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LPL LG Display

Filed: 17 May 21, 6:20am
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2021

 

 

LG Display Co., Ltd.

(Translation of Registrant’s name into English)

 

 

LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

 

 

 


Table of Contents

QUARTERLY REPORT

(From January 1, 2021 to March 31, 2021)

THIS IS A TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED AND CERTAIN NUMBERS WERE ROUNDED FOR THE CONVENIENCE OF READERS. REFERENCES TO “Q1”, “Q2”, “Q3” AND “Q4” OF A FISCAL YEAR ARE REFERENCES TO THE THREE-MONTH PERIODS ENDED MARCH 31, JUNE 30, SEPTEMBER 30 AND DECEMBER 31, RESPECTIVELY, OF SUCH FISCAL YEAR.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH KOREAN INTERNATIONAL FINANCIAL REPORTING STANDARDS, OR K-IFRS, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. K-IFRS ALSO DIFFERS IN CERTAIN RESPECTS FROM THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES IN THIS DOCUMENT.

Contents

 

 

1.

 

Company

   3 
  

A.

 

Name and contact information

   3 
  

B.

 

Credit rating

   3 
  

C.

 

Capitalization

   4 
  

D.

 

Voting rights

   5 
  

E.

 

Dividends

   5 
 

2.

 

Business

   6 
  

A.

 

Business overview

   6 
  

B.

 

Industry

   7 
  

C.

 

New businesses

   9 
 

3.

 

Major Products and Raw Materials

   9 
  

A.

 

Major products

   9 
  

B.

 

Average selling price trend of major products

   9 
  

C.

 

Major raw materials

   10 
 

4.

 

Production and Equipment

   11 
  

A.

 

Production capacity and output

   11 
  

B.

 

Production performance and utilization ratio

   11 
  

C.

 

Investment plan

   11 
 

5.

 

Sales

   12 
  

A.

 

Sales performance

   12 
  

B.

 

Sales organization and sales route

   13 
  

C.

 

Sales methods and sales terms

   13 
  

D.

 

Sales strategy

   13 
  

E.

 

Major customers

   13 
 

6.

 

Purchase Orders

   13 
 

7.

 

Market Risks and Risk Management

   13 
  

A.

 

Market risks

   13 
  

B.

 

Risk management

   14 

 

1


Table of Contents


Table of Contents
1.

Company

 

 A.

Name and contact information

The name of our company is “EL-GI DISPLAY CHUSIK HOESA,” which shall be “LG Display Co., Ltd.” in English.

Our principal executive office is located at LG Twin Towers, 128 Yeoui-daero, Yeongdeungpo-gu, Seoul 07336, Republic of Korea, and our telephone number is +82-2-3777-1010. Our website address is http://www.lgdisplay.com.

 

 B.

Credit rating

 

 (1)

Corporate bonds (Domestic)

 

Subject instrument

  

Month of rating

  

Credit rating(1)

  

Rating agency (Rating range)(2)

Corporate bonds  February 2019  AA-  

 

NICE Information Service Co., Ltd. (AAA ~ D)

  April 2019
  November 2019
  

 

February 2020

  A+
  June 2020
  

 

February 2019

  AA-  Korea Investors Service, Inc. (AAA ~ D)
  June 2019
  October 2019
  

 

February 2020

  A+
  June 2020
  March 2021
  

 

April 2019

  AA-  Korea Ratings Corporation (AAA ~ D)
  November 2019
  

 

February 2020

  A+
  May 2020

 

(1)

The results of our credit ratings subsequent to the reporting period are as follows:

 

Subject instrument

  

Month of rating

  

Credit rating(2)

  

Rating agency (Rating range)

Corporate bonds  April 2021  A+  Korea Ratings Corporation (AAA ~ D)
Corporate bonds  May 2021  A+  NICE Information Service Co., Ltd. (AAA ~ D)

 

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(2)

Domestic corporate bond credit ratings are generally defined to indicate the following:

 

Subject

instrument

 

Credit rating

  

Definition

Corporate bonds AAA  Strongest capacity for timely repayment.
 

 

AA+/AA/AA-

  

 

Very strong capacity for timely repayment. This capacity may, nevertheless, be slightly inferior than is the case for the highest rating category

 

 

A+/A/A-

  

 

Strong capacity for timely repayment. This capacity may, nevertheless, be more vulnerable to adverse changes in circumstances or in economic conditions than is the case for higher rating categories.

 

 

BBB+/BBB/BBB-

  

 

Capacity for timely repayment is adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.

 

 

BB+/BB/BB-

  

 

Capacity for timely repayment is currently adequate, but that there are some speculative characteristics that make the repayment uncertain over time.

 

 

B+/B/B-

  

 

Lack of adequate capacity for repayment and speculative characteristics. Interest payment in time of unfavorable economic conditions is uncertain.

 

 

CCC

  

 

Lack of capacity for even current repayment and high risk of default.

 

 

CC

  

 

Greater uncertainties than higher ratings.

 

 

C

  

 

High credit risk and lack of capacity for timely repayment.

 

 

D

  

 

Insolvency.

 

 (2)

Corporate bonds (Overseas)

 

Subject instrument

  

Month of rating

  

Credit rating

  

Rating agency (Rating range) (2)

Corporate bonds(1)  November 2018  AA  Standard & Poor’s Rating Services (AAA ~ D)

 

(1)

Represents credit rating for our overseas corporate bonds guaranteed by the Korea Development Bank.

(2)

Overseas corporate bond credit ratings are generally defined to indicate the following:

 

Subject

instrument

  

Credit rating

  

Definition

Corporate bonds  AAA  Highest level of stability.
  

 

AA+/AA/AA-

  

 

Very high level of stability. This stability may be slightly more risky than is the case for the highest rating category but presents no issues.

  

 

A+/A/A-

  

 

High level of stability. There are no issues with repaying the principal, but there are characteristics that could be subject to future deterioration.

  

 

BBB+/BBB/BBB-

  

 

Level of stability is adequate. Current level of stability and profitability is adequate, but requires special attention during times of economic downturns.

  

 

BB+/BB/BB-

  

 

Speculative characteristics. There is no guarantee on future stability. Expected business performance is uncertain.

  

 

B+/B/B-

  

 

Inadequate as an investment target. Ability to make principal repayments or comply with contractual terms and conditions is uncertain.

  

 

CCC/CC/C

  

 

Very low level of stability. Ability to make payments of principal and interest is highly unlikely. Extremely speculative. Currently in default or undergoing a serious problem.

  

 

D

  

 

Bankruptcy.

 

 C.

Capitalization

 

 (1)

Change in capital stock (as of March 31, 2021)

There were no changes to our issued capital stock during the reporting period ended March 31, 2021.

 

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 (2)

Convertible bonds (as of March 31, 2021)

 

Description

  Issue
Date
   Maturity
Date
   Issue Amount
(in Won)
  Class of
Shares
Subject to
Conversion
   Conversion
Period
   Conditions for Conversion   Outstanding Bonds   Notes 
  Conversion
Ratio
  Conversion
Price
   Issue Amount
(in Won)
  Number of
Shares subject
to conversion
 

Unsecured Foreign Convertible Bonds No. 3

   

Aug.
22,
2019
 
 
 
   

Aug.
22,
2024
 
 
 
   813,426,670,000(1)   

Registered
Common
Shares
 
 
 
   



Aug.
23,

2020
~

Aug.
12,

2024

 
 

 
 

 
 

 

   100 W19,845    813,426,670,000(1)   40,988,998    


Listed on
Singapore
Stock
Exchange
 
 
 
 

Total

   —      —      813,426,670,000   —      —      100 W19,845    813,426,670,000   40,988,998    —   

 

(1)

The issue amount for Unsecured Foreign Convertible Bonds No. 3 is calculated based on the application of the mid-point of the relevant Won-US dollar exchange rates as of noon, July 30, 2019 (Korea Standard Time) quoted on Bloomberg, which wasW1,182.65 per U.S. dollar, to the actual issue amount of USD 687,800,000.

 

 D.

Voting rights (as of March 31, 2021)

(Unit: share)

 

Description

  Number of shares 

A. Total number of shares issued(1):

  Common shares(1)   357,815,700 
  Preferred shares   —   

B. Shares without voting rights:

  Common shares   —   
  Preferred shares   —   

C. Shares subject to restrictions on voting rights pursuant to our articles of incorporation:

  Common shares   —   
  Preferred shares   —   

D. Shares subject to restrictions on voting rights pursuant to regulations:

  Common shares   —   
  Preferred shares   —   

E. Shares with restored voting rights:

  Common shares   —   
  Preferred shares   —   

Total number of issued shares with voting rights (=A – B – C – D + E):

  Common shares   357,815,700 
  Preferred shares   —   

 

(1)

Authorized: 500,000,000 shares

 

 E.

Dividends

Dividends for the three most recent fiscal years

 

Description (unit)

 2021 Q1  2020  2019 

Par value (Won)

  5,000   5,000   5,000 

Profit (loss) for the year (million Won)(1)

  228,011   (89,342  (2,829,705

Earnings (loss) per share (Won)(2)

  637   (250  (7,908

Total cash dividend amount for the period (million Won)

  —     —     —   

Total stock dividend amount for the period (million Won)

  —     —     —   

Cash dividend payout ratio (%)(3)

  —     —     —   

Cash dividend yield (%)(4)

  Common shares  —     —     —   
  Preferred shares  —     —     —   

Stock dividend yield (%)

  Common shares  —     —     —   
  Preferred shares  —     —     —   

Cash dividend per share (Won)

  Common shares  —     —     —   
  Preferred shares  —     —     —   

Stock dividend per share (share)

  Common shares  —     —     —   
  Preferred shares  —     —     —   

 

(1)

Based on profit for the year attributable to the owners of the controlling company.

(2)

Earnings per share is based on par value ofW5,000 per share and is calculated by dividing net income by weighted average number of common shares.

(3)

Cash dividend payout ratio is the percentage that is derived by dividing total cash dividend by profit for the year attributable to the owners of the controlling company.

 

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(4)

Cash dividend yield is the percentage that is derived by dividing cash dividend by the arithmetic average of the daily closing prices of our common shares during the one-week period ending two trading days prior to the closing of the register of shareholders for the purpose of determining the shareholders entitled to receive annual dividends.

Historical dividend information

 

Number of consecutive years of dividends (*)

   Average Dividend Yield 

Interim dividends

   Annual dividends    Last 3 years    Last 5 years 

—  

   —      —      0.65(**) 

 

*

No dividends were paid during the last three fiscal years.

**

Arithmetic average of actual dividends paid in fiscal years 2016 and 2017 over the most recent five fiscal year period.

 

 F.

Matters relating to Articles of Incorporation

Our current articles of incorporation were amended as of March 23, 2021 at the annual general meeting of shareholders.

 

Articles to be Amended

  

Description of Amendments

Deletion of Article 27 (Election of Directors), Paragraph 2  To reflect the applicable provision of the amended Commercial Act that provides for a less stringent voting requirement for shareholder approval in the case of the adoption of electronic voting for the appointment of an audit committee member (including a director who will serve as an audit committee member).
Addition of new Paragraph 3 of Article 36-2 (Composition of Audit Committee) and re-numbering of previous Paragraphs 3 and 4 to Paragraphs 4 and 5, respectively  To reflect the applicable provision of the Commercial Act regarding a separate shareholder approval process for an audit committee member.
Deletion of Article 42-2 (Redemption of Shares)  To reflect the applicable provisions of the amended Commercial Act and the amended Financial Investment Services and Capital Markets Act, which permit a stock corporation to retire its own shares within the limit of its distributable income pursuant to a resolution of the board of directors without needing to have a basis to do so under its articles of incorporation..

 

2.

Business

 

 A.

Business overview

We were incorporated in February 1985 under the laws of the Republic of Korea. LG Electronics and LG Semicon transferred their respective LCD business to us in 1998, and since then, our business has been focused on the research, development, manufacture and sale of display panels, applying technologies such as TFT-LCD and OLED.

As of March 31, 2021, in order to support our business activities, we operated TFT-LCD and OLED production and research facilities in Paju and Gumi in Korea, and we have also established subsidiaries in the Americas, Europe and Asia.

As of March 31, 2021, our business consisted of the manufacture and sale of display and display related products utilizing TFT-LCD, OLED and other technologies under a single reporting business segment.

 

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Consolidated operating results highlights

(Unit: In billions of Won)

 

   2021 Q1   2020   2019 

Sales Revenue

   6,883    24,230    23,476 

Gross Profit

   1,231    2,643    1,868 

Operating Profit (loss)

   523    (29   (1,359

Total Assets

   36,398    35,072    35,575 

Total Liabilities

   23,158    22,335    23,086 

 

 B.

Industry

 

 (1)

Industry characteristics

 

  

From the supply perspective, the display panel industry is technology- and capital-intensive in nature and requires mass production through achieving an economy of scale.

 

  

From the demand perspective, the display panel industry tends to demonstrate a high level of volatility depending on the global macroeconomic conditions, major regional sales events and/or seasonal factors.

 

  

Demand for display panels for traditional IT products such as notebooks and desktop monitors has shown a strong growth due to changes in lifestyle including increased instances of working from home and online classes as a result of the COVID-19 pandemic, and demand for high-end products has also sustained.

 

  

Demand for smartphone and automotive display panels has fluctuated due to weakened conditions in the end-product market in light of the COVID-19 pandemic. However, further growth is expected with the release of new products using plastic OLED panels and those that offer changes in form factors or new customer experiences such as foldable smartphones.

 

  

The market for television display panels has shown a steady growth, largely from developed countries, and has rapidly become focused on larger-sized panels reflecting increased consumer needs for larger screens.

 

  

We also anticipate a gradual growth in the market for high value-added product segments such as display panels for industrial uses.

 

 (2)

Growth Potential

 

  

We are focusing on securing profitability through differentiated products such as “Cinematic Sound” OLED and “Wallpaper” display panels under our strategic plan to transition our business to center around OLED, which has a strong future growth potential. In the television business, we are expanding our offerings of premium products such as OLED products. In particular, with respect to large-sized OLED television display panels, we are continuing to secure additional production capacity of 8.5th generation OLED panels and are planning to further strengthen the fundamentals of our OLED business by continuing to introduce differentiated products and obtaining additional production capacity for 8.5th and 10.5th generation OLED display panels. In the IT business, we are increasing the proportion of premium products such as high resolution and wide screen products based on IPS and Oxide technologies. In the mobile business, we have commenced mass production of 6th generation plastic OLED smartphones. We are also strengthening the foundation for the expansion of small- and medium-sized OLED business, including automotive display panels.

 

 (3)

Cyclicality

 

  

The display panel business is highly cyclical and sensitive to fluctuations in the general economy. The industry experiences recurring volatility caused by imbalances between supply and demand due to capacity expansion and changing production utilization rates within the industry.

