HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
(With Independent Auditors’ Review Report Thereon)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
Table of 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 Condensed Consolidated Interim Financial Statements 9
152, Teheran-ro, Gangnam-gu, Seoul 135-984(Yeoksam-dong, Gangnam Finance Center 10th Floor)Republic of Korea
Independent Auditors’ Review Report
(Based on a report originally issued in Korean)
The Board of Directors and Shareholders
Hyundai Capital Services, Inc.:
We have reviewed the accompanying condensed consolidated interim financial statements of Hyundai
Capital Services, Inc. and its subsidiaries (the Group), which comprise the condensed consolidated
statement of financial position as of June 30, 2015, the condensed consolidated statements of
comprehensive income for the three-month and six-month periods ended June 30, 2015 and 2014, the
condensed consolidated statements of changes in equity and cash flows for the six-month periods ended
June 30, 2015 and 2014 and notes, comprising a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these condensed consolidated
interim financial statements in accordance with Korean International Financial Reporting Standards (K-
IFRS) No.1034, Interim Financial Reporting, and for such internal control as management determines
is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to issue a report on these condensed consolidated interim financial statements
based on our reviews.
We conducted our reviews in accordance with the Review Standards for Quarterly and 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 reviews, 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.
Other matters
The procedures and practices utilized in the Republic of Korea to review such condensed consolidated
interim financial statements may differ from those generally accepted and applied in other countries.
Accordingly, this report and the accompanying condensed consolidated interim financial statements are
for use by those knowledgeable about Korean review standards and their application in practice.
The statement of financial position of the Group as of December 31, 2014, and the related consolidated
statements of comprehensive income, changes in equity and cash flows for the year then ended, which
are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing
and our report thereon, dated March 2, 2015, expressed an unqualified opinion. The accompanying
condensed consolidated statement of financial position of the Group as of December 31, 2014,
presented for comparative purposes, is consistent, in all material respects, with the audited consolidated
financial statements from which it has been derived.
Seoul, Republic of Korea
August 12, 2015
This report is effective as of August 12, 2015, 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 review report has not been updated to reflect the impact of such subsequent events or
circumstances, if any.
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Financial Position
As of June 30, 2015 and December 31, 2014
(In millions of Korean won)
June 30,
2015 December 31,
Notes (Unaudited) 2014
Assets
Cash and due from other financial institutions
Cash and cash equivalents 22 W 725,744 608,207
Due from banks 2,847 36,133
Short-term financial investments 4 493,176 950,396
1,221,767 1,594,736
Securities 5
Available-for-sale securities 72,731 63,446
Investments in associates 227,776 209,118
300,507 272,564
Loans receivable 6, 7
Loans receivable 9,128,031 9,903,532
Allowance for loan losses (318,715) (319,323)
8,809,316 9,584,209
Installment financial assets 6, 7
Automobile installment financing receivables 7,657,217 6,548,952
Allowance for loan losses (60,940) (53,121)
Durable goods installment financing receivables 875 1,164
Allowance for loan losses (112) (78)
Mortgage installment financing receivables 4,188 5,945
Allowance for loan losses (86) (68)
7,601,142 6,502,794
Lease receivables 6, 7
Finance lease receivables 2,704,342 2,736,708
Allowance for loan losses (50,271) (52,494)
Cancelled lease receivables 19,878 16,755
Allowance for loan losses (18,711) (15,761)
2,655,238 2,685,208
Leased assets
Operating lease assets 1,874,387 1,727,082
Accumulated depreciation (566,694) (540,364)
Accumulated impairment losses (394) (598)
Cancelled lease assets 7,662 7,435
Accumulated impairment losses (4,058) (3,801)
1,310,903 1,189,754
Property and equipment, net 8 250,791 248,322
Other assets
Non-trade receivables 151,764 121,223
Allowance for doubtful accounts 7 (7,572) (6,438)
Accrued revenues 105,602 111,004
Allowance for doubtful accounts 7 (12,551) (13,660)
Advance payments 124,844 104,219
Prepaid expenses 70,577 45,157
Intangible assets 9 54,647 57,262
Derivative assets 13, 26 84,787 20,321
Leasehold deposits 22,882 22,033
594,980 461,121
Total assets W 22,744,644 22,538,708
See accompanying notes to the condensed consolidated interim financial statements
3
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Financial Position (Continued)
As of June 30, 2015 and December 31, 2014
(In millions of Korean won)
June 30,
2015 December 31,
Notes (Unaudited) 2014
Liabilities
Borrowed funds 10
Borrowings W 1,508,132 1,562,261
Bonds issued 16,192,770 15,899,469
17,700,902 17,461,730
Other liabilities
Non-trade payables 284,992 276,706
Accrued expenses 172,346 177,592
Unearned revenue 35,203 38,751
Withholdings 47,672 36,465
Derivative liabilities 13, 26 181,077 383,107
Current tax liabilities 62,407 51,487
Employee benefit liabilities 11 37,127 25,006
Deposits received 577,197 609,078
Deferred income tax liabilities 19 28,118 33,722
Provisions 12 7,714 7,448
Other 50 50
1,433,903 1,639,412
Total liabilities 19,134,805 19,101,142
Equity
Issued capital 496,537 496,537
Capital surplus 407,539 407,539
Accumulated other comprehensive loss 21 (63,881) (64,595)
Retained earnings 14 2,769,644 2,598,085
Total equity 3,609,839 3,437,566
Total liabilities and equity W 22,744,644 22,538,708
See accompanying notes to the condensed consolidated interim financial statements
4
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Comprehensive Income (Unaudited)
For the three-month and six-month periods ended June 30, 2015 and 2014
(In millions of Korean won)
Three-month periods Six-month periods
ended June 30, ended June 30,
Notes 2015 2014 2015 2014
Operating revenue
Interest income 15 W 5,531 10,749 13,902 22,624
Gain on valuation and sale of securities 349 349 842 1,002
Income on loans 15, 16 277,213 320,691 566,003 653,235
Income on installment financial assets 15, 16 107,066 88,970 206,740 168,375
Income on leases 15, 16 215,042 216,457 426,679 435,105
Gain on sale of loans 37,378 (171) 40,483 3,673
Gain on foreign currency transactions 3,001 196,013 41,612 196,521
Dividend income 295 177 2,243 2,383
Other operating income 17 165,872 (57,520) 243,227 81,746
Total operating revenue 811,747 775,715 1,541,731 1,564,664
Operating expenses
Interest expense 15 163,927 192,449 336,195 387,264
Lease expense 16 128,069 123,867 250,260 250,126
Provision for loan losses 7 72,345 107,672 149,212 226,650
Loss on foreign currency transactions 127,746 (91,865) 171,973 13,193
General and administrative expenses 18 183,965 167,657 360,059 321,190
Other operating expenses 17 16,006 210,166 66,560 222,989
Total operating expenses 692,058 709,946 1,334,259 1,421,412
Operating income 119,689 65,769 207,472 143,252
Non-operating income
Share in net income of associates
under the equity method 5 10,097 2,733 19,087 6,828
Gain on sale of property and equipment 18 48 1,250 61
Reversal of impairment loss
on intangible assets — — — 26
Other 1,043 2,099 2,415 4,087
Total non-operating income 11,158 4,880 22,752 11,002
Non-operating expenses
Share in net loss of associates
under the equity method 5 (167) (41) 18 216
Impairment loss on investments
in associates 5 — — — 27,689
Loss on sale of property and equipment 89 55 366 58
Donation 117 423 129 513
Other 173 98 402 378
Total non-operating expenses 212 535 915 28,854
Profit before income taxes 130,635 70,114 229,309 125,400
Income tax expense 19 33,660 15,517 57,750 40,251
Profit for the period W 96,975 54,597 171,559 85,149
See accompanying notes to the condensed consolidated interim financial statements
5
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Comprehensive Income (Unaudited) (Continued)
For the three-month and six-month periods ended June 30, 2015 and 2014
(In millions of Korean won)
Three-month periods Six-month periods
ended June 30, ended June 30,
Notes 2015 2014 2015 2014
Other comprehensive income (loss), 21
net of income taxes
Items that will never be reclassified
to profit or loss:
Remeasurements of defined
benefit plans W 1,380 (3,012) (2,614) (3,901)
Items that are or may be reclassified
subsequently to profit or loss:
Net change in unrealized gains and
losses on available-for-sale
securities 3,559 (353) 6,585 531
Share in other comprehensive income
(loss) of associates under the
equity method 54 (4,550) (311) (4,938)
Net change in effective portion of
cash flow hedges (8,287) (18,360) (2,148) (19,154)
Net change in foreign currency
translation adjustments 541 (419) (798) (517)
Total other comprehensive
income (loss), net of
income taxes (2,753) (26,694) 714 (27,979)
Total comprehensive income for the period W 94,222 27,903 172,273 57,170
Earnings per share
Basic and diluted earnings per share 20 W 977 550 1,728 857
(in won)
See accompanying notes to the condensed consolidated interim financial statements
6
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Changes in Equity (Unaudited)
For the six-month periods ended June 30, 2015 and 2014
(In millions of Korean won)
Accumul-
Capital surplus ated other
Additional Other compre-
Issued paid-in capital hensive Retained Total
Capital capital surplus income earnings equity
Balances as of January 1, 2014 W 496,537 369,339 38,200 (11,573) 2,360,380 3,252,883
Total comprehensive income
Profit for the period — — — — 85,149 85,149
Other comprehensive
income (loss):
Net change in unrealized gains
and losses on available-for-
sale securities — — — 531 — 531
Share in other comprehensive
income of associates under
the equity method — — — (4,938) — (4,938)
Net change in effective portion
of cash flow hedges — — — (19,154) — (19,154)
Net change in foreign currency
translation adjustments — — — (517) — (517)
Remeasurements of defined
benefit plans — — — (3,901) — (3,901)
Total comprehensive
income — — — (27,979) 85,149 57,170
Balances as of June 30, 2014 W 496,537 369,339 38,200 (39,552) 2,445,529 3,310,053
Balances as of January 1, 2015 W 496,537 369,339 38,200 (64,595) 2,598,085 3,437,566
Total comprehensive income
Profit for the period — — — — 171,559 171,559
Other comprehensive
income (loss):
Net change in unrealized gains
and losses on available-for-
sale securities — — — 6,585 — 6,585
Share in other comprehensive
income of associates under
the equity method — — — (311) — (311)
Net change in effective portion
of cash flow hedges — — — (2,148) — (2,148)
Net change in foreign currency
translation adjustments — — — (798) — (798)
Remeasurements of defined
benefit plans — — — (2,614) — (2,614)
Total comprehensive
income — — — 714 171,559 172,273
Balances as of June 30, 2015 W 496,537 369,339 38,200 (63,881) 2,769,644 3,609,839
See accompanying notes to the condensed consolidated interim financial statements
7
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Interim Statements of Cash Flows (Unaudited)
For the six-month periods ended June 30, 2015 and 2014
(In millions of Korean won)
Notes 2015 2014
Cash flows from operating activities
Cash generated from operations 22 W 217,765 430,794
Interest received 14,679 22,192
Interest paid (152,297) (361,519)
Dividends received 2,243 2,383
Income taxes paid (53,124) (72,444)
Net cash provided by operating activities 29,266 21,406
Cash flows from investing activities
Acquisition of investments in associates — (5,150)
Acquisition of property and equipment (17,786) (14,840)
Proceeds from sale of property and equipment 920 171
Acquisition of intangible assets (4,146) (6,077)
Proceeds from sale of intangible assets 413 —
Increase in leasehold deposits (340) (873)
Decrease in leasehold deposits 512 1,537
Net cash used in investing activities (20,427) (25,232)
Cash flows from financing activities
Proceeds from borrowings 870,521 1,040,000
Repayments of borrowings (924,960) (1,145,000)
Proceeds from issue of bonds 4,056,236 1,918,499
Repayments of bonds (3,893,090) (1,943,504)
Net cash provided by (used in) financing activities 108,707 (130,005)
Effect of exchange rate fluctuations on
cash and cash equivalents held (9) (29)
Net increase (decrease) in cash and cash equivalents 117,537 (133,860)
Cash and cash equivalents at beginning of the period 22 608,207 1,502,600
Cash and cash equivalents at end of the period 22 W 725,744 1,368,740
See accompanying notes to the condensed consolidated interim financial statements
8
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
9 (Continued)
1. Reporting Entity
Hyundai Capital Services, Inc. (the Company) was established on December 22, 1993, to engage
in installment financing, facilities leasing and new technology financing. The Company changed its
trade name from Hyundai Auto Finance Co., Ltd. to Hyundai Financial Services Co. on April 21, 1995,
and changed its trade name once again to Hyundai Capital Services, Inc. on December 30, 1998. In
accordance with the Monopoly Regulation and Fair Trade Act, the Company is incorporated into
Hyundai Motor Company Group. As of June 30, 2015, the Company’s operations are headquartered at
3 Uisadang-daero, Yeongdeungpo-gu, Seoul, Korea. Its major shareholders are Hyundai Motor
Company and GE International Holdings Corporation with 56.47% and 43.30% ownership, respectively.
