month period ended
September 30, 2012.

26

September 30, 2013
(Unaudited)
6.

Investments in Associates, Continued
Condensed financial statements of associates as of and for the nine-month ended September 30, 2013
and for the year ended December 31, 2012 were as follows:
Fiscal year
end

Assets

Profit (loss)
for the
period

Liabilities

Operating
revenue

8,614,817,007

1,875,911,211

127,203,292

September 30, 2013
Hyundai Card Co.,
Ltd.
Hyundai Life
Insurance Co., Ltd.

December W 10,939,628,346
4,054,029,585

3,862,219,250

740,471,405

(28,938,932)

December 31, 2012
Hyundai Card Co.,
Ltd.
Hyundai Life
Insurance Co., Ltd. (*)

December W 11,252,488,244

9,060,021,557

2,524,941,896

191,504,230

3,562,563,039

885,330,384

(6,045,704)

March

March

3,824,606,629

(*) Hyundai Life Insurance Co., Ltd. is a corporation with fiscal year ending on March 31. However,
its assets and liabilities presented above are as of December 31, 2012, and the results of its
operations are for the nine-month period ended December 31, 2012.

27

September 30, 2013
(Unaudited)
7.

Financial Receivables
Details of financial receivables as of September 30, 2013 and December 31, 2012 were as follows:

Principal

Deferred loan
origination
fees and costs

Allowance for
doubtful
accounts

Present value
discount

Book value

September 30, 2013
Loans receivables
3,152,027

-

-

(14,452)

3,137,575

2,960,371,452

42,366,488

(261,990)

(17,711,378)

2,984,764,572

2,963,523,479

42,366,488

(261,990)

(17,725,830)

2,987,902,147

291,424,266

3,557,999

-

(1,805,336)

293,176,929

18,294,517

(197,723)

-

(123,232)

17,973,562

309,718,783

3,360,276

-

(1,928,568)

311,150,491

187,013,026

135,381

-

(1,606,732)

185,541,675

W 3,460,255,288

45,862,145

(261,990)

(21,261,130)

3,484,594,313

108,000

-

-

(270)

107,730

2,764,943,740

35,870,003

(200,613)

(19,258,900)

2,781,354,230

2,765,051,740

Factoring receivables

35,870,003

(200,613)

(19,259,170)

2,781,461,960

331,018,925
25,765,456
356,784,381

2,702,341
(140,848)
2,561,493

-

(2,351,090)
(176,228)
(2,527,318)

331,370,176
25,448,380
356,818,556

132,355,777

687

-

(1,026,911)

131,329,553

W 3,254,191,898

38,432,183

(200,613)

(22,813,399)

3,269,610,069

W

Loans
Installment financial
assets
Auto
Durable goods
Lease receivables
Financial lease
receivables

December 31, 2012
Loans receivables
Factoring receivables
Loans
Installment financial
assets
Auto
Durable goods
Lease receivables
Financial lease
receivables

W

28

September 30, 2013
(Unaudited)
8.

Allowance for Doubtful Accounts
Changes in allowance for doubtful accounts for the nine-month period ended September 30, 2013 and
for the year ended December 31, 2012 were as follows:
Loans
receivables
September 30,
2013
Beginning balance W 19,259,170
Amounts
written off
(6,452,388)
Recoveries of
amounts
previously
written off
441,884
Disposal of
receivables
(12,287,883)
Unwinding of
discount
(201,947)
Additional
(reversed)
allowance
16,966,994
Ending balance

W

17,725,830

December 31,
2012
Beginning balance W 18,169,160
Amounts
written off
(4,168,839)
Recoveries of
amounts
previously
written off
772,833
Disposal of
receivables
(14,903,755)
Unwinding of
discount
(226,349)
Additional
(reversed)
allowance
19,616,120
Ending balance

W

19,259,170

Installment
financial
assets

Lease
receivables

Other assets

Total

2,527,318

1,026,911

227,475

23,040,874

(306,497)

(137,513)

-

(6,896,398)

40,649

32,256

-

514,789

(1,513,822)

(955)

-

(13,802,660)

(18,209)

-

-

(220,156)

1,199,129

686,033

(76,883)

18,775,273

1,928,568

1,606,732

150,592

21,411,722

3,175,354

620,397

330,388

22,295,299

(396,392)

-

-

(4,565,231)

86,527

-

-

859,360

(1,921,390)

(34,163)

-

(16,859,308)

(28,019)

-

-

(254,368)

1,611,238

440,677

(102,913)

21,565,122

2,527,318

1,026,911

227,475

23,040,874

29

September 30, 2013
(Unaudited)
9.

