Kia Motors Slovakia s.r.o. ANNUAL REPORT 2016

Kia

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s.r.

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1. Foreword ................................................................................................. 4

2. Key Events in Kia Motors Slovakia’s History .................................... 6

3. Kia Motors Slovakia ............................................................................... 8

CompanyProfile........................................................................... 8

CompanyExecutives................................................................... 8

KiaMotorsCorporation............................................................... 8

KiaMotorsSlovakiain2016....................................................... 9

GoalsandForecastfor2017...................................................... 9

ProductLine-Up......................................................................... 10

ProductionProcess....................................................................12

4. Sustainable Development ...................................................................14

EnvironmentalAspects..............................................................14

HumanResources.......................................................................15

EducationofEmployees............................................................15

SafetyandOccupationalHealthin2016.................................16

DueFulfilmentofObligations...................................................17

CooperationwithSchools.........................................................17

Philanthropy................................................................................18

CorporatePhilosophy.................................................................19

5. Quality Management System ...........................................................20

6. Financial Overview ................................................................................21

7. Yearly Closing ....................................................................................... 22

CONTENTS

4

FOREwORD

InDecember2016,KiaMotorsSlovakiacelebrated the 10th anniversaryof the launch of passenger carproduction in Slovakia. During the

past decade more than 2.5 millionvehicles and 3.8 million engineshave left the production lines. Thementioned period represents an eraof continuous growth and develop-mentinthecompany’shistoryduringwhichtheannualproductioncapacityhas gradually increased to current350,000vehicles.

Last year was the seventh conse-cutiveyearinwhichtheproductionwasincreased. In total, 339,500 vehiclesand 612,915 engines were produced.ThefourthgenerationofKiaSportage,havingdominatedproductionquantitywithnearlytwothirdssincethelaunchof volume production in December2015,hasbecomethemain reasonofsuccess.ProductionofoneofthemostsellingCUVsinEuroperecordedover10percentriseyear-on-year.

Record breaking production has alsobeen confirmed by performance ofourmodelsinthereliabilityandqualitytests. Among many, a particularly

significant success of Sportage ina reliability survey of the reputableresearch company J.D. Power on theGerman market stands out whenin competition with 24 brands and68 models it came in first place. Itsdominance was also affirmed bya victory in 100,000 km long-termdurability tests of the renownedGerman automotive magazines AutoMotorundSportandAutoBild.Inbothlong-term tests the third generationachievedzero-defectresults.

Kia Motors Slovakia is one of themost significant companies in thecountry inmany aspects. On a long-termbasis,ithasbelongedtothetopproducers, employers and exporters,as well as contributors to the statebudget. Achieved production andbusiness results were highlighted

with the National Quality Award in2016 awarded by the Slovak OfficeofStandards,MetrologyandTesting.At the same time, our companywas

evaluatedasaLeadingHROrganisationamong automotive companies inSlovakia by PricewaterhouseCoopersSlovenskofourtimesinarow.

Allofthementionedresultswouldbedifficult to achieve without challengeand passion of our employees.Combination of their everyday efforttogether with a unique innovationsystemgivesourcompanyaparticularcompetitiveness advantage. Hugeacknowledgement belongs also to allofoursuppliersandbusinesspartnersthankstowhomweareabletoprovidethe top quality cars and fulfil ourambitiousgoalscontinuously.

EekHeeLeePresidentandCEOKiaMotorsSlovakia

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KEY EvENTS iN KiA MOTORS SLOvAKiA‘S HiSTORY

2 0 1 62004MarchInvestmentAgreementbetweenKMCandtheSlovakRepublicOctober Plantconstructionlaunched

2006December Productionofcee’d

2007June SportageproductionNovember ISO14001certificate

2008November ISO9001certificate

2010June 3rdgenerationSportage

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2 0 1 62011September ProductioninEngineshopIIOctober ProductionofVenga

2012April 2ndgenerationcee’dDecember STNOHSAS18001certificate

2013May cee’dGTandpro_cee’dGTproduction

2014October NationalProductivityAward2013NovemberSlovakGoldExclusivequalitycertificate

2015November4thgenerationSportage

2016NovemberSlovakNationalQualityAward2016

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KiA MOTORS SLOvAKiA

On March 18, 2004, Kia MotorsCorporation officially confirmed theconstruction of its first Europeanautomotive plant in Slovakia. KiaMotors Slovakia s.r.o. (hereinafterreferred to as “KiaMotors Slovakia”)is a company 100 percent owned byKia Motors Corporation. The main

activity is the production of motorvehicles including engines. Theregistered capital is in the amountof 433,322,934.01 EUR. In 2016, thecompanyexecutiveswereEekHeeLeeandJunGyuLee.

ThevolumeproductionatKiaMotorsSlovakia started in December 2006.TheplantcurrentlymanufacturesKiacee’d of lower middle class in threecarbodyversions,theCUVmodelKiaSportage,andtheMPVrepresentativeKiaVenga.

Eek Hee LeePresident and CEO

EekHeeLeestudiedattheUniversityofUlsan,SouthKorea,andsuccessfullygraduated in the field of MechanicalEngineering in 1979. He started hiscareer with Hyundai Group in 1981.Afterseveralyears,he joined thecarproductionplantinUlsanasDirectorofProductionManagementuntil2004.

Later,Mr. Lee began towork for theHyundaiMotorCompanyHeadquarterswhere he became responsible forStrategicPlanningandGlobalProduc-tion Management. As a highly skilledprofessional,hebecamethePresidentand CEO of Kia Motors Slovakia inDecember 2011. He is authorized toact solely as a statutory body of KiaMotorsSlovakia.

KiaMotorsCorporationisamakerofworld-class quality vehicles for theyoung-at-heart. The company wasfoundedin1944andisKorea‘soldestmanufacturer of motor vehicles.OverthreemillionKiavehiclesayearare produced at 14 manufacturingand assembly operations in fivecountries. In 2016, Kia Motors sold3,007,976vehiclesthroughanetworkof distributors and dealers covering180 countries thus conquering thethree-millionmarkforthefirsttime.The global value of the Kia Motors

brand has grown by 12 percentover the last year, according toInterbrand’s exclusive list of the 100‘BestGlobalBrands’.Accordingtothe2016study,Kiahasrisentothe69thmostvaluablebrandintheworld.TheKorean manufacturer’s estimatedbrand value grew from 5.7 billionUSD in 2015 to 6.3 billion USD in2016. As of December 31, 2016, KiaMotors employed 51,443 employeesworldwide. Its annual revenuesrepresent 52,713 billion KRW. KiaMotors Corporation‘s brand slogan –"ThePowertoSurprise“–representsthe company‘s global commitmentto surprise the world by providingexcitingandinspiringexperiencesthatgobeyondexpectations.

Jun Gyu LeeChief Financial Officer, Head of Business Management Division

In 1991, Jun Gyu Lee graduatedfrom Sogang University in Seoul,South Korea, specializing in BusinessAdministration.Threeyears later, hestarted to work for Hyundai Motorin Foreign Capital Management. In2010, JunGyu Lee joined KiaMotorsCorporation and worked with theGlobal Accounting department. Mr.Lee has beenworking at KiaMotorsSlovakia since March 2015 as CFOand Head of Business Managementdivision.Heisauthorizedtoactsolelyas a statutory body of Kia MotorsSlovakia.

Company Profile

Company Executives Kia Motors Corporation

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In recent years, car sales havestabilizedontheEuropeanmarketandgradually reached the pre-crisis levelof 2008. Despite the positive sales

trendonmarketsinseveralEuropeancountries, vehicle demand on KiaMotors Slovakia’s two key marketswilldependonpoliticaldecisions.TheEU economic sanctions against theRussian Federation remain in place,which is why a continuous negativeimpact on the purchasing power ofthe local population canbeexpected.The impact of Brexit from the singleEuropeanmarketwillbeknownafterthe final agreement on arrangementof its trade relations with the EU.ThedepreciationoftheBritishpoundmay have a negative impact on theeconomic results of our company inthenearfuture.

During 2016 Kia Motors Slovakiainvested60millioneuros in itsplant.Another130millioneuroswillbeusedin 2017 to adapt production lines for

productionofanewmodelandengine.The business plan of Kia MotorsSlovakia counts with production of335,000 cars. During the upcomingyear, employee’s training in relationto the planned production of a newmodelwillbeorganized.Besidesthem,another around 240 operators andengineersaregoingtogettrainingonthenewmodeldirectlyattheResearchandDevelopmentCentreinNamyang,South Korea. The main educationalfocus will again remain on technicalskillsandmanagementcompetencies.

Despitetheunfavourablesituationonthe labourmarket over the last yearwemanagedtosecurethenecessary

staff to cover the continuousproduction.Findingsuitablecandidateswith appropriate qualifications andworkhabitsisincreasinglychallenging.

Incaseoffurtherdeteriorationonthelabour market, Kia Motors Slovakiais ready to expand its recruitmentactivities also outside the Zilinaregion. In terms of employee healthprotection, several activities focusedon preventing damage of health,evaluation factors at workplace andwork,ergonomicsandregularmedicalcheck-upswerecarriedout lastyear.In 2017, attention will be aimed atfurther development of ergonomics,start of rehabilitation program foremployeesaswellascreatingasingleelectronic system for more efficientdata collection in the field of healthandsafety.

Kia Motors Slovakia in 2016

Goals and forecasts for 2017

Export: 95 countries

339,500 cars

612,915 engines

Sportage 64%, cee’d 28%, venga 8%

56% of Kia EU* sales made in KMS

Export: UK 16%, Germany 9%, Russia 9%

Most popular engine: 1.7 L diesel 24%

Profit after taxes: 213,991 thousand EUR

Revenue: 5,566,181 thousand EUR

*EUandEFTAmemberstates

Yearly car production (units) Yearly engines production

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016339,500 612,900

338,020 582,238

323,720 493,141

313,000 491,046

292,050 464,480

252,252 359,588

229,505 320,977

150,021 244,407

201,507 176,934

145,078 114,499

5,015 2,882

YEAR I PRODUCTION YEAR I PRODUCTION

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Kia Sportage

TheKia cee’d family of the C-segmenthas successfully applied itself withEuropean customers ever since 2006.Kia cee’d comes in three bodyversions: five-door hatchback, three-door sporty pro_cee’d, and familySportswagon. From the first half of2015, a product enhanced versionof its second generation has beenmanufactured. For those who enjoya sporty ride, two high-performanceversionsareathand:Kiacee’dGTandKiapro_cee’dGTpoweredby1.6-litreturbocharged GDI gasoline enginedelivering 150 kW. Themodern cee’dalsocomesinaGTLinethatattractscustomers with its sporty look and

dynamicattributesoftheGTversion.The GT Line comes in three bodyversions.Atthemoment,eachofthebodyversionsofKiacee’disavailablein two gasoline engines: 1.4-litre (73kW) and 1.6-litre (99 kW) as well astwo diesel engines: 1.4-litre (66 kW)and1.6-litre(81kWand100kW).The1.0-litreT-GDI(73kWor88kW)isatdisposal,too.

Lastyear, theCUVKiaSportagewasKia’s most sold model in Europe. InNovember 2015, production of thefourth generation with improveddriving experience and higher com-fort was launched. It acquired themaximum of five stars in the EuroNCAP safety rating. For customersexpecting sportier drive, a GT Lineeditioncomesinhandy.

ThemodelSportageissoldasafront-wheel drivewith a six-speedmanualgearbox in combinationwith gasoline1.6-litre GDI (GDI 97 kW or T-GDI130 kW) or diesel 1.7-litre (85 kW)or 2.0-litre (100 kW) engines. Theall-wheel drive variant comes withgasoline 1.6-litre T-GDI (130 kW) anddiesel2.0-litreCRDi(100kWor136kW)engines. For 2.0-litre engines, a six-

speed automatic or manual gearboxcanbechosenfrom.TheKiaSportagealsocomeswithaseven-speeddual-clutchtransmission. It isofferedonlywith the new 1.6-litre T-GDI enginewith 130kWor 1.7-litredieselengine(104kW).The2.4-litre(135kW)engineavailable in combination with thesix-speed automatic transmissioncompletes the all-wheel driveSportageportfolio.

