2021 Audit Report

KIA CORPORATION
AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2021 AND 2020
WITH THE INDEPENDENT AUDITOR’S REPORT
KIA CORPORATION AND ITS SUBSIDIARIES

Table of contents

Page

Independent Auditor’s Report 1

Consolidated Financial Statements

Consolidated Statements of Financial Position 6

Consolidated Statements of Income 8

Consolidated Statements of Comprehensive Income 9

Consolidated Statements of Changes in Equity 10

Consolidated Statements of Cash Flows 12

Notes to the Consolidated Financial Statements 13

Ernst & Young Han Young
2-4F, 6-8F, Taeyoung Building, 111, Yeouigongwon-ro,
Yeongdeungpo-gu, Seoul 07241 Korea
Tel: +82 2 3787 6600

Fax: +82 2 783 5890
ey.com/kr
Independent auditor’s report

English Translation of Independent Auditor’s Report Originally Issued in Korean on March 14, 2022

The Shareholders and Board of Directors
Kia Corporation

Opinion

We have audited the consolidated financial statements of Kia Corporation (the “Company”) and its subsidiaries (the
“Group”), which comprise the consolidated statements of financial position as of December 31, 2021 and 2020, and the
consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with Korean International Financial
Reporting Standards (“KIFRS”).

Basis for opinion

We conducted our audit in accordance with Korean Auditing Standards (“KGAAS”). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to
our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

(Key audit matter 1) Classification of the performance obligation of warranty for the vehicles sold and measurement of
the related amount:
As described in Note 3 to the consolidated financial statements, the Group provides free warranties for the customers
for a period of time after the vehicles were sold, and these warranties are divided into assurance type warranties and
service type warranties. In the case of service type warranties, certain portion of sales proceeds received at the time of
the vehicle sale is allocated to the warranty obligation and recognized as revenue when the performance obligation for
the service type warranties is fulfilled; accordingly, contract liabilities were recognized on the consolidated financial
statements as of December 31, 2021. In the case of assurance type warranties, the amount expected to be liable by the
Group in the future should be recognized as provision at the end of the reporting period, and the sales warranty
provisions of ￦4,640,702 million have been recognized on the consolidated financial statements as of December 31,
2021.
A member ﬁrm of Ernst & Young Global Limited

The performance obligation of the warranty is calculated by using various assumptions and warranty policies of the Group,
including the duration of the warranty, the estimated warranty costs to be incurred in the future, and the discount rate.
Also, these assumptions are determined by the nature and range of the free warranty provided by the Group. We have
selected the topic as our key audit matter, taking into account the materiality of the related liability amount, the
uncertainty of the estimates used by management, the complexity of the assumptions, and possible errors that may arise
in classifying the types of warranty.

The main audit procedures that we have conducted related to the considerations described above are as follows:
• Reviewed whether the classification of warranty types defined in the Group's accounting policies is in accordance with
KIFRS
• Assessed whether relevant controls for recognizing and measuring sales warranty provisions are effectively designed
and operated.
• Involved an IT specialist to assess whether IT general controls for IT system that is being used for warranty transaction
and relevant automated controls are effectively designed and operated.
• Compared internal and external information with the underlying data of the major accounting estimates by
management
• Performed an analytical review of the basis of management’s assumptions used in the measurement of related
liabilities with the historical data
• Performed an independent recalculation of the related liabilities balance at the end of the reporting period
• Compared the actual warranty provided in the current year with the forecasted warranty provision from the previous
year by car models

(Key audit matter 2) Complete and accurate measurement of the amount of incentive‐related liabilities provided to
dealers:

The Group provides a variety of incentive programs to dealers to facilitate vehicle sales. The Group reflects the forecasted
amount expected to be incurred from dealer incentives as accrued expenses in the consolidated financial statements.

Kia America, Inc. (“KUS”), a subsidiary in the United States, accounts for the significant proportion of the total incentive
amount of the Group, and due to various terms and conditions of incentive programs, accounting estimates and complex
calculations are performed when measuring related liabilities. We have selected this topic as our key audit matter, taking
into account the importance of the incentive amount of KUS and the risk that the related liabilities are difficult to be
measured accurately and completely due to the complexity of the estimates and calculations used by management for
each incentive programs.

The main audit procedures that we have conducted related to the considerations described above are as follows:

• Reviewed whether the incentive program accounting defined in the Group's accounting policies complies with the
KIFRS
• Involved the component auditors to perform the following procedures for the components that account for the
significant proportion of incentive‐related liabilities

‐ Understanding the underlying data aggregation process of key estimates used in the measurement of incentive‐
related liabilities
‐ Comparison of internal and external information with the underlying data and estimates used by management
‐ Analysis of the assumptions used by management when comparing related liabilities to historical performance
‐ Independent recalculation of the related liability balance as of December 31, 2021
‐ Comparison of the forecasted liability recognized as of the end of the previous reporting period with the actual
amount incurred for the current period


Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with KIFRS, 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.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
KGAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KGAAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.


We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Hee yeong, Kim.

Signature

March 14, 2022

This audit report is effective as of March 14, 2022 the independent auditor’s report date. Accordingly, certain material
subsequent events or circumstances may have occurred during the period from the independent auditor’s report date
to the time this report is used. Such events or circumstances could significantly affect the accompanying consolidated
financial statements and may result in modifications to this report.

KIA CORPORATION
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2021 AND 2020
The accompanying consolidated financial statements, including all footnote disclosures, were
prepared by, and are the responsibility of, the Group.
Song, Ho Seong
Chief Executive Officer
KIA CORPORATION
Main Office Address: (Road Name Address) 12, Heolleung-ro, Seocho-gu, Seoul
(Phone Number) 02-3464-1114
5
Consolidated Statements of Financial Position

As of December 31, 2021 and 2020

(In millions of Korean won)
December 31, December 31,
Note 2021 2020
Assets

Cash and cash equivalents 5,32 ￦ 11,533,710 ￦ 10,160,697
Short‐term financial instruments 5,32 4,532,697 2,912,700
Other current financial assets 6,32 1,624,525 1,806,427
Accounts and notes receivable – trade 23,32,33 1,787,698 1,819,008
Accounts and notes receivable – others 32,33 1,949,313 1,925,008
Advanced payments 33 348,096 123,106
Inventories 7 7,087,685 7,093,959
Current tax assets 227,975 147,444
Other current assets 23 113,784 105,033
Total current assets 29,205,483 26,093,382

Long‐term financial instruments 5,32 135,200 134,736
Other non‐current financial assets 6,32 1,147,745 710,580
Long‐term accounts and notes receivable – trade 23,32,33 4,526 5,377
Investments in joint ventures and associates 8 17,004,793 14,613,560
Property, plant and equipment 4,9 15,583,831 15,579,715
Investment property 4,10 23,239 22,412
Intangible assets 4,11,12 2,831,510 2,665,571
Deferred tax assets 27 483,023 535,834
Other non‐current assets 15, 23 430,647 129,276
Total non‐current assets 37,644,514 34,397,061

Total assets ￦ 66,849,997 ￦ 60,490,443
(Continued)
6
Consolidated Statements of Financial Position

As of December 31, 2021 and 2020, Continued

December 31, December 31,
Note 2021 2020
Liabilities

Accounts and notes payable – trade 32,33 ￦ 7,920,301 ￦ 7,302,405
Short‐term borrowings 13,32 3,107,772 4,479,452
Accounts and notes payable – others 32,33 2,677,480 2,382,260
Advances received 23 454,421 325,701
Accrued expenses 32 1,855,448 1,975,242
Income taxes payable 777,302 300,531
Current portion of long‐term debt and bonds 13,17,32 1,307,848 788,542
Provisions – current 16 3,165,970 3,281,621
Other current liabilities 14,18,29,32 296,094 261,835
Total current liabilities 21,562,636 21,097,589

Bonds 13,17,32 3,296,975 2,722,994
Long‐term debt 13,17,32 1,631,282 2,175,728
Long‐term advances received 23 114,460 105,372
Net defined benefit liabilities 15 1,850 ‐
Provision for other long‐term employee benefits 320,679 334,933
Provisions 16,17 1,721,259 1,408,745
Deferred tax liabilities 27 1,755,177 1,365,533
Other non‐current liabilities 14,18,29,32,33 1,533,123 1,387,877
Total non‐current liabilities 10,374,805 9,501,182

Total liabilities 31,937,441 30,598,771

Equity
Owners of the Company
Capital stock 19 2,139,317 2,139,317
Capital surplus 1,560,650 1,560,650
Retained earnings 20 31,682,932 27,173,417
Accumulated other comprehensive loss 19 (406,392) (920,638)
Other equity 19 (66,078) (61,074)
Equity attributable to owners of the Company 34,910,429 29,891,672

Non‐controlling interests 2,127 ‐

Total equity 34,912,556 29,891,672

Total liabilities and equity ￦ 66,849,997 ￦ 60,490,443
See accompanying notes to the consolidated financial statements
7
Consolidated Statements of Income

For the years ended December 31, 2021 and 2020

(In millions of Korean won, except earnings per share)

Notes 2021 2020
Sales 4,23,33 ￦ 69,862,366 ￦ 59,168,096
Cost of sales 28,33 56,937,165 49,222,564
Gross profit 12,925,201 9,945,532

Selling expenses 24,28,33 4,578,163 4,910,714
General and administrative expenses 24,28,33 3,281,353 2,968,361
Operating profit 5,065,685 2,066,457

Gain on investments in joint ventures and associates, net 8 1,168,179 61,399
Finance income 25,32,33 356,724 341,844
Finance costs 25,32,33 327,444 424,756
Other income 26,33 626,537 601,545
Other expenses 26,33 495,900 805,131
Profit before income taxes 6,393,781 1,841,358

Income tax expense 27 1,633,470 353,773
Profit for the year ￦ 4,760,311 ￦ 1,487,585

Profit attributable to:
Owners of the Company 4,760,450 1,487,585
Non‐controlling interests (139) ‐

Earnings per share 21
Basic earnings per share in Korean won ￦ 11,874 ￦ 3,710
8
Consolidated Statements of Comprehensive Income

2021 2020

Other comprehensive income (loss) for the year:
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans 141,624 17,767
Remeasurements of associates, etc. 8,028 (15,350)
Change in fair value of financial assets measured
at fair value through other comprehensive income 25,829 96,489

175,481 98,906

Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges 1,648 15,414
Change in capital adjustments – increase(decrease) in gain of equity
method accounted investment (731) 117,673
Change in capital adjustments – decrease(increase) in loss of equity
method accounted investment 253,838 (201,507)
Exchange differences on translating foreign operations 233,987 (143,466)
488,742 (211,886)

Other comprehensive income (loss) for the year 664,223 (112,980)
Total comprehensive income for the year ￦ 5,424,534 ￦ 1,374,605

Total comprehensive income attributable to:
Owners of the Company 5,424,692 1,374,605
Non‐controlling interests (158) ‐
9
Consolidated Statements of Changes in Equity



Attributable to owners of the Company
Non‐

Accumulated contro
other lling
Capital Retained comprehensive Other intere
stock Capital surplus earnings loss equity sts Total

Balance at January 1, 2020 ￦ 2,139,317 ￦ 1,560,650 ￦ 26,056,216 ￦ (716,971) ￦ (61,074) ￦ ‐ ￦ 28,978,138

‐

‐
Total comprehensive income: ‐

Profit for the year ‐ ‐ 1,487,585 ‐ ‐ ‐ 1,487,585

Change in fair value of financial assets
measured at fair value through other
comprehensive income ‐ ‐ ‐ 96,489 ‐ ‐ 96,489

Derecognition of financial assets measured
at fair value through other
comprehensive income ‐ ‐ 88,270 (88,270) ‐ ‐ ‐

Effective portion of changes in fair value of
cash flow hedges ‐ ‐ ‐ 15,414 ‐ ‐ 15,414

Changes in capital adjustments – increase
in gain of equity method accounted
investment ‐ ‐ ‐ 117,673 ‐ ‐ 117,673

Changes in capital adjustments – increase
in loss of equity method accounted
investment ‐ ‐ ‐ (201,507) ‐ ‐ (201,507)

Remeasurements of defined benefit plans ‐ ‐ 17,767 ‐ ‐ ‐ 17,767

Remeasurements of associates, etc. ‐ ‐ (15,350) ‐ ‐ ‐ (15,350)

Exchange differences on translating foreign
operations ‐ ‐ ‐ (143,466) ‐ ‐ (143,466)

Total comprehensive income ‐ ‐ 1,578,272 (203,667) ‐ ‐ 1,374,605

Transactions with owners and other,
recorded directly in equity:
Payment of dividends ‐ ‐ (461,071) ‐ ‐ ‐ (461,071)

Balance at December 31, 2020 ￦ 2,139,317 ￦ 1,560,650 ￦ 27,173,417 ￦ (920,638) ￦ (61,074) ￦ ‐ ￦ 29,891,672
(Continued)
10
Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020, Continued


Attributable to owners of the Company
Accumulated Non‐

Capital Capital Retained other Other controlling
stock surplus earnings comprehensive loss equity interests Total

Balance at January 1, 2021 ￦ 2,139,317 ￦ 1,560,650 ￦ 27,173,417 ￦ (920,638) ￦ (61,074) ￦ ‐ ￦ 29,891,672

Total comprehensive income:

Profit for the year ‐ ‐ 4,760,450 ‐ ‐ (139) 4,760,311

Change in fair value of financial assets
comprehensive income ‐ ‐ ‐ 25,829 ‐ ‐ 25,829

Derecognition of financial assets
comprehensive income ‐ ‐ 344 (344) ‐ ‐ ‐

Effective portion of changes in fair value
of cash flow hedges ‐ ‐ ‐ 1,648 ‐ ‐ 1,648

Changes in capital adjustments –
decrease in gain of equity method
accounted investment ‐ ‐ ‐ (731) ‐ ‐ (731)

Changes in capital adjustments –
decrease in loss of equity method
accounted investment ‐ ‐ ‐ 253,838 ‐ ‐ 253,838

Remeasurements of defined benefit
plans ‐ ‐ 141,624 ‐ ‐ ‐ 141,624

Remeasurements of associates, etc. ‐ ‐ 8,028 ‐ ‐ ‐ 8,028

Exchange differences on translating
foreign operations ‐ ‐ ‐ 234,006 ‐ (19) 233,987

Total comprehensive income ‐ ‐ 4,910,446 514,246 ‐ (158) 5,424,534

Transactions with owners and other,
recorded directly in equity:
Paid‐in capital increase of subsidiaries ‐ ‐ ‐ ‐ ‐ 2,285 2,285
Acquisition of treasury stocks. ‐ ‐ ‐ ‐ (38,116) ‐ (38,116)
Disposition of treasury stocks. ‐ ‐ ‐ ‐ 33,112 ‐ 33,112
Payment of dividends ‐ ‐ (400,931) ‐ ‐ ‐ (400,931)

Balance at December 31, 2021 ￦ 2,139,317 ￦ 1,560,650 ￦ 31,682,932 ￦ (406,392) ￦ (66,078) ￦ 2,127 ￦ 34,912,556
11
Consolidated Statements of Cash Flows

Note 2021 2020
Cash flows from operating activities
Cash generated from operations 30 ￦ 8,126,585 ￦ 5,651,369
Interest received 163,834 162,751
Interest paid (168,632) (224,197)
Dividends received 152,196 116,621
Income tax paid (914,313) (282,648)
Net cash provided by operating activities 7,359,670 5,423,896

Cash flows from investing activities
Net decrease in short‐term financial instruments ‐ 149,046
Net decrease in other current financial assets 170,332 23,954
Decrease in other non‐current financial assets 16,888 37,008
Proceeds from disposal of property, plant and equipment 69,093 58,584
Proceeds from disposal of intangible assets 3,759 885
Net increase in short‐term financial instruments (1,625,093) ‐
Net increase in long‐term financial instruments (277) (30,937)
Increase in other non‐current financial assets (122,528) (4,865)
Acquisition of investments in joint ventures and associates (1,033,446) (778,707)
Acquisition of property, plant and equipment (1,319,523) (1,661,898)
Acquisition of intangible assets (583,115) (657,923)
Net cash used in investing activities (4,423,910) (2,864,853)

Cash flows from financing activities
Cash proceeds from short‐term borrowings and long‐term debt 4,942 4,643,610
Cash proceeds from bonds 1,071,513 600,000
Cash proceeds from other financing activities 37 318
Repayment of short‐term borrowings and long‐term debt (1,757,750) (702,588)
Repayment of bonds (435,200) (500,000)
Payment of dividends (400,931) (461,071)
Acquisition of treasury stocks (38,116) ‐
Cash payments to other financing activities (65,104) (62,986)
Net cash provided by (used in) financing activities (1,620,519) 3,517,283

Effect of exchange rate changes on cash and
cash equivalents held in foreign currencies 57,772 (184,345)

Net increase in cash and cash equivalents 1,373,013 5,891,981
Cash and cash equivalents at January 1 10,160,697 4,268,716

Cash and cash equivalents at December 31 ￦ 11,533,710 ￦ 10,160,697
12
`KIA CORPORATION AND ITS SUBSIDIARIES
Notes to the Consolidated Financial Statements


1. General description of the Company and its subsidiaries

(1) General description of the Parent Company

Kia Corporation (the “Company”) was established in December 1944 under the laws of the Republic of Korea to
manufacture and sell a range of passenger cars, recreational vehicles and other commercial vehicles in domestic and
international markets. The Company owns and operates three principal automobile production sites in Korea:
the Gwangmyeong autoland, the Hwasung autoland and the Kwangju autoland. On March 22, 2021, the Company
changed its name from Kia Motors Corporation to Kia Corporation.

The shares of the Company have been listed on the Korea Exchange since 1973. As of December 31, 2021, the Company’s
largest shareholder is Hyundai Motor Company, which holds 33.88% of the Company’s stock issued and outstanding.

The consolidated financial statements of the Company and its subsidiaries (collectively, the “Group”) comprise the Group
and its interests in associates and joint ventures.

(2) Consolidated subsidiaries

Details of consolidated subsidiaries as of December 31, 2021, are summarized as follows:
Year‐end
Country of reporting Percentage
Subsidiaries(*) domicile Main business date of ownership
Exclusive importer and distributor of December
Kia America, Inc. (KUS) U.S.A. motor vehicles and parts 31 100.00%
Manufacturing and sale of vehicles December
Kia Georgia, Inc. (KaGA)(*1) U.S.A. and parts 31 100.00%
Kia Canada Inc. (KCA)(*2) Canada motor vehicles and parts 31 100.00%
December
Kia Deutschland GmbH (KDE) Germany ＂ 31 100.00%
December
Kia Europe GmbH (Kia EU) Germany Holding company 31 100.00%
Kia Polska Sp. z o.o. (KPL)(*3) Poland motor vehicles and parts 31 100.00%
Kia Slovakia s.r.o. (KaSK) Slovakia and parts 31 100.00%
Kia Sales Slovakia s.r.o. (KSK)(*4) Slovakia motor vehicles and parts 31 100.00%
December
Kia Belgium N.V. (KBE)(*6) Belgium ＂ 31 100.00%
December
Kia Czech s.r.o. (KCZ)(*4) Czech ＂ 31 100.00%
United December
Kia UK Limited (KUK)(*4) Kingdom ＂ 31 100.00%
December
Kia Austria GmbH (KAT)(*4) Austria ＂ 31 100.00%
December
Kia Hungary Kft. (KHU)(*5) Hungary ＂ 31 100.00%
December
Kia Iberia S.L. (KES)(*4) Spain ＂ 31 100.00%
December
Kia Sweden AB (KSE)(*4) Sweden ＂ 31 100.00%
13


Year‐end
Country of reporting Percentage
Subsidiaries(*) domicile Main business date of ownership
December
Kia France (KFR)(*4) France ＂ 31 100.00%
Netherland December
Kia Nederland B.V. (KNL)(*4) s ＂ 31 100.00%
December
Kia Italia S.r.l. (KIT)(*4) Italy ＂ 31 100.00%
Kia Russia & CIS, LLC December
(Kia RUS&CIS)(*7) Russia ＂ 31 100.00%
December
Kia Australia Pty Ltd. (KAU) Australia ＂ 31 100.00%
New December
Kia New Zealand Limited (KNZ)(*8) Zealand ＂ 31 100.00%
Kia Mexico, S.A. de C.V. (KMX)(*9) Mexico and parts 31 100.00%
March
Kia India Private Limited (KIN) India ＂ 31 99.99%
December
Kia Malaysia Sdn Bhd (KMY)(*10) Malaysia ＂ 31 66.67%

(*) The Company changed the names of the subsidiaries for the years ended December 31, 2021.
(*1) 100.00% owned by KUS
(*3) 100.00% owned by KDE
(*4) 100.00% owned by Kia EU
(*5) 100.00% owned by KAT
(*6) 99.99% owned by Kia EU and 0.01% owned by KDE
(*7) 80.00% owned by Kia EU and 20.00% owned by KDE
(*8) 100.00% owned by KAU
(*10) It was newly established during the current year.

