LG ENERGY SOLUTION, LTD.
AND ITS SUBSIDIARIES
Consolidated Financial Statements
As of and For the Years Ended December 31, 2023 and 2022
(With the Independent Auditor's Report Thereon)
Table of Contents
Independent Auditor's Report
Page | |
Consolidated Financial Statements | |
Consolidated Statements of Financial Position | 1 |
Consolidated Statements of Profit or Loss | 2 |
Consolidated Statements of Comprehensive Income | 3 |
Consolidated Statements of Changes in Equity | 4 |
Consolidated Statements of Cash Flows | 5 |
Notes to the Consolidated Financial Statements | 6 |
Independent Auditor's Report on Consolidated Internal Control over Financial | 93 |
Reporting | |
Report on the Operation of Consolidated Internal Control over Financial Reporting | 95 |
Deloitte Anjin LLC
9F., One IFC,
10, Gukjegeumyung-ro,
Youngdeungpo-gu, Seoul
07326, Korea
Tel: +82 (2) 6676 1000
Fax: +82 (2) 6674 2114
www.deloitteanjin.co.kr
Independent Auditor's Report
English Translation of Independent Auditor's Report Originally Issued in Korean on March 7, 2024
To the Shareholders and the Board of Directors of LG Energy Solution, Ltd.:
Audit Opinion
We have audited the consolidated financial statements of LG Energy Solution, Ltd. and its subsidiaries (the "Group"), which comprise the consolidated statements of financial position as of December 31, 2023 and 2022, and the related consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows, all expressed in Korean won, for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with Korean International Financial Reporting Standards ("K-IFRSs").
We have also audited, in accordance with the Korean Standards on Auditing ("KSAs"), the internal control over financial reporting of the Group as of December 31, 2023, based on the 'Conceptual Framework for Design and Operation of Internal Control Over Financial Reporting', and our report dated March 07, 2024, expressed an unqualified opinion.
Basis for Audit Opinion
We conducted our audits in accordance with the KSAs. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audits of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our audits of the consolidated financial statements of the current period. These matters were addressed in the context of our audits of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
GM Recall Warranty Provisions
1) Description of Key Audit Matter
As stated in Note 4 of the consolidated financial statements, the warranty provisions for voluntary recalls related to the customers are estimated based on the number of vehicles subject to recall, the expected total repair costs and the cost- sharing ratio, etc. General Motors Company ("GM"), the Group's customer, voluntarily decided to recall certain vehicles during the year ended December 31, 2021, and the estimated amount of the provision the Group has recognized for this recall is ₩96,857 million, as of December 31, 2023.
We have assessed this item as a key audit matter, considering that the recognized amount of the warranty provision is material and the significant management judgment is involved in estimation.
- How our audit addressed the Key Audit Matter Our procedures included the following:
- Evaluate whether the Group's policies and internal controls for recognizing and measuring warranty provisions are effectively designed and operated.
- Perform the following procedures to assess the reasonableness of the key assumptions used by management:
- Compare the underlying data with external and internal sources of information.
- Engage an auditor's expert to evaluate the reasonableness of the key assumptions and variables used by management.
- Evaluate the competence and objectivity of the external expert engaged by management.
- Independently recalculate the balance of the provision.
- Assess the adequacy of the related footnote disclosures.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation of the accompanying consolidated financial statements in accordance with K-IFRSs,and for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management of the Group is responsible for assessing the Group's ability to continue as a going concern; disclosing, as applicable, matters related to going concern; and using the going- concern basis of accounting, unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative, but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audits of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override, of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of the management's use of the going-concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group's audit. We are solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditor's report, unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Kiu Seok Seo.
March 7, 2024
This report is effective as of March 7, 2024, the auditor's report date. Certain subsequent events or circumstances may have occurred between the auditor's report date and the time the auditor's report is read. Such events or circumstances could significantly affect the consolidated financial statements and may result in modifications to the auditor's report.