 

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Macroeconomic factors and other causes of business cycles can affect the rate of growth in demand for display panels. Accordingly, if supply exceeds demand, average selling prices of display panels may decrease. Conversely, if growth in demand outpaces growth in supply, average selling prices may increase.

 

 (4)

Market conditions

 

  

Most display panel manufacturers are located in Asia as set forth below. Competition in the TFT-LCD sector is intensifying amid the continued investments in new fabrication facilities led by Chinese panel manufacturers. In response, Korean panel manufacturers are continuing their efforts to maintain their market leadership and differentiate themselves by transitioning their business focus to OLED products and optimizing their lower-profit TFT-LCD businesses.

 

 a.

Korea: LG Display, Samsung Display, etc.

 

 b.

Taiwan: AU Optronics, Innolux, CPT, HannStar, etc.

 

 c.

Japan: Japan Display, Sharp, Panasonic LCD, etc.

 

 d.

China: BOE, CSOT, CEC Panda, HKC, etc.

 

  

Our worldwide market share of large-sized display panels (i.e., panels that are 9 inches or larger) based on revenue is as follows:

 

   2021 Q1  2020  2019 

Panels for Televisions(1)(2)

   22.1  21.6  28.1

Panels for IT Products(1)

   21.7  21.2  24.8

Total(1)

   21.9  21.4  27.2

 

(1)

Source: Large Area Display Market Tracker (OMDIA).

(2)

Includes panels for public displays.

 

 (5)

Competitiveness and competitive advantages

 

  

Our ability to compete successfully depends on factors both within and outside our control, including the development of new and premium products through technological advances, timely investments, adaptable product portfolio and flexible fabrication mix, achievement of competitive production costs through enhancing productivity and managing supply costs of components and raw materials, our relationship with customers, success in marketing to our end-brand customers, general economic and industry conditions and foreign exchange rates.

 

  

In order for us to compete effectively, it is critical to offer differentiated products that enable us to secure profit margins even during times of a mismatch in the market supply and demand, to be cost competitive and to maintain stable relationships with customers.

 

  

A substantial portion of our sales is attributable to a limited number of end-brand customers and their designated system integrators. As such, it is important to build a sustained relationship with such customers.

 

  

Developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. It is important that we take active measures to protect our intellectual property internationally. It is also necessary to recruit and retain experienced key managerial personnel and skilled line operators.

 

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As a leading technology innovator in the display industry, we continue to focus on delivering differentiated value to our customers by developing various technologies and products, including display panels with WOLED/POLED, IPS, Oxide, in-TOUCH and other technologies. With respect to OLED panels, following our supply of the world’s first 55-inch OLED 3D panels for televisions in January 2013, we have shown that we are technologically a step ahead of the competition by continuing to enhance the performance of our WOLED products and to introduce differentiated large-sized OLED products such as our “Transparent,” “Cinematic Sound,” “Bendable” and “Rollable” and “Transparent” large-sized OLED. Moreover, we have continually introduced differentiated plastic OLED products for smartphones, automotive products, wearable devices and foldable notebook computers, among others. With respect to TFT-LCD panels, we are leading the market with our competitive advantages in technology, including through our IPS, Oxide and LTPS technology-based ultra-large and ultra-high definition (“Ultra HD” or “UHD”) television panels, desktop and notebook monitors featuring high resolutions, differentiated designs and high frequency refresh rates, and specialized products for automotive, commercial and medical uses. Our production facilities are also equipped to produce products incorporating in-TOUCH technology.

 

  

Moreover, we are maintaining and strengthening close long-term relationships with major global firms to secure customers and expand partnerships for technology development.

 

 C.

New businesses

For our continued growth, we are actively exploring and preparing for new business opportunities that may arise in the changing market environment. As such, we are continually reviewing and looking at opportunities in the display and promising new industries.

 

3.

Major Products and Raw Materials

 

 A.

Major products

We manufacture TFT-LCD and OLED panels, of which a significant majority is sold overseas.

(Unit: In billions of Won, except percentages)

 

Business area

  Sales type   Items (By
product)
   

Usage

  Major
trademark
  2021 Q1 
  Sales
Revenue
   Percentages
(%)
 

Display

   




Goods/

Products/
Services/
Other
sales

 

 
 
 
 

   Televisions   Panels for televisions  LG Display   2,149    31.2
   IT products   Panels for monitors, notebook computers and tablets  LG Display   2,717    39.5
   

Mobile,

etc.


 

  Panels for smartphones, etc.  LG Display   2,016    29.3

Total

           6,883    100.0

 

 B.

Average selling price trend of major products

The average selling prices of display panels are subject to change based on market conditions and demand by product category. The average selling price of display panels per square meter of net display area shipped in the first quarter of 2021 decreased by approximately 7% compared to the fourth quarter of 2020 due to reduced shipments of plastic OLED panels for mobile devices. There is no assurance that the average selling prices of display panels per square meter of net display area will not fluctuate in the future due to changes in market conditions.

 

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(Unit: US$ / m2)

 

Period

  Average Selling Price(1)(2) (in US$ / m2) 

2021 Q1

   736 

2020 Q4

   790 

2020 Q3

   706 

2020 Q2

   654 

2020 Q1

   567 

2019 Q4

   606 

2019 Q3

   513 

2019 Q2

   456 

2019 Q1

   528 

 

(1)

Quarterly average selling price per square meter of net display area shipped.

(2)

Excludes semi-finished products in the cell process.

 

 C.

Major raw materials

Prices of major raw materials depend on fluctuations in supply and demand in the market as well as on change in size and quantity of raw materials due to the increased production of large-sized panels.

 

 

              

(Unit: In billions of Won, except percentages)

 

Business area

  Purchase type   

Items

  Usage   Cost(1)   Ratio (%)  

Suppliers

    Printed circuit boards (“PCB”)     642    20.7 Youngpoong Electronics Co., Ltd., etc.
    Polarizers     529    17.1 LG Chem, etc.

Display

   
Raw
materials
 
 
  Backlights (“BLU”)   
Display panel
manufacturing
 
 
   354    11.4 Heesung Electronics LTD., etc.
    Glass     230    7.4 Paju Electric Glass Co., Ltd., etc.
    Drive IC     321    10.3 Silicon Works Co., Ltd., etc.
    Others     1,026    33.1 -

Total

         3,102    100.0 

- Period: January 1, 2021 ~ March 31, 2021.

(1)

Based on total cost for purchase of raw materials which includes manufacturing and development costs, etc.

(2)

Among our major suppliers, LG Chem and Silicon Works Co., Ltd. are member companies of the LG Group, and Paju Electric Glass Co., Ltd. is our affiliate.

 

  

The average price of electrolytic galvanized iron, which is the main raw material for BLU components, increased by 19.0% from the fourth quarter of 2020 to the first quarter of 2021 due to stronger demand resulting primarily from China’s large-scale infrastructure deployment efforts to recover from the economic downturn following the COVID-19 pandemic. The average price of electronic galvanized iron is expected to continue to increase due to a shortage in steel inventory in China and rising international transportation costs.

 

  

The average price of polymethyl methacrylate increased by 7.0% from the fourth quarter of 2020 to the first quarter of 2021 and is expected to continue to increase due to rising international crude oil prices and transportation costs as a result of an increase in demand due to global economic recovery following the COVID-19 pandemic.

 

  

The average price of copper, the main raw material for PCB components, increased by 18.1% from the fourth quarter of 2020 to the first quarter of 2021 and is expected to continue to increase due to increased industrial activities as a result of the global economic recovery and expansion of the electric vehicle market.

 

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4.

Production and Equipment

 

 A.

Production capacity and output

 

 (1)

Production capacity

The table below sets forth the production capacity of our Gumi, Paju and Guangzhou facilities in the periods indicated.

 

             

(Unit: 1,000 glass sheets)

 

 

Business area

  

Items

  

Location of facilities

  2021 Q1(1)   2020(2)   2019(2) 

Display

  Display panel  Gumi, Paju, Guangzhou   2,158    8,589    9,408 

 

(1)

Calculated based on the maximum monthly input capacity (based on glass input substrate size for eigth-generation glass sheets) during the period multiplied by the number of months in the period (i.e., 3 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period.

(2)

Calculated based on the maximum monthly input capacity (based on glass input substrate size for eighth-generation glass sheets) during the year multiplied by the number of months in a year (i.e., 12 months). The production capacity for facilities with adjusted utilization rates have been calculated based on the maximum input capacity during the period.

 

 (2)

Production output

The table below sets forth the production output of our Gumi, Paju and Guangzhou facilities in the periods indicated.

 

             

(Unit: 1,000 glass sheets)

 

 

Business area

  

Items

  

Location of facilities

  2021 Q1(1)   2020(1)   2019(1) 

Display

  Display panel  Gumi, Paju, Guangzhou   2,008    6,815    8,373 

 

(1)

Based on the production results (input standard) of each plant converted into eighth-generation glass sheets.

 

 B.

Production performance and utilization ratio

(Unit: Hours, except percentages)

 

Production facilities

  

Available working hours

in 2021 Q1

  

Actual working hours in

2021 Q1

  Average utilization ratio 

Gumi

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

   100.0

Paju

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

   100.0

Guangzhou

  

2,160(1)

(24 hours x 90 days)

  

2,160(1)

(24 hours x 90 days)(2)

   100.0

 

(1)

Based on the assumption that all 24 hours in a day have been fully utilized.

(2)

Number of days is calculated by averaging the number of working days for each facility.

 

 C.

Investment plan

In 2020, our total capital expenditures on a cash out basis was around mid-W2 trillion. In 2021, we expect to make investments within our EBITDA and estimate that our total capital expenditures will be within mid- to high-W3 trillion range.

 

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5.

Sales

 

 A.

Sales performance

(Unit: In billions of Won)

 

Business area

  

Sales types

  

Items (Market)

  2021 1Q   2020   2019 
  Products  Display panel  Overseas(1)   6,723    23,287    22,180 
      Korea(1)   148    899    1,255 
      Total   6,872    24,186    23,435 
  Royalty  LCD, OLED technology patent  Overseas(1)   5    14    14 
      Korea(1)   0    0    0 

Display

      Total   5    14    14 
  Others  Raw materials, components, etc.  Overseas(1)   5    24    17 
      Korea(1)   2    7    10 
      Total   7    30    26 
  Total    Overseas(1)   6,733    23,324    22,211 
      Korea(1)   150    906    1,265 
      Total   6,883    24,230    23,476 

 

(1)

Based on ship-to-party.

 

 B.

Sales organization and sales route

 

  

As of March 31, 2021, each of our television, IT and mobile businesses had individual sales and customer support functions.

 

  

Sales subsidiaries in the United States, Germany, Japan, Taiwan, China and Singapore perform sales activities and provide local technical support to customers.

 

  

Sales of our products take place through one of the following two routes:

1) LG Display Headquarters and overseas manufacturing subsidiaries g Overseas sales subsidiaries (USA/Germany/Japan/Taiwan/China/Singapore), etc. g System integrators and end-brand customers g End users

2) LG Display Headquarters and overseas manufacturing subsidiaries g System integrators and end-brand customers g End users

 

  

Sales performance by sales route

 

Sales performance

    

Sales route

    Ratio 

Overseas

    Overseas subsidiaries     93.2
    Headquarters     6.8

Overseas sales portion (overseas sales / total sales)

     97.8

Korea

    Overseas subsidiaries     3.6
    Headquarters     96.4

Korea sales portion (Korea sales / total sales)

     2.2

 

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 C.

Sales methods and sales terms

 

  

Direct sales and sales through overseas subsidiaries, etc. Sales terms are subject to change depending on the fluctuation in the supply and demand of LCD panels.

 

 D.

Sales strategy

 

  

As part of our sales strategy for IT products, we have secured stable sales to major personal computer manufacturers and leading consumer electronics manufacturers globally.

 

  

With respect to television products, we have led the premium television market with our OLED TVs and strengthened the differentiation of our OLED products through unique designs and integration of additional technologies (Wallpaper, Cinematic Sound, Rollable, etc.). We also strengthened sales of high-resolution, IPS, narrow bezel and other high-end display panels in the monitor, notebook computer and tablet markets.

 

  

With respect to smartphones, commercial products (including interactive whiteboards and video wall displays, among others), industrial products (including aviation and medical equipment, among others) and automobile display products, we have continued to build a strong and diversified business portfolio by expanding our business with customers with a global reach on the strength of our differentiated products applying IPS, plastic OLED, high-resolution, high-reliability, Super Narrow bezel, in-TOUCH and other technologies.

 

 E.

Major customers

 

  

Customers “A” and “B” each accounted for more than 10% of our sales revenue in each of 2020 and the first quarter of 2021, and our sales revenue derived from our top ten customers comprised 83% of our total sales revenue in the first quarter of 2020 and 86% in the first quarter of 2021.

 

6.

Purchase Orders

 

  

We do not have purchase order contracts that recognize unbilled revenue by implementing the cost-based method.

 

7.

Market Risks and Risk Management

 

 A.

Market risks

The display industry may experience fluctuations in the average selling prices of TFT-LCD and OLED panels that may differ from cyclical patterns in the industry. To the extent prices decrease below our cost structure, our margins may be adversely impacted.

The display industry is highly competitive. We have experienced pressure on the prices and margins of our major products due largely to additional manufacturing capacity from competitors in Korea, China, Taiwan and Japan coupled with changes in the production mix of such competitors.

Our ability to compete successfully depends on factors both within and outside our control, including our development of products with differentiated technology, timely investments, adaptable production capabilities, our ability to execute and reliability, product prices, component and raw material supply costs, the success or failure of our end-brand customers in marketing their brands and products, and general economic and industry conditions.

Our results of operations are subject to exchange rate fluctuations. To the extent that we incur costs in one currency and generate sales in a different currency, our profit margins may be affected by changes in the exchange rates between the two currencies. Our sales of display panels are denominated mainly in U.S. dollars, whereas our foreign currency denominated purchases of raw materials are denominated mainly in U.S. dollars and Japanese Yen. Seeking to achieve stable management, we take every precaution in our foreign currency risk management to minimize the risk of foreign currency fluctuations on our foreign currency denominated assets and liabilities.

 

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 B.

Risk management

As the average selling prices of TFT-LCD and OLED panels can continue to decline over time irrespective of industry-wide cyclical fluctuations, we may find it hard to manage risks associated with certain factors that are outside our control. However, we counteract such declines in average selling prices by increasing the proportion of high value added panels in our product mix while also implementing various cost reduction measures. In addition, in order to manage our risk against foreign currency fluctuations, we eliminate such risk by matching foreign currency inflow and outflow by currency. We also continually monitor our currency position and risk, and when needed, we may from time to time enter into cross-currency interest rate swap contracts and foreign currency forward contracts.

 

8.

Derivative Contracts

 

 A.