The consolidated financial statements include the accounts of the Company and its subsidiaries,
including Autopia 43rd Asset Securitization Specialty Company (ABS SPC) with trust for the
securitization, and other subsidiaries as summarized below (collectively, the Group). Investments in
Beijing Hyundai Auto Finance Co., Ltd. and four other associates are accounted for under the equity
method.
(1) The Group’s subsidiaries
Subsidiaries as of June 30, 2015 and December 31, 2014 are as follows. Asset securitization
vehicles are special purpose vehicles which are sponsored by the Group under its securitization program.
The Group is exposed to variability of returns of the vehicles through its holding of debt securities in
the vehicles and by issuing financial guarantees to the vehicles; and the Group manages key decisions
that significantly affect these vehicles’ returns. As a result, the Group has concluded that its controls
these vehicles even though its ownership interests over these vehicles do not exceed 50%.
(*1) Including trusts for asset securitization
(*2) Hyundai Capital Europe GmbH holds 100% ownership interests of Hyundai Capital Services
Limited Liability Company located at Russia.
Ownership June 30, December 31,
Location (%) 2015 2014
Asset Korea 0.9 Autopia 43rd
ABS SPC (*1) Autopia 43rd
ABS SPC (*1)
securitization Autopia 44th
ABS SPC (*1) Autopia 44th ABS SPC (*1)
vehicles Autopia 45th
ABS SPC (*1) Autopia 45th ABS SPC (*1)
Autopia 46th
ABS SPC (*1) Autopia 46th ABS SPC (*1)
Autopia 47th
ABS SPC (*1) Autopia 47th ABS SPC (*1)
HB Third ABS SPC HB Third ABS SPC
0.5 Autopia 49th
ABS SPC (*1) Autopia 49th ABS SPC (*1)
Autopia 50th
ABS SPC (*1) Autopia 50th ABS SPC (*1)
Autopia 51st ABS SPC (*1) Autopia 51
st ABS SPC (*1)
Autopia 52nd
ABS SPC (*1) Autopia 52nd
ABS SPC (*1)
Autopia 54th
ABS SPC (*1) Autopia 54th ABS SPC (*1)
Autopia 55th
ABS SPC (*1) Autopia 55th ABS SPC (*1)
Autopia 56th
ABS SPC (*1)
0.31 HB Fourth ABS SPC HB Fourth ABS SPC
Limited Germany 100 Hyundai Capital Europe GmbH (*2) Hyundai Capital Europe GmbH (*2)
liability India 100 Hyundai Capital India Private Ltd. Hyundai Capital India Private Ltd.
companies Brazil 100 Hyundai Capital Brasil LTDA Hyundai Capital Brasil LTDA
Trusts Korea 100 Special money trust (16 trusts) Special money trust (29 trusts)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
10 (Continued)
(2) Changes in subsidiaries
During the six-month period ended June 30, 2015, Autopia 56th ABS SPC, including a trust for
asset securitization, was newly included in the Group’s consolidated financial statements except for
changes in the number of special money trust accounts in which the Group invests.
(3) Key financial information of subsidiaries
Key financial information of subsidiaries as of and for the period ended June 30, 2015 is
summarized as follows:
2. Basis of Preparation
(1) Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with
Korean International Financial Reporting Standards (K-IFRS), as prescribed in the Act on External
Audits of Corporations in the Republic of Korea.
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
annual financial statements. Selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in financial position and performance of the
Group since the last annual consolidated financial statements as at and for the year ended December 31,
2014. These condensed consolidated interim financial statements do not include all of the disclosures
required for full annual financial statements.
(2) 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.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
In preparing these condensed consolidated interim financial statements, the significant judgments
made by management in applying the Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial statements as of and for
the year ended December 31, 2014.
(in millions of Korean won) Total
compre-
Operating Profit (loss) hensive
Assets Liabilities Equity revenue for the period income (loss)
Hyundai Capital Europe GmbH W 15,323 5,699 9,624 7,781 (1,263) (1,648)
Hyundai Capital India Private Ltd. 1,207 563 644 682 35 46
Hyundai Capital Brasil LTDA 4,305 118 4,187 2,990 1,706 1,282
Autopia ABS SPCs 2,359,500 2,361,657 (2,157) 51,906 (958) (1,173)
HB ABS SPCs 4,747 3,738 1,009 1,141 562 562
Special money trusts 416,319 — 416,319 26 26 26
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
11 (Continued)
(3) Measurement of fair value
The Group regularly reviews significant unobservable inputs and valuation adjustments. If third
party information, such as broker quotes or pricing services, is used to measure fair values, then the
Group assesses the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of K-IFRS, including the level in the fair value hierarchy.
When measuring the fair value of an asset or a liability, the Group uses market observable data as
far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorized in different
levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in Note 27.
3. Significant Accounting Policies
Except as described below, the accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those applied by the Group in its consolidated
financial statements as of and for the year ended December 31, 2014. The following changes in
accounting policies are also expected to be reflected in the Group’s consolidated financial statements
as at and for the year ending December 31, 2015.
Amendments to K-IFRS No. 1019, Employee Benefits, entitled Defined Benefits Plans: Employee
Contributions
The narrow scope amendments apply to contributions from employees or third parties to defined
benefit plans. The objective of the amendments is to simplify the accounting for contributions that are
independent of the number of years of employee service, for example, employee contributions that are
calculated according to a fixed percentage of salary. When contributions are eligible for the practical
expedient, a company is permitted, but not required, to recognize them as a reduction of the service cost
in the period in which the related service is rendered.
The amendments apply retrospectively for annual periods beginning on or after July 1, 2014.
Earlier application is permitted. The adoption of the amendments had no significant impact on the
Group’s consolidated financial statements.
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
12 (Continued)
4. Short-term Financial Investments
Short-term financial investments as of June 30, 2015 and December 31, 2014 are as follows:
For liquidity management, the Group holds short-term investments in excess of immediate funding
needs. These excess funds are invested in short-term, highly liquid and investment grade money market
instruments, which provide liquidity for the Group’s short-term funding needs and flexibility in the use
of other funding sources.
(1) Debt securities
Details of debt securities in short-term financial investments as of June 30, 2015 and December 31,
2014 are as follows:
(2) Beneficiary certificates
Details of beneficiary certificates in short-term financial investments as of June 30, 2015 and
December 31, 2014 are as follows:
(in millions of Korean won) June 30, December 31,
2015 2014
Debt securities W 405,103 899,880
Beneficiary certificates 88,073 50,516
W 493,176 950,396
(in millions of Korean won) June 30, 2015
Interest Acquisition Carrying
Details rate (%) cost amount
Commercial paper and Korea development bank
repurchase agreements and 58 others 1.45 ~ 2.30 W 404,529 405,103
(in millions of Korean won) December 31, 2014
Interest Acquisition Carrying
Details rate (%) cost amount
Commercial paper and Korea development bank
repurchase agreements and 170 others 2.40 ~ 2.65 W 899,543 899,880
(in millions of Korean won) June 30, 2015
Acquisition Carrying
Details cost amount
Money market funds Hana UBS Class One MMF K-5 W 60,000 60,026
KDB Government Bond Corporate MMF 1 20,000 20,004
Dongbu Together Corporate MMF 3 C 8,000 8,043
W 88,000 88,073
(in millions of Korean won) December 31, 2014
Acquisition Carrying
Details cost amount
Money market trusts Shinhan Bank W 10,000 10,500
Money market funds Hana UBS Class One MMF K-5 40,000 40,016
W 50,000 50,516
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
13 (Continued)
5. Securities
Securities as of June 30, 2015 and December 31, 2014 are as follows:
(in millions of Korean won) June 30, December 31,
2015 2014
Available-for-sale securities
Equity securities
Marketable equity securities W 23,194 13,958
Unlisted equity securities 9,909 10,537
33,103 24,495
Debt securities
Government and public bonds 2,625 1,807
Corporate bonds 31,265 31,209
33,890 33,016
Beneficiary certificates 5,738 5,935
72,731 63,446
Investments in associates 227,776 209,118
W 300,507 272,564
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
14 (Continued)
5.1. Available-for-sale Securities
Available-for-sale securities as of June 30, 2015 and December 31, 2014 are as follows:
(1) Equity securities
(*1) The fair value of Hyundai Finance Corp. is estimated at the average of appraisal value quoted
by two independent valuation service providers, using the valuation technique based on the income
approach (discounted cash flow model). In measuring the fair value under this methodology, these
service providers estimate five-year financial statements based on projections considering actual
operating results assuming that the operational structure will remain unchanged for the next five years.
Operating income and expenses are estimated based on the past performances, future business plans
and expected market conditions. The Group has reviewed the underlying assumptions and concurs with
the methodology employed.
(2) Debt securities
The fair value of Seoul Metropolitan Rapid Transit Corp. and other Korean municipal bonds is
quoted from broker and dealer companies and Autopia 53rd ABS SPC is quoted from an independent
valuation service provider.
(3) Beneficiary certificates
The fair value of the beneficiary certificate is quoted from an independent valuation service
provider, using the valuation technique based on the income approach (discounted cash flow model).