Kia cee‘d

Product Line-Up

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Kia venga

EnginesIn 2016, Kia Motors Slovakiamanufactured a record 612,900engines representing a 5 percentyear-on-yearincrease.Morethanhalfofallproducedengineswereexported.Thesinglemostbuiltenginewasthe1.7-litre diesel accounting for 24percentofallcustomerorders.Dieselengines constituted over 50 percentof the total engine production. Theplantcurrentlyassembles1.4-litreand1.6-litre as well as 1.6-litre GDI andT-GDIgasolineengines.Thecompanyalso produces 1.4-litre, 1.6-litre,1.7-litre,and2.0-litredieselengines.

The spacious mini MPV designedand produced only for Europeancustomers completes the productline-uprollingofftheproductionlinesatKiaMotorsSlovakia.Vengaaswellascee’darebothproducedexclusivelyin the Slovak plant. It passed strictreliability and durability tests and isa product with stable position in theproduction portfolio. Since October2014, a product enhanced versionwith a new face and more moderninteriorhasbeenavailable.Currently,the model comes with two gasoline1.4-litre(66kW)and1.6-litre(92kW)in addition to two diesel 1.4-litre (66kW)and1.6-litre(85kW)engines. Sportage

64%

cee’d 28%

venga 8%

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Production Process

Press shop

2presslines86typesofpanels20-secondpanelproduction

5millionpanelsannually

Paint shop

360º Ro-Dipconveyorsystem7.5 kmconveyorsystem

80robots

14 colouroptions

Body shop

100%weldingautomatization

354robotsCapacity8typesofcarbodies

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Engine shop

5gasolineengines4 dieselengines

7metalcuttinglines2assemblylines

Assembly shop

Area 18footballpitches225 workingstations43%modularization

3.5 kmtesttrack

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SUSTAiNABLE DEvELOPMENTEnvironmental Aspects

An Environmental Management Sys-tem at Kia Motors Slovakia is basedon corporate social responsibilityprinciples valid for the wholeHYUNDAI MOTOR GROUP dividedinto economical, societal andenvironmental responsibility. Thecompany implements managementsystems in order to achieve itsenvironmental responsibility as anoutstandingcarmaker.

Environmental strategy is based onthekey factorssuchasminimizationof climate change effect, reductionofgasemission,recyclabilityincreaseandfulfilmentofcleanproduction.

Throughoutthewholemanufacturingprocess, Kia Motors Slovakia takesenvironment into consideration focu-sing on car production and R&Dactivities which are environmentallyfriendly. Evidence of such behaviourisshownintheimplementationoftheEnvironmental Management System,

which was certified according to theinternational standard ISO 14001.Amongothersarecertificatesreceivedfor manufactured car models: LCA -Life Cycle Assessment based on ISO14040 and Integrating environmentalaspects into product design anddevelopmentbasedonISO14062.

The company is a member of seve-ral national and internationalenvironmentalgroupings,e.g.member-ship in the legislative committee ofAutomotive Industry Association ofthe Slovak Republic, working groupsofACEA(industrialemissions,processchemicals,REACH),etc.

The Environmental Management Sys-tem commits the company tocomply not only with the requiredlegislation, but also to a constantimprovement of environmental pro-tection, regular evaluation ofenvironmental performance andgrowth in environmental awarenessof all employees. An important partof the system is regular monitoringand evaluation of consumption ofwater, energy, materials as well as

the amount of waste, waste watersand emissions over the period ofone car production, and acceptanceof environmental goals for theirreduction.

The Kia manufacturing plant redu-ces its long-term impact on theenvironment.While using the electricenergy in themainplant, theenergyeffectivity has been improved by 17percent due to implementation ofinnovative solutions. Also decreasedconsumption of natural gas hasbeen recorded thanks to which theamountofCO2emittedduringthecarproductionwasreducedby13percentinthesameperiod.Kiahasconfirmedits responsibleapproach towards theenvironment by planting 1,258 treesonitspremisesinTeplickanadVahom.

The goal of Kia Motors Slovakia isto proceed in the development ofenvironmental management becauseenvironmental protection is a key toasuccessfulbusinessandsustainabledevelopment.

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Human Resources As of December 31, 2016, the plantemployed a total of 3,625 people,while the average age reached 35years. The human resources policyatKiaMotorsSlovakia standson thefollowingbasicpillars:employeecare,transparent communication withemployees on horizontal level, highlycompetitive remuneration system,wide range of benefits usable infree time aswell as improvement ofconditionsforemployees.Since2005,auniqueconceptofcounsellingroomsso-called Harmony rooms have beenutilized; Harmony rooms are locateddirectly in production shops, throughwhichemployeeshaveanopportunitytoactivelyparticipateinimprovementof the working environment andrelationships in the workplace. Everyyear the company organizes eventsfor its employees and their familymembers; the most significant onesbeingtheKiaFamilyDayandParents’Day. In order to increase the levelof care for its employees and offerassistance in overcoming personaldifficulties, the company prepareda new program of psychologicalcounseling available from December

2016. The idea behind the concept istohelpemployeesconqueranystressrelated to their person and achieveharmony.

In 2016, a consulting firm Price-waterhouseCoopers Slovensko reco-gnized Kia Motors Slovakia as

a Leading HR Organization with themost effective management ofhuman resources and best practicesinthefieldofpersonnelmanagementinSlovakiainthecontestthecompanyhaswonfourtimesinarow.

Education of Employees

Kia Motors Slovakia has, since itsinception,focusedonthepersonalandprofessionalgrowthofitsemployees,whichthecompanyconsidersakeytoitssuccess.Lastyear,productionandadministrative employees attended345 different types of trainings,including trainings required by law.Thegoalofalltrainingswastoimprovetheirskillsandincreasetheirexpertiseas well as strengthen the work andmanagementcompetencies.

Kia Motors Slovakia also organizestrainingsincooperationwiththeparentcompany Kia Motors Corporation.The main objective is to acquirenecessary skills and technicalknowledge required forproductionofnew models. In 2016, 91 employeesattended trainings in South Korea.Throughouttheyear2016,KiaMotors

Slovakia’s employees were trainedfor 41,986 hours altogether. ForemployeeswithbestworkresultsKiaorganizesamotivationalprogramKiaSpiriteveryyear inSouthKorea; last

year, 60 of them participated in theprogram.KiaMotors Slovakia has itsown Training Centre in the village ofGbelany.

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In 2016, several activities in thefield of occupational health werecarried out focusing on preventionagainsthealthdamageofemployees,especially through medical exams,field evaluation factors of work andworkplaces as well as ergonomics.Throughout the year, orientationexams with electromyograph andperimeter were launched at thecompany’s doctor’s office, whichoptimize conditions for selection ofemployeesforcertainpositions.

Thisyear,intheareaoffieldevaluationofworkfactors,thecompanyfocusedon re-evaluation of all positions in

the plant that are in contact withchemicalagents.Atthesametime,incooperation with production relateddepartments and based on resultsfrom measurement of work factors(noise, vibration and physical load),auniformso-calledhealthiestpossiblerotation of positionswas establishedduringashiftinfourproductionshops,accordingtowhichtheRegionalOfficeof Public Health in Zilina categorizedpositions to one of the four workcategories.

Inergonomicswesuccessfullymana-ged to improve workplaces, e.g. bysupplementing ergonomic pads for

underneath the feet and exchangingordeterminingprocessesofrepairingvibration tools. Moreover, KiaMotorsSlovakia purchased ergonomic soft-ware that we plan to start using in2017,therebycontributingtoanalysisof problematic places and positionsin terms of physical load. Suggestedsolutionsofproblematicplaceswillbeconsultedandappliedbymembersofaworkgroupcreatedin2016tomakeworkplacesevenmoreeffectivefromergonomicspointofview.

Safety and Occupational Health in 2016

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Due Fulfilment of Obligations

Cooperation with Schools

Kia Motors Slovakia follows and fulfilsalllegalobligations,suchasfilingreportsand payment of taxes, insuranceand all other obligations under VAT,customs duties and employee-relatedduties. The company observes theobligations under the statutory auditact, whereby the legally stipulatedfunctions of the audit committeerest with the company’s supervisoryboard. Investment reports about thefulfilmentofobligationsconnectedwiththe drawing of state aid are preparedon a regular basis and provided to theMinistry of Economy of the SlovakRepublic. Kia settled all due claimsand due liabilities towards all stateauthoritiesbyDecember31,2016.

Kia Motors Slovakia has cooperatedactively with secondary vocationalschools in the Zilina region since2007;sincethenithasenabledmorethan700studentstoobtainpracticalexperience in itsproductionfacilities.

In the 2016/2017 school year, 39students finished vocational practicaltrainingintheKiaplant.

In the 2016/2017 school year, Kia isparticipating in the dual education

system for the first time. Twenty-two students in total from theSecondary Vocational EngineeringSchool in Kysucke Nove Mesto willgraduate in the following spe-cializations: Mechanical specialistof car production and Programmerof machining and welding tools anddevices. The students have not onlybeen receiving practical experiencewith themostattractiveemployer inthe Zilina region, they are also going

to be guaranteed a working positionaftertheirgraduation.

Six secondary students and twouniversity students have joined thescholarship program at Kia MotorsSlovakiainthe2016/2017schoolyear.Conditions for obtaining scholarshipswere excellent study results andpractical vocational training duringtheirstudies.

KiaMotorsSlovakiaoffersplanttoursof its production shops to secondaryvocational school students andtechnicaluniversitystudents.In2016,3,422 students accompaniedby theirteachersvisitedtheproductionplant.

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In 2016, Kia Motors Slovakiacontinuedtorealizeitsintentiontobearesponsiblepartnerfororganizationsand inhabitants of the Zilina Self-Governing Region by supportingvarious philanthropic activities. Thecompany supported 181 projects viaKia Motors Slovakia Foundation withthetotalamountofEUR1,614,726(formoreinformation,pleaseseethe2016Annual Report of KiaMotors SlovakiaFoundation).Thecompanyalsodonateda financial amount of EUR 375,000for direct realization of projects. Theprimaryfieldsofsupportin2016wereself-realizationofdisabledsportsmen,equalopportunitiesforminoritygroups,increaseofenvironmentalstabilityandsafety,education,culture,developmentof sports and volunteering of thecompany employees. Development ofeducation and sports with focus onchildrenandyouthremainsthetargetofthefoundationin2017.

A significant part of the corporateresponsibilityofKiaMotorsSlovakiaisthecompany’svolunteeringprogram:blood donation, support of 20 non-profit organizations via volunteering

or help with reconstruction ofZilina Faculty Hospital. In 2016, Kiavolunteers worked for 1,875 hoursaltogether.Inthesameyear,69ofouremployeesparticipatedinthelargestvolunteering event in Slovakia titledOur City,which benefited 10 variousorganizations in the Zilina region inoneday.In2016,KiaMotorsSlovakia

Foundation in cooperation with theNational Blood Transfusion Serviceorganized three blood donations foradministrativeemployees.Themostprecious body fluid was donated 57times. Voluntary blood donationshave been organized in Kia MotorsSlovakiasince2007.

Philanthropy

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Since its establishment, HYUNDAIMOTOR GROUP has been guided byits philosophy and values, and hasflourished by keeping these intact inthe organization. In 2011, Kia MotorsSlovakia adopted the corporatephilosophy and believes that itsgrowth into a global company couldnot have been possible withoutour management philosophy andhorizontalprinciplesthatstresstrustbased, on-site, and transparentmanagement.EffectiveasofMarch1,2014,KiaMotorsSlovakiaestablished

a system for handling motionsand investigation of allegations ofunethical behaviour of the companyemployees.

KiaMotorsfulfilscorporatephilosophyrepresenting the values which haveto be kept, the directionwewant totake,andaclearvisionofourfuture.Endowedwithanintrinsicpassionforsuccess,wepledge towork togethertowardournewvisionandaspirationfor 2020. A company’s managementphilosophy is the answer to why

the HYUNDAI MOTOR GROUP exists,and is a tenet that should be deeplyembeddedinthemindsandactionsofemployees.

The five core values defined as partof our new corporate philosophyare principles that have existed inus throughout our history, and areprinciples thatall employeespromisetofurtherfosterinourorganization.