Currency risks

 

  

We are exposed to currency risks on sales, purchases and borrowings that are denominated in currencies other than in Won, our functional currency. These currencies are primarily the U.S. dollar, the Chinese Yuan and the Japanese Yen.

 

  

Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by our underlying operations, primarily in Won, the U.S. dollar and the Chinese Yuan.

 

  

In respect of other monetary assets and liabilities denominated in foreign currencies, we have adopted a policy to maintain our net exposure within an acceptable level by buying or selling foreign currencies at spot rates, when necessary, to address short-term imbalances.

 

  

As of March 31, 2021, in order to avoid risks of interest rate fluctuations and exchange rate fluctuations on foreign currency denominated borrowings with floating interest rates, we entered into an aggregate of $1,925 million in Won/US dollar cross currency swap agreements with Standard Chartered Bank and others, for which we have not applied hedge accounting.

 

  

Any rights or obligations arising from derivative contracts that do not apply hedge accounting are measured at fair value and are accounted for as assets and liabilities, whereas any resulting valuation gain or loss is recognized as profit or loss at the time such valuation gain or loss is incurred.

We recognized a net gain on valuation of derivative instruments in the amount ofW117 billion with respect to our foreign exchange derivative instruments held during the reporting period.

 

 B.

Interest rate risks

 

  

Our exposure to interest rate risks relates primarily to our floating rate long term loan obligations. We have established and are managing interest rate risk policies to minimize uncertainty and costs associated with interest rate fluctuations by monitoring cyclical interest rate fluctuations and enacting countermeasures.

 

  

As of March 31, 2021, we entered into an aggregate ofW170 billion in interest rate swap agreements to KB Kookmin Bank and others, for which we have not applied hedge accounting. We recognized a net gain on valuation of derivative instruments in the amount ofW1 billion with respect to our interest rate derivative instruments held during the reporting period.

 

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9.

Major Contracts

Our material contracts, other than contracts entered into in the ordinary course of business, are set forth below:

 

Type of agreement

  

Name of party

  

Term

  

Content

Technology licensing agreement  Hewlett-Packard  January 2011 ~  Patent licensing of semi-conductor device technology
  Ignis Innovation, Inc.  July 2016 ~  Patent licensing of OLED related technology
Technology licensing/supply agreement  HannStar Display Corporation  December 2013 ~  Patent cross-licensing of LCD technology
  AU Optronics Corporation  August 2011~  Patent cross-licensing of LCD technology
  Innolux Corporation  July 2012 ~  Patent cross-licensing of LCD technology
  Universal Display Corporation  

January 2015 ~

December 2025

  Patent licensing of OLED related technology

 

10.

Research & Development (“R&D”)

 

 A.

Summary of R&D-related expenditures

(Unit: In millions of Won, except percentages)

 

Items

  2021 Q1  2020  2019 

R&D Expenditures (prior to deducting governmental subsidies)

   475,299   1,740,083   1,776,879 

Governmental Subsidies

   (41  (1,524  (590

Net R&D-Related Expenditures

   475,258   1,738,559   1,776,289 
  R&D Expenses   423,735   1,454,072   1,338,344 

Accounting Treatment(1)

  Development Cost (Intangible Assets)   51,523   284,487   437,945 

R&D-Related Expenditures / Revenue Ratio(2)

(Total R&D-Related Expenditures ÷ Revenue for the period × 100)

   6.9  7.2  7.6

 

(1)

For accounting treatment purposes, R&D expenses are presented as research and development expenses in our statements of comprehensive income, net of amortization of capitalized intangible asset development costs.

(2)

Calculated based on the R&D-related expenditures before subtracting government subsidies (state subsidies).

 

 B.

R&D achievements

Achievements in 2019

 

 (1)

Developed the world’s first ultra large-sized in-TOUCH product (50-inch UHD)

 

  

World’s first to apply in-TOUCH technology on ultra large-sized products (50-inch and larger)

 

  

World’s first to apply low temperature PAS to achieve in-TOUCH function

 

 (2)

Developed the world’s first transparent WOLED product (55-inch FHD)

 

  

Developed WOLED-based Top Emission OLED device and process technology

 

 (3)

Developed the world’s first OLED 8K product (88-inch 8K)

 

  

Developed gearing technology that secures and compensates aperture ratio for high resolution (8K) product implementation

 

 (4)

Developed the world’s first gaming monitor product applying OLED (55” UHD)

 

  

Developed 55” UHD gaming monitor product using advantages of OLED (latency, gray to gray, color recall)

 

 (5)

Developed the world’s first curved gaming monitor product applying AH-IPS COT (37.5” WQ+)

 

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Developed and produced the world’s first monitor product applying AH-IPS COT

 

  

Pioneered gaming/curved premium monitor product market

 

 (6)

Developed the world’s first monitor product applying Crystal Sound Display (“CSD”) (27.0” FHD)

 

  

Developed and produced the world’s first monitor product applying CSD

 

  

Developed large-sized, front-oriented stereo speaker through the application of exciter and piezo to the bottom cover of the liquid crystal module

 

 (7)

Developed the world’s first automotive product applying plastic OLED (16.9” + 7.2” / 14.2”)

 

  

Developed and produced the world’s first 1CG multi-display product applying plastic OLED (16.9” + 7.2” / 14.2”)

Achievements in 2020

 

 (1)

Developed the first products in our Guangzhou OLED panel production facility (77” UHD, 48” UHD)

 

  

Completed the development of the first products in our Guangzhou OLED panel production facility (77” UHD, 48” UHD)

 

 (2)

Developed the world’s first rollable television display product (65” UHD)

 

  

Introduced a new form factor (from flat to rollable) to the television market

 

  

Enhanced space utilization through adjusting the display size and ratio based on the purpose of use

 

 (3)

Developed the world’s first 2K zone mini-LED & ultra-slim UHD monitor product

 

  

Fulfilled customer needs for top quality monitor products and strengthened our market position in the premium market by developing the world’s first differentiated 2K zone product

 

  

By leveraging early advantage in the underlying mini-LED technology, explored a new revenue source through applying the technology to all IT products

 

  

Achieved high luminance at HDR 1000 and wide color gamut at 99.8% DCI

Achievements in 2021

 

 (1)

Developed the world’s first bendable OLED television display product (65” UHD)

 

  

Implemented both flat and bendable forms based on the scene usage and provided diverse form factors to customers

 

 (2)

Developed the world’s first 83” OLED television display product

 

  

Increased the range of options for customers by developing the new 83” UHD

 

 (3)

Developed the world’s first QHD 240Hz gaming notebook product

 

  

Developed the world’s first QHD resolution 240Hz high-speed notebook product (obtained panel characteristics through new design and process optimization)

 

  

Led the QHD high-speed gaming product market

 

11.

Intellectual Property

As of March 31, 2021, our cumulative patent portfolio (including patents that have already expired) included 21,755 patents in Korea and 28,670 patents in other countries.

 

12.

Environmental and Safety Matters

We are subject to a variety of environmental laws and regulations, and we may be subject to fines or restrictions that could cause our operations to be interrupted. Our manufacturing processes generate worksite waste, including water and air pollutants, at various stages in the manufacturing process, and we are subject to relevant laws and regulations in each area of the environment, including with respect to the treatment of chemical by-products. We have installed and operate various types of anti-pollution equipment, consistent with environmental standards, for the treatment of chemical waste and equipment for the recycling of treated waste water at our various facilities. However, we cannot provide assurance that environmental claims will not be brought against us or that the local or national governments will not take steps toward adopting more stringent environmental standards. Any failure on our part to comply with any present or future environmental regulations could result in the assessment of damages or imposition of fines against us, suspension of production or a cessation of operations. In addition, environmental regulations could require us to acquire costly equipment or to incur other significant compliance expenses that may materially and negatively affect our financial condition and results of operations.

 

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In accordance with the Framework Act on Low Carbon, Green Growth, we implemented the greenhouse gas emission and energy consumption target system from 2012 to 2014. In 2015, we implemented the greenhouse gas trading system, under which we are responsible to meet our emission targets based on the emission credits allocated to us by the Ministry of Environment of the Korean government. As a result, we have been investing in additional equipment and there may be other costs associated with meeting reduction targets, which may have a negative effect on our profitability or production activities.

In connection with the greenhouse gas emission and energy reduction target system, we submitted a statement of our domestic emissions and energy usage for 2020 to the Korean government in March 2021 after it was certified by BSI Korea, a government-designated certification agency. The table below sets forth yearly levels of our greenhouse gases emissions and energy usage in the statement submitted to the Korean government:

(Unit: thousand tonnes of CO2 equivalent; Tetra  Joules)

 

         

Category

  2020   2019   2018 

Greenhouse gases

   4,748    5,885    6,696 

Energy

   56,668    62,776    64,296 

The decrease in greenhouse gas emissions in 2020 compared to 2019 was due primarily to the introduction of a reduction facility that decomposes fluorinated greenhouse gases used in our manufacturing process, resulting in an overall decrease in emission levels.

As we were designated as a target company for the greenhouse gas emission trading system in 2015, we submit a plan for allocating and monitoring our greenhouse gas emissions to the government every year. In order to continually promote the reduction of greenhouse gas emissions, we have set a short-term goal to reduce the emission level from 2014 to 2022 by 16.8% and a medium- to long-term goal to reduce the emission level from 2014 to 2050 by 75.6%. To achieve this, we are continually investing in facility improvements and monitoring our emission levels.

We are making extensive investments to replace SF6 gas, which is the main component of greenhouse gases, with NF3 gas. In addition, as a short-term strategy, we are actively implementing measures in compliance with the emission trading system. In 2020, we reduced our carbon dioxide greenhouse gas emission levels by 1.44 million tons, which was 0.47 million tons more than our initial target of 0.97 million tons. As our medium- to long-term goal, we plan to develop low-carbon production technologies in order to eliminate greenhouse gas emission during our manufacturing process and to conserve energy.

Operations at our manufacturing plants are subject to regulation and periodic scheduled and unscheduled on-site inspections by the Ministry of Environment and local environmental protection authorities. We believe that we have adopted adequate anti-pollution measures and have minimized our impact on the environment by improving existing and developing new technologies for the effective maintenance of environmental protection standards consistent with local industry practice. In addition, we have continually monitored, and we believe that we are in compliance in all material respects with, the applicable environmental laws and regulations in Korea. Expenditures related to such compliance may be substantial. Such expenditures are generally included in capital expenditures. As required by Korean law, we employ licensed environmental specialists to manage our water and air pollution, toxic materials and waste. In December 2013, to ensure safe water quality and reduce costs, we entered into a contract with a specialist company to operate our waste water treatment facilities. In stages beginning in November 1997, we have obtained environmental management system ISO 14001 certifications for our domestic panel and module production facilities in Paju and Gumi and our overseas panel and module production plants in Nanjing, Yantai, Guangzhou and Vietnam and have operated such facilities in accordance with such certifications. Since December 2013, we have also obtained energy management system ISO 50001 certifications for our domestic panel and module production plants and our overseas facilities in Nanjing and Guangzhou and have operated such facilities in accordance with such certifications.

 

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In addition, in March 2020, our overseas subsidiary in Guangzhou received the clean production company certification and is currently in operation in compliance with such certification. In recognition of our efforts to reduce greenhouse gas emissions, we were awarded a commendation from the Minister of Environment in the efforts against climate change category in the 2013 Green Management Awards, which was jointly hosted by the Ministry of Environment and the Ministry of Trade, Industry and Energy. In addition, in recognition of our efforts to improve recycling and reduce waste, we received a citation in 2014 for being a leading recycling company from the Prime Minister of Korea and, in recognition of our continued water conservation activities (reuse system investments, etc.), we attained the highest level, Leadership A, and received the grand prize award at the CDP Water Korea Best Awards in 2016 from the Carbon Disclosure Project, which was presided over by the Carbon Disclosure Project Korea Committee. Since then, we have continued to maintain our excellence in water conservation activities in 2018 and 2020. In addition, our continued efforts to reduce greenhouse gas emissions have been recognized from 2017 to 2020 by becoming the only domestic information technology company to attain the Leadership A level and again receiving carbon management honors by ranking in the top five among all eligible companies. In May 2017, we were awarded a commendation from the Minister of Environment for having scored the highest grade among companies in the low- and medium-volume pollutant emitters category that had entered into voluntary agreements with the Metropolitan Air Quality Management Office, in recognition of having successfully met our voluntary targets for reduction of air pollutants as well as our overall efforts to enhance our relevant facilities and operational systems. In addition, in recognition of efficient control, management and operating systems implemented in our manufacturing facilities, we received the top-level certification, Level 1, in 2017 under the Factory Energy Management System evaluation presided by the Korea Energy Agency. Furthermore, in November 2017, we received the highest commendation, the Presidential Award, in the Korean Energy Efficiency Awards presided by the Ministry of Trade, Industry and Energy in recognition of our energy management practices and energy saving measures. In May 2018, we received the CEM Insight Award, presented at the Clean Energy Ministerial Meetings, and also received certification for our energy business management (Energy Champion) presided by the Ministry of Trade, Industry and Energy and the Korea Energy Agency in November 2018. Since 2019, we have been carrying out forest development activities around our manufacturing facilities after signing an agreement with Gyeong-gi Province to surround our facilities with forests to reduce air pollutants such as fine dust and have received a commendation for such efforts.

In the case of the European Union’s Restriction of Hazardous Substances (RoHS) Directive 2011/65/EU, with the adoption of Directive (EU) 2015/863 in 2016, four additional substances (four phthalate substances) have been added to the six already restricted substances, which additional restrictions became effective as of July 22, 2019. In order to address the latent risk elements of the four phthalate substances that became restricted in 2019 and to establish a more stable management system, we implemented in 2016 a preemptive response process with respect to such four phthalate substances. In implementing this process, we collaborated with external agencies to ascertain regulatory trends and establish our response strategy, and we formulated and applied effective management measures through the collaborative efforts of our development, procurement and quality teams. Beryllium (Be) was not designated internationally as a mandatorily restricted substance but has continued to be the subject of discussion for restriction, and certain of our customers have designated it as a restricted substance not to be used in products. Accordingly, we have completed verification of the parts used in products for customers who have banned the use of Beryllium. We have also conducted verification of the parts used in products for all customers who are expected to implement a ban and we have established a Beryllium verification process for parts in development. Through such efforts, we have established a voluntary hazardous substance response process that can be expanded to products for all customers, not only those who have requested a response.