LG ENERGY SOLUTION, LTD.
AND ITS SUBSIDIARIES
Consolidated financial statements
as of and for the years ended December 31, 2023 and 2022
"The accompanying consolidated financial statements, including all footnotes and disclosures, have been prepared by, and are the responsibility of, the Group."
Young Soo Kwon
Chief Executive Officer
LG Energy Solution, Ltd.
LG Energy Solution, Ltd. and its subsidiaries
Consolidated statements of financial position
As of December 31, 2023 and 2022
(Korean won in millions) | ||||||||||
Notes | December 31, 2023 | December 31, 2022 | ||||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | 3,5,6 | ₩ | 5,068,783 | ₩ | 5,937,967 | |||||
Trade receivables | 3,5,7,30 | 5,128,474 | 4,771,846 | |||||||
Other receivables | 3,5,7,30 | 555,186 | 462,188 | |||||||
Other current financial assets | 3,5,8 | 65,439 | 9,167 | |||||||
Prepaid income taxes | 67,072 | 46,205 | ||||||||
Other current assets | 13 | 927,106 | 581,267 | |||||||
Inventories | 9 | 5,396,336 | 6,995,629 | |||||||
17,208,396 | 18,804,269 | |||||||||
Non-current assets | ||||||||||
Trade receivables | 3,5,7 | 129,995 | 120,698 | |||||||
Other receivables | 3,5,7,30 | 122,282 | 119,058 | |||||||
Other non-current financial assets | 3,5,8 | 357,038 | 408,551 | |||||||
Investments in associates and joint ventures | 10,30 | 223,559 | 203,696 | |||||||
Deferred tax assets | 27 | 2,228,924 | 2,100,492 | |||||||
Property, plant and equipment | 11,18,32 | 23,654,677 | 15,331,047 | |||||||
Intangible assets | 12,32 | 875,993 | 642,090 | |||||||
Investment properties | 32,34 | 212,489 | 213,042 | |||||||
Other non-current assets | 13,16 | 423,791 | 356,502 | |||||||
28,228,748 | 19,495,176 | |||||||||
Total assets | ₩ | 45,437,144 | ₩ | 38,299,445 | ||||||
Liabilities | ||||||||||
Current liabilities | ||||||||||
Trade payables | 3,5,30 | ₩ | 3,093,719 | ₩ | 3,841,766 | |||||
Other payables | 3,5,30 | 3,458,103 | 2,882,030 | |||||||
Borrowings | 3,5,11,14,31 | 3,211,456 | 2,866,701 | |||||||
Provisions | 15 | 517,170 | 976,949 | |||||||
Other current financial liabilities | 3,5,8 | 7,652 | 3,923 | |||||||
Income tax payables | 33,321 | 173,120 | ||||||||
Other current liabilities | 17,33 | 615,764 | 700,434 | |||||||
10,937,185 | 11,444,923 | |||||||||
Non-current liabilities | ||||||||||
Non-current other payables | 3,5,30 | 25,291 | 36,606 | |||||||
Borrowings | 3,5,11,14,31 | 7,720,832 | 5,242,552 | |||||||
Other non-current financial liabilities | 3,5,8 | 68,824 | 742 | |||||||
Provisions | 15 | 869,123 | 518,781 | |||||||
Net defined benefit liabilities | 16 | 239 | 499 | |||||||
Deferred tax liabilities | 27 | 19,958 | 108,350 | |||||||
Other non-current liabilities | 17,33 | 1,422,183 | 353,230 | |||||||
10,126,450 | 6,260,760 | |||||||||
Total liabilities | 21,063,635 | 17,705,683 | ||||||||
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 | 554,518 | 296,070 | ||||||||
Retained earnings | 20 | 2,364,496 | 1,154,518 | |||||||
20,200,641 | 18,732,215 | |||||||||
Non-controlling interest | 1 | 4,172,868 | 1,861,547 | |||||||