Corporate Philosophy

We promote a customer-drivencorporate culture by providingthe best quality and impeccableservice.

We embrace every opportunityfor greater challenge, and areconfidentinachievingourgoals.

We are focused on mutualcommunication and collaboration within the company and with ourbusinesspartners.

Werespectthediversityofculturesandcustomsandstrivetobecomea respected global corporatecitizen.

We believe the future of ourorganization lies intheheartsandcapabilitiesofpeople,andwillhelpthem develop their potential bycreating a corporate culture thatrespectstalent.

Together for a better future.

viSiON 2020Lifetime partner in automobiles and beyond

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Customersatisfactionisatoppriorityfor Kia Motors Slovakia and all itsemployees. Qualified and educatedemployeesensurethehighestqualitylevelthroughoutthewholeproductionprocess, from the very beginningof production planning through carproductionallthewaytofinalqualitycontrol of newly manufactured ve-hicles prepared for export tocustomers. Almost 400 employeesensure the quality of vehicles duringthe manufacturing process to onlydeliver safe and reliable cars of highquality.

Automobiles produced at Kia MotorsSlovakia meet the high demands ofthe European Union and countriesthey are exported to. All enginesassembled into the plant’s productsdistributed in the European Union

comply with the Euro 6 emissionstandard. Engines exported to theRussian Federation comply with theEuro 5 emission standard. Moreover,allvehiclesmanufacturedintheplantreceivedtopcrashtestsafetyranking– five stars – in Euro NCAP. Modelsmanufactured in theSlovakKiaplanthave achieved success across thewhole of Europe. Among the mostsignificantonesisthewinofthethirdgeneration of Kia Sportage in theVehicleDependabilityStudyconductedin Germany by the renowned J.D.Power association. Model Sportagerankedfirstamong24brandsand68models. Its dominance was ensuredwith a win in the 100,000-kilometrelong termtests inacclaimedGermanautomotive magazines Auto MotorundSportandAutoBild.

Apart for product quality, focus isturned to improvement of a ma-nagement system. The QualityManagement System at Kia MotorsSlovakia was recertified by an inde-pendent certification body DNV GLaccording to ISO 9001:2008 in 2014.In2016,ahistoricallyhighestvalueofcustomer satisfactionwith quality ofourvehicleswasrecorded.Continuousimprovement of all processes withinthe company in order to achievemaximum customer satisfaction en-suredthecompanyawininthemostprestigiousqualityawardinSlovakia-the2016NationalQualityAwardoftheSlovak Republic. In 2017, Kia MotorsSlovakiawillprepareforrecertificationaccording to a new ISO 9001:2015standardsplannedforOctober2017.

QUALiTY MANAGEMENT SYSTEM

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6. Financial Overview

income Statement InTEUR

2016 2015

Revenue 5,566,181 5,073,403

Costofsales -5,031,643 -4,464,096

Gross profit 534,538 609,307

Administrativeandsellingexpenses -272,912 -303,184

Operating profit 261,626 306,123

Interestcosts -1,968 -2,200

Interestincome 1,379 2,831

Otherfinancial(expense)/income,net -4,220 -9,869

Net finance costs -4,809 -9,238

Otheroperatingincome/(expenses),net 23,356 -26,647

Profit before taxes 280,173 270,238

Currentanddeferredincometax -66,182 -60,100

Total comprehensive income for the year 213,991 210,138

Statement of changes in share capitalInTEUR

Capital increasing Amount Contributions of capital EUR

Balance as of 1.1.2016 433,323 EUR

Balance as of 31.12.2016 433,323 EUR

Balance sheet InTEUR

31 December 2016 31 December 2015

Assets

Non-currentassets 652,390 730,533

Currentassets 1,507,047 1,459,483

Total assets 2,159,437 2,190,016

Equity

Issuedcapital 433,323 433,323

Legalreservefundandaccumulatedprofit 467,462 418,347

Total equity 900,785 851,670

Liabilities

Non-currentliabilities 604,688 497,530

Currentliabilities 653,964 840,816

Total liabilities 1,258,652 1,338,346

Total equity and liabilities 2,159,437 2,190,016

Distribution of profit Thegeneralmeetingwilldecideonthedistributionofprofitintheamountof213,991TEURfortheyear2016accountingperiod.Theproposalpresentedbythestatutorybodytothegeneralmeetingisasfollows:• Nocontributiontoreservefund.• Distributionoftheremainingamountwillbedecidedongeneralmeeting.ThegeneralmeetingwillbeheldinMarch2017.

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7. Yearly Closing

Statement of financial position as at 31 December 2016inTEUR

Note 31 December 2016 31 December 2015

Assets

Property,plantandequipment 11 568,861 646,953

Intangibleassets 12 4,044 3,882

Prepaidroyaltyexpense 13 4,904 24,519

Deferredtaxassets 15 74,581 55,179

Total non-current assets 652,39 730,533

Inventories 16 307,866 316,936

Tradeandotheraccountsreceivable 17 863,791 946,068

Cashandcashequivalents 18 53,939 35,287

Prepaidexpenses 13 19,774 19,783

Intercompanyloanreceivable 19 259,891 99,674

Financeleasereceivable 14 - 557

Incometaxreceivable 1,786 41,178

Total current assets 1,507,047 1,459,483

Total assets 2,159,437 2,190,016

Equity

Issuedcapital 20 433,323 433,323

Legalreservefund 20 43,332 43,332

Accumulatedprofit 424,13 375,015

Total equity 900,785 851,67

Liabilities

Interest-bearingloansandborrowings 21 190,396 111,448

Provisions 22 414,292 386,082

Total non-current liabilities 604,688 497,53

Interest-bearingloansandborrowings 21 16,064 29,434

Tradeandotheraccountspayable 23 443,452 689,300

Provisions 22 194,448 122,082

Total current liabilities 653,964 840,816

Total liabilities 1,258,652 1,338,346

Total equity and liabilities 2,159,437 2,190,016

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Statement of cash flows for the year ended 31 December 2016 inTEUR

Cashflowsfromoperatingactivities Note 2016 2015

Profitfortheyear 213,991 210,138

Adjustmentsfor:

Depreciationofproperty,plantandequipmentandintangibleassets,netofamortisationofstateaid 11,12 105,102 107,109

Valueadjustmentforinventories 80 -17,598

Scrapofpropertyonretirement 92 255

Interestcosts 8 1,968 2,200

Interestincome 8 -1,379 -2,831

UnrealizedFXlosses 1,152 20,607

UnrealizedFXgains -14,936 258

Warrantyprovisionscharges 22 117,568 145,150

Otherprovisioncharges,netofactualcosts 22 52,083 -44,644

Warrantyprovisionreversal 22 - -3,500

Releaseofprepaidroyalty 6 19,616 20,715

Taxexpense 10 66,182 60,100

Gainon/(lossfrom)saleofproperty,plantandequipment -599 554

Operating profit before changes in working capital items 560,920 497,997

Decrease/(Increase)ininventories 16 8,990 -17,244

Decrease/(Increase)intradeandotherreceivablesandprepaidexpenses 13,17 95,849 -225,845

(Decrease)/Increaseintradeandotherpayables 23 -245,855 223,665

Cash generated from operating activities 419,904 478,573

Interestpaidfromfinancingreceivables,overdraftsandother -387 -

Interestreceivedfromonbillsofexchangeandbankdeposits 1,236 2,767

Taxpaid -46,192 -124,753

Warrantyclaims 22 -69,074 -70,063

Net cash generated from operating activities 305,487 286,024

Cashflowsfrominvestingactivities

Acquisitionofproperty,plantandequipment 11 -26,201 -116,606

Acquisitionofintangibleassets 12 -1,712 -887

Receiptoffinanceleasepaymentsincludinginterest 14 559 6,713

Provisionofintercompanyloan 19 -160,217 -54,892

Proceedsfromsaleofnon-currentassets 1,247 287

Interestreceivedfromintercompanyloan 368 623

Net cash (used for) investing activities -185,956 -164,762

Cashflowsfromfinancingactivities

Financeleasepaymentsincludinginterests 21 -3,491 -4,189

Repaymentoflong-termbankloans 21 -26,250 -36,719

Paymentofdividend -164,876 -173,238

Interestpaidonlong-termbankloans -1,262 -1,616

Receiptoflong-termbankloan 21 95,000 80,000

Net cash (used for) financing activities -100,879 -135,762

Netincrease/(decrease)incashandcashequivalents 18,652 -14,500

Cashandcashequivalentsatbeginningoftheperiod 18 35,287 49,787

Cash and cash equivalents at end of the period 18 53,939 35,287

24

Statement of comprehensive income for the year ended 31 December 2016inTEUR

Note 2016 2015

Revenue 5 5,566,181 5,073,403

Costofsales 6 -5,031,643 -4,464,096

Gross profit 534,538 609,307

Administrativeandsellingexpenses 7 -272,912 -303,184

Operating profit 261,626 306,123

Interestcosts -1,968 -2,2

Interestincome 1,379 2,831

Otherfinancialexpense,net -4,22 -9,869

Net finance costs 8 -4,809 -9,238

Otheroperatingincome/(expense) 9 23,356 -26,647

Profit before taxes 280,173 270,238

Currentanddeferredincometax 10 -66,182 -60,1

Profit for the year 213,991 210,138

Othercomprehensiveincome - -

Total comprehensive income for the year 213,991 210,138

Statement of changes in equity for the year ended 31 December 2016inTEUR

Note Share capital Legal reserve

fund

Retained earnings

Total

(Note20) (Note20)

Balance as of 1 January 2015 433,323 30,154 351,293 814,770

Totalcomprehensiveincomefortheyear - - 210,138 210,138

Legalreservefundtransfer - 13,178 -13,178 -

Dividenddistribution - - -173,238 -173,238

Balance as of 31 December 2015 20 433,323 43,332 375,015 851,670

Balance as of 1 January 2016 433,323 43,332 375,015 851,670

Totalcomprehensiveincomefortheyear - - 213,991 213,991

Dividenddistribution - - -164,876 -164,876

Balance as of 31 December 2016 20 433,323 43,332 424,130 900,785

25

Notes to the financial statements for the year ended 31 December 2016

1. General information about the CompanyKiaMotorsSlovakias.r.o.(hereinafterreferredtoas“theCompany”)isacompanyincorporatedinSlovakia.TheCompanywasestablishedon13February2004andwasregisteredintheCommercialRegisteron26February2004(CommercialRegisteroftheDistrictCourtZilina,Sections.r.o.,file15074/L).

TheCompany’sregisteredaddressis:

KiaMotorsSlovakias.r.o.ICO:35876832DIC:2021787801Sv.JanaNepomuckeho1282/1TeplickanadVahom01301Slovakia

TheprincipalactivityoftheCompanyisthemanufactureandsaleofautomobilesandengines.

Thesefinancialstatementshavebeenpreparedasat31December2016andfortheyearthenendedandwerepreparedandauthorizedforissuebytheCompany’sdirectorson24January2017.FinancialstatementscanbemodifieduntiltheapprovaloftheGeneralAssembly.

TheFinancialStatementshavebeenpreparedasordinaryfinancialstatementsinaccordancewithArticle17(6)ofSlovakActNo.431/2002Coll.onAccountingfortheaccountingperiodfrom1January2016to31December2016.

The Financial Statements of the Company as at 31 December 2015 including the auditor’s report on the audit of thefinancialstatementsasat31December2015andtheannualreportincludingthesupplementauditor’sreportontheauditofthecomplianceoftheannualreportwiththefinancialstatementswerefiledintheRegisterofFinancialStatementson22June2016.

On16January2017thegeneralmeetingappointedKPMGSlovenskospol.sr.o.astheauditoroftheFinancialStatementsfortheperiodfrom1January2016to31December2016.

The Company’s bodies:Directors EekHeeLee JunGyuLee

information about the ultimate parent

TheCompanyisconsolidatedintothefinancialstatementsofKiaMotorsCorporation,12,Heolleung-ro,Seocho-gu,Seoul,Korea,whichistheCompany’sparentthuspotentialstatementsareavailabletopublicatSeoul,Koreastockexchange.