In October 2005, we became the first display panel company to receive accreditation as an International Accredited Testing Laboratory by the Korea Laboratory Accreditation Scheme, which is operated by the Korean Ministry of Trade, Industry & Energy. In September 2006, we received international accreditation from TUV SUD, EU’s German accreditation agency, as a RoHS testing laboratory. Our efforts to keep pace with the increasingly stringent accreditation standards and to receive and maintain such accreditations are part of our on-going efforts to systematically monitor environmentally controlled substances in our component parts inventory. Moreover, we participated in reforming IEC 62321, an international testing standard published by the International Electrotechnical Commission and used by RoHS, and the commission adopted our halogen-free combustion ion chromatography method in as IEC 62321-3-2, which was published in June 2013. In 2017, in a joint effort with the global product testing/accreditation agency SGS, we became the first display panel company to develop Eco Label, an environmentally friendly accreditation program for television display modules, and have since continuously received the SGS Eco Label accreditation for our OLED television models. For the IPS Nano Color for LCD, we received the Quality & Performance Mark from Intertek, a global product testing/accreditation agency, by applying a technology to eliminate cadmium (Cd) and indium phosphide (InP). In 2018, we became the first display panel company to receive the “Green Technology Certification” from the Korean Ministry of Science and ICT for improving the light efficiency technology of OLED to promote energy use reduction.

 

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In June 2017, we were assessed a fine ofW1 million, which we subsequently paid, for failure to meet certain waste disposal subcontractor requirements under the Waste Management Act. To prevent such violations from occurring again, we are strengthening the periodic evaluation process for our waste management subcontractors.

In June 2017, we were audited by the Ministry of Employment and Labor in connection with the occurrence of a safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine ofW2.4 million. In addition, the trial court ordered a fine ofW0.5 million on each of us and our chief production officer on the basis of certain other applicable provisions of the Industrial Safety and Health Act. In relation to the same matter, in May 2018, the Prosecutor’s Office sought a fine ofW3.0 million on each of us and our chief production officer on the basis of certain other applicable provisions of the Industrial Safety and Health Act. The trial court (Goyang Branch of Uijeongbu District Court) issued a summary order confirming the same fines ofW3.0 million on November 22, 2018, which fines were paid in full after such order was confirmed on November 5, 2020. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

In January 2018, we were audited by the Ministry of Employment and Labor in connection with the occurrence of another safety accident and found to be in violation of certain provisions of the Industrial Safety and Health Act relating to supervisory obligations. As a result, we were issued a corrective order and assessed a fine ofW14.4 million. In relation to this matter, in January 2019, the trial court (Goyang Branch of Uijeongbu District Court) assessed a fine ofW1 million as a summary order on each of us and our chief production officer pursuant to certain other provisions of the Industrial Safety and Health Act. In addition, in January 2019, the trial court sought a fine ofW4 million andW2 million on us and the employee in charge of on-site safety management, respectively, on the basis of certain other provisions of the Industrial Safety and Health Act. Relevant authorities are currently conducting further investigations. In order to prevent such accidents from occurring again, we are strengthening our safety management standards and training for our employees.

Also in January 2018, the government of Gyeong-gi Province issued a warning and assessed a fine ofW1 million on us, which we subsequently paid, for the failure to comply with certain requirements relating to air pollutant emission and prevention facilities under the Air Quality Management Act. To prevent such violations from occurring again, we have shortened the air pollutant emission maintenance reporting period and strengthened the verification process for relevant data.

In March 2018, we were audited by the Ministry of Employment and Labor in connection with our health and safety training practices, and we were found to have omitted requisite health and safety training sessions for certain employees in our P9 facilities in 2016 and 2017. As a result, we were assessed a fine ofW6.95 million, which we subsequently paid, and have strengthened our efforts to promote health and safety training programs in advance as well as our management and supervision activities to ensure such programs are conducted.

In June 2019, the government of Gyeong-gi Province reviewed the operational history and the number of self-measurements of our emission outlets and confirmed that there were certain deficiencies in self-measurements for our reserve facilities. As a result, we were assessed a fine ofW1.6 million by the government of Gyeong-gi Province, which we subsequently paid, for the violation of Article 39 of the Air Quality Management Act. To prevent the recurrence, we have established a monthly self-measurement plan for our reserve facilities.

In May 2020, we were assessed a fine ofW1.4 million by the National Institute of Chemical Safety for our failure to conduct safety training on hazardous chemicals in violation of Article 33 of the Chemicals Control Act, which we subsequently paid. In order to prevent recurrence, we conducted safety training on hazardous chemicals for the relevant personnel and newly established a working process that complies with safety regulations.

 

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In May 2020, we received a warning from Daegu Regional Environmental Office regarding a safety incident that occurred in April 2020 in violation of Article 13-1 of the Chemical Control Act. In addition, in connection with another safety incident that occurred in May 2020, we were assessed an administrative penalty ofW1.44 million in May 2020 and an improvement order in June 2020, in each case by Daegu Regional Environmental Office, for a violation of Article 13-2 of the Chemical Control Act. We subsequently paid such fine, and we also submitted a report of compliance with such improvement order in July 2020. Regarding these two incidents, Gimcheon Branch of Daegu District Court issued a summary order to assess fines ofW3 million on each of us and two of our employees (the former head of safety and health management at our Gumi facilities and a former working level staff), which order was subsequently confirmed. In order to prevent recurrence, we are strengthening our safety management standards and employee training efforts.

In January 2021, an incident involving a leakage of tetramethylammonium hydroxide chemicals occurred during refurbishment of equipment at one of our plants in Paju, causing bodily harm to workers. Government authorities are currently investigating the cause of such incident. In light of such incident, we plan to implement measures to fundamentally enhance our safety management standards with an aim to ensure health and safety of all workers at our facilities and maintain public trust, including four key safety management initiatives comprising (i) performing detailed safety diagnosis at all of our facilities, (ii) internalizing major hazardous tasks, (iii) developing dedicated personnel for safety- and environment-related matters and strengthening our support to our service providers, and (iv) strengthening the authority and capability of our safety management organizations.

 

13.

Financial Information

 

 A.

Financial highlights (Based on consolidated K-IFRS).

(Unit: In millions of Won)

 

Description

  As of March 31, 2021   As of December 31, 2020   As of December 31, 2019 

Current assets

   12,163,134    11,099,470    10,248,315 

Quick assets

   9,811,445    8,928,814    8,197,160 

Inventories

   2,351,689    2,170,656    2,051,155 

Non-current assets

   24,234,417    23,972,053    25,326,248 

Investments in equity accounted investees

   111,187    114,551    109,611 

Property, plant and equipment, net

   20,203,685    20,147,051    22,087,645 

Intangible assets

   1,259,004    1,020,088    873,448 

Other non-current assets

   2,660,541    2,690,363    2,255,544 

Total assets

   36,397,551    35,071,523    35,574,563 

Current liabilities

   11,998,080    11,006,948    10,984,976 

Non-current liabilities

   11,160,370    11,327,636    12,101,306 

Total liabilities

   23,158,450    22,334,584    23,086,282 

Share capital

   1,789,079    1,789,079    1,789,079 

Share premium

   2,251,113    2,251,113    2,251,113 

Retained earnings

   7,748,806    7,524,297    7,503,312 

Other equity

   32,982    (163,446   (203,021

Non-controlling interest

   1,417,121    1,335,896    1,147,798 

Total equity

   13,239,101    12,736,939    12,488,281 

 

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Table of Contents

(Unit: In millions of Won, except for per share data and number of consolidated entities)

 

Description

  For the three months
ended
March 31, 2021
   For the year ended
December 31, 2020
   For the year ended
December 31, 2019
 

Revenue

   6,882,761    24,230,124    23,475,567 

Operating profit (loss)

   523,029    (29,117   (1,359,382

Profit (loss) from continuing operations

   265,811    (70,636   (2,872,078

Profit (loss) for the period

   265,811    (70,636   (2,872,078

Profit (loss) attributable to:

      

Owners of the Company

   228,011    (89,342   (2,829,705

Non-controlling interest

   37,800    18,706    (42,373

Basic earnings (loss) per share

   637    (250   (7,908

Diluted earnings (loss) per share

   637    (250   (7,908

Number of consolidated entities

   21    21    22 

 

 B.

Financial highlights (Based on separate K-IFRS).

(Unit: In millions of Won)

 

Description

  As of March 31, 2021   As of December 31, 2020   As of December 31, 2019 

Current assets

   7,729,112    6,948,054    7,081,228 

Quick assets

   6,240,613    5,529,932    5,554,929 

Inventories

   1,488,499    1,418,122    1,526,299 

Non-current assets

   19,692,197    19,757,148    20,301,452 

Investments

   4,779,685    4,784,828    4,958,308 

Property, plant and equipment, net

   11,500,994    11,736,673    12,764,175 

Intangible assets

   1,073,094    887,431    708,047 

Other non-current assets

   2,338,424    2,348,216    1,870,922 

Total assets

   27,421,309    26,705,202    27,382,680 

Current liabilities

   11,028,860    10,180,660    9,140,483 

Non-current liabilities

   6,087,313    6,261,307    7,576,104 

Total liabilities

   17,116,173    16,441,967    16,716,587 

Share capital

   1,789,079    1,789,079    1,789,079 

Share premium

   2,251,113    2,251,113    2,251,113 

Retained earnings

   6,264,944    6,223,043    6,625,901 

Other equity

   0    0    0 

Total equity

   10,305,136    10,263,235    10,666,093 

(Unit: In millions of Won, except for per share data)

 

Description

  For the three months
ended
March 31, 2021
   For the year ended
December 31, 2020
   For the year ended
December 31, 2019
 

Revenue

   6,632,538    22,799,273    21,658,329 

Operating profit (loss)

   187,076    (812,979   (1,784,245

Profit (loss) from continuing operations

   45,322    (513,262   (2,639,893

Profit (loss) for the period

   45,322    (513,262   (2,639,893

Basic earnings (loss) per share

   127    (1,434   (7,378

Diluted earnings (loss) per share

   127    (1,434   (7,378

 

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 C.

Consolidated subsidiaries (as of March 31, 2021)

 

Company Interest

  

Primary Business

  

Location

  Equity 

LG Display America, Inc.

  Sales  U.S.A.   100

LG Display Germany GmbH

  Sales  Germany   100

LG Display Japan Co., Ltd.

  Sales  Japan   100

LG Display Taiwan Co., Ltd.

  Sales  Taiwan   100

LG Display Nanjing Co., Ltd.

  Manufacturing  China   100

LG Display Shanghai Co., Ltd.

  Sales  China   100

LG Display Guangzhou Co., Ltd.

  Manufacturing  China   100

LG Display Shenzhen Co., Ltd.

  Sales  China   100

LG Display Singapore Pte. Ltd.

  Sales  Singapore   100

L&T Display Technology (Fujian) Limited

  Manufacturing and sales  China   51

LG Display Yantai Co., Ltd.

  Manufacturing  China   100

LG Display (China) Co., Ltd.

  Manufacturing and sales  China   70

Nanumnuri Co., Ltd.

  Workplace services  Korea   100

Unified Innovative Technology, LLC

  Managing intellectual property  U.S.A.   100

Global OLED Technology LLC

  Managing intellectual property  U.S.A.   100

LG Display Guangzhou Trading Co., Ltd.

  Sales  China   100

LG Display Vietnam Haiphong Co., Ltd.

  Manufacturing  Vietnam   100

Suzhou Lehui Display Co., Ltd.

  Manufacturing and sales  China   100

LG Display Fund I LLC (1)

  Investing in new emerging companies  U.S.A   100

LG Display High-Tech (China) Co., Ltd.

  Manufacturing and sales  China   70

 

(1)

During the reporting period, we invested an additionalW6,157 million in LG Display Fund I LLC.

 

 D.

Status of equity investments (as of March 31, 2021)

 

 (1)

Consolidated subsidiaries

 

Company

  Capital Stock
(in millions)
   Date of
Incorporation
   Equity
Interest
 

LG Display America, Inc.

  USD411    September 1999    100

LG Display Germany GmbH

  EUR1    November 1999    100

LG Display Japan Co., Ltd.

  JPY95    October 1999    100

LG Display Taiwan Co., Ltd.

  NTD116    April 1999    100

LG Display Nanjing Co., Ltd.

  CNY  3,020    July 2002    100

LG Display Shanghai Co., Ltd.

  CNY   4    January 2003    100

LG Display Guangzhou Co., Ltd.

  CNY  1,655    June 2006    100

LG Display Shenzhen Co., Ltd.

  CNY4    August 2007    100

LG Display Singapore Pte. Ltd.

  USD1    January 2009    100

L&T Display Technology (Fujian) Limited

  CNY116    January 2010    51

LG Display Yantai Co., Ltd.

  CNY1,008    April 2010    100

Nanumnuri Co., Ltd.

  KRW800    March 2012    100

LG Display (China) Co., Ltd.

  CNY8,232    December 2012    70

Unified Innovative Technology, LLC

  USD9    March 2014    100

LG Display Guangzhou Trading Co., Ltd.

  CNY1    April 2015    100

Global OLED Technology LLC

  USD138    December 2009    100

LG Display Vietnam Haiphong Co., Ltd.

  USD600    May 2016    100

Suzhou Lehui Display Co., Ltd.

  CNY637    July 2016    100

 

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Company

  Capital Stock
(in millions)
   Date of
Incorporation
   Equity
Interest
 

LG Display Fund I LLC (1)

  USD 17    May 2018    100

LG Display High-Tech (China) Co., Ltd.

  CNY 15,600    July 2018    70

MMT (Money Market Trust)

   —      January 2018    —   

 

(1)

During the reporting period, we invested an additionalW6,157 million in LG Display Fund I LLC.

 

 (2)

Affiliated companies

 

Company

  Carrying Amount
(in millions)
   Date of
Incorporation
   Equity
Interest
 

Paju Electric Glass Co., Ltd.

  W43,805    January 2005    40

Wooree E&L Co., Ltd.

  W10,025    June 2008    14

YAS Co., Ltd.

  W25,096    April 2002    15

Avatec Co., Ltd.

  W20,766    August 2000    15

Arctic Sentinel, Inc.

   —      June 2008    10

Cynora GmbH

  W2,609    March 2003    11

Material Science Co., Ltd.

  W3,244    January 2014    10

Nanosys Inc.

  W5,642    July 2001    3

Although our respective share interests in Wooree E&L Co., Ltd., YAS Co., Ltd., Avatec Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH, Material Science Co., Ltd. and Nanosys Inc. are below 20%, we are able to exercise significant influence through our right to appoint a director to the board of directors of each investee. Accordingly, the investments in these investees have been accounted for using the equity method.

For the three months ended March 31, 2020 and 2021, the aggregate amount of dividends we received from our affiliated companies wasW4,068 million andW8,239 million, respectively.

 

14.

Audit Information

 

 A.

Audit service

(Unit: In millions of Won, hours)

 

Description

  

2021 Q1

  

2019

  

2018

Auditor

  KPMG Samjong  KPMG Samjong  KPMG Samjong

Activity

  Audit by independent auditor  Audit by independent auditor  Audit by independent auditor

Compensation(1)

  1,470 (550)  1,410 (540)(2)  1,280 (500)(2)

Time required

  

2,210

  19,777  21,194

 

(1)

Compensation amount is the contracted amount for the full fiscal year.