(in millions of Korean won) Carrying amount
Number Ownership Acquisition June 30, December 31,
of shares (%) cost 2015 2014
Marketable equity securities
NICE Information Service Co., Ltd. 1,365,930 2.25 W 3,312 13,386 6,461
NICE Holdings Co., Ltd. 491,620 1.30 3,491 9,808 7,497
Unlisted equity securities
Hyundai Finance Corporation (*1) 1,700,000 9.29 9,888 9,741 10,365
Korean Egloan, Inc. 4,000 3.12 100 100 100
Golfclub Lich AG 14 0.59 60 68 72
W 16,851 33,103 24,495
(in millions of Korean won) Carrying amount
Interest rate Acquisition June 30, December 31,
Issuer (%) cost 2015 2014
Government and Seoul Metropolitan
public bonds Rapid Transit Corp.
and other Korean
municipal bonds 1.50, 2.00 W 2,517 2,625 1,807
Corporate bonds Autopia 53rd
ABS SPC 3.59, 4.42 30,000 31,265 31,209
W 32,517 33,890 33,016
(in millions of Korean won) Carrying amount
Acquisition June 30, December 31,
cost 2015 2014
Hyundai Ship Special Asset Investment Trust III W 5,707 5,738 5,935
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
15 (Continued)
5.2. Investments in Associates
(1) Details of investments in associates
Details of investments in associates as of June 30, 2015 and December 31, 2014 are as follows:
(*1) While the Group holds less than 20% of the voting rights, it has the ability to exercise
significant influence through representation on the board of directors or equivalent governing body of
the investee. Therefore, investments in these entities are accounted for using the equity method.
(*2) Due to the unavailability of the financial statements as of June 30, 2015, the equity method
was applied using the investee’s financial statements as of May 31, 2015. There were no significant
transactions between May 31 and June 30, 2015.
(*1) While the Group holds less than 20% of the voting rights, it has the ability to exercise
significant influence through representation on the board of directors or equivalent governing body of
the investee. Therefore, investments in these entities are accounted for using the equity method.
(*2) Due to the unavailability of the financial statements as of December 31, 2014, the equity
method was applied using the investee’s financial statements as of November 30, 2014. There were no
significant transactions between November 30 and December 31, 2014.
June 30, 2015
Principal Date of
Number of Ownership place of financial
shares (%) business statements Industry
Hi Network, Inc. (*1)(*2) 13,332 19.99 Korea 5/31/2015 Insurance brokerage
Korea Credit Bureau (*1) 140,000 7.00 Korea 6/30/2015 Credit information service
Hyundai Capital Germany GmbH 600,200 30.01 Germany 6/30/2015 Automobile finance brokerage
Hyundai Capital UK Ltd. 16,494,500 29.99 U.K. 6/30/2015 Automobile finance
Beijing Hyundai Auto Finance Co., Ltd. — 46.00 China 6/30/2015 Automobile finance
December 31, 2014
Principal Date of
Number of Ownership place of financial
shares (%) business statements Industry
Hi Network, Inc. (*1)(*2) 13,332 19.99 Korea 11/30/2014 Insurance brokerage
Korea Credit Bureau (*1) 140,000 7.00 Korea 12/31/2014 Credit information service
Hyundai Capital Germany GmbH 600,200 30.01 Germany 12/31/2014 Automobile finance brokerage
Hyundai Capital UK Ltd. 16,494,500 29.99 U.K. 12/31/2014 Automobile finance
Beijing Hyundai Auto Finance Co., Ltd. — 46.00 China 12/31/2014 Automobile finance
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
16 (Continued)
(2) Summary of financial information of investees
Summary of financial information of investees as of June 30, 2015 and December 31, 2014, for
assets and liabilities, for the six-month periods ended June 30, 2015 and 2014, for revenue and income,
and the reconciliation of investee’s net assets to the carrying amount of the investments in the Group’s
financial statements are as follows:
(in millions of Korean won) June 30, 2015
The
Group’s
Total Total Issued Total share in Carrying
assets liabilities capital equity net assets Goodwill amount
Hi Network, Inc. W 4,707 1,810 333 2,897 579 — 579
Korea Credit Bureau 53,761 7,110 10,000 46,651 3,266 1,037 4,303
Hyundai Capital Germany GmbH 8,112 2,188 3,547 5,924 1,778 — 1,778
Hyundai Capital UK Ltd. 2,117,655 1,994,282 96,055 123,373 37,000 — 37,000
Beijing Hyundai Auto Finance Co., Ltd. 2,821,744 2,421,492 354,325 400,252 184,116 — 184,116
(in millions of Korean won) Six-month period ended June 30, 2015
Other Total
compre- compre-
Net hensive hensive
Operating Interest Interest income income income
revenue income expense (loss) (loss) (loss)
Hi Network, Inc. W 5,579 23 — 204 — 204
Korea Credit Bureau 19,060 185 — (260) — (260)
Hyundai Capital Germany GmbH 2,193 32 — 1,026 (265) 761
Hyundai Capital UK Ltd. 58,125 54,673 11,672 13,117 (5,308) 7,809
Beijing Hyundai Auto Finance Co., Ltd. 153,451 148,516 56,992 32,183 2,741 34,924
(in millions of Korean won) December 31, 2014
The
Group’s
Total Total Issued Total share in Carrying
assets liabilities capital equity net assets Goodwill amount
Hi Network, Inc. W 5,306 2,613 333 2,693 539 — 539
Korea Credit Bureau 54,717 7,806 10,000 46,911 3,284 1,037 4,321
Hyundai Capital Germany GmbH 7,033 1,871 3,547 5,162 1,550 — 1,550
Hyundai Capital UK Ltd. 1,879,927 1,764,363 96,055 115,564 34,657 — 34,657
Beijing Hyundai Auto Finance Co., Ltd. 2,313,511 1,948,183 354,325 365,328 168,051 — 168,051
(in millions of Korean won) Six-month period ended June 30, 2014
Total
Other compre-
Net compre- hensive
Operating Interest Interest income hensive income
revenue income expense (loss) loss (loss)
Hi Network, Inc. 6,298 30 — 75 — 75
Korea Credit Bureau 16,860 287 — (3,332) — (3,332)
Hyundai Capital Germany GmbH 2,073 34 — 829 (321) 508
Hyundai Capital UK Ltd. 43,373 39,706 7,131 14,484 (641) 13,843
Beijing Hyundai Auto Finance Co., Ltd. 72,313 70,676 34,917 3,655 (10,630) (6,975)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
17 (Continued)
(3) Roll-forward of investments in associates
The following tables present a roll-forward of the carrying amounts of investments in associates
for the six-month periods ended June 30, 2015 and 2014:
(*1) At December 31, 2013, the carrying amount of the Group’s investments in HK Savings Bank
was W51,137 million including goodwill of W12,248 million. In March, 2014, the Group recognized
impairment loss of W27,689 million on this investment which made a new cost basis of W24,000
million equaling to net recoverable amount based on the impairment analysis. In May, 2014, the board
of directors approved the plan to sell all of the Group’s interest in HK Savings Bank, and the investment
was sold in October, 2014.
(4) Goodwill related to associates
Goodwill that forms part of the carrying amount of an investment in Korea Credit Bureau was
amounted to W1,037 million as of June 30, 2015 and December 31, 2014.
(in millions of Korean won) Six-month period ended June 30, 2015
Share in
other
Share in compre-
Beginning net income hensive Ending
balance (loss) income (loss) balance
Hi Network, Inc. W 539 40 — 579
Korea Credit Bureau 4,321 (18) — 4,303
Hyundai Capital Germany GmbH 1,550 308 (80) 1,778
Hyundai Capital UK Ltd. 34,657 3,935 (1,592) 37,000
Beijing Hyundai Auto Finance Co., Ltd. 168,051 14,804 1,261 184,116
W 209,118 19,069 (411) 227,776
(in millions of Korean won) Six-month period ended June 30, 2014
Share in
other Reclassifi-
Share in compre- Loss on cation to
Beginning net income hensive impair- assets held Ending
balance Addition (loss) income (loss) ment for sale balance
HK Savings Bank (*1) W 51,137 — 554 (2) (27,689) (24,000) —
Hi Network, Inc. 424 — (4) — — — 420
Korea Credit Bureau 4,292 — (212) — — — 4,080
Hyundai Capital Germany GmbH 1,755 — 249 (97) — — 1,907
Hyundai Capital UK Ltd. 22,668 5,150 4,344 (192) — — 31,970
Beijing Hyundai Auto Finance Co., Ltd. 77,037 — 1,681 (4,890) — — 73,828
W 157,313 5,150 6,612 (5,181) (27,689) (24,000) 112,205
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
18 (Continued)
6. Financial Receivables
Financial receivables as of June 30, 2015 and December 31, 2014 are as follows:
(in millions of Korean won) June 30, 2015
Deferred
loan costs,
net of fees
(Initial
Unpaid direct fees,
outstanding net of costs Present Allowance
principal on finance value for loan Carrying
balance leases) discounts losses amount
Loans receivable
Loans W 9,087,064 42,930 (1,963) (318,715) 8,809,316
Installment financial assets
Automobile 7,607,864 49,353 — (60,940) 7,596,277
Durable goods 875 — — (112) 763
Mortgage 4,183 5 — (86) 4,102
7,612,922 49,358 — (61,138) 7,601,142
Lease receivables
Finance lease receivables 2,704,710 (368) — (50,271) 2,654,071
Cancelled lease receivables 19,878 — — (18,711) 1,167
2,724,588 (368) — (68,982) 2,655,238
W 19,424,574 91,920 (1,963) (448,835) 19,065,696
(in millions of Korean won) December 31, 2014
Deferred
loan costs,
net of fees
(Initial
Unpaid direct fees,
outstanding net of costs Present Allowance
principal on finance value for loan Carrying
balance leases) discounts losses amount
Loans receivable
Loans W 9,869,534 35,340 (1,342) (319,323) 9,584,209
Installment financial assets
Automobile 6,503,014 45,938 — (53,121) 6,495,831
Durable goods 1,164 — — (78) 1,086
Mortgage 5,938 7 — (68) 5,877
6,510,116 45,945 — (53,267) 6,502,794
Lease receivables
Finance lease receivables 2,737,140 (432) — (52,494) 2,684,214
Cancelled lease receivables 16,755 — — (15,761) 994
2,753,895 (432) — (68,255) 2,685,208
W 19,133,545 80,853 (1,342) (440,845) 18,772,211
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
19 (Continued)
7. Allowances for Loan Losses
The following tables present a roll-forward of in allowance for loan losses including allowance for
doubtful accounts for other assets for the six-month periods ended June 30, 2015 and 2014:
(in millions of Korean won) Six-month period ended June 30, 2015
Installment
Loans financial Lease Other
receivable assets receivables assets Total
Beginning balance W 319,323 53,267 68,255 20,098 460,943
Charge-offs (180,690) (21,844) (399) (2,415) (205,348)
Recoveries 54,506 7,446 12 6,523 68,487
Unwinding of discounts (3,265) (155) (120) — (3,540)
Provision for (release of) allowance 129,552 22,424 1,319 (4,083) 149,212
Others (711) — (85) — (796)
Ending balance W 318,715 61,138 68,982 20,123 468,958
(in millions of Korean won) Six-month period ended June 30, 2014
Installment
Loans financial Lease Other
receivable assets receivables assets Total
Beginning balance W 333,359 42,980 60,168 20,677 457,184
Charge-offs (231,301) (22,106) (559) (3,256) (257,222)
Recoveries 51,650 6,034 28 5,252 62,964
Unwinding of discounts (4,117) (169) (158) — (4,444)
Provision for (release of) allowance 193,746 25,017 9,531 (1,644) 226,650
Others (204) (8) (31) — (243)
Ending balance W 343,133 51,748 68,979 21,029 484,889
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
20 (Continued)
8. Property and Equipment
The following tables present a roll-forward of the carrying amounts of property and equipment for
the six-month periods ended June 30, 2015 and 2014:
(in millions of Korean won) Six-month period ended June 30, 2015
Beginning Translation Ending
balance Addition Transfer Disposal Depreciation differences balance
Land W 97,883 — — — — — 97,883
Buildings 87,589 6 815 — (1,204) — 87,206
Vehicles 5,062 286 — (82) (566) (13) 4,687
Fixture and
furniture 42,538 9,610 1,984 (287) (11,696) (20) 42,129
Others 2,101 — — — — — 2,101
Construction
in progress 13,149 6,480 (2,799) — — (45) 16,785
W 248,322 16,382 — (369) (13,466) (78) 250,791
(in millions of Korean won) Six-month period ended June 30, 2014
Beginning Translation Ending
balance Addition Transfer Disposal Depreciation differences balance
Land W 95,218 11 1,921 — — — 97,150
Buildings 89,267 405 132 — (1,198) — 88,606
Vehicles 2,154 287 — (101) (466) 2 1,876
Fixture and
furniture 42,068 5,019 489 (58) (10,523) (15) 36,980
Others 2,005 75 — (10) — — 2,070
Construction
in progress 2,306 5,019 (2,351) — — (4) 4,970
W 233,018 10,816 191 (169) (12,187) (17) 231,652
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
21 (Continued)
9. Intangible Assets
The following tables present a roll-forward of the carrying amounts of intangible assets for the six-
month periods ended June 30, 2015 and 2014:
(*1) The Group obtained control of GE Capital Korea Co., Ltd. (GECK) by acquiring 100% of its
shares in July 2012 and then merged with GECK in August 2012. As a result of the business
combination, the Group recognized goodwill in the amount of W1,429 million, measured as the excess
of the consideration transferred over amounts of the identifiable assets acquired and the liabilities
assumed. The Group tested goodwill for impairment as of December 31, 2014 and recognized
impairment loss equal to the carrying amount of goodwill as the recoverable amount of the CGU was
determined to be less than its carrying amount.