2. Statement of complianceThesefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnion(EU).

3. Basis of preparation

Thefinancialstatementshavebeenpreparedonahistoricalcostbasis.

FunctionalcurrencyThe financial statements are presented in euro,which is the Company’s functional currency, and are rounded to thenearestthousand.

Use of estimates and judgmentThepreparationoffinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassets,liabilities,incomeandexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgmentsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognizedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodor intheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.

Inparticular,informationaboutsignificantareasofestimationuncertaintyandcriticaljudgmentsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountrecognizedinthefinancialstatementsaredescribedinthefollowingnotes:

•Note22–Provisionforwarrantyrepairs

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4. Significant accounting policies

Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedinthesefinancialstatements.

a) Foreign currency

Transactionsinforeigncurrenciesaretranslatedtoeuroattheforeignexchangeraterulingatthedateprecedingthedateofthetransaction.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthebalancesheetdatearetranslatedtoeuroattheforeignexchangeraterulingatthatdate.Foreignexchangedifferencesarisingontranslationarerecognizedintheincomestatement.Non-monetaryassetsandliabilitiesthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateatthedateprecedingthedateofthetransaction.Non-monetaryassetsand liabilitiesdenominated in foreign currencies thatarestatedat fair valueare translated toeuroat foreignexchangeratesrulingatthedatesthefairvaluewasdetermined.

b) Property, plant and equipment

i. Owned assets

Itemsofproperty,plantandequipmentarestatedatcost lessaccumulateddepreciation (seebelow)and impairmentlosses(seeaccountingpolicyi).Thecostofself-constructedassetsincludesthecostofmaterials,directlabour,theinitialestimate,whererelevant,ofthecostsofdismantlingandremovingtheitemsandrestoringthesiteonwhichtheyarelocated,andanappropriateproportionofproductionoverheads.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset arecapitalizedaspartofthecostofthatasset.

Wherepartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitemsofproperty,plantandequipment.

ii. Subsequent costs

TheCompanyrecognizesinthecarryingamountofanitemofpropertyorplantandequipmentthecostofreplacingpartofsuchanitemwhenthatcostisincurredifitisprobablethatthefutureeconomicbenefitsembodiedwithintheitemwillflowtotheCompanyanditscostcanbemeasuredreliably.Allothercostsarerecognizedintheincomestatementasanexpenseasincurred.

iii. Leased assets

Leases in termsofwhich theCompanyassumessubstantiallyall the riskand rewardsofownershipare classifiedasfinanceleases.Uponinitialrecognitiontheleasedassetismeasuredatanamountequaltothelowerofitsfairvalueortheminimumleasepayments.Subsequenttoinitialrecognition,theassetisaccountedforinaccordancewiththeaccountingpolicyapplicabletothatasset.

Other leases are operating leases and the leased assets are not recognized in the Company’s statement of financialposition.

iv. Depreciation

Depreciationischargedtotheincomestatementonastraight-linebasisovertheestimatedusefullivesofeachpartofanitemofproperty,plantandequipment.Theestimatedusefullivesareasfollows:

• buildings 20-30years• machineryandequipment 3-15years• moulds 4-5years• other 2-4years

Assetsaredepreciatedfromthedateofacquisitionor,inrespectofinternallyconstructedassets,fromthetimeanassetiscompletedandreadyforuse.Expenditureonrepairsormaintenanceofpropertyandequipmentincurredtorestoreormaintainfutureeconomicbenefitsexpectedfromtheassetsisrecognizedasanexpensewhenincurred.Depreciationmethodsandusefullives,aswellasresidualvalues,arereassessedatthereportingdate.

v. Government grants

TheCompanyisentitledtoreceivegovernmentgrantsrelatedtotheacquisitioncostsofproperty,plantandequipmentifcertainconditionsarefulfilled.TheconditionsarestipulatedintheInvestmentAgreementbetweentheCompanyandtheSlovakRepublicorindecisionsissuedbyMinistryofEconomy.Thegrantsreceivedarerecordedasadeductionofproperty,plantandequipmentandarebeingamortizedovertheestimatedusefullivesoftheproperty,plantandequipmentforwhichtheyhavebeenreceivedoncesuchassetsareplacedintouse.Non-monetarygrantsreceivedarerecordedatfairvalueuponreceiptdate.

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c) intangible assets

i. Owned assets

IntangibleassetsacquiredbytheCompanyhavefiniteusefullivesandaremeasuredatcostlessaccumulatedamortizationandaccumulatedimpairmentlosses(seeaccountingpolicyi).

EmissionrightspurchasedorgrantedbySlovakRepublicaremeasuredatcostsrespectivelythemarketvalueatthegrantdate.

ii. Subsequent costs

Subsequentexpenditureiscapitalizedonlywhenitincreasesthefutureeconomicbenefitsembodiedinthespecificassettowhichitrelates.Allotherexpendituresarerecognizedinprofitorlossasincurred.

iii. AmortizationAmortizationischargedtotheincomestatementonastraight-linebasisovertheestimatedusefullivesofeachpartofintangibleassets.Theestimatedusefullivesareasfollows:

• software 4-6years• otherintangibleassets 4-5years

iv. Emission rights

Emissionrightsareacquiredforownuseonlyandareaccountedforasanintangibleasset.Theemissionrightsgrantedbygovernmentarerecordedatfairvalueatthedateofreceipt.Emissionrightsaredisposedtocostofgoodssold,onceused.

d) Royalties

TheCompanypaysroyaltytoitsparentCompanyfortheproductionandsaleofcars.

i. Lump sum royalty

Prepaid lumpsumroyaltiesare initially recordedasprepaymentsandareamortizedonastraight-linebasisover theperiodforwhichtheroyaltyhasbeenpaid.Amortizationcostisrecordedascostofgoodssold(refertoNote6).Thelumpsumroyaltyreducestherunningroyaltycalculatedonthebasisdescribedbelow.

ii. Running royalty

Royaltiesrepresentregularexpensederivedfromtheentity’srevenueforsaleofcars(until2012:onthebasisofnumberofcarsproduced),andarerecordedascostofgoodssold(refertotheNote6).

e) Trade and other accounts receivable, finance lease receivable and intercompany loan receivable

Trade, other receivables, finance receivables and intercompany loans provided are recognized initially at fair value,subsequentto initialrecognitiontheyarestatedattheiramortizedcostusingtheeffective interestratemethod, lessimpairmentlosses(seeaccountingpolicyi).Tradereceivableisoffsetwithtradeliabilityandpresentedonthenetbasisinfinancialpositionwhenandonlywhen,thereiscurrentlyalegalenforceablerighttosetoffandthereisanintentiontosettlethereceivablesandliabilitiesonthenetbasisortorealizethemsimultaneously.

Accordingtotheagreementwiththreecustomers,theCompanychargesthecustomerafixedinterestratefortheagreedportionoffinancedperiod,whichisrecordedasinterestincomeonBillsofExchangefromrelatedparties(refertonote8).

f) inventories

Inventoriesarestatedatthelowerofcostornetrealizablevalue.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcostofcompletionandsellingexpenses.

Thecostofproductioninventoriesisbasedonstandardcostandincludesexpenditureincurredinacquiringtheinventoriesandbringingthemtotheirexistinglocationandcondition.Thecostofnon-productioninventoriesisbasedonaweightedaveragecostformulaandincludesexpenditureincurredinacquiringtheinventoriesandbringingthemtotheirexistinglocationandcondition.Inthecaseofmanufacturedinventoriesandworkinprogress,costincludesanappropriateshareofproductionoverheadsbasedonnormaloperatingcapacity.

g) Cash and cash equivalents

Cashandcashequivalentscomprisecashbalances.BankoverdraftsthatarerepayableondemandandformanintegralpartoftheGroup’scashmanagementareincludedasacomponentofcashandcashequivalentsforthepurposeofthestatementofcashflows.

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h) impairmentFinancial assetsAfinancialassetisconsideredtobeimpairedifobjectiveevidenceindicatesthatoneormoreeventshavehadanegativeeffectontheestimatedfuturecashflowsofthatasset.

Animpairmentlossinrespectofafinancialassetmeasuredatamortizedcostiscalculatedasthedifferencebetweenitscarryingamount,andthepresentvalueoftheestimatedfuturecashflowsdiscountedattheoriginaleffectiveinterestrate.

Individuallysignificantfinancialassetsaretestedforimpairmentonanindividualbasis.Theremainingfinancialassetsareassessedcollectivelyingroupsthatsharesimilarcreditriskcharacteristics.

Allimpairmentlossesarerecognizedinprofitorloss.

Animpairmentlossisreversedifthereversalcanberelatedobjectivelytoaneventoccurringaftertheimpairmentlosswasrecognized.Forfinancialassetsmeasuredatamortizedcost,thereversalisrecognizedinprofitorloss.

Non-financial assetsThecarryingamountsoftheCompany’sassets,otherthaninventories(seeaccountingpolicyb,cande)anddeferredtaxassets (seeaccountingpolicyo) are reviewedateach reportingdate todeterminewhether there is any indicationofimpairment.Ifanysuchindicationexists,theasset’srecoverableamountisestimated.An impairment loss is recognizedwhenever the carrying amount of an asset or its cash-generating unit exceeds itsrecoverableamount.Acash-generatingunitisthesmallestidentifiableassetgroupthatgeneratescashflowsthatarelargelyindependentfromotherassetsandgroups.

Impairmentlossesrecognizedinrespectofcash-generatingunitsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtocash-generatingunits(groupofunits)andthen,toreducethecarryingamountoftheotherassetsintheunit(groupofunits)onaproratabasis.

Therecoverableamountofotherassetsisthegreateroftheirfairvaluelesscoststosellandvalueinuse.Inassessingvalue inuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Foranassetthatdoesnotgeneratelargelyindependentcashinflows,therecoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs.

Inrespectofotherassets, impairment lossesrecognized inpriorperiodsareassessedateachreportingdateforanyindicationsthatthelosshasdecreasedornolongerexists.Animpairmentlossisreversediftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamount.

Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized.

i) interest-bearing borrowingsInterest-bearingborrowingsarerecognizedinitiallyatfairvaluelessattributabletransactioncosts.Subsequenttoinitialrecognition,interest-bearingborrowingsarestatedatamortizedcostwithanydifferencebetweencostandredemptionvaluebeingrecognizedintheincomestatementovertheperiodoftheborrowingsonaneffectiveinterestbasis.

j) Provisions

AprovisionisrecognizedinthebalancesheetwhentheCompanyhasapresentlegalorconstructiveobligationasaresultofapasteventthatcanbeestimatedreliably,andit isprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand,whereappropriate,therisksspecifictotheliability.

Aprovisionforwarranties is recognizedwhentheunderlyingproductsorservicesaresold.Thesupplierswarrantforapartofwarrantyprovisionandtheybeartheriskoffailureoftheirparts.KMSwarrantsfortheactualclaimtothecustomersand itmayreclaimaportionthatwascausedbysuppliers.Thereclaimasset isfullyrecognizedwhen it isvirtuallycertainitwillbecollected.ForfurtherdescriptionrefertoNote29.

k) Trade and other payables

Tradeandotherpayablesarerecognizedinitiallyatfairvalue.Subsequenttoinitialrecognitiontheyarestatedatamortizedcost.Tradepayableisoffsetwithtradereceivableandpresentedonthenetbasisinfinancialpositionwhenandonlywhen,thereiscurrentlyalegalenforceablerighttosetoffandthereisanintentiontosettletheliabilitiesandreceivablesonthenetbasisortorealizethemsimultaneously.

l) Revenue for goods sold

Revenuefromthesaleofgoodsisrecognizedintheincomestatementwhenthesignificantrisksandrewardsofownershiphavebeentransferredtothebuyer.Norevenueisrecognizediftherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,associatedcostsorthepossiblereturnofgoodsalsocontinuingmanagementinvolvementwiththegoods.AsignificantelementoftheCompany’srevenueiswithrelatedparties(seeNote25).