(2)

Compensation amount in (     ) is for Form 20-F filing and SOX 404 audit.

 

 B.

Non-audit service

(Unit: In millions of Won, hours)

 

Period

  Date of contract  

Description of service

  

Period of service

  Compensation 

2021 Q1

  —    —    —     —   

2020

  —    —    —     —   

2019

  July 23, 2019  Issuance of comfort letters  July 23, 2019 ~ August 31, 2019   120 

 

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15.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Omitted in quarterly and semi-annual reports in accordance with Korean disclosure rules.

 

16.

Board of Directors

 

 A.

Members of the board of directors

As of March 31, 2021, our board of directors consisted of two non-outside directors, one non-standing director and four outside directors. As of the end of the reporting period, there is no change in the composition of our board of directors, but on April 26, 2021, our board of directors approved the formation of the Related Party Transaction Committee (date of formation: July 1, 2021) and the ESG Committee (date of formation: April 26, 2021).

(As of March 31, 2021)

 

Name

  

Position

  

Primary responsibility

James (Hoyoung) Jeong  Representative Director (non-outside), Chief Executive Officer and President  Overall head of business management
Donghee Suh  Director (non-outside), Chief Financial Officer and Senior Vice President  Overall head of finances
Young-Soo Kwon  Director (non-standing)  Chairman of the board of directors
Kun Tai Han  Outside Director  Related to the overall management
Byung Ho Lee (1)  Outside Director  Related to the overall management
Chang-Yang Lee  Outside Director  Related to the overall management
Doocheol Moon (1)  Outside Director  Related to the overall management

 

(1)

Byung Ho Lee was reappointed for another term as an outside director, and Doocheol Moon was newly appointed as an outside director at the annual general meeting of shareholders held on March 23, 2021.

 

 B.

Committees of the board of directors

We have the following committees that serve under our board of directors: Management Committee, Outside Director Nomination Committee, Audit Committee and ESG Committee. The Related Party Transaction Committee is set to be established on July 1, 2021.

As of March 31, 2021, the Management Committee consisted of two non-outside directors, James (Hoyoung) Jeong and Donghee Suh.

As of March 23, 2021, the composition of the Outside Director Nomination Committee was as follows.

(As of March 23, 2021)

 

Committee

  

Composition

  

Member

Outside Director Nomination Committee(1)  1 non-standing director and 2 outside directors  Young-Soo Kwon, Byung Ho Lee and Doocheol Moon

 

(1)

Each of Young-Soo Kwon, Byung Ho Lee and Doocheol Moon was appointed as a member of the outside director nomination committee of the board of directors at the board of directors’ meeting on March 23, 2021.

As of March 31, 2021, the composition of the Audit Committee was as follows.

(As of March 31, 2021)

 

Committee

  

Composition

  

Member

Audit Committee  3 outside directors  Kun Tai Han, Chang-Yang Lee and Doocheol Moon(1)

 

(1)

Doocheol Moon is the audit committee chairman.

 

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As of the date of this report, the composition of the ESG Committee was as follows.

(As of the date of this report)

 

Committee

  

Composition

  

Member

ESG Committee  1 non-standing director and 4 outside directors  Kun Tai Han, Byung Ho Lee, Chang-Yang Lee, Doocheol Moon and James (Hoyoung) Jeong

As of the date of this report, the composition of the Related Party Transaction Committee, which will be established as of July 1, 2021, was as follows.

(As of the date of this report)

 

Committee

  

Composition

  

Member

Related Party Transaction Committee  1 non-standing director and 3 outside directors  Kun Tai Han, Byung Ho Lee, Chang-Yang Lee and Donghee Suh

 

 C.

Independence of directors

Directors are appointed in accordance with the procedures of the Commercial Act and other relevant laws and regulations. Our board of directors is independent as four out of the seven directors that comprise the board are outside directors. Outside directors candidates are nominated for appointment at a shareholders’ meeting after undergoing rigorous review by the Outside Director Nomination Committee.

All of our current outside directors were nominated by the Outside Director Nomination Committee, and all of our current non-outside directors were nominated by the board of directors.

 

17.

Information Regarding Shares

 

 A.

Total number of shares

 

 (1)

Total number of shares authorized to be issued (as of March 31, 2021): 500,000,000 shares.

 

 (2)

Total shares issued and outstanding (as of March 31, 2021): 357,815,700 shares.

 

 B.

Shareholder list

 

 (1)

Largest shareholder and related parties as of March 31, 2021:

 

Name

  

Relationship

  Number of shares of common stock   Equity interest 

LG Electronics

  Largest shareholder   135,625,000    37.9

James (Hoyoung) Jeong

  Registered director of member company   10,000    0.0

Donghee Suh

  Registered director of member company   9,000    0.0

 

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 (2)

Shareholders who are known to us that own 5% or more of our shares as of March 31, 2021:

 

Beneficial owner

  Number of shares of common stock  Equity interest 

LG Electronics

   135,625,000   37.90

National Pension Service

   22,671,167 (1)   6.34(1) 

 

(1)

As of the public disclosure filing on February 24, 2021.

 

18.

Directors and Employees

 

 A.

Directors

 

 (1)

Remuneration for directors in 2021 Q1:

(Unit: person, in millions of Won)

 

Classification

  No. of directors (1)   Amount paid   Per capita average
remuneration paid (2)
 

Non-outside directors

   3    436    145 

Outside directors who are not audit committee members

   1    20    20 

Outside directors who are audit committee members

   3    59    20 

Total

   7    514    73 

 

(1)

Number of directors as at March 31, 2021.

(2)

Per capita average remuneration paid is calculated by dividing total amount paid by the average number of directors for the year ended March 31, 2021.

(3)

Due to the expiration of Mr. Sung-Sik Hwang’s term as a non-outside director and Mr. Doocheol Moon’s nomination as a non-outside director at the annual general meeting of shareholders held on March 23, 2021, the amount paid to non-outside directors includes the remuneration paid to both directors.

 

 (2)

Standards of remuneration paid to non-outside and outside directors

 

  

Non-outside directors (excluding outside directors and audit committee members)

The remuneration system for non-outside directors consists of base salary, position salary and performance-related pay. The remuneration for non-outside directors is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the non-outside director’s position and job responsibilities.

 

  

Standards for base salary/position salary: relevant position and job responsibilities, among others

 

  

Standards for performance-related pay: financial performance of the company and achievement of individual management goals, among others

 

  

Outside directors, audit committee members and auditor

The remuneration for outside directors, audit committee members and auditor is measured in accordance with the standards established by the board of directors (within the amount approved at the annual general meeting of shareholders), including the individual’s job responsibilities, among others.

 

 (3)

Remuneration for individual directors and audit committee members

Not required for quarterly reports.

 

 (4)

Remuneration for the five highest paid individuals (among those paid overW500 million per year)

Not required for quarterly reports.

 

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 (5)

Stock options

Not applicable.

 

 B.

Employees

As of March 31, 2021, we had 26,017 employees (excluding our directors). On average, our male employees have served 12.1 years and our female employees have served 10.0 years. The total amount of salary paid to our employees for the three months ended March 31, 2021 based on income tax statements submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act wasW553,737 million for our male employees andW75,777 million for our female employees. The following table provides details of our employees as of March 31, 2021:

(Unit: person, in millions of Won, year)

 

   Number of
employees (1)
   Total salary in 2021 (2)(3)(4)   Average
salary per
capita(5)
   Average years of
service
 

Male

   21,954    553,737    25    12.1 

Female

   4,063    75,777    18    10.0 

Total

   26,017    629,514    24    11.8 

 

(1)

Includes part-time employees hired for temporary needs or to serve as temporary replacements for employees on parental leave.

(2)

Welfare benefits and retirement expenses have been excluded. Total welfare benefit provided to our employees for the three months ended March 31, 2021 wasW85,041 million and the per capita welfare benefit provided wasW3.3 million.

(3)

Based on income tax statements, which are submitted to the Korean tax authority in accordance with Article 20 of the Income Tax Act.

(4)

Includes incentive payments to employees who have transferred from our affiliated companies.

(5)

Calculated using the cumulative salary and the average number of employees (male: 22,212, female: 4,100) for the three months ended March 31, 2021.

In December 2017, we were audited by the Ministry of Employment and Labor regarding our human resource practices (including in relation to employment contracts, hours of work, outsourcing and employees in pregnancy), and we were found to be in violation of certain provisions of the Labor Standard Act relating to overtime, night and holiday work. As a result, we were issued a corrective order in January 2018 and paid additional overtime wages ofW2,893 million to 16,106 administrative employees of our Paju facilities for their nighttime work between January 1, 2015 to December 31, 2017. In addition, we reviewed nighttime work records of our administrative employees outside of our Paju facilities during the same period and paid additional overtime wages ofW2,166 million to eligible employees. In order to prevent such violation from occurring again, we are periodically monitoring the nighttime work records of our employees.

From December 2017 to January 2018, we were audited by the Ministry of Employment and Labor regarding our human resource practices relating to temporary and part-time employees, and we were found to have omitted certain required information (including the number of break hours and vacation days) in the employment contracts of 82 temporary employees. As a result, we were assessed a fine ofW27 million, which we subsequently paid. In order to prevent such violation from occurring again, we have amended the relevant provisions of the applicable employment contracts.

 

19.

Other Matters

 

 A.

Legal proceedings

We are a defendant in three separate civil lawsuits (comprising one damages claim in the United Kingdom filed by private plaintiffs, one damages claim in Israel filed by private plaintiffs and one unjust enrichment claim in the United States filed by the Commonwealth of Puerto Rico) filed against us and certain other TFT-LCD panel manufacturers in connection with alleged anticompetitive behavior of the defendants. In each of these cases, the amount being sought has not been determined, and no trial has been scheduled. While the expected outcome of each of these cases is unclear, we do not believe that any of these cases would have a material effect on our financial conditions.

 

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We have also been a defendant in four patent infringement lawsuits (two in the United States, one in Germany and one in China) filed against us and certain other set manufacturers by Solas OLED Ltd. With respect to each of these cases, we have entered into a Settlement and License Agreement with the plaintiff in December 2020. The plaintiff withdrew its claims in all four cases between January and March 2021.

 

 B.

Material events subsequent to the reporting period

None.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2021 and 2020

(With Independent Auditors’ Review Report Thereon)


Table of Contents


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Condensed Consolidated Interim Financial Statements

March 31, 2021 and 2020

(Unaudited)

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed consolidated interim financial statements of LG Display Co., Ltd. and subsidiaries (the “Group”) which comprise the condensed consolidated interim statement of financial position as of March 31, 2021, the condensed consolidated interim statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020, and notes comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Condensed Consolidated Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally 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 reviews, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

We audited the consolidated statement of financial position as of December 31, 2020 and the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 3, 2021, expressed an unmodified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2020, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Notes to the Condensed Consolidated Interim Financial Statements

March 31, 2021 and 2020

(Unaudited)

KPMG Samjong Accounting Corp.

Seoul, Korea

May 14, 2021

 

This report is effective as of May 14, 2021 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 condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

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LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

As of March 31, 2021 and December 31, 2020

 

(In millions of won)  Note   March 31, 2021   December 31, 2020 

Assets

      

Cash and cash equivalents

   4, 25   W3,904,032   4,218,099

Deposits in banks

   4, 25    447,634   78,652

Trade accounts and notes receivable, net

   5, 14, 25, 27    4,308,671   3,517,512

Other accounts receivable, net

   5, 25    121,248   144,480

Other current financial assets

   6, 25    43,132   52,403

Inventories

   7    2,351,689   2,170,656

Prepaid income taxes

     114,668   114,202

Other current assets

   5    872,060   803,466
    

 

 

   

 

 

 

Total current assets

     12,163,134   11,099,470

Deposits in banks

   4, 25    11   11

Investments in equity accounted investees

   8    111,187   114,551

Other non-current financial assets

   6, 25    78,193   68,231

Property, plant and equipment, net

   9, 17    20,203,685   20,147,051

Intangible assets, net

   10, 17    1,259,004   1,020,088

Deferred tax assets

   23    2,262,614   2,273,677

Defined benefits assets, net

   12    183,424   224,997

Other non-current assets

     136,299   123,447
    

 

 

   

 

 

 

Total non-current assets

     24,234,417   23,972,053
    

 

 

   

 

 

 

Total assets

    W36,397,551   35,071,523
    

 

 

   

 

 

 

Liabilities

      

Trade accounts and notes payable

   25, 27    3,974,921   3,779,290

Current financial liabilities

   11, 25    3,729,125   3,195,024

Other accounts payable

   25    3,116,263   2,781,941

Accrued expenses

     598,907   651,880

Income tax payable

     36,522   25,004

Provisions

   13    193,066   197,468

Advances received

   14    295,078   333,821

Other current liabilities

     54,198   42,520
    

 

 

   

 

 

 

Total current liabilities

     11,998,080   11,006,948

Non-current financial liabilities

   11, 25    10,727,311   11,124,846

Non-current provisions

   13    93,992   89,633

Defined benefit liabilities, net

   12    1,479   1,498

Deferred tax liabilities

   23    9,046   9,530

Other non-current liabilities

     328,542   102,129
    

 

 

   

 

 

 

Total non-current liabilities

     11,160,370   11,327,636
    

 

 

   

 

 

 

Total liabilities

     23,158,450   22,334,584
    

 

 

   

 

 

 

Equity

      

Share capital

   15    1,789,079   1,789,079

Share premium

     2,251,113   2,251,113

Retained earnings

     7,748,806   7,524,297

Reserves

   15    32,982   (163,446)
    

 

 

   

 

 

 

Total equity attributable to owners of the Controlling Company

     11,821,980   11,401,043
    

 

 

   

 

 

 

Non-controlling interests

     1,417,121   1,335,896
    

 

 

   

 

 

 

Total equity

     13,239,101   12,736,939
    

 

 

   

 

 

 

Total liabilities and equity

    W36,397,551   35,071,523
    

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

3


Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won, except earnings per share)  Note   2021  2020 

Revenue

   16, 17, 27   W6,882,761  4,724,249

Cost of sales

   7, 18, 27    (5,651,296  (4,446,096
    

 

 

  

 

 

 

Gross profit

     1,231,465  278,153

Selling expenses

   18, 19    (216,605  (199,854

Administrative expenses

   18, 19    (216,056  (173,289

Research and development expenses

   18    (275,775  (266,929
    

 

 

  

 

 

 

Operating profit (loss)

     523,029  (361,919
    

 

 

  

 

 

 

Finance income

   22    212,883  333,196

Finance costs

   22    (419,639  (303,835

Other non-operating income

   21    479,371  542,033

Other non-operating expenses

   18, 21    (473,638  (507,081

Equity in income of equity accounted investees, net

     1,287  2,733
    

 

 

  

 

 

 

Profit (loss) before income tax

     323,293  (294,873

Income tax expense (benefit)