(in millions of Korean won) Six-month period ended June 30, 2015
Beginning Translation Ending
balance Addtion Disposal Amortization differences balance
Development costs W 24,896 3,845 (37) (5,717) — 22,987
Memberships 29,545 49 — — 5 29,599
Other intangible assets 2,821 — — (758) (2) 2,061
W 57,262 3,894 (37) (6,475) 3 54,647
(in millions of Korean won) Six-month period ended June 30, 2014
Beginning Reversal of Ending
balance Addition Transfer Amortization impairment balance
Goodwill (*1) W 1,429 — — — — 1,429
Development costs 29,017 2,487 — (5,314) — 26,190
Trademark 2 — — (2) — —
Memberships 29,638 — (191) — 26 29,473
Other intangible assets 2,661 1,969 — (908) — 3,722
W 62,747 4,456 (191) (6,224) 26 60,814
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
22 (Continued)
10. Borrowed Funds
(1) Borrowings
Borrowings as of June 30, 2015 and December 31, 2014 are as follows:
(2) Bonds issued
Bonds issued as of June 30, 2015 and December 31, 2014 are as follows:
(in millions of Korean won) Annual Carrying amount
interest June 30, December 31,
Lender rate (%) Maturity 2015 2014
Short-term borrowings:
Commercial paper Shinhan Bank 1.70 ~ July 24, 2015 through
and 5 others 2.30 June 13, 2016 W 220,000 180,000
General loans Kookmin Bank 2.45 ~ July 30, 2015 through
and 6 others 3.60 June 30, 2016 770,000 840,000
Borrowings in
foreign currency Citibank 0.84 July 23, 2015 2,521 —
992,521 1,020,000
Current portion of long-term
borrowings:
General loans Shinhan Bank 2.60 ~ August 3, 2015 through
and 3 others 3.82 April 4, 2016 253,611 264,000
Borrowings in
foreign currency — 54,903
253,611 318,903
Long-term borrowings:
General loans Shinhan Bank 2.55 ~ September 9, 2016 through
and 5 others 4.03 November 15, 2018 262,000 223,358
W 1,508,132 1,562,261
(in millions of Korean won) Annual Carrying amount
interest June 30, December 31,
rate (%) Maturity 2015 2014
Short-term notes:
Asset-backed short-term bonds 1.78 July 20, 2015 W 40,000 20,000
Less: discount on bonds (39) (2)
39,961 19,998
Current portion of long-term bonds:
Bonds 2.77 ~ 5.70 July 8, 2015 through 3,654,608 4,231,328
Less: discount on bonds June 22, 2016 (2,455) (4,615)
3,652,153 4,226,713
Long-term bonds:
Bonds 1.60 ~ 6.53 July 25, 2016 through 12,522,131 11,675,441
Less: discount on bonds April 21, 2023 (21,475) (22,683)
12,500,656 11,652,758
W 16,192,770 15,899,469
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
23 (Continued)
11. Employee benefit liabilities
(1) Defined contribution plans
The Group recognized W61 million and W29 million in the statement of comprehensive income
for retirement benefits based on the defined contribution plan for the six-month periods ended June 30,
2015 and 2014, respectively.
(2) Defined benefit plans
(a) Characteristics of the defined benefit plan
The Group operates defined benefit plan. Under the plan, eligible employees are paid severance
benefits based on average salaries of three months prior to the termination and service periods. The plan
assets are mainly comprised of interest rate guaranteed type instruments, and therefore, are exposed to
the risk of declining interest rates.
(b) Roll-forward of present value of defined benefit obligations
The following tables present a roll-forward of the present value of defined benefit obligations for
the six-month periods ended June 30, 2015 and 2014:
(c) Roll-forward of fair value of plan assets
The following tables present a roll-forward of the fair value of defined benefit obligations for the
six-month periods ended June 30, 2015 and 2014:
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Beginning balance W 91,189 69,772
Current service costs 8,243 6,275
Interest cost 1,202 1,241
Actuarial losses:
Experience adjustments 1,699 1,901
Changes in economic assumptions 1,510 2,921
Changes in demographic assumptions 6 —
Transfer of severance benefits from (to) related parties, net (18) (668)
Benefits paid (3,907) (5,083)
Ending balance W 99,924 76,359
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Beginning balance W 71,770 56,888
Expected return on plan assets 944 1,010
Actuarial losses - Changes in economic assumptions (235) (324)
Transfer of severance benefits from (to) related parties, net (342) (104)
Benefits paid (3,536) (2,716)
Ending balance W 68,601 54,754
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
24 (Continued)
(3) Other long-term employee benefit plans
The Group grants long service payments to employees and directors with certain periods of services.
The Group recognized current service cost of W615 million in the statement of comprehensive income
and paid W398 million for the six-month period ended June 30, 2015. The Group recognizes other long-
term employee benefit liability of W5,804 million and W5,587 million as of June 30, 2015 and
December 31, 2014, respectively.
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
25 (Continued)
12. Provisions
Provisions include the allowance for unused loan commitments, residual value guarantees and asset
retirement obligations and others. A similar approach to the allowance for loan losses is used for
calculating a reserve for the estimated credit losses related to unused loan commitments.
The following tables present a roll-forward of the provisions for the six-month periods ended
June 30, 2015 and 2014:
(*1) The Group facilitates credits with limits, under which the Group provides commitments to
extend credits. Provision is made for estimated losses arising from unused loan commitments.
(*2) The Group facilitates certain installment financial receivable products which the Group
guarantees residual value of used automobiles for consumers. Provision is made for estimated incurred
losses arising from these residual value guarantees.
(*3) The Group recognizes provisions for asset retirement obligations (AROs) which represent the
estimated costs to restore the existing leased properties which are discounted to the present value using
the appropriate discount rate at the end of the reporting period. Disbursements of such costs are expected
to occur at the end of the lease contract. Such costs are reasonably estimated using the average lease
term and the average restoration expenses. The average lease term is calculated based on the past three-
year historical data of the expired leases. The average restoration expense is calculated based on the
actual costs incurred for the past two years using the four-year average inflation rate. The present value
of AROs is capitalized to the acquisition cost of leasehold improvements in fixture and furniture and
are depreciated over the useful life of the assets.
(in millions of Korean won) Six-month period ended June 30, 2015
Unused Residual Asset
loan value retirement
commit- guaran- obliga-
ments (*1) tees (*2) tions (*3) Other Total
Beginning balance W 1,431 809 5,208 — 7,448
Provision for (release of) allowance 26 324 (877) 201 (326)
Provisions made for AROs and
capitalized to related assets — — 565 — 565
Unwinding of interests — — 27 — 27
Ending balance W 1,457 1,133 4,923 201 7,714
(in millions of Korean won) Six-month period ended June 30, 2014
Unused Residual
loan value
commit- guaran-
ments (*1) tees (*2) Total
Beginning balance W 1,826 — 1,826
Provision for (release of) allowance (309) 176 (133)
Ending balance W 1,517 176 1,693
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
26 (Continued)
13. Derivative Financial Instruments and Hedge Accounting
(1) Trading derivatives
The Group had no trading derivatives as of June 30, 2015 and trading derivatives as of
December 31, 2014 are as follows:
During the six-month periods ended June 30, 2015 and 2014, the Group recognized gain (loss) on
trading derivatives of W194 thousand and (W2,370) thousand, respectively.
(2) Derivatives designated and qualifying as hedging instruments
In the normal course of business, the Group enters into derivative contracts to manage its exposures
to changes in future cash flows arising from volatilities in interest rate and foreign currency exchange
rates with its borrowings and bonds issued. The Group primarily uses interest rate swaps and currency
swaps to manage exposures to fluctuations in future cash flows due to interest rate risk and foreign
exchange risk. The Group also utilizes currency forward contracts to manage exposures to fluctuation
in future cash flows related to its lease contracts denominated in foreign currencies. There was no
change in overall strategy of the Group for cash flow hedges.
Derivatives that are designated and qualifying as hedging instruments for cash flow hedges as of
June 30, 2015 and December 31, 2014 are as follows:
Notional principal amount represents Korean won equivalent amounts of foreign currencies for
won-to-foreign currency transactions and receiving foreign currencies for foreign currency-to-foreign
currency transactions that are translated with the benchmark foreign currency exchange rate disclosed
by the Bank of Korea as of the reporting date.