(3) Financial information of subsidiaries

Financial information of significant subsidiaries (before eliminating intra‐group transaction) as of and for the years ended
December 31, 2021 and 2020, are summarized as follows:

(i) Financial information as of and for the year ended December 31, 2021

Company Total assets Total liabilities Sales Net income
KUS ￦ 7,713,254 ￦ 5,873,092 ￦ 19,798,093 ￦ 855,362
KaGA 2,746,264 2,532,519 7,651,307 116,534
KaSK 3,632,629 1,444,388 7,493,548 299,886
KMX 1,925,331 1,402,296 4,154,485 88,269
KIN 2,566,988 1,699,310 3,690,974 185,875
Kia RUS&CIS 1,149,538 397,729 4,235,788 280,316

14


1. General description of the Company and its subsidiaries, Continued

(3) Financial information of subsidiaries, Continued

(ii) Financial information as of and for the year ended December 31, 2020

Company Total assets Total liabilities Sales Net income (loss)
KUS ￦ 6,163,475 ￦ 5,235,435 ￦ 16,826,412 ￦ 722,394
KaGA 3,081,693 2,996,317 6,376,092 (615,683)
KaSK 3,399,978 1,515,082 6,158,492 142,532
KMX 2,042,857 1,647,003 3,843,432 1,957
KIN 2,538,205 1,907,285 2,953,154 73,721
Kia RUS&CIS 829,454 399,853 3,576,957 99,914

2. Basis of Preparation

(1) Statement of compliance

The consolidated financial statements have been prepared in accordance with Korean International Financial Reporting
Standards (“KIFRS”), as prescribed in the Act on External Audit of Stock Companies in the Republic of Korea. The
accompanying consolidated financial statements have been translated into English from Korean financial statements. In
the event of any differences in interpreting the financial statements or the independent auditor’s report thereon, Korean
version, which is used for regulatory reporting purposes, shall prevail.

(2) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material
items in the consolidated statements of financial position:
• Financial assets at fair value through profit or loss are measured at fair value
• Financial assets at fair value through other comprehensive income are measured at fair value
• Liabilities for defined benefit plans are recognized at the net of total present value of defined benefit obligations
less the fair value of planned assets

(3) Functional and presentation currency

The consolidated financial statements are presented in Korean won, which is the Group’s functional currency and the
currency of the primary economic environment in which the Group operates.

(4) Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with KIFRS 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 prospectively.

15


2. Basis of Preparation, Continued

(4) Use of estimates and judgments, Continued

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment within the next fiscal year are included in the following notes:

• Note 15 : Retirement benefits plan
• Note 16 : Provisions
• Note 17 : Commitments and contingencies
• Note 23 : Revenue from contracts with customers
• Note 27 : Income tax expense
• Note 29 : Leases

The Group expects that the COVID‐19 pandemic that started in early 2020 and the government support measures of
each country will have a certain impact on the consolidated financial statements of the Group in the future, but the
impact cannot be reasonably estimated as of December 31, 2021.

(5) Measurement of fair value

A number of the Group’s accounting policies and disclosures require the measurement of fair values for both financial
and non‐financial assets and liabilities. The Group has an established control framework with respect to the
measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant
fair value measurements, including Level 3 fair values, and reports directly to the CFO.

The valuation team 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 valuation team assesses
the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of
KIFRS, including the level in the fair value hierarchy in which such valuations should be classified.

3. Significant Accounting Policies

The significant accounting policies applied by the Group in preparation of its consolidated financial statements are
included below. The consolidated financial statements for the years ended December 31, 2021 and 2020 are based on
the same accounting policies except for the newly applied standards.

(1) Basis of consolidation

Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date
on which control commences until the date on which control ceases.

If a member of the Group uses accounting policies other than those adopted in the consolidated financial statements for
like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in
preparing the consolidated financial statements.

Intra‐group transactions
Intra‐group balances and transactions, and any unrealized income and expenses arising from intra‐group transactions,
are eliminated in preparing the consolidated financial statements. Intra‐group losses are recognized as expense if intra‐
group losses indicate an impairment that requires recognition in the consolidated financial statements.

16


3. Significant Accounting Policies, Continued

(1) Basis of consolidation, Continued

Non‐controlling interests
Non‐controlling interests in a subsidiary are accounted for separately from the Company’s ownership interests in a
subsidiary. Each component of net profit or loss and other comprehensive income is attributed to the owners of the
Company and non‐controlling interest holders even when the allocation reduces the non‐controlling interest balance
below zero.

Changes in the Company’s ownership interest in a subsidiary
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions with owners in their capacity as owners. Adjustments to non‐controlling interests are based on a
proportionate amount of the net assets of the subsidiary. The difference between the consideration and the adjustments
made to non‐controlling interest is recognized directly in equity attributable to the owners of the Company.

(2) Business combination

Business combination
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities
or businesses under common control.

Each identifiable asset and liability is measured at its acquisition‐date fair value except for below:

• Contingent liabilities that are a present obligation and can be measured reliably are recognized
• Deferred tax assets or liabilities are recognized and measured in accordance with KIFRS 1012 Income Taxes
• Employee benefit arrangements are recognized and measured in accordance with KIFRS 1019 Employee Benefits

The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the
sum of the acquisition‐date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer
to former owners of the acquire and the equity interests issued by the acquirer.

Acquisition‐related costs are costs the acquirer incurs to affect a business combination. Those costs include finder's fees;
advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs, including
the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity
securities. Acquisition‐related costs, other than those associated with the issue of debt or equity securities, are expensed
in the periods in which the costs are incurred and the services are received. The costs to issue debt or equity securities
are recognizes as expenses during the period in which the costs incurred and the services rendered except for the
issuance costs of debt or equity securities recognized in accordance with KIFRS 1032 Financial Instruments: Presentation
and KIFRS 1109 Financial Instruments.

Goodwill
Goodwill derived from business combinations occurred is measured at fair value of the consideration transferred,
including the recognized amount of any non‐controlling interest in the acquire, less the net recognized amount of the
identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative,
bargain purchase gain is immediately recognized in the consolidated statements of income for the period. Goodwill is
subsequently measured at cost, less accumulated impairment losses.

Acquisition of non‐controlling interests is accounted for intercompany transaction, and related goodwill is not recognized.

17



(3) Investments in associates and joint ventures

An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the
voting power of another entity.

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement,
and require unanimous consent for strategic financial and operating decisions.

The investment in an associate and joint venture is initially recognized at cost and the carrying amount is increased or
decreased to recognize the Group’s share of profit or loss and changes in equity of the associate and joint venture after
the date of acquisition. Intra‐group balances and transactions, and any unrealized income and expenses arising from
intra‐group transactions, are eliminated in preparing the consolidated financial statements. Intra‐group losses
recognized as expense if intra‐group losses indicate an impairment that requires recognition in the consolidated financial
statements.

If an associate and joint venture uses accounting policies different from those of the Group for like transactions and
events in similar circumstances, appropriate adjustments are made to its financial statements in applying the equity
method.

When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that
interest is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has
an obligation or has to make payments on behalf of the investee for further losses.

(4) Cash and cash equivalents

Cash and cash equivalents composed of cash on hand, demand deposits and short‐term, highly liquid investments that
are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value.

(5) Inventories

Inventories are measured at the lower of cost or net realizable value. The cost of inventories is determined based on the
specific identification method for materials‐in‐transit and moving‐average method for all other inventories and includes
expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing
them to their existing location and condition.

When inventories are sold, the carrying amount of those inventories is recognized as cost of goods sold in same period
as the related revenue. Net realizable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses. The amount of any write‐down of inventories to net realizable value
and all losses of inventories are recognized as an expense in the period the write‐down or loss occurs. The amount of
any reversal of any write‐down of inventories, arising from an increase in net realizable value, are recognized as a
reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

18



(6) Non‐current assets held for sale

Non‐current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily
through sale rather than through continuing use are classified as held for sale. In order to be classified as held for sale,
the assets or disposal groups must be available for immediate sale in their present condition and their sale must be highly
probable. The assets or disposal groups that are classified as non‐current assets held for sale are measured at the lower
of their carrying amount and fair value less cost to sell. The Group recognizes an impairment loss for any initial or
subsequent write‐down of an asset or disposal group to fair value, less costs to sell, and a gain for any subsequent
increase in fair value less costs to sell, up to the cumulative impairment loss previously recognized.

A non‐current asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated
(or amortized).

(7) Non‐derivative financial assets

Financial assets are measured at fair value at initial recognition. If financial assets are not classified as financial assets at
fair value through profit or loss, the transaction cost, which directly associated with the acquisition of financial assets, is
added to the fair value at initial recognition. Financial assets are classified, at initial recognition, as subsequently
measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of accounts receivable that do
not contain a significant financing component or for which the Group has applied the practical expedient, the Group
initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss, transaction costs. Accounts receivable that do not contain a significant financing component or for which the Group
has applied the practical expedient are measured at the transaction price determined under KIFRS 1115.

In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortized cost
• Financial assets at fair value through OCI with recycling of cumulative gains and losses
• Financial assets at fair value through OCI with no recycling of cumulative gains and losses upon derecognition
• Financial assets at fair value through profit or loss

Financial assets at amortized cost
The Group measures financial assets at amortized cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding

Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method and are
subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or
impaired.

19



(7) Non‐derivative financial assets, Continued

Financial assets at fair value through OCI with recycling of cumulative gains and losses
The Group measures debt instruments at fair value through OCI if both of the following conditions are met:
• The financial asset is held within a business model with the objective of both holding to collect contractual cash
flows and selling
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding

For financial assets at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or
reversals are recognized in profit or loss and computed in the same manner as for financial assets measured at amortized
cost. The remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair value change
recognized in OCI is recycled to profit or loss.

Financial assets at fair value through OCI with no recycling of cumulative gains and losses upon derecognition
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the definition of equity under KIFRS 1032 Financial Instruments:
Presentation.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as finance income
in the consolidated statements of income when the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of the financial asset.

Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated
upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded
derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial
assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value
through profit or loss, irrespective of the business model.

Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position at fair
value with net changes in fair value recognized in the consolidated statement of income.
A derivative embedded in a hybrid contract, with a financial liability or non‐financial host, is separated from the host and
accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a
separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the
hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value
with changes in fair value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a
financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The
financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset.

20



(7) Non‐derivative financial assets, Continued

Derecognition
A financial asset is primarily derecognized when:
• The rights to receive cash flows from the asset have expired, or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass‐through’ arrangement; and either (a)
the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass‐through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Group
also recognizes an associated liability.

Offsetting of financial assets and liabilities
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements of
financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention
to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

(8) Non‐derivative financial liabilities

The Group classifies non‐derivative financial liabilities into financial liabilities at fair value through profit or loss or other
financial liabilities in accordance with the substance of the contractual arrangement and the definitions of financial
liabilities. The Group recognizes financial liabilities in the consolidated statements of financial position when the Group
becomes a party to the contractual provisions of the financial liability.

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

Other financial liabilities
Non‐derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other
financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value, minus
transaction costs that are directly attributable to the acquisition. Subsequent to initial recognition, other financial
liabilities are measured at amortized cost using the effective interest method.

The Group derecognizes a financial liability from the consolidated statements of financial position when it is extinguished
(i.e., when the obligation specified in the contract is discharged, cancelled or expires).

21


(9) Derivative financial instruments, including hedge accounting

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value,
and changes therein are either recognized in profit or loss or, when the derivatives are designated in a hedging
relationship and the hedge is determined to be an effective hedge, other comprehensive income.

(a) Hedge accounting

The Group holds derivative contracts to manage foreign exchange and interest rate risk. The Group designated
derivatives as hedging instruments to hedge the foreign currency risk of highly probable forecasted transactions and
interest rate fluctuation risk (a cash flow hedge).

On initial designation of the hedge, the Group formally documents the relationship between the hedging instruments
and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction,
together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes
an assessment, both at the inception of the hedge relationship, as well as on an ongoing basis, whether the hedging
instruments are expected to be “highly effective” in offsetting the changes in the cash flows of the respective hedged
items during the period for which the hedge is designated.

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

For fair value hedges relating to items carried at amortized cost, any adjustment to carrying value is amortized through
profit or loss over the remaining term of the hedge using the EIR method. EIR amortization may begin as soon as an
adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable
to the risk being hedged.

If the hedged item is derecognized, the unamortized fair value is recognized immediately in profit or loss.

When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulative change in the fair
value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding
gain or loss recognized in profit and loss.

Cash flow hedge
When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a
recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective
portion of changes in the fair value of the derivative is recognized in other comprehensive income. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument
no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked,
then hedge accounting is discontinued prospectively.

The amounts accumulated in OCI are accounted for, depending on the nature of the underlying hedged transaction. If
the hedged transaction subsequently results in the recognition of a non‐financial item, the amount accumulated in equity
is removed from the separate component of equity and included in the initial cost or other carrying amount of the
hedged asset or liability. This is not a reclassification adjustment and will not be recognized in OCI for the period. This
also applies where the hedged forecast transaction of a non‐financial asset or non‐financial liability subsequently
becomes a firm commitment for which fair value hedge accounting is applied.

22


(9) Derivative financial instruments, including hedge accounting, continued

For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a reclassification
adjustment in the same period or periods during which the hedged cash flows affect profit or loss.

If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated
OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified
to profit or loss as a reclassification adjustment.

(b) Other derivative financial instruments

Changes in the fair value of other derivative financial instrument not designated as a hedging instrument are recognized
immediately in profit or loss.

(10) Impairment of financial assets

The Group recognizes an allowance for expected credit losses (ECLs) for all financial assets not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that
are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the
next 12‐months (a 12‐month ECL). For those credit exposures for which there has been a significant increase in credit
risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).

For accounts receivable and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted
for forward‐looking factors specific to the debtors and the economic environment.
For financial assets at fair value through OCI, the Group applies the low credit risk simplification. At every reporting date,
the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and
supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses
the internal credit rating of the debt instrument. In addition, the Group considers that there has been a significant
increase in credit risk when contractual payments are more than 30 days past due.

If the Group’s financial assets at fair value through OCI comprise solely of quoted bonds that are graded in the top
investment category, they are considered to be low credit risk investments. It is the Group’s policy to measure ECLs on
such instruments on a 12‐month basis. However, when there has been a significant increase in credit risk since
origination, the allowance will be based on the lifetime ECL. The Group uses the ratings from the credit rating agency
both to determine whether the debt instrument has significantly increased in credit risk and to estimate ECLs.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.

23



(11) Property, plant and equipment

Property, plant and equipment are initially measured at cost. The cost of property, plant and equipment includes
expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing
the asset to the location and condition necessary for it to be capable of operating in the manner intended by management
and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent to initial recognition, an item of property, plant and equipment is carried at its cost, less any accumulated
depreciation and any accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of property, plant and equipment at cost or, if appropriate, as
consolidated items, if it is probable that future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. The transferred amount is derecognized, and the costs of the day‐to‐day
servicing are recognized in profit or loss as incurred.

Property, plant and equipment, except for land, are depreciated on a straight‐line basis over estimated useful lives that
appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A
component that is significant compared to the total cost of property, plant and equipment is depreciated over its
consolidated useful life.

The estimated useful lives of the Group’s property, plant and equipment are as follows:

Estimated useful lives (years)
Buildings and structures 20–40
Machinery and equipment 15
Dies, molds and tools 5
Vehicles 5
Other equipment 5

Depreciation methods, useful lives and residual values are reviewed at the end of each reporting date and adjusted, if
appropriate. The change is accounted for as a change in an accounting estimate.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and are recognized in other income or
expenses.

(12) Borrowing costs

The Group capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset. Other borrowing costs are recognized in expense as incurred. A qualifying asset is
an asset that requires a substantial period of time to get ready for its intended use or sale. Financial assets and inventories
that are manufactured or otherwise produced over a short period of time are not qualifying assets. Assets that are ready
for their intended use or sale when acquired are not qualifying assets.

24



(13) Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost, less accumulated amortization and
accumulated impairment losses.

Amortization of intangible assets except for goodwill is calculated on a straight‐line basis over the estimated useful lives
of intangible assets from the date that they are available for intended use. The residual value of intangible assets except
for goodwill is zero. However, as useful lives of intangible assets are not foreseeable to the periods over which
memberships are expected to be available for use, this intangible asset is determined as having indefinite useful lives and
not amortized.

The estimated useful lives of the Group’s intangible assets are as follows:

Estimated useful lives (years)
Development costs (*)
Industrial property rights 5, 10
Software 5
Membership Indefinite
Others 9–25

(*) Capitalized development costs are amortized over the useful life considering the life cycle of the developed products.

The amortization periods and amortization methods of intangible assets with finite useful lives are reviewed at the end
of each reporting period. The amortization methods and the useful lives of intangible asset as indefinite are reviewed
and assessed at the end of each reporting period. If an indefinite useful life is no longer supported, the change from
indefinite to finite life is accounted for as a change in accounting estimate. Intangible assets with indefinite useful
lives(e.g. membership) are not amortized; instead, the assets are tested for impairment annually.

Research and development
Expenditures on research activities are recognized as expense in the period in which they incur. Expenditures on
development activities are capitalized as intangible assets (development costs) and amortized on a straight‐line basis
over the economic life when the assets become available for sale or use.

The Group’s product development process consists of four stages which comprise prior research, development approval,
product development and mass production. The product to be developed is decided based on discussions of product
concepts and market researches which take place in the prior research stage, and the product development is
commenced upon management’s approval. In general, the Group recognizes intangible assets when development
activities take place upon management’s approval which confirms product specifications, release schedules and sales
plans. Prior expenditures are considered as research activities and are recognized as expense in the period in which they
incurred.

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

(14) Investment property

Property held for the purpose of earning rentals or benefiting from capital appreciation is classified as investment
property. Investment property is measured initially at its cost. Transaction costs are included in the initial measurement.
Subsequently, investment property is carried at depreciated cost, less any accumulated impairment losses.

25



(15) Impairment of non‐financial assets

The carrying amounts of the Group’s non‐financial assets, other than assets arising from employee benefits, inventories
and deferred tax assets, are reviewed at the end of the reporting period to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible
assets that have indefinite useful lives, irrespective of whether there is any indication of impairment, are tested for
impairment annually by comparing their recoverable amount to their carrying amount.

The Group estimates the recoverable amount of an individual asset. If it is impossible to measure the individual
recoverable amount of an asset, then the Group estimates the recoverable amount of cash‐generating unit (“CGU”). The
recoverable amount of an asset or a CGU is the greater of its value in use and its fair value, less costs to sell. The value
in use is estimated by applying appropriate discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the
estimated future cash flows expected to be generated by the asset or a CGU.

An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(16) Government grants

Government grants are not recognized, unless there is a reasonable assurance that the Group will comply with the grant’s
conditions and that the grant will be received. Government grants whose primary condition is that the Group’s purchases,
constructs or otherwise acquires long‐term assets are deducted in calculating the carrying amount of the asset. The grant
is recognized in profit or loss over the life of a depreciable asset as a reduction to depreciation expense.

Other government grants that are intended to compensate the Group for expenses incurred are deducted from related
costs over the periods in which the Group recognizes the related costs as expenses. Government grants, which are
intended to give immediate financial support to the Group with no future related costs, are recognized as government
grant income in profit or loss.

(17) Employee benefits

Short‐term employee benefits
Short‐term employee benefits are employee benefits that are due to be settled within 12 months after the end of the
period in which the employees render the related service. When an employee has rendered service to the Group during
an accounting period, the Group recognizes the undiscounted amount of short‐term employee benefits expected to be
paid in exchange for that service.

Other long‐term employee benefits
Other long‐term employee benefits include employee benefits that are settled beyond 12 months after the end of the
period in which the employees render the related service and are calculated at the present value of the amount of future
benefit that employees have earned in return for their service in the current and prior periods, less the fair value of any
related assets. The present value is determined by discounting the expected future cash flows using the interest rate of
high‐quality corporate bonds with similar maturing as the expected benefit payment date. Any actuarial gains and losses
are recognized in profit or loss in the period in which they arise.

26



(17) Employee benefits, Continued

Retirement benefits
The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount and
deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a
qualified actuary using the projected unit credit method.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other
comprehensive income (loss). The Group determines the net interest expense (income) on the net defined benefit
liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the
beginning of the annual period to the then‐net defined benefit liability (asset), taking into account any changes in the
net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest
expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and
losses on the settlement of a defined benefit plan when the settlement occurs.