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Thetimingofthetransfersofrisksandrewardsvariesdependingontheindividualtermsofthesalesagreement.Formajorityofcustomerstherisksandrewardsusuallytransferwhentheproductisdeliveredtofirstcarrier.Generallythecarssoldtothecustomershavenorightsofreturn.

m) Finance costs and finance income

Financecostsandfinanceincomecompriseinterestexpenseonborrowingscalculatedusingtheeffectiveinterestratemethod,interestincomeonfundsinvestedandforeignexchangegainsandlossesrelatedtochangesinthebankbalancesandloans.

Interestincomeandexpensearerecognizedintheincomestatementastheyaccrue,usingtheeffectiveinterestmethod,excepttotheextentthattheyrelatetothefinancingofproperty,plantandequipment,inwhichcasetheyarecapitalizedaspartoftheacquisitioncostsoftherelatedassets.

Interestpaidfromthelongtermbankloan,shorttermbankloanandfinanceleaseliabilitiesarepresentedinthecashflowsfromfinancingactivities.Interestreceivedfromfinanceleasereceivableispresentedincashflowsfrominvestingactivities.Interestpaidonoverdrafts,interestpaidandreceivedfromfinancingreceivables(seeaccountingpolicyf)andotherinterestpaidandreceivedarepresentedincashflowsfromoperatingactivities.

n) Other operating income and expense

Otheroperatingcostsandotheroperating incomecompriseofforeignexchangegainsand lossesrelatedtooperatingincomeandoperatingexpenses,gainonsaleofproperty,plantandequipment,governmentgrantsforjobcreationandeducationandotheritems.

o) income tax

Incometaxexpensecomprisescurrentanddeferredtax.Incometaxisrecognizedintheincomestatementexcepttotheextentthatitrelatestoitemsrecognizeddirectlyinequity,inwhichcaseitisrecognizedinequity. Current tax is theexpected taxpayableon the taxable incomefor theyear,using tax ratesenactedorsubstantivelyenactedatthebalancesheetdate,andanyadjustmenttotaxpayableinrespectofpreviousperiods.

Deferredtaxisprovidedusingthebalancesheetliabilitymethod,providingfortemporarydifferencesbetweenthecarryingamounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes and taxlossescarriedforward.Temporarydifferencesrelatingtothe initialrecognitionofassetsor liabilitiesthataffectneitheraccountingnortaxableprofitarenotprovidedfor.Deferredtaxismeasuredatthetaxratesthatareexpectedtobeappliedtothetemporarydifferenceswhentheyreverse,basedonthelawsthathavebeenenactedorsubstantivelyenactedbythereportingdate. Adeferredtaxassetisrecognizedonlytotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthetemporarydifferencecanbeutilized.Deferredtaxassetsarereviewedateachreportingdateandarereducedtotheextentthatitisnolongerprobablethattherelatedtaxbenefitwillberealized.

p) Employee benefits

Short-termemployeebenefitsobligationsaremeasuredonanundiscountedbasisandareexpensedastherelatedserviceisprovided.

Aliabilityisrecognizedfortheamountexpectedtobepaidundershort-termcashbonusiftheCompanyhasapresentlegalorconstructiveobligationtopaythisamountasaresultofpastserviceprovidedbytheemployeeandtheobligationcanbeestimatedreliably.

Long-termemployeebenefitscompriseofaretirementbonusdefinedbasedonthebenefitthatanemployeewillreceiveuponfirstretirement.Theamountofthisbenefitdependsonyearsofserviceandisaccruedbasedonactuarialestimations.TheminimumrequirementoftheLabourCodeforaretirementbonusisonemonthaveragesalary.

q) Government grants

GovernmentgrantsareinitiallyrecognizedinthebalancesheetwhenthereisreasonableassurancethatitwillbereceivedandthattheCompanywillcomplywiththeconditionsattachingtoit.GrantsthatcompensatetheCompanyforexpensesincurredareinitiallyrecognizedasdeferredrevenueanditisreleasedtotheincomestatementasotheroperatingincomeonasystematicbasisinthesameperiodsinwhichtheexpensesarerecognized.GrantsthatcompensatetheCompanyfortheacquisitioncostsofproperty,plantandequipmentareinitiallyrecognizedasadeductionofproperty,plantandequipmentandareamortized,reflectedintheincomestatementasadeductionofdepreciationexpenseovertheusefullifeoftheassetstowhichtheyrelate(refertoNote4,b.v.).

r) New standards

ThefollowingnewStandardsandInterpretationsarenotyeteffectivefortheannualperiodended31December2016andhavenotbeenappliedinpreparingthesefinancialstatements:

30

iFRS 9 Financial instruments

IFRS9wasissuedinJuly2014andiseffectiveforannualperiodsbeginningonorafter1January2018.Keyfeaturesofthenewstandardare:

Financialassetsarerequiredtobeclassifiedintothreemeasurementcategories:thosetobemeasuredsubsequentlyatamortisedcost,thosetobemeasuredsubsequentlyatfairvaluethroughothercomprehensiveincome(FVOCI)andthosetobemeasuredsubsequentlyatfairvaluethroughprofitorloss(FVPL).

Classificationfordebtinstrumentsisdrivenbytheentity’sbusinessmodelformanagingthefinancialassetsandwhetherthecontractualcashflowsrepresentsolelypaymentsofprincipalandinterest(SPPI).Ifadebtinstrumentisheldtocollectcashflows,itmaybecarriedatamortisedcostifitalsomeetstheSPPIrequirement.DebtinstrumentsthatmeettheSPPIrequirementandareheldinaportfoliowhereanentitybothholdstocollectassets’cashflowsandsellsassetsmaybeclassifiedasFVOCI.FinancialassetsthatdonotcontaincashflowsthatareSPPImustbemeasuredatFVPL(forexample,derivatives).EmbeddedderivativesarenolongerseparatedfromfinancialassetsbutwillbeincludedinassessingtheSPPIcondition.

Investments inequity instrumentsarealwaysmeasuredatfairvalue.However,managementcanmakeanirrevocableelectiontopresentchangesinfairvalueinothercomprehensiveincome,providedtheinstrumentisnotheldfortrading.Iftheequityinstrumentisheldfortrading,changesinfairvaluearepresentedinprofitorloss.

Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forwardunchangedtoIFRS9.Thekeychangeisthatanentitywillberequiredtopresenttheeffectsofchangesinowncreditriskoffinancialliabilitiesdesignatedatfairvaluethroughprofitorlossinothercomprehensiveincome.

IFRS9introducesanewmodelfortherecognitionofimpairmentlosses–theexpectedcreditlosses(ECL)model.Thereisa ‘threestage’approachwhich isbasedonthechange increditqualityoffinancialassetssince initialrecognition. Inpractice, thenewrulesmean thatentitieswillhave to recordan immediate lossequal to the 12-monthECLon initialrecognitionoffinancialassetsthatarenotcreditimpaired(orlifetimeECLfortradereceivables).Wheretherehasbeena significant increase in credit risk, impairment ismeasuredusing lifetimeECL rather than 12-monthECL.Themodelincludesoperationalsimplificationsfortradereceivablesandlease.

Hedgeaccounting requirementswereamendedtoalignaccountingmorecloselywith riskmanagement.Thestandardprovides entitieswith an accounting policy choice between applying the hedge accounting requirements of IFRS 9 orcontinuingtoapplyIAS39toallhedgesbecausethestandardcurrentlydoesnotaddressaccountingformacrohedging.ThestandardhasnotbeenendorsedbytheEuropeanUnionyet.TheCompanyiscurrentlyassessingtheimpactofthenewstandardonitsfinancialstatements.

iFRS 15 Revenue from Contracts with CustomersIFRS15hasbeenissuedon28May2014andiseffectivefortheperiodsbeginningonorafter1January2018.Thenewstandardintroducesthecoreprinciplethatrevenuemustberecognisedwhenthegoodsorservicesaretransferredtothecustomer,atthetransactionprice.Anybundledgoodsorservicesthataredistinctmustberecognisedseparately,andanydiscountsorrebatesonthecontractpricemustgenerallybeallocatedtotheseparateelements.Whentheconsiderationvariesforanyreason,minimumamountsmustberecognisediftheyarenotatsignificantriskofreversal.Costsincurredtosecurecontractswithcustomershavetobecapitalisedandamortisedovertheperiodwhenthebenefitsofthecontractareconsumed.

ThestandardhasbeenendorsedbytheEuropeanUnion.ClarificationstoIFRS15RevenuefromContractswithCustomersisnotyetendorsedbytheEUbutIFRS15RevenuefromContractswithCustomersincludingEffectiveDateofIFRS15havebeenendorsedbytheEU.TheCompanyiscurrentlyassessingtheimpactofthenewstandardonitsfinancialstatements.

iFRS 16 LeasesIFRS16iseffectiveforannualperiodsbeginningonorafter1January2019.EarlierapplicationispermittediftheentityalsoappliesIFRS15.IFRS16supersedesIAS17Leasesandrelatedinterpretations.TheStandardeliminatesthecurrentdualaccountingmodelforlesseesandinsteadrequirescompaniestobringmostleaseson-balancesheetunderasinglemodel,eliminatingthedistinctionbetweenoperatingandfinanceleases.UnderIFRS16,acontractis,orcontains,aleaseifitconveystherighttocontroltheuseofanidentifiedassetforaperiodoftimeinexchangeforconsideration.Forsuchcontracts,thenewmodelrequiresalesseetorecognisearight-of-useassetandaleaseliability.Theright-of-useassetisdepreciatedandtheliabilityaccruesinterest.Thiswillresultinafront-loadedpatternofexpenseformostleases,evenwhenthelesseepaysconstantannualrentals.

ThenewStandardintroducesanumberoflimitedscopeexceptionsforlesseeswhichinclude:• leaseswithaleasetermof12monthsorlessandcontainingnopurchaseoptions,and• leaseswheretheunderlyingassethasalowvalue(‘small-ticket’leases).

LessoraccountingshallremainlargelyunaffectedbytheintroductionofthenewStandardandthedistinctionbetweenoperatingandfinanceleaseswillberetained.

AnnualImprovementstoIFRSs

The improvements introduce amendments existing standards, interpretations and consequential amendments tootherstandardsandinterpretations.NoneoftheseamendmentsorinterpretationshavebeenendorsedbyEUyet.

NoneoftheseamendmentsareexpectedtohaveasignificantimpactonthefinancialstatementsoftheEntity.

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AmendmentstoIAS7(applicabletoannualperiodsbeginningonorafter1January2017).Theamendmentrequirenewdisclosuresthathelpuserstoevaluatechangesinliabilitiesarisingfromfinancingactivities,includingchangesfromcashflowsandnon-cashchanges(suchastheeffectofforeignexchangegainsorlosses,changesarisingforobtainingorlosingcontrolofsubsidiaries,changesinfairvalue).

AmendmentstoIAS12:RecognitionofDeferredTaxAssetsforUnrealisedLosses(applicabletoannualperiodsbeginningonorafter1January2017).Theamendmentsclarifyhowandwhentoaccountfordeferredtaxassetsincertainsituationsandclarifyhowfuturetaxableincomeshouldbedeterminedforthepurposesofassessingtherecognitionofdeferredtaxassets.

Amendments to IFRS 2: Classification andMeasurement of Share-based Payment Transactions (applicable to annualperiodsbeginningonorafter1January2018).Theamendmentsclarifyshare-basedpaymentaccountingonthefollowingareas: • theeffectsofvestingandnon-vestingconditionsonthemeasurementofcash-settledshare-basedpayments; • share-basedpaymenttransactionswithanetsettlementfeatureforwithholdingtaxobligations;andamodificationtothetermsandconditionsofashare-basedpaymentthatchangestheclassificationofthetransactionfromcash-settledtoequitysettled.

Amendments to IFRS 4: Applying IFRS 9 Financial Instrumentswith IFRS 4 Insurance Contracts (applicable to annualperiodsbeginningonorafter1January2021).TheamendmentsaddressconcernsarisingfromimplementingIFRS9beforeimplementingthereplacementstandardthattheIASBisdevelopingforIFRS4.Theamendmentsintroducetwooptionalsolutions.OnesolutionisatemporaryexemptionfromIFRS9,effectivelydeferringitsapplicationforsomeinsurers.Theother isanoverlayapproachtopresentationtoalleviatethevolatilitythatmayarisewhenapplyingIFRS9beforetheforthcominginsurancecontractsstandard.