(in thousands of Korean won) December 31, 2014
Notional principal
amount Assets Liabilities
Foreign currency forwards W 15,114 — 194
(in millions of Korean won) June 30, 2015
Accumulated
Notional other
principal comprehensive
amount Assets Liabilities income (loss)
Interest rate swaps W 1,190,000 — 16,312 (12,364)
Currency swaps 5,196,808 84,696 164,765 (30,959)
Foreign currency forwards 3,850 91 — 22
W 6,390,658 84,787 181,077 (43,301)
(in millions of Korean won) December 31, 2014
Accumulated
Notional other
principal comprehensive
amount Assets Liabilities income (loss)
Interest rate swaps W 1,330,000 — 16,571 (12,561)
Currency swaps 6,066,047 20,083 366,536 (28,613)
Foreign currency forwards 5,716 238 — 21
W 7,401,763 20,321 383,107 (41,153)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
27 (Continued)
Changes in effective portion of cash flow hedges for the six-month periods ended June 30, 2015
and 2014 are as follows:
The Group is expected to be exposed to the variability in future cash flows arising from hedged
items designated as cash flow hedges, until September 29, 2020. There was no cash flow hedges
discontinued during the six-month periods ended June 30, 2015 and 2014.
There was no ineffective portion recognized in profit or loss related to cash flow hedge for the six-
month periods ended June 30, 2015 and 2014.
(in millions of Korean won) Six-month period ended June 30, 2015
Changes
in fair value
recognized
in other Reclassified
Beginning comprehensive to Ending
balance income profit or loss balance
Effective portion of cash flow hedges W (54,292) 128,093 (130,927) (57,126)
Income tax effects 13,139 13,825
Effective portion of cash flow hedges,
net of income taxes W (41,153) (43,301)
(in millions of Korean won) Six-month period ended June 30, 2014
Changes
in fair value
recognized
in other Reclassified
Beginning comprehensive to Ending
balance income profit or loss balance
Effective portion of cash flow hedges W 2,344 (208,866) 183,597 (22,925)
Income tax effects (567) 5,548
Effective portion of cash flow hedges,
net of income taxes W 1,777 (17,377)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
28 (Continued)
14. Equity
(1) Regulatory reserve for loan losses
In accordance with the Article 11 of Regulation on Supervision of Specialized Credit Finance
Business mandated by the Financial Services Commission, the Group appropriates regulatory reserves
for loan losses which equal to the difference between allowance for loan losses estimated under K-IFRS
and allowance estimated based on regulatory risk grades of loans and receivables and minimum required
reserve ratio to each grade.
Details of regulatory reserve for loan losses as of June 30, 2015 and December 31, 2014 are as
follows:
Regulatory reserve for loan losses as of June 30, 2015 and December 31, 2014 represents the
amount which reflects the expected provision for (release of) regulatory reserve for loan losses to
appropriated reserve for loan losses at the beginning of the period.
Provision for (release of) regulatory reserve for loan losses and profit for the period and earnings
per share adjusted with provision for (release of) regulatory reserve for loan losses for the six-month
periods ended June 30, 2015 and 2014 are as follows:
(*1) Provision for (release of) regulatory reserve for loan losses represents additional reserves
expected to be made (released) for the six-month periods ended June 30, 2015 and 2014.
(*2) Profit for the period adjusted with provision for (release of) regulatory reserve for losses is not
prepared in accordance with K-IFRS, but the amount reflects the expected provision for (release of)
regulatory reserve for loan losses on a pre-tax basis on profit for the period.
(in millions of Korean won) June 30, December 31,
2015 2014
Appropriated reserve for loan losses W 335,372 328,317
Expected provision for (release of)
regulatory reserve for loan losses (34,151) 7,055
W 301,221 335,372
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Profit for the period W 171,559 85,149
Less: provision for (release of)
regulatory reserve for loan losses (*1) (34,151) 14,521
Profit for the period adjusted with provision for
(release of) regulatory reserve for loan losses (*2) W 205,710 70,628
Basic and diluted earnings per share
adjusted with provision for (release of)
regulatory reserve for loan losses (in won) W 2,071 711
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
29 (Continued)
(2) Retained earnings
Details of retained earnings as of June 30, 2015 and December 31, 2014 are as follows:
(*1) Korean Commercial Act requires the Group to appropriate, as a legal reserve, an amount equal
to a minimum of 10% of annual cash dividends declared, until the reserve equals 50% of its issued
capital. The reserve is not available for the payment of cash dividends, but may be transferred to capital
stock or used to reduce accumulated deficit, if any.
(in millions of Korean won) June 30, December 31,
2015 2014
Legal reserves:
Earned surplus reserve (*1) W 107,634 107,634
Discretionary reserves:
Regulatory reserve for loan losses 335,372 328,317
Reserve for electronic financial transactions 100 100
Reserve for business rationalization 74 74
335,546 328,491
Retained earnings before appropriation 2,326,464 2,161,960
W 2,769,644 2,598,085
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
30 (Continued)
15. Net Interest Income
Net interest income for the three-month and six-month periods ended June 30, 2015 and 2014 are
as follows:
(*1) Including amortization of unearned revenue for security deposits received for leases under the
effective interest method.
(*2) Including amortization of present value discounts under the effective interest method for the
security deposits paid for leased offices, amortization of present value discounts for customer deposits
received for leases and unwinding of provisions.
16. Net Fee Income
Net fee income for the three-month and six-month periods ended June 30, 2015 and 2014 are as
follows:
(in millions of Korean won) Three-month periods Six-month periods
ended June 30, ended June 30,
2015 2014 2015 2014
Interest income:
Cash and due from
other financial institutions W 4,995 10,196 12,277 20,706
Available-for-sale securities 303 302 601 596
Loans receivable 265,491 309,143 542,827 630,440
Installment financial assets 103,696 86,786 200,399 164,285
Lease receivables (*1) 51,197 59,873 102,823 120,326
Other (*2) 233 251 1,024 1,323
425,915 466,551 859,951 937,676
Interest expense:
Borrowings 11,052 16,122 22,946 33,447
Bonds issued 148,473 169,433 303,287 340,181
Other (*2) 4,402 6,894 9,962 13,636
163,927 192,449 336,195 387,264
Net interest income W 261,988 274,102 523,756 550,412
(in millions of Korean won) Three-month periods Six-month periods
ended June 30, ended June 30,
2015 2014 2015 2014
Fee income:
Loans receivable W 11,722 11,549 23,176 22,795
Installment financial assets 3,369 2,184 6,340 4,090
Lease receivables 39,034 40,843 78,602 87,303
54,125 54,576 108,118 114,188
Fee expenses:
Lease expenses 5,377 5,834 10,211 12,559
Net fee income W 48,748 48,742 97,907 101,629
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
31 (Continued)
17. Other Operating Income and Expenses
Other operating income and expenses for the three-month and six-month periods ended June 30,
2015 and 2014 are as follows:
18. General and Administrative Expenses
General and administrative expenses for the three-month and six-month periods ended June 30,
2015 and 2014 are as follows:
(in millions of Korean won) Three-month periods Six-month periods
ended June 30, ended June 30,
2015 2014 2015 2014
Other operating income:
Gain on valuation of derivatives W 99,227 (92,567) 142,135 11,529
Gain on derivatives transactions 28,496 102 29,829 1,062
Gain on short-term financial
investments 716 — 850 —
Gain on purchased loan 13,273 14,638 26,542 29,223
Shared services income 9,829 5,553 14,352 11,689
Other fee and commission 14,169 11,799 27,173 22,277
Other 162 2,955 2,346 5,966
W 165,872 (57,520) 243,227 81,746
Other operating expenses:
Loss on valuation of derivatives W (22,209) 190,856 15,402 190,950
Loss on derivatives transactions 24,749 5,168 25,635 5,240
Shared services expense 8,684 7,232 13,566 13,209
Other 4,782 6,910 11,957 13,590
W 16,006 210,166 66,560 222,989
(in millions of Korean won) Three-month periods Six-month periods
ended June 30, ended June 30,
2015 2014 2015 2014
Salaries W 59,304 45,617 118,398 79,508
Severance benefits 6,155 3,270 10,432 6,536
Employee benefits 7,609 6,559 17,694 15,901
Advertising 17,751 12,259 32,426 24,854
Sales promotion 18,536 16,356 36,559 32,826
Rents 11,610 10,292 23,550 22,035
Utilities 2,518 2,874 5,080 6,258
Communication 3,855 4,067 7,605 7,960
Travel and transportation 1,560 1,504 2,675 2,473
Professional and other service fees 16,872 20,706 32,548 36,133
Outsourcing service charges 9,410 17,727 17,048 35,248
Commissions and charges 5,806 5,437 11,681 10,549
Depreciation 7,014 6,114 13,466 12,187
Amortization 3,165 3,172 6,475 6,224
Other 12,800 11,703 24,422 22,498
W 183,965 167,657 360,059 321,190
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
32 (Continued)
19. Income Taxes
(1) Income tax expense
Income tax expense for the six-month periods ended June 30, 2015 and 2014 are as follows:
(2) Deferred income taxes recognized directly to equity
Deferred income taxes recognized directly to equity for the six-month periods ended June 30, 2015
and 2014 are as follows:
(in millions of Korean won) Six-month periods
ended June 30,
2015 2014
Current income tax expense W 63,834 44,832
Change in deferred income tax due to temporary differences (5,604) (12,015)
Deferred income taxes recognized directly to equity (480) 7,434
Income tax expense W 57,750 40,251
Six-month period ended June 30,
2015 2014
Beginning Ending Beginning Ending
balance balance Changes balance balance Changes
Unrealized gains and losses on
available-for-sale securities W (2,168) (4,270) (2,102) (1,036) (1,205) (169)
Share in other comprehensive
income of associates
under the equity method 326 426 100 — 243 243
Effective portion
of cash flow hedges 13,139 13,825 686 (567) 5,548 6,115
Remeasurements of
defined benefit plans 8,186 9,022 836 4,356 5,601 1,245
W 19,483 19,003 (480) 2,753 10,187 7,434
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
33 (Continued)
(3) Effective tax rate reconciliation
Income tax expense attributable to net income was W57,750 million and W40,251 million for the
six-month periods ended June 30, 2015 and 2014, respectively, and differed from the amounts computed
by applying the statutory tax rate to profit before income taxes as a result of the following:
20. Earnings Per Share
(1) Basic earnings per share
Basic earnings per share attributable to common stock of equity holders for the three-month and
six-month periods ended June 30, 2015 and 2014 are as follows:
(2) Diluted earnings per share
There are no potential common stocks as of June 30, 2015 and 2014. Therefore, the diluted earnings
per share is equal to basic earnings per share for the three-month and six-month periods ended June 30,
2015 and 2014.