Total equity | 24,373,509 | 20,593,762 | ||||||||
Total liabilities and equity | ₩ | 45,437,144 | ₩ | 38,299,445 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
1
LG Energy Solution, Ltd. and its subsidiaries
Consolidated statements of profit or loss
For the years ended December 31, 2023 and 2022
(Korean won in millions)
Notes | 2023 | 2022 | ||||||
Revenue | 30,33,35 | ₩ | 33,745,470 | ₩ | 25,598,609 | |||
Cost of sales | 21,22,30 | 28,802,437 | 21,308,077 | |||||
Gross profit | 4,943,033 | 4,290,532 | ||||||
Other operating income | 676,874 | - | ||||||
Selling and administrative expenses | 21,22,30 | 3,456,673 | 3,076,813 | |||||
Operating profit | 2,163,234 | 1,213,719 | ||||||
Finance income | 5,24,30 | 984,984 | 385,537 | |||||
Finance costs | 5,24,30 | 857,201 | 519,021 | |||||
Share of loss of associates and joint ventures | 10 | (32,450) | (36,641) | |||||
Other non-operating income | 25 | 1,125,846 | 1,349,485 | |||||
Other non-operating expenses | 26 | 1,340,953 | 1,397,765 | |||||
Profit before income tax expense | 2,043,460 | 995,314 | ||||||
Income tax expense | 27 | 405,475 | 215,488 | |||||
Profit for the period | ₩ | 1,637,985 | ₩ | 779,826 | ||||
Profit for the period attributable to: | ||||||||
Owners of the Parent Company
Non-controlling interests:
Earnings per share attributable to the equity holders of the Parent Company (in Korean won)
Basic or diluted earnings per share
₩ | 1,237,180 | ₩ | 767,236 |
1 | 400,805 | 12,590 |
28
5,2873,306
The accompanying notes are an integral part of the consolidated financial statements.
2
LG Energy Solution, Ltd. and its subsidiaries
Consolidated statements of comprehensive income
For the years ended December 31, 2023 and 2022
(Korean won in millions)
Notes | 2023 | 2022 | ||||||
Profit for the year | ₩ | 1,637,985 | ₩ | 779,826 | ||||
Other comprehensive income: | ||||||||
Items that will not be subsequently reclassified to profit or loss: | ||||||||
Remeasurements of net defined benefit liabilities | 16 | (35,273) | 68,543 | |||||
Gain (loss) on valuation of financial assets at FVOCI | 5 | (136,381) | 54,743 | |||||
Income tax effect of other comprehensive income (loss) | 39,393 | (36,145) | ||||||
(132,261) | 87,141 | |||||||
Items that may be subsequently reclassified to profit or loss: | ||||||||
Exchange differences on translation of foreign operations | 405,378 | (96,207) | ||||||
Gain (loss) on cash flow hedge | 5 | (17,203) | 6,021 | |||||
Share of other comprehensive income of associates and joint ventures | 10 | 4,543 | 14,771 | |||||
Income tax effect of other comprehensive income (loss) | 12,686 | (39,175) | ||||||
405,404 | (114,590) | |||||||
Other comprehensive income (loss) for the period, net of tax | 273,143 | (27,449) | ||||||
Total comprehensive income for the period, net of tax | ₩ | 1,911,128 | ₩ | 752,377 | ||||
Total comprehensive income for the period attributable to: | ||||||||
Owners of the Parent Company | ₩ | 1,468,426 | ₩ | 706,907 | ||||
Non-controlling interest | 442,702 | 45,470 |
The accompanying notes are an integral part of the consolidated financial statements.
