9th Annual Shareholders Meeting Held

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1 9th Annual Shareholders Meeting Held Mr. Min Kyung-jip appointed as the new CEO. Our company held the annual shareholders meeting for the 9th fiscal hear on March 9th and appointed the former Vice President, Mr. Min Kyung-jip, as our new inside director (CEO). Mr. Min joined LG Chemical as a technical researcher and served in served in many different divisions such as the R&D, Planning, and Strategy, etc. In 2009, he was appointed as the first director of the R&D Center of LG Hausys when the company was established and lead the development projects for market-leading, innovative automobile materials and parts. Especially, he played leading roles in development projects for the world s first floor and wallpaper materials using the PLA, the plant-based fiber material originating from maze, laying the foundations for the growth of new businesses in the energy saving sector, such as the low-e glass or PF insulators, and enhancing the competitiveness in the automobile materials and parts including the development of the fabric materials for automobile applications and reduction of the weight of the auto parts. Based on his experience and expertise, Mr. Min is expected to play a critical role in further improving the performances in the automobile parts and materials as well as the shift in the business structure to premium construction materials, and increasing our sales in overseas markets, in order to ensure our growth into a world leader. In addition, Vice President Mr. Hyunhwoi Ha of LG Co., Ltd., has been re-appointed as the Other Non-Executive Director during the latest general shareholders meeting, during which Mr. Jingon Kim, Professor of Chemical Engineering of POSTECH and Professor Jongtae Bae, School of Business Administration, KAIST, were re-elected as the outside directors of the company. Also, Professor Bonghwan Lee of Industrial and Academic Cooperation, School of Engineering, Seoul National University has been appointed as a new outside director for the first time. 1/7

2 LG Hausys won 2018 if Design Award The new futuristic IoT window handle that gives useful information to the users, including weather forecast, fine dust, and indoor air quality Our company won a primary prize of the 2018 International Form Design Award for our Hidden Display Handle on March 9th. The Hidden Display Handle is a product based on IoT (Internet of Things) technology. This futuristic window handle product obtains useful information such as the weather forecast, fine dust, or indoor air quality and shows it on the built-in display on the handle. The handle gives the user a heads-up when it is necessary to use caution before opening the windows due to snow, rain, or fine dust, or when it is necessary to open the window due to poor indoor air quality, or advises the user to turn on the air purifier due to bad weather conditions or indoor air conditions. The handle can provide information on the weather or indoor air quality to the user. It even tells the user whether the window is open or not over a mobile phone application while he/she is outside. In addition, the display has been developed in a built-in design that is hidden while the display is off, further enhancing the integrity of the design and earning good reputations for its design values, which eventually resulted in winning of the IF Design Award. The if Design Award, organized by the International Forum Design of Germany, is a world-renowned design award as one of the top 3 design awards of the world along with the Red Dot Design Award and IDEA Design Award. Director Minhee Lee of the Central Research Laboratory said, I believe the reason why we could win the award was that we could provide more values to our customers using new technologies while our design was subtle and simple, adding, We will continue to introduce innovative products that would lead the future residential spaces through the synergies between R&D and designs. 2/7

3 LG Hausys Exhibited in 2018 Iran WOODEXPO The company participated in Iran Wood Expo as an exhibitor. Our company participated in 2018 Iran WOODEXPO held in Tehran International Exhibition Center, Iran, from February 12 to 16 (by local time). Iran WOODEXPO is the largest construction materials expo in Iran which plays the role as the bridgehead for our company, leading us to find new customers among Iranian construction companies and construction material dealers. More than 2,000 companies from all around the world exhibited in the event, which was visited by more than 200,000 visitors. During this year s event, our company exhibited new products such as the Hi-MACS concrete collection, furniture film products that reflect the Middle-Eastern furniture market trends. These products were met with positive reactions, as they were optimized to appeal to the Middle Eastern market. Mr. Kounghoon Oh, Director of Dubai Branch, said The Middle Eastern market has a lot of volatility depending on the international politics. But, it is still a very attractive market considering the purchasing capabilities of the consumers and the potential for future growth, adding, The current primary product line-up, Hi-MACS (Solid Surface) products and furniture films, will be reinforced with the floor materials and wall papers, while we increase our contact with the customers through exhibitions and show-rooms. We, in the end, will establish a firm brand position of LG Hausys in the Middle East. 3/7

