Pulmuone Establishes Corporate Structure of International Standard on its 35th Anniversary

◦ Pulmuone Corporation wholly owns its subsidiaries as a parent, forming a One Company corporate structure

◦ By fully controlling Pulmuone Foods in Mar 2019, Pulmuone is among the top 10 food companies with KRW 2.27 trillion in consolidated sales

◦ Having adopted professional corporate management in 2018, Pulmuone aims to become a global LOHAS company with transparent corporate structure

SEOUL – May 13^th, 2019 – Pulmuone, a global wholesome food company which celebrates its 35-year anniversary this year, established a corporate structure of international standard and announced its plan for becoming a global Lifestyles Of Health And Sustainability(LOHAS) company.

Through its 13th anniversary statement on May 13, 2019, Pulmuone announced that the company established a corporate structure of international standard that is as transparent as Nestle, Danone and other major global companies, with Pulmuone Corporation becoming a wholly owning parent company of its non-listed subsidiaries, except for joint ventures.

“In a year that commemorates the 35th anniversary, Pulmuone, which completed the task of forming a One Company corporate structure of international standard, pledges to become the global LOHAS company of national and international prestige,” said Hyo-yul Lee, the Chief Executive Officer of Pulmuone Corporation. “As the national awareness on the significance of corporate structure is relatively low, Pulmuone will make every effort to promote the merit of its corporate management system through active investor and public relations activities.”

Pulmuone, an operational holding company, announced that the company strengthened its operational transparency by acquiring the entire 7.24% share capital of Pulmuone Foods’ outside investors and becoming a wholly owning parent entity of its One Company structure.

Under the structure, the Pulmuone Corporation as a parent entity takes charge of corporate management, branding and R&D, while subsidiaries including Pulmuone Foods, Pulmuone Food & Culture and Pulmuone Health & Living take lead in conducting businesses.

The Pulmuone’s corporate structure differs to a great extent from other Korean companies in that entities and subsidiaries are deemed to be identical as Pulmuone Corporation wholly owns its subsidiaries as a parent entity, and also that the structure is in appliance with requirements by International Financial Reporting Standards(IFRS), which mandates an entity that controls one or more other entities to present consolidated financial statements. In cases of major international businesses such as Nestle and Danone, only a patent company is listed, owning 100 percent of its subsidiaries, as is the case for Pulmuone Corporation.

Pulmuone took the lead in adopting the holding company system in 2003 and has been presenting consolidated financial statements, the main financial statements type recommended by IFRS, since 2009. Pulmuone Corporation posted record-high sales of KRW 2.27 trillion in 2018, which was amongst the top 10 food manufacturers of the country.

After 34 years of owner-management, Pulmuone Corporation established a professional corporate management system in January 2018 to separate ownership from management, and by wholly owning its subsidiaries ahead of its 35th anniversary, Pulmuone is now with more transparent, globally-recognized corporate structure.

As an effort to maintain its solid corporate structure, Pulmuone, a KRW 1.21 trillion asset firm, voluntarily set up an audit committee, which is mandatory for only the firms with KRW 2 trillion or more in assets, in 2003, and outside directors comprise the majority of the current Board of Directors.

“Domestic firms adopted the holding company system in 1999, after the Asian financial crisis, to improve ownership structure transparency and lower the level of ownership-control disparity,” said Jong-heon Kim, a Head of Financial Management of Pulmuone Corporation. “In many major countries, parent companies own their subsidiaries in whole with an aim to ensure solid corporate structure.”

Mr. Kim added, “That is also the case for Pulmuone Corporation with a One Company structure where resolutions of the Board of Directors represent the whole corporate system, enabling integrated execution of corporate plans, efficient performance management and better strategy formulation.”

Pulmuone Corporation is the nation’s only food company to attain the highest possible A+ grade for two consecutive years (2017-2018) on ESG evaluation by Korea Corporate Governance Service, which measures non-financial factors on sustainable management such as environmental responsibility, social contribution and governance structure. Overall management performance of Pulmuone Corporation, including financial and non-financial achievements, is presented in the 2018 Pulmuone Integrated Report.