Fair Value of Financial Instruments
Fair value is the amount at which the asset could be exchanged or the liabilities could be settled in a
transaction between knowledgeable and willing independent parties. The best estimated fair value is
the published price quotation in an active market. The Group believes that valuation technique applied
to the financial instruments is adequate and fair value of financial instruments is reasonable, but if the
Group use another valuation technique or assumptions, such fair value might be changed. Also, as fair
value measurement of financial instruments uses variable valuation techniques and assumptions,
comparing fair value with those recognized by other financial institutions might be difficult.
Fair values of financial instruments as of September 30, 2013 and December 31, 2012 were as follows:
September 30, 2013
Book value
Fair value
Financial assets
Cash and due from
banks
W
Available-for-sale
securities
Loans receivables
Installment
financial assets

December 31, 2012
Book value
Fair value

290,531,966

290,531,966

282,834,795

282,834,795

49,111,105
2,987,902,147

49,111,105
2,971,440,679

26,984,327
2,781,461,960

26,984,327
2,775,937,581

311,150,491

310,283,118

356,818,556

357,631,944

185,541,674

185,642,264

131,329,553

132,353,718

141,834

141,834

137,775

137,775

8,813,881

8,813,881

15,813,310

15,813,310

17,593,389
2,114,730
3,852,901,217

17,593,389
2,073,546
3,835,631,782

16,858,350
11,083,914
3,623,322,540

16,858,350
11,201,215
3,619,753,015

703,154,996
2,663,886,918
289,802,484

706,479,489
2,700,658,502
296,673,394

723,883,961
2,428,295,638
309,637,148

730,188,793
2,494,275,095
319,737,569

1,665,110

1,665,110

7,505,990

7,505,990

Account payables

11,949,378

11,949,378

15,199,625

15,199,625

Accrued expenses

22,250,132

22,250,132

27,995,752

27,995,752

3,387,983

3,387,983

3,045,893

3,045,893

48,707,968
3,744,804,969

49,334,332
3,792,398,320

33,014,098
3,548,578,105

33,618,900
3,631,567,617

Lease receivables
Derivative assets
Account
receivables
Accrued revenues
Leasehold deposits
W
Financial liabilities
Borrowings
Debentures
Securitized debts

W


Withholdings (*)
Leasehold deposits
W

(*) Excluding taxes and dues

30

September 30, 2013
(Unaudited)
9.

Fair Value of Financial Instruments, Continued
The levels of fair value hierarchy have been defined as follows:
- Level 1: Quoted prices in active markets for identical assets or liabilities. For example, listed
stocks and derivatives.
- Level 2: Inputs for the asset or liability included within valuation techniques that are observable
market data. For example, most bonds issued in Korean won and foreign currency, general
unlisted derivatives like swap, forward, option.
- Level 3: Inputs for the asset or liability that is not based on observable market data. For example,
unlisted stocks, complicated structured bonds, complicated unlisted derivatives and others.
The fair value hierarchy of financial instruments as of September 30, 2013 and December 31, 2012
were as follows:
Book value

Fair value hierarchy
Level 2

Fair value

Level 1

Level 3

49,111,105
141,834
49,252,939

8,290,000
8,290,000

141,834
141,834

40,821,105
40,821,105

1,665,110

1,665,110

-

1,665,110

-

Financial assets
Available-for-sale
securities
W 26,984,327
Derivative assets
137,775
W 27,122,102

26,984,327
137,775
27,122,102

10,650,000
10,650,000

137,775
137,775

16,334,327
16,334,327

7,505,990

-

7,505,990

-

September 30,
2013
Financial assets
Available-for-sale
securities
W 49,111,105
Derivative assets
141,834
W 49,252,939
Derivative
liabilities
W
December 31,
2012

Derivative
liabilities
W

7,505,990

31

September 30, 2013
(Unaudited)
9.