   23    57,482  (95,976
    

 

 

  

 

 

 

Profit (loss) for the period

     265,811  (198,897
    

 

 

  

 

 

 

Other comprehensive income (loss)

     

Items that will never be reclassified to profit or loss

     

Remeasurements of net defined benefit liabilities

   12    (4,594  (2,574

Other comprehensive income (loss) from associates

     (81  92

Related income tax

   12    1,173  661
    

 

 

  

 

 

 
     (3,502  (1,821

Items that are or may be reclassified to profit or loss

     

Foreign currency translation differences for foreign operations

     240,355  273,903

Other comprehensive income (loss) from associates

     (502  1,595
    

 

 

  

 

 

 
     239,853  275,498
    

 

 

  

 

 

 

Other comprehensive income for the period, net of income tax

     236,351  273,677
    

 

 

  

 

 

 

Total comprehensive income for the period

    W502,162  74,780
    

 

 

  

 

 

 

Profit (loss) attributable to:

     

Owners of the Controlling Company

     228,011  (198,991

Non-controlling interests

     37,800  94
    

 

 

  

 

 

 

Profit (loss) for the period

    W265,811  (198,897
    

 

 

  

 

 

 

Total comprehensive income attributable to:

     

Owners of the Controlling Company

     420,937  28,328

Non-controlling interests

     81,225  46,452
    

 

 

  

 

 

 

Total comprehensive income for the period

    W502,162  74,780
    

 

 

  

 

 

 

Earnings (loss) per share (in won)

     

Basic and diluted earnings (loss) per share

   24   W637  (556
    

 

 

  

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

   Attributable to owners of the Controlling Company        
(In millions of won)  Share
capital
   Share
premium
   Retained
earnings
  Reserves  Sub-total  Non-controlling
interests
   Total
equity
 

Balances at January 1, 2020

  W1,789,079   2,251,113   7,503,312  (203,021  11,340,483  1,147,798   12,488,281
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total comprehensive income (loss) for the period

           

Profit (loss) for the period

   —      —      (198,991  —     (198,991  94   (198,897
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Other comprehensive income (loss)

           

Remeasurements of net defined benefit liabilities, net of tax

   —      —      (1,913  —     (1,913  —      (1,913

Foreign currency translation differences for foreign operations, net of tax

   —      —      —     227,545  227,545  46,358   273,903

Other comprehensive income from associates

   —      —      92  1,595  1,687  —      1,687
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total other comprehensive income (loss)

   —      —      (1,821  229,140  227,319  46,358   273,677
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total comprehensive income (loss) for the period

  W—      —      (200,812  229,140  28,328  46,452   74,780
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Balances at March 31, 2020

  W1,789,079   2,251,113   7,302,500  26,119  11,368,811  1,194,250   12,563,061
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Balances at January 1, 2021

  W1,789,079   2,251,113   7,524,297  (163,446  11,401,043  1,335,896   12,736,939
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total comprehensive income (loss) for the period

           

Profit for the period

   —      —      228,011  —     228,011  37,800   265,811
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Other comprehensive income (loss)

           

Remeasurements of net defined benefit liabilities, net of tax

   —      —      (3,421  —     (3,421  —      (3,421

Foreign currency translation differences for foreign operations, net of tax

   —      —      —     196,930  196,930  43,425   240,355

Other comprehensive loss from associates

   —      —      (81  (502  (583  —      (583
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total other comprehensive income (loss)

   —      —      (3,502  196,428  192,926  43,425   236,351
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total comprehensive income for the period

  W—      —      224,509  196,428  420,937  81,225   502,162
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Balances at March 31, 2021

  W1,789,079   2,251,113   7,748,806  32,982  11,821,980  1,417,121   13,239,101
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won)  Note   2021  2020 

Cash flows from operating activities:

     

Profit (loss) for the period

    W265,811  (198,897

Adjustments for:

     

Income tax expense (benefit)

   23    57,482  (95,976

Depreciation and amortization

   18    1,096,999  992,442

Gain on foreign currency translation

     (177,983  (201,052

Loss on foreign currency translation

     199,616  237,887

Expenses related to defined benefit plans

   12    35,879  40,223

Gain on disposal of property, plant and equipment

     (1,352  (3,579

Loss on disposal of property, plant and equipment

     8,372  4,377

Impairment loss on property, plant and equipment

     1,727  5,912

Reversal of impairment loss on property, plant and equipment

     (532  —   

Impairment loss on intangible assets

     7,767  4,347

Reversal of impairment loss on intangible assets

     (1,250  (550

Expense on increase of provision

     52,263  69,646

Finance income

     (173,567  (263,600

Finance costs

     405,299  278,888

Equity in income of equity method accounted investees, net

   8    (1,287  (2,733

Other income

     —     (13,944

Other expenses

     15,432  202
    

 

 

  

 

 

 
     1,524,865  1,052,490

Changes in:

     

Trade accounts and notes receivable

     (617,249  299,683

Other accounts receivable

     26,643  6,160

Inventories

     (171,184  (257,525

Lease receivables

     987  583

Other current assets

     (43,530  (96,090

Other non-current assets

     (34,220  (27,205

Trade accounts and notes payable

     42,841  151,249

Other accounts payable

     120,318  (314,044

Accrued expenses

     (37,934  (112,180

Provisions

     (52,306  (70,545

Advances received

     70,057  (19,211

Other current liabilities

     6,968  (40,207

Defined benefit liabilities, net

     1,116  (4,440

Other non-current liabilities

     (514  3,427
    

 

 

  

 

 

 
     (688,007  (480,345

Cash generated from operating activities

     1,102,669  373,248

Income taxes paid

     (20,810  (47,206

Interests received

     16,365  17,043

Interests paid

     (136,013  (158,391
    

 

 

  

 

 

 

Net cash provided by operating activities

    W962,211  184,694
    

 

 

  

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Statements of Cash Flows, Continued

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won)  Note  2021  2020 

Cash flows from investing activities:

     

Dividends received

    W3,668  7,739

Increase in deposits in banks

     (366,883  (600

Proceeds from withdrawal of deposits in banks

     400  1,200

Acquisition of financial assets at fair value through profit or loss

     (5,069  (29

Proceeds from disposal of financial asset at fair value through profit or loss

     380  —   

Proceeds from disposal of financial assets at fair value through other comprehensive income

     9  6

Proceeds from disposal of investments in equity accounted investees

     600  600

Acquisition of property, plant and equipment

     (570,379  (1,027,979

Proceeds from disposal of property, plant and equipment

     2,885  269,174

Acquisition of intangible assets

     (197,377  (119,264

Government grants received

     —     19,035

Receipt from (payment for) settlement of derivatives

     (20,435  21,615

Proceeds from collection of short-term loans

     7,204  6,134

Increase in deposits

     —     (791

Decrease in deposits

     215  947

Proceeds from disposal of other assets

     —     11,000
    

 

 

  

 

 

 

Net cash used in investing activities

     (1,144,782  (811,213
    

 

 

  

 

 

 

Cash flows from financing activities:

 ��26   

Proceeds from short-term borrowings

     1,226,939  1,027,114

Repayments of short-term borrowings

     (904,668  (877,007

Proceeds from long-term borrowings

     200,000  642,613

Repayments of current portion of long-term borrowings and bonds

     (736,264  (19,059

Payment of lease liabilities

     (15,879  (17,675
    

 

 

  

 

 

 

Net cash provided by (used in) financing activities

     (229,872  755,986
    

 

 

  

 

 

 

Net increase (decrease) in cash and cash equivalents

     (412,443  129,467

Cash and cash equivalents at January 1

     4,218,099  3,336,003

Effect of exchange rate fluctuations on cash held

     98,376  92,916
    

 

 

  

 

 

 

Cash and cash equivalents at March 31

    W3,904,032  3,558,386
    

 

 

  

 

 

 

See accompanying notes to the consolidated interim financial statements.

 

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Table of Contents
1.

Reporting Entity

 

 (a)

Description of the Controlling Company

LG Display Co., Ltd. (the “Controlling Company”) was incorporated in February 1985 and the Controlling Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Controlling Company and its subsidiaries (the “Group”) is to manufacture and sell displays and its related products. As of March 31, 2021, the Group is operating Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Controlling Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of March 31, 2021, LG Electronics Inc., a major shareholder of the Controlling Company, owns 37.9% (135,625,000 shares) of the Controlling Company’s common stock.

The Controlling Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2021, there are 357,815,700 shares of common stock outstanding. The Controlling Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2021, there are 17,451,976 ADSs outstanding.

 

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Table of Contents
1.

Reporting Entity, Continued

 

 (b)

Consolidated Subsidiaries as of March 31, 2021

 

(In millions)                   

Subsidiaries

  Location  Percentage of
ownership
  Fiscal year end  Date of
incorporation
  

Business

  Capital stocks 

LG Display America, Inc.

  San Jose,

U.S.A.

   100 December 31  September 24,
1999
  Sell display products  USD411 

LG Display Germany GmbH

  Eschborn,
Germany
   100 December 31  November 5,
1999
  Sell display products  EUR1 

LG Display Japan Co., Ltd.

  Tokyo,
Japan
   100 December 31  October 12,
1999
  Sell display products  JPY95 

LG Display Taiwan Co., Ltd.

  Taipei,
Taiwan
   100 December 31  April 12,

1999

  Sell display products  NTD116 

LG Display Nanjing Co., Ltd.

  Nanjing,
China
   100 December 31  July 15,

2002

  Manufacture display products  CNY3,020 

LG Display Shanghai Co., Ltd.

  Shanghai,
China
   100 December 31  January 16,
2003
  Sell display products  CNY4 

LG Display Guangzhou Co., Ltd.

  Guangzhou,
China
   100 December 31  June 30,

2006

  Manufacture display products  CNY1,655 

LG Display Shenzhen Co., Ltd.

  Shenzhen,
China
   100 December 31  August 28,
2007
  Sell display products  CNY4 

LG Display Singapore Pte. Ltd.

  Singapore   100 December 31  January 12,
2009
  Sell display products  USD1 

L&T Display Technology (Fujian) Limited

  Fujian,

China

   51 December 31  January 5,
2010
  Manufacture and sell LCD module and LCD monitor sets  CNY116 

LG Display Yantai Co., Ltd.

  Yantai,

China

   100 December 31  April 19,

2010

  Manufacture display products  CNY1,008 

Nanumnuri Co., Ltd.

  Gumi,

South Korea

   100 December 31  March 21,

2012

  Provide janitorial services  KRW800 

LG Display

(China) Co., Ltd.

  Guangzhou,
China
   70 December 31  December 10,
2012
  Manufacture and sell display products  CNY8,232 

Unified Innovative Technology, LLC

  Wilmington,
U.S.A.
   100 December 31  March 12,

2014

  Manage intellectual property  USD9 

LG Display Guangzhou Trading Co., Ltd.

  Guangzhou,
China
   100 December 31  April 28,

2015

  Sell display products  CNY1 

Global OLED Technology, LLC

  Sterling,
U.S.A.
   100 December 31  December 18,
2009
  Manage OLED intellectual property  USD138 

LG Display Vietnam Haiphong Co., Ltd.

  Haiphong,

Vietnam

   100 December 31  May 5,

2016

  Manufacture display products  USD600 

Suzhou Lehui Display Co., Ltd.

  Suzhou,
China
   100 December 31  July 1,

2016

  Manufacture and sell LCD module and LCD monitor sets  CNY637 

LG DISPLAY FUND I LLC(*)

  Wilmington,
U.S.A.
   100 December 31  May 1,

2018

  Invest in venture business and acquire technologies  USD17 

LG Display High-Tech (China) Co., Ltd.

  Guangzhou,
China
   70 December 31  July 11,

2018

  Manufacture and sell display products  CNY 15,600 

 

(*)

For the three-month period ended March 31, 2021, the Controlling Company contributedW6,157 million in cash for the capital increase of LG DISPLAY FUND I LLC.

 

9


Table of Contents
2.

Basis of Presenting Financial Statements

 

 (a)

Statement of Compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Group as of and for the year ended December 31, 2020.

 

 (b)

Basis of Measurement

The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

 

  

derivative financial instruments at fair value, financial assets at fair value through profit or loss (“FVTPL”), financial assets at fair value through other comprehensive income (“FVOCI”), financial liabilities at fair value through profit or loss (“FVTPL”), and

 

  

net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets

 

 (c)

Functional and Presentation Currency

Each subsidiary’s financial statements within the Group are presented in the subsidiary’s functional currency, which is the currency of the primary economic environment in which each subsidiary operates. The condensed consolidated interim financial statements are presented in Korean won, which is the Controlling Company’s functional currency.

 

 (d)

Use of Estimates and Judgments

The preparation of the condensed consolidated interim financial statements in conformity with K-IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

3.

Summary of Significant Accounting Policies

The significant accounting policies followed by the Group in the preparation of its condensed consolidated interim financial statements are the same as those followed by the Group in its preparation of the consolidated financial statements as of and for the year ended December 31, 2020, except for the application of K-IFRS No. 1034, Interim Financial Reporting.

 

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Table of Contents
4.

Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Current assets

    

Cash and cash equivalents

    

Cash

  W1,233    156 

Demand deposits

   3,902,799    4,217,943 
  

 

 

   

 

 

 
  W3,904,032    4,218,099 
  

 

 

   

 

 

 

Deposits in banks

    

Time deposits

  W2,000    1,800 

Restricted deposits (*)

   445,634    76,852 
  

 

 

   

 

 

 
  W447,634    78,652 
  

 

 

   

 

 

 

Non-current assets

    

Deposits in banks

    

Restricted deposits (*)

  W11    11 
  

 

 

   

 

 

 
  W4,351,677    4,296,762 
  

 

 

   

 

 

 

 

(*)

Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies’ suppliers, restricted deposits pledged to enforce the Group’s investment plans upon the receipt of grants from Gumi city and Gyeongsangbuk-do, restricted deposits pledged in relation to a subsidiary’s borrowings and others.

 

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Table of Contents
5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets

 

 (a)

Trade accounts and notes receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Due from third parties

  W3,489,070    3,054,471 

Due from related parties

   819,601    463,041 
  

 

 

   

 

 

 
  W4,308,671    3,517,512 
  

 

 

   

 

 

 

 

 (b)

Other accounts receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 

Current assets

    

Non-trade receivables, net

  W114,509    140,616 

Accrued income

   6,739    3,864 
  

 

 

   

 

 

 
  W121,248    144,480 
  

 

 

   

 

 

 

Due from related parties included in other accounts receivable as of March 31, 2021 and December 31, 2020 areW1,044 million andW21,189 million, respectively.

