LG Chem, Ltd. and Subsidiaries Consolidated Interim Financial Statements March 31, 2018 and 2017 LG Chem, Ltd. and Subsidiaries Index March 31, 2018 and 2017 Page(s) Report on Review of Interim Financial Statements ................................................................... 1 - 2 Consolidated Interim Financial Statements Consolidated Interim Statements of Financial Position ................................................................. 3 - 4 Consolidated Interim Statements of Profit or Loss .............................................................................. 5 Consolidated Interim Statements of Comprehensive Income .............................................................. 6 Consolidated Interim Statements of Changes in Equity ....................................................................... 7 Consolidated Interim Statements of Cash Flows ................................................................................ 8 Notes to the Consolidated Interim Financial Statements ............................................................. 9 - 69 Report on Review of Interim Financial Statements (English Translation of a Report Originally Issued in Korean) To the Shareholders and Board of Directors of LG Chem, Ltd. Reviewed Financial Statements We have reviewed the accompanying consolidated interim financial statements of LG Chem, Ltd. and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at March 31, 2018, and the related consolidated interim statements of profit or loss, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2018 and 2017, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to issue a report on these consolidated interim financial statements based on our review. We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of 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 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 the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting. Other Matters We have audited the consolidated statement of financial position of the Group as at December 31, 2017, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 6, 2018. The consolidated statement of financial position as at December 31, 2017, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2017. Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries. Seoul, Korea May 14, 2018 This report is effective as of May 14, 2018, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any. 2 LG Chem, Ltd. and Subsidiaries Consolidated Interim Statements of Financial Position March 31, 2018 (Unaudited) and December 31, 2017 (in millions of Korean won) Notes March 31, 2018 December 31, 2017 (Unaudited) Assets Current assets Cash and cash equivalents 3, 5, 6 2,916,612 2,249,341 Trade receivables 3, 5, 7, 31 4,708,745 4,448,669 Other receivables 3, 5, 7, 31 381,643 770,776 Prepaid income taxes 259 932 Other current assets 13 456,018 376,814 Inventories 9 3,783,786 3,352,454 Assets held for sale 35 6,584 6,595 Total current assets 12,253,647 11,205,581 Non-current assets Other receivables 3, 5, 7 123,823 126,429 Other financial assets 3, 5, 8 24,491 23,782 Investments in associates and joint ventures 1, 10, 33 258,752 264,096 Deferred tax assets 28 283,999 281,506 Property, plant and equipment 11 11,518,116 11,211,482 Intangible assets 12 1,847,837 1,823,155 Investment properties 1,024 1,027 Other non-current assets 13 103,810 104,163 Total non-current assets 14,161,852 13,835,640 Total assets 26,415,499 25,041,221 Liabilities Current liabilities Trade payables 3, 5, 31 1,998,797 2,014,779 Other payables 3, 5, 31 1,428,050 1,847,222 Borrowings 3, 5, 14 1,593,245 1,451,324 Provisions 15 89,502 62,940 Income tax payables 28 480,113 414,110 Other current liabilities 3, 5, 17 1,183,806 854,283 Liabilities held for sale 35 35 31 Total current liabilities 6,773,548 6,644,689 Non-current liabilities Other payables 3, 5 10,181 8,646 Borrowings 3, 5, 14 2,643,036 1,593,625 Provisions 15 153,337 163,476 Net defined benefit liabilities 16 218,115 180,681 Deferred tax liabilities 28 38,964 42,627 Other non-current liabilities 17 68,078 68,900 Total non-current liabilities 3,131,711 2,057,955 Total liabilities 9,905,259 8,702,644 3 LG Chem, Ltd. and Subsidiaries Consolidated Interim Statements of Financial Position March 31, 2018 (Unaudited) and December 31, 2017 (in millions of Korean won) Notes March 31, 2018 December 31, 2017 (Unaudited) Equity Share capital 1, 19 391,406 391,406 Capital surplus 2,274,386 2,274,386 Other components of equity 21 (362,676) (362,676) Accumulated other comprehensive income (100,836) (173,839) Retained earnings 20 14,108,635 14,039,250 Equity attributable to owners of the Parent Company 16,310,915 16,168,527 Non-controlling interest 199,325 170,050 Total equity 16,510,240 16,338,577 Total liabilities and equity 26,415,499 25,041,221 The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes. 4 LG Chem, Ltd. and Subsidiaries Consolidated Interim Statements of Profit or Loss Three-Month Periods Ended March 31, 2018 and 2017 (unaudited) Period Ended March 31 (in millions of Korean won, except per share amounts) Notes 2018 2017 (Unaudited) (Unaudited) Revenue 31, 33 6,553,590 6,486,668 Cost of sales 23, 31 (5,212,029) (5,073,053) Gross profit 1,341,561 1,413,615 Selling and administrative expenses 22, 23, 31 (690,720) (616,707) Operating profit 33 650,841 796,908 Finance income 5, 25 81,427 63,055 Finance costs 5, 25 (67,510) (107,297) Share of net profit of associates and joint ventures accounted for using the equity method 10 743 3,231 Other non-operating income 5, 26 79,225 209,564 Other non-operating expenses 5, 27, 35 (91,530) (267,160) Profit before income tax 32 653,196 698,301 Income tax expense 28 (100,452) (150,204) Profit for the period 552,744 548,097 Profit is attributable to: Owners of the Parent Company 531,349 531,490 Non-controlling interests 21,395 16,607 Earnings per share attributable to the equity holders of the Parent Company (in won) 29 Basic and diluted earnings per ordinary share 6,934 6,936 Basic and diluted earnings per preferred share 6,947 6,949 The above consolidated interim statements of profit or loss should be read in conjunction with the accompanying notes. 5 LG Chem, Ltd. and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month Periods Ended March 31, 2018 and 2017 (unaudited) Period Ended March 31 (in millions of Korean won) Notes 2018 2017 (Unaudited) (Unaudited) Profit for the period 552,744 548,097 Other comprehensive income Items that will not be reclassified to profit or loss Remeasurements of net defined benefit liability 16 (2,663) (7,321) Gain on valuation of financial assets at fair value 2,320 - through other comprehensive income Shares of remeasurements of net defined benefit liabilities of associates 150 62 Income tax relating to these items (176) 1,770 Items that may be subsequently reclassified to profit or loss Exchange differences on translation of foreign operations 81,096 (112,297) Changes in valuation of available-for-sale financial instruments - 81 Shares of other comprehensive income of joint ventures and associates 10 1,701 (3,161) Income tax relating to these items (3,330) (3,357) Other comprehensive income for the period, net of tax 79,098 (124,223) Total comprehensive income for the period 631,842 423,874 Total comprehensive income for the period is attributable to: Owners of the Parent Company 602,567 415,710 Non-controlling interest 29,275 8,164 The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.