The changes in financial instruments of level 3 for the nine-month period ended September 30, 2013
and for the year ended December 31, 2012 were as follows:
September 30, 2013
December 31, 2012
Beginning balance
W
Acquisition
Interest income
Gains on valuation (other comprehensive income)
Ending balance

16,334,327
23,156,266
738,495
592,017
40,821,105

W

8,648,233
6,302,089
871,838
512,167
16,334,327

The book values of financial instruments by categories as of September 30, 2013 and December 31,
2012 were as follows:
Financial
assets at fair Available-forvalue through sale financial
profit or loss
assets

Hedging
derivative
instruments

Loans and
receivables

Total

September 30, 2013
Financial assets
Cash and due from banks

W

-

-

290,531,966

-

290,531,966


-

49,111,105

-

-

49,111,105

Loans receivable

-

-

2,987,902,147

-

2,987,902,147


-

-

311,150,491

-

311,150,491


-

-

185,541,674

-

185,541,674

736

-

-

141,098

141,834

Account receivables

-

-

8,813,881

-

8,813,881

Accrued revenues

-

-

17,593,389

-

17,593,389

Leasehold deposits

-

-

2,114,730

-

2,114,730

W

736

49,111,105

3,803,648,278

141,098

3,852,901,217

W

Derivative assets

December 31, 2012
Financial assets
Cash and due from banks

-

-

282,834,795

-

282,834,795


-

26,984,327

-

-

26,984,327

Loans receivable

-

-

2,781,461,960

-

2,781,461,960


-

-

356,818,556

-

356,818,556


-

-

131,329,553

-

131,329,553

74,422

-

-

63,353

137,775

Account receivables

-

-

15,813,310

-

15,813,310

Accrued revenues

-

-

16,858,350

-

16,858,350

-

-

11,083,914

-

11,083,914

74,422

26,984,327

3,596,200,438

63,353

3,623,322,540

Derivative assets

Leasehold deposits
W

32

September 30, 2013
(Unaudited)
9.

Hedging
derivative
instruments

at amortized cost

Total

September 30, 2013
Borrowings

W

703,154,996

-

703,154,996

2,663,886,918

-

2,663,886,918

289,802,484

-

289,802,484

-

1,665,110

1,665,110

Account payables

11,949,378

-

11,949,378

Accrued expenses

22,250,132

-

22,250,132

3,387,983

-

3,387,983

Debentures
Securitized debts

Withholdings (*)

48,707,968

-

48,707,968

W

3,743,139,859

1,665,110

3,744,804,969

W

723,883,961

-

723,883,961

2,428,295,638

-

2,428,295,638

309,637,148

-

309,637,148

-

7,505,990

7,505,990

Account payables

15,199,625

-

15,199,625

Accrued expenses

27,995,752

-

27,995,752

3,045,893

-

3,045,893

33,014,098

-

33,014,098

3,541,072,115

7,505,990

3,548,578,105

December 31, 2012
Borrowings
Debentures
Securitized debts

Withholdings (*)
W
(*) Excluding taxes and dues

33

September 30, 2013
(Unaudited)
10. Transfer of Financial Assets
(a) Financial assets that are not entirely derecognized
The Group issued senior and subordinated securitized debts based on loans and instalment receivables
which were securitized. The securitized debts have recourse only to the transferred assets.
Details of financial assets transferred but not entirely derecognized as of September 30, 2013 and
September 30, 2013

December 31, 2012

Book value of assets
Loans receivables

W

637,705,793
12,511,874

Sub total
Book value of related liabilities

539,978,100
35,652,795

650,217,667

575,630,895

W

289,802,484

309,637,148

W

646,776,822

574,639,694

(296,673,394)

(319,737,569)

350,103,428

254,902,125

Liabilities having right of resource on
transferred assets:
Fair value of assets
Fair value of related liabilities
Net position

W

(b) Financial assets that are entirely derecognized
The Group derecognized loans receivables from the consolidated financial statements by transferring
them for W101,598,233 to Commercial Auto Third SPC (Trustee Bank: Citibank Korea, Inc.) on
December 18, 2012. Gains related to the transaction amounted to W2,450,829. The Group has
continuing involvement in the transferred asset after taking over debt securities issued by Commercial
Auto Third SPC.
Details of continuing involvement were as follows:
Book value of
continuing
involvement
Available-for-sale
securities
Acquisition on debt securities