AmendmentstoIFRS10andIAS28Saleorcontributionofassetsbetweenaninvestoranditsassociateorjointventure(effectivedatehasnotbeensetyetbytheIASB).TheAmendmentsclarifythatinatransactioninvolvinganassociateor joint venture, theextentofgainor loss recognitiondependsonwhether theassets soldor contributed constituteabusiness,suchthat: • afullgainorlossisrecognisedwhenatransactionbetweenaninvestoranditsassociateorjointventureinvolves

thetransferofanassetorassetswhichconstituteabusiness(whetheritishousedinasubsidiaryornot),whilea partial gain or loss is recognisedwhen a transaction between an investor and its associate or joint ventureinvolvesassetsthatdonotconstituteabusiness,eveniftheseassetsarehousedinasubsidiary.

AmendmentstoIAS12:RecognitionofDeferredTaxAssetsforUnrealisedLosses(applicabletoannualperiodsbeginningonorafter1January2017).Theamendmentsclarifyhowandwhentoaccountfordeferredtaxassetsincertainsituationsandclarifyhowfuturetaxableincomeshouldbedeterminedforthepurposesofassessingtherecognitionofdeferredtaxassets.

AmendmentstoIAS40TransfersofInvestmentProperty(applicabletoannualperiodsbeginningonorafter1January2018).Theamendmentsreinforcetheprinciplefortransfersinto,oroutof, investmentpropertyin IAS40InvestmentPropertytospecifythatsuchatransfershouldonlybemadewhentherehasbeenachangeinuseoftheproperty.Basedontheamendmentsatransfer ismadewhenandonlywhenthere isanactualchangeinuse– i.e.anassetmeetsorceasestomeetthedefinitionofinvestmentpropertyandthereisevidenceofthechangeinuse.Achangeinmanagementintentionalonedoesnotsupportatransfer.

InterpretationIFRIC22ForeignCurrencyTransactionsandAdvanceConsideration(applicabletoannualperiodsbeginningonorafter1January2018).TheInterpretationclarifieshowtodeterminethedateofthetransactionforthepurposeofdeterminingtheexchangeratetouseoninitialrecognitionoftherelatedasset,expenseorincome(orpartofit)onthederecognitionofanon-monetaryassetornon-monetary liabilityarising fromthepaymentor receiptofadvanceconsideration ina foreigncurrency. Insuchcircumstances, thedateof the transaction is thedateonwhichanentityinitially recognises thenon-monetaryassetornon-monetary liabilityarising fromthepaymentor receiptofadvanceconsideration.

5. Revenue

Revenueisprincipallyrepresentedbysaleofcars(cee’d,Venga,SportageandnewSportagemodel)andsaleofenginestoanotherproductionplant.Thebreakdownbykeyproductsandgeographicalareaisasfollows:

Inthousandsofeuro 2016 2015

RevenuefromsalesofcarstoEUcountriesexcludingSlovakia 3,468,552 2,918,333

RevenuefromsalesofcarstononEUcountries 1,397,301 1,491,306

Saleofengines,sparepartsandwaste 636,877 611,066

RevenuefromsaleofcarstoSlovakia 63,451 52,698

Total 5,566,181 5,073,403

32

6. Cost of sales


Materialconsumption 4,497,322 3,952,284

Depreciationandamortization(refertoNote11,12) 110,927 113,914

Amortizationofgovernmentgrants(refertoNote11) -6,319 -7,300

Personnelexpenses 92,037 87,898

Energyconsumption 22,229 22,961

Creationofinventoryprovision 89 3,025

Runningroyaltycharge 226,849 202,402

Royaltycharge 19,616 20,715

Othercostofsales 68,893 68,197

Total 5,031,643 4,464,096

TheCompanyhadonaverage3,605employees,outofthatwere2managers(in2015:3,590,outofthat2managers).Asat31December2016theCompanyhad3,625employees,outofthat2managers(asat31December2015:3,646,outofthat2managers).

7. Administrative and selling expenses


Logisticsservices 138,233 152,763

Warrantycharges(refertoNote22) 117,568 141,650

Personnelexpenses 4,264 3,869

Marketingservices 6,766 1,156

Depreciationandamortization(refertoNote11,12) 494 495

Otheroperatingexpenses 5,587 3,251

Total 272,912 303,184

8. Net finance costs


Interestexpense,longtermbankloans -1,513 -1,960

Interestexpense,leasesandother 455 240

-1,968 -2,200

Interestincome,other 747 1,717

InterestincomeonBillsofExchangefromrelatedparties 264 491

Interestincomeintercompanyloan 368 623

1,379 2,831

Net interest (expense)/income -589 631

Foreignexchangelosses -12,424 -14,252

Foreignexchangegains 8,204 4,383

Net foreign exchange losses -4,220 -9,869

Net finance costs -4,809 -9,238

33

interests on trade receivables and related borrowings

Accordingtotheagreementwiththreecustomers,relatedparties,theCompanychargesthecustomerafixedinterestratefortheagreedportionoffinancedperiod,which isrecordedas interest incomeontradereceivablesfromrelatedparties(refertoNote25).

9. Other operating income/(expense), net


Foreignexchangegains 50,929 38,369

Foreignexchangelosses -29,091 -65,689

Governmentsgrantsreceivedforjobcreationandeducation - -44

Scrapofpropertyonretirement -92 -255

Gain/(Loss)fromsaleofproperty 678 -554

Otheroperatingincome 932 1,526

Net other operating income/(expense) 23,356 -26,647

10. income tax


Current tax expense

Periodincometaxcharge -73,387 -63,339

Adjustmenttoprioryearincometax -12,197 11

-85,584 -63,328

Deferred tax expense

Originationandreversaloftemporarydifferences 19,402 3,228

19,402 3,228

Total income tax expense -66,182 -60,100

Reconciliation of effective tax rate

Inthousandsofeuro 2016 % 2015 %

Profitbeforetax 280,173 270,238

Incometaxusingthedomesticcorporationtaxrate -61,638 (22.00%) -59,452 (22.00%)

Effectofdecreaseinthetaxrate(from22%to21%) -3,941 (1.41%) - -

Taxnon-deductibleexpensesandotheritems -601 (0.21%) -659 (0.24%)

Changeinestimatesrelatedtoprioryear -2 (0.00%) 11 0.00%

income tax charge for the year -66,182 (23.62%) -60,100 (22.24%)

ThestatutorytaxratedecreasedinDecember2016from22%to21%andwillbeapplicableeffectivefrom1January2017.

34

11. Property, plant and equipment

Inthousandsofeuro Lands and Buildings

Machinery and equipment

Other investments in progress

Total

Cost

Balanceat1January2015 284,115 1,059,342 7,962 5,037 1,356,456

Acquisitions - - - 116,606 116,606

Transfer 1,831 116,309 753 -118,893 -

Disposals - -19,672 -301 - -19,973

Balance at 31 December 2015 285,946 1,155,979 8,414 2,750 1,453,089

Balanceat1January2016 285,946 1,155,979 8,414 2,750 1,453,089

Acquisitions - - - 26,200 26,200

Transfer 2,555 23,636 654 -26,845 -

Disposals - -14,628 -208 - -14,836

Balance at 31 December 2016 288,501 1,164,987 8,860 2,105 1,464,453

Depreciation and impairment losses

Balanceat1January2015 63,425 585,211 6,959 - 655,595

Depreciationchargefortheperiod 9,320 103,012 648 - 112,980

Disposals - -18,576 -301 - -18,877

Balance at 31 December 2015 72,745 669,647 7,306 - 749,698

Balanceat1January2016 72,745 669,647 7,306 - 749,698

Depreciationchargefortheperiod 9,397 99,911 641 - 109,949

Disposals - -13,969 -205 - -14,174

Balance at 31 December 2016 82,142 755,589 7,742 - 845,473

Government grants acquisition costs

Balance1January2015 38,282 118,227 - - 156,509

At31December2015 38,282 118,227 - - 156,509

At 31 December 2016 38,282 118,227 - - 156,509

Government grants amortization

Balance1January2015 9,406 83,365 - - 92,771

Amortization 1,317 5,983 - - 7,300

At31December2015 10,723 89,348 - - 100,071

Amortization 1,317 5,002 - - 6,319

At 31 December 2016 12,040 94,350 - - 106,390

Carrying amounts

At1January2015 191,814 439,269 1,003 5,037 637,123

At31December2015 185,642 457,453 1,108 2,750 646,953

At 31 December 2016 180,117 385,521 1,118 2,105 568,861

insuranceProperty,plantandequipmentisinsuredagainstdamageuptoTEUR1,064,762(2015:TEUR1,033,533).

LeasesTheCompanyleasesmaterialmouldsforproductionofVengamodelfromrelatedpartyunderfinancelease.Thenetbookvalueofthemouldsat31December2016amountstoTEUR2,296(2015:TEUR3,551).

35

12. intangible assets

Inthousandsofeuro information technologies

and software

Emission rights Assets under construction

Total

Cost

Balanceat1January2015 22,594 155 160 22,909

Acquisition - - 1,083 1,083

Transfers 882 233 -1,115 -

Disposals - -192 - -192

Balance at 31 December 2015 23,476 196 128 23,800

Balanceat1January2016 23,476 196 128 23,800

Acquisition - - 1,844 1,844

Transfers 1,472 210 -1,682 -

Disposals -383 -225 - -608

Balance at 31 December 2016 24,565 181 290 25,036

Amortization and impairment losses

Balanceat1January2015 18,343 - - 18,343

Amortizationfortheyear 1,429 - - 1,429

Balance at 31 December 2015 19,772 - - 19,772

Balanceat1January2016 19,772 - - 19,772

Amortizationfortheyear 1,472 - - 1,472

Disposals -383 - - -383

Balance at 31 December 2016 20,861 - - 20,861

Government grants acquisition costs

Balanceat1January2015 - 141 - 141

Acquisitions - 196 - 196

Disposals - -191 - -191

Balanceat31December2015 - 146 - 146

Acquisitions - 131 - 131

Disposals - 146 - 146

Balance at 31 December 2016 - 131 - 131

Carrying amounts

At1January2015 4,251 14 160 4,425

At 31 December 2015 3,704 50 128 3,882

At1January2016 3,704 50 128 3,882

At 31 December 2016 3,704 50 290 4,044

36

13. Prepaid expenses

Inthousandsofeuro 31 December 2016 31 December 2015

Non-current assets:

Lumpsumroyaltyprepaid 24,520 44,135

less:currentportion -19,616 -19,616

Total 4,904 24,519


Current assets:

Lumpsumroyaltyprepaid 19,616 19,616

Otherprepayments 158 167

Total 19,774 19,783

Followingisanoverviewoflumpsumroyaltyprepayments:

Inthousandsofeuro Year Royalty prepaid (TEUR) Amortization period (months)

Royaltyforcurrentcee’dcarmodel 2012 117,693 72

TheCompanypayslumpsumroyaltyandrunningroyaltyaccordingtoroyaltyagreements.TheseagreementssecuretheCompanyarighttoproduceandsellcarsandenginesintheproductionplant.Theamortizationofroyaltyprepaymentsisrecordedincostofgoodssold,inthesamelineofthestatementofcomprehensiveincomeasthecostsforrunningroyalty(refertoNote6).

Royaltiesrepresentregularexpensesderivedfromtheentity’srevenueforsaleofcars(until2012:onthebasisofnumberofcarsproduced),andarerecordedascostofgoodssold(refertotheNote6).

14. Finance lease receivable

Financeleasereceivablerepresentspresentvalueoffuturepaymentsfromrelatedpartyforafiveyearsleaseofmoulds.Theoutstandingfinanceleasepaymentsareasfollows:

Inthousandsofeuro Minimum lease payments

interest Present value of minimum lease payments

Finance lease

31 December 2016 31 December 2016 31 December 2016 31 December 2015

Lessthanoneyear - - - 557

Betweenoneandfiveyears - - - -

- - - 557

15. Deferred tax assets


Property,plantandequipment(netofgovernmentgrants) -45,679 -48,907

Warrantyprovision 116,364 111,236

Otherprovisions 11,735 191

Otheritems 333 831

Subtotal for temporary difference 82,753 63,351

Unrecognizeddeferredtaxasset -8,172 -8,172

Deferred tax asset 74,581 55,179

37

16. inventories


Rawmaterialsandconsumables 250,609 267,936

Lessvalueadjustment -2,431 -

Workinprogressandsemi-finishedgoods 31,900 20,443

Lessvalueadjustment -234 -299

Finishedgoods 28,471 31,582

Lessvalueadjustment -449 -2,726

307,866 316,936

Valueadjustmenttoinventorieswascreatedforexpectedlowerrecoverableamountoffinishedproductsandforotherinventoryitemsthatareexpectedtohavelowerrecoverablevalue.

