[Summary of Q&A related to SK Innovation E&S merger]

[Summary of Q&A related to SK Innovation E&S merger]

<Lee Jin-ho, Kim Chul-joong of Mirae Asset Securities>

Q) Even if SK-on / SK-on's cash flow improves, its performance improvement is still slow. There are concerns about whether E&S' cash merged with SK Innovation will also be reinvested in SK-on. What is the change in SK-on's investment plan?
A) Most of SKON's investment will be completed this year. CAPEX demand will drop sharply from next year
Basically, SKON will source its own funds, but it will be decided after consulting with Innovation in a flexible manner depending on the situation

Q) Additional merger / media also mentioned a plan to re-divide SK E&S business and merge part of it with SK On. Is this a possible story?
A) No further merger is being considered at this time

Q) Consolidated CAPEX / What is the consolidated company's annual CAPEX guidance after the merger between the two companies?
A) Management of existing investment projects and review of the appropriateness of new investments are underway
Expect more efficient CAPEX spending than the sum of each company's CAPEX guidance
Specific guidance will be provided after the merger

Q) Financial structure / After merger, financial synergy is important. What is the company's debt-to-equity target or ROE improvement effect? How can it be embodied, such as shareholder return or corporate value enhancement?
A) There is still only a merger plan, and details are insufficient, making it difficult to present a goal
Focus on improving financial structure and ROIC as usual after merger
The shareholder return policy maintains a guidance of at least KRW 2,000 in dividends for 24-25 years
After the merger, there will be discussions on shareholder return policy in line with trends in battery business turnaround and EBITDA improvement

Q) EBITDA / On the basis of the sum of the two companies in 23, EBITDA increased from KRW 6 trillion to KRW 20 trillion in 2030. What is the composition? And what synergies are there?
A) EBITDA in 2030 is 10 trillion for batteries, 5 trillion for oil refining chemical business excluding batteries, 3 trillion for E&S, and 2 trillion for synergy
The synergy part will be made into a solution by combining renewable energy such as ESS battery production capacity of the integrated corporation, SMR that is promoting SK Innovation, liquid immersion cooling, the thermal management system's core solution, SK E&S' ESS solution, and solar power
Customers can use data centers or grid operators, OEMs, and more

Q) Is there any change in SK-on IPO / SK-on IPO plans?
A) Since the merger, there have been no changes to SK IPO
The schedule is for the end of the 26th year
Since the IPO has not been materialized, I think it is premature to mention how to specifically compensate SKINO shareholders

Q) Synergy business / Whether ESS production or renewable energy-related parts are currently in the loss section. What roadmaps are there for profitability in the future?
A) E&S Acquires Key Capture Energy In U.S
It's not a deficit as you said, it's a surplus last year.
The value of ESS business (grid solution) is high as the possibility of renewable energy is increasing
Renewable energy business also had an operating profit of 50 billion last year. Not a deficit
Solar-focused 1.2GW in operation
A promising business with a total of 4.5GW
Companies' RE100 Declaration and Private PPA. Expectations to Create Big EBITDA in the Future

Q) RCPS / SK E&S Redemption Convertible Preferred Stock (RCPS). It is planned to extinguish RCPS before the merger. If this asset is repaid, earnings or financial statement improvement could be weakened?
A) It is impossible to share specific details, but there is no cash outflow due to repayment, no RCPS issuance under the name of innovation, and we are discussing the structure to maintain the purpose at the time of initial issuance
So, after RCPS succession with innovation, there is no potential large-scale overhang issue turning into stocks
When already calculating the merger ratio, the asset value and profit value are evaluated excluding RCPS
Please note that there is no impact of merger ratio due to RCPS

Q) What is the specific process of determining the merger ratio / SK Innovation and E&S merger ratio?
A) The merger ratio is calculated in accordance with the Capital Markets Act
Listed corporation innovation is evaluated at 10.8 trillion won according to the standard market price. Unlisted corporation E&S is evaluated at 6.2 trillion won by applying the essential value method
Based on the total number of shares issued by both companies, the exchange ratio is 1:1.19
According to KB Securities' report, it can be intuitively understood at a market capitalization ratio of 1:0.58

SK Innovation: 1 month. The arithmetic average of trading volume at the closing price of one week and the previous day. KRW 112,396 per share
SK E&S Essential Value: Net asset value (KRW 3.8 trillion) 40% + earnings value (KRW 7.8 trillion) calculated as a weighted average of 60%
Net asset value: Based on separate financial statements. Investment assets reflected by the cost method are also reflected through market valuation
Deducted 0.7 trillion won in 23-year dividends and 0.7 trillion won in permanent bonds. RCPS is also valued at 1.5 trillion won and deducted
Therefore, the net asset value of the final E&S is KRW 3.8 trillion
Earnings Value: Defined as City Gas and LNG Business, a subsidiary of E&S
Evaluation based on the operating cash flow of each individual company. The total amount is KRW 16 trillion
E&S' debt of 5.4 trillion won and RCPS value of 3.1 trillion won are finally deducted and evaluated at 7.8 trillion won

Q) SK E&S / SK E&S understands that gas will be directly introduced from Tanggu, Indonesia, and the U.S. What about future gas introduction plans?
A) E&S Gas Portfolio Equity Gas (1/3) + Long-Term Supply Contract (1/3) + Spot Volume (1/3) = 1
Indonesian Tanggu Volume At 600,000 Tons. Termination Of Contract In Second Half Of 26
Expected to be introduced at CB Gas Field (Kaldita-Barossa, Australia) by 1.3 million tonnes from the second half of 25 or early 26
Therefore, CB Gas Field plans to replace Tanggu supplies
2.2M TONES TO BE U.S. TO BE CONTINUED TO BE IMPORTED
The total gas introduced by E&S is 6 million tons. Plans to expand it to 10 million tons by 2030