W

4,017,422

34

Maximum exposure
to loss
4,017,422

September 30, 2013
(Unaudited)
11. Financial Lease Receivables
Details of total lease investments and present value of minimum lease payment as of September 30,
2013 and December 31, 2012 were as follows:
September 30, 2013
Total lease
investments
Less than 1 year

W

December 31, 2012

Present value of
minimum lease
payment

Total lease
investments

Present value of
minimum lease
payment

W

71,552,483

55,614,516

48,968,100

122,350,986

1 to 5 years

80,187,482

115,595,924

88,188,405

83,388,364

202,538,468

187,148,407

143,802,921

132,356,464

Details of unearned interest income as of September 30, 2013 and December 31, 2012 were as
follows:
September 30, 2013

December 31, 2012

202,538,468

132,356,464

187,148,407
15,390,061

Unearned interest income

143,802,921

187,148,407

Total lease investments
W
Net lease investments
Minimum lease payment (present value)
Unguaranteed residual value
(present value)

132,356,464
11,446,457

12. Property and Equipment
Details of property and equipment as of September 30, 2013 and December 31, 2012 were as follows:
Acquisition cost

Accumulated
depreciation

Book value

September 30, 2013
W

113,472
9,187,421
411,000

(70,624)
(6,012,815)
-

42,848
3,174,606
411,000

W

Vehicles
Others

9,711,893

(6,083,439)

3,628,454

W

235,097
7,965,357
411,000

(165,298)
(5,263,430)
-

69,799
2,701,927
411,000

W

8,611,454

(5,428,728)

3,182,726

December 31, 2012
Vehicles
Others

35

September 30, 2013
(Unaudited)
12. Property and Equipment, Continued
Changes in property and equipment for the nine-month period ended September 30, 2013 and for the
year ended December 31, 2012 were as follows:
Beginning
balance
September 30,
2013
Vehicles
Fixtures and
furniture
Others

Acquisition

Disposal

Depreciation

Ending
balance

69,799

-

(2,534)

(24,417)

42,848

W

2,701,927
411,000
3,182,726

1,392,631
1,392,631

(225)
(2,759)

(919,727)
(944,144)

3,174,606
411,000
3,628,454

W

114,731

76,172

(61,447)

(59,657)

69,799

W

December 31,
2012
Vehicles
Fixtures and
furniture
Others

W

2,382,936
411,000
2,908,667

1,418,127
1,494,299

(114,015)
(175,462)

(985,121)
(1,044,778)

2,701,927
411,000
3,182,726

As of September 30, 2013, the Group maintained comprehensive property insurance with Hyundai
Marine and Fire Insurance for its fixtures and furniture, and other tangible assets for up to W4,008,254
(W4,008,254 as of December 31, 2012), vehicle insurance for its vehicles, and group accident
insurance, travel insurance and business damage insurance for its employees. Also, the Group
maintained comprehensive property insurance with Hyundai Marine and Fire Insurance for its machine
tool installment financial assets and lease assets for up to W187,038,984 (W92,452,845 as of
December 31, 2012).

36

September 30, 2013
(Unaudited)
13. Intangible Assets
Details of intangible assets as of September 30, 2013 and December 31, 2012 were as follows:
Accumulated
amortization

Acquisition cost
September 30, 2013
Development costs
Software
Others

Book value

W

3,694,703
6,541,948
25,851

(1,349,176)
(5,423,557)
(25,848)

2,345,527
1,118,391
3

W

10,262,502

(6,798,581)

3,463,921

W

2,847,793
6,422,131
25,851

(869,745)
(4,947,389)
(25,631)

1,978,048
1,474,742
220

W

9,295,775

(5,842,765)

3,453,010

December 31, 2012
Development costs
Software
Others

Changes in intangible assets for the nine-month period ended September 30, 2013 and for the year
ended December 31, 2012 were as follows:
Beginning
balance
September 30, 2013
Development costs
Software
Others

W

W
December 31, 2012
Development costs
Software
Others

W

W

Increase (*)

Amortization

Ending
balance

1,978,048
1,474,742
220
3,453,010

846,910
123,112
970,022

(479,431)
(479,463)
(217)
(959,111)

