Hci 2012 2_q_con_eng_final_

Hyundai Commercial, Inc. andSubsidiaries

Interim Consolidated Financial Statements

June 30, 2012 and 2011

Hyundai Commercial, Inc. and SubsidiariesIndexJune 30, 2012 and 2011

Report on Review of Interim Financial Statements ..........................................................................1-2

Interim Consolidated Financial Statements

Interim Consolidated Statements of Financial Position .........................................................................3-5

Interim Consolidated Statements of Comprehensive Income................................................................6-7

Interim Consolidated Statements of Changes in Equity ....................................................................... 8-9

Interim Consolidated Statements of Cash Flows ....................................................................................10

Notes to the Interim Consolidated Financial Statements...................................................................11-34

1

Report on Review of Interim Financial Statements

To the Shareholders and Board of Directors of

Hyundai Commercial, Inc.

Reviewed Financial Statements

We have reviewed the accompanying interim consolidated financial statements of Hyundai

Commercial, Inc. (the Company) and its subsidiaries. These financial statements consist of

consolidated statement of financial position of the Company and its subsidiaries as of June 30,

2012, and the related consolidated statements of comprehensive income for the three-month

and the six-month periods ended June 30, 2012 and 2011, and statements of changes in

equity and cash flows for the six-month periods ended June 30, 2012 and 2011, and a

summary of significant accounting policies and other explanatory notes, expressed in Korean

won.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated

financial statements in accordance with the International Financial Reporting Standards as

adopted by the Republic of Korea (Korean IFRS) 1034, Interim Financial Reporting, and for

such internal control as management determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to

fraud or error.

Auditor's Responsibility

Our responsibility is to issue a report on these interim consolidated financial statements based

on our reviews.

We conducted our reviews in accordance with the quarterly and semi-annual review

standards 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.

2

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe the

accompanying interim consolidated financial statements do not present fairly, in all material

respects, in accordance with the Korean IFRS 1034, Interim Financial Reporting.

Emphasis of matter

We audited the consolidated statement of financial position as of December 31, 2011, and the

related statements of comprehensive income, changes in equity and cash flows for the year

ended December 31, 2011, in accordance with auditing standards generally accepted in the

Republic of Korea and expressed an unqualified opinion on those statements dated March 14,

2012. The statement of financial position as of December 31, 2011, presented herein for

comparative purposes, is consistent, in all material respects, with the above audited statement

of financial position as of December 31, 2011.

Review standards and their application in practice vary among countries. The procedures and

practices used in the Republic of Korea to review such consolidated financial statements may

differ from those generally accepted and applied in other countries. Accordingly, this report is

for use by those who are informed about Korean review standards and their application in

practice.

Seoul, Korea

August 24, 2012

This report is effective as of August 24, 2012, 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 interim consolidated

financial statements and notes thereto. Accordingly, the readers of the review report should

understand that there is a possibility that the above review report may have to be revised to

reflect the impact of such subsequent events or circumstances, if any.

Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Financial PositionJune 30, 2012 and December 31, 2011

3

(In Korean won)

NoteJune 30,

2012December 31,

2011Assets

Cash and deposits

Cash and cash equivalents 20 \ 315,239,545,258 \ 276,009,118,714

Deposits 9,000,000 9,000,000

315,248,545,258 276,018,118,714

Securities 3

Available-for-sale securities 21,920,499,370 26,848,232,720

Equity method investments 246,350,869,471 147,539,965,125

268,271,368,841 174,388,197,845

Loans receivable 4,5,6,7

Factoring 1,271,408,014 575,109,250

Allowance for doubtful accounts (7,083,261) (3,163,206)

Loans 2,672,303,580,491 2,408,864,450,819

Allowance for doubtful accounts (17,708,928,242) (18,165,997,032)

2,655,858,977,002 2,391,270,399,831

Installment financial assets 4,5,6,7

Auto installment financing receivables 372,135,913,837 402,435,731,643

Allowance for doubtful accounts (2,309,106,954) (2,700,210,858)Durable goods installment financing

receivables 44,939,504,217 68,855,356,831


414,456,995,823 468,115,734,026

Lease receivables 4,5,8 106,162,624,869 84,053,398,124

Property and equipment 9

Vehicles 98,408,505 114,731,133

Fixtures and furniture 2,590,889,826 2,382,936,140

Others 410,999,664 410,999,664

3,100,297,995 2,908,666,937


4

(In Korean won)

NoteJune 30,

2012December 31,

2011Other assets

Intangible assets 10 ￦ 2,819,843,423 ￦ 3,072,304,012

Non-trade receivables 23,060,211,622 29,912,441,707


Accrued revenues 16,249,408,321 18,075,550,289


Advance payments 380,625,765 635,365,367

Prepaid expenses 2,947,184,936 3,383,242,667

Leasehold deposits 10,727,825,934 9,963,176,364

Derivative assets 15 1,393,026,517 1,369,008,885

Others 3,885,995,860 3,885,995,860

61,214,467,362 69,966,696,832

Total assets ￦3,824,313,277,150 ￦3,466,721,212,309

Liabilities and Equity

Borrowings

Borrowings 11 ￦ 709,591,561,777 ￦ 725,523,723,026

Debentures 12 2,312,721,130,449 1,937,737,884,950

Securitized debts 13 359,510,372,728 359,361,741,945

3,381,823,064,954 3,022,623,349,921

Other liabilities

Non-trade payables 12,624,174,322 7,907,799,257

Accrued expenses 22,006,482,015 26,857,795,596

Unearned revenue 5,167,253,902 4,869,902,233

Advances 106,262,869 231,248,416

Withholdings 4,840,082,697 3,073,415,790

Accrued income taxes 7,361,014,012 14,047,411,098

Defined benefit liability 14 3,251,151,561 2,232,465,895

Leasehold deposits received 24,363,550,971 16,493,405,207

Deferred income tax liabilities 18,128,090,752 16,336,206,889

Derivative liabilities 15 2,343,820,146 2,691,394,681

100,191,883,247 94,741,045,062

Total liabilities 3,482,014,948,201 3,117,364,394,983


5

(In Korean won)

NotesJune 30,

2012December 31,

2011

Equity

Common stock 1,16 100,000,000,000 100,000,000,000

Preferred stock 25,000,000,000 25,000,000,000

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

Capital surplus 16

Paid-in capital in excess of par value 74,608,059,537 74,608,059,537

Accumulated other comprehensiveincome and expenses

19

Loss on valuation of derivatives (615,226,534) (1,082,947,513)

Gain on valuation of available-for-sale securities

1,942,933,776 6,047,837,848

Accumulated comprehensive incomeof equity method investee

67,899,945 (1,702,584,378)

1,395,607,187 3,262,305,957

Retained earnings 16 141,274,842,225 146,466,631,832

Non-controlling interests 19,820,000 19,820,000

Total equity 342,298,328,949 349,356,817,326

Total liabilities and equity ￦3,824,313,277,150 ￦3,466,721,212,309

The accompanying notes are an integral part of these interim consolidated financial statements.

Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Comprehensive IncomeThree-Month and Six-Month Periods ended June 30, 2012 and 2011

6

(In Korean won)

Notes

2012 2011

ThreeMonths

SixMonths

ThreeMonths

SixMonths

Operating revenue

Interest income ￦2,800,734,685 ￦5,572,386,120 ￦1,279,969,441 ￦ 2,387,169,557

Income on loans 68,177,970,017 133,313,505,392 59,945,849,276 113,805,600,081

Income on installment financialreceivables

10,977,195,309 23,040,822,533 15,401,001,549 31,475,076,372

Income on leases 1,896,785,538 3,574,663,299 1,092,108,442 2,335,488,860

Gain on disposal of loans 966,463,198 1,729,577,040 653,969,795 1,117,030,921

Gain on foreign exchangetranslations

- - 3,348,000,000 5,534,000,000

Dividend income - 250,000,000 - 300,000,000

Other operating income 1,053,204,157 628,670,379 1,241,670,031 754,483,806

Total operating revenue 85,872,352,904 168,109,624,763 82,962,568,534 157,708,849,597

Operating expenses

Interest expenses 41,035,492,920 80,550,883,516 36,938,859,569 70,920,446,952

Bad debts expense 5 3,889,005,153 8,697,812,014 5,817,998,892 10,960,116,735

Loss on disposal of loans 464,015,511 1,079,502,006 148,596,245 286,474,469

Loss on foreign currencytransactions

880,000,000 27,500,000 825,500,346 1,962

General and administrativeexpenses

17 15,581,238,326 29,866,953,086 13,278,632,714 27,065,419,592

Other operating expenses 1,180,964,459 1,854,810,141 1,123,744,947 1,549,202,834

Total operatingexpenses

63,030,716,369 122,350,414,743 61,481,332,713 116,315,662,544

Operating income 22,841,636,535 45,759,210,020 21,481,235,821 41,393,187,053

Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Comprehensive IncomeThree-Month and Six-Month Periods ended June 30, 2012 and 2011

7

(In Korean won)Notes

2012 2011

ThreeMonths

SixMonths

ThreeMonths

SixMonths

Non-operating income

Gain on equity methodvaluation

3 - 5,856,423,741 4,557,764,212 8,660,056,384

Non-operating expenses

Loss on equity methodvaluation

3 12,975,036,702 7,982,403,935 - -

Other non-operatingexpenses

- 8,582,824,000 - -

12,975,036,702 16,565,227,935 - -

Income before incometaxes

9,866,599,833 35,050,405,826 26,039,000,033 50,053,243,437

Income tax expense 18 5,714,613,323 10,391,091,084 6,365,741,803 12,974,837,754

Net income ￦ 4,151,986,510 ￦24,659,314,742 ￦19,673,258,230 ￦37,078,405,683

Net income attributable to:

Owners of the parent 4,151,986,510 24,659,314,742 19,673,258,230 37,078,405,683

Non-controllinginterests

- - - -

4,151,986,510 24,659,314,742 19,673,258,230 37,078,405,683

Other comprehensiveincome, net of income taxes

19

Gain on valuation ofderivatives

(244,727,857) 467,720,979 (102,132,583) 769,921,914

Gain(Loss) on valuation ofavailable-for-salefinancial securities

(2,737,291,529) (4,104,904,072) (1,230,487,830) 3,836,630,666

Other comprehensiveincome of equitymethod investee

(6,691,593,080) 1,770,484,323 (305,379,086) (324,181,793)

(9,673,612,466) (1,866,698,770) (1,637,999,499) 4,282,370,787

Total comprehensive income ￦(5,521,625,956) ￦22,792,615,972 ￦18,035,258,731 ￦41,360,776,470

Total comprehensive incomeattributable to:

Owners of the parent (5,521,625,956) 22,792,615,972 18,035,258,731 41,360,776,470

Non-controllinginterests

- - - -

(5,521,625,956) 22,792,615,972 18,035,258,731 41,360,776,470


Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Changes in EquitySix-Month Periods ended June 30, 2012 and 2011

8

(In Korean won)

Capital stockCapitalsurplus

Accumulatedother

comprehensiveincome andexpenses

Retainedearnings

Total attributable toowners of the

parent

Non-controllinginterests Total equity

Balances as of January 1, 2011 \100,000,000,000 \ - \ (862,281,456) \ 81,470,127,594 \ 180,607,846,138 \ 9,910,000 \180,617,756,138

Total comprehensive income

Net income - - - 37,078,405,683 37,078,405,683 - 37,078,405,683Other comprehensive income

Gain on valuation of derivatives - - 769,921,914 - 769,921,914 - 769,921,914Gain on valuation of available-for-

sale securities- - 3,836,630,666 - 3,836,630,666 - 3,836,630,666

Other comprehensive income ofequity method investee

- - (324,181,793) - (324,181,793) - (324,181,793)

Total comprehensive income - - 4,282,370,787 37,078,405,683 41,360,776,470 - 41,360,776,470

Transactions with ownersEstablishment of special purpose

entity- - - - - 9,910,000 9,910,000

Dividends - - - (10,000,000,000) (10,000,000,000) - (10,000,000,000)

Total transactions with owners - - - (10,000,000,000) (10,000,000,000) 9,910,000 (9,990,090,000)

Balances as of June 30, 2011 \100,000,000,000 \ - \ 3,420,089,331 \ 108,548,533,277 \ 211,968,622,608 \ 19,820,000 \ 211,988,442,608

Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Changes in EquitySix-Month Periods ended June 30, 2012 and 2011

9

(In Korean won)

Capital stock Capital surplus

Accumulatedother

comprehensiveincome andexpenses

Retainedearnings

Total attributableto owners of the

parent

Non-controllinginterests Total equity

Balances as of January 1, 2012 \125,000,000,000 \ 74,608,059,537 \ 3,262,305,957 \ 146,466,631,832 \349,336,997,326 \ 19,820,000 \349,356,817,326

Total comprehensive income

Net income - - - 24,659,314,742 24,659,314,742 - 24,659,314,742Other comprehensive income

Gain on valuation of derivatives - - 467,720,979 - 467,720,979 - 467,720,979Loss on valuation of available-for-

sale securities- - (4,104,904,072) - (4,104,904,072) - (4,104,904,072)

Other comprehensive income ofequity method investee

- - 1,770,484,323 148,895,651 1,919,379,974 - 1,919,379,974

Total comprehensive income - - (1,866,698,770) 24,808,210,393 22,941,511,623 - 22,941,511,623

Transactions with owners

Dividends - - - (30,000,000,000) (30,000,000,000) - (30,000,000,000)

Total transactions with owners - - - (30,000,000,000) (30,000,000,000) - (30,000,000,000)

Balances as of June 30, 2012 \125,000,000,000 \ 74,608,059,537 \ 1,395,607,187 \141,274,842,225 \342,278,508,949 \ 19,820,000 \342,298,328,949


Hyundai Commercial, Inc. and SubsidiariesInterim Consolidated Statements of Cash FlowsSix-Month Periods ended June 30, 2012 and 2011

10

(In Korean won)

Note June 30, 2012 June 30, 2011Cash flows from operating activities

Cash generated from operations 20 \ (101,510,726,025) \ (275,138,668,439)

Interest received 4,842,900,556 2,537,128,759Interest paid (77,670,773,925) (68,918,870,047)Dividends received 250,000,000 300,000,000Income taxes paid (14,172,117,385) (10,358,293,801)

Net cash used in operations (188,260,716,779) (351,578,703,528)

Cash flows from investing activitiesAcquisition of equity method investment (98,969,780,000) -Disposal of vehicles 63,107,858 27,020,000Acquisition of vehicles (76,172,300) (79,715,188)Acquisition of fixtures and furniture (766,713,486) (416,747,741)Acquisition of intangible assets (279,514,400) (85,415,316)Recover in leasehold deposits 5,000,000 -Increase in leasehold deposits (908,722,500) (2,161,847,000)

Net cash used in investing activities (100,932,794,828) (2,716,705,245)

