Hyundai Mobis : 2023 Annual Separate Financial Statements Audit Report

HYUNDAI MOBIS CO., LTD.

Separate financial statements

for each of the two years in the period ended December 31, 2023

with the independent auditor's report

Table of contents

	Page
Independent Auditor's Report
Separate Financial Statements
Separate Statements of Financial Position	1
Separate Statements of Profit or Loss	3
Separate Statements of Comprehensive Income	4
Separate Statements of Changes in Equity	5
Separate Statements of Cash Flows	6
Notes to the Separate Financial Statements	7
Independent auditor's report on internal control over financial reporting ("ICFR")
Management's report on the effectiveness of ICFR

Ernst & Young Han Young

2-4F,6-8F, Taeyoung Building, 111, Yeouigongwon-ro,

Yeongdeungpo-gu, Seoul 07241 Korea

Tel: [phone]

Fax: [phone] ey.com/kr

Independent Auditor's Report

(English Translation of a Report Originally Issued in Korean)

The Shareholders and Board of Directors

HYUNDAI MOBIS CO., LTD.

Opinion

We have audited the separate financial statements of HYUNDAI MOBIS CO., LTD. (the "Company"), which comprise the separate statements of financial position as of December 31, 2023 and 2022, and the separate statements of profit or loss, separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for each of the two years in the period ended December 31, 2023, and the notes to the separate financial statements, including material accounting policy information.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2023 in accordance with International Financial Reporting Standards as adopted by the Republic of Korea ("KIFRS").

We have audited the Company's internal control over financial reporting ("ICFR") as of December 31, 2023, based on the Conceptual Framework for Design and Operation of ICFR established by the Operating Committee of ICFR in Korea, in accordance with Korean Standards on Auditing ("KSA"), and our report dated March 12, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

We conducted our audit in accordance with KSA. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the separate financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the separate 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 judgement, were of most significance in our audit of the separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

(Key audit matter 1) Appropriate cut-off of revenue recognition for A/S parts

As described in Notes 3-(20) and 28 to the separate financial statements, the Company is engaged in A/S parts business of significant scale, and recognizes the related consideration as revenue when the control of goods is transferred in a contract with a customer. The Company's sales of A/S parts are transacted with various customers, and the timing of revenue recognition may differ depending on the contract with the customer, and thus, the inherent risk of cut-off of revenue recognition is high. Therefore, we identified the appropriateness of sales cut-off of A/S parts as a key audit matter in consideration of the significance of sales of A/S parts in the Company's revenues and the significant risk of misstatement in the cut-off of revenue recognition, which may occur depending on the terms of contracts with various customers.

A member firm of Ernst & Young Global Limited

Our procedures performed with regard to the key audit matter are as follows:

• Review the time when the control is transferred on the basis of revenue recognition under KIFRS by reviewing the Company's major contract terms and conditions.
• Obtain an understanding of the Company's policies, processes and the Company's internal control over revenue recognition of A/S parts.
• Evaluate the effectiveness of the design and operation of the Company's internal control over sales cut-off of A/S parts
• Compare the accounting records with supporting documents of sales transactions of the A/S parts occurring on and around the year end, on a sample basis.

(Key audit matter 2) Assessment of inventory valuation allowance

As described in Notes 3-(8) and 8 to the separate financial statements, the Company recognized an allowance for inventory valuation of W105,339 million by measuring inventories at the lower of acquisition cost and net realizable value.

The Company has a variety of inventories, which account for a significant proportion of total assets of the Company. The Company assesses the net realizable value of inventories based on various assumptions, such as the non-movement period, forecasted demand, and estimated selling price of inventories. Therefore, we identified the adequacy of the assessment of inventory valuation allowance as a key audit matter in consideration of the significance of inventories in the Company's separate financial statements and the significant risk of misstatement that may occur due to the estimates uncertainty used when assessing net realizable value, and the complexity of assumptions by management.

Our procedures performed with regard to the key audit matter are as follows:

• Obtain an understanding of the accounting policies and the Company's internal control over the assessment of inventory valuation allowance.
• Compare the significant underlying data used by management for the accounting estimates with related internal and external data.
• Review the outcome of accounting estimates included in the prior year's separate financial statements.
• Verify inventory valuation allowances by conducting our independent recalculation of them.

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

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with KIFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

A member firm of Ernst & Young Global Limited

Auditor's Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate 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 KSA 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 separate financial statements.