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Profit before income taxes (A) W 229,309 125,400
Income taxes at statutory tax rates 55,031 29,885
Adjustments:
Non-taxable income (2) (7)
Non-deductible expense 140 157
Changes in estimates for tax provisions of the prior year (139) (3,319)
Tax audit settlements — 13,283
Others including tax credits and foreign subsidiaries 2,720 252
Income tax expense (B) W 57,750 40,251
Effective tax rate (B/A) 25.18% 32.10%
Three-month periods ended June 30, Six-month period ended June 30,
2015 2014 2015 2014
Profit for the period attributable
to common stock (in won) (A) W 96,975,422,693 54,597,148,109 W 171,559,083,307 85,149,261,705
Weighted average of number of
outstanding common stocks (B) 99,307,435 99,307,435 99,307,435 99,307,435
Basic earnings per share (in won) (A/B) W 977 550 W 1,728 857
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
34 (Continued)
21. Other Comprehensive Income
Other comprehensive income for the six-month periods ended June 30, 2015 and 2014 are as
follows:
(*1) Including accumulated other comprehensive loss in the amount of W40 million, net of income
taxes of W13 million, as of June 30, 2014, related to the investments in HK Savings Bank which were
reclassified to assets held for sale.
(in millions of Korean won) Six-month period ended June 30, 2015
Changes
Reclassifi-
Beginning cation to Other Income tax Ending
balance profit or loss changes effects balance
Net change in unrealized
gains and losses on
available-for-sale securities W 6,792 (87) 8,774 (2,102) 13,377
Share in other comprehensive
loss of associates
under the equity method (1,021) — (411) 100 (1,332)
Net change in effective portion
of cash flow hedges (41,153) (130,927) 128,093 686 (43,301)
Net change in foreign currency
translation adjustments (3,573) — (798) — (4,371)
Remeasurements of
defined benefit plans (25,640) — (3,450) 836 (28,254)
W (64,595) (131,014) 132,208 (480) (63,881)
(in millions of Korean won) Six-month period ended June 30, 2014
Changes
Reclassifi-
Beginning cation to Other Income tax Ending
balance profit or loss changes effects balance
Net change in unrealized
gains and losses on
available-for-sale securities W 3,243 (100) 800 (169) 3,774
Share in other comprehensive
loss of associates
under the equity method (*1) (1,615) — (5,181) 243 (6,553)
Net change in effective portion
of cash flow hedges 1,777 183,597 (208,866) 6,115 (17,377)
Net change in foreign currency
translation adjustments (1,333) — (517) — (1,850)
Remeasurements of
defined benefit plans (13,645) — (5,146) 1,245 (17,546)
W (11,573) 183,497 (218,910) 7,434 (39,552)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
35 (Continued)
22. Supplemental Cash Flow Information
(1) Cash and cash equivalents
Details of cash and cash equivalents as of June 30, 2015 and December 31, 2014 are as follows:
Other cash equivalents include demand deposits, certificate of deposits, time deposits, commercial
paper, repurchase agreements and other debt instruments with maturities of three months or less from
the acquisition date that are readily convertible to known amounts of cash which are subject to an
insignificant risk of changes in their fair value, and are used by the Group in the management of its
short-term commitments.
(2) Cash generated from operations
Cash generated from operations for the six-month periods ended June 30, 2015 and 2014 are as
follows:
(in millions of Korean won) June 30, December 31,
2015 2014
Cash on hold W 2 1
Ordinary deposits 173,698 197,732
Checking deposits 4,336 5,621
Other cash equivalents 547,708 404,853
W 725,744 608,207
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Profit for the period W 171,559 85,149
Adjustments:
Gain on sale of available-for-sale securities (842) (1,002)
Income on loans (amortization net deferred loan costs and
accretion of present value discounts) 25,712 14,004
Income on installment financial assets (amortization of
net deferred loan costs) 21,939 13,909
Income on leases (amortization of net deferred loan costs) 22,996 27,888
Gain on foreign currency translation (16,005) (191,293)
Dividend income (2,243) (2,383)
Gain on valuation of derivatives (142,135) (11,529)
Gain on valuation of short-term financial investments (850) —
Net interest expenses (accretion of present value discounts) 322,293 364,639
Lease expenses (depreciation and impairment loss on
leased assets) 156,652 150,065
Provision for loan losses 149,212 226,650
Loss on foreign currency translation 142,211 11,707
Severance benefits 8,501 6,507
Long-term employee benefits 615 —
Depreciation 13,466 12,187
Amortization 6,475 6,224
Loss on valuation of derivatives 15,402 190,950
Provisions (release of provisions) 551 (133)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
36 (Continued)
(in millions of Korean won) Six-month period ended June 30,
2015 2014
Share in net income of associates under the equity method W (19,087) (6,828)
Gain on sale of property and equipment (1,250) (61)
Reversal of impairment loss on intangible assets — (26)
Share in net loss of associates under the equity method 18 216
Impairment loss on investments in associates — 27,689
Loss on sale of property and equipment 365 58
Income tax expense 57,750 40,251
761,746 879,689
Changes in operating assets and liabilities:
Decrease (increase) in due from banks 33,286 (936)
Increase in short-term financial investments 458,070 —
Decrease in available-for-sale securities 240 851
Decrease in loans receivable 619,629 963,998
Increase in installment financial assets (1,142,711) (1,149,437)
Increase in finance lease receivables (220,760) (197,292)
Decrease in cancelled lease receivables 7,682 9,311
Increase in operating lease assets (277,575) (184,711)
Decrease in cancelled lease assets 218,675 253,379
Decrease (increase) in non-trade receivables (25,909) 22,213
Decrease in accrued revenues 3,604 7,439
Increase in advance payments (20,625) (17,696)
Decrease in prepaid expenses (25,211) (22,320)
Increase in derivatives, net (142,596) (85,304)
Increase (decrease) in non-trade payables 10,465 (57,348)
Increase (decrease) in accrued expenses (176,331) 320
Decrease in unearned revenue (3,548) (3,002)
Increase (decrease) in withholdings 11,207 (4,120)
Increase in current tax liabilities — 1,551
Decrease in deposits received (42,687) (67,999)
Decrease in defined benefit liabilities (3,907) (5,083)
Decrease in plan assets 3,536 2,716
Transfer of severance benefits from (to) related parties, net 324 (564)
Decrease in long-term employee benefits (398) —
Decrease in other liabilities — (10)
(715,540) (534,044)
W 217,765 430,794
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
37 (Continued)
23. Commitments and Contingencies
(1) Line of credit commitments
As of June 30, 2015, the Group has line-of-credit commitments from Shinhan Bank and two other
financial institutions with aggregated limits in the amount of W54,500 million.
(2) Credit Facility Agreement
(a) Credit Facility Agreement with GE Capital
The Group entered into a credit facility agreement with GE Capital European Funding & Co. (GE
Capital) on February 15, 2013 and the limit of this credit facility is euro equivalent amounts to USD
600 million. The agreement was renewed on January 9, 2015 with the same limit above. The agreement
is renewable in every one year and ultimately expires on January 5, 2018.
In relation to the credit facility agreement above, Hyundai Motor Company guarantees GE Capital
for any amounts not paid by the Group, for amount up to its ownership interests of 56% in the Group.
(b) Revolving Credit Facility
As of June 30, 2015, the Group has revolving credit facility agreements amounted to USD 200
million, EUR 10 million and W1,995,000 million with Kookmin Bank and 20 other financial
institutions for credit lines.
(3) Guarantees
Details of guarantees provided to the Group as of June 30, 2015 and December 31, 2014 are as
follows:
(*1) The amounts represent the guaranteed unpaid principals as of June 30, 2015 and December 31,
2014 as defined under the joint liability agreement.
The Group has residual value guarantee insurance policy with KB Insurance Co., Ltd. and other
insurance carriers which covers losses resulting from defaults in mortgage loans where unpaid amounts
exceed the recoverable amounts from the collateral of the loans. Loans insured by the policy and
residual value guaranteed by the insurance policy as of June 30, 2015 and December 31, 2014 are as
follows:
(in millions of Korean won) June 30, December 31,
Guarantor Details 2015 2014
Hyundai Motor Company Joint liabilities on finance lease
receivables (*1) W 1,568 1,568
Seoul Guarantee Guarantee for debt collection
Insurance Co., Ltd. deposit and others 90,272 102,696
(in millions of Korean won) June 30, December 31,
2015 2014
Loans insured W 702,431 799,687
Residual value guaranteed by the insurance policy 233,990 271,032
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
38 (Continued)
(4) Pending litigations
Pending litigations include 14 cases with aggregated amount of W1,270 million where the Group
is the defendant, 27 cases with aggregated amount of W1,366 million where the Group is the plaintiff,
and litigations against a number of debtors to collect receivables as of June 30, 2015. The Group
recognizes provisions of W201 million related to one legal suit.
Management has reviewed legal claims against the Group with outside legal counsels and has taken
into consideration the views of such counsel as to the outcome of the claims. In management’s opinion,
the final disposition of all such claims will not have a material adverse effect on the Group’s financial
position or results of its operations.
(5) Receivables transfer agreement
The Group entered into an agreement with Hyundai Card Co., Ltd., Hyundai Commercial Co., Ltd.,
and Hyundai Life Insurance Co., Ltd., to purchase certain delinquent receivables on a regular basis at
amount agreed with the transferors.
24. Related Party Transactions
(1) Relationships between parents and subsidiaries
The parent company is Hyundai Motor Company. Related parties include associates, joint ventures,
post-employment benefit plans, members of key management personnel and entities which the Group
controls directly or indirectly, has joint control or significant influence over them.
(2) Related parties
See Note 23, regarding the credit facility agreement with GE Capital, which has significant
influence on the Group. The other related parties that have transactions, and receivables and payables
with the Group as of June 30, 2015 is as follows:
Type Company
The Parent Hyundai Motor Company
Associates Hi Network, Inc., Korea Credit Bureau, Hyundai Capital Germany GmbH,
Hyundai Capital UK Ltd. and Beijing Hyundai Auto Finance Co., Ltd.