Cash flows from financing activitiesProceeds from borrowings 345,790,000,000 525,939,158,071Repayments of borrowings (361,722,161,249) (483,278,171,079)Issuance of debentures 619,356,099,400 440,865,039,400Repayments of debentures (245,000,000,000) (233,740,000,000)Issuance of securitized debts - 199,456,325,600Repayments of securitized debts - (20,000,000,000)Cash inflows of transactions with subsidiaries - 9,910,000Payments of dividends (30,000,000,000) (10,000,000,000)

Net cash provided by financing activities 328,423,938,151 419,252,261,992

Net increase in cash and cash equivalents 39,230,426,544 64,956,853,219

Cash and cash equivalentsBeginning of period 276,009,118,714 99,938,403,013

End of period \ 315,239,545,258 \ 164,895,256,232


Hyundai Commercial, Inc. and SubsidiariesNotes to the Interim Consolidated Financial StatementsJune 30, 2012 and 2011, and December 31, 2011

11

1. General Information

Hyundai Commercial, Inc. (the Company) was established on March 27, 2007, by taking over all

the assets, liabilities, rights and obligations related with the loans of the industrial product division

of Hyundai Capital Services, Inc. and its installment financing and lease financing division. It is

engaged in installment financing, and leasing of facilities. The Company’s operations are

headquartered in Yeouido, Seoul. Its shareholders are as follows:

Shareholders Ownership

Hyundai Motor Company 50.00%

Myung-yi Chung 33.33%

Tae-young Chung 16.67%

Total 100.00%

The consolidated financial statements have been prepared and presented which included the

accounts of Hyundai Commercial, Inc., as the parent company according to the Korean IFRS

1027, and Commercial Auto First trust and SPC and another subsidiary(collectively the “Group”),

while Hyundai Card Co., Ltd. and Hyundai Life Insurance Co., Ltd. are accounted for under the

equity method.

Subsidiaries as of June 30, 2012 and December 31, 2011, are as follows. The Company has the

substantial power over the subsidiaries established as special purpose entities for asset

securitization even though its ownership interests over the subsidiaries do not exceed 50%.

June 30, 2012 December 31, 2011

Special

Purpose

Entities

Commercial Auto First Trust and SPC Commercial Auto First Trust and SPC

Commercial Auto Second Trust and SPC Commercial Auto Second Trust and SPC

2. Summary of Significant Accounting Policies

2.1 Basis of Preparation

The Group’s interim consolidated financial statements for the six-month period ended June 30,

2012, have been prepared in accordance Korean IFRS 1034, ‘Interim Financial Reporting’. These

interim consolidated financial statements have been prepared in accordance with the Korean

IFRS standards and interpretations issued and effective or issued and early adopted as of June

30, 2012.

New standards, amendments and interpretations issued but not effective for the financial year

beginning January 1, 2012, and not early adopted by the Group are as follows:


12

- Amendments to Korean-IFRS 1019, Employee Benefits

According to the amendments to Korean-IFRS 1019, Employee Benefits, the corridor method is

no longer permitted. Therefore, actuarial gains and losses on the defined benefit obligation are

recognized immediately under other comprehensive income. The amendment requires to

recognize immediately all past service costs. And the amendment replaces the interest cost on

the defined benefit obligation, and the expected return on plan assets with a net interest cost

based on the net defined benefit asset or liability and the discount rate measured at the

beginning of the year. This amendment will be effective for the Group as of January 1, 2013. The

Group is assessing the impact of application of the amended Korean-IFRS 1019 on its

consolidated financial statements.

- Enactment of Korean-IFRS 1113, Fair value measurement

Korean-IFRS 1113, Fair value measurement, aims to improve consistency and reduce complexity

by providing a precise definition of fair value and a single source of fair value measurement and

disclosure requirements for use across Korean-IFRS. Korean-IFRS 1101 does not extend the use

of fair value accounting but provides guidance on how it should be applied where its use is

already required or permitted by other standards within Korean-IFRS. This amendment will be

effective for the Group as of January 1, 2013, and the Group expects that it would not have a

significant impact on the Group.

- Enactment of Korean-IFRS 1001, Presentation of Financial Statements

According to the amendments to Korean-IFRS 1001, 'Presentation of Financial Statements',

items of other comprehensive income present as two groups depending on whether it will be

reclassified subsequently to profit or loss or not. An entity shall apply those amendments for

annual periods beginning on or after July 1, 2012, and earlier application is permitted. The Group

expects that it would not have a significant impact on the Group.

2.2 Accounting Policies

The following is a summary of significant accounting policies followed by the Group in the

preparation of its interim consolidated financial statements. These policies have been consistently

applied to all the periods presented, unless otherwise stated.

Interim period income tax expense is calculated by applying estimated average annual effective

tax rate to the interim period’s pre-tax income.


13

3. Securities

Securities as of June 30, 2012 and December 31, 2011, are as follows:

(in thousands of Korean won)

Type June 30, 2012 December 31, 2011

Available-for-sale securities

Equity securities

Marketable equitysecurities \ 12,550,000 \ 18,200,000

Unlisted equitysecurities

3,257,412 3,083,604

Sub-total 15,807,412 21,283,604

Debt securities 6,113,087 5,564,629

Sub-total 21,920,499 26,848,233

Equity method investments 246,350,869 147,539,965

\ 268,271,369 \ 174,388,198

Available-for-sale securities

Available-for-sale securities as of June 30, 2012 and December 31, 2011, are as follows:


Book value

Number ofshares

Ownership(%)

Acquisitioncost

June 30,2012

December31, 2011

Marketable equity securities

JNK Heaters Co.,Ltd.

1,000,000 12.5 \10,126,881 \12,550,000 \18,200,000

Unlisted equity securities

Leehan Corp.1 136,000 12.3 3,199,762 3,256,792 3,082,984

Isung Eng,. Corp. 62 620 620 620Debt securities

Leehan Corp.2 - - 5,469,801 6,113,087 5,564,629

\18,797,064 \21,920,499 \26,848,233

1The fair value of the securities for Leehan Corp. was valued as the valuation price provided by an external

appraiser, Korea Asset Pricing. The external appraisers valuated the fair value as the average of valuation

prices using the discounted cash flow model and the imputed market value model.2

Those debt securities are the convertible bond issued by Leehan Corp. during the period, and the fair

value of the convertible bond for Leehan Corp. was valued as the valuation price provided by an external

appraiser, Korea Asset Pricing. The differences between the fair value of convertible bond and the book

value of normal bond by effective interest rate recognized in the gain or loss on valuation of debt securities

and the fluctuation of conversion right and advanced redemption right recognized in the gain or loss on

embedded derivatives.


14

Equity method investments

Equity method investments as of June 30, 2012 and December 31, 2011, are as follows:


June 30, 2012Number of

sharesOwnership

(%)Acquisition

costNet asset

valueBook value

Hyundai Card Co.,Ltd.

1 8,889,622 5.54 \ 113,820,162 \ 116,666,848 \ 153,593,598

Hyundai LifeInsurance Co.,Ltd.

27,613,060 38.73 98,969,780 56,043,454 92,757,271

Total \ 212,789,942 \ 172,710,302 \ 246,350,869

1The Company’s shareholdings in Hyundai Card Co., Ltd. are less than 20%. However, the Company is

able to participate in the management and significantly influence the financial and operating processes.

Thus, the equity method is applied.2

The Group acquired the equity securities of Hyundai Life Insurance Co., Ltd. during the current period.


December 31, 2011Number of

sharesOwnership

(%)Acquisition

costNet asset

valueBook value

Hyundai Card Co.,Ltd.