 

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5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets, Continued

 

 (c)

The aging of trade accounts and notes receivable and other accounts receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021 
   Book value   Allowance for impairment 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
  Other
accounts
receivable
 

Current

  W4,306,503    120,531    (1,348  (1,829

1-15 days past due

   3,516    243    —     (2

16-30 days past due

   —      782    —     (6

31-60 days past due

   —      2    —     —   

More than 60 days past due

   —      1,560    —     (33
  

 

 

   

 

 

   

 

 

  

 

 

 
  W4,310,019    123,118    (1,348  (1,870
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(In millions of won)  December 31, 2020 
   Book value   Allowance for impairment 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
  Other
accounts
receivable
 

Current

  W3,516,891    143,674    (1,047  (1,740

1-15 days past due

   1,638    1,023    —     (8

16-30 days past due

   30    522    —     —   

31-60 days past due

   —      782    —     (8

More than 60 days past due

   —      257    —     (22
  

 

 

   

 

 

   

 

 

  

 

 

 
  W3,518,559    146,258    (1,047  (1,778
  

 

 

   

 

 

   

 

 

  

 

 

 

Movements in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the three-month period ended March 31, 2021 and for the year ended December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
   Other
accounts
receivable
 

Balance at the beginning of the period

  W1,047    1,778    460    3,322 

(Reversal of) bad debt expense

   301    92    587    (480

Write-off

   —      —      —      (1,064
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the end of the reporting period

  W1,348    1,870    1,047    1,778 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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5.

Trade Accounts and Notes Receivable, Other Accounts Receivable and Other Current Assets, Continued

 

 (d)

Other current assets as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Advanced payments

  W51,792    34,808 

Prepaid expenses

   111,105    63,972 

Value added tax refundable

   699,111    693,623 

Right to recover returned goods

   10,052    11,063 
  

 

 

   

 

 

 
  W872,060    803,466 
  

 

 

   

 

 

 

 

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6.

Other Financial Assets

Other financial assets as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 

Current assets

    

Financial assets at fair value through profit or loss

    

Derivatives(*)

  W10,605    9,252 

Financial assets at fair value through other comprehensive income

    

Debt instruments

    

Government bonds

  W15    24 

Financial assets carried at amortized cost

    

Deposits

  W4,403    8,696 

Short-term loans

   21,925    28,491 

Lease receivables

   6,184    5,940 
  

 

 

   

 

 

 
  W32,512    43,127 
  

 

 

   

 

 

 
  W43,132    52,403 
  

 

 

   

 

 

 

Non-current assets

    

Financial assets at fair value through profit or loss

    

Equity instruments

  W19,795    13,223 

Convertible securities

   2,422    2,377 

Derivatives(*)

   7,969    111 
  

 

 

   

 

 

 
  W30,186    15,711 
  

 

 

   

 

 

 

Financial assets at fair value through other comprehensive income

    

Debt instruments

    

Government bonds

  W48    48 

Financial assets carried at amortized cost

    

Deposits

  W22,034    22,251 

Long-term loans

   10,643    13,899 

Lease receivables

   15,282    16,322 
  

 

 

   

 

 

 
  W47,959    52,472 
  

 

 

   

 

 

 
  W78,193    68,231 
  

 

 

   

 

 

 

 

(*)

Represents valuation gain from cross currency interest rate swap contracts related to foreign currency denominated borrowings and bonds and others. The contracts are not designated as hedging instruments.

 

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7.

Inventories

Inventories as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 

Finished goods

  W819,313    785,282 

Work-in-process

   860,899    733,071 

Raw materials

   505,382    491,432 

Supplies

   166,095    160,871 
  

 

 

   

 

 

 
  W2,351,689    2,170,656 
  

 

 

   

 

 

 

For the three-month periods ended March 31, 2021 and 2020, the amounts of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:

 

(In millions of won)  2021   2020 

Inventories recognized as cost of sales

  W5,651,296    4,446,096 

Including: inventory write-downs

   173,804    389,679 

Including: usage of inventory write-downs

   (213,932   (472,885

There were no significant reversals of inventory write-downs recognized during the three-month periods ended March 31, 2021 and 2020.

 

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8.

Investments in Equity Accounted Investees

Associates as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)                          

Associates

  

Location

  Fiscal
year end
  

Date of
incorporation

  

Business

  March 31, 2021   December 31, 2020 
  Percentage
of
ownership
  Carrying
amount
   Percentage
of ownership
  Carrying
Amount
 

Paju Electric Glass Co., Ltd.

  

Paju,

South Korea

  December 31  

January

2005

  Manufacture glass for display   40 W43,805    40 W47,262 

WooRee E&L Co., Ltd.

  

Ansan,

South Korea

  December 31  

June

2008

  Manufacture LED back light unit packages   14  10,025    14  10,540 

YAS Co., Ltd.

  

Paju,

South Korea

  December 31  

April

2002

  Develop and manufacture deposition equipment for OLEDs   15  25,096    15  24,493 

AVATEC Co., Ltd.

  

Daegu,

South Korea

  December 31  

August

2000

  Process and sell glass for display   15  20,766    14  20,196 

Arctic Sentinel, Inc.

  Los Angeles, U.S.A.  March 31  

June

2008

  

Develop and manufacture

tablet for kids

   10  —      10  —   

Cynora GmbH

  

Bruchsal,

Germany

  December 31  

March

2003

  Develop organic emitting materials for displays and lighting devices   11  2,609    12  2,609 

 

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8.

Investments in Equity Accounted Investees, Continued

 

(In millions of won)                       

Associates

  

Location

  Fiscal
year end
  

Date of
incorporation

  

Business

  March 31, 2021   December 31, 2020 
  Percentage
of
ownership
  Carrying
Amount
   Percentage of
ownership
  Carrying
amount
 

Material Science Co., Ltd.

  

Seoul,

South Korea

  December 31  

January

2014

  Develop, manufacture, and sell materials for display   10 W3,244    10 W3,791 

Nanosys Inc.

  

Milpitas,

U.S.A.

  December 31  

July

2001

  Develop, manufacture, and sell materials for display   3  5,642    3  5,660 
           

 

 

    

 

 

 
           W111,187    W114,551 
           

 

 

    

 

 

 

Although the Controlling Company’s respective share interests in WooRee E&L Co., Ltd., YAS Co., Ltd., AVATEC Co., Ltd., Arctic Sentinel, Inc., Cynora GmbH, Material Science Co., Ltd. and Nanosys Inc. are below 20%, the Controlling Company is able to exercise significant influence through its right to appoint a director to the board of directors of each investee. Accordingly, the investments in these investees have been accounted for using the equity method.

Dividends income recognized from equity method investees for the three-month periods ended March 31, 2021 and 2020 amounted toW4,068 million andW8,239 million, respectively.

 

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9.

Property, Plant and Equipment

For the three-month periods ended March 31, 2021 and 2020, the Group purchased property, plant and equipment ofW760,741 million andW745,993 million, respectively. The capitalized borrowing costs and the annualized capitalization rate wereW14,686 million and 4.63%, andW72,618 million and 4.18% for the three-month periods ended March 31, 2021 and 2020, respectively. In addition, for the three-month periods ended March 31, 2021 and 2020, the Group recognized the right-of-use asset for use of vehicles, machinery and others ofW10,770 million andW18,863 million, respectively. Also, for the three-month periods ended March 31, 2021 and 2020, the Group disposed of property, plant and equipment with carrying amounts ofW9,590 million andW3,101 million, respectively, and recognizedW1,352 million andW8,372 million, respectively, as gain and loss, on disposal of property, plant and equipment for the three-month period ended March 31, 2021 (gain and loss for the three-month period ended March 31, 2020:W3,579 million andW4,377 million, respectively).

 

10.

Intangible Assets

The Group capitalizes expenditures related to development activities, such as expenditures incurred on designing, manufacturing and testing of products after those related activities meet the capitalization criteria of development costs including technical feasibility, future economic benefits and others. The balances of capitalized development costs as of March 31, 2021 and December 31, 2020 areW301,024 million andW301,953 million, respectively. For the three-month period ended March 31, 2021, the Group recognized an impairment loss amounting toW7,767 million in connection with development projects.

 

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11.

Financial Liabilities

 

 (a)

Financial liabilities as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Current

    

Short-term borrowings

  W742,443    394,906 

Current portion of long-term borrowings and bonds

   2,928,631    2,705,709 

Derivatives(*)

   17,627    58,875 

Lease liabilities

   40,424    35,534 
  

 

 

   

 

 

 
  W3,729,125    3,195,024 
  

 

 

   

 

 

 

Non-current

    

Won denominated borrowings

  W2,443,625    2,435,000 

Foreign currency denominated borrowings

   6,414,540    6,584,658 

Bonds

   1,779,295    1,948,541 

Derivatives(*)

   41,131    108,750 

Lease liabilities

   48,720    47,897 
  

 

 

   

 

 

 
  W10,727,311    11,124,846 
  

 

 

   

 

 

 

 

(*)

Represents cross currency interest rate swap contracts and others entered into by the Group to hedge currency and interest rate risks with respect to foreign currency denominated borrowings and bonds. The contracts are not designated as hedging instruments.

 

 (b)

Short-term borrowings as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won, USD and CNY)         

Lender

  Annual interest rate
as of
March 31, 2021 (%)(*)
   March 31,
2021
   December 31,
2020
 

Standard Chartered Bank Korea Limited

   12ML + 1.68   W340,050    326,400 

Standard Chartered Bank Vietnam and others

   3ML + 0.80~0.90    402,393    68,506 
    

 

 

   

 

 

 

Foreign currency equivalent

    USD655   USD 363 
    

 

 

   

 

 

 
    W742,443    394,906 
    

 

 

   

 

 

 

 

(*)

ML represents Month LIBOR (London Inter-Bank Offered Rates).

 

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11.

Financial Liabilities, Continued

 

 (c)

Won denominated long-term borrowings as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)           

Lender

  

Annual interest rate

as of

March 31, 2021 (%)(*)

  March 31,
2021
   December 31, 2020 

Woori Bank

  2.75  W—      60 

Korea Development Bank and others

  CD rate (91days) + 1.00~1.60,    
  2.21~3.40   3,063,125    3,272,500 

Less current portion of long-term borrowings

     (619,500   (837,560
    

 

 

   

 

 

 
    W2,443,625    2,435,000 
    

 

 

   

 

 

 

 

(*)

CD represents certificate of deposit.

 

 (d)

Foreign currency denominated long-term borrowings as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won, USD and CNY) 

Lender

  Annual interest rate
as of
March 31, 2021 (%)
  March 31,
2021
  December 31,
2020
 

The Export-Import Bank of Korea and others

   3ML+0.75~2.40   
   6ML+1.25~1.35  W1,751,257   1,680,960 

China Construction Bank and others

   USD : 3ML+0.65~1.43   
   CNY : LPR(5Y)+0.44,   
   

LPR(1Y)-0.20~+0.30,

4.20

 

 

  6,024,955   5,948,472 
   

 

 

  

 

 

 

Foreign currency equivalent

   USD 2,675  USD 2,742 
   CNY 27,524  CNY 27,825 

Less current portion of long-term borrowings

    (1,361,672  (1,044,774
   

 

 

  

 

 

 
   W6,414,540   6,584,658 
   

 

 

  

 

 

 

 

(*)

LPR represents Loan Prime Rate of People’s Bank of China.

 

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11.

Financial Liabilities, Continued

 

 (e)

Details of bonds issued and outstanding as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won and USD)               
   Maturity   Annual interest rate
as of

March 31, 2021 (%)
   March 31,
2021
  December 31,
2020
 

Won denominated bonds at amortized cost (*1)

       

Publicly issued bonds

   

May 2021 ~

February 2024

 

 

   1.95~2.95   W1,120,000   1,320,000 

Privately issued bonds

   

May 2022 ~

May 2033

 

 

   3.25~4.25    160,000   160,000 

Less discount on bonds

       (1,477  (1,798

Less current portion

       (609,528  (499,796
      

 

 

  

 

 

 
      W668,995   978,406 
      

 

 

  

 

 

 

Foreign currency denominated bonds at amortized cost (*2)

       

Publicly issued bonds

   November 2021    3.88   W340,050   326,400 

Privately issued bonds

   April 2023    3ML+1.47    113,350   108,800 

Foreign currency equivalent

      USD400  USD400 

Less discount on bonds

       (2,437  (3,161

Less current portion

       (337,931  (323,579
      

 

 

  

 

 

 
      W113,032   108,460 

Financial liabilities at fair value through profit or loss

       

Foreign currency denominated convertible bonds

   August 2024    1.50   W997,268   861,675 

Foreign currency equivalent

      USD880  USD792 
      

 

 

  

 

 

 
      W1,779,295   1,948,541 
      

 

 

  

 

 

 

 

(*1)

Principal of the won denominated bonds is to be repaid at maturity and interests are paid quarterly.

(*2)

Principal of the foreign currency denominated bonds is to be repaid at maturity and interests are paid quarterly or semi-annually.

 

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11.

Financial Liabilities, Continued

 

 (f)

Details of the convertible bonds issued by the Controlling Company and outstanding as of March 31, 2021 are as follows:

 

(In won, USD)
     

Description

Type   Unsecured foreign currency denominated convertible bonds
Issuance amount   USD 687,800,000
Annual interest rate (%)   1.50
Issuance date   August 22, 2019
Maturity date   August 22, 2024
Interest payment   Payable semi-annually in arrear until maturity date
Principal redemption   

1.  Redemption at maturity:

Redeemed on the maturity date, at their outstanding principal amount, which has not been early redeemed or converted.

 

2.  Early redemption:

The Controlling Company has a right to redeem before maturity (call option) and the bondholders have a right to require the Controlling Company to redeem before maturity (put option). At exercise of each option, the outstanding principal amount together with accrued but unpaid interest are to be redeemed.

Conversion price  W 19,845 per common share (subject to adjustment based on diluted effects of certain events)
Conversion period   From August 23, 2020 to August 12, 2024
Redemption at the option of the issuer (Call option)   

•  On or at any time after 3 years from the issuance, if the closing price of the shares for any 20 trading days out of the 30 consecutive trading days is at least 130% of the applicable conversion price

•  The aggregate principal amount of the convertible bonds outstanding is less than 10% of the aggregate principal amount originally issued, or

•  In the event of certain changes in laws and other directives resulting in additional taxes for the holders

Redemption at the option of the bondholders (Put option)   On the third anniversary from the issuance date

The Controlling Company designated the convertible bonds as financial liabilities at fair value through profit of loss and recognized the change in fair value in profit or loss. The Controlling Company measures the convertible bond at fair value using the market price of convertible bonds disclosed on Bloomberg. The number of convertible shares as of March 31, 2021 is as follows:

 

(In won and No. of shares)    
   March 31, 2021 

Aggregate outstanding amount of the convertible bonds

  W813,426,670,000 

Conversion price

  W19,845 

Number of common shares to be issued at conversion

   40,988,998 

 

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12.

Employee Benefits

The Controlling Company and certain subsidiaries’ defined benefit plans provide a lump-sum payment to an employee based on final salary rates and length of service at the time the employee leaves the Controlling Company or certain subsidiaries.