In addition, employees of KUS are eligible to participate, upon meeting certain service requirement, in the profit sharing
retirement plan under the Internal Revenue Code 401(k) in the United States. KUS and employees of KUS paid each
contribution during the period in which the employees render the related service.

(18) Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event. It is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching
the best estimate of a provision. Where the effect of the time value of money is significant, provisions are determined
at the present value of the expected future cash flows.

Where some or all of the expenditures required to settle a provision are expected to be reimbursed by another party,
the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received
if the entity settles the obligation. The reimbursement is treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no
longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the
provision is reversed.

A provision for warranties is recognized when the underlying products or services are sold. The provision is based on
historical warranty data and a weighted‐average of all possible outcomes against their associated probabilities.

A provision shall be used only for expenditures for which the provision was originally recognized.

(19) Emission rights

The Group accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on
Allocation and Trading of Greenhouse Gas Emission.

27



(19) Emission rights, Continued

Greenhouse gases emission right
Greenhouse gases emission right consists of emission allowances that are allocated from the government free of charge
or purchased from the market. The cost includes any cost directly attributable to bringing the asset and condition
necessary for it to be capable of operating in the manner intended by management.

Emission right held for the purpose of performing the obligation is classified as intangible asset. The intangible asset is
initially measured at cost and after initial recognition, is carried at cost, less accumulated impairment losses.

The Group derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to
government in which the future economic benefits are no longer expected to be probable.

Emission liability
Emission liability is a present obligation of submitting emission rights to the government with regard to emission of
greenhouse gas. Emission liability is recognized when it is probable that outflows of resources will be required to settle
the obligation and the costs required to perform the obligation are reliably estimable. Emission liability is an amount of
estimated obligations for emission rights to be submitted to the government for the performing period. The emission
liability is measured based on the expected quantity of emission for the performing period in excess of emission
allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The
Group derecognizes emission liability when it submits emission rights to the government.

The Group recognized the emission liability of W119,109 million as of December 31, 2021

(20) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of the Group at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to
the functional currency using the reporting date’s exchange rate. Non‐monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the
date that the fair value was determined. Non‐monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on a
financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges,
which are recognized in other comprehensive income. Also, foreign currency differences arising on settlement of
monetary assets and liabilities are recognized in profit or loss.

(21) Equity capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and
share options are recognized as a deduction from equity, net of any tax effects.

When the Group repurchases its share capital, the amount of the consideration paid is recognized as a deduction from
equity and classified as treasury shares. The profits or losses from the purchase, disposal, reissue, or retirement of
treasury shares are not recognized in profit or loss. If the Group or an entity in the Group acquires and retains treasury
shares, the consideration paid or received is directly recognized in equity.
28



(22) Revenue from contracts with customers

The Group is engaged in the business of producing and selling passenger cars, recreational vehicles and other commercial
vehicles (hereinafter referred to as "vehicles") and its parts. In a contract with a customer, the Group recognizes revenue
when the control of the goods or services is transferred to the customer, at an amount that reflects the consideration
expected to be paid for the goods or services. Since the Group controls the goods or services at the stage prior to the
delivery of the contracted goods or services to the customers, the Group operates on a contractual principle with all
customers.

There are other commitments other than the provision of goods on the sales contract of the vehicles and its parts with
the customer by the Group, and the Group considers whether the obligations under these other commitments are
separate performance obligations that requires certain portion of the transaction amount to be allocated. Accordingly,
the Group is required to separately identify the provision of service type warranties that exists in the sales contract of
the vehicles and its parts, the provision of the additional service goods and services, and the provision of points for the
customer loyalty points program from the provision of the vehicles and its parts as separate performance obligations.

The major performance obligations of the Group for contracts with customers are as follows:

① Provision of vehicles and its parts
Revenue of the vehicles and its parts is recognized at the time of delivery of the asset, at which control of the asset is
transferred to the customer, the general collecting terms being within 90 days of delivery.

When calculating the transaction price allocated to the obligation to provide vehicles and its parts, the Group considers
the following:

A. Variable consideration
The transaction price allocated to the performance obligation to deliver the vehicles and its parts is based on the
individual selling price of the goods and takes into account the estimated value of the transaction discount and the
variable consideration due to return or refund obligations. The Group shall include in the transaction price an amount of
variable consideration estimated only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is
subsequently resolved.

B. Significant financing component
The Group is receiving short‐term advances from certain customers, depending on the terms in the contract with
customers. Applying the simplified approach of KIFRS 1115, if it is expected that the duration between the transfer of
the goods to the customer and the payment of the consideration by the customer will be within one year at the time the
contract is initiated, the Group does not reflect the impact of significant financing components in calculating the
transaction price.

C. Provision of assurance type warranties
The Group provides warranties for repairs of defective products at the point of sale of vehicles and its parts in accordance
with relevant laws and regulations. The Group determines that the majority of these guarantees are assurance type
warranties as per KIFRS 1115, and accordingly, it accounts for the warranties in accordance with KIFRS 1037 Provisions,
contingent liabilities and contingent assets (Note 16).

29



(22) Revenue from contracts with customers, Continued

② Provision of service type warranties
In addition to the defects repair warranty at the time of the sale of the vehicles and its parts, the Group provides different
additional warranties depending on the type of goods. The Group distinguishes these additional warranties as separate
performance obligations under KIFRS 1115 and allocates a portion of the transaction price received in providing the
goods to the performance obligations, and revenues are recognized over the period when the performance obligation is
fulfilled.

When the Group calculates the transaction price allocated to the obligation to provide the service type warranty, the
Group considers the following:

A. Estimating selling price of each service
In the case of a service type warranty provided by the Group, the individual selling price is not directly observed, and the
Group considers all available information to a reasonable extent and estimates its individual selling prices in a consistent
manner.

The Group generally receives the total transaction amount from the customer, including the consideration of the service
type warranty, within 90 days from the delivery of vehicles and its parts. In general, as there is a significant difference
between the point at which the Group receives the consideration for the provision of the service type warranty and the
time at which the obligation is actually fulfilled, the Group reviews whether significant financing components exist. The
Group determines that the difference arises due to a reason other than providing financial services to the customer or
the Group, and therefore, there is no significant financing component in the transaction price.

③ Provision of additional goods or services
The Group pledges to provide customers with additional goods and services in addition to the sale of the vehicles and its
parts. The Group classifies these additional goods and services as separate performance obligations under KIFRS 1115
and allocates a portion of the transaction proceeds received in providing the vehicles and its parts to the performance
obligation; revenues are recognized over the period when the performance obligation is satisfied.

When the Group calculates the transaction price allocated to the performance obligation, the Group considers the
following:

A. Estimating selling price of each service
In case of additional goods and services provided by the Group, the individual selling prices are not directly observed,
and the Group considers all available information to a reasonable extent and estimates its individual selling prices in a
consistent manner.

The Group generally receives the total transaction amount from the customer, including the consideration for the
provision of additional goods and services within 90 days from the delivery of the vehicles and its parts. In general, as
there is a significant difference between the point when the Group receives the consideration for the provision of
additional goods and services and when it actually performs the obligation, the Group considers the existence of
significant financing components. The Group determines that the difference arises due to a reason other than providing
financial services to the customer or the Group, and therefore, there is no significant financing components in the
transaction price.

30



(22) Revenue from contracts with customers, Continued

④ Customer loyalty points program
The Group operates 'Kia Members Point', a customer loyalty point program, and customers are able to earn points for
use in future purchases of the Group's goods under this program. Customer loyalty point program are a separate
performance obligation because they provide significant rights to the customer. Accordingly, part of the sales proceeds
of the vehicles are distributed to the points based on the relative individual selling prices and are recognized as contract
liabilities until the point is used. Revenue is recognized when customers use points. When estimating the individual
selling price of a point, the Group considers the possibility of the customer using the points in the future. The Group
makes quarterly adjustments to the estimates of points to be used in the future, and adjustments to contract liabilities
are reflected in revenue.

(23) Finance income and finance costs

Finance income comprises interest income from the fair value measurement of financial assets at fair value through
profit or loss and financial assets measured at amortized cost, income from disposal of financial assets at fair value
through profit or loss and financial assets measured at amortized cost, changes in fair value of financial assets at fair
value through profit or loss, gain on hedging instruments recognized in profit or loss, and dividend income from entities
excluding joint ventures and associates. Interest income is recognized as it accrues in profit or loss, using the effective
interest method. Dividend income is recognized in profit on the date that the Group’s right to receive payment is
established.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, losses from the
disposal of financial assets at fair value through profit or loss and financial assets measured at amortized cost, changes
in fair value of financial assets, and loss on the hedging instrument recognized in profit or loss. Interest expense of
borrowings is recognized as it accrues in profit or loss, using the effective interest method.

(24) Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss
except to the extent that it relates to a business combination, or items recognized directly in equity or in other
comprehensive income.

Current tax
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or
substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years.
The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding
the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods,
and non‐taxable or non‐deductible items from the accounting profit. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group
operates and generates taxable income.

31



(24) Income taxes, Continued

Deferred tax
Deferred tax is recognized, using the asset‐liability method, in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred
tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible
temporary differences to the extent that it is probable that taxable profit will be available against which they can be
utilized. However, deferred tax is not recognized for the following temporary differences: taxable temporary differences
arising on the initial recognition of goodwill, or the initial recognition of assets or liabilities in a transaction that is not a
business combination ,and that affects neither accounting profit or loss nor taxable income.

The Group recognizes a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, except to the extent that the Group is able to control the timing
of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.

The Group recognizes a deferred tax asset for all deductible temporary differences arising from investments in
subsidiaries, joint ventures and associates, to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and reduces the carrying
amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of
part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset
is realized or the liability is settled, based on tax laws that have been enacted or substantively enacted by the end of the
reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that
would follow from the manner in which the Group expects, at the end of the reporting period to recover or settle the
carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset the related current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority and they are intended to settle
current tax liabilities and assets on a net basis.

(25) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted‐average number of
ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the
profit or loss attributable to ordinary shareholders and the weighted‐average number of ordinary shares outstanding,
adjusted for own shares held, for the effects of all potential dilutive ordinary shares.

(26) Operating segments

The Group distinguishes segments based on internal reporting data reviewed periodically by top management to make
decisions about the resources to be allocated to the segment and to assess the performance of the segment. As described
in Note 4, the Group is a single reporting entity.

(27) Cash dividend
The Group recognizes dividends payable after approval of distribution to pay cash dividends. The distribution to
shareholders requires approval by shareholders. Corresponding amounts are directly reflected in equity.

32



(28) Leases

A. Right‐of‐use asset
At the commencement date, the Group recognizes a right‐of‐use asset. The right‐of‐use asset is measured at cost, less
any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of a lease
liability. The cost of the right‐of‐use asset includes the amount of the initial measurement of the lease liability recognized,
initial direct costs incurred, and so forth. If it is not reasonably estimable that the lessee will obtain ownership of the
underlying asset at the end of the lease term, the right‐of‐use asset is depreciated on a straight‐line basis over the shorter
of the period of useful life and lease term.

B. Lease liability
At the commencement date, the Group measures a lease liability at the present value of the lease payments to be made
over the lease term. The lease payments include fixed payments (including in‐substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under
residual value guarantees. In calculating the present value of lease payments, the Group uses the incremental borrowing
rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made.

In addition, the carrying amount of lease liabilities is remeasured if there is a change in underlying assets, a change in
the fixed lease payments (including in‐substance fixed lease payments), a change in the lease payment (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease payments), or a change in the
lease term.

C. Short‐term leases and leases of low‐value assets

The Group applies a lease recognition exemption to: (a) leases that, at the commencement date, have a lease term of
12 months or less and do not contain a purchase option and (b) leases for which the underlying asset is of low value. The
lease payments on short‐term leases and leases of low‐value assets are recognized as an expense on a straight‐line basis
over the lease term.

(29) New and amended standards that have been applied

Newly applied KIFRS and related changes in accounting policies during the current period are as follows:

‐ Amendments to KIFRS 1109, KIFRS 1039, KIFRS 1107, KIFRS 1104 and KIFRS 1116 : Interest Rate Benchmark Reform
(Step 2)

The amendments provide temporary reliefs for responding the case where the replacement of interbank offered rates
(IBORs) with alternative, nearly risk‐free interest rates (RFRs) makes the impact on the financial reporting.
The amendments include the following practical expedients:
• In case of changes to contracts or changes to cash flows due directly to the Reform, treat them as changes to a floating
interest rate, akin to a movement in the market rate of interest;
• Permit changes required by the IBOR Reform to be made to hedge designations and hedge documentation without
discontinuing hedge relationships; and
• Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR
instrument is designated as a hedge of a risk component.
These amendments had no material impact on the consolidated financial statements of the Group.
33



(29) New and amended standards that have been applied, Continued

‐ Amendments to KIFRS 1116 Covid‐19 Related Rent Concessions beyond June 30, 2021

On May 28, 2020, the IASB issued Covid‐19‐Related Rent Concessions ‐ amendment to KIFRS 1116 Leases. The
amendments provide relief to lessees from applying KIFRS 1116 guidance on lease modification accounting for rent
concessions arising as a direct consequence of the Covid‐19 pandemic. As a practical expedient, a lessee may elect not
to assess whether a Covid‐19 related rent concession from a lessor is a lease modification. A lessee that makes this
election accounts for any change in lease payments resulting from the Covid‐19 related rent concession the same way it
would account for the change under KIFRS 1116 if the change were not a lease modification.

The amendment was intended to apply until June 30, 2021, but as the impact of the Covid‐19 pandemic is continuing,
on March 31, 2021, the IASB extended the period of application of the practical expedient to June 30, 2022.The
amendment applies to annual reporting periods beginning on or after April 1, 2021. The Group has not received Covid‐
19‐related rent concessions, but plans to apply the practical expedient if it becomes applicable within allowed period of
application. This amendment had no material impact on the consolidated financial statements of the Group.

(30) Standard issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of
the Group’s financial statements are disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.

‐ KIFRS 1117 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance
contracts covering recognition and measurement, presentation and disclosure. Once effective, KIFRS 1117 will replace
KIFRS 1104 Insurance Contracts that was issued in 2007. KIFRS 1117 applies to all types of insurance contracts (i.e., life,
non‐life, direct insurance and re‐insurance), regardless of the type of entities that issue them, as well as to certain
guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply. The
overall objective of KIFRS 1117 is to provide an accounting model for insurance contracts that is more useful and
consistent for insurers. In contrast to the requirements in KIFRS 1104, which are largely based on grandfathering previous
local accounting policies, KIFRS 1117 provides a comprehensive model for insurance contracts, covering all relevant
accounting aspects. The core of KIFRS 1117 is the general model, supplemented by:

• A specific adaptation for contracts with direct participation features (the variable fee approach)
• A simplified approach (the premium allocation approach) mainly for short‐duration contracts
KIFRS 1117 is effective for reporting periods beginning on or after January 1, 2023, with comparative figures required.
Early application is permitted, provided the entity also applies KIFRS 1109 and KIFRS 1115 on or before the date it first
applies KIFRS 1117. This standard is not applicable to the Group.

‐ Amendments to KIFRS 1001: Classification of Liabilities as Current or Non‐current
The amendments to paragraphs 69 to 76 of KIFRS 1001 specify the requirements for classifying liabilities as current or
non‐current. The amendments clarify:

• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification

34



(30) Standard issued but not yet effective, Continued

The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be applied
retrospectively. The Group is currently assessing the impact the amendments will have on current practice and whether
existing loan agreements may require renegotiation.

‐ Reference to the Conceptual Framework – Amendments to KIFRS 1103
The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial
Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018
without significantly changing its requirements.
The Board also added an exception to the recognition principle of KIFRS 1103 to avoid the issue of potential ‘day 2’ gains
or losses arising for liabilities and contingent liabilities that would be within the scope of KIFRS 1037 or KIFRS 2121 Levies,
if incurred separately. At the same time, the Board decided to clarify existing guidance in KIFRS 1103 for contingent
assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of
Financial Statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2022
and apply prospectively.

‐ Property, Plant and Equipment: Proceeds before Intended Use – Amendments to KIFRS 1016
The amendment prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds
from selling items produced while bringing that asset to the location and condition necessary for it to be capable of
operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items,
and the costs of producing those items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied
retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest
period presented when the entity first applies the amendment. The amendments are not expected to have a material
impact on the Group.
‐ Onerous Contracts – Costs of Fulfilling a Contract – Amendments to KIFRS 1037
The amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss‐
making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide
goods or services include both incremental costs and an allocation of costs directly related to contract activities. General
and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the
counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after
January 1, 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations
at the beginning of the annual reporting period in which it first applies the amendments.
‐ Definition of Accounting Estimates ‐ Amendments to KIFRS 1008

The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies
and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop
accounting estimates. The amendments are effective for annual reporting periods beginning on or after January 1, 2023
and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that
period. Earlier application is permitted as long as this fact is disclosed. The amendments are not expected to have a
material impact on the Group.
35



‐ Disclosure of Accounting Policies ‐ Amendments to KIFRS 1001 and KIFRS Practice Statement 2

The amendments provide guidance and examples to help entities apply materiality judgments to accounting policy
disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing
the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their
‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions
about accounting policy disclosures. The amendments to KIFRS 1001 are applicable for annual periods beginning on or
after January 1, 2023 with earlier application permitted. The amendments are not expected to have a material impact
on the Group.

‐ Amendments to KIFRS 1012 Income Taxes – Narrowing the scope of the initial recognition exception of deferred
taxes

The amendments narrowed the scope of the initial recognition exemption so that it no longer applies to transactions
that, on initial recognition, give rise to equal taxable and deductible temporary difference, thus to resolve accounting
diversity in the recognizing of deferred tax assets and liabilities. Paragraphs 15 and 24 (initial recognition exemption of
deferred taxes) of KIFRS 1012 were amended to include an additional condition (3) where a deferred tax asset and
liability shall be recognized for a temporary difference that arises on initial recognition of an asset or liability in a single
transaction if that transaction give rise to equal amounts of taxable and deductible temporary differences. The
amendments are effective for annual reporting periods beginning on or after January 1, 2023 with earlier adoption
permitted. The amendments are not expected to have a material impact on the Group.

‐ KIFRS 1037 ‐ Onerous Contracts – Costs of Fulfilling a Contract

The amendments are intended to specify which costs an entity needs to include when assessing whether a contract is
onerous or loss‐making. The amendments apply a “directly related cost approach”. The costs that relate directly to a
contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract
activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly
chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods
beginning on or after January 1, 2022. The Group will apply these amendments to contracts for which it has not yet
fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

‐ KIFRS 1101 First‐time Adoption of International Financial Reporting Standards – Subsidiary as a first‐time adopter

The amendment permits a subsidiary that elects to apply paragraph D16(1) of KIFRS 1101 to measure cumulative
translation differences using the amounts reported by the parent, based on the parent’s date of transition to KIFRS. This
amendment is also applied to an associate or joint venture that elects to apply paragraph D16(1) of KIFRS 1101.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption
permitted.

36




‐ KIFRS 1109 Financial Instruments – Fees in the ‘10 per cent’ test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified
financial liability are substantially different from the terms of the original financial liability. These fees include only those
paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender
on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after
the beginning of the annual reporting period in which the entity first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption
permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first applies the amendment. The amendments are not
expected to have a material impact on the consolidated financial statements of the Group.

4. Geographic and Segment Information

The Group is engaged in manufacturing and sales of vehicles and parts, leasing of vehicles and rendering vehicle
maintenance services. Due to the insignificant portion of leasing income and maintenance services compared to total
sales, the revenue from leasing and maintenance services are not disclosed.