1 8,889,622 5.54 \ 113,820,162 \ 110,613,215 \ 147,539,965

Valuations of equity method investment for the six-month periods ended June 30, 2012 and 2011,

are as follows:

(in thousands of Korean won)June 30, 2012

BeginningBalance

AcquisitionGain on

valuation

Changes inaccumulated

othercomprehensive

income

Changes inretainedearnings

EndingBalance

HyundaiCard Co.,Ltd.

\147,539,965 \ - \ 5,856,424 \ 197,209 \ - \153,593,598

Hyundai LifeInsuranceCo,. Ltd.

- 98,969,780 (7,982,404) 1,620,999 148,896 92,757,271

Total \147,539,965 \ 98,969,780 \ (2,125,980) \ 1,818,208 \ 148,896 \246,350,869


BeginningBalance

AcquisitionGain on

valuation

Changes inaccumulated

othercomprehensive

income(1)

Changes inretainedearnings

EndingBalance

HyundaiCard Co.,Ltd.

\133,160,973 \ - \ 8,660,056 \ (415,618) \ (1,097) \ 141,404,314

(1) Changes in accumulated other comprehensive income is the amount before income taxes.


15

The assets and liabilities as of June 30, 2012 and December 31, 2011, and revenue and income for

the six-month periods ended June 30, 2012 and 2011, follow :


June 30, 2012

Year endAssets Liabilities

Operatingrevenue

Net income

Hyundai CardCo., Ltd.

December 31 \11,083,975,683 \ 8,978,009,491 \ 1,234,977,718 \ 105,713,461

Hyundai LifeInsuranceCo,. Ltd.

June 30 3,530,425,026 3,385,737,691 257,338,314 (3,991,872)

As Hyundai Life Insurance Co,. Ltd.’s fiscal year is from April 1, 2012 to March 31, 2013, the

asset and liability amounts are as of June 30, 2012, and its operating revenue and net income

amounts are from January 1, 2012 to June 30, 2012. The deemed acquisition date is February

29, 2012, and the investee recognized its net income of \ 13,891,570 thousand after deemed

acquisition date.


December 31, 2011 June 30, 2011

Year endAssets Liabilities

Operatingrevenue

Net income

Hyundai CardCo., Ltd.

December 31 \10,851,933,716 \8,855,250,685 \ 2,407,597,301 \ 238,647,582

4. Financial Receivables

Financial receivables as of June 30, 2012 and December 31, 2011, are as follows:


June 30, 2012

Principal

Deferred loanorigination fees

and costs(Initial direct costsfor lease assets)

Presentvalue

discounts

Allowancefor doubtful

accountsBook value

Loan receivables

Factoringreceivables

\ 1,271,408 \ - \ - \ (7,083) \ 1,264,325

Loans 2,643,485,970 28,982,904 (165,294) (17,708,928) 2,654,594,652

2,644,757,378 28,982,904 (165,294) (17,716,011) 2,655,858,977

Installment financial assets

Auto 371,208,446 927,468 - (2,309,107) 369,826,807

Durable goods 45,286,917 (347,413) - (309,315) 44,630,189

416,495,363 580,055 - (2,618,422) 414,456,996

Lease receivables


16

Finance leasereceivables

106,967,691 (12,930) - (792,136) 106,162,625

\ 3,168,220,432 \ 29,550,029 \ (165,294) \ (21,126,569) \ 3,176,478,598


December 31, 2011

Principal

Deferred loanorigination fees

and costs(Initial direct costsfor lease assets)

Presentvalue

discounts

Allowancefor doubtful

accountsBook value

Loan receivables

Factoring \ 575,109 \ - \ - \ (3,163) \ 571,946

Loans 2,390,384,894 18,629,791 (150,234) (18,165,997) 2,390,698,454

2,390,960,003 18,629,791 (150,234) (18,169,160) 2,391,270,400

Installment financial assets

Auto 402,751,465 (315,733) - (2,700,211) 399,735,521

Durable goods 69,532,615 (677,259) - (475,143) 68,380,213

472,284,080 (992,992) - (3,175,354) 468,115,734

Lease receivables

Finance leasereceivables

84,693,337 (19,542) - (620,397) 84,053,398

\ 2,947,937,420 \ 17,617,257 \ (150,234) \ (21,964,911) \ 2,943,439,532

5. Allowance for Doubtful Accounts

Changes in allowance for doubtful accounts for the six-month periods ended June 30, 2012 and

2011, are as follows:


June 30, 2012

TypeLoan

receivablesInstallment

financial assetsLease

receivablesOther assets Total

Beginning balance \ 18,169,160 \ 3,175,354 \ 620,397 \ 330,388 \ 22,295,299

Amounts written off (1,837,601) (168,041) - - (2,005,642)

Recoveries of amountspreviously written off

(6,976,948) (492,415) (29,269) - (7,498,632)

Unwinding of discount (100,809) (11,804) - - (112,613)

Additional(reversed)allowance

8,462,209 115,328 201,008 (80,733) 8,697,812

Ending balance \ 17,716,011 \ 2,618,422 \ 792,136 \ 249,655 \ 21,376,224


June 30, 2011

TypeLoan

receivablesInstallment

financial assetsLease

receivablesOther assets Total

Beginning balance \ 12,795,689 \ 3,609,027 \ 214,613 \ 372,974 \ 16,992,303

Amounts written off (1,491,516) (108,512) - - (1,600,028)

Recoveries of amountspreviously written off

(3,811,733) (790,425) (6,798) - (4,608,956)


17

Unwinding of discount (52,619) (6,935) (108) - (59,662)

Additional allowance 9,493,981 1,218,413 233,221 14,502 10,960,117

Ending balance \ 16,933,802 \ 3,921,568 \ 440,928 \ 387,476 \ 21,683,774

6. Financial Instruments

The fair values of financial instruments as of June 30, 2012 and December 31, 2011, are as follows:


Type

June 30, 2012 December 31, 2011

Bookvalue

Fairvalue

Bookvalue

Fairvalue

Financial assets

Cash and deposits \ 315,248,545 \ 315,248,545 \ 276,018,119 \ 276,018,119

Available-for-salesecurities

21,920,499 21,920,499 26,848,233 26,848,233

Loans receivable 2,655,858,977 2,658,605,196 2,391,270,400 2,398,975,565

Installment financialassets

414,456,996 417,786,700 468,115,734 473,294,235

Derivative assets 1,393,027 1,393,027 1,369,009 1,369,009

Non-trade

receivables22,914,566 22,914,566 29,694,392 29,694,392

Accrued revenues 16,145,399 16,145,399 17,963,211 17,963,211

Leasehold deposits 10,727,826 10,705,059 9,963,176 9,861,028

\ 3,458,665,835 \ 3,464,718,991 \ 3,221,242,274 \ 3,234,023,792

Financial liabilities

Borrowings \ 709,591,562 \ 715,773,727 \ 725,523,723 \ 730,010,502

Debentures 2,312,721,130 2,367,471,040 1,937,737,885 1,983,599,328

Securitized debts 359,510,373 367,830,150 359,361,742 367,266,231

Derivative liabilities 2,343,820 2,343,820 2,691,395 2,691,395

Non-trade payables 12,624,174 12,624,174 7,907,799 7,907,799

Accrued expenses 22,006,482 22,006,482 26,857,796 26,857,796

Withholdings1

4,464,006 4,464,006 2,731,628 2,731,628

Leasehold depositsreceived

24,363,551 24,740,460 16,493,405 16,677,090

\ 3,447,625,098 \ 3,517,253,859 \ 3,079,305,373 \ 3,137,741,769

1Excluding taxes.