Movementsofprovisionforinventoriesaresetoutinthetablebelow:

Inthousandsofeuro 31 December 2015 Creation Use Reversal 31 December 2016

Provisiontorawmaterial - 2,431 - - 2,431

Provisiontoworkinprogressandsemi-finishedgoods 299 234 -299 - 234

Provisiontofinishedgoods 2,726 449 -2,726 - 449

3,025 3,114 -3,025 - 3,114

insuranceInventoryisinsuredagainstdamageuptoTEUR178,250(2015:TEUR147,328).

17. Trade and other accounts receivable


Tradeaccountsreceivable 684,105 719,185

Valueaddedtaxreceivable 173,747 222,471

Otherreceivables 4,865 4,295

Financial 862,717 945,951

Advancepaymentreceived 1,074 117

Non-financial 1,074 117

863,791 946,068

Thebreakdownbycurrencyisasfollows:

Inthousandsofeuro 31 December 2016 % 31 December 2015 %

EUR 517,629 60.0% 641,206 67.8%

RUB 195,020 22.6% 152,182 16.1%

GBP 87,596 10.1% 93,345 9.9%

USD 26,904 3.1% 59,167 6.2%

SEK 25,531 3.0% - 0,0%

PLN 10,037 1.2% - 0.0%

NZD - 0.0% 51 0.0%

862,717 100.0% 945,951 100.0%

67%orTEUR 580,587 (as at 31December 2015: 70%orTEUR657,809) of trade and other receivables are due fromcompanieswithintheHYUNDAIMOTORGROUP.TheCompanyhasnotincurredanysignificanthistoricalimpairmentlosses.

TheCompanyexpectstorecovervalueaddedtax intwomonthsfromthebalancesheetdateonthegroundsofvalidlegislation.

Asat31December2016theCompanyoffsetgrosstradeandotheraccountsreceivableofTEUR53,360(asat31December2015:TEUR73,793)withthegrosstradeandotheraccountspayableofselectedbusinesspartnersofTEUR27,257(31December2015:TEUR30,557)withcertainpartnersandpresentedthemasnetreceivableofTEUR26,103(31December2015:TEUR43,236).

38

18. Cash and cash equivalents


Bankbalances 53,938 35,286

Vouchers 1 1

Cash and cash equivalents 53,939 35,287

Cashand cashequivalents in theamountofEUR 16,183 thousandaredenominated inGBPandEUR53 thousandaredenominatedinRUB(31December2015:inGBPwasEUR53thousandandinRUBwasEUR27,072thousand).

19. intercompany loan receivable

The intercompany loan receivable represents the positive balance on the cash pool account of theGroup,where theCompanytransferredpartofitsavailablecashresources.

20. Capital and reserves

Share capitalTheCompany’stotalauthorizedandissuedsharecapitalamountedtoTEUR433,323asof31December2016(31December2015:TEUR433,323).Thesharecapitalisfullypaidup.ThesoleshareholderoftheCompanyexercisefullvotingrightsandhasrightstoreceivedividends.

Legal reserve fundTheCompanyisobligedbySlovaklawtocreatealegalreservetotallingaminimumof5%ofnetprofit(annually)anduptoamaximumof10%ofregisteredsharecapital.Asthefund’sbalancehasalreadyreachedthemaximumbalance,nofurtherdistributionfromtheCompany’sprofitsisrequiredbylaw.ThelegalreservefundcanonlybeusedtocovertheCompany’slosses.

21. interest-bearing loans and borrowings


Non-current liabilities

Long-termbankloans 190,396 111,448

Long-term bank loans 190,396 111,448

Current liabilities

Short-termportionofthelong-termbankloan 16,052 25,982

Leaseliability - 3,423

Accruedinterestandother 12 29

Short-term bank loans 16,064 29,434

CertaintypeoflongtermbankloansisfullycoveredbyaguaranteeprovidedbyKiaMotorsCorporation,theCompany’sparentcompany.

Alltheloanspresentedabovebearthevariableinterestrate.

Finance leaseFinanceleaseliabilityrepresentspresentvalueofpaymentstorelatedpartiesforfiveyearleaseofparkinglotandanotherfiveyearleaseofmouldsandarepayableasfollows:

Inthousandsofeuro Future minimum lease payments

interest Present value of mini-mum lease payments

Finance lease


Lessthanoneyear - - - 3,423

Betweenoneandfiveyears - - - -

- - - 3,423

39

22. Provisions

Inthousandsofeuro warranty Other Total

Balanceat1January2015 434,032 47,189 481,221

Provisionscharges(refertoNote7) 145,150 1,768 146,918

Actualcosts -70,063 -46,412 -116,475

Provisionreversed -3,500 - -3,500

Balance at 31 December 2015 505,619 2,545 508,164

Balanceat1January2016 505,619 2,545 508,164

Provisionscharges(refertoNote7) 117,568 53,759 171,327

Actualcosts -69,075 -1,676 -70,751

Provisionreversed(refertoNote7) - - -

Balance at 31 December 2016 554,112 54,628 608,740

Anoverviewoflong-termandshort-termprovisionsissetoutinthefollowingtable:


Non-current 414,292 386,082

Current 194,448 122,082

Balance at the reporting date 608,740 508,164

warranty provision

Thewarrantyprovision ismeasuredbasedontheprobabilityof theproductsrequiringrepairor replacementandthebestestimateofthecoststobeincurredinrespectofdefectiveproductssoldonorbeforethebalancesheetdate.Thewarrantyperiodgrantedisupto7years,whichistheperiodoverwhichitisexpectedtheprovisiontobeused.

Other provisions

Otherprovisionswere recorded forestimatedcashoutflows resulted frompastevents incurredduring2016and it isexpectedtheywillbeusedin2017.

warranty provision reclaims

KMSwarrantsfortheactualclaimamounttothecustomersanditreclaimsaportionthatwascausedbysuppliers.Thereclaimassetisrecognizedwhenitisvirtuallycertainitwillbecollected,i.e.mostlyatthetimetheclaimisattributedtothesupplier.Asat31December2016theamountofestimatedreclaimsrepresentsTEUR83,761(asat31December2015:TEUR68,209).

23. Trade and other accounts payable


Tradepayablesincludingaccruals 420,043 662,407

Employeerelatedliabilities 10,080 9,743

Otherpayables 7,715 10,282

Payrollwithholdingtaxes 1,143 1,533

Financial 438,981 683,965

Advancepaymentreceived 4,471 5,335

Non-financial 4,471 5,335

443,452 689,300

40

Thebreakdownbycurrenciesisasfollows:

Inthousandsofeuro 31 December 2016 Balance

recalculated to EUR

% 31 December 2015 Balance

recalculated to EUR

%

EUR 436,452 99.4% 681,449 99.6%

USD 1,880 0.4% 2,027 0.3%

RUB 649 0.2% 479 0.1%

JPY 0 0.0% 10 0.0%

438,981 100.0% 683,965 100.0%

66%orTEUR291,325(asat31December2015:75%orTEUR516,862)oftradeandotherpayablesareduetocompanieswithintheHYUNDAIMOTORGROUP.

Asat31December2016theCompanyoffsetgrosstradeaccountspayableofTEUR249,007(asat31December2015:TEUR312,624)withthegrosstradeaccountsreceivableofTEUR27,257(asat31December2015:TEUR30,557)withcertainpartnersandpresentedthemasnetreceivableofTEUR221,750(asat31December2015:TEUR282,067).

24. Capital commitments and contingencies

Capital commitmentsAt31December2016theCompanyhadordersinplacetoacquireproperty,plantandequipmentintheamountofTEUR12,545(31December2015:TEUR9,379).

ContingencesThedirectorsdonotexpecttheoutcomeofpendinglitigationstohaveamaterialeffectontheCompany’sfinancialposition.

25. Related parties

IdentityofrelatedpartiesTheCompanyhasarelatedpartyrelationshipwithitsparentKiaMotorsCorporationandothergroupcompanieswithinthe HYUNDAIMOTOR GROUP andwith its directors and executive officers. The ultimate controlling party is HyundaiMotorCompany,whoisentitledtoexercisethecontroloverentitiesidentifiedbytheCompanyasrelatedparties.ThoseCompanieswithinHYUNDAIMOTORGROUPhaveacommonBoard.

Transactions with key management personnelThere have been no transactions with management, except for their salaries, which are included in the caption ofadministrativeexpenseintheincomestatementandintotalamounttoTEUR666(2015:TEUR532).

Other related party transactionsOtherrelatedpartiesarepartoftheHYUNDAIMOTORGROUPandalsotheparentCompanyKiaMotorsCorporation,themanagingCompany.

Transactions with the parent company 2016 2015

Inthousandsofeuro

Revenue 38 1,559

Warrantyprovisionchargebacks 4,226 1,309

Purchasesofmaterial -75,982 -92,687

Acquisitionofproperty,plantandequipment -64 -15,272

Purchaseofservices -635 -3,765

Paymentofdividends -164,876 -173,238

Runningroyaltiescharge -226,850 -202,402

41

Transactions with other companies 2016 2015

Inthousandsofeuro

Revenues 4,620,280 4,410,200

Revenuefromsaleofproperty 1,239 21

Interestincomefromleaseinterest 2 177

Warrantyprovisionchargebacks 14,365 8,240

Purchaseofmaterial -2,761,397 -2,476,026

Acquisitionofproperty,plantandequipment -7,839 -22,275

Purchaseofservices -149,871 -145,381

Warrantycharges -76,672 -71,562

Interestfromintercompanyloan 371 625

Interestexpenseonfinancelease -68 -240

Interestincomefromrefundedinterestfromfinancingreceivables 264 491Significantassetsandliabilitiesarisingfromrelated-partytransactionsarepresentedinthetablebelow:

Assets and liabilities arising from transactions with the parent company 2016 2015

Inthousandsofeuro

Tradeaccountsreceivableandprepayments 4 1

Tradeaccountspayable -11,680 -75,924

Assets and liabilities arising from transactions with other group companies

2016 2015

Inthousandsofeuro

Tradeaccountsreceivable 580,583 657,808

Intercompanyloanreceivable 259,891 99,674

Financeleasereceivable - 557

Financeleaseliability - -3,423

Tradeaccountspayable -279,645 -440,938

Alloutstandingbalanceswiththeserelatedpartiesarepricedonanarm’slengthbasisandaretobesettledincashwithinsixmonths period, except for the finance lease receivable and finance lease liability,whichmatures according to therepaymentcalendarwithinfiveyearsperiod.

26. Financial risk management

OverviewTheCompanyhasexposuretothefollowingrisksfromitsuseoffinancialinstruments: • creditrisk; • liquidityrisk; • marketrisk.ThisnotepresentsinformationabouttheCompany’sexposuretoeachoftheaboverisks,theCompany’sobjectives,policiesandprocesses formeasuringandmanaging risk, and theCompany’smanagementof capital and furtherquantitativedisclosures.

Risk management frameworkTheDirectorshaveoverallresponsibilityfortheestablishmentandoversightoftheCompany’sriskmanagementframework.TheCompany’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbytheCompany,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.RiskmanagementpoliciesandsystemsarereviewedregularlytoreflectchangesinmarketconditionsandtheCompany’sactivities.TheCompany,throughitstrainingandmanagementstandardsandprocedures,aimstodevelopadisciplinedandconstructivecontrolenvironmentinwhichallemployeesunderstandtheirrolesandobligations.

TheDirectorsmonitorcompliancewiththeCompany’sriskmanagementpoliciesandproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbytheCompany.