2,345,527
1,118,391
3
3,463,921

1,763,019
1,306,607
2,678
3,072,304

694,513
784,411
1,478,924

(479,484)
(616,276)
(2,458)
(1,098,218)

1,978,048
1,474,742
220
3,453,010

(*) Includes transfer from advanced payments

37

September 30, 2013
(Unaudited)
14. Borrowings
Details of borrowings as of September 30, 2013 and December 31, 2012 were as follows:
Annual
interest rate
(%)

Lender
Borrowings in Korean won

SK Securities
and 2 others
Woori Bank
and 8 others

December 31,
2012

General loan

W

160,000,000

210,000,000

W

Commercial paper

2.61 ~ 4.17

September 30,
2013

543,154,996
703,154,996

513,883,961
723,883,961

2.98 ~ 5.80

15. Debentures
Details of debentures issued by the Group as of September 30, 2013 and December 31, 2012 were as
follows:
Annual interest
Par value
Issue price
rate (%)
September 30, 2013
Current portion of debenture
Debenture
Discount on debentures

2.28 ~ 8.00

W

2,113,000,000
-

2,113,000,000
(1,678,161)
2,111,321,839

W

2,665,794,000

2,663,886,918

W

847,488,500
-

847,488,500
(313,409)

847,488,500
Non-current portion of debenture
Debenture

552,565,079

2,113,000,000

December 31, 2012
Current portion of debenture
Debenture

552,794,000
(228,921)

552,794,000
Non-current portion of debenture
Debenture

552,794,000
-

847,175,091

1,582,704,000
-

1,582,704,000
(1,583,452)

1,582,704,000

1,581,120,548

2,430,192,500

2,428,295,639

2.74 ~ 8.00

3.05 ~ 6.00

3.10 ~ 8.00

W

38

September 30, 2013
(Unaudited)
16. Securitized Debts
The amounts of securitized debts, which are secured by loans and installment financial assets in
accordance with Asset Backed Securitization Act as of September 30, 2013 and December 31, 2012
were as follows:
Annual interest
rate (%)

Par value

Issue price

September 30, 2013
Current portion of securitized debts
Securitized debts
Discount on securitized debts

W

150,000,000
-

150,000,000
(64,371)

150,000,000

149,935,629

140,000,000
-

140,000,000
(133,145)

140,000,000

139,866,855

W

290,000,000

289,802,484

W

50,000,000
-

50,000,000
(33,017)

50,000,000

49,966,983

260,000,000
-

260,000,000
(329,835)

260,000,000

Non-current portion of securitized
debts
Securitized debts

4.76 ~ 5.19

259,670,165

310,000,000

309,637,148

4.90 ~ 5.43

December 31, 2012
Current portion of securitized debts
Securitized debts
Non-current portion of securitized
debts
Securitized debts

4.78 ~ 4.92

4.76 ~ 5.43

W

17. Defined Benefit Liability
Details of defined benefit liability as of September 30, 2013 and December 31, 2012 were as follows:
September 30, 2013
Present value of defined
obligations
Fair value of plan assets
Defined benefit liability

benefit

12,597,779
(8,745,764)
3,852,015

W
W

39

December 31, 2012

10,602,378
(8,546,162)
2,056,216

September 30, 2013
(Unaudited)
17. Defined Benefit Liability, Continued
Changes in present value of defined benefit obligations for the nine-month period ended September
30, 2013 and for the year ended December 31, 2012 were as follows:
September 30, 2013
Beginning balance
Current service cost
Interest cost
Actuarial losses
Transfer of severance benefits from
related parties
Transfer of severance benefits to related
parties
Benefits paid
Ending balance

W

December 31, 2012

10,602,378
1,881,119
269,644
56,218
766,994

1,301,233

(521,624)
(456,950)
12,597,779

W

7,596,812
2,065,107
312,346
966,673

(1,230,543)
(409,250)
10,602,378

Changes in the fair value of plan assets for the nine-month period ended September 30, 2013 and for
the year ended December 31, 2012 were as follows:
September 30, 2013
Beginning balance
Expected return on plan assets
Remeasurement gains
Transfer of severance benefits from
related parties
Transfer of severance benefits to related
parties
Contributions by plan participants
Benefits paid
Ending balance