18

The fair value hierarchy of financial assets and liabilities carried at fair value as of June 30, 2012

and December 31, 2011, are as follows:


June 30, 2012

TypeBookvalue

Fairvalue

Fair value hierarchy1

level 1 level 2 level 3

Financial assets at fair

value


\ 21,920,499 \ 21,920,499 \ 12,550,000 \ - \ 9,370,499

Derivative assets 1,393,027 1,393,027 - 1,393,027 -

\ 23,313,526 \ 23,313,526 \ 12,550,000 \ 1,393,027 \ 9,370,499

Financial liabilities at

fair value

Derivative liabilities \ 2,343,820 \ 2,343,820 \ - \ 2,343,820 \ -

1The levels of fair value hierarchy have been defined as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities. Listed stocks and derivatives

Level 2: Inputs for the asset or liability included within valuation techniques that are observable market

data. Most bonds issued in Korean won and foreign currency, general unlisted derivatives like swap,

forward, option

Level 3: Inputs for the asset or the liability that are not based on observable market data. Unlisted stocks,

complicated structured bonds, complicated unlisted derivatives and others.


December 31, 2011

TypeBookvalue

Fairvalue

Fair value hierarchy1

level 1 level 2 level 3

Financial assets at fair

value


\ 26,848,233 \ 26,848,233 \ 18,200,000 \ - \ 8,648,233

Derivative assets 1,369,009 1,369,009 - 1,369,009 -

\ 28,217,242 \ 28,217,242 \ 18,200,000 \ 1,369,009 \ 8,648,233

Financial liabilities at

fair value

Derivative liabilities \ 2,691,395 \ 2,691,395 \ - \ 2,691,395 \ -


19

The changes in financial instruments of level 3 for the six-month periods ended June 30, 2012 and



TypeAvailable-for-sale securities

June 30, 2012 June 30, 2011

Beginning balance \ 8,648,233 \ 17,657,945

Gains on interest 487,707 -

Gains on valuation(Other comprehensive income)

234,559 (3,194,363)

Reclassification1

- (11,518,000)

Ending balance \ 9,370,499 \ 2,945,582

1The fair value hierarchy of the available-for-sale securities has been reclassified from level 3 to level 1 as

JNK Heaters Co., Ltd. was listed during the prior period.

The book values of financial instruments by categories as of June 30, 2012 and December 31,



June 30, 2012

Type

Financialassets at fairvalue throughprofit or loss

Loans andreceivables

Available-for-sale financial

assets

Hedgingderivative

instrumentsTotal

Financial assets

Cash and deposits \ - \ 315,248,545 \ - \ - \ 315,248,545

Available-for- salesecurities

- - 21,920,499 - 21,920,499

Loans receivable - 2,655,858,977 - - 2,655,858,977

Installmentfinancial assets

- 414,456,996 - - 414,456,996

Derivative assets 228,839 - - 1,164,188 1,393,027

Non-tradereceivables

- 22,914,566 - - 22,914,566

Accrued revenues - 16,145,399 - - 16,145,399

Leaseholddeposits

- 10,727,826 - - 10,727,826

\ 228,839 \ 3,435,352,309 \ 21,920,499 \ 1,164,188 \ 3,458,665,835


20


December 31, 2011

Type

Financialassets at fairvalue throughprofit or loss

Loans andreceivables

Available-for-sale financial

assets

Hedgingderivative

instrumentsTotal

Financial assets

Cash and deposits \ - \ 276,018,119 \ - \ - \ 276,018,119

Available-for- salesecurities

- - 26,848,233 - 26,848,233

Loans receivable - 2,391,270,400 - - 2,391,270,400

Installmentfinancial assets

- 468,115,734 - - 468,115,734

Derivative assets 501,793 - - 867,216 1,369,009

Non-tradereceivables

- 29,694,392 - - 29,694,392

Accrued revenues - 17,963,211 - - 17,963,211

Leaseholddeposits

- 9,963,176 - - 9,963,176

\ 501,793 \ 3,193,025,032 \ 26,848,233 \ 867,216 \ 3,221,242,274


June 30, 2012 December 31, 2011

TypeFinancial

liabilities atamortized cost

Hedgingderivative

instrumentsTotal

Financialliabilities at

amortized cost

Hedgingderivative

instrumentsTotal

Financial liabilities

Borrowings \ 709,591,562 \ - \ 709,591,562 \ 725,523,723 \ - \ 725,523,723

Debentures 2,312,721,130 - 2,312,721,130 1,937,737,885 - 1,937,737,885

Securitized debts 359,510,373 - 359,510,373 359,361,742 - 359,361,742

Derivativeliabilities

- 2,343,820 2,343,820 - 2,691,395 2,691,395

Non-tradepayables

12,624,174 - 12,624,174 7,907,799 - 7,907,799

Accrued expenses 22,006,482 - 22,006,482 26,857,796 - 26,857,796

Withholdings 4,464,006 - 4,464,006 2,731,628 - 2,731,628

Leaseholddepositsreceived

24,363,551 - 24,363,551 16,493,405 - 16,493,405

\3,445,281,278 \ 2,343,820 \3,447,625,098 \ 3,076,613,978 \ 2,691,395 \ 3,079,305,373


21

7. Derecognition of financial assets

The Group issued securitized debts based on loans and installment financial assets. Related

securitized debts have right of recourse about basic assets.

Details of transferred financial assets not derecognized as of June 30, 2012 and December 31, 2011,

are as follows:



Book value of assets

Loan receivable \ 555,419,654 \ 466,479,102

Installment financial assets 62,167,008 97,302,634

Sub total 617,586,662 563,781,736

Book value of related liabilities 359,510,373 359,361,742

Liabilities having right of resource on transferred assets :

Fair value of assets 618,660,422 566,361,232

Fair value of related liabilities (367,830,150) (367,266,231)

Net position \ 250,830,272 \ 199,095,001

8. Finance Lease Receivables

Details of total lease investments and present value of minimum lease receipts as of June 30,

2012 and December 31, 2011, are as follows:


Type

June 30, 2012 December 31, 2011

Total leaseinvestments

Present value ofminimum lease

receipts

Total leaseinvestments

Present value ofminimum lease

receipts

Less than 1 year \ 46,254,326 \ 40,175,517 \ 38,319,151 \ 33,136,156

1 to 5 years 71,138,888 66,779,244 55,204,893 51,537,639

\ 117,393,214 \ 106,954,761 \ 93,524,044 \ 84,673,795

Details of unearned interest income as of June 30, 2012 and December 31, 2011, are as follows:



Total lease investments \ 117,393,214 \ 93,524,044

Net lease investments

Minimum lease receipts

(present value)106,954,761 84,673,795

Unguaranteed residual value

(present value)- -


22

106,954,761 84,673,795

Unearned interest income \ 10,438,453 \ 8,850,249

9. Property and Equipment

Property and equipment as of June 30, 2012 and December 31, 2011, consist of:


TypeJune 30, 2012 December 31, 2011

Acquisitioncost

Accumulateddepreciation

Book valueAcquisition

costAccumulateddepreciation

Book value

Vehicles \ 235,097 \ (136,688) \ 98,409 \ 238,639 \ (123,908) \ 114,731

Fixture andfurniture

7,678,421 (5,087,532) 2,590,889 7,065,590 (4,682,654) 2,382,936

Others 411,000 - 411,000 411,000 - 411,000

\ 8,324,518 \ (5,224,220) \ 3,100,298 \ 7,715,229 \ (4,806,562) \ 2,908,667

Changes in property and equipment for the six-month periods ended June 30, 2012 and 2011, are

as follows:


June 30, 2012

Type Beginning balance Acquisition Disposal Depreciation Ending balance

Vehicles \ 114,731 \ 76,172 \ (61,447) \ (31,047) \ 98,409


2,382,936 766,713 (87,386) (471,374) 2,590,889

Others 411,000 - - - 411,000

\ 2,908,667 \ 842,885 \ (148,833) \ (502,421) \ 3,100,298


June 30, 2011

Type Beginning balance Acquisition Disposal Depreciation Ending balance

Vehicles \ 119,066 \ 79,715 \ (22,673) \ (31,547) \ 144,561


1,986,277 416,748 (48,895) (640,518) 1,713,612

Others 411,000 - - - 411,000

\ 2,516,343 \ 496,463 \ (71,568) \ (672,065) \ 2,269,173


23

10. Intangible Assets

Intangible assets as of June 30, 2012 and December 31, 2011, consist of:


TypeJune 30, 2012 December 31, 2011

Acquisitioncost


Bookvalue

Acquisitioncost


Bookvalue

Software \ 5,866,268 \ (4,642,484) \ 1,223,784 \ 5,637,719 \ (4,331,112) \ 1,306,607

Other intangibleassets

2,230,097 (634,038) 1,596,059 2,179,131 (413,434) 1,765,697

\ 8,096,365 \ (5,276,522) \ 2,819,843 \ 7,816,850 \ (4,744,546) \ 3,072,304

Changes in intangible assets for the six-month periods ended June 30, 2012 and 2011, are as

follows:


June 30, 2012

Type Beginning balance Increase Amortization Ending balance

Software \ 1,306,607 \ 228,549 \ (311,372) \ 1,223,784

Other intangible assets 1,765,697 50,965 (220,603) 1,596,059

\ 3,072,304 \ 279,514 \ (531,975) \ 2,819,843


June 30, 2011

Type Beginning balance Increase1 Amortization Ending balance

Software \ 1,632,196 \ 53,625 \ (558,445) \ 1,127,376

Other intangible assets 849,207 956,340 (152,598) 1,652,949

\ 2,481,403 \ 1,009,965 \ (711,043) \ 2,780,325

1Inclusive of transfer from advance payments.

11. Borrowings

Borrowings as of June 30, 2012 and December 31, 2011, consist of:


Types LenderAnnual

interest rate (%)June 30, 2012 December 31, 2011

Borrowings in won

Commercial paperSK Securities

and 3 others3.65 ~ 4.27 \ 100,000,000 \ 140,000,000

General loansWoori Bank and

9 others3.71 ~ 6.19 609,591,562 585,523,723

\ 709,591,562 \ 725,523,723


24

12. Debentures

Debentures issued by the Group and outstanding as of June 30, 2012 and December 31, 2011,

are as follows:


TypeAnnualinterest

rates (%)

June 30, 2012 December 31, 2011

Par value Issue price Par value Issue price

Current portion of debenture

Debenture 3.78 ~ 6.45 \ 740,000,000 \ 740,000,000 \ 635,000,000 \ 635,000,000

Less: Discount ondebentures

- (270,012) - (253,677)

740,000,000 739,729,988 635,000,000 634,746,323

Non-current portion of debenture

Debenture 3.64 ~ 8.00 1,574,741,000 1,574,741,000 1,304,713,500 1,304,713,500

Less: Discount ondebentures

- (1,749,858) - (1,721,938)

1,574,741,000 1,572,991,142 1,304,713,500 1,302,991,562

\ 2,314,741,000 \ 2,312,721,130 \ 1,939,713,500 \ 1,937,737,885

13. Securitized debts

The amounts of securitized debts which are secured by loans and installment financial assets in

accordance with Asset Backed Securitization Act, as of June 30, 2012 and December 31, 2011,

are as follows:


TypeAnnualinterest

rates (%)

June 30, 2012 December 31, 2011

Par value Issue price Par value Issue price

Current portion of securitized debts

Debenture 4.12 ~ 4.26 \ 50,000,000 \ 50,000,000 \ 50,000,000 \ 50,000,000

Less: Discount onsecuritized debts

- (18,499) - (62,214)

50,000,000 49,981,501 50,000,000 49,937,786

Non-current portion of securitized debts

Debenture 4.76 ~ 5.43 310,000,000 310,000,000 310,000,000 310,000,000

Less: Discount onsecuritized debts

- (471,128) - (576,044)

310,000,000 309,528,872 310,000,000 309,423,956

\ 360,000,000 \ 359,510,373 \ 360,000,000 \ 359,361,742


25

14. Defined Benefit Liability

Details of the amounts recognized in the income statements for the six-month periods ended

June 30, 2012 and 2011:


Type June 30, 2012 June 30, 2011

Current service cost \ 978,819 \ 806,977

Interest cost 151,472 125,198

Expected return on plan assets (100,897) (75,764)

Past service cost 245,559 146,177

\ 1,274,953 \ 1,002,588

The amounts of defined benefit plans recognized in the statements of financial position as of June

30, 2012 and December 31, 2011, are as follows:



Present value of funded obligations \ 8,595,421 \ 7,596,812

Fair value of plan assets (5,344,269) (5,364,346)

Defined benefit liability \ 3,251,152 \ 2,232,466

15. Derivative Financial Instruments and Hedge Accounting

The Group has the convertible bond issued by Leehan Corp., and recognized the difference

between the acquisition cost of convertible bond and the fair value of normal bond as derivative

assets. The amount recognized as derivative assets as of June 30, 2012, is \ 228,839 thousand

(December 31, 2011 : \ 501,793 thousand), while the net losses from derivative asset for the six-

month period ended June 30, 2012, is \ 272,954 thousand. (June 30, 2011 : Nil)

Derivatives designated as cash flow hedges as of June 30, 2012 and December 31, 2011, are as

follows:


Type

June 30, 2012 December 31, 2011

Assets Liabilities

Accumulatedother

comprehen-sive income

andexpenses

Assets Liabilities

Accumulatedother

comprehen-sive income

andexpenses

Interest rate swaps \ 36,073 \ 223,006 \ (141,599) \ - \ 241,837 \ (899,733)

Currency swaps 1,128,115 2,120,814 (473,628) 867,216 2,449,558 (183,215)

\ 1,164,188 \ 2,343,820 \ (615,227) \ 867,216 \ 2,691,395 \ (1,082,948)


26

The amount recognized as other comprehensive income, representing the effective portion related

to cash flow hedge, is \ 467,721 thousand as of June 30, 2012, and the reclassified amount from

other comprehensive income to profit or loss is \ 373,842 thousand. There is no ineffective portion

recognized related to cash flow hedge for the six-months periods ended June 30, 2012.

16. Equity

The Company is authorized to issue 80,000,000 shares (par value of per share : \ 5,000). As of

June 30, 2012 and December 31, 2011, the number of common stock and preferred stock, and

paid in capital are as follows :

(in thousands of Korean won, except number of shares)

Type June 30,

2012

December 31,

2011

Commonstock

Number of shares 20,000,000 20,000,000

Capital stock 100,000,000 100,000,000

Additional paid-in capital -

100,000,000 100,000,000

Preferred

stock

Number of shares 5,000,000 5,000,000

Capital stock 25,000,000 25,000,000

Additional paid in capital 74,608,060 74,608,060

99,608,060 99,608,060

Total \ 199,608,060 \ 199,608,060

The convertible preferred stocks have been issued at \ 20,000 per share(par value \ 5,000 per

share) are non-cumulative, non-participating, nominative, non-permanent preferred stock without

voting right, and will be converted into common stock after seven years from issue date.