(1) The following table provides information of sales and non‐current assets by geographic locations where the Group’s
entities are located as of and for the year ended December 31, 2021:

Consolidation Consolidated
Domestic America Europe Other adjustment amount
Total sales ￦ 40,979,570 ￦ 33,636,168 ￦ 36,014,993 ￦ 5,464,531 ￦ (46,232,896) ￦ 69,862,366
Intercompany sales (19,872,394) (9,835,350) (16,208,293) (316,859) 46,232,896 ‐
Net sales 21,107,176 23,800,818 19,806,700 5,147,672 ‐ 69,862,366
Property, plant and
equipment,
intangible assets
and other 13,970,202 1,845,020 1,266,480 1,360,464 (3,586) 18,438,580

(2) The following table provides information of sales and non‐current assets by geographic locations where the Group’s
entities are located as of and for the year ended December 31, 2020:

Consolidation Consolidated
Domestic America Europe Other adjustment amount
Total sales ￦ 34,362,327 ￦ 28,755,395 ￦ 29,260,704 ￦ 4,302,137 ￦ (37,512,467) ￦ 59,168,096
Intercompany sales (15,371,485) (8,415,115) (13,406,777) (319,090) 37,512,467 ‐
Net sales 18,990,842 20,340,280 15,853,927 3,983,047 ‐ 59,168,096
Property, plant and
equipment,
intangible assets
and other 13,935,381 1,839,878 1,213,751 1,246,135 32,553 18,267,698

37


5. Cash, Cash Equivalents and Restricted Financial Instrument

(1) Cash and cash equivalents as of December 31, 2021 and 2020, are summarized as follows:

December 31, 2021 December 31, 2020
Cash on hand ￦ 100 ￦ 102
Deposits with financial institutions 11,533,610 10,160,595
￦ 11,533,710 ￦ 10,160,697

(2) Financial instruments which are restricted in use as of December 31, 2021 and 2020, are summarized as follows:

December 31, 2021 December 31, 2020 Description
Cash and cash equivalents 7 ‐ Escrow account
Short‐term security deposit and
Short‐term financial instruments ￦ 284 ￦ 5,326 deposit for transactions
Long term financial instruments 78,000 78,000 Win‐Win cooperation deposits
20,000 20,000 Win‐Win mold facility fund
33,200 33,200 Win‐Win loan fund
9 9 Deposit for a checking account
3,455 3,122 Long‐term security deposit
￦ 134,955 ￦ 139,657

6. Other Financial Assets

(1) Other current financial assets as of December 31, 2021 and 2020, are summarized as follows:

Accrued income ￦ 25,882 ￦ 44,410
Current derivatives assets 10,956 ‐
Deposits provided 115,605 119,719
Debt securities 1,472,074 1,642,290
Others 8 8
￦ 1,624,525 ￦ 1,806,427

(2) Other non‐current financial assets as of December 31, 2021 and 2020, are summarized as follows:

Long‐term accounts and notes receivable ‐ other ￦ 230,474 ￦ 193,217
Non‐current derivatives assets 97,782 ‐
Deposits provided 66,035 54,526
Equity securities 691,628 336,619
Debt securities 61,826 126,218
￦ 1,147,745 ￦ 710,580

38


6. Other Financial Assets, Continued

(3) Equity securities as of December 31, 2021 and 2020, are summarized as follows.

Percentage of Acquisition Carrying Carrying
Ownership (%) cost amount amount
Marketable securities(FVOCI):
Hyundai WIA Corporation 13.44 ￦ 237,510 ￦ 291,955 ￦ 195,489
Hyundai Motor Securities Co., Ltd. 4.54 29,574 17,765 18,124
SeAH Besteel Corp.(*1) ‐ ‐ ‐ 19
Grab Holdings INC(*2) 0.42 163,801 134,063 ‐
Others 95,392 52,403 ‐
526,277 496,186 213,632
Non‐marketable securities(FVOCI):
ANI Technologies Pvt. Ltd. 0.9 69,736 74,321 69,736
Others 103,644 121,121 53,251
173,380 195,442 122,987
￦ 699,657 ￦ 691,628 ￦ 336,619

(*1) The Group has sold all of securities during the year ended December 31, 2021.
(*2) The Group reclassified it from debt securities to marketable securities as the stocks of Grab Holdings INC was
converted to common shares during the year ended December 31, 2021.

(4) Debt securities as of December 31, 2021 and 2020, are summarized as follows:

Acquisition Carrying Carrying

Cost amount amount
Debt securities (AC):
National housing bond and others ￦ 22,332 ￦ 22,332 ￦ 19,909
Debt securities (FVPL):
Grab Holdings INC.(*1) ‐ ‐ 85,134
Rimac Automobili d.o.o. 21,176 21,176 21,176
Industrial finance bond and others 1,472,074 1,472,074 1,642,289
others 18,318 18,318 ‐
￦ 1,533,900 ￦ 1,533,900 ￦ 1,768,508
(*1) The Group reclassified it from debt securities to marketable securities as the stocks of Grab Holdings INC was
converted to common shares during the year ended December 31, 2021.

39


6. Other Financial Assets, Continued

(5) Changes in accumulated balance of valuation gain or loss recognized in other comprehensive income from equity
securities for the years ended December 31, 2021 and 2020, are as follows:

2021 2020
Balance on January 1 ￦ (47,028) ￦ (54,127)
Changes in the fair value 34,871 104,394
Reclassification (475) (97,295)
Balance on December 31 before taxes (12,632) (47,028)
Income tax effect 2,999 11,909
Balance on December 31 after taxes ￦ (9,633) ￦ (35,119)

7. Inventories

Inventories as of December 31, 2021 and 2020, are summarized as follows:

Finished goods ￦ 4,648,272 ￦ 5,324,265
Merchandise 14,500 13,691
Semi‐finished goods 404,034 303,130
Work‐in‐process 284,370 216,972
Raw materials 948,166 660,422
Supplies 209,637 203,266
Materials‐in‐transit 578,706 372,213
￦ 7,087,685 ￦ 7,093,959

The amount of valuation allowance on inventories is ￦59,214 million and ￦81,829 million as of December 31, 2021

and 2020, respectively.

40


8. Investments in Joint Ventures and Associates

(1) Details of investments in joint ventures and associates as of December 31, 2021 and 2020, are summarized as follows:

Percentage of Carrying Percentage of Carrying
Company Location ownership(%) amount ownership(%) amount
Hyundai Mobis Co., Ltd.(*1,2) Korea 17.37 ￦ 6,038,669 17.28 ￦ 5,608,117
Hyundai Steel Co., Ltd.(*1) ＂ 17.27 2,944,196 17.27 2,734,788
Hyundai Engineering & Construction Co.,
Ltd.(*1) ＂ 5.24 738,376 5.24 708,869
Hyundai Card Co., Ltd.(*1) ＂ 11.48 383,819 11.48 362,344
Hyundai Capital Services, Inc.(*3) ＂ 40.10 2,030,982 20.10 912,841
Hyundai Transys Inc. ＂ 40.43 1,065,748 40.43 991,352
EUKOR Car Carriers, Inc.(*1) ＂ 8.00 126,826 8.00 100,160
Hyundai Engineering Co., Ltd.(*1) ＂ 9.35 342,746 9.35 329,395
Hyundai Autoever Corporation(*1,4) ＂ 16.24 206,235 19.05 105,734
Haevichi Hotel&Resorts Co., Ltd. ＂ 23.24 40,687 23.24 40,135
Hyundai Autron Co., Ltd.(*4) ＂ ‐ ‐ 20.00 30,767
Beijing Transys Transmission Co., Ltd. China 24.08 48,297 24.08 40,515
China Millennium Corporations 30.30 53,677 30.30 44,369
Hyundai Motor Group China, Ltd. ＂ 30.00 80,282 30.00 58,002
Hyundai Transys (Shandong) Co., Ltd. ＂ 25.00 60,387 25.00 64,457
Dongfeng Yueda Kia Motors Co., Ltd.(*5,6) ＂ 50.00 ‐ 50.00 163,579
Hyundai Motor Manufacturing Rus LLC Russia 30.00 307,599 30.00 236,151
Hyundai Capital America, Inc. U.S.A 20.00 1,312,373 20.00 1,004,743
United
Hyundai Capital Services UK Ltd.(*1,5) Kingdom 10.00 49,107 10.00 36,513
Hyundai Capital Canada, Inc. Canada 30.00 132,603 30.00 66,923
Motional AD LLC (*1,5) U.S.A 14.00 566,332 14.00 581,252
Supernal LLC(*7) “ 22.22 45,447 ‐ ‐
Hyundai Wia Automotive Engine
(Shandong) Co., Ltd. (WAE) China 25.70 223,727 25.70 217,406
Hyundai Motor Group Innovation Center in
Singapore PTE. LTD. Singapore 30.00 57,464 30.00 37,777
Others ‐ 149,214 ‐ 137,371
￦ 17,004,793 ￦ 14,613,560

(*1) Although the Group’s ownership in the investee is below 20%, the Group has significant influence over the
investee’s financial and operating policy decisions, etc. In this regard, the Company categorizes the investee as an
associate.
(*2) Due to the retirement of Hyundai Mobis Co., Ltd.’s treasury stock, the percentage of ownership increased during
the year ended December 31, 2021.
(*3) The Group made additional capital contribution of ￦872,277 million during the year ended December 31, 2021.
(*4) Hyundai Autoever Corporation merged with Hyundai Autron Co., Ltd. during the year ended December 31, 2021. As
a result, the Group received 0.1309696 shares of Hyundai Autoever Corporation per common share of Hyundai
Autron Co., Ltd.
(*5) The Group has classified the investee as a joint venture since the Group holds the rights to net assets of the joint
venture under the joint venture agreement. In addition, the Group is in charge of providing technical assistance and
research and development to a joint venture, Dongfeng Yueda Kia Motors Co., Ltd., in accordance with the joint
venture agreement.
41


8. Investments in Joint Ventures and Associates, Continued

(*6) The application of equity method was suspended due to losses exceeding the amount of investment held by the
Group.
(*7) It was newly acquired during the year ended December 31, 2021.

(2) Fair value of marketable securities of associates as of December 31, 2021 and 2020, are summarized as follows:

Company December 31, 2021 December 31, 2020
Hyundai Mobis Co., Ltd. ￦ 4,180,690 ￦ 4,197,117
Hyundai Steel Co., Ltd. 945,016 912,747
Hyundai Engineering & Construction Co., Ltd. 259,226 218,403
Hyundai Autoever Corporation 614,642 494,000

(3) Changes in investments in joint ventures and associates for the year ended December 31, 2021, are summarized as
follows:

Share of
Beginning Acquisition profit or Changes in Dividends Ending
Company balance (Disposal) loss equity received Others balance
Hyundai Mobis Co., Ltd. ￦ 5,608,117 ￦ ‐ ￦ 390,142 ￦ 134,286 ￦ (82,135) ￦ (11,741) ￦ 6,038,669
Hyundai Steel Co., Ltd. 2,734,788 ‐ 255,955 (35,156) (11,525) 134 2,944,196
Hyundai Engineering & Construction
Co., Ltd. 708,869 ‐ 19,491 13,599 (3,499) (84) 738,376
Hyundai Card Co., Ltd. 362,344 ‐ 34,451 3,621 (16,838) 241 383,819
Hyundai Capital Services, Inc. 912,841 872,277 237,421 26,887 (18,444) ‐ 2,030,982
Hyundai Transys Inc. 991,352 ‐ 35,569 21,222 ‐ 17,605 1,065,748
EUKOR Car Carriers, Inc. 100,160 ‐ 14,971 11,804 ‐ (109) 126,826
Hyundai Engineering Co., Ltd. 329,395 ‐ 24,753 (766) (10,650) 14 342,746
Hyundai Autoever Corporation 105,734 33,322 69,140 (712) (3,000) 1,751 206,235
Haevichi Hotel&Resorts Co., Ltd. 40,135 ‐ 411 (7) ‐ 148 40,687
Hyundai Autron Co., Ltd. 30,767 (33,322) 2,611 ‐ ‐ (56) ‐
Beijing Transys Transmission Co., Ltd. 40,515 ‐ 2,812 4,830 ‐ 140 48,297
China Millennium Corporations 44,369 ‐ 4,021 5,287 ‐ ‐ 53,677
Hyundai Motor Group China, Ltd. 58,002 15,214 229 6,836 ‐ 1 80,282
Hyundai Transys (Shandong) Co., Ltd. 64,457 ‐ (11,072) 7,002 ‐ ‐ 60,387
Dongfeng Yueda Kia Motors Co., Ltd. 163,579 ‐ (163,579) ‐ ‐ ‐ ‐
Hyundai Motor Manufacturing Rus LLC 236,151 ‐ 51,840 19,608 ‐ ‐ 307,599
Hyundai Capital America, Inc. 1,004,743 ‐ 210,050 ‐ ‐ 97,580 1,312,373
Hyundai Capital Services UK Ltd. 36,513 ‐ 9,533 ‐ ‐ 3,061 49,107
Hyundai Capital Canada, Inc. 66,923 41,204 15,066 9,410 ‐ ‐ 132,603
Motional AD LLC 581,252 ‐ (69,120) 54,200 ‐ ‐ 566,332
Supernal LLC ‐ 55,835 (11,996) 1,607 ‐ 1 45,447
(Shandong) Co., Ltd. (WAE) 217,406 ‐ (12,047) 18,368 ‐ ‐ 223,727
Hyundai Motor Group Innovation
Center in Singapore PTE. LTD 37,777 19,652 (2,475) 2,511 ‐ (1) 57,464
Others(*1) 137,371 10,284 2,557 455 (2,487) 1,034 149,214
￦ 14,613,560 ￦ 1,014,466 ￦1,110,734 ￦ 304892 ￦ (148,578) ￦ 109,719 ￦ 17,004,793

(*1) During the year ended December 31, 2021, the Group lost significant influence on ARRIVAL S.A.R.L.. Consequently,
the shares were reclassified from investments in associate to financial assets measured at fair value through other
comprehensive income, and the Group recognized gain on disposal of ￦57,004 million. In addition, the Group
recognized in other gain on disposal of ￦441 million.
42



Changes in investments in joint ventures and associates for the year ended December 31, 2020, are summarized as
follows:

Share of
Beginning Acquisition profit or Changes in Dividends Ending
Company balance (Disposal) loss equity received Others (*1) balance
Hyundai Mobis Co., Ltd. ￦ 5,435,344 ￦ ‐ ￦ 282,391 ￦ (49,638) ￦ (49,281) ￦ (10,699) ￦ 5,608,117
Hyundai Steel Co., Ltd. 2,767,215 ‐ (64,651) 54,738 (17,287) (5,227) 2,734,788
Hyundai Engineering & Construction
Co., Ltd. 714,810 ‐ 819 (483) (3,499) (2,778) 708,869
Hyundai Card Co., Ltd. 346,879 ‐ 26,456 560 (11,551) ‐ 362,344
Hyundai Capital Services, Inc. 855,555 ‐ 70,953 4,318 (17,985) ‐ 912,841
Hyundai Transys Inc. 994,163 ‐ 2,679 (7,157) ‐ 1,667 991,352
EUKOR Car Carriers, Inc. 115,300 ‐ (8,867) (6,273) ‐ ‐ 100,160
Hyundai Engineering Co., Ltd. 321,352 ‐ 18,452 (594) (10,650) 835 329,395
Hyundai Autoever Corporation. 97,052 ‐ 11,232 (674) (2,840) 964 105,734
Haevichi Hotel&Resorts Co., Ltd. 41,539 ‐ (1,277) 10 ‐ (137) 40,135
Hyundai Autron Co., Ltd. 27,543 ‐ 3,187 ‐ ‐ 37 30,767
Beijing Transys Transmission Co., Ltd. 45,291 ‐ (5,244) 453 ‐ 15 40,515
China Millennium Corporations 41,049 ‐ 3,120 231 ‐ (31) 44,369
Hyundai Motor Group China, Ltd. 58,816 ‐ 1,129 (1,943) ‐ ‐ 58,002
Hyundai Transys (Shandong) Co., Ltd. 62,692 ‐ 4,414 (2,649) ‐ ‐ 64,457
Dongfeng Yueda Kia Motors Co., Ltd. 554,499 ‐ (404,526) 13,606 ‐ ‐ 163,579
Hyundai Motor Manufacturing Rus LLC 264,167 ‐ 29,216 (57,232) ‐ ‐ 236,151
Hyundai Capital America, Inc. 968,185 ‐ 102,958 ‐ ‐ (66,400) 1,004,743
Hyundai Capital Services UK Ltd. 31,206 ‐ 6,178 ‐ ‐ (871) 36,513
Hyundai Capital Canada, Inc. 63,240 ‐ 6,215 (2,532) ‐ ‐ 66,923
Motional AD LLC ‐ 696,970 (37,446) (78,272) ‐ ‐ 581,252
(Shandong) Co., Ltd. (WAE) ‐ 62,762 9,555 (1,105) ‐ 146,194 217,406
Hyundai Motor Group Innovation
Center in Singapore PTE. LTD ‐ 37,777 ‐ ‐ ‐ ‐ 37,777
Others 110,596 26,389 4,456 (521) (2,756) (793) 137,371
￦ 13,916,493 ￦ 823,898 ￦ 61,399 ￦ (135,157) ￦ (115,849) ￦ 62,776 ￦ 14,613,560

43



(4) Financial information of joint ventures and associates as of and for the year ended December 31, 2021, is summarized
as follows:

Operating Total
Total Total profit Net income comprehensive
Company assets liabilities Sales (loss) (loss) income (loss)
Hyundai Mobis Co., Ltd. ￦ 51,482,537 ￦ 16,125,063 ￦ 41,702,184 ￦ 2,040,112 ￦ 2,362,474 ￦ 2,910,762
Hyundai Steel Co., Ltd. 37,031,392 18,770,988 22,849,921 2,447,503 1,505,155 1,603,849
Hyundai Engineering & Construction Co., Ltd. 19,646,707 10,210,797 18,065,534 753,503 549,501 717,604
Hyundai Card Co., Ltd. 21,644,783 18,016,428 2,738,381 406,724 314,162 345,723
Hyundai Capital Services, Inc. 34,923,979 29,718,462 3,445,976 482,334 431,387 431,387
Hyundai Transys Inc. 6,604,425 3,919,066 8,156,977 95,022 91,010 156,375
EUKOR Car Carriers, Inc. 3,690,429 2,109,849 1,894,623 229,287 191,261 330,875
Hyundai Engineering Co., Ltd. 6,186,108 2,495,903 7,355,145 364,649 248,081 240,973
Hyundai Autoever Corporation 2,346,123 970,301 2,070,382 96,106 71,368 85,016
Haevichi Hotel & Resorts Co., Ltd. 453,863 279,755 116,474 370 1,872 2,490
Beijing Transys Transmission Co., Ltd. 418,954 218,384 227,148 14,540 13,704 13,704
China Millennium Corporations 188,263 11,112 28,512 13,187 13,269 13,269
Hyundai Motor Group China, Ltd. 938,092 636,003 530,635 11,847 1,141 14,804
Hyundai Transys (Shandong) Co., Ltd. 851,339 562,571 739,548 32,604 (44,288) (44,288)
Dongfeng Yueda Kia Motors Co., Ltd.(*) 1,968,018 2,408,766 2,252,802 (789,502) (783,249) (783,249)
Hyundai Motor Manufacturing Rus LLC 1,931,470 959,020 3,178,717 153,866 172,149 172,149
Hyundai Capital America Inc. 59,230,349 52,672,107 1,828,252 1,234,938 1,050,250 1,050,250
Hyundai Capital Services UK Ltd.(*) 5,852,818 5,312,436 138,448 104,105 124,774 95,326
Hyundai Capital Canada, Inc. 4,642,638 4,200,629 30,098 (36,147) 50,220 58,027
Motional AD LLC 4,232,664 262,478 949 (527,319) (516,022) (521,047)
Hyundai Wia Automotive Engine (Shandong)
Co., Ltd. (WAE) 1,186,629 441,120 797,685 15,346 3,083 3,083
Singapore PTE. LTD 190,267 1,612 ‐ (8,695) (8,251) (8,251)
Superrnal LLC 304,944 155,376 ‐ (77,655) (77,655) (77,655)

(*) Additional financial information of joint ventures is summarized as follows:

Cash and cash Financial Interest Interest Income tax
Company equivalents liabilities Depreciation income expense benefit
Dongfeng Yueda Kia Motors
Co., Ltd. ￦ 133,796 ￦ 1,011,266 ￦ 308,571 ￦ 5,457 ￦ 37,399 ￦ (12,022)
Motional AD LLC 188,571 86,536 50,347 3,642 2,476 (10,756)

44



Financial information of joint ventures and associates as of and for the year ended December 31, 2020, is summarized
as follows:

Operating Total
Total Total profit Net income comprehensive
Company assets liabilities Sales (loss) (loss) income (loss)
Hyundai Mobis Co., Ltd. ￦ 48,233,728 ￦ 14,878,152 ￦ 36,626,504 ￦ 1,830,292 ￦ 1,554,301 ￦ 1,447,730
Hyundai Steel Co., Ltd. 34,846,161 18,149,080 18,023,398 73,032 (440,120) (466,713)
Hyundai Engineering & Construction Co., Ltd. 17,882,018 9,115,640 16,970,859 548,972 227,697 137,010
Hyundai Card Co., Ltd. 19,941,847 16,500,527 2,526,126 328,414 244,538 249,405
Hyundai Capital Services, Inc. 33,683,340 28,951,217 3,225,352 386,597 348,824 348,824
Hyundai Transys Inc. 5,948,554 3,513,935 7,256,405 53,950 (4,824) (24,998)
EUKOR Car Carriers, Inc. 3,167,471 1,915,466 1,292,324 3,270 (110,202) (187,892)
Hyundai Engineering Co., Ltd. 5,883,340 2,321,359 7,188,429 258,737 173,810 169,080
Hyundai Autoever Corporation 1,077,084 514,696 1,562,593 86,823 60,722 62,287
Haevichi Hotel & Resorts Co., Ltd. 450,767 279,035 91,765 (7,311) (5,679) (6,223)
Hyundai Autron Co., Ltd. 368,380 214,642 941,724 9,385 12,080 12,265
Beijing Transys Transmission Co., Ltd. 421,315 253,063 286,839 (3,439) (21,779) (21,779)
China Millennium Corporations 157,952 11,519 29,567 10,136 10,297 10,297
Hyundai Motor Group China, Ltd. 769,461 561,742 385,951 18,078 6,210 3,109
Hyundai Transys (Shandong) Co., Ltd. 796,020 495,498 684,330 3,025 6,338 6,338
Dongfeng Yueda Kia Motors Co., Ltd.(*) 2,692,870 2,350,918 3,588,706 (649,897) (835,521) (835,521)
Hyundai Motor Manufacturing Rus LLC 1,676,120 941,181 2,829,969 139,101 93,127 93,127
Hyundai Capital America Inc. 45,365,827 40,336,259 1,200,473 608,196 514,792 514,792
Hyundai Capital Services UK Ltd.(*) 3,747,574 3,747,574 285,730 82,357 77,345 61,778
Hyundai Capital Canada, Inc. 2,707,456 2,484,379 72,619 (32,450) 20,716 17,792
Motional AD LLC 4,300,304 147,074 645 (245,635) (231,530) (231,530)
(Shandong) Co., Ltd. (WAE) 1,261,961 554,090 994,131 1,255 2,144 2,144
Singapore PTE. LTD 122,285 5 ‐ (2,890) (2,890) (2,890)

(*) Additional financial information of joint ventures is summarized as follows:

Cash and cash Financial Interest Interest Income tax
Company equivalents liabilities Depreciation income expense benefit
Co., Ltd. ￦ 216,936 ￦ 715,657 ￦ 172,999 ￦ 6,190 ￦ 20,609 ￦ (14,927)
Motional AD LLC 1,577,353 70,726 43,646 1,739 4 (11,664)

45



(5) Financial information of significant joint ventures and associates reconciled from the proportionate share in investees'
net assets to the balance in the Group’s consolidated financial statements as of and for the year ended December
31, 2021, is summarized as follows:


Intra‐Group
Group’s share of transaction Carrying
Company net assets Goodwill and others amount
Hyundai Mobis Co., Ltd. ￦ 6,043,265 ￦ 29,519 ￦ (34,115) ￦ 6,038,669
Hyundai Steel Co., Ltd. 3,146,182 8,277 (210,263) 2,944,196
Hyundai Engineering &
Construction Co., Ltd. 379,163 284,338 74,875 738,376
Hyundai Transys Inc. 1,052,807 - 12,941 1,065,748
Co., Ltd. (220,374) - (5,751) ‐
Motional AD LLC 564,384 - 1,948 566,332

(6) Unrecognized share of loss in investments in associates due to discontinuing the use of the equity method as of and
for the year ended December 31, 2021, is summarized as follows:

2021 Accumulated
Kia Tigers Co., Ltd. ￦ 278 ￦ 2,728
ZF Automotive Korea Co., Ltd. (1,008) 1,730
Dongfeng Yueda Kia Motors Co., Ltd. 226,125 226,125

46


9. Property, Plant and Equipment

(1) Details of property, plant and equipment as of December 31, 2021 and 2020, are summarized as follows:

Accumulated Accumulated
Acquisition depreciation & Carrying Acquisition depreciation & Carrying
cost impairment loss amount cost impairment loss amount
Land ￦ 4,962,668 ￦ ‐ ￦ 4,962,668 ￦ 4,939,660 ￦ ‐ ￦ 4,939,660
Buildings 4,193,094 (1,689,608) 2,503,486 4,041,713 (1,532,430) 2,509,283
Structures 819,469 (491,203) 328,266 801,846 (466,003) 335,843
Machinery &
equipment 9,835,164 (5,963,643) 3,871,521 9,402,749 (5,378,904) 4,023,845
Dies, molds & tools 7,868,897 (5,784,560) 2,084,337 7,194,853 (5,058,668) 2,136,185
Vehicles 412,383 (178,457) 233,926 392,928 (163,390) 229,538
Other equipment 872,256 (600,788) 271,468 831,066 (549,665) 281,401
Construction in
progress 1,060,715 ‐ 1,060,715 866,665 ‐ 866,665
30,024,646 (14,708,259) 15,316,387 28,471,480 (13,149,060) 15,322,420
Right‐of‐use assets:
Land 1,767 (1,165) 602 1,460 (742) 718
Buildings 429,921 (163,732) 266,189 364,954 (108,427) 256,527
Other equipment 770 (117) 653 432 (382) 50
432,458 (165,014) 267,444 366,846 (109,551) 257,295
￦ 30,457,104 ￦ (14,873,273) ￦ 15,583,831 ￦ 28,838,326 ￦ (13,258,611) ￦ 15,579,715

(2) Changes in property, plant and equipment for the year ended December 31, 2021, are summarized as follows:

Acquisition
(capital
Beginning expenditure Ending
balance included) Disposal Depreciation Transfer Other balance
Land ￦ 4,939,660 ￦ ‐ ￦ ‐ ￦ ‐ ￦ 9,213 ￦ 13,795 ￦ 4,962,668
Buildings 2,509,283 3,065 (200) (121,311) 52,026 60,623 2,503,486
Structures 335,843 1,114 (240) (26,035) 7,757 9,827 328,266
Machinery & equipment 4,023,845 17,066 (8,284) (583,827) 339,965 82,756 3,871,521
Dies, molds & tools 2,136,185 172,221 (4,273) (761,057) 491,992 49,269 2,084,337
Vehicles 229,538 13,557 (59,164) (70,279) 119,534 740 233,926
Other equipment 281,401 13,247 (1,939) (78,717) 44,425 13,051 271,468
Construction in progress 866,665 1,138,441 (44) ‐ (956,360) 12,013 1,060,715
15,322,420 1,358,711 (74,144) (1,641,226) 108,552 242,074 15,316,387
Land 718 308 ‐ (424) ‐ ‐ 602
Buildings 256,527 58,117 (1,106) (58,825) ‐ 11,476 266,189
Other equipment 50 965 (165) (197) ‐ ‐ 653
257,295 59,390 (1,271) (59,446) ‐ 11,476 267,444
￦ 15,579,715 ￦ 1,418,101 ￦ (75,415) ￦ (1,700,672) ￦ 108,552 ￦ 253,550 ￦ 15,583,831

The amounts of gain and loss on disposals of property, plant and equipment are ￦8,509 million and ￦13,654 million,
respectively, for the year ended December 31, 2021.

The Group received government grants through investment agreement with Slovakia government and others.
The grants, amounting to ￦156,654 million, are presented as deduction of property, plant and equipment.
47


9. Property, Plant and Equipment, Continued
(3) Changes in property, plant and equipment for the year ended December 31, 2020, are summarized as follows:

Acquisition
(capital
Beginning expenditure Ending
balance included) Disposal Depreciation Transfer Other balance
Land ￦ 4,919,924 ￦ ‐ ￦ (1,105) ￦ ‐ ￦ 29,521 ￦ (8,680) ￦ 4,939,660
Buildings 2,589,518 1,146 (1,723) (120,223) 87,218 (46,653) 2,509,283
Structures 345,635 1,573 (230) (26,146) 22,441 (7,430) 335,843
Machinery & equipment 3,897,887 53,651 (28,789) (564,637) 743,032 (77,299) 4,023,845
Dies, molds & tools 1,858,057 36,100 (3,475) (755,310) 1,039,023 (38,210) 2,136,185
Vehicles 220,078 10,861 (43,953) (64,470) 110,786 (3,764) 229,538
Other equipment 310,827 13,522 (1,175) (85,842) 60,029 (15,960) 281,401
Construction in progress 1,366,230 1,493,460 (41) ‐ (1,985,477) (7,507) 866,665
15,508,156 1,610,313 (80,491) (1,616,628) 106,573 (205,503) 15,322,420

Land 986 149 (3) (414) ‐ ‐ 718
Building 237,292 83,950 (1,342) (57,249) ‐ (6,124) 256,527
Other equipment 241 ‐ ‐ (191) ‐ ‐ 50
238,519 84,099 (1,345) (57,854) ‐ (6,124) 257,295
￦ 15,746,675 ￦ 1,694,412 ￦ (81,836) ￦ (1,674,482) ￦ 106,573 ￦ (211,627) ￦ 15,579,715

The amounts of gain and loss on disposals of property, plant and equipment are ￦6,483 million and ￦29,737 million,
respectively, for the year ended December 31, 2020.

The Group received government grants through investment agreement with Slovakia government and others.
The grants, amounting to ￦157,318 million, are presented as deduction of property, plant and equipment during the
year ended December 31, 2020.

(4) The capitalized borrowing costs and capitalization interest rate for the years ended December 31, 2021 and 2020,
are summarized as follows:

2021 2020
Capitalized borrowing costs(*) ￦ 29,019 ￦ 17,644
Capitalization interest rates (%) 1.58 0.88

(*) It is includes borrowing costs that were capitalized in respect of development costs of ￦10,897 million and ￦3,444
million for the years ended December 31, 2021 and 2020, respectively.

48


10. Investment property

(1) Details of investment property as of December 31, 2021 and 2020, are summarized as follows:

Acquisition Accumulated Carrying Acquisition Accumulated Carrying
cost depreciation amount cost depreciation amount
Buildings ￦ 38,684 ￦ (15,445) ￦ 23,239 ￦ 35,503 ￦ (13,091) ￦ 22,412

(2) Changes in investment property for the year ended December 31, 2021, are summarized as follows:

Beginning Ending

balance Depreciation Other balance
Buildings ￦ 22,412 ￦ (1,141) ￦ 1,968 ￦ 23,239

(3) Changes in investment property for the year ended December 31, 2020, are summarized as follows:

Beginning Ending
balance Depreciation Other balance
Buildings ￦ 25,004 ￦ (1,176) ￦ (1,416) ￦ 22,412

(4) The amount recognized in profit or loss from investment property for the years ended December 31, 2021 and 2020,
is summarized as follows:

2021 2020
Rental income ￦ 4,641 ￦ 4,880
Operating expenses & maintenance expenses 1,670 1,622

(5) Buildings held for earning rentals are classified as investment property. In addition, the fair value of investment
property does not differ from its book value significantly as of December 31, 2021.

11. Goodwill

(1) Changes in goodwill for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Balance at January 1 ￦ 37,236 ￦ 37,094
Other change 14 142
Balance at December 31 ￦ 37,250 ￦ 37,236

(2) Impairment test of goodwill

Goodwill is allocated to each CGU (Cash Generating Unit) that is expected to benefit from each operating unit. The Group
estimated the recoverable amount of CGU as its value in use calculated by discounting the future cash flows to be
generated on the basis of business plan approved by management in five years.

49


11. Goodwill, Continued

Cash flows expected to be generated after five years were estimated to the extent not exceeding the long‐term average
growth rate of the industry. No impairment loss was recognized as result of the impairment tests in 2021 and 2020.

12. Intangible assets
(1) Details of intangible assets except for goodwill as of December 31, 2021 and 2020, are summarized as follows:

Accumulated Accumulated
Acquisition Accumulated impairment
Carrying Acquisition Accumulated impairment Carrying
cost amortization loss
amount cost amortization loss amount
Development
costs ￦ 5,424,514 ￦ (2,627,480) ￦ (297,273) ￦ 2,499,761 ￦ 4,835,497 ￦ (2,200,638) ￦ (301,517) ￦ 2,333,342
Industrial
property rights 89,112 (37,177) ‐ 51,935 73,119 (28,088) ‐ 45,031
Software 575,451 (444,711) (153) 130,587 527,353 (385,984) ‐ 141,369
Membership (*) 82,577 ‐ (9,755) 72,822 75,172 ‐ (8,464) 66,708
Other 64,217 (25,062) ‐ 39,155 61,399 (19,514) ‐ 41,885
￦ 6,235,871 ￦ (3,134,430) ￦ (307,181) ￦ 2,794,260 ￦ 5,572,540 ￦ (2,634,224) ￦ (309,981) ￦ 2,628,335

(*) Membership has indefinite useful life and has been tested for impairment annually by comparing its recoverable
amount to its carrying amount.

(2) Changes in intangible assets for the year ended December 31, 2021, are summarized as follows:

Beginning Impairment Ending
balance Acquisition Disposal Amortization loss Transfer Other balance
Development
costs (*) ￦ 2,333,342 ￦ 602,092 ￦ ‐ ￦ (441,017) ￦ 4,244 ￦ ‐ ￦ 1,100 ￦ 2,499,761
Industrial
property rights 45,031 15,629 (22) (8,703) ‐ ‐ ‐ 51,935
Software 141,369 45,196 (45) (64,459) (150) 5,188 3,488 130,587
Membership 66,708 8,258 (860) ‐ (1,284) ‐ ‐ 72,822
Other 41,885 8,482 (2,882) (5,039) ‐ (4,040) 749 39,155
￦ 2,628,335 ￦ 679,657 ￦ (3,809) ￦ (519,218) ￦ 2,810 ￦ 1,148 ￦ 5,337 ￦ 2,794,260

(*) Capitalized development costs are amortized over the useful life considering the life cycle of the developed products.
All acquisitions are internally generated.

(3) Changes in intangible assets for the year ended December 31, 2020, are summarized as follows:

Beginning Impairment Ending
balance Acquisition Disposal Amortization loss Transfer Other balance
Development
costs ￦ 2,232,586 ￦ 595,146 ￦ (27) ￦ (467,937) ￦ (25,512) ￦ ‐ ￦ (914) ￦ 2,333,342
Industrial
property rights 36,708 15,870 (74) (7,473) ‐ ‐ ‐ 45,031
Software 131,069 64,643 (59) (63,269) ‐ 11,519 (2,534) 141,369
Membership 65,976 1,474 (483) ‐ (259) ‐ ‐ 66,708
Other 49,353 7,200 (299) (5,185) ‐ (10,649) 1,465 41,885
￦ 2,515,692 ￦ 684,333 ￦ (942) ￦ (543,864) ￦ (25,771) ￦ 870 ￦ (1,983) ￦ 2,628,335

50


12. Intangible assets, Continued

(4) Details of research and development expenditures for the years ended December 31, 2021 and 2020, are summarized
as follows:

2021 2020
Development costs ￦ 602,092 ￦ 595,146
Test expenses (manufacturing costs) 222,958 181,305
Test expenses (selling and administrative expenses) 1,046,810 896,570
￦ 1,871,860 ￦ 1,673,021

(5) Details of impairment loss recognized for development costs for the year ended December 31, 2021 are as follows:

Impairment loss
Development costs 2021 Accumulated amounts Valuation method
Sedans(*) ￦ 748,975 ￦ 4,057 ￦ (111,993) Value‐in‐use
RVs(*) 1,508,950 187 (185,280) Value‐in‐use
￦ 2,257,925 ￦ 4,244 ￦ (297,273)

(*) The recoverable amount has been estimated using the estimated future cash flow reflecting the changes in business
environment and each product’s previous operating results, discounted the rate of between 12.0% and 14.7%, for
the year ended December 31, 2021.

(6) Details of development costs as of December 31, 2021 are summarized as follows:

December 31, 2021 Residual amortization period
Sedans(*1) ￦ 748,975 1~9 years
RVs(*2) 1,508,950 1~9 years
Power train(*3) 171,021 1~9 years
Others 70,815 ‐
￦ 2,499,761

(*1) K3, K5, K8, K9, Stinger and others
(*2) Sportage, Sorento, Carnival, Telluride and others
(*3) Engines and transmissions

51


13. Borrowings and Bonds

(1) Details of borrowings as of December 31, 2021 and 2020, are summarized as follows:

(i) Short‐term borrowings

Annual interest
rate(%) Amount
December 31, December 31, December 31,
Lender 2021 2021 2020
Usance Hana Bank and others 0.02~0.45 ￦ 87,054 ￦ 99,681
Trade financing(*) Korea Development Bank and others 0.00001~1.22 3,015,689 3,347,442
General loans Bank of America and others ‐ 5,029 1,032,329
￦ 3,107,772 ￦ 4,479,452

(*) The Group is continuously recognizing the carrying amount of the outstanding receivables, which it provided a credit
guarantee of, among the receivables sold to financial institutes, and cash received for such transfer is recognized as
borrowings collateralized by receivables.

(ii) Long‐term debt in Korean won

Annual interest

rate(%) Amount

Lender 2021 2021 2020
Nong Hyup Bank ‐ ￦ ‐ ￦ 50,000
Woori Bank ‐ ‐ 50,000
Facility loans Kookmin Bank 2.22 300,000 300,000
Shinhan Bank 2.09 200,000 200,000
Korea Development Bank 1.50 200,000 200,000
700,000 800,000
Less : current portion of long‐term debt (200,000) (100,000)
￦ 500,000 ￦ 700,000

52


13. Borrowings and Bonds, Continued

(1) Details of borrowings as of December 31, 2021 and 2020, are summarized as follows:, Continued

(iii) Long‐term debt in foreign currencies

Annual interest

rate(%) Amount

Lender 2021 2021 2020
Facility loans and Korea Development Bank and
others others 0.07~3.31 1,272,889 1,457,376
Overseas investment
loans The Export‐Import Bank of Korea 1.42 296,375 272,000
1,569,264 1,729,376
Less : current portion of long‐term debt (437,982) (253,648)
￦ 1,131,282 ￦ 1,475,728

(2) Details of bonds as of December 31, 2021 and 2020, are summarized as follows:

Annual interest

rate(%) Amount

Maturity date 2021 2021 2020
2022.6.4~2022.11.5 2.40~2.57 ￦ 380,000 ￦ 380,000
2022.2.15~2024.2.15 2.15~2.41 450,000 450,000
Unsecured public bonds
2023.4.21~2027.4.22 2.02~2.19 600,000 600,000
2024.3.3~2028.3.3 1.30~1.96 300,000 ‐
2026.4.21 3.25 355,650 761,600
Foreign public bonds 2023.4.25~2027.10.25 3.00~3.50 1,066,950 979,200
2023.4.25~2026.10.16 1.00~1.75 829,850 ‐
Less: discounts on bonds (15,609) (12,912)
3,966,841 3,157,888
Less : current portion of bonds (669,866) (434,894)
￦ 3,296,975 ￦ 2,722,994

53


14. Other Liabilities

(1) Details of other current liabilities as of December 31, 2021 and 2020, are summarized as follows:

Unearned income ￦ 216,220 ￦ 190,052
Dividends payable 23 23
Guarantee deposits received 4,822 6,583
Current portion of derivatives liabilities 5,947 2,839
Current portion of lease liabilities 51,314 47,536
Others 17,768 14,802
￦ 296,094 ￦ 261,835

(2) Details of other non‐current liabilities as of December 31, 2021 and 2020, are summarized as follows:

Deposits received ￦ 11,586 ￦ 12,158
Long‐term unearned income 707,105 520,416
Long‐term accounts and notes payable – others 304,685 285,252
Derivatives liabilities 11,179 53,681
Lease liabilities 221,112 213,031
Financial guarantee liabilities 324 1,270
Long‐term accrued expenses 277,132 302,069
￦ 1,533,123 ￦ 1,387,877

54


15. Retirement Benefits Plan

(1) Details of net defined benefit liabilities (assets) as of December 31, 2021 and 2020, are summarized as follows:

Present value of defined benefit obligations ￦ 3,149,442 ￦ 3,092,342
Fair value of plan assets (3,431,059) (3,132,580)
Net defined benefit assets ￦ (281,617) ￦ (40,238)

(2) The components of plan assets as of December 31, 2021 and 2020, are summarized as follows:

Time deposits and others ￦ 3,431,059 ￦ 3,132,580

(3) The components of retirement benefit costs for the years ended December 31, 2021 and 2020 are summarized as
follows:

2021 2020
Current service costs ￦ 324,326 ￦ 324,902
Interest costs (income), net (2,518) 3,726
￦ 321,808 ￦ 328,628

(4) The principal actuarial assumptions, presented as weighted–average rate, used for the defined benefit plans as of
December 31, 2021 and 2020 are summarized as follows:

Discount rate (%) 2.84 2.33
Expected rate of salary increase (%) 3.84 4.00

(5) Changes in defined benefit obligations for the years ended December 31, 2021 and 2020 are summarized as follows:

2021 2020
Balance at January 1 ￦ 3,092,342 ￦ 2,911,152
Current service costs 324,326 324,902
Interest costs 68,615 64,470
Remeasurements(*) (205,076) (31,454)
Transfer in, net (180) 333
Benefits paid (130,585) (177,061)
Balance at December 31 ￦ 3,149,442 ￦ 3,092,342

55


15. Retirement Benefits Plan, Continued

(*) Details of remeasurements for the years ended December 31, 2021 and December 31, 2020, are summarized as
follows:

2021 2020
Actuarial gain arising from changes in
demographic assumptions ￦ (2,430) ￦ ‐
Actuarial gain arising from changes in financial
assumptions (181,163) (9,885)
Others (21,483) (21,569)
￦ (205,076) ￦ (31,454)

(6) Changes in plan assets for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Balance at January 1 ￦ 3,132,580 ￦ 2,703,591
Return on plan assets 71,133 60,744
Remeasurements (9,720) (6,843)
Contributions 350,000 520,000
Transfer in (out), net (777) 702
Benefits paid (112,157) (145,614)
Balance at December 31 ￦ 3,431,059 ￦ 3,132,580
(7) Sensitivity analysis of defined benefit obligations from changes in assumptions for the years ended December 31,
2021 and 2020, are summarized as follows:

1% Up 1% Down 1% Up 1% Down
Discount rate ￦ (316,020) ￦ 214,348 ￦ (269,340) ￦ 312,785
Rate of salary increase 213,910 (320,224) 309,579 (271,838)

56


16. Provisions

The Group, according to the assurance type warranty that it offers to the ultimate consumer for each product sold,
categorizes sales warranty provisions at the point of sale in order to compensate any expense which may occur due to
the usual repair of parts, unusual replacement of parts, or accident caused by defective exported products. In addition,
the Group estimates probable expenses related to pending lawsuits and emission liabilities and recognizes such amounts
as other provisions.