December 31, 2012

8,546,162
213,781
6,004

600,148

(174,678)
(456,950)
8,745,764

W

5,364,346
220,433
4,187

611,445

W

(294,075)
3,000,000
(348,877)
8,546,162

Gains and losses related to defined benefit plans for the nine-month periods ended September 30,
2013 and 2012 were as follows:
September 30, 2013
Current service cost
Interest cost
Expected return on plan assets

1,881,119
269,644
(213,781)
1,936,982

W

W

40

September 30, 2012
1,917,869
231,909
(160,665)
1,989,113

September 30, 2013
(Unaudited)
18. Derivative Financial Instruments and Hedge Accounting
The Group acquired the convertible bonds issued by Leehan Corp. in 2011, and recorded the difference
between the acquisition cost of convertible bond and the fair value of bond without convertible right as
derivative assets. The Group recognized derivative assets of W736 and W74,423 as of September
30, 2013 and December 31, 2012, respectively. Net losses on the derivative assets were W73,687
and W391,854 for the nine-month periods ended September 30, 2013 and 2012, respectively.
Cash flow hedge is used by the Group to reduce the exposure from changes in interest rate and
exchange rate of the cash flows of foreign currency debentures. Interest rate swaps and currency
swaps are used.
Derivatives designated as cash flow hedges as of September 30, 2013 and December 31, 2012 were
as follows:

Assets

Liabilities

Other
comprehensive
income (loss)

September 30, 2013
W

141,098
-

1,288,577
376,533

(1,555,301)
487,640

W

141,098

1,665,110

(1,067,661)

W

63,352
-

2,084,383
5,421,607

(1,531,844)
(382,978)

W

Interest rate swaps
Currency swaps

63,352

7,505,990

(1,914,822)

December 31, 2012
Interest rate swaps
Currency swaps

For the nine-month period ended September 30, 2013, the amount recognized as other comprehensive
income, representing the effective portion related to cash flow hedge, is W847,161 and the amount
reclassified from other comprehensive income to profit or loss is W90,000 (before tax). There is no
amount recognized as profit or loss related to cash flow hedge, representing the ineffective portion, for
the nine-month period ended September 30, 2013.

41

September 30, 2013
(Unaudited)
19. Equity
The Controlling Company is authorized to issue 80,000,000 shares (par value at W5,000). Details of
capital stock as of September 30, 2013 were as follows:
Preferred stock (*)

Common stock
Number of issued shares
outstanding
Capital stock
Paid-in-capital in excess of par
value

W

Total

20,000,000
100,000,000

5,000,000
25,000,000

25,000,000
125,000,000

-

74,608,060

74,608,060

(*) The convertible preferred stocks are non-cumulative, non-participating, nominative, non-permanent
preferred stocks without voting right. The stocks will be converted to common stock after 7
years from issue date.
20. Retained Earnings
Details of retained earnings as of September 30, 2013 and December 31, 2012 were as follows:
September 30, 2013
Legal reserve
Revenue reserve
Voluntary reserve
Reserve for loan losses
Reserve for electronic financial transactions

December 31, 2012

W

4,000,000
3,357,192
100,000
3,457,192

138,248,394

Unappropriated retained earnings
(Expected regulatory reserve for credit losses
September 30, 2013: W3,686,307;
December 31, 2012: W11,932,446)

7,100,000
15,289,638
100,000
15,389,638

W

130,082,243

160,738,032

137,539,435

Appropriated and expected regulatory reserve for credit losses as of September 30, 2013 and
September 30, 2013
Appropriated regulatory reserve for credit
losses
Expected regulatory reserve for credit
losses

December 31, 2012

W

15,289,638

3,357,192

W

3,686,307
18,975,945

11,932,446
15,289,638

42

September 30, 2013
(Unaudited)
20. Retained Earnings, Continued
Profit adjusted for estimated regulatory reserve for credit losses for the nine-month periods ended
September 30, 2013 and 2012 were as follows:
September 30, 2013
Three-month
Nine-month
period ended
period ended
Estimated provision of regulatory reserve
for credit losses
Profit adjusted by regulatory reserve for
credit losses
Earnings per share adjusted by estimated
regulatory reserve for credit losses (won)

W

September 30, 2012
Three-month
Nine-month
period ended
period ended

9,063,340

29,198,597

13,454,069

38,113,383

-

(3,686,307)

(955,035)

(10,637,581)