Others Hyundai Life Insurance Co., Ltd., Hyundai Card Co., Ltd., Hyundai Autoever Corp.,
Hyundai Glovis Co., Ltd., Kia Motors Corp., Hyundai Capital America, and 30 others
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
39 (Continued)
(3) Transactions with related parties
Significant transactions, which occurred in the normal course of business with related companies
for the six-month periods ended June 30, 2015 and 2014 are as follows:
(in millions of Korean won) Six-month period ended June 30, 2015
Operating Operating Non-operating Other
revenue expenses income Sales Purchases
The Parent
Hyundai Motor Company W 21,323 1,145 — — 442,871
Associates
Hi Network, Inc. 245 112 — — —
Korea Credit Bureau 1 108 — — —
Hyundai Capital Germany GmbH 245 — — — —
491 220 — — —
Other related parties
Hyundai Life Insurance Co., Ltd. 190 5,469 — — 2,003
Hyundai Card Co., Ltd. 26,515 11,810 64 — 70,365
Hyundai Autoever Corp. 57 20,946 — — 20,366
Hyundai Glovis Co., Ltd. 145 648 — 13,579 —
Kia Motors Corp. 15,105 1,985 — — 124,068
Hyundai Capital America 6,303 — — — —
Others 12,229 10,352 — — 39,966
60,544 51,210 64 13,579 256,768
W 82,358 52,575 64 13,579 699,639
(in millions of Korean won) Six-month period ended June 30, 2014
Operating Operating Non-operating Other
revenue expenses income Sales Purchases
The Parent
Hyundai Motor Company W 6,568 759 — — 441,177
Associates
Hi Network, Inc. — 661 — — —
Korea Credit Bureau 4 98 — — —
Hyundai Capital Germany GmbH 229 — — — —
Beijing Hyundai Auto Finance Co., Ltd. 24 — — — —
HK Savings Bank 35 — — 24 —
292 759 — 24 —
Other related parties
Hyundai Life Insurance Co., Ltd. 69 4,309 65 — 261
Hyundai Card Co., Ltd. 18,108 12,296 2,297 — 82,598
Hyundai Autoever Corp. 38 17,049 — — 13,268
Kia Motors Corp. 7,064 547 — — 110,867
Hyundai Capital America 7,818 — — — —
Others 11,112 10,540 873 24,255 26,328
44,209 44,741 3,235 24,255 233,322
W 51,069 46,259 3,235 24,279 674,499
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
40 (Continued)
Receivables and payables with related parties as of June 30, 2015 and December 31, 2014 are as
follows:
(*1) Other assets include plan assets of W57,901 million and W59,307 million as of June 30, 2015
and December 31, 2014, respectively, related to the Group’s defined benefit plan.
(4) Key management compensation
Compensation to key management for the six-month periods ended June 30, 2015 and 2014 are as
follows:
The key management above consists of directors (including non-permanent directors), who have
significant authority and responsibilities for planning, operating and controlling the Group.
(in millions of Korean won)
Lease Other Other
receivables assets liabilities
The Parent
Hyundai Motor Company W 473 8,695 29,529
Associates
Hyundai Capital Germany GmbH — — 13
Other related parties
Hyundai Life Insurance Co., Ltd. (*1) 410 65,724 402
Hyundai Card Co., Ltd. 1,001 1,526 122,864
Hyundai Glovis Co., Ltd. 462 2,495 —
Kia Motors Corp. — 3,308 19,317
Hyundai Capital America — 36,779 —
Others 11,660 25,730 458
13,533 135,562 143,041
W 14,006 144,257 172,583
(in millions of Korean won)
Lease Other Other
receivables assets liabilities
The Parent
Hyundai Motor Company W 1,477 2,924 12,471
Other related partiies
Hyundai Life Insurance Co., Ltd. (*1) 400 66,829 50
Hyundai Card Co., Ltd. 2,004 865 126,606
Hyundai Autoever Corp. — — 98
Hyundai Glovis Co., Ltd. 436 1,744 —
Kia Motors Corp. — 410 7,642
Hyundai Capital America — 22,800 —
Others 11,321 804 925
14,161 93,452 135,321
W 15,638 96,376 147,792
June 30, 2015
December 31, 2014
Six-month period ended June 30,
2015 2014
Short-term employee benefits W 7,336 2,647
Severance benefits 893 1,066
Other Long-term employee benefits 7 —
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
41 (Continued)
25. Transfer of Financial Assets
The Group issued senior and subordinated asset-backed securities collateralized by loans
receivable, installment financial assets, and lease receivables; and the investors in the securitized notes
have recourse only to the cash flows from the transferred financial assets.
Details of financial assets transferred that are not derecognized as of June 30, 2015 and
December 31, 2014 are as follows:
(*1) Excluding derivatives for hedges. The Group enters into currency swaps contracts principally
to manage exposures to fluctuations in future cash flows due to interest rate risk and foreign exchange
risk of foreign currency denominated asset-backed securities issued.
(in millions of Korean won) June 30, December 31,
2015 2014
Carrying amount of assets:
Loans receivable W 800,345 1,135,248
Installment financial assets 2,222,639 1,801,193
Lease receivables 288,309 320,341
3,311,293 3,256,782
Carrying amount of associated liabilities (*1): (2,359,271) (2,301,178)
For those liabilities that have recourse
only to the transferred financial assets:
Fair value of assets 3,339,021 3,273,905
Fair value of associated liabilities (*1) (2,381,388) (2,318,511)
Net position W 957,633 955,394
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
42 (Continued)
26. Offsetting Financial Assets and Liabilities
Derivative assets and liabilities are subject to an enforceable master netting arrangement or similar
agreement including derivative clearing agreements based on future events as defined in the
arrangement.
Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and
similar agreements as of June 30, 2015 and December 31, 2014 are as follows:
(in millions of Korean won) June 30, 2015
Gross
amounts of Net
recognized amounts of
financial financial
Gross assets assets
amounts of /liabilities /liabilities Related amounts not offset
recognized offset in the in the in the statement of
financial statement of statement of financial position
assets financial financial Financial Cash collateral Net
/liabilities position position instruments received amounts
Financial assets:
Derivative assets W 84,787 — 84,787 84,787 — —
Financial liabilities:
Derivative liabilities 181,077 — 181,077 84,787 — 96,290
(in millions of Korean won) December 31, 2014
Gross
amounts of Net
recognized amounts of
financial financial
Gross assets assets
amounts of /liabilities /liabilities Related amounts not offset
recognized offset in the in the in the statement of
financial statement of statement of financial position
assets financial financial Financial Cash collateral Net
/liabilities position position instruments received amounts
Financial assets:
Derivative assets W 20,321 — 20,321 20,321 — —
Financial liabilities:
Derivative liabilities 383,107 — 383,107 20,321 — 362,786
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
43 (Continued)
27. Fair Value Measurements of Financial Instruments
(1) Fair value of financial instruments
The fair values of financial instruments, together with carrying amounts shown in the statements
of financial position, as of June 30, 2015 and December 31, 2014 are as follows:
(*1) Excluding liabilities for taxes and dues
The following methods and assumptions were used to estimate the fair value of each class of
financial instruments:
Cash and Due from banks
The carrying amount and the fair value of cash are identical. As cash, deposits, and other cash
equivalent instruments can be easily converted into cash, the carrying amount, at face value or cost plus
accrued interest, approximates the fair value because of short maturity of these instruments.
Short-term financial investments
In case that the market of a financial instrument is active, fair value is established at the close
quoted price as of the last day for the reporting period. The fair value of investments in money market
funds is determined by the sum of acquisition cost and accrued interest.
(in millions of Korean won) June 30, 2015 December 31, 2014
Carrying Fair Carrying Fair
amount value amount value
Financial assets:
Cash and due from
other financial institutions W 1,221,767 1,221,767 1,594,736 1,594,736
Available-for-sale securities 72,731 72,731 63,446 63,446
Loans receivable 8,809,316 8,643,370 9,584,209 9,439,544
Installment financial assets 7,601,142 7,640,895 6,502,794 6,528,367
Lease receivables 2,655,238 2,654,541 2,685,208 2,676,961
Derivative assets 84,787 84,787 20,321 20,321
Non-trade receivables 144,192 144,192 114,785 114,785
Accrued revenues 93,051 93,051 97,344 97,344
Leasehold deposits 22,882 21,938 22,033 20,896
W 20,705,106 20,577,272 20,684,876 20,556,400
Financial liabilities:
Borrowings W 1,508,132 1,515,490 1,562,261 1,571,584
Bonds issued 16,192,770 16,637,260 15,899,469 16,346,713
Derivative liabilities 181,077 181,077 383,107 383,107
Non-trade payables (*1) 267,222 267,222 255,369 255,369
Accrued expenses 172,346 172,346 177,592 177,592
Withholdings (*1) 28,096 28,096 19,314 19,314
Deposits received 577,197 557,278 609,078 584,187
Other liabilities 50 50 50 50
W 18,926,890 19,358,819 18,906,240 19,337,916
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
44 (Continued)
Available-for-sale securities
When available, the Group measures the fair value of a security using quoted prices in an active
market. If a market for a security is not active, the Group establishes fair value by using a highly
accredited independent valuation agency. The independent valuation agency utilizes various valuation
technique, which include the discounted cash flow model, the imputed market value model, the free
cash flow to equity (FCFE) model, the dividend discount model, the risk adjusted discount rate method,
and the net asset valuation approach. Depending on the characteristic and nature of the instrument, the
fair value is measured by using at least one valuation technique.
Loans receivable, installment financial assets, and lease receivables
The fair value is determined by using the discounted cash flow model that incorporate parameter
inputs for expected maturity rate/prepayment rate, as appropriate. As the discount rate used for
determining the fair value incorporates the time value of money and credit risk, the Group’s discount
rate system is formed to consider the market risk and the credit risk.
Derivative financial instruments
The fair value of interest rate swaps and currency swaps are determined by using the discounted
cash flow model based on a current interest rate yield curve appropriate for market interest rate as of
the reporting date. The fair value of each derivative instrument measured by discounting and offsetting
the probable future cash flows of swap, which are estimated based on the forward rate and the closing
foreign exchange price. The fair value of each derivative is measured by offsetting and discounting the
expected cash flows of the swap at appropriate discount rate which is based on forward interest rate and
exchange rate that is generated by using above method. The fair value of currency forward is measured
principally with the forward exchange rate which is quoted in the market at the end of reporting period
considering the maturity of the currency forward. The discount rate used in measuring the fair value of
currency forward is derived from CRS rate which is determined by using the spot exchange rate and the
forward exchange rate based on the interest rate parity theory.
Borrowings
The fair value of borrowings is determined by using the discounted cash flow method; the fair value
of a financial instrument is determined by discounting the expected future cash flows at an appropriate
discount rate.
Bonds issued
The fair value of bonds is determined by using discounted cash flow method. The fair value of
bonds denominated in won and bonds denominated in foreign currencies are quoted from a reliable
independent valuation service provider.
Other financial assets and liabilities
The fair value of other financial assets and other financial liabilities is determined by using
discounted cash flow method. For certain other financial assets and liabilities, carrying amount
approximates fair value due to their short term nature and generally negligible credit risk. These
instruments include nontrade receivables, accrued interest receivable, nontrade payables, and others.
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
45 (Continued)
(2) Fair value hierarchy
(a) Financial assets and liabilities measured at fair value
The fair value hierarchy of financial assets and liabilities measured at fair value in the statement of
financial position as of June 30, 2015 and December 31, 2014 are as follows:
(*1) Equity securities for which quoted prices in active markets are not available and fair value of
those instruments cannot be estimated reliably are measured at cost and classified as Level 3 instruments.
These instruments are amounted to W168 million and W172 million as of June 30, 2015 and
December 31, 2014, respectively.