Legal reserve and discretionary reserve as of June 30, 2012 and December 31, 2011, are as

follows:

(in millions of Korean won)

Type

June 30,

2012

December 31,

2011

Legal reserve Revenue reserve \ 4,000,000 \ 1,000,000

Discretionaryreserve

Reserve for electronic financialtransactions

100,000 100,000

Reserve for bad loans 3,357,192 -

Unappropriated retained earnings

(Expected reserve for bad loans

June 30, 2012: \ 9,918,236 thousand,

December 31, 2011: \ 3,357,192 thousand)

133,817,650 145,366,632

\ 141,274,842 \ 146,466,632


27

If allowances for doubtful accounts do not meet the minimum amount calculated in accordance

with allowance reserve standards of Regulation on Supervision under Article 11 of the Specialized

Credit Financial Business Law Article 11, the Group appropriates a reserve for bad loans in an

amount more than the difference between the allowance and the requirement. The reserve for bad

loans is attributed to discretionary reserve for retained earnings. If the existing reserve for bad

loans exceeds the reserve for bad loans to be reserved, the excess amounts are to be reversed.

And if undisposed deficit exists, the reserve for bad loans is reserved after undisposed deficit is

disposed of.

Appropriated and expected reserves for bad loans as of June 30, 2012 and December 31,




Appropriated reserve for bad loans \ 3,357,192 \ -

Expected reserve for bad loans 9,682,546 3,357,192

\ 13,039,738 \ 3,357,192

Transfer to reserve for bad loans and net income in consideration of effect of changes in

reserve for bad loan for the six-month periods ended June 30, 2012 and 2011, are as follows:


Type June 30, 2012 June 30, 2011

Net income \ 24,659,315 \ 37,078,406

Transfer to reserve for bad loans1

(9,682,546) (408,955)

Net income in consideration of changes in reserve forbad loans

2 14,976,769 36,669,451

Net income per share in consideration of changes inreserve for bad loans (In won)

3 749 1,833

1Transfer to reserve for bad loans are subtracted from balance of reserve for bad loans in 2011 to balance

in 2010.2

Net income in consideration of changes in reserve for bad loans is not accordance with K-IFRS, and the

amount is the sum of the transfer to reserve for bad loans before income tax and net income.3

Net income per share in consideration of changes is calculated by subtracting the transfer to reserve for

bad loans from the net income for common stock.

The \ 30 billion of dividends for fiscal year ended December 31, 2011, were paid in March 2012

(2011 : \ 10 billion).


Type December 31, 2011 December 31, 2010

Common stock \ 24,000,000 \ 10,000,000

Preferred stock 6,000,000 -

Total \ 30,000,000 \ 10,000,000


28

17. General and Administrative Expenses

General and administrative expenses for the three-month and six-month periods ended June 30,

2012 and 2011, are as follows:


2012 2011

Three months Six months Three months Six months

Payroll \ 4,568,093 \ 8,195,793 \ 4,274,675 \ 8,695,536

Severance benefits 781,519 1,274,914 561,708 1,002,588

Fringe benefits 1,312,506 2,727,606 1,154,555 2,362,867

Outsourcing service charges 992,298 1,979,729 756,554 1,509,578

Sales promotions 3,602,914 6,888,858 2,445,376 5,726,356

Commission 606,483 1,811,504 431,747 1,208,684

Outsourcing service commission 732,547 1,233,670 535,593 958,006

Depreciation 258,027 502,421 311,567 672,065

Amortization 255,995 531,975 339,339 711,043

Taxes and dues 443,323 938,001 548,729 879,271

Electronic expenses 357,298 749,399 412,527 638,012

Rent 372,536 628,469 208,812 429,658

Maintenance expenses on

building278,182 547,957 248,076 460,591

Travel and transportation 187,139 375,963 168,305 311,253

Education 150,203 282,273 227,632 386,322

Communication 128,639 270,700 121,740 246,901

Other expenses 553,536 927,721 531,698 866,689

\ 15,581,238 \ 29,866,953 \ 13,278,633 \ 27,065,420

18. Income Tax

The Group recognized income tax based on estimation of weighted average annual tax rate annual

fiscal year. Expected weighted average annual tax rate for June 30, 2012, is 29.7% (June 30,

2011 : 27.5%).


29

19. Other Comprehensive Income

Other comprehensive income for the six-month periods ended June 30, 2012 and 2011, consist of:


TypeBeginning

balance

ChangesIncome

tax effectsEndingbalance

Reclassifi-cation of

profit or loss

Otherchanges

Loss on valuation ofderivatives \ (1,082,948) \ 373,842 \ 243,204 \ (149,325) \ (615,227)

Gain on valuation ofavailable-for-salefinancial assets

6,047,838 - (5,415,441) 1,310,537 1,942,934

Accumulatedcomprehensiveexpense of equitymethod investee

(1,702,584) - 1,818,209 (47,725) 67,900

\ 3,262,306 \ 373,842 \(3,354,028) \1,113,487 \ 1,395,607


June 30, 2011

TypeBeginning

balance

Changes

Incometax effects

Endingbalance

Reclassifi-cation ofprofit or

loss

Otherchanges

Loss on valuation ofderivatives \ (1,662,559) \1,240,761 \ (191,820) \ (279,020) \ (892,638)

Gain on valuation ofavailable-for-salefinancial assets

2,180,057-

4,837,638 (1,001,007) 6,016,688

Accumulatedcomprehensiveexpense of equitymethod investee

(1,379,779)-

(415,618) 91,436 (1,703,961)

\ (862,281) \1,240,761 \ 4,230,200 \ (1,188,591) \ 3,420,089

20. Supplemental Cash Flow Information

Cash and cash equivalents in the statements of financial position as of June 30, 2012 and

December 31, 2011, consist of:



Cash \ 2,000 \ 2,000

Ordinary deposits 17,622,199 6,005,235

Short-term financial instruments 297,615,346 270,001,884

\ 315,239,545 \ 276,009,119


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Cash generated from operations for the six-month periods ended June 30, 2012 and 2011, are as

follows:


June 30, 2012 June 30, 2011

Net income \ 24,659,315 \ 37,078,406

Adjustments

Net interest expenses 74,978,498 68,533,277

Dividends (250,000) (300,000)

Income tax 10,391,091 12,974,838

Gain on loans receivable 21,687,165 15,172,240

Gain on installment financing 2,200,962 (250,805)

Gain on leased assets (10,039) (14,991)

Gain on foreign currency translation - (2,186,000)

Gain on disposal of property and equipment (1,661) (4,346)

Gain on valuation of derivatives (27,500) -

Gain on equity method valuation 2,125,980 (8,660,056)

Bad debts expense 8,697,812 10,960,117

Severance benefits 1,274,953 1,002,588

Depreciation 502,421 672,065

Amortization of intangible assets 531,975 711,043

Loss on foreign currency translation 27,500 -

Loss on disposal of property and equipment 87,386 48,895

Loss on reduction of investment assets - 610,000

Loss on valuation of derivatives 272,954 2,186,000

Others - 1,098

122,489,497 101,455,963

Changes in operating assets and liabilities

Decrease in available-for-sale securities - 3,250,000

(Increase) in loans receivable (262,534,798) (415,348,138)

