LG Energy Solution : 2024 1Q Review Report

LG ENERGY SOLUTION, LTD.

AND ITS SUBSIDIARIES

Interim Condensed Consolidated Financial Statements As of March 31, 2024, and December 31, 2023, and

For the Three-Month Periods Ended March 31, 2024 and 2023

(With the Independent Auditor's Review Report Thereon)

LG ENERGY SOLUTION, LTD.

Table of Contents

Report on Review of Interim Condensed Consolidated Financial Statements

	Page
Interim Condensed Consolidated Financial Statements
As of March 31, 2024, and December 31, 2023, and
For the Three-Month Periods Ended March 31, 2024 and 2023:
Interim Condensed Consolidated Statements of Financial Position	1
Interim Condensed Consolidated Statements of Profit or Loss	2
Interim Condensed Consolidated Statements of Comprehensive Income	3
Interim Condensed Consolidated Statements of Changes in Equity	4
Interim Condensed Consolidated Statements of Cash Flows	5
Notes to the Interim Condensed Consolidated Financial Statements	6

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Report on Review of Interim Condensed Consolidated Financial Statements

English Translation of Independent Auditor's Review Report Originally Issued in Korean on May 10, 2024

To the Shareholders and the Board of Directors of

LG Energy Solution, Ltd.:

Reviewed financial statements

We have reviewed the accompanying interim condensed consolidated financial statements of LG Energy Solution, Ltd. and its subsidiaries (the "Group"). These interim condensed consolidated financial statements consist of the interim condensed consolidated statement of financial position as of March 31, 2024, and the related interim condensed consolidated statements of profit or loss, interim condensed consolidated statements of comprehensive income, interim condensed consolidated statements of changes in equity and interim condensed consolidated statements of cash flows, all expressed in Korean won, for the three-month periods ended March 31, 2024 and 2023, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the interim condensed consolidated financial statements

Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with Korean International Financial Reporting Standard ("K-IFRS") 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of interim condensed consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

We conducted our review in accordance with the review standards for interim financial statements in the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing ("KSAs") and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with K-IFRS 1034 Interim Financial Reporting.

Other matters

We have audited the consolidated statement of financial position of the Group as of December 31, 2023, and the related consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, in accordance with KSA. We expressed an unqualified opinion on those consolidated financial statements, not presented herein, in our audit report dated March 7, 2024.

The accompanying consolidated statement of financial position as of December 31, 2023, presented for comparative purposes, is not different, in all material respects, from the above audited consolidated statement of financial position.

May 10, 2024

This review report is effective as of May 10, 2024, the independent auditor's review report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the independent auditor's review report date to the time this review report is used. Such events and circumstances could significantly affect the accompanying interim condensed consolidated financial statements and may result in modifications to this review report.

LG ENERGY SOLUTION, LTD.

AND ITS SUBSIDIARIES (the "Group")

Interim condensed consolidated financial statements as of March 31, 2024, and December 31, 2023, and

for the three-month periods ended March 31, 2024 and 2023

"The accompanying interim condensed consolidated financial statements, including all footnotes and disclosures, have been prepared by, and are the responsibility of, the Group."

Dong Myung Kim

Chief Executive Officer

LG Energy Solution, Ltd.