(in millions of Korean won) June 30, 2015
Carrying Fair Fair value hierarchy
amount value Level 1 Level 2 Level 3 (*1)
Financial assets measured at fair value:
Short-term financial investments W 493,176 493,176 — 493,176 —
Available-for-sale securities 72,731 72,731 23,194 33,890 15,647
Derivative assets
Designated as hedging instruments
for cash flow hedges 84,787 84,787 — 84,787 —
W 650,694 650,694 23,194 611,853 15,647
Financial liabilities measured at fair value:
Derivative liabilities
Designated as hedging instruments
for cash flow hedges W 181,077 181,077 — 181,077 —
(in millions of Korean won) December 31, 2014
Carrying Fair Fair value hierarchy
amount value Level 1 Level 2 Level 3 (*1)
Financial assets measured at fair value:
Short-term financial investments W 950,396 950,396 — 950,396 —
Available-for-sale securities 63,446 63,446 13,958 33,016 16,472
Derivative assets
Designated as hedging instruments
for cash flow hedges 20,321 20,321 — 20,321 —
W 1,034,163 1,034,163 13,958 1,003,733 16,472
Financial liabilities measured at fair value:
Derivative liabilities
Trading W — — — — —
Designated as hedging instruments
for cash flow hedges 383,107 383,107 — 383,107 —
W 383,107 383,107 — 383,107 —
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
46 (Continued)
The valuation techniques and inputs for measuring the fair value of financial assets and liabilities
classified as Level 2 as of June 30, 2015 and December 31, 2014 are as follows:
The following tables present a roll-forward of the fair value of Level 3 instruments for the six-
month periods ended June 30, 2015 and 2014.
The valuation techniques and quantitative information of significant unobserved inputs for
financial instruments classified as Level 3 as of June 30, 2015 and December 31, 2014 are as follows:
(in millions of Korean won) Fair value
June 30, December 31, Valuation
2015 2014 technique Inputs
Financial assets measured
at fair value:
Short-term financial
investments W 493,176 950,396 DCF Model Discount rate, short-term interest rate, volatility and others
Available-for-sale securities 33,890 33,016 DCF Model Discount rate
Derivative assets
Designated as hedging
instruments
for cash flow hedges 84,787 20,321 DCF Model Discount rate, short-term interest rate, volatility, foreign exchange rate and others
W 611,853 1,003,733
Financial liabilities measured
at fair value:
Derivative liabilities
Designated as hedging
instruments
for cash flow hedges W 181,077 383,107 DCF Model Discount rate, short-term interest rate, volatility, foreign exchange rate and others
(in millions of Korean won) Available-for-sale securities
Six-month period ended June 30,
2015 2014
Beginning balance W 16,472 10,844
Losses recognized as other comprehensive loss (626) (255)
Redemption of principal (199) —
Ending balance W 15,647 10,589
(in millions of Korean won) June 30, 2015
Estimated
range of
Valuation Unobservable unobservable
Fair value technique Inputs inputs inputs Impacts on fair value
Financial assets
measured at fair value:
Available-for-sale securities
Equity securities W 9,741 FCFE Growth rate and Sales growth rate 0.04% ~ Fair value is likely to increase
model discount rate 2.94% as the sales growth rate and pre-tax
Pre-tax operating 17.77% ~ operating income ratio rise,
income ratio 19.59% while cost of equity capital declines.
Cost of capital
on equity 10.73%
Beneficiary certificates 5,738 Net asset Credit rating and Credit rating BBB Fair value is likely to increase
model discount rate Discount rate 6.85% as the discount rate declines
W 15,479 while credit rating of loan receivables rises.
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
47 (Continued)
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable
changes in the fair value of financial instruments which are affected by the unobservable inputs, using
a statistical technique. When the fair value is affected by more than two input parameters, the amounts
represent the most favorable or most unfavorable. For fair value measurements classified as Level 3,
the sensitivity analysis on change of unobservable inputs as of June 30, 2015 and December 31, 2014
is as follows:
(*1) For equity securities that changes in fair value are calculated by increasing and decreasing
growth rate (-1%~1%) and discount rate (-1~1%). For beneficiary certificates, the changes in fair value
are calculated by increasing and decreasing discount rate (-1%~1%).
(*2) For equity securities that changes in fair value are calculated by increasing and decreasing
growth rate (0.5%~1.5%) and discount rate (-1~1%). For beneficiary certificates, the changes in fair
value are calculated by increasing and decreasing discount rate (-1%~1%).
(in millions of Korean won) December 31, 2014
Estimated
range of
Valuation Unobservable unobservable
Fair value technique Inputs inputs inputs Impacts on fair value
Financial assets
measured at fair value:
Available-for-sale securities
Equity securities W 10,365 FCFE Growth rate and Sales growth rate 0.54% ~ Fair value is likely to increase
model discount rate 1.77% as the sales growth rate and pre-tax
Pre-tax operating 19.60% ~ operating income ratio rise,
income ratio 21.82% while cost of equity capital declines.
Cost of capital
on equity 7.88%
Beneficiary certificates 5,935 Net asset Credit rating and Credit rating BBB Fair value is likely to increase
model discount rate Discount rate 7.18% as the discount rate declines
W 16,300 while credit rating of loan receivables rises.
(in millions of Korean won) Other comprehensive income (loss)
June 30, 2015 December 31, 2014
Favorable Unfavorable Favorable Unfavorable
change (*1) change (*1) change (*2) change (*2)
Available-for-sale securities W 1,149 (822) 9,246 (3,558)
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
48 (Continued)
(b) Financial assets and liabilities measured at amortized cost
The fair value hierarchy of financial assets and liabilities measured at amortized cost as of June 30,
2015 and December 31, 2014 are as follows:
(*1) Excluding liabilities for taxes and dues
(in millions of Korean won) June 30, 2015
Carrying Fair Fair value hierarchy
amount value Level 1 Level 2 Level 3
Financial assets measured at
amortized cost:
Cash and cash equivalents W 725,744 725,744 2 725,742 —
Due from banks 2,847 2,847 — 2,847 —
Loan receivables 8,809,316 8,643,370 — — 8,643,370
Installment financial assets 7,601,142 7,640,895 — — 7,640,895
Lease receivables 2,655,238 2,654,541 — — 2,654,541
Non-trade receivables 144,192 144,192 — — 144,192
Accrued revenues 93,051 93,051 — — 93,051
Leasehold deposits 22,882 21,938 — 21,938 —
W 20,054,412 19,926,578 2 750,527 19,176,049
Financial liabilities measured at
amortized cost:
Borrowings W 1,508,132 1,515,490 — 1,515,490 —
Bonds issued 16,192,770 16,637,260 — 16,637,260 —
Non-trade payables (*1) 267,222 267,222 — — 267,222
Accrued expenses 172,346 172,346 — — 172,346
Withholdings (*1) 28,096 28,096 — — 28,096
Deposits received 577,197 557,278 — 557,278 —
Other 50 50 — — 50
W 18,745,813 19,177,742 — 18,710,028 467,714
(in millions of Korean won) December 31, 2014
Carrying Fair Fair value hierarchy
amount value Level 1 Level 2 Level 3
Financial assets measured at
amortized cost:
Cash and cash equivalents W 608,207 608,207 1 608,206 —
Due from banks 36,133 36,133 — 36,133 —
Loan receivables 9,584,209 9,439,544 — — 9,439,544
Installment financial assets 6,502,794 6,528,367 — — 6,528,367
Lease receivables 2,685,208 2,676,961 — — 2,676,961
Non-trade receivables 114,785 114,785 — — 114,785
Accrued revenues 97,344 97,344 — — 97,344
Leasehold deposits 22,033 20,896 — 20,896 —
W 19,650,713 19,522,237 1 665,235 18,857,001
Financial liabilities measured at
amortized cost:
Borrowings W 1,562,261 1,571,584 — 1,571,584 —
Bonds issued 15,899,469 16,346,713 — 16,346,713 —
Non-trade payables (*1) 255,369 255,369 — — 255,369
Accrued expenses 177,592 177,592 — — 177,592
Withholdings (*1) 19,314 19,314 — — 19,314
Deposits received 609,078 584,187 — 584,187 —
Other 50 50 — — 50
W 18,523,133 18,954,809 — 18,502,484 452,325
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
49 (Continued)
The valuation techniques and inputs related to cash and cash equivalents, non-trade receivables,
accrued revenues, non-trade payables, accrued expenses, withholdings and other liabilities are not
disclosed as the Group estimates the fair value of these items equal to the carrying amount as the
carrying amount is a reasonable approximation of the fair value because of short maturity of these
instruments.
The valuation techniques and inputs for the fair value measurements for financial assets and
liabilities classified as Level 2 for which the fair value are disclosed as of June 30, 2015 and
December 31, 2014 are as follows:
The valuation techniques and inputs for the fair value measurements of financial assets and
liabilities classified as Level 3 for which the fair value are disclosed as of June 30, 2015 and
December 31, 2014 are as follows:
28. Financial Risk Management
The Group is exposed to credit risk, liquidity risk and market risk (exchange and rate risk). In order
to manage these factors, the Group operates risk management policies and programs that monitor
closely and respond to each of the risk factors. The Group primarily utilizes derivatives to manage
specific risks.
There was no material change in the Group's risk management operations and policies after
December 31, 2014.
(in millions of Korean won) Fair value
June 30, December 31, Valuation
2015 2014 technique Inputs
Financial assets measured at
amortized cost:
Due from banks W 2,847 36,133 DCF model Market benchmark interest rate
Leasehold deposits 21,938 20,896 DCF model Market benchmark interest rate
W 24,785 57,029
Financial liabilities:
amortized cost:
Borrowings W 1,515,490 1,571,584 DCF model Market benchmark interest rate, other spreads
Bonds issued 16,637,260 16,346,713 BDT model Market benchmark discount rate, volatility and other inputs
Deposits received 557,278 584,187 DCF model Market benchmark interest rate
W 18,710,028 18,502,484
(in millions of Korean won) Fair value
June 30, December 31, Valuation
2015 2014 technique Inputs
Financial assets measured at
amortized cost:
Loans and receivables W 8,643,370 9,439,544 DCF model Market benchmark interest rate, credit spread and other spreads
Installment financial assets 7,640,895 6,528,367 DCF model Market benchmark interest rate, credit spread and other spreads
Lease receivables 2,654,541 2,676,961 DCF model Market benchmark interest rate, credit spread and other spreads
W 18,938,806 18,644,872
HYUNDAI CAPITAL SERVICES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
June 30, 2015
50
29. Capital Management
The objective of the Group’s capital management is to maintain sound capital structure. The Group
uses the adjusted capital adequacy ratio under the Article 8 of Regulation on Supervision of Specialized
Credit Finance Business (the Regulation) mandated by the Financial Services Commission as a capital
management indicator. The ratio is calculated as adjusted total assets divided by adjusted equity based
on the Company’s financial position in the separate financial statements.
Adjusted capital adequacy ratios of the Company as of June 30, 2015 and December 31, 2014 are
as follows:
(*1) Adjusted capital adequacy ratio is calculated in accordance with Regulations on Supervision
of Specialized Credit Finance Business and Detailed Regulations on Supervision of Specialized Credit
Finance Business. The Company should maintain the adjusted capital adequacy ratio 7% or above in
accordance with the Regulation.
(in millions of Korean won) June 30, December 31,
2015 2014
Adjusted total assets (A) W 21,954,834 21,792,521
Adjusted equity (B) 3,551,863 3,345,862
Adjusted capital adequacy ratio (B/A) (*1) 16.18% 15.35%