Decrease in installment financing receivables 55,086,969 37,637,771

(Increase) in finance lease receivables (22,303,623) (22,769,853)

(Increase) in deferred loan origination fees andcosts

(35,959,538) (23,675,361)

(Decrease) in present value discounts (706,058) (1,025,485)

(Decrease) in allowance for bad debts (35,833) (604,585)

Decrease in non-trade receivables 6,852,230 2,592,380

Decrease(increase) in accrued revenues 1,793,683 (2,146,615)

Decrease(increase) in advance payments 254,740 (400,508)

Decrease in prepaid expenses 436,058 4,145,987

Increase in non-trade payables 4,716,375 703,537

(Decrease) in accrued expenses (6,470,211) (5,547,376)

Increase in unearned revenue 297,352 1,739,579

(Decrease) in advance receipts (124,986) (120,157)

Increase in withholdings 1,766,667 127,081


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Payment of severance benefits (214,377) (336,638)

Decrease(increase) in plan assets 161,594 (124,141)

Transfer of severance benefits from related parties 522,976 412,549

Transfer of severance benefits to related parties (726,460) -

Increase in leasehold deposits received 8,527,702 7,816,936

(248,659,538) (413,673,037)

\ (101,510,726) \ (275,138,668)

Significant investing and financing activities not affecting cash flows for the six-month periods

ended June 30, 2012 and 2011, are as follows:


Type June 30, 2012 June 30, 2011

Transferred from advance payments to otherintangible assets

\ - \ 924,550

Transferred to legal reserve 3,000,000 1,000,000Transferred to discretionary reserve 3,357,192 100,000

21. Commitments and Contingencies

Details of credit line agreements of the Group as of June 30, 2012, and December 31, 2011, are

as follows:

June 30, 2012 December 31, 2011

TypeFinancial

institutionsContract limit No use Contract limit No use

Limit ofoverdraft

Woori Bank and6 other banks

KRW 315 billion KRW 265 billion KRW 225 billion KRW 175 billion

Limit of L/C Shinhan Bank - - USD 8 million USD 8 million

Details of pending significant litigations involving the Group as of June 30, 2012, are as follows:


Type Number of litigations Amount of litigations

Plaintiff 10 \ 452,634

Defendant - -

As of report date, the outcome of these cases cannot be reasonably determined and no

adjustments are reflected on the consolidated financial statements of the Group as of June 30,

2012.

The Group enters into a financial support agreement with Shinhan Bank for the acquisition of mold

equipment for Hyundai and Kia Motor Company’s component partner companies. The Group

guarantees the loans of the component partner companies. The amount of payment guarantees as of

June 30, 2012, is \ 6,398,639 thousand (December 31, 2011: \ 12,542,306 thousand).


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Details of guarantees involving third parties as of June 30, 2012, and December 31, 2011, are asfollows:


Guarantor Details June 30, 2012 December 31, 2011

Hyundai WiaGuarantees on machinery installment

financing receivables\ 41,516,595 \ 63,422,227

Hyundai Motor

Company

Guarantees on finance leasereceivables 6,196,598 8,877,631

22. Related Party Transactions

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.

Significant transactions, which occurred in the normal course of business with related companies

for the six-month periods ended June 30, 2012 and 2011, are as follows:

(in thousands of Korean won) June 30, 2012 June 30, 2011Purchases Sale Purchases Sale

Parent Company

Hyundai Motor Company \ 112,602 \ - \ 209,814 \ -

Others

Hyundai Wia Corp. 26,248,587 - 31,802,695 -

Hyundai Capital ServicesInc.

- 26,395,537 - 14,762,197

Hyundai Autoever Corp. 475,107 - 72,955 -

26,723,694 26,395,537 31,875,650 14,762,197

\ 26,836,296 \ 26,395,537 \ 32,085,464 \14,762,197

Revenues and expenses arising from transactions with related parties for the three-month and six-

month periods ended June 30, 2012 and 2011, and receivables and payables as of June 30, 2012

and December 31, 2011, are as follows:

(in thousands of Korean won) June 30, 2012 December 31, 2011Receivables Payables Receivables Payables

Parent Company

Hyundai Motor Company \ 173,650 \ 9,101 \ 209,920 \ 173,830

Others

Kia Motors Corp. 2,053 - 2,966 -


2,915,635 53,607 2,435,947 34,453

Hyundai Card Co., Ltd. 3,767,922 8,240,856 3,504,434 2,870,760

Samwoo Co., Ltd. 26,103,902 118,675 31,345,746 118,675

Mseat Inc. 5,000,000 - 15,000,000 -


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Employees 1,511,820 - 1,281,205 -

39,301,332 8,413,138 53,570,298 3,023,888

\ 39,474,982 \ 8,422,239 \ 53,780,218 \ 3,197,718


June 30, 2012

Revenues ExpensesThree months Six months Three months Six months

Parent Company

Hyundai Motor Company \ 516,937 \1,085,413 \ 9,586 \ 14,623

Others

Kia Motors Corp. 6,105 13,685 - -


1,185,513 2,502,971 879,367 2,169,418

Autoever Systems Corp. - - 589,342 1,066,785

HMC Investment Securities - - 15,000 20,000

Hyundai Card Co., Ltd. 158,487 562,743 236,875 772,236

Innocean Worldwide Corp. - - 3,300 13,200

Samwoo 476,812 1,095,208 - -

Haevichi Hotel and Resort - - - 330

Haevichi Country Club - - 820 1,370

Mseat Inc. 278,987 534,949 - -

Wia Magna Powertrain - - - -

Employees 7,454 14,440 125 165

2,113,358 4,723,996 1,724,829 4,043,504

\ 2,630,295 \5,809,409 \ 1,734,415 \ 4,058,127


June 30, 2011

Revenues ExpensesThree months Six months Three months Six months

Parent Company

Hyundai Motor Company \ 790,112 \1,602,519 \ 1,683 \ 6,181

Others

Kia Motors Corp. 5,689 12,637 - -


818,210 1,435,930 664,800 829,859

Autoever Systems Corp. - - 598,114 978,575

HMC Investment Securities 256,200 21,931 - 82,000

Hyundai Card Co., Ltd. 124,572 235,868 192,137 313,080

Innocean Worldwide Corp. - - 20,816 46,116

Samwoo 142,151 192,191 - -

Haevichi Hotel and Resort - - - -

Haevichi Country Club - - - -

Mseat Inc. 146,697 211,565 - -


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Wia Magna Powertrain 28,221 59,417 - -

Employees 7,262 15,595 - 55

1,529,002 2,185,134 1,475,867 2,249,685

\ 2,319,114 \3,787,653 \ 1,477,550 \ 2,255,866

The Group has been provided with guarantees by the related parties(Note 21).

Compensation for key management for the six-month periods ended June 30, 2012 and 2011,

consists of:


Type June 30, 2012 June 30, 2011

Short-term employee benefits \ 1,230,945 \ 899,483

Severance benefits 559,065 317,884

The key management above consists of directors (including non-permanent directors), who have

significant authority and responsibilities for planning, operating and controlling the operations of

the Group.

23. Financial Risk Management

The Group is exposed to credit risk, liquidity risk and market risk (exchange and rate risk). In

order to manage these factors, the Group operates risk management policies and programs that

monitor closely and respond to each of the risk factors. The Group uses derivatives to manage

specific risks.

As the interim consolidated financial statements do not include all the financial risk management

and disclosures that are required in annual consolidated financial statements, please refer to

annual consolidated financial statements as of December 31, 2012.

There was no significant change in the Group's risk management division and policies after

December 31, 2011.

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