9,063,340

25,512,290

12,499,034

27,475,802

453

1,276

625

1,374

The dividends for the year ended December 31, 2012 were paid in March 2013, and details of dividend
for the years ended December 31, 2012 and 2011 were as follows:
December 31, 2012
Interim dividends
Common stock
Annual dividends
Common stock
Preferred stock

December 31, 2011

W

25,000,000

-

W

6,000,000
31,000,000

24,000,000
6,000,000
30,000,000

43

September 30, 2013
(Unaudited)
21. General and Administrative Expenses
Details of general and administrative expenses for the three-month and nine-month periods ended
September 30, 2013
Nine-month
Three-month
period ended
period ended
Wages and salaries

W

September 30, 2012
Three-month
Nine-month
period ended
period ended

6,764,920

17,421,419

5,975,718

14,171,511

669,348

1,936,982

714,199

1,989,113

Employee welfare

1,522,068

4,846,711

1,437,064

4,164,670

Outsourcing service charges

1,155,610

3,313,182

1,056,232

3,035,961

Sales commission

1,874,438

6,982,512

3,112,890

10,001,748

Commission

935,283

2,885,731

704,314

2,515,818

Outsourcing service commission

927,062

2,636,145

392,791

1,626,461

Depreciation

344,407

944,144

264,423

766,844

Amortization

337,391

959,111

267,036

799,011

Taxes and dues

502,028

1,560,174

451,326

1,389,327

Electronic data processing expenses

862,528

2,073,050

1,186,651

1,936,049

Rent

972,619

2,406,658

366,329

994,798

24,020

61,650

280,313

828,270

Travel expenses

156,046

591,952

123,935

499,898

Training expenses

144,081

371,271

248,857

531,130

Communication

171,121

497,489

170,279

440,979

Others

546,686

1,491,710

417,527

1,345,249

17,909,656

50,979,891

17,169,884

47,036,837

Retirement benefits

Administrative expenses for building

W

22. Income Tax Expenses
Income tax expense is calculated based on the current tax expense with prior year adjustments,
deferred tax expense from changes in temporary differences, and other adjustments. The effective
tax rate for the nine-month periods ended September 30, 2013 and 2012 were 35.1% and 29.8%,
respectively.
The Group did not recognize deferred income tax assets of W11,829,161 and W4,956,191 as of
September 30, 2013 and December 31, 2012, respectively, related to temporary differences in
investments in associates because it is not probable that the temporary differences will be realized.

44

September 30, 2013
(Unaudited)
23. Accumulated Other Comprehensive Income (Loss)
Details of accumulated other comprehensive income and loss for the nine-month periods ended
Beginning
balance
September 30, 2013
Items that are or may be
reclassified subsequently to
profit or loss
Unrealized loss on valuation
of derivatives
W
Unrealized gain (loss) on
valuation of available-forsale financial assets
Accumulated
(loss) of equity method
investees

Changes
Reclassification
Other
of profit or loss
changes

Income tax
effects

Ending
balance

Items that will not be
reclassified to profit or loss
Remeasurement of defined
benefit plans

(270,466)

(1,067,661)

713,160

-

(1,767,983)

427,852

(626,971)

3,811,298

-

(7,519,106)

(68,928)

(3,776,736)

(90,000)

(8,079,462)

88,458

(5,471,368)

-

(50,214)

12,152

(1,708,213)

939,485

(90,000)

(8,129,676)

100,610

(7,179,581)

(1,082,948)

562,817

(2,137,008)

380,954

(2,276,185)

6,047,838

-

(3,402,436)

849,133

3,494,535

(1,702,584)

-

7,879,685

(7,233)

6,169,868

3,262,306

September 30, 2012
Items that are or may be
reclassified subsequently to
profit or loss
Unrealized loss on valuation
of derivatives
W
Unrealized gain on valuation
of available-for-sale
financial assets
Accumulated
(loss) of equity method
investees

1,207,627

(1,670,151)

W

(90,000)

2,609,636

Items that will not be
reclassified to profit or loss
Remeasurement of defined
benefit plans

(1,914,822)

562,817

2,340,241

1,222,854

7,388,218

(940,586)

W

-

-

-

(940,586)

2,321,720

562,817

2,340,241

1,222,854

6,447,632

45

Eng fy2013 3_q_20131126_final

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