Changes in provisions for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Sales Sales

warranty Other(*1) Total warranty Other Total
Balance at January 1 ￦ 4,556,643 ￦ 133,723 ￦ 4,690,366 ￦ 3,619,302 ￦ 236,838 ￦ 3,856,140
Provisions (reversal)
made 1,823,375 (19,533) 1,803,842 2,908,121 756 2,908,877
Provisions used (1,853,095) (23,272) (1,876,367) (1,864,595) (95,368) (1,959,963)
Other increase
(decrease) 113,779 155,609 269,388 (106,185) (8,503) (114,688)
Balance at December 31 ￦ 4,640,702 ￦ 246,527 ￦ 4,887,229 ￦ 4,556,643 ￦ 133,723 ￦ 4,690,366
Current 3,140,851 25,119 3,165,970 3,253,790 27,831 3,281,621
Non‐current 1,499,851 221,408 1,721,259 1,302,853 105,892 1,408,745

(*1) As of December 31, 2021, the Group recognizes probable loss of ￦72,268 million in relation to the litigation on
ordinary wages (1st trial of the second and third cases are in progress) and ￦119,109 million of emissions liabilities
with regard to environmental regulations in North America as other provisions.

17. Commitments and Contingencies

(1) As of December 31, 2021, the Group provides one certificate of deposit valued at ￦1,473 million and 2,517 units of
capital investments in Korea Defense Guarantee Cooperative (KDGC) with the carrying amount of ￦596 million as
collateral to KDGC as a performance guarantee on the contract. In addition, some property, plant and equipment are
pledged as collateral for guarantee deposits received with the collateral amount of ￦3,007 million.

(2) The Group provides guarantees for employees relating to borrowings to acquire shares of the Group. The outstanding
amount for which the Group has provided collective guarantees to the Korea Securities Finance Corporation is
￦181,432 million as of December 31, 2021. Management is of the opinion that aforementioned guarantees will not
have a significant adverse effect on the Group’s credit risk since the Group has pledged its acquired shares as collateral
for the borrowings.

(3) As of December 31, 2021, the Group has pending litigations, in which the Group is a defendant, such as claims for
alleged damages and product liabilities. Management of the Group predicts that the outcome of such litigations
cannot be reasonably determined; the amount and timing of the outflow of resources are uncertain; the impact on
the consolidated financial statements would not be material. Additionally, the Group is under investigations from
domestic and overseas authorities related to the recall of the Seta 2 engines, and the outcome and effect of these
investigations cannot be reliably estimated as of December 31, 2021.

(4) As of December 31, 2021, KaGA has an agreement with the West Point Development Authority and Troup Country
Development Authority with a limit of USD 2,700,000 thousand to purchase building, machinery and equipment for
tax incentives.

57


17. Commitments and Contingencies, Continued

(5) As of December 31, 2021, in regard to the factory expansion, KaSK has an agreement with suppliers to acquire
property, plant and equipment, for which outstanding balance is EUR 2,579 thousand.

(6) As of December 31, 2021, KMX has an investment agreement with the Government of the State of Nuevo Leon for at
least USD 1,054 million for tax incentives.

(7) As of December 31, 2021, in relation to the factory expansion and others, KIN entered into a purchase agreement
with suppliers to acquire property, plant and equipment amounting to INR 3,050 million.

(8) The Group has agreed to invest ￦512,080 million in connection with the construction of Global Business Center
(GBC). In addition, the Group has recognized ￦340,929 million of related liabilities as of December 31, 2021 in
accordance with the agreement with the Seoul Metropolitan Government to implement public contributions under
the new construction project in December 2019.

(9) As of December 31, 2021, the Group has overdrafts, general loans, trade‐financing agreements, and loans
collateralized by accounts receivable with numerous financial institutions including Hana bank with a combined limit
of up to USD 10,409 million, EUR 1,037 million, and ￦2,667,651 million.

18. Derivative Financial Instruments and Hedge
(1) Details of derivative financial instruments as of December 31, 2021 and 2020, are summarized as follows:
Fair value and Book value
Type December 31, 2021 December 31, 2020 Note
Total Return Swap ￦ (11,180) ￦ (12,843)
Interest Rate Swap 5,842 (2,787) (*)
Currency Swap 102,896 (40,890) (*)
Raw material Swap (5,947) ‐ (*)
(*) Derivative financial instruments designated as cash flow hedges

58


18. Derivative Financial Instruments and Hedge, Continued

(2) Risk management strategies and applied approach for risk management

The Group is exposed to certain risks with ongoing business operations. The main risks managed by derivatives are
interest rate risk and foreign exchange risk. The approach of the Group’s risk management strategies and risk
management is described in Note 31.

The Group entered into the interest swap contract with nominal value of ￦22,600 million, the currency swap contract
with nominal value of ￦1,828,995 million and the raw material swap contract with nominal value of ￦60,019 million.
These derivative financial instruments are used to hedge exposures to changes in cash flows of long‐term debt, bonds,
and forecast transactions.

Because the terms of such derivatives are in line with terms of long‐term debt (borrowings and bonds) denominated in
dollar and terms of forecast transactions, there is an economic relationship between the hedged item and the hedging
instrument. Because the underlying risk of derivative financial instruments is same as the hedged risk components, the
Group set a 1:1 risk‐averting ratio for the hedging relationship. For assessing the hedging effectiveness, the Group uses
a Critical Terms Match Method to compare the changes in the fair value of the hedging instrument and the changes in
the cash flow of the hedged item due to the hedged risk.

The ineffective portion of risk aversion could be generated as follows:
‐ Different interest rate curves applied to discount hedged items and hedging instruments
‐ Difference in the timing of the cash flow of the hedged item and the hedging instrument
‐ In case of the counterparty's credit risk having a different effect on the fair value movement of the hedging instrument
and the hedged item

(3) Information on the future cash flows of derivatives designated as net cash flow hedges as of December 31, 2021 is
as follows:
(In millions of Korean won, except for average contract rate)
Type Within 1 year 1‐5 years More than 5 years Total
Interest swap:
Nominal cash flow ￦ 1,944 ￦ 4,056 ‐ ￦ 6,000
Currency swap:
Nominal cash flow 11,202 96,392 ‐ 107,594
Average contract rate 1,132.4 1,121.4 ‐
Raw material swap:
Nominal cash flow (5,460) (505) ‐ (5,965)
Average purchase
price 2,055.5 2,031.5 ‐

59


18. Derivative Financial Instruments and Hedge, Continued

(4) The effect on the consolidated financial statements of derivatives designated as cash flow hedges as of December
31, 2021 is as follows:

Changes in the fair
value used to
calculate the
Contractual nominal Accounts of the ineffective portion of
amount Derivatives assets Derivatives liabilities hedging` instrument the hedge
Cash flow hedge:
Interest rate swap ￦ 22,600 ￦ 5,842 ￦ ‐ Other financial ￦ 8,628
Currency swap 1,828,995 102,896 ‐ assets/ Other 138,911
Raw material swap 60,019 ‐ 5,947 liabilities (5,947)

(5) The effect on the consolidated financial statements of financial instruments eligible for the cash flow hedges as of
December 31, 2021 is as follows:

Changes in the fair
value used to
Carrying amount of the hedged item calculate the
Accounts of the ineffective portion of Cash flow
Assets Liabilities hedged items the hedge hedge reserve
Cash flow hedge:
Borrowings ￦ ‐ ￦ 796,375 Long‐term debt ￦ 37,686 ￦ 10,219
Bonds ‐ 1,541,150 Bonds 109,853 11,073
Raw material ‐ ‐ Inventory (5,947) (4,312)
(6) The effect of the Group’s risk management activities on the consolidated statements of income and comprehensive
income for the year ended December 31, 2021 is as follows:

Effective portion of hedge Ineffective portion of Reclassification from
accounting recognized in other hedge accounting cash flow hedge reserve Accounts that affect profit or
Hedged items comprehensive income(*) recognized in profit or loss to profit or loss loss by reclassification

Interest expenses & Gain(Loss)
Borrowings ￦ 9,748 ￦ ‐ ￦ 24,505
on foreign currency translation
Bonds (3,788) ‐ 106,835
Raw material (4,312) ‐ ‐ Cost of sales

(*) The amount reflected the effect of income taxes

60


19. Equity

(1) The number of shares to issue, the number of shares issued and the par value of the share of the Group are
820,000,000 shares, 405,363,347 shares and ￦5,000 as of December 31, 2021, respectively. The Group retired
22,500,000 shares of treasury stock on July 2, 2003 and on May 28, 2004. Due to these stock retirements, the
aggregate par value of issued shares differs from capital stock amount.

(2) Accumulated other comprehensive loss as of December 31, 2021 and 2020, is summarized as follows:

Changes in fair value of financial assets measured at FVOCI ￦ (9,634) ￦ (35,119)
Effective portion of changes in fair value of cash flow hedges 16,980 15,332
Change in capital adjustments ‐ gain of equity method accounted
investment 161,151 161,882
Change in capital adjustments ‐ loss of equity method accounted
investment (215,976) (469,814)
Exchange differences on translating foreign operations (358,913) (592,919)
￦ (406,392) ￦ (920,638)

61


19. Equity, continued

(3) Other equity as of December 31, 2021 and 2020, is summarized as follows:

Gain on capital reduction ￦ 119,859 ￦ 119,859
Other capital surplus 45,287 35,256
Treasury stocks(*) (231,224) (216,189)
￦ (66,078) ￦ (61,074)

(*) Changes in treasury stocks for the years ended December 31, 2021 and 2020 are as follows.

Number of stocks Amount
The beginning of previous year 4,432,084 ￦ (216,189)
The end of previous year 4,432,084 (216,189)
Acquisition of treasury stocks 442,689 (38,116)
Disposition of treasury stocks (442,442) 23,081
The end of current year 4,432,331 ￦ (231,224)

20. Retained Earnings

(1) Retained earnings as of December 31, 2021 and 2020, are summarized as follows:

Legal reserve ￦ 436,000 ￦ 395,900
Discretionary reserve 19,029,955 18,599,407
Unappropriated retained earnings 12,216,977 8,178,110
￦ 31,682,932 ￦ 27,173,417

(2) Changes in retained earnings for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Balance on January 1 ￦ 27,173,417 ￦ 26,056,216
Profit for the year attributable to owners of the Company 4,760,450 1,487,585
Dividends paid (400,931) (461,071)
Remeasurements of defined benefit plans 141,624 17,767
Remeasurements of associates, etc. 8,028 (15,350)
Derecognition of financial assets measured at FVOCI 344 88,270
Balance on December 31 ￦ 31,682,932 ￦ 27,173,417

62


21. Earnings per Share
(1) Details of the basic earnings per share calculation for the years ended December 31, 2021 and 2020, are summarized
as follows:

(In Korean won, except for number of shares)
2021 2020
Profit for the year attributable to owners of the Company ￦ 4,760,450,412,141 ￦ 1,487,584,943,568
Weighted‐average number of ordinary shares outstanding(*) 400,916,727 400,931,263
Basic earnings per share ￦ 11,874 ￦ 3,710

(*) The weighted‐average number of ordinary shares outstanding is calculated by averaging outstanding period, and
treasury stock is not included in the number of ordinary shares outstanding.

(2) The Group did not compute diluted earnings per ordinary share for the years ended December 31, 2021 and 2020
since there are no dilutive items during the years.

22. Dividends

(1) Details of dividends for the years ended December 31, 2021 and 2020, are summarized as follows:

(In millions of Korean won, except for shares, par value and ratio)
2021 2020
Number of shares issued 405,363,347 405,363,347
Number of treasury shares (4,432,331) (4,432,084)
Number of dividend shares 400,931,016 400,931,263
Par value per share ￦ 5,000 ￦ 5,000
Dividend rate 60% 20%
Dividend amount ￦ 1,202,793 ￦ 400,931

(2) Dividend payout ratio for the years ended December 31, 2021 and 2020 are as follows:

(In millions of Korean won, except for ratio)
2021 2020
Dividends ￦ 1,202,793 ￦ 400,931
Profit for the year 4,760,450 1,487,585
Dividend payout ratio 25.27% 26.95%

(3) Dividend yield ratio for the years ended December 31, 2021 and 2020, are summarized as follows:

(In Korean won, except for ratio)
2021 2020
Dividend per share ￦ 3,000 ￦ 1,000
Market price as of year‐end 82,200 62,400
Dividend yield ratio 3.65% 1.60%

63


23. Revenue from Contracts with Customers

(1) Details of revenues from contract with customers of the Group for the years ended December 31, 2021 and 2020,
are as follows:

2021 2020
Types of goods or services
Sales of vehicles ￦ 61,179,254 ￦ 53,332,585
Others 8,683,112 5,835,511
￦ 69,862,366 ￦ 59,168,096

(*) The geographical market segmentation in which the Group is located is described in Note 4.
64


23. Revenue from Contracts with Customers, Continued
(2) Receivables, contract assets, and contract liabilities from contracts with customers as of December 31, 2021 and 2020,
are as follows:

Accounts and notes receivable ‐ trade ￦ 1,792,224 ￦ 1,824,385
Prepaid expenses 146,761 91,461
Advances received 119,651 109,029
Unearned income 879,674 639,733
Accrued expenses 814,240 883,775

(3) Details of impairment loss on receivables and contract assets from contracts with customers recognized by the Group
for the years ended December 31, 2021 and 2020, are as follows:

December 31, 2021 . December 31, 2020
Impairment of accounts and notes receivable ‐ trade ￦ 755 ￦ 166
(4) The amounts allocated to performance obligations that are not satisfied(or partially not satisfied) of the transaction
prices in major contracts entered into as of December 31, 2021 and 2020, are as follows:
Provision of additional services and others (*) ￦ 999,325 ￦ 748,762

(*) The transaction prices for unsatisfied performance obligations will be recognized as revenue in the period when such
supplementary services are provided.
(5) The amounts recognized as assets from costs to obtain or fulfill a contract as of December 31, 2021 and 2020 are as
follows.
Costs of additional services and others (*) ￦ 146,761 ￦ 91,461

(*) The costs from unsatisfied performance obligation will be recognized as expenses in the period when such
supplementary services are provided.

65


24. Selling, General and Administrative Expenses
(1) Details of selling expenses for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Advertising ￦ 1,436,200 ￦ 1,300,680
Sales promotion 990,153 993,351
Warranty expenses 1,818,535 2,290,517
Freight 44,636 42,020
Overseas marketing and export expenses 288,639 284,146
￦ 4,578,163 ￦ 4,910,714

(2) Details of general and administrative expenses for the years ended December 31, 2021 and 2020, are summarized
as follows:

2021 2020
Salaries ￦ 847,748 ￦ 803,885
Bonus 252,883 206,871
Retirement benefits cost 82,553 84,759
Accrual for other long‐term employee benefits 4,603 10,987
Other employee benefits 198,071 196,924
Travel 25,709 22,966
Communications 13,149 13,375
Utilities 17,639 19,107
Taxes and dues 41,805 39,115
Rent 18,080 15,837
Depreciation 137,676 136,330
Amortization 43,524 43,082
Bad debt expenses 755 166
Repairs and maintenance 29,042 24,608
Insurance premium 25,647 29,290
Entertainment expense 2,406 1,866
Maintenance fee for vehicles 27,437 31,544
Supplies and stationery 17,394 13,095
Information fees 3,474 3,277
Education and training 25,399 20,073
Commissions and fees 405,991 331,593
Test expenses 1,046,810 896,570
Others 13,558 23,041
￦ 3,281,353 ￦ 2,968,361

66


25. Finance Income and Finance Costs

(1) Details of finance income for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Interest income ￦ 141,857 ￦ 170,133
Gain on foreign exchange transactions 11,341 6,326
Gain on foreign currency translation 62,413 110,971
Dividend income 3,618 3,503
Gain on valuation and trading of derivatives 58,827 50,911
Gain on valuation of financial asset measured at fair value through
profit or loss 78,668 ‐
￦ 356,724 ￦ 341,844

(2) Details of finance costs for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Interest expense ￦ 169,895 ￦ 234,524
Loss on foreign exchange transactions 10,758 43,850
Loss on foreign currency translation 98,880 110,147
Loss on valuation and trading of derivatives 47,911 36,235
￦ 327,444 ￦ 424,756

26. Other Income and Other Expenses

(1) Other income for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Rent ￦ 9,487 ￦ 9,780
Gain on foreign exchange transactions 425,165 313,101
Gain on foreign currency translation 50,673 125,294
Gain on disposal of property, plant and equipment 8,509 6,483
Gain on disposal of intangible assets ‐ 96
Reversal of impairment loss on intangible assets 4,244 ‐
Reversal of allowance for doubtful accounts 481 1,087
Miscellaneous profit 127,978 145,704
￦ 626,537 ￦ 601,545

67


26. Other Income and Other Expenses, Continued

(2) Other expenses for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Loss on foreign exchange transactions ￦ 331,923 ￦ 370,942
Loss on foreign currency translation 58,720 199,944
Loss on disposal of accounts and notes receivable – trade 568 423
Donation 21,121 27,891
Loss on disposal of property, plant and equipment 13,654 29,737
Loss on disposal of intangible assets 50 153
Impairment loss on intangible assets 1,434 25,771
Miscellaneous losses 68,430 150,270
￦ 495,900 ￦ 805,131

27. Income Tax Expense

(1) The components of income tax expense for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Current tax payable ￦ 1,310,552 ￦ 343,374
Changes in deferred taxes due to temporary differences 442,455 (20,312)
Income taxes directly charged to equity (119,537) 30,711
Income tax expense ￦ 1,633,470 ￦ 353,773

(2) Current tax and deferred taxes related to items directly charged to equity for the years ended December 31, 2021
and 2020, are summarized as follows:

2021 2020

Gain on disposal of treasury stocks ￦ (3,805) ￦ ‐
Remeasurements of defined benefit plans (53,617) (6,861)
Change in fair value of financial assets measured at FVOCI (9,041) (7,906)
Effective portion of changes in fair value of cash flow hedges (625) (5,847)
Change in capital adjustments – gain/loss of equity method accounted
investment (52,449) 51,325
Income taxes directly charged to equity ￦ (119,537) ￦ 30,711

Income tax related to remeasurements of defined benefit plans, change in fair value of financial assets measured at
FVOCI and effective portion of changes in fair value of cash flow hedges were recognized in other comprehensive income
(loss).

68


27. Income Tax Expense, Continued

(3) Reconciliation from profit before income taxes to income tax expense for the years ended December 31, 2021 and
2020, is as follows:

(In millions of Korean won, except for ratio)
2021 2020
Profit before income taxes ￦ 6,393,781 ￦ 1,841,358
Income tax calculated at statutory tax rates (*) 1,459,760 417,368
Adjustments:
Non‐taxable income (46,249) (33,310)
Non‐deductible expense 99,331 94,686
Tax credits (44,219) (42,808)
Tax effect of gains/losses on investments in subsidiaries, joint ventures
and associates 258,999 (52,496)
Others (94,152) (29,667)
Income tax expense ￦ 1,633,470 ￦ 353,773
Average effective tax rate 25.55% 19.21%

(*) Calculated by multiplying each nation’s statutory tax rate and profit before income taxes on each separate financial
statements.