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

• Identify and assess the risks of material misstatement of the separate 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.
• 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 Company'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 separate 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 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 separate 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.

A member firm of Ernst & Young Global Limited

The engagement partner on the audit resulting in this independent auditor's report is Hee-Yeong Kim.

March 12, 2024

This audit report is effective as of March 12, 2024, the independent auditor's report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of the independent auditor's report to the time this report is used. Such events and circumstances could significantly affect the accompanying separate financial statements and may result in modifications to this report.

A member firm of Ernst & Young Global Limited

HYUNDAI MOBIS CO., LTD.

Separate Financial Statements

For each of the two years in the period ended December 31, 2023

"The accompanying separate financial statements, including all footnotes and disclosures, have been

prepared by, and are the responsibility of, the Company."

Gyusuk Lee

Chief Executive Officer

HYUNDAI MOBIS Co., Ltd.

HYUNDAI MOBIS CO., LTD. Separate Statements of Financial

As of December 31, 2023 and 2022

(In millions of won)

Assets

Cash and cash equivalents

Other financial assets

Trade and other receivables, net

Inventories, net

Other current assets

Non-current Assets Held for Sale

Total current assets

Property, plant and equipment, net

Intangible assets, net

Investment property, net

Right-of-use assets, net

Investment in associates, joint ventures and subsidiaries

Non-current financial assets

Other non-current assets

Total non-current assets

Total assets

(continued)

Position

Note		2023			2022
4, 39	W	1,435,435		W	1,024,760
5,6,39		3,713,895			5,349,855
7,18,28,35,39		7,980,808			7,639,927
8		2,703,313			2,317,042
9,39		250,660			183,461
40		11,861			-
		16,095,972			16,515,045
10		7,146,617			7,187,351
11		905,649			859,565
12		28,063			28,536
13		121,346			105,334
14,35		9,745,899			8,582,349
15,39		879,183			879,940
5,7,16,22,39		654,373			623,930
		19,481,130			18,267,005
	W	35,577,102		W	34,782,050

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HYUNDAI MOBIS CO., LTD.

Separate Statements of Financial Position, Continued

As of December 31, 2023 and 2022

(In millions of won)	Note			2023			2022
Liabilities	17,35,39		W
Trade and other payables		5,271,758		W	4,891,982
Short-term borrowings	18,38,39			153,100			1,052,232
Current lease liabilities	13,38,39			45,150			38,119
Income taxes payable	33			144,943			205,886
Current provisions for warranties	21			965,294			668,242
Other current liabilities	19,39			341,780			252,983
Total current liabilities				6,922,025			7,109,444
Bonds	18,38,39			199,686			349,348
Non-current lease liabilities	13,38,39			74,183			66,005
Non-current provision for warranties	21			289,794			236,535
Deferred tax liabilities	33			351,645			403,504
Other non-current liabilities	20,36,39			527,816			528,787
Total non-current liabilities				1,443,124			1,584,179
Total liabilities				8,365,149			8,693,623
Equity	23
Capital stock			491,096			491,096
Capital surplus	23			1,363,467			1,362,608
Treasury stock	24			(681,939)			(568,475)
Other equity	25			(164,198)			(164,243)
Retained earnings	26			26,203,527			24,967,441
Total equity				27,211,953			26,088,427
Total liabilities and equity			W	35,577,102		W	34,782,050

The accompanying notes are an integral part of the separate financial statements.

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HYUNDAI MOBIS CO., LTD.

Separate Statements of Profit or Loss

For each of the two years in the period ended December 31, 2023

(In millions of won, except earnings per share)	Note			2023			2022
Revenue	28,35		W	38,970,304		W	34,052,113
Cost of sales	29,35			(34,719,201)			(29,927,002)
Gross profit				4,251,103			4,125,111
Selling, general and administrative expenses	29,30,32,35			(3,089,416)			(2,719,778)
Operating profit				1,161,687			1,405,333
Other income	31,32			285,711			354,527
Other expenses	31,32			(196,905)			(320,242)
Finance income	32,35			1,296,241			1,161,302
Finance costs	32			(361,201)			(529,345)
Gain (loss) on Investment in associates, joint	14			313			(21,716)
ventures and subsidiaries
Profit before income taxes				2,185,846			2,049,859
Income tax expense	33			(370,947)			(473,399)
Profit for the year			W	1,814,899		W	1,576,460
Earnings per share
34		W
Basic earnings per share in won		19,959		W	17,230

The accompanying notes are an integral part of the separate financial statements.

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