LG Energy Solution, Ltd. and its subsidiaries

Interim condensed consolidated statements of financial position

As of March 31, 2024, and December 31, 2023

(Korean won in millions)
	Notes			March 31, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	3,5,6		￦	5,288,382		￦	5,068,783
Trade receivables	3,5,7,30			4,650,709			5,128,474
Other receivables	3,5,7,30			825,599			555,186
Other current financial assets	3,5,8			96,719			65,439
Prepaid income taxes				100,730			67,072
Other current assets	13			1,208,742			927,106
Inventories	9			5,657,920				5,396,336
				17,828,801			17,208,396
Non-current assets
Trade receivables	3,5,7			147,034			129,995
Other receivables	3,5,7,30			140,861			122,282
Other non-current financial assets	3,5,8			449,345			357,038
Investments in associates and joint ventures	10,32			223,224			223,559
Deferred tax assets	27			2,376,551			2,228,924
Property, plant and equipment	11,32			26,532,490			23,654,677
Intangible assets	12,32			933,120			875,993
Investment properties	32,34			201,258			212,489
Other non-current assets	13,16			442,674			423,791
				31,446,557			28,228,748
Total assets			￦	49,275,358			￦	45,437,144
Liabilities
Current liabilities
Trade payables	3,5,30		￦	3,149,291		￦	3,093,719
Other payables	3,5,30			2,799,506			3,458,103
Borrowings	3,5,11,14,31			3,286,138			3,211,456
Provisions	15			483,568			517,170
Other current financial liabilities	3,5,8			7,922			7,652
Income tax payables				85,155			33,321
Other current liabilities	17,33			496,910			615,764
				10,308,490			10,937,185
Non-current liabilities
Other payables	3,5,30			23,682			25,291
Borrowings	3,5,11,14,31			9,571,472			7,720,832
Other non-current financial liabilities	3,5,8			212,266			68,824
Provisions	15			933,651			869,123
Net defined benefit liabilities	16			54		239
Deferred tax liabilities	27			52,675			19,958
Other non-current liabilities	17,33			1,468,229				1,422,183
				12,262,029			10,126,450
Total liabilities				22,570,519			21,063,635
Equity attributable to owners of
the Parent Company
Share capital	19			117,000			117,000
Capital surplus	19			17,164,627			17,164,627
Accumulated other comprehensive income				1,047,757			554,518
Retained earnings	20			2,363,645			2,364,496
				20,693,029			20,200,641
Non-controlling interest				6,011,810				4,172,868
Total equity				26,704,839			24,373,509
Total liabilities and equity			￦	49,275,358		￦	45,437,144

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

1

LG Energy Solution, Ltd. and its subsidiaries

Interim condensed consolidated statements of profit or loss

For the three-month periods ended March 31, 2024 and 2023

(Korean won in millions)

		Notes			March 31, 2024			March 31, 2023
Revenue	21,30,32,33 ￦	6,128,714		￦	8,747,117
Cost of sales	21,22,30			5,204,715			7,452,907
Gross profit					923,999			1,294,210
Other operating income	21			188,954			100,294
Selling and administrative expenses	21,22,30			955,616			761,338
Operating profit	21			157,337			633,166
Finance income	5,24,30			282,667			289,036
Finance costs	5,24,30			257,578			265,279
Share of profit (loss) of associates and joint
ventures	10			(12,631)		(9,859)
Other non-operating income	25			203,984			339,992
Other non-operating expenses	26			151,130			275,867
Profit before income tax expense					222,649			711,189
Income tax expense	27			10,597			149,203
Profit for the period				￦	212,052			￦	561,986
Profit for the period attributable to:
Owners of the Parent Company				￦	(464)	￦	500,595
Non-controlling interests					212,516			61,391
Earnings per share attributable to the equity
holders of the Parent Company (in Korean won)	28
Basic or diluted earnings per share					(2)		2,139

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

2

LG Energy Solution, Ltd. and its subsidiaries

Interim condensed consolidated statements of comprehensive income

For the three-month periods ended March 31, 2024 and 2023

(Korean won in millions)

	Notes		March 31, 2024			March 31, 2023
Profit for the period		￦	212,052		￦	561,986
Other comprehensive income:
Items that will not be subsequently reclassified to profit or loss:
Remeasurements of net defined benefit liabilities	16		(651)		779
Gain on valuation of financial assets at FVOCI	5		907			10,338
Income tax effect of other comprehensive income			(44)		(3,009)
			212			8,108
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations			693,471			471,188
Gain (loss) on cash flow hedge	5		1,383			(7,227)
Share of other comprehensive income of associates and
joint ventures			9,538			6,903
Income tax effect of other comprehensive income			(4,800)		4,594
			699,592			475,458
Other comprehensive income for the period, net of tax			699,804			483,566
Total comprehensive income for the period, net of tax		￦	911,856		￦	1,045,552
Total comprehensive income for the period
attributable to:
Owners of the Parent Company		￦	492,273 ￦	916,084
Non-controlling interest			419,583		129,468