3
LG Energy Solution, Ltd. and its subsidiaries
Consolidated statements of changes in equity
For the years ended December 31, 2023 and 2022
(Korean won in millions) | Attributable to the equity holders of the Parent Company | |||||||||||||||||||||
Accumulated | Retained | |||||||||||||||||||||
other | earnings | |||||||||||||||||||||
Share | Capital | comprehensive | (accumulated | Non-controlling | ||||||||||||||||||
Notes | capital | surplus | income (loss) | deficit) | Subtotal | interests | Total | |||||||||||||||
As of January 1, 2022 | ₩ | 100,000 | ₩ | 7,122,437 | ₩ | 406,092 | ₩ | 337,587 | ₩ | 7,966,116 | ₩ | 776,257 | ₩ | 8,742,373 | ||||||||
Comprehensive income for the period: | ||||||||||||||||||||||
Profit for the period | - | - | - | 767,236 | 767,236 | 12,590 | 779,826 | |||||||||||||||
Remeasurements of net defined benefit liabilities | 16 | - | - | - | 49,695 | 49,695 | - | 49,695 | ||||||||||||||
Exchange differences on translation of foreign operations | - | - | (166,655) | - | (166,655) | 32,878 | (133,777) | |||||||||||||||
Gain on valuation of financial assets at FVOCI | 5 | - | - | 37,447 | - | 37,447 | - | 37,447 | ||||||||||||||
Gain on cash flow hedge | 5 | - | - | 4,415 | - | 4,415 | - | 4,415 | ||||||||||||||
Equity adjustments in equity method | 10 | - | - | 14,771 | - | 14,771 | - | 14,771 | ||||||||||||||
Total comprehensive income for the period | - | - | (110,022) | 816,931 | 706,909 | 45,468 | 752,377 | |||||||||||||||
Transactions with owners of the Parent Company recognized directly | ||||||||||||||||||||||
in equity: |
Capital increase
Others
Total Transactions with owners of the Parent Company recognized directly in equity
17,000 | 10,079,370 | - | - | 10,096,370 | 1,039,822 | 11,136,192 | ||||||
- | (37,180) | - | - | (37,180) | - | (37,180) | ||||||
17,000 | 10,042,190 | - | - | 10,059,190 | 1,039,822 | 11,099,012 |
As of December 31, 2022 | ₩ | 117,000 | ₩ | 17,164,627 | ₩ | 296,070 | ₩ | 1,154,518 | ₩ | 18,732,215 | ₩ | 1,861,547 | ₩ | 20,593,762 | |||||||
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 | - | - | - | 1,237,180 | 1,237,180 | 400,805 | 1,637,985 | ||||||||||||||
Remeasurements of net defined benefit liabilities | 16 | - | - | - | (27,202) | (27,202) | - | (27,202) | |||||||||||||
Exchange differences on translation of foreign operations | - | - | 371,891 | - | 371,891 | 41,897 | 413,788 | ||||||||||||||
Loss on valuation of financial assets at FVOCI | 5 | - | - | (105,060) | - | (105,060) | - | (105,060) | |||||||||||||
Loss on cash flow hedge | 5 | - | - | (12,926) | - | (12,926) | - | (12,926) | |||||||||||||
Equity adjustments in equity method | 10 | - | - | 4,543 | - | 4,543 | - | 4,543 | |||||||||||||
Total comprehensive income for the period | - | - | 258,448 | 1,209,978 | 1,468,426 | 442,702 | 1,911,128 | ||||||||||||||
Transactions with owners of the Parent Company recognized directly | |||||||||||||||||||||
in equity: | |||||||||||||||||||||
Capital increase and others | - | - | - | - | - | 1,868,619 | 1,868,619 | ||||||||||||||
Total transactions with owners of the Parent Company recognized | - | - | - | - | - | 1,868,619 | 1,868,619 | ||||||||||||||
directly in equity | |||||||||||||||||||||
As of December 31, 2023 | ₩ | 117,000 | ₩ | 17,164,627 | ₩ | 554,518 | ₩ | 2,364,496 | ₩ | 20,200,641 | ₩ | 4,172,868 | ₩ | 24,373,509 | |||||||
The accompanying notes are an integral part of the consolidated financial statements.
4
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LG Energy Solution Ltd. published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 09:20:05 UTC.