Hyundai Elevator : Convocation Notice of the 40th AGM

Hyundai Elevator Co., Ltd.

Convocation Notice of

the Annual General Meeting of Shareholders

2024.03.13

Table of Contents

1 Shareholder Letter

1. Notice of the Annual General Meeting of Shareholders
2. Agenda Items
3. ESG Highlights
4. • Corporate Governance
   • Environment and Social Activities

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1. Shareholder Letter

Dear Shareholders,

We express our gratitude for the unwavering support and encouragement you have extended to Hyundai Elevator in 2023.

The past year has been marked by ongoing global market uncertainties, including the Russia-Ukraine conflict and the Israel-Gaza war, contributing to an increase in oil prices. Additionally, the escalating tensions between the United States and China have added to the unpredictability of global markets. Domestically, Korea has faced challenges such as the prolonged high-interest rates and concerns about project financing (PF) real estate defaults, resulting in difficulties in capital acquisition and a sustained slowdown in the construction industry.

Despite these challenges, we have persistently engaged in cost-cutting activities to enhance profitability. Additionally, in our commitment to securing future competitiveness, we have joined the government- led initiative 'One Team Korea.' This includes participating in bids for major projects such as the Indonesia new capital relocation and Saudi Arabia's NEOM City development. Furthermore, we have undertaken new challenges, including becoming a hub for Urban Air Mobility (UAM) with the H-Port project and developing modular elevators, which will be a core architectural technology for smart cities.

In the upcoming year, guided by the motto "Enhancing Future Competitiveness and Establishing a Foundation for Sustainable Growth," we intend to proactively prepare for the uncertainties in both domestic and international environments. Through five core management strategies - namely, "Boosting Global Presence," "Strengthening Profitability," "Ensuring Future Competitiveness," "Enhancing ESG Management," and "Improving Operational Efficiency" - we aim to fortify our position in a changing landscape. Our efforts will be directed towards improving business performance and maximizing shareholder value by adapting to changes and laying the groundwork for sustained growth.

[Financial Highlights]

In 2023, despite the challenging environment characterized by a sluggish construction industry and high- interest rates, our company achieved significant growth in revenue, recording an increase of 13.6% compared to the previous year, reaching KRW 1,882.5 Bn. Operating profit also experienced a notable growth of 42.6% on the prior year, reaching KRW 101.1 Bn. We actively targeted the replacement demand market and sustained growth in the maintenance sector.

Our market share in the domestic new elevator market is 38.9%, maintaining the top position for the 17th consecutive year. Additionally, we continue to secure the top position in the maintenance sector for the ninth consecutive year.

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[Improvement in Corporate Governance]

Last year, our company formulated corporate governance policies aimed at enhancing shareholder value and continues its efforts to implement them. As part of our shareholder return policy, we plan to distribute more than 50% of net profit (excluding one-time gains) over the next five years through cash dividends or the acquisition and retirement of treasury stocks. Additionally, a certain proportion of one-time non- operating profits will be allocated separately for cash dividends or the acquisition and retirement of treasury stocks, further enhancing shareholder value. This year marks the first year of implementing this commitment, with the Board of Directors proposing a cash dividend of KRW 144.4 billion (KRW 4,000 per share), considering both ordinary income and one-time gains.

In terms of board governance policies, the Board has introduced a new process to verify independent director candidates through an external professional organization. We have established internal transaction and risk management committees, implemented a dedicated support team for the audit committee, and established an evaluation system for board operations to enhance its expertise. Furthermore, to improve board independence, an independent director has been appointed as the Chairman of the Board, separating the roles of CEO and Board Chairman. All committee chairpersons within the Board (Audit Committee, Independent Director Candidate Recommendation Committee, Evaluation and Compensation Committee, ESG Committee, Internal Transaction Committee, Risk Management Committee) are now appointed as independent directors, further enhancing the independence of board operations.

[Pursuit of Sustainability]

Our company is committed to sustainable development, making continuous efforts to manage and improve matters that significantly impact sustainability. In June 2023, we established the ESG Committee under the Board of Directors to build a sustainable management system. Additionally, to enhance our RE100 achievement rate and proactively respond to climate change, we installed renewable energy (solar power) facilities at our Chungju and Shanghai factories. Beyond transitioning all company vehicles to eco-friendly options (electric and hybrid vehicles), we are actively engaged in energy-saving campaigns throughout the organization to achieve substantial reductions in greenhouse gas emissions.