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

3

LG Energy Solution, Ltd. and its subsidiaries

Interim condensed consolidated statements of changes in equity

For the three-month periods ended March 31, 2024 and 2023

(Korean won in millions)						Attributable to the equity holders of the Parent Company
										Accumulated
										other
				Share	Capital		comprehensive		Retained					Non-controlling
	Notes			capital			surplus			income (loss)			earnings			Subtotal			interests			Total
As of January 1, 2023			₩	117,000 ₩	17,164,627	₩	296,070	₩	1,154,518	₩	18,732,215	₩	1,861,547 ₩	20,593,762
Comprehensive income for the period:
Profit for the period				-			-		-		500,595		500,595		61,391		561,986
Remeasurements of net defined benefit liabilities	16			-			-		-		573		573		-		573
Exchange differences on translation of foreign operations				-			-		405,908		-		405,908		68,076		473,984
Gain on valuation of financial assets at FVOCI	5			-			-		7,534		-		7,534		-		7,534
Cash flow hedge	5			-			-		(5,428)		-		(5,428)		-		(5,428)
Equity adjustments in equity method	10			-			-		6,903		-		6,903		-		6,903
Total comprehensive income for the period
			-			-		414,917		501,168		916,085		129,467		1,045,552
Transactions with owners of the Parent Company recognized directly
in equity:
Capital increase				-			-		-		-		-		408,360		408,360
Total transactions with owners of the Parent Company recognized
directly in equity				-			-		-		-		-		408,360		408,360
As of March 31, 2023			₩	117,000 ₩	17,164,627	₩	710,987	₩	1,655,686	₩	19,648,300	₩	2,399,374 ₩	22,047,674
As of January 1, 2024
		₩	117,000 ₩	17,164,627	₩	554,518	₩	2,364,496	₩	20,200,641	₩	4,172,868 ₩	24,373,509
Comprehensive income for the period:
Profit for the period				-			-		-		(464)		(464)		212,516		212,052
Remeasurements of net defined benefit liabilities	16			-			-		-		(502)		(502)		-		(502)
Exchange differences on translation of foreign operations				-			-		481,942		-		481,942			207,067		689,009
Gain on valuation of financial assets at FVOCI	5			-			-		714		-		714		-		714
Cash flow hedge	5			-			-		1,045		-		1,045		-		1,045
Equity adjustments in equity method	10			-			-		9,538		-		9,538		-		9,538
Total comprehensive income for the period
			-			-		493,239		(966)		492,273		419,583		911,856
Transactions with owners of the Parent Company recognized directly in
equity:
Capital increase				-			-		-		-		-		1,500,454		1,500,454
Others				-			-		-		115		115		(81,095)		(80,980)
Total transactions with owners of the Parent Company recognized
directly in equity				-			-		-		115		115		1,419,359		1,419,474
As of March 31, 2024			₩	117,000 ₩	17,164,627	₩	1,047,757	₩	2,363,645	₩	20,693,029	₩	6,011,810 ₩	26,704,839

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

4

LG Energy Solution, Ltd. and its subsidiaries

Interim condensed consolidated statements of cash flows

For the three-month periods ended March 31, 2024 and 2023

(Korean won in millions)
	Notes		March 31, 2024	March 31, 2023
Cash flows from operating activities:
Cash generated from operations	31		￦	709,250	￦	862,945
Interest received				58,380			40,298
Interest paid				(126,006)		(53,073)
Income tax paid				(110,555)		(69,290)
Net cash provided by operating activities				531,069			780,880
Cash flows from investing activities:
Cash inflow from investing activities:
Decrease in other receivables				15,635			81,192
Decrease in other non-current receivables				2,765		2,423
Proceeds from disposal of property, plant and equipment				14,743			3,009
Proceeds from disposal of intangible assets				1			-
Government grants received				4,485			69,691
				37,629			156,315
Cash outflow for investing activities:
Increase in other receivables				(655)		(97,583)
Increase in other non-current receivables				(29,507)			(10,760)
Acquisition of investments in associates and joint ventures				(2,757)			(46,575)
Acquisition of financial instruments				(1,113)		(28,261)
Acquisition of property, plant and equipment				(3,437,337)			(2,124,410)
Acquisition of intangible assets				(30,733)			(29,847)
Other cash outflow for investing activities					-			(4,431)
				(3,502,102)		(2,341,867)
Net cash used in investing activities				(3,464,473)		(2,185,552)
Cash flows from financing activities:
Cash inflow from financing activities:
Proceeds from borrowings and others	31			3,043,557			436,043
Paid-in capital by non-controlling interests				1,500,454			408,361
				4,544,011			844,404
Cash outflow for financing activities:
Repayments of borrowings and others	31			(1,455,798)			(639,818)
Capital decrease of a subsidiary				(81,095)			-
				(1,536,893)		(639,818)
Net cash provided by financing activities				3,007,118			204,586
Net increase (decrease) in cash and cash equivalents				73,714			(1,200,086)
Cash and cash equivalents at the beginning of the period				5,068,783			5,937,967
Effects of exchange rate changes on cash and cash equivalents				145,885			42,612
Cash and cash equivalents at the end of the period			￦	5,288,382		￦	4,780,493

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

5