Kumho Petrochemical : 45th Annual General Meeting of Shareholders Reference Material

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KUMHO PETROCHMICAL

45th Annual General Meeting of Shareholders Reference Material

Table of Contents
No.	Topic	Page
	CEO Message	02
1	Notice of Convocation of the 45th Ordinary General Meeting of Shareholders	04
2	Agendas	05
3	Governance	15
4	Appendicess
	1) Financial Statements (FY2021)	24

1. Mid/Long-termGrowth Strategy for Sustainable Business Management

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Letter to Shareholders

Dear shareholders,

The COVID-19 pandemic has continued to be a major source of uncertainties, creating substantial challenges for the global economy. Notwithstanding such uncertainties and challenges, Kumho Petrochemical ("Kumho" or "the Company"), through consistent diligence, sound business practices, and learning from invaluable lessons from five decades in the petrochemicals business, has focused on delivering stellar performance and results across its businesses.

Thanks to the trust and support of our shareholders, the Company achieved another year of record-breaking financial performance while making forward strides in other areas of its businesses.

Our Strong business performance

We are very excited to announce to our shareholders that the Company achieved remarkable and unprecedented business performance, far exceeding our forecasts: a record consolidated sales of KRW 8.46 trillion and operating income of 2.41 trillion, up 75.9% and 238.6%, respectively, from the previous year. Our achievements were the result of strong investment activity in strategic products, such as NB-Latex and Epoxy, and ongoing efforts to improve the product portfolio.

Eusuring Sustainability for all stakeholders

Kumho Petrochemical is committed, over the next 50 years, to delivering sustainable outcomes for all stakeholders under the vision of 'Solution Partner Creating Our Common Future With Value Beyond Chemistry'. We have made extensive efforts to increase performance in the environmental, social and governance ("ESG") areas.

In furtherance of our commitment, we have also made extensive efforts to increase performance in the environmental, social, and governance ("ESG") areas.

Over the past twelve months, as promised prior to the 2021 Annual General Meeting of shareholders ("AGM"), we reorganized the Board of Directors and Committees to ensure their independence in the pursuit of enforcing sound corporate governance practices. Details about the Board and Committee charters are available on the Company website.

After the Extraordinary General Meeting ("EGM") of shareholders held in June 2021, the Company also successfully completed the transition to a professional management structure whereby three executives of the Company with years of experience and deep knowledge of the petrochemicals business related to sales, finance, and R&D joined the Board. The three new executive directors replaced the owner shareholder director and his affiliated directors to ensure the transformation of the Board into an independent decision-making entity and to complete the transformation to a professionalized management of the Company. We will continue to improve our governance practices to create long-term shareholder value along with ensuring sustainable growth.

Our ESG team, responsible for generating solid ESG performance and fostering any necessary internal reforms, recently established the "ESG Vision and Strategy for 2025" as part of Kumho's commitment to pursue excellence in our ESG practices. We plan to disclose how we will deal with climate risk in accordance with the Task Force on Climate-Related Financial Disclosures ("TCFD") framework including participating in global initiatives.

In February 2022, the Company announced its Carbon neutral growth roadmap which includes five key strategies: (i) Accelerating carbon reduction across all business sites with conversion to clean energy; (ii) Conversion to eco-friendly products;

1. Conversion to eco-friendlybio-based raw materials; (iv) Increase recycling; (v) Digitalization of carbon asset management. With these strategies, the Company targets a 29.3% reduction of carbon emission compared to BAU by 2030, while setting the year 2035 as the beginning of our journey to achieve carbon-neutrality by 2050.

Along with the Carbon-neutral growth roadmap, we have strengthened our existing business strategies to achieve our long-term vision of sustainable growth. We aim to achieve sales of KRW 12 trillion by 2026 by focusing on the the following three core strategies: (i) ESG-led business framework, (ii) intensive investment in our core businesses, and (iii) securing new growth engines for the future. Further details are set out in "Mid/Long-term Growth Strategy for Sustainable Business Management" of our attachment

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Board Changes

This year, we are seeking shareholder approval to appoint two additional independent directors with outstanding capabilities. The Board believes these two candidates to be the best candidates to enhance investor engagement and reflect the growing investor interest in ESG activities. Sangsoo Park has been working as a director of multiple public companies for over twenty years and has extensive knowledge and experience in auditing, risk management, and compensation. The Board strongly believes that his experiences in Investment Pool for Public Funds and Special Committee on Responsible Investment & Governance of National Pension Service will enhance the Board's understanding of investor and broader stakeholder expectations. Youngwoo Park is a top environmental expert who served as the head of UNEP Asia Pacific office and was Senior Advisor for Environmental Policy and Project Development of SACEP. He is currently serving as a director of Ecomom Korea, a non-profit organization that runs environmental education and leadership programs. The Board will benefit from his expertise in monitoring the risks and opportunities of climate change and achieving the ambitious goal of carbon-neutral growth.