Furthermore, we are promoting gender equality and enhancing the competitiveness of female employees. We have joined the United Nations Women's Empowerment Principles and undertaken various initiatives. Recognizing our contributions, we received the award for the Governance category in the '2023 Republic of Korea Sustainable Management Awards' from a reputable institution authorized by the Ministry of Trade, Industry, and Energy. For details on our carbon emission performance and other ESG efforts, please refer to the upcoming ESG report scheduled for the first half of this year.

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[Annual General Shareholders Meeting]

We cordially invite all shareholders to the upcoming 40th Annual Shareholders' Meeting scheduled for March 28. The agenda for this meeting includes the approval of financial statements, the appointment of directors, and the approval of the director's compensation limit. Specifically, under the director appointment agenda, we are proposing the appointment of HAN Hee-won as a new independent director, alongside three reappointment candidates, including myself. Professor HAN Hee-won, currently serving as a professor in the College of Law at Dongguk University, brings extensive knowledge in both legal matters and regional economic development, and we believe she will make a substantial contribution to the effective operation of the Board. For more detailed explanations on each agenda item, please refer to pages 7-19 of the accompanying materials.

In an effort to proactively address the evolving economic landscape and uphold the commitment to improving corporate governance issues and enhancing shareholder value, the Board has meticulously assessed the qualifications, expertise, and suitability of the candidates needed for these tasks. After careful consideration, the Board has put forth these nominees and seeks the support of our shareholders in this regard.

Finally, we express our sincere gratitude for the continued interest and support from our shareholders. In 2024, we will strive to meet your expectations with our best efforts. Thank you.

Sincerely yours,

Cho Jae Cheon

CEO, Hyundai Elevator Co., Ltd.

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2. Notice of Convocation for the Annual General Meeting of Shareholders

With utmost respect, we wish for the prosperity of our shareholders and peace within your households.

In accordance with Article 365 of the Commercial Act and Article 17 of our Company's Articles of Incorporation, we hereby notify you of the convocation of the 40th Extraordinary General Meeting of Shareholders for the 40th fiscal year as follows and kindly request your attendance:

Details:

1. Date and Time: March 28, 2024 (Thursday) at 09:00 AM (KST)
2. Location: Welfare Building 4th Floor Auditorium (Bok-ji Dong), 128, Chungjusandan 1-ro,Chungju-si,Chungcheongbuk-do, Republic of Korea
3. Purpose of the Meeting A. Report Item:
4. • Audit Report
   • Sales Report
   • Report on Internal Accounting Control System Operation Status
   • Report on Transactions with Major Shareholders and Affiliates

   B. Resolution Item:

   • Agenda Item 1: Approval of the 40th Financial Statements (including the Statement of Appropriation of Retained Earnings) and Consolidated Financial Statements
     ※Cash dividend of KRW 500 per share (Total dividend amount KRW 144.4bn)
   • Agenda Item 2: Election of Directors

Agenda Item 2-1:Re-election of CHO Jae Cheon as Executive Director

Agenda Item 2-2:Re-election of KIM Ho Jin as Non-Independent Non- Executive Director

Agenda Item 2-3:Re-election of JEONG Young Gi as Independent Director

Agenda Item 2-4: Election of HAN Hee Won as Independent Director

• Agenda Item 3: Appointment of Audit Committee Members from Independent directors Agenda Item 3-1: JEONG Young Gi
  Agenda Item 3-2: HAN Hee Won
• Agenda Item 4: Approval of the Director's Compensation Limit
• • Compensation Limit: KRW 5.0 Bn (2023 limit: KRW 6.0 Bn)

4. Availability of Management Reference Information:

In accordance with Article 542-4, Paragraph 3 of the Commercial Act, the notice and announcement for the General Meeting of Shareholders are available at our headquarters, branches, the Financial Services Commission, Korea Exchange, and the Securities Services Department of Kookmin Bank.

5. Items to prepare for Attendance at the Shareholders' Meeting:

• Identification Card for direct participation
• Power of Attorney, proxy's identification card for proxy participation

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3. Resolution Item

Agenda Item 1: Approval of the 40th Financial Statements (including the Statement of Appropriation of Retained Earnings) and Consolidated Financials

Over the past three years, our financial statements have received an 'UNQUALIFIED' opinion from the external auditor (PwC), and the FY2023 audit report is schedule to be disclosed on March 20, 2024.

Both revenue and orders have grown compared to the previous year, driven by the expansion of domestic remodeling and maintenance services. Profit has also increased compared to the previous year, attributed to selective orders and cost-cutting efforts through focus and concentration. Additionally, with the inclusion of Hyundai Movex Co., Ltd. as a consolidated subsidiary, both revenue and operating profit on the income statement have increased. Furthermore, the balance sheet reflects an increase in total assets, total liabilities, and total equity.