(4) The Group will set off a deferred tax asset against a deferred tax liability of the same taxable entity if, and only if, they
relate to income taxes levied by the same taxation authority and the entity has a legally enforceable right to set off
current tax assets against current tax liabilities.

(5) Changes in deferred tax assets and liabilities for the year ended December 31, 2021, are as follows:

Other
Beginning Profit comprehensive Ending
balance or loss income balance
Allowance for doubtful accounts ￦ 7,552 ￦ 2,594 ￦ ‐ ￦ 10,146
Bad debts write‐off 9,533 ‐ ‐ 9,533
Accrued expenses 272,348 55,177 ‐ 327,525
Sales warranty provisions 979,008 48,610 ‐ 1,027,618
Provision for other long‐term employee benefits 90,073 (4,682) ‐ 85,391
Annual leaves 31,753 1,527 ‐ 33,280
Revaluated land (398,522) ‐ ‐ (398,522)
Depreciation (222,923) (16,028) ‐ (238,951)
Investments in subsidiaries, joint ventures and
associates (1,948,670) (163,599) (52,449) (2,164,718)
Gains/losses on valuation of derivatives 3,111 167 (625) 2,653
Gains/losses on valuation of equity securities 11,909 131 (9,041) 2,999
Accumulated deficit carryforward 33,582 (28,710) ‐ 4,872
Others 301,547 (221,910) (53,617) 26,020
￦ (829,699) ￦ (326,723) ￦ (115,732) ￦ (1,272,154)

69


27. Income Tax Expense, Continued

Changes in deferred tax assets and liabilities for the year ended December 31, 2020, are as follows:

Other
Beginning Profit comprehensive Ending
balance or loss income balance
Allowance for doubtful accounts ￦ 13,271 ￦ (5,719) ￦ ‐ ￦ 7,552
Bad debts write‐off 9,533 ‐ ‐ 9,533
Accrued expenses 411,674 (139,326) ‐ 272,348
Sales warranty provisions 836,727 142,281 ‐ 979,008
Provision for other long‐term employee
benefits 85,065 5,008 ‐ 90,073
Annual leaves 32,540 (787) ‐ 31,753
Revaluated land (398,522) ‐ ‐ (398,522)
Depreciation (157,195) (65,728) ‐ (222,923)
Investments in subsidiaries, joint ventures
and associates (2,001,166) 1,171 51,325 (1,948,670)
Gains/losses on valuation of derivatives 6,003 2,955 (5,847) 3,111
Gains/losses on valuation of equity securities 10,790 9,025 (7,906) 11,909
Accumulated deficit carryforward 60,710 (27,128) ‐ 33,582
Others 240,559 67,849 (6,861) 301,547
￦ (850,011) ￦ (10,399) ￦ 30,711 ￦ (829,699)

(6) As of December 31, 2021, the total temporary difference related to investments in subsidiaries, joint ventures and
associates for which deferred tax assets were not recognized is ￦1,136,502 million.

28. Classification of Expenses by Nature

Details of expenses by nature for the years ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Change in inventories ￦ 212,767 ￦ 891,097
Raw materials and merchandise consumed 47,951,873 40,342,883
Employee benefits 5,290,288 4,872,459
Depreciation 1,701,813 1,675,658
Others 9,120,722 8,775,678
￦ 64,796,681 ￦ 57,101,639

70


29. Leases
(1) Description of leases
The Group uses and provides leases in connection with its operations, and the main leases consist of real estate leases,
etc. The effect of future cash outflows that are potentially exposed to the use of leases but are not reflected in the
measurement of lease liabilities has no significant impact on consolidated financial statements of the Group.

As of December 31, 2021, the weighted‐average incremental borrowing interest rates used by the Group in order to
discount lease liabilities is in between 1.48% and 9.65%, and changes in right‐of‐use assets are included in Note 9.

(2) Changes in lease liabilities for the years ended December 31, 2021 and 2020 are as follows:

2021 2020
Balance at January 1 ￦ 260,567 ￦ 234,296
Increase 55,871 85,992
Payments (64,385) (62,964)
Interest expense 7,270 7,496
Others (exchange difference) 13,103 (4,253)
Balance at December 31 ￦ 272,426 ￦ 260,567

(3) Income and expenses recognized in lease contracts for the years ended December 31, 2021 and 2020 are as follows:

Income recognized in lease contracts
Interest income ￦ 4,539 ￦ 4,856
Others(*) 46 35
￦ 4,585 ￦ 4,891
Expenses recognized in lease contracts
Depreciation of right‐of‐use assets ￦ 59,446 ￦ 57,854
Expenses from the lease agreements that are
not recognized as lease liabilities 1,539 605
Interest expenses 7,270 7,496
Others(*) 166 188
￦ 68,421 ￦ 66,143

(*) Gain or loss from disposal of right‐of‐use assets due to changes in the lease agreements and termination of the lease
contracts is included.

71


29. Leases, Continued

(4) Fixed lease payments and variable lease payments recognized in lease contracts for the year December 31, 2021 are
summarized as follows:

Fixed Variable Total
Fixed payments ￦ 63,993 ￦ 681 ￦ 64,674
Variable lease payments with minimum
payments 202 95 297
￦ 64,195 ￦ 776 ￦ 64,971

Fixed lease payments and variable lease payments recognized in lease contracts for the year December 31, 2020 are

Fixed Variable Total
Fixed payments ￦ 62,443 ￦ 632 ￦ 63,075
Variable lease payments with minimum
payments 197 138 335
￦ 62,640 ￦ 770 ￦ 63,410

(5) Exercise of termination and renewal option has no significant impact on the consolidated financial statements of the
Group.
(6) Future minimum lease receivables to arise from leases provided by the Group as of December 31, 2021 are as follows:
Within 1 year 1‐5 years More than 5 years Total
Lease receivables ￦ 11,428 ￦ 25,681 ￦ 11,771 ￦ 48,880

72


30. Supplement of Cash Flows

(1) Details of cash generated from operations for the years ended December 31, 2021 and 2020, are summarized as
follows:

2021 2020
Adjustments:
Salaries ‐ (484)
Retirement benefits costs 321,808 328,627
Depreciation 1,701,813 1,675,658
Sales warranty expenses 1,727,390 2,796,680
Income tax expense 1,633,470 353,773
Gain on investment in joint ventures and associates, net (1,168,179) (61,399)
Interest expenses, net 28,038 65,120
Dividend income (3,618) (3,503)
Loss on foreign currency translation, net 44,514 73,826
Loss on disposal of property, plant and equipment, net 5,145 23,254
Impairment loss (reversal of impairment loss) on intangible (2,810) 25,771
assets
Others (120,777) 140,307
4,686,012 5,961,494
Changes in operating assets and liabilities:
Decrease in accounts and notes receivable ‐ trade 31,928 246,647
Decrease (increase) in accounts and notes receivable – other 88,178 (364,919)
Decrease (increase) in inventories (143,342) 841,828
Increase in accounts and notes payable ‐ trade 619,457 530,154
Increase (decrease) in advances received 137,808 (126,522)
Increase (decrease) in accounts and notes payable ‐ other 312,513 (792,893)
Decrease in accrued expenses (16,194) (109,999)
Payment of retirement benefits (130,584) (177,061)
Changes in net defined benefit liabilities (assets) (237,246) (374,416)
Changes in sales warranty provisions (1,853,095) (1,864,595)
Payment of other provisions (23,272) (95,368)
Others (105,889) 489,434
(1,319,738) (1,797,710)
Cash generated from operations ￦ 8,126,585 ￦ 5,651,369

73


30. Supplement of Cash Flows, Continued

(2) Significant non‐cash transactions from investing and financing activities for the years ended December 31, 2021 and
2020, are summarized as follows:

2021 2020
Change in accounts and notes payable ‐ others in connection
with acquisition of property, plant and equipment ￦ (21,063) ￦ (5,112)
Change in accounts and notes payable ‐ others in connection
with acquisition of intangible assets (17,295) (48,069)
Decrease in inventories in connection with acquisition of
property, plant and equipment 163,337 160,652

(3) Changes in liabilities arising from financing activities for the year ended December 31, 2021 are as follows:

Non‐cash changes
Transferred
Exchange rate in/to current
January 1 Cash flow changes portion Others (*1) December 31
Short‐term borrowings ￦ 4,479,452 ￦ (1,363,890) ￦ (7,790) ￦ ‐ ￦ ‐ ￦ 3,107,772
Current portion of long‐
term debt and
bonds(*2) 788,542 (824,118) 11,549 1,331,875 ‐ 1,307,848
Bonds 2,722,994 1,071,513 164,530 (670,172) 8,110 3,296,975
Long‐term debt 2,175,728 ‐ 117,257 (661,703) ‐ 1,631,282
Deposits received 12,158 (592) 20 ‐ ‐ 11,586
Lease liabilities 260,568 (64,385) 13,101 ‐ 63,142 272,426
￦ 10,439,442 ￦ (1,181,472) ￦ 298,667 ￦ ‐ ￦ 71,252 ￦ 9,627,889

(*1) It includes acquisition of new lease, amortization of present value discounts and others.
(*2) It includes the current portion of bonds transferred.

74


30. Supplement of Cash Flows, Continued

Changes in liabilities arising from financing activities for the year ended December 31, 2020 are as follows:

Non‐cash changes
Transferred
Exchange rate in/to current
January 1 Cash flow changes portion Others (*1) December 31
Short‐term borrowings ￦ 1,414,756 ￦ 3,142,911 ￦ (78,215) ￦ ‐ ￦ ‐ ￦ 4,479,452
Current portion of long‐
term debt and
bonds(*2) 1,075,465 (979,757) (23,842) 716,676 ‐ 788,542
Bonds 2,667,128 600,000 (83,760) (463,028) 2,654 2,722,994
Long‐term debt 1,307,808 1,277,868 (156,300) (253,648) ‐ 2,175,728
Deposits received 11,863 295 ‐ ‐ ‐ 12,158
Lease liabilities 234,296 (62,964) (4,252) ‐ 93,488 260,568
￦ 6,711,316 ￦ 3,978,353 ￦ (346,369) ￦ ‐ ￦ 96,142 ￦ 10,439,442

(*1) It includes acquisition of new lease, amortization of present value discounts and others.
(*2) It includes the current portion of bonds transferred.

75


31. Finance Risk Management

The Group’s activities are exposed to a variety of financial risks: credit risk, liquidity risk and market risk (composed of
foreign exchange risk and interest rate risk). The treasury department monitors and manages the financial risk arising
from the Group’s underlying operations in accordance with the risk management policies and procedures authorized by
the Board of Directors.

(1) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group has transacted with customers after evaluating on their credit rating graded by
the independent credit rating agencies and has their collaterals to control customers on default. If those grades are not
available, customers’ credit is evaluated upon their other transaction information. The Group regularly monitors
customers’ credit ratings.

(2) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group manages liquidity risk by reviewing and
forecasting regular cash flows. The Group has a certain level of current account to prepare unexpected payment of short‐
term financial liabilities and others.

(3) Market risk

Market risk is the risk of fluctuations in fair value of financial instrument and future cash flow by changes of market price.
The purpose for managing market price is to optimize profits, while managing and controlling on exposure to market risk
within acceptable limits.

(i) Foreign exchange risk

The Group is exposed to foreign exchange risk arising from various foreign currencies including the US dollar and Euro,
which relates to primarily to the Group’s global operating activities. The Group periodically measures and assesses the
exposure to primary currencies to minimize the fluctuation of business performance and financial risk on fluctuations in
foreign exchange and establish its own guidelines and manage foreign exchange risk.

[Risk]
‐ Risk of changes in presentation amount in Korean won due to foreign exchange fluctuation in future sales amounts
denominated in foreign currency
‐ Risk of changes in presentation amount in Korean won due to foreign exchange fluctuation in assets and liabilities
denominated in foreign currency
‐ Foreign exchange risk until the time of collecting accounts and notes receivable and paying of accounts and notes
payable

[Strategy]
‐ The Group is on the principle that it minimizes the exposure to currencies by matching inflows and outflows of foreign
currencies, size, and maturity.
‐ The Group reduces the exposure period of foreign currencies by trade financing instruments such as negotiation in
order to manage the risk arising from accounts and notes receivable and accounts and notes payable from operating
activities.
‐ The Group hedges its foreign currency risk arising from future cash flow that are expected to occur within a maximum
12‐month period by making use of derivative financial instruments such as currency forwards, currency options, etc.
‐ Derivative financial instruments such as currency swaps, etc. are used to hedge the foreign exchange risk until
maturities for borrowings in foreign currencies, whose maturity exceeds 12 months
‐ The Group enters into derivative financial instrument contracts based on its internal guideline and procedures for
foreign exchange risk, and speculative transactions are strictly limited.
76


31. Finance Risk Management, Continued

(ii) Interest rate risk

The Group is exposed to the risk that fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. To minimize uncertainty and net interest expense due to interest rate fluctuations, the
Group monitors the market movements of interest rate and forecasts and thus maintains appropriate financial
instruments.
[Risk]
‐ Risk of volatility in net interest expenses on financial instruments such as deposits due to changes in market interest
rate
‐ Risk of future cash flows volatility of borrowings due to changes in market interest rate
‐ Risk of changes in interest rates on accounts and notes receivable due to changes in market interest rate

[Strategy]
‐ The Group manages interest rate risk with a balanced portfolio of fixed and variable rate borrowings, The Group enters
into derivative financial instruments such as interest rate swaps and currency swaps to hedge the risk of cash flow
fluctuations arising from changes in interest rates.
‐ The Group is on the principle that the contracts of derivative financial instruments are limited to hedging instruments
for long‐term borrowings and bonds, and it matches the key terms of the hedged items such as the maturity, size and
interest payment date, etc. and keeps them until maturity.

(iii) Raw material price risk
The Group is affected by the price volatility of certain raw materials. Its operating activities in sales segment require
manufacturing through the ongoing purchase of raw materials and therefore, the Group is exposed to changes in such
prices depending on its forecast purchases. In order to minimize uncertainty and cost of sales due to raw material price
fluctuations, the Group monitors raw material price fluctuations and forecast data and operates appropriate financial
instruments based on the result.
[Risk]
‐ Risk of change in purchase price of inventories such as raw materials due to market price fluctuations
‐ Risk of change in future cash flows of cost of sales due to market price fluctuations

[Strategy]
‐ The Group hedges the risk of cash flow fluctuations due to price fluctuations by using derivatives such as raw material
swaps for some of the forecast transactions among its raw material purchases.
‐ The Group, in principle, limits the execution of derivatives contracts to hedging instruments for certain raw materials,
matches the hedged items and critical terms, and holds them until maturity.

(4) Capital management

The fundamental goal of capital management is to maintain on sound financial structure. As for this to be maintained,
the Group uses debt ratio as indicator of capital management. The debt ratio is calculated as total liability divided by
total equity.

77


32. Risk Management of Financial Instruments

(1) Credit risk

(i) Exposure to credit risk

The carrying amount of financial assets means maximum exposure in respect of credit risk. The maximum exposure as
of December 31, 2021 and 2020, is as follows:

Cash and cash equivalents(*) ￦ 11,533,610 ￦ 10,160,595
Short‐term financial instruments 4,532,697 2,912,700
Other current financial assets 1,624,525 1,806,427
Accounts and notes receivable – trade 1,787,698 1,819,008
Accounts and notes receivable – others 1,949,313 1,925,008
Long‐term financial instruments 135,200 134,736
Other non‐current financial assets 1,147,745 710,580
Long‐term accounts and notes receivable ‐ trade 4,526 5,377
￦ 22,715,314 ￦ 19,474,431

(*) Cash on hand is excluded.

(ii) Impairment

The aging information based on carrying amount of trade accounts and notes receivable and other receivables as of
December 31, 2021 and 2020 is as follows:

Accounts and Accounts and
notes receivable Other notes receivable Other
‐trade receivables(*) ‐trade receivables(*)
Not overdue ￦ 1,598,591 ￦ 2,151,432 ￦ 1,618,242 ￦ 1,484,786
Past due less than 3 months 194,059 34,695 204,693 90,821
Past due 4–6 months 913 13,314 1,351 23,605
Past due 7–12 months 56 129,632 21 153,085
Past due for more than 12 months 91,464 61,565 95,432 588,004
￦ 1,885,083 ￦ 2,390,638 ￦ 1,919,739 ￦ 2,340,301

(*) Other receivables are composed of accounts and notes receivables ‐ other, long‐term accounts and notes receivables
‐ other, accrued income, deposits provided and guarantee deposits.

78


32. Risk Management of Financial Instruments, Continued

(1) Credit risk, Continued

(ii) Impairment, Continued

Changes in allowance for doubtful accounts of trade accounts and notes receivable and other receivables for the years
ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Accounts and Accounts and
notes receivable Other notes receivable Other
‐trade receivables ‐trade receivables
Balance at January 1 ￦ 95,354 ￦ 3,422 ￦ 95,932 ￦ 5,304
Write‐off (3,110) ‐ (1) (491)
Bad debt expenses (reversal of 386 593 166 (753)
allowance for doubtful accounts)
Others 229 (686) (743) (638)
Balance at December 31 ￦ 92,859 ￦ 3,329 ￦ 95,354 ￦ 3,422

(2) Liquidity risk

Aggregate maturities of the Group’s financial liabilities, including estimated interest, as of December 31, 2021, are

More than

Within 1 year 1‐5 years 5 years Total
Non‐interest‐bearing liabilities:
Accounts and notes payable – trade ￦ 7,920,301 ￦ ‐ ￦ ‐ ￦ 7,920,301
Accounts and notes payable – others 2,385,621 ‐ ‐ 2,385,621
Accrued expenses 1,574,867 ‐ ‐ 1,574,867
Other current liabilities 28,559 ‐ ‐ 28,559
Other non‐current liabilities ‐ 604,582 ‐ 604,582
Interest‐bearing liabilities:
Bonds 754,343 2,997,049 487,430 4,238,822
Borrowings 3,802,975 1,604,474 102,083 5,509,532
Lease liabilities 52,276 124,886 144,035 321,197
Financial guarantee: 207,463 359,257 ‐ 566,720
￦ 16,726,405 ￦ 5,690,248 ￦ 733,548 ￦ 23,150,201

(*) The maturity analysis was based on the earliest expiration date when the Group would have to pay based on the
undiscounted cash flows of the financial liabilities.

79



(2) Liquidity risk, Continued

Aggregate maturities of the Group’s financial liabilities, including estimated interest, as of December 31, 2020, are

More than

Within 1 year 1‐5 years 5 years Total
Non‐interest‐bearing liabilities:
Accounts and notes payable – trade ￦ 7,302,405 ￦ ‐ ￦ ‐ ￦ 7,302,405
Accounts and notes payable – others 2,133,442 ‐ ‐ 2,133,442
Accrued expenses 1,595,488 ‐ ‐ 1,595,488
Other current liabilities 24,246 ‐ ‐ 24,246
Other non‐current liabilities ‐ 653,159 ‐ 653,159
Interest‐bearing liabilities:
Bonds 512,197 2,170,573 748,782 3,431,552
Borrowings 4,820,730 2,180,928 183,017 7,184,675
Lease liabilities 48,736 120,722 137,955 307,413
Financial guarantee: 272,912 405,518 ‐ 678,430
￦ 16,710,156 ￦ 5,530,900 ￦ 1,069,754 ￦ 23,310,810

(*) The maturity analysis was based on the earliest expiration date when the Group would have to pay based on the
undiscounted cash flows of the financial liabilities.