Credit riskCreditriskistheriskoffinanciallosstotheCompanyifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations,andarisesprincipallyfromtheCompany’sreceivablesfromcustomers.

83% (1-12/2015:88%)of theCompany’s revenue isattributable tosales transactionswith customers in theHYUNDAIMOTORGROUPwhicharerelatedparties.TodatetheCompanyhasrecoveredalldueamountsfromHYUNDAIMOTOR

42

GROUPcustomers.84%(in2015:91%)oftheoutstandingtradereceivablesbalanceisduefromcustomersinHYUNDAIMOTORGROUPwhocooperateswiththeentitysinceitsincorporationoftaxofficeforVAT.Noimpairmentprovisionhasbeenrecordedtoeitherdueorpastduebalanceofthisreceivableasmanagementassessedthesecreditswithhighqualityonthebasisofhistoricalcollection.InthepasttheCompanyrecovereditsVATbalancewithin2monthsfromthebalancesheetdate,onthisbasisitexpectslowcollectionrisk.

Managementhasacreditpolicyinplaceandtheexposuretocreditriskismonitoredonanongoingbasis.CreditevaluationsareperformedonallcustomersoutsidetheHYUNDAIMOTORGROUPrequiringcreditoveracertainamount.Themaximumexposuretocreditriskisrepresentedbythecarryingamountofeachfinancialassetinthebalancesheet.

Liquidity riskLiquidityriskistheriskthattheCompanywillencounterdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.TheCompany’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetotheCompany’sreputation.

TheCompany’smanagementusesoverdraftaccountsandshorttermfacilitiestofinancetheiroperationalneeds,whereaslongtermfinancingandequityareusedtofinanceinvestments.

The Company’smanagement ismonitoring the available cash balance on a regular basis. The available cash balancecomprise of overdraft limits and available cash in comparison to the expected financial liabilities that become due inthefollowingmonth.TheCompanytreats itsplansaccordingtocurrentsituationand incompliancewith itsplansandpredictionsoffuturecash-flowsituation.

TheCompany’smanagementismonitoringwhethertheyhavesufficientresourcestofulfiltheirobligationswhentheyfalldue.Themanagementismonitoringliquiditythroughtargetedcurrentratioofabove1.2calculatedascurrentassetsdividedwith current liabilities. At 31 December 2016 the current ratio reachedmanagement target of 2.30 (as at 31December2015:1.74).

Thefollowingarecontractualmaturitiesoffinancialliabilitiesincludinginterestpaymentsasat:

31 December 2016

Inthousandsofeuro Note Carrying amount

6 months or less

7-12 months

2-3 years

4-5 years

more than 5 years

Tradeandotherreceivables 17 862,717 862,717 - - - -

Intercompanyloanreceivable 19 259,891 259,891 - - - -

Cashandcashequivalents 18 53,939 53,939 - - - -

Interestbearingloansandbor-rowings,excl.unamortizedcosts

21 -206,875 -13,125 -3,125 -187,500 -3,125 -

Interests -1,578 -425 -414 -716 -23 -

Transactioncosts 21 427 108 90 213 16 -

Tradeandotheraccountspay-able 23 -438,981 -438,981 - - - -

Warrantyprovision 22 -554,112 -70,679 -70,664 -254,448 -132,463 -25,858

Otherprovisions 22 -54,628 -53,105 - - - -1,523

Incometaxreceivable/payable 1,786 - 1,786 - - -

-77,414 600,340 -72,327 -442,451 -135,595 -27,381

43

Thefollowingarecontractualmaturitiesoffinancialliabilitiesincludinginterestpaymentsasat:

31 December 2015

Inthousandsofeuro Note Carrying amount

6 months or less

7-12 months

2-3 years

4-5 years

more than 5 years

Tradeandotherreceivables 17 945,951 945,951 - - 2 24

Intercompanyloanreceivable 19 99,674 99,674 - - - -

Financeleasereceivable,in-cludinginterests 14 559 559 - - - -

Cashandcashequivalents 18 35,287 35,287 - - - -

Interestbearingloansandbor-rowings,excl.unamortizedcosts

21 -141,548 -15,164 -14,509 -102,500 -9,375 -

Interests -2,200 -591 -561 -906 -142 -

Transactioncosts 21 695 143 125 335 92 -

Tradeandotheraccountspay-able 23 -683,965 -683,965 - - - -

Warrantyprovision 22 -505,619 -61,751 -58,654 -222,553 -131,574 -31,087

Otherprovisions 22 -2,545 -1,676 - - - -869

Incometaxreceivable/payable 41,178 - 41,178 - - -

-212,533 318,441 -32,421 -325,624 -140,997 -31,932

Market riskMarketriskistheriskthatchangesinmarketprices,suchasforeignexchangeratesandinterestrateswillaffecttheCompany’sincomeorthevalueofitsholdingsoffinancialinstruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimizingthereturnonrisk.

Currency riskTheCompanyisexposedtoforeigncurrencyriskinsalesandpurchasesinothercurrencythatthefunctionalcurrency,i.e.GBP,USD,PLN,SEKandRUB.Thetotalexposureswhicharisefromthecurrencyriskaremonitoredonrevenueside,as74%(2015:71%)ofrevenuesand99%(2015:99%)ofpurchasesaredenominatedineuroandmanagementisnothedgingtheexposuresonFXfluctuations.Inadditionmanagementhasexposureinforeigncurrencyonthebankaccount.Thetotalexposureisstatedinnote8.Netfinancecosts.

Alltheborrowingsaredenominatedinthefunctionalcurrencyeurotoreduceanycurrencyriskfromborrowings.

AstrengtheningandweakeningofRUB,GBP,SEK,USDandPLNby5%againstEURat31December2016wouldhaveincreased/(decreased)equityandnetprofitbytheamountsshownbelow.

InthousandsofEUR impact on profit and equity – strengthening of foreign currency

impact on profit and equity – weakening of foreign currency


RUB 10,233 9,409 -9,258 -8,513

GBP 5,462 4,915 -4,942 -4,447

SEK 1,373 - -1,243 -

USD 1,364 3,010 -1,234 -2,723

PLN 553 - -501 -

NZD - 3 - -2

interest rate riskManagementhasenteredintoloancontractswhichareexposedtofloatinginterestratesinthenormalcourseofbusiness.Managementpolicyistoenterinthevariableinterestratesborrowingscontractsonly.Managementdoesnotseetheneedtohedgetheinterestratesrelatedtothesecontracts.

Anincreaseofinterestrate(EURIBOR,LIBOR)by100basispoints,consideringallotherfactorsremainunchanged,wouldcauseadecreaseofprofitabilitybyTEUR2,069(2015:TEUR1,165).

Thesensitivitieswereestimatedbasedonyearendbalancesandtheactualresultsmightdifferfromtheseestimates.

Capital managementTheCompanydefinesthecapitalasitsEquityandlong-termborrowings.TheCompany’spolicyistomaintainastrongcapital basesoas to sustain futuredevelopmentof thebusinessandmaintain sufficient funds for significant capitalexpenditures that are planned within the next three years. The Company’s needs for capital are satisfied throughborrowingsandthroughcontributionstosharecapital.TheCompanydoesnotprovideshareoptionstoemployeesorotherexternalparties.

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Managementistargetingthedebttoequityratiobelow2.5.Theratioiscalculatedastotalliabilitieslesscashdividedbytheequityassummarizedinthetablebelow:


Totalliabilities 1,258,652 1,338,346

Lessavailablecash -53,939 -35,287

Totalliabilitieslesscash 1,204,713 1,303,059

Totalequity 900,785 851,670

Adjusteddebt/equityratio 1.3 1.5

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27. Operational risk

TheCompanyisexposedindirectlytothepurchasingtrendsofconsumersintheautomotivesector.ThisriskismanagedbytheCompany’sparentcompanythroughmonitoringmarkettrendsandadjustingproductionvolumesaccordingly.

Day-to-day operations harbour various risks that could potentially weaken the Company’s financial position andperformance.Businessrisksthatcouldresultfromproductioninterruptionsduetoe.g.energyoutages,technicalfailures,fires,floodsetc.arepartiallyhedgedusinginsurancecontracts.

Newproductsinherentlycarrytheriskthatcustomermightnotacceptthem.Forthisreason,theparentCompanyconductsextensiveanalysesandcustomersurveys.Trendsareidentifiedintimelyfashionandexaminedcloselytodeterminetheirrelevancetocustomers.

28. Fair values

Fair values versus carrying amountsThe fair value of trade and other receivables, cash and cash equivalents, finance lease receivables, trade and otherpayables,finance leasepayables, loansand interestbearingborrowingswithvariable interestrate isapproximatedbytheircarryingamountsasat31December2016aswellasat31December2015.Basis for determining fair valuesThe fair value of trade and other receivables, cash and cash equivalents, finance lease receivables, trade and otherpayables,financeleasepayables,loansandinterestbearingborrowingsisestimatedasthepresentvalueofthefuturecashflowsdiscountedatmarketrateofinterestatthereportingdate.

29. Accounting estimates and judgments

The preparation of financial statements requiresmanagement tomake judgments, estimates and assumptions thataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpense.Actualresultsmaydifferfromtheseestimates.

Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodaffected.

Provisionsforwarrantyrepairs

TheCompanyhasaprovisionforwarrantycosts,whichat31December2016amountedtoTEUR554,112(31December2015:TEUR505,619)asdisclosed innote22.TheCompanyprovidesawarrantycoverageperioduptofiveyearson itscee’d,Sportage,Vengaandix35models.Inaddition,forKiavehiclessoldintheEuropeanUnionandotherselectedcountriesafurthertwoyearswarrantycoverageperiodisprovidedonenginesandtransmissions.Allwarrantycoverageperiodsaresubjecttoamaximummileageof150,000kilometres.Theseconditionsmayvarydependingonrespectivemodelandmarket.

Theprovisionrepresenttheestimatedwarrantycosts,whichwecalculatebasedonhistoricalexperiencewithconsiderationgiventotheexpectedleveloffuturewarrantyrepairs,theexpectednumberofunitstobeaffectedandtheestimatedaveragerepaidcostsperunitandeachcountry.Theproductscontainpartsmanufacturedbythirdpartysuppliers.

Webelievethecalculationofwarrantyprovisionisacriticalaccountingestimatebecausechangesinthecalculationcanmateriallyaffectnetincomeandrequireustoestimatethefrequencyandamountsoffuturewarrantyclaims,whichareinherentlyuncertain.Theuncertaintiesfurtherinclude,butarenotlimitedto,thefactthatthemodelsproducedinourfactory,especiallySUVmodelofnewSportageQLarenewfirstproducedin2015,aswellastheperiodofthewarrantycoverageisabovethatpreviouslyprovidedbytheKiaMotorsGroup.Thepolicyistocontinuouslymonitortheadequacyofwarrantyprovisions.Thereforewarrantychargesaremaintainedatanamountdeemedadequatetocoverestimatedfuturewarrantyclaims.Actualclaimsinthefuturemaydifferfromtheoriginalestimates,whichmayresultinmaterialrevisionsofthewarrantycharges.

Thewarrantyprovisionestimatewasbasedonatrend lineforgroupofcountries,whichrepresentsexpected levelofwarrantycosts inyear2toyear7asapercentageofyear1.This isourbestestimatewhichwasbasedonhistoricalexperiencesfromclaimsincurredfordifferentmodelsofKiaMotorsGroup.Thecalculationofwarrantyprovisionissensitivetothechangesinthewarrantytrendlineandtotheestimatedvalueoffuturewarrantyclaims.Anincreaseordecreaseofthewarrantytrendlineby10%wouldincreaseordecreasethewarrantyprovisionbyTEUR49,222(31December2015:TEUR44,914).Thesensitivitieswereestimatedbasedonyearendbalancesandtheactualresultsmightdifferfromtheseestimates.

Thesefinancialstatementswereapprovedon24January2017.

JunGuyLeeCFO

Kia Motors Slovakia s.r.o.Sv.JanaNepomuckeho1282/101301TeplickanadVahom

SlovakRepublicTel.:+421415150111Fax:+421415150901

www.kia.sk

Kia Motors Slovakia s.r.o. ANNUAL REPORT 2016

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