4 Thorough Process Analysis and Efficient Investment to Increase the production Capacity! Ornamental, Insulator, and Insulator Production Engineering Team Awarded with the Grand Prize in th Quarter Practical Management Cost Leadership Award Since the Uijeongbu fire incident in 2015, the construction laws and regulations have become a lot tighter over a narrow window of time to make the buildings safer from a fire. Also, the insulator performance rules are becoming more demanding in order to save the energy. With the tightening regulations, our company s PF insulators grew by more than 50% in sales, thanks to their superiority in flame retardant and insulator performances. Now, let us take a look at the activities or Ornament, Insulator, and Insulator Production Engineering Team, who had to take on the challenge of enhancing their production capacity in order to keep up with the orders beyond the factory s production capacity. Photo of the PF insulator factory interior 1. Mindset. Commitment to reach the goal Established a goal to enhance the production capacity to 110% of the expected sales volume! The production capacity for the PF insulators grew by more than 50% after two major equipment build-up in But, it was still struggling to keep up with the increased volume of orders. In 2017, the Insulator Production Engineering Team concluded that they needed to increase the production capacity by enhancing the efficiency of their investment. They set their goal to increasing the production capacity to 110% of the 4/7

5 expected sales volume. As the first step, they created a slogan, Live with the Foam and Die with the Foam, we shall devote our lives to the insulator products! as a token of their determination to meet the goal. Inserted the Practice Management Slogan in the signature Attached the Practice Management Slogan labels on the desks 2. Systemize. Automatic execution system Identified the points of improvement by analyzing the bottle-neck process. The Insulator Production Engineering Team analyzed the PF insulator production process in order to enhance the production capacity. The production process at that time consisted Polymerization -> Mixing -> Foaming/Hardening -> Curing. Among the production equipment along these processes, they noted that the capacity in the mixing and curing stages were falling behind in terms of the capacities compared to other stages, eventually becoming bottle-necks. The team set three improvement goals of shortening the curing period for the resins (mixing), increasing the feed-in volume for the curing room (curing), and shortening the curing period for semi-products (curing) and started their improvement works. In order to shorten the resin curing period, they calculated the optimal rotation time for the four mixer units. With this, they could decrease the curing time. Also, they decreased the temperature of the resin while it is in transit between mixers. This solved the issue of lower viscosity of the resin due to the shortened curing time. As the next step, they controlled each unit of the conveyor belt system individually used to feed the materials into the curing room. This reduced the intervals between the pallets. They also introduced pallets dedicated for thermo-resistant insulator products. Lastly, they removed the moisture inside the semi-products to secure the dimensional 5/7

6 stability of the finished products. To achieve this, they divided the curing process into three phases, and adjusted the temperature in the room in each phase for this effect. With these three improvement activities, the Insulator Production Engineering Team could enhance the mixture capacity by 20% and curing capacity by 45%. 3. Self-Motivation. From the bottom of your heart The answer is in the field Under the motto of The Answer is in the field, the Insulator Production Engineering Team sends their new recruits or newly transferred engineers to the field, to operate the production line along with the field engineers for two months. They are not there as just another worker in the line. They are there to find the irrationalities in the process and contemplate on how to identify and optimize such drawbacks and execute their plans for actual improvement. Such experiences laid the foundation for making such improvements, which they could realize. Equipment in operation 4. Leading by example through leadership. Taking selfinitiative / leadership Being considerate to others is the first step to a creative meeting! Team Leader Hansul Kim of the Insulator Production Engineering Team set a several rules to make their meeting culture more creative. These rules include Do not interrupt others while they are talking, Do not criticize others suggestions, and No phone calls while in a meeting. The team members were encouraged to follow these rules while they 6/7

7 are in the meetings. As a result, their meetings became more productive as all members could present their ideas and opinions more freely, regardless of their paygrades. Weekly Equipment Meeting Weekly Team Meeting Their endeavors in 2017 finally paid, and they could meet their 110% capacity goal. But, their quest does not end there. They plan to expand their practice management to the No. 2 Insulator Plant that is to be built soon. It seems 2018 will be a productive year for this team like the previous one. 7/7

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