Dividend

Delivering sustainable shareholder value has always been one of our key focus areas. At the end of 2021, we announced the three-year dividend program of returning 25-35% of our non-consolidated net income to shareholders over the next three years. In line with such goals, the Board is declaring a final dividend of KRW 10,000 per common share and KRW 10,050 per preferred share. The total amount of dividend is KRW 281 billion and payout ratio to non-consolidated net income is 28.5%. The Board also decided to buy back shares worth approximately KRW 150 billion. As a result, we deliver the total shareholder returns of KRW 431 billion, which is a 272% increase compared to the prior year. The Board will continue its endeavors to create long- term sustainable growth in shareholder value.

2022 AGM

We invite our shareholders to join the 2022 AGM of Kumho.

Kumho recognizes and appreciates the voting rights of our shareholders. We encourage you to participate and exercise your voting rights in the upcoming AGM. Information on the meeting, including explanatory notes on the items of business, has been provided in the Convocation Notice.

Sincerely,

March 2022

On behalf of Kumho Petrochemical's Board of Directors

CEO of Kumho Petrochemical

Jong-Hoon, Baek

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Notice of General Meeting of Shareholders

1. Date and Time: March 25, 2022 (Friday) 09:00
2. Place: Grand Auditorium, 4F, East Bldg. of Signature Towers, 100, Cheonggyecheon-ro,Jung-gu, Seoul
3. Purpose of Meeting
4. 1. Reporting:
      Audit report, business report, report on details of transactions with the largest shareholder, etc., report on the status of operation of the internal accounting management system
   2. Matters to be Resolved (Agenda):

Agenda No. 1: Approval of the 45th Fiscal Year's Financial Statements and Dividends

o Agenda no. 1-1: Approval of financial statements for the 45th fiscal year (excluding statement of appropriation of retained earnings)

o Agenda no. 1-2: Approval of dividends and statement of appropriation of retained earnings for the 45th fiscal year

• Agenda no. 1-2-1: KRW 10,000 per share for cash dividend on common shares, and KRW 10,050 per share for cash dividend on preferred shares
• Agenda no. 1-2-2: KRW 14,900 per share for cash dividend on common shares, and KRW 14,950 per share for
  cash dividend on preferred shares (proposed by shareholder Chul-Wan Park)

Agenda No. 2: Appointment of Two Outside Directors

o Agenda no. 2-1: Appointment of Sang-Soo Park as outside director

o Agenda no. 2-2: Appointment of Young-Woo Park as outside director

o Agenda no. 2-3: Appointment of Sung-Yong Lee as outside director (proposed by shareholder Chul-Wan Park)

o Agenda no. 2-4: Appointment of Sang-Moon Ham as outside director (proposed by shareholder Chul-Wan Park)

Agenda No. 3: Appointment of one Audit Committee Member

o Agenda no. 3-1: Appointment of Sang-Soo Park as Audit Committee member

o Agenda no. 3-2: Appointment of Sung-Yong Lee as Audit Committee member (proposed by shareholder Chul- Wan Park)

Agenda No. 4: Approval of Ceiling Amount of Remuneration for Directors 4. Matters Concerning Exercise of Voting Rights

Shareholders may attend a general meeting of shareholders and directly exercise their voting rights or delegate their voting rights to a proxy to exercise their voting rights.

• In case of direct exercise: Identification card (resident registration card, driver's license or passport)
• In case of exercise by proxy: Power of attorney, identification card of the proxy, certificate of seal impression or copy of identification card of the shareholder

※ Matters to be stated in the power of attorney

1. Name, address and resident registration number of the delegator (in case of a corporation, its corporate registration number; hereinafter the same shall apply);
2. Name, address, resident registration number and details of delegation of voting rights; and
3. The delegator's seal or signature.

(Our template for power of attorney will be posted on the website below from March 12, 2021) https://www.kkpc.com/kor/invest/disclosure/announcementList/

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