(3) Foreign exchange risk

The Group’s equity and profit or loss would have been increased or decreased if the foreign exchange rates against USD
and EUR were fluctuant. The Group assumes that interest rate fluctuates 10% as of December 31, 2021 and 2020. Also,
the Group assumes that other variables, such as interest rate, are not changed by sensitivity analysis. The Group analyzed
by the same method that was used for the last period, and details for the effect on profit before income taxes are

10% up 10% down 10% up 10% down
USD ￦ (320,081) ￦ 320,081 ￦ (219,294) ￦ 219,294
EUR (114,589) 114,589 (146,957) 146,957

(4) Interest rate risk

Sensitivity analysis of interest income/expenses from changes in interest rate as of December 31, 2021 and 2020, is

100 bp up 100 bp down 100 bp up 100 bp down
Interest income ￦ 110,324 ￦ (110,324) ￦ 101,606 ￦ (101,606)
Interest expenses 14,779 (14,779) 28,350 (28,350)
80



(5) Fair value

(i) Fair value and carrying amount

Details of fair value and carrying amount of financial assets and liabilities by category as of December 31, 2021 and 2020,
are summarized as follows:

December 31, 2021
Carrying amount Fair value
Financial assets measured at fair value
through profit or loss:
Other current financial assets ￦ 1,472,074 ￦ 1,472,074
Derivative assets 39,494 39,494
￦ 1,511,568 ￦ 1,511,568
through other comprehensive income:
Long‐term equity securities ￦ 691,628 ￦ 691,628

Financial assets measured at amortized cost:
Cash and cash equivalents ￦ 11,533,710 ￦ 11,533,710
Other current financial assets 141,495 141,495
Long‐term accounts and notes receivable – trade 4,526 4,526
Other non‐current financial assets 318,842 318,842
￦ 20,403,481 ￦ 20,403,481
Financial liabilities measured at fair value
Derivative liabilities ￦ 11,179 ￦ 11,179

Financial liabilities measured at amortized cost:
Accounts and notes payable – trade ￦ 7,920,301 ￦ 7,920,301
Accounts and notes payable – others 2,385,621 2,385,621
Bonds 3,966,841 3,988,282
Borrowings 5,377,036 5,399,991
Others 2,463,634 2,463,634
￦ 22,113,433 ￦ 22,157,829
Financial instruments designated as cash flow
hedges:
Derivative assets ￦ 108,738 ￦ 108,738
Derivative liabilities 5,947 5,947
￦ 102,791 ￦ 102,791

81



(5) Fair value, Continued

(i) Fair value and carrying amount, Continued

Details of fair value and carrying amount of financial assets and liabilities by category as of December 31, 2020 is
.
December 31, 2020
Carrying amount Fair value
Other current financial assets ￦ 1,642,289 ￦ 1,642,289
￦ 1,748,598 ￦ 1,748,598
through other comprehensive income:
Long‐term equity securities ￦ 336,619 ￦ 336,619

Financial assets measured at amortized cost:
Cash and cash equivalents ￦ 10,160,697 ￦ 10,160,697
Other current financial assets 164,137 164,137
Long‐term accounts and notes receivable – trade 5,377 5,377
￦ 17,389,314 ￦ 17,389,314
Financial liabilities measured at fair value
Derivative liabilities ￦ 12,843 ￦ 12,843

Financial liabilities measured at amortized cost:
Accounts and notes payable – trade ￦ 7,302,405 ￦ 7,302,405
Accounts and notes payable – others 2,133,442 2,133,442
Bonds 3,157,888 3,185,515
Borrowings 7,008,828 7,021,472
Others 2,478,210 2,478,210
￦ 22,080,773 ￦ 22,121,044
Financial instruments designated as cash flow
hedges:
Derivative assets ￦ ‐ ￦ ‐
Derivative liabilities 43,677 43,677
￦ (43,677) ￦ (43,677)

82




(i) Fair value and carrying amount, Continued

The Group measured the fair value of financial instruments as follows:

• The fair value of financial assets traded within the market is measured at the closing bid price quoted at the end of
the reporting period.
• The fair value of the derivatives is measured at the present value of the difference between contractual forward
price and future forward price at the end of the reporting period discounted for the remaining period of the contract.

Except for the financial assets and liabilities above, the fair value of accounts receivable and others classified as current
assets is close to their carrying amounts. In addition, the fair value of other financial instruments is determined as the
present value of estimated future cash flows discounted at the current market interest rate. As of December 31, 2021,
there are no significant business climate and economic environment changes affecting the fair value of financial assets
and liabilities.

(ii) Fair value hierarchy

Fair value measurements classified by fair value hierarchy as of December 31, 2021, are summarized as follows:

Level 1 Level 2 Level 3 Total
Financial assets
Other current financial assets ￦ ‐ ￦ 1,472,074 ￦ ‐ ￦ 1,472,074
Other non‐current financial
assets ‐ 39,494 ‐ 39,494
Marketable equity securities 496,186 ‐ ‐ 496,186
Non‐marketable equity
securities ‐ ‐ 195,442 195,442
Derivatives assets ‐ 108,738 ‐ 108,738
￦ 496,186 ￦ 1,620,306 ￦ 195,442 ￦ 2,311,934
Financial liabilities
Derivatives liabilities ￦ ‐ ￦ 17,126 ￦ ‐ ￦ 17,126

There were no significant transfers between levels 1, 2 and 3.

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 in active markets for identical assets or liabilities
Level 2: Inputs that are observable for the asset or liability, either directly or indirectly
Level 3: Inputs for the asset or liability that are not based on observable market data

83




The valuation techniques and the unobservable inputs used in measuring Level 2 and 3 fair values as of December 31,
2021, are summarized as follows:

Fair value Valuation methods Inputs
Financial assets at fair value through
profit or loss ￦ 1,511,568
other comprehensive income 195,442
Financial liabilities at fair value through DCF model Discount rate
profit or loss 11,179 and others and others(*)
Derivative assets designated as cash
flow hedges 108,738
Derivative liabilities designated as cash
flow hedges 5,947
(*) When discounting the expected cash flow, the Group used the interest rate that added the credit spread to the
government bond yield as of December 31, 2021 and the weighted average capital cost of the entities to be evaluated

(iii) Financial instruments not measured at fair value and for which fair value is disclosed

Financial instruments measured at amortized cost, but presented as fair value classified by fair value hierarchy as of
December 31, 2021, are summarized as follows:

Level 1 Level 2 Level 3 Total
Bonds and borrowings ￦ ‐ ￦ ‐ ￦ 9,388,273 ￦ 9,388,273

The Group has not disclosed the fair value hierarchy for financial instruments because their carrying amounts are a
reasonable approximation of the fair values.

The valuation techniques and the significant but not unobservable input variables used in measuring the fair value of
financial instruments classified as Level 3 of financial instruments measured at amortized cost but disclosed at fair value
are as follows:

Fair value Valuation methods Significant unobservable input
Bonds and borrowings ￦ 9,388,273 DCF model Discount rate considering credit risk

84



(6) Income and expenses by financial instruments category

Income and expenses by financial instruments category for the year ended December 31, 2021 are summarized as
follows:

Other comprehensive

Finance income Finance costs income
profit or loss ￦ 45,784 ￦ ‐ ￦ ‐
other comprehensive income 82,286 ‐ 25,829
Financial assets measured at
amortized cost 107,414 8,217 ‐
Financial liabilities measured at
Derivative instruments 58,827 47,912 1,648
￦ 356,724 ￦ 327,444 ￦ 27,477

Income and expenses by financial instruments category for the year ended December 31, 2020 are summarized as
follows:

Other comprehensive

Finance income Finance costs income
profit or loss ￦ 38,731 ￦ ‐ ￦ ‐
other comprehensive income 3,503 ‐ 96,489
Financial assets measured at
Financial liabilities measured at
Derivative instruments 50,911 36,235 15,414
￦ 341,844 ￦ 424,756 ￦ 111,903

85



(7) Offsetting financial assets and financial liabilities

(i) Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements
as of December 31, 2021, are summarized as follows:

Gross amounts of
Gross amounts of recognized financial Net amounts of
recognized financial liabilities financial Related amounts
assets/liabilities set off assets/liabilities not set off Net amount
Financial assets:
Accounts and notes receivable ‐ trade, and
others ￦ 801,478 ￦ (632,404) ￦ 169,074 ￦ (8,573) ￦ 160,501
Financial liabilities:
Short‐term borrowings 3,015,688 ‐ 3,015,688 (3,015,688) ‐
Accounts and notes payables‐ trade, and
others 3,175,697 (632,404) 2,543,293 (8,573) 2,534,720
￦ 6,191,385 ￦ (632,404) ￦ 5,558,981 ￦ (3,024,261) ￦ 2,534,720

(ii) Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements
as of December 31, 2020, are summarized as follows:

Gross amounts of
Gross amounts of recognized financial Net amounts of
recognized financial liabilities financial Related amounts
assets/liabilities set off assets/liabilities not set off Net amount
Financial assets:
Accounts and notes receivable ‐ trade, and
others ￦ 436,067 ￦ (301,234) ￦ 134,833 ￦ (30,953) ￦ 103,880
Financial liabilities:
Short‐term borrowings 4,379,771 ‐ 4,379,771 (4,379,771) ‐
Accounts and notes payables‐ trade, and
others 1,938,199 (300,126) 1,638,073 (30,953) 1,607,120
￦ 6,317,970 ￦ (300,126) ￦ 6,017,844 ￦ (4,410,724) ￦ 1,607,120

86


33. Related Party Transactions

(1) Significant transactions

Significant transactions arising from operation between the Group and related parties or affiliates by the Monopoly
Regulation and Fair Trade Act of the Republic of Korea (the “Act”) for the year ended December 31, 2021, are summarized
as follows:

Revenue Expenses
Relation Company Sales Other Total Purchases Other Total
Entity with Hyundai Motor Company ￦ 737,650 ￦ 9,124 ￦ 746,774 ￦ 624,423 ￦ 653,995 ￦ 1,278,418
significant Hyundai Motor America 208,491 ‐ 208,491 7,993 170,439 178,432
influence over the
Hyundai Motor Manufacturing
Company and its
Czech, s.r.o. 651,503 2,310 653,813 70,213 4,412 74,625
subsidiaries
Alabama, LLC ‐ 261,819 261,819 580,701 2,482 583,183
Hyundai Auto Canada Corp. ‐ ‐ ‐ 709 38,479 39,188
Hyundai Kefico Corporation 6 1,080 1,086 305,211 7,420 312,631
Others 542,534 5,722 548,256 394,050 297,062 691,112
Joint ventures and Hyundai Mobis Co., Ltd. 100,005 3,595 103,600 7,200,552 40,045 7,240,597
associates EUKOR Car Carriers, Inc. ‐ 335 335 ‐ 216,654 216,654
Hyundai Transys Inc. 54,971 211 55,182 1,093,221 32,694 1,125,915
Hyundai Capital Services, Inc. 759,801 57 759,858 697 101,515 102,212
Donghee Auto Co., Ltd. 62 ‐ 62 141,953 4,287 146,240
Hyundai Engineering Co., Ltd. 286 713 999 926 111,296 112,222
Hyundai Steel Co., Ltd. 4,132 14 4,146 81,553 6,398 87,951
Mobis Alabama, LLC 3,278 8,060 11,338 1,932,561 9,941 1,942,502
Mobis Slovakia s.r.o. 45,240 3,127 48,367 1,676,686 51,103 1,727,789
Rus LLC 16,609 ‐ 16,609 994,574 79 994,653
Hyundai Motor Group China,
Ltd. ‐ ‐ ‐ ‐ 30,058 30,058
Hyundai Transys Georgia
Powertrain, Inc. (formerly,
Powertech America Inc) ‐ 2,055 2,055 380,571 916 381,487
Mobis Parts America, LLC ‐ 160 160 964,987 ‐ 964,987
Dongfeng Yueda Kia Motors Co.,
Ltd. 97,636 1,908 99,544 307,129 761 307,890
Sewon America, Inc. ‐ 1 1 167,400 6,645 174,045
Others 34,695 22,656 57,351 3,123,457 1,624,056 4,747,513
Other related parties 10,007 24,688 34,695 382 5,647 6,029
Affiliates by the Act 64,027 55,103 119,130 8,191,215 1,176,799 9,368,014

For the year ended December 31, 2021, the Group received dividends of ￦152,105 million from related parties and
paid dividends of ￦142,812 million to related parties. In addition, the Group receives royalties for production of
products in accordance with contracts with production entities domiciled in foreign countries and others.

87


33. Related Party Transactions, Continued

(1) Significant transactions, Continued

Significant transactions arising from operation between the Group and related parties or affiliates by the Act for the year
ended December 31, 2020, are summarized as follows:

Revenue Expenses
Relation Company Sales Other Total Purchases Other Total
Entity with Hyundai Motor Company ￦ 348,143 ￦ 10,909 ￦ 359,052 ￦ 458,493 ￦ 618,413 ￦ 1,076,906
influence over the
Company and its
Czech, s.r.o. 380,587 246 380,833 60,517 4,267 64,784
subsidiaries
Alabama, LLC ‐ 38,289 38,289 343,465 ‐ 343,465
Hyundai Auto Canada Corp. 17,506 ‐ 17,506 646 40,230 40,876
Hyundai Kefico Corporation 4 3,812 3,816 292,606 22 292,628
Others 358,395 4,608 363,003 274,181 156,696 430,877
Joint ventures and Hyundai Mobis Co., Ltd. 70,653 3,720 74,373 6,074,544 2,352 6,076,896
Hyundai Transys Inc. 62,428 34 62,462 1,051,338 4,329 1,055,667
Hyundai Capital Services, Inc. 668,832 58 668,890 948 99,420 100,368
Donghee Auto Co., Ltd. 392 ‐ 392 127,420 1,754 129,174
Hyundai Engineering Co., Ltd. 264 733 997 9,177 108,155 117,332
Hyundai Steel Co., Ltd. 9,357 13 9,370 76,924 ‐ 76,924
Mobis Alabama, LLC 4,729 9,625 14,354 1,631,186 23,300 1,654,486
Mobis Slovakia s.r.o. 30,749 4,016 34,765 1,461,658 2,368 1,464,026
Rus LLC 15,721 ‐ 15,721 961,651 39 961,690
Hyundai Motor Group China,
Ltd. ‐ ‐ ‐ ‐ 12,473 12,473
Powertech America Inc) ‐ 3,159 3,159 317,324 849 318,173
Mobis Parts America, LLC ‐ 296 296 733,124 ‐ 733,124
Ltd. 75,427 20,319 95,746 288,922 1,127 290,049
Sewon America, Inc. ‐ 1 1 170,876 14,934 185,810
Others 35,548 25,316 60,864 2,803,573 1,712,323 4,515,896
Other related parties 4,145 11,431 15,576 392 4,909 5,301
Affiliates by the Act 68,061 35,667 103,728 6,724,786 954,112 7,678,898

For the year ended December 31, 2020, the Group received dividends of ￦119,269 million from related parties and
paid dividends of ￦166,155 million to related parties. In addition, the Group receives royalties for production of
products in accordance with contracts with production entities domiciled in foreign countries and others.

88



(2) Account balances

Significant account balances with related parties or affiliates by the Act as of December 31, 2021, are summarized as
follows:

Receivables Payables
Relation Company Trade Other Total Trade Other Total
Entity with Hyundai Motor Company ￦ 98,010 ￦ 39,555 ￦ 137,565 ￦ 88,540 ￦ 321,491 ￦ 410,031
influence over
the Company and
Czech, s.r.o. 37,738 15 37,753 ‐ 291 291
its subsidiaries
Alabama, LLC ‐ 50,733 50,733 40,974 ‐ 40,974
Hyundai Kefico Corporation ‐ 111 111 50,736 2 50,738
Others 52,299 1,892 54,191 47,401 36,731 84,132
Joint ventures and Hyundai Mobis Co., Ltd. ‐ 618 618 1,446,855 1,105 1,447,960
Hyundai Transys Inc. 13,058 1,995 15,053 209,283 ‐ 209,283
Hyundai Capital Services, Inc. 36,667 20 36,687 ‐ 140,701 140,701
Donghee Auto Co., Ltd. ‐ ‐ ‐ 13,449 3 13,452
Hyundai Engineering Co., Ltd. ‐ 41 41 795 11,125 11,920
Hyundai Steel Co., Ltd. 884 104 988 21,202 67 21,269
Mobis Alabama, LLC 507 1,446 1,953 314,766 ‐ 314,766
Mobis Slovakia s.r.o. ‐ ‐ ‐ 176,614 4,927 181,541
Rus LLC 6,602 ‐ 6,602 134,733 ‐ 134,733
Hyundai Motor Group China, Ltd. ‐ ‐ ‐ ‐ 13,080 13,080
Powertech America, Inc.) ‐ 629 629 61,742 ‐ 61,742
Mobis Parts America, LLC ‐ ‐ ‐ 80,696 ‐ 80,696
Ltd. 119,904 295 120,199 24,458 700 25,158
Sewon America, Inc. 9,708 ‐ 9,708 13,094 ‐ 13,094
Others 16,477 13,063 29,540 795,510 94,612 890,122
Other related parties 3,564 8 3,572 67 466 533

89



(2) Account balances, Continued

Significant account balances with related parties or affiliates by the Act as of December 31, 2020, are summarized as
follows:

Receivables Payables
Relation Company Trade Other Total Trade Other Total
Entity with Hyundai Motor Company ￦ 102,897 ￦ 53,426 ￦ 156,323 ￦ 156,309 ￦ 212,837 ￦ 369,146
significant Hyundai Motor America 50,454 ‐ 50,454 922 67,067 67,989
influence over
the Company and
Czech, s.r.o. 50,004 13 50,017 ‐ 495 495
its subsidiaries
Alabama, LLC ‐ 2,360 2,360 55,654 ‐ 55,654
Hyundai Kefico Corporation ‐ 10 10 62,379 ‐ 62,379
Others 75,584 18,559 94,143 42,803 18,532 61,335
Joint ventures and Hyundai Mobis Co., Ltd. 25,433 1,606 27,039 1,436,887 527 1,437,414
Hyundai Transys Inc. 12,009 1,010 13,019 279,431 2,209 281,640
Hyundai Capital Services, Inc. 40,826 22 40,848 ‐ 192,178 192,178
Donghee Auto Co., Ltd. ‐ ‐ ‐ 9,221 ‐ 9,221
Hyundai Engineering Co., Ltd. ‐ 29 29 3,743 13,027 16,770
Hyundai Steel Co., Ltd. 1,040 395 1,435 15,891 ‐ 15,891
Mobis Alabama, LLC 183 1,686 1,869 295,574 ‐ 295,574
Mobis Slovakia s.r.o. ‐ 3 3 109,009 5,231 114,240
Rus LLC 6,728 ‐ 6,728 136,195 ‐ 136,195
Hyundai Motor Group China, Ltd. ‐ ‐ ‐ ‐ 5,960 5,960
Powertech America, Inc.) ‐ 450 450 58,014 ‐ 58,014
Mobis Parts America, LLC ‐ ‐ ‐ 60,165 ‐ 60,165
Ltd. 69,041 125 69,166 16,438 686 17,124
Sewon America, Inc. ‐ ‐ ‐ 13,560 ‐ 13,560
Others 20,297 13,455 33,752 608,699 66,953 675,652
Other related parties 1,725 8 1,733 41 531 572

90



(3) Significant capital transactions with related parties

Significant capital transactions with related parties for the years ended December 31, 2021 and 2020, are summarized
as follows:

2021 2020
Cash investments in joint ventures and associates ￦ 1,033,446 ￦ 778,676

The Group has money market trust of W 350,000 million in Hyundai Motor Securities Co., Ltd. as of December 31, 2021
(2020: W 320,000 million). The Group contributed W 1,410,000 million to the trust during the year ended December 31,
2021 (2020: W 1,050,000 million) and withdrew W 1,380,000 million from the trust during the year ended December 31,
2021 (2020: W 1,180,000 million).

(4) Key management personnel compensation

Details of compensation to key management personnel, including registered and non‐registered directors, for the years
ended December 31, 2021 and 2020, are summarized as follows:

2021 2020
Salaries ￦ 64,654 ￦ 48,082
Retirement benefits cost 16,479 13,635
￦ 81,133 ￦ 61,717

(5) Details of guarantees given to the related parties

Details of guarantees given to the related parties as of December 31, 2021 are summarized as follows:

(In thousands of US dollar)
Financial Period of
Relation Company Purpose institution guarantees Amount
Dongfeng Yueda Kia Construction 2020. 04. 20 ~
Joint venture Shinhan Bank and others USD 325,000
Motors Co., Ltd. investment and others 2024. 04. 13

34. Date of Authorization for Issuance of the Consolidated Financial Statements

The consolidated financial statements as of and for the year ended on December 31, 2021 to be submitted at the
shareholders’ meeting were authorized for issuance at the Board of Directors’ meeting held on February 25, 2022.

35. Subsequent Events

(1) The Group issued an unsecured bonds of USD 700,000,000 on February 8, 2022.

(2) The Group cannot make reasonable estimation on the financial impact of sanctions against Russia in relation to the
ongoing conflict in Ukraine.

91

2021 Audit Report

Uploaded by

Copyright:

Available Formats

2021 Audit Report

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2021 Audit Report

Uploaded by

Copyright:

Available Formats

KIA CORPORATION

AND ITS SUBSIDIARIES

KIA CORPORATION AND ITS SUBSIDIARIES

Tel: +82 2 3787 6600

Independent auditor’s report

A member ﬁrm of Ernst & Young Global Limited

A member ﬁrm of Ernst & Young Global Limited

A member ﬁrm of Ernst & Young Global Limited

A member ﬁrm of Ernst & Young Global Limited

at fair value through other comprehensive income 25,829 96,489

The amount of valuation allowance on inventories is ￦59,214 million and ￦81,829 million as of December 31, 2021

You might also like