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• Operating Performance (Summary Consolidated Income Statement)

				(Unit: KRW Bn)
	Account	2023.1.1. ~12.31.	2022.1.1. ~12.31.	Remarks
	Revenue	2,602.1	2,129.3
	Cost of Goods Sold	2,163.2	1,813.9
	Gross Profit	438.9	315.4
	Selling, General, and	356.3	272.4
	Administrative Expenses
	Operating Profit	82.6	43.0
	Income (Loss) before Income Tax	401.6	110.1
	Expense
	Income Tax Expense (Profit)	87.3	31.9
	Consolidated Net Income (Loss)	314.3	78.2

• Financial Position (Consolidated Balance Sheet)

						(Unit: KRW Bn)
	Account		As at end 2023		As at end 2022	Remarks
	Current Assets	1,345.8	1,096.3
	Non-current Assets	2,194.1	1,918.2
	Total Assets	3,539.9	3,014.5
	Current Liabilities	1,333.8	1,222.9
	Non-current Liabilities	830.1	624.9
	Total Liabilities	2,163.9	1,847.8
	Capital Stock	212.2	212.2
	Consolidated Capital Surplus	573.7	570.4
	Consolidated Other Capital	(128.8)	(32.0)
	Components
	Consolidated Other Accumulated	6.4	8.1
	Earnings and Comprehensive
	Income
	Consolidated Retained	626.9	394.6
	Earnings (Deficit)	85.6	13.4
	Non-controlling Interest
	Total Equity	1,376.0	1,166.7
	Total Liabilities and Equity	3,539.9	3,014.5

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In November 2023, we introduced a five-year shareholder return policy for the period spanning from

2023 to 2027. The outlined policy includes the following elements:

1. Cash dividends or the acquisition and retirement of treasury stock, surpassing 50% of the annual net profit (excluding one-time gains)
2. Separate allocation of cash dividends or the acquisition and retirement of treasury stock for a certain portion of one-timenon-operating gains.
3. Ensuring stability through the establishment of a minimum dividend (KRW 500 per share based on the 2022 year-end dividend)

In the first year following the announcement of the shareholder return policy, a cash dividend of KRW 4,000 per share has been proposed, marking an eightfold increase compared to the previous year's KRW 500 per share. We will continue to strive for an optimal level of shareholder return, taking into consideration the Company's growth in the future.

	Cash Dividend
5,000		8.79%	10.00%
4,000			8.00%
3,000		4,000	6.00%
2,000			4.00%
1.94%	1.75%
1,000			2.00%
800	500
-		0.00%
2021	2022	2023
	Dividend(KRW)	Dividend Yield(%)

		2021		2022		2023
	Market Price	41,340		28,590		45,525
	(KRW)	('21.12.22~'22.12.28)	('22.12.21~'22.12.27)	('23.12.20~'23.12.26)
	Dividend per share	800		500		4,000
	(KRW)
	Dividend Yield (%)	1.94%		1.75%		8.79%

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Agenda Items 2 and 3: Appointment of Directors

Our Board of Directors is comprised of a total of seven members, including four Independent directors. In December 2023, Ms. HYUN Jeong Eun (Executive Director) and Mr. SUH Chang Jin (Independent director) resigned, leading to the appointment of Mr. RHIM Yu Chul (Non-Executive Director) and Ms. LEE Ki Hwa (Independent director) during the extraordinary shareholders' meeting held in December 2023.

As four directors are scheduled to complete their terms in March 2024, to ensure the stable operation of the Board, we propose to reappoint three of them (Agendas 2-1,2-2,2-3) and appoint one new Independent director (Agenda 2-4). All candidates for this general shareholders' meeting have been considered based on the 'FAVORABLE' opinion obtained through qualification verification by an independent external advisory agency, utilizing the Board Skills Matrix (BSM) to enhance the board's expertise and capabilities. Independent director candidates were recommended by the Independent director Nomination Committee, while all other executive and non-executive director candidates were presented through the recommendations at the first regular board meeting in 2024.

Currently, the Chairman of our Board of Directors is JEONG Young-gi, an Independent director. To ensure the independence of all committees within the Board, the Chairpersons of these committees are also appointed from the pool of Independent directors, further securing the autonomy of both the Board and its committees. The introduction of BSM has further enhanced the expertise and capabilities of our Board of Directors.

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