 

 (a)

Net defined benefit liabilities (defined benefit assets) recognized as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Present value of partially funded defined benefit obligations

  W1,421,888    1,397,542 

Fair value of plan assets

   (1,603,833   (1,621,041
  

 

 

   

 

 

 
  W(181,945   (223,499
  

 

 

   

 

 

 

Defined benefit liabilities, net

  W1,479    1,498 

Defined benefit assets, net

  W183,424    224,997 

 

 (b)

Expenses related to defined benefit plans recognized in profit or loss for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Current service cost

  W37,353    40,999 

Net interest cost

   (1,474   (776
  

 

 

   

 

 

 
  W35,879    40,223 
  

 

 

   

 

 

 

 

 (c)

Plan assets as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Guaranteed deposits in banks

  W1,603,833    1,621,041 

As of March 31, 2021, the Controlling Company maintains the plan assets primarily with Mirae Asset Daewoo Co., Ltd., KB Insurance Co., Ltd. and others.

 

 (d)

Remeasurements of the net defined benefit liabilities (assets) included in other comprehensive income (loss) for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Remeasurements of net defined benefit liabilities

  W(4,594   (2,574

Tax effect

   1,173    661 
  

 

 

   

 

 

 

Remeasurements of net defined benefit liabilities, net of income tax

  W(3,421   (1,913
  

 

 

   

 

 

 

 

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13.

Provisions and Other Liabilities

Changes in provisions for the three-month period ended March 31, 2021 are as follows:

 

(In millions of won)            
   Warranties (*)   Others   Total 

Balance at January 1, 2021

  W272,195    14,906    287,101 

Additions (reversal)

   52,263    (1,677   50,586 

Usage

   (50,629   —      (50,629
  

 

 

   

 

 

   

 

 

 

Balance at March 31, 2021

  W273,829    13,229    287,058 
  

 

 

   

 

 

   

 

 

 

Current

  W179,837    13,229    193,066 

Non-current

  W93,992    —      93,992 

 

(*)

Product warranties on defective products are normally applicable for warranty periods from the date of customer’s purchase. The provision is calculated by using historical and anticipated rates of warranty claims and costs per claim to satisfy the Group’s warranty obligation.

 

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14.

Contingencies and Commitments

 

 (a)

Legal Proceedings

Anti-trust litigations

Some individual claimants filed “follow-on” damages claims against the Group and other TFT-LCD manufacturers alleging violations of EU competition law. While the Group continues its vigorous defense of the various pending proceedings described above, as of March 31, 2021, the Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the proceedings.

Solas OLED Ltd. Litigations

Between April 2019 and September 2020, Solas OLED Ltd. filed altogether four patent infringement actions, with two in the United States District Court for the Western District of Texas, one in the Mannheim District Court in Germany and one in the Beijing Intellectual Property Court in China, against the Controlling Company and television manufacturers. The actions in the United States and Germany also included the Controlling Company’s subsidiaries, LG Display America, Inc. and LG Display Germany GmbH, as defendants, respectively. In December 2020, the parties reached an agreement to amicably settle all claims and all patent infringement actions have been formally dismissed during the three-month period ended March 31, 2021.

Others

The Group is involved in various lawsuits and disputes in addition to the pending proceedings described above. The Group cannot reliably estimate the timing and amount of outflows of resources embodying economic benefits relating to the disputes.

 

 (b)

Commitments

Factoring and securitization of accounts receivable

The Controlling Company has agreements with Korea Development Bank and several other banks for accounts receivable sales negotiating facilities of up to an aggregate of USD 1,065 million (W1,207,178 million) in connection with the Controlling Company’s export sales transactions with its subsidiaries. As of March 31, 2021, there are no short-term borrowings that are outstanding but past due in connection with these agreements. In connection with all of the contracts in this paragraph, the Controlling Company has sold its accounts receivable with recourse.

 

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14.

Contingencies and Commitments, Continued

 

The Controlling Company and overseas subsidiaries entered into agreements with financial institutions for accounts receivables sales negotiating facilities. The respective maximum amount of accounts receivables that could be sold under the agreements and the amount of sold but not yet due accounts receivables by contract are as follows:

 

(In millions of USD and KRW)                   

Classification

  

Financial institutions

  Credit limit   Not yet due 
      Contractual
amount
   KRW
equivalent
   Contractual
amount
   KRW
equivalent
 

Controlling

  

Shinhan Bank

  KRW90,000    90,000    —      —   

Company

    USD60    68,010    —      —   
  

Sumitomo Mitsui Banking Corporation

  USD20    22,670    —      —   
  

MUFG Bank

  KRW17,000    17,000    —      —   
    USD160    181,360    —      —   
  

BNP Paribas

  USD125    141,688    —      —   
  

ING Bank

  USD90    102,015   USD15    17,003 
    

 

 

   

 

 

   

 

 

   

 

 

 
    USD455     USD15   
    KRW 107,000    622,743    —      17,003 
    

 

 

   

 

 

   

 

 

   

 

 

 

Subsidiaries

          

LG Display Singapore Pte. Ltd.

  

Standard Chartered Bank

  USD290    328,715    —      —   
    

 

 

   

 

 

   

 

 

   

 

 

 
  

BNP Paribas

  USD15    17,003    —      —   

LG Display Taiwan Co., Ltd.

  

Australia and New Zealand Banking Group Ltd.

  USD70    79,345    —      —   
  

KGI Bank Co., Ltd.

  USD30    34,005    —      —   
    

 

 

   

 

 

   

 

 

   

 

 

 
  

BNP Paribas

  USD75    85,012   USD75    85,012 

LG Display Germany GmbH

  

Commerzbank AG

  USD2    2,632    —      —   
  

DZ Bank AG

  USD8    8,501   USD4    4,106 
    

 

 

   

 

 

   

 

 

   

 

 

 

LG Display America, Inc.

  

Hong Kong & Shanghai Banking Corp.

  USD400    453,400    —      —   
  

Standard Chartered Bank

  USD600    680,100   USD 256    290,630 
  

Sumitomo Mitsui

Banking Corporation

  USD150    170,025   USD20    22,671 
    

 

 

   

 

 

   

 

 

   

 

 

 

LG Display Japan Co., Ltd.

  

Chelsea Capital Corporation Tokyo Branch

  USD120    136,020   USD30    34,025 
    

 

 

   

 

 

   

 

 

   

 

 

 

LG Display Guangzhou Trading Co., Ltd.

  

KEB Hana Bank (China) Company Limited

  USD30    34,005    —      —   
    

 

 

   

 

 

   

 

 

   

 

 

 
    USD1,790    2,028,763   USD385    436,444 
    

 

 

   

 

 

   

 

 

   

 

 

 
    USD2,245     USD400   
    KRW107,000    2,651,506    —      453,447 
    

 

 

   

 

 

   

 

 

   

 

 

 

In connection with all of the contracts in the above table, the Group has sold its accounts receivable without recourse.

 

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14.

Contingencies and Commitments, Continued

 

Letters of credit

As of March 31, 2021, the Group entered into agreements with financial institutions in relation to opening of letters of credit and the respective credit limits under the agreements are as follows:

 

(In millions of won and USD)        
   Contractual amount   KRW equivalent 

KEB Hana Bank

   USD 150   W170,025 

Sumitomo Mitsui Banking Corporation

   USD 50    56,675 

Industrial Bank of Korea

   USD 100    113,350 

Industrial and Commercial Bank of China

   USD 200    226,700 

Shinhan Bank

   USD 200    226,700 

KB Kookmin Bank

   USD 100    113,350 

MUFG Bank

   USD 100    113,350 

The Export–Import Bank of Korea

   USD 200    226,700 

Standard Chartered Bank

   USD 300    340,050 
  

 

 

   

 

 

 
  USD1,400   W1,586,900 
  

 

 

   

 

 

 

Payment guarantees

The Controlling Company obtained payment guarantees amounting to USD 200 million (W226,700 million) from KB Kookmin Bank and others for advances received in connection with the long-term supply agreements. The Controlling Company also obtained payment guarantees amounting to USD 306 million (W346,638 million) from Korea Development Bank for foreign currency denominated bonds and USD 2 million (W2,267 million) from Shinhan Bank for value added tax payments in Poland.

LG Display (China) Co., Ltd. and other subsidiaries are provided with payment guarantees from the China Construction Bank and other various banks amounting to CNY 549 million (W94,534 million), JPY 900 million (W9,246 million), EUR 2.5 million (W3,321 million), VND 49,694 million (W2,440 million), and USD 0.5 million (W567 million), respectively, for their local tax payments and utility payments.

License agreements

As of March 31, 2021, the Group has technical license agreements with Hitachi Display, Ltd. and others in relation to its LCD business and patent license agreement with Universal Display Corporation in relation to its OLED business. Also, the Group has a trademark license agreement with LG Corp. and other intellectual property license agreements with various companies as of March 31, 2021.

Long-term supply agreement

As of March 31, 2021, in connection with long-term supply agreements with customers, the Controlling Company recognized USD 100 million (W113,350 million) in advances received. The advances received are offset against outstanding accounts receivable balances after a given period of time, as well as those arising from the supply of products thereafter. The Controlling Company received payment guarantees amounting to USD 200 million (W226,700 million) from KB Kookmin Bank and other various banks relating to advances received (see note 14(b) payment guarantees).

 

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14.

Contingencies and Commitments, Continued

 

Pledged Assets

In connection with the borrowings amounting to CNY 19,320 million (W3,329,802 million) from China Construction Bank and others, as of March 31, 2021, the Group is providing its property, plant and equipment with carrying amount ofW663,630 million as pledged assets.

 

15.

Share Capital and Reserves

 

 (a)

Share capital

The Controlling Company is authorized to issue 500,000,000 shares of capital stock (par valueW5,000) and, as of March 31, 2021 and December 31, 2020, the number of issued common shares is 357,815,700. There have been no changes in the capital stock from January 1, 2020 to March 31, 2021.

 

 (b)

Reserves

Reserves consist mainly of the following:

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

Other comprehensive income (loss) from associates

The other comprehensive income (loss) from associates comprises the amount related to change in equity of equity accounted investees.

Reserves as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won) 
   March 31, 2021   December 31, 2020 

Foreign currency translation differences for foreign operations

  W58,263    (138,667

Other comprehensive loss from associates

   (25,281   (24,779
  

 

 

   

 

 

 
  W32,982    (163,446
  

 

 

   

 

 

 

 

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16.

Revenue

Details of revenue for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Sales of goods

  W6,871,565    4,712,798 

Royalties

   4,559    4,717 

Others

   6,637    6,734 
  

 

 

   

 

 

 
  W6,882,761    4,724,249 
  

 

 

   

 

 

 

 

17.

Geographic and Other Information

The following is a summary of the Group’s revenue by region based on the location of the customers for the three-month periods ended March 31, 2021 and 2020.

 

 (a)

Revenue by geography

 

(In millions of won)        

Region

  2021   2020 

Domestic

  W149,778    272,051 

Foreign

    

China

   4,573,480    3,043,061 

Asia (excluding China)

   748,998    587,685 

United States

   720,494    346,976 

Europe (excluding Poland)685,232

   293,905    303,648 

Poland

   396,106    170,828 
  

 

 

   

 

 

 
  W6,732,983    4,452,198 
  

 

 

   

 

 

 
  W6,882,761    4,724,249 
  

 

 

   

 

 

 

Sales to Company A and Company B amount toW2,864,642 million andW1,470,562 million, respectively, for the three-month period ended March 31, 2021 (the three-month period ended March 31, 2020:W1,647,686 million andW931,917 million, respectively). The Group’s top ten end-brand customers together accounted for 86% of sales for the three-month period ended March 31, 2021 (the three-month period ended March 31, 2020: 83%).

 

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17.

Geographic and Other Information, Continued

 

 (b)

Non-current assets by geography

 

(In millions of won) 
   March 31, 2021   December 31, 2020 
  Property, plant
and equipment
   Intangible
assets
   Property, plant
and equipment
   Intangible
assets
 

Domestic

  W11,501,158    1,061,910    11,736,856    874,849 

Foreign

        

China

   6,642,952    91,847    6,731,052    39,396 

Vietnam

   2,044,221    7,326    1,663,807    7,688 

Others

   15,354    97,921    15,336    98,155 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W8,702,527    197,094    8,410,195    145,239 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W20,203,685    1,259,004    20,147,051    1,020,088 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 (c)

Revenue by product and services

 

(In millions of won)        
   March 31, 2021   March 31, 2020 

TV

  W2,149,168    1,484,054 

IT products(*)

   2,717,303    1,746,758 

Mobile and others

   2,016,290    1,493,437 
  

 

 

   

 

 

 
  W6,882,761    4,724,249 
  

 

 

   

 

 

 

 

(*)

IT products consist of Monitor, Notebook and Tablet products and revenue by products and services for the three-month period ended March 31, 2020 are reclassified according to classification for the three-month period ended March 31, 2021.

 

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18.

The Nature of Expenses and Others

The classification of expenses by nature for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Changes in inventories

  W(181,033   (258,936

Purchases of raw materials, merchandise and others

   3,273,445    2,671,442 

Depreciation and amortization

   1,096,999    992,442 

Outsourcing

   305,789    166,069 

Labor

   832,922    681,399 

Supplies and others

   255,942    166,749 

Utility

   236,299    209,831 

Fees and commissions

   177,554    151,029 

Shipping

   70,665    42,742 

Advertising

   39,987    42,538 

Warranty

   52,263    58,646 

Travel

   11,553    13,071 

Taxes and dues

   39,549    27,360 

Others

   167,642    145,609 
  

 

 

   

 

 

 
  W6,379,576    5,109,991 
  

 

 

   

 

 

 

Total expenses consist of cost of sales, selling, administrative, research and development expenses and other non-operating expenses, excluding foreign exchange differences.

 

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19.

Selling and Administrative Expenses

Details of selling and administrative expenses for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Salaries

  W87,143    72,472 

Expenses related to defined benefit plans

   6,018    6,755 

Other employee benefits

   18,479    17,220 

Shipping

   60,427    33,690 

Fees and commissions

   56,180    52,193 

Depreciation

   63,079    55,710 

Taxes and dues

   23,180    12,896 

Advertising

   39,987    42,538 

Warranty

   52,263    58,646 

Insurance

   4,588    2,801 

Travel

   1,156    3,385 

Training

   2,171    900 

Others

   17,990    13,937 
  

 

 

   

 

 

 
  W432,661    373,143 
  

 

 

   

 

 

 

 

20.

Personnel Expenses

Details of personnel expenses for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)    
   2021   2020 

Salaries and wages

  W690,713    554,897 

Other employee benefits

   125,500    106,243 

Contributions to National Pension plan

   16,542    17,027 

Expenses related to defined benefit plans and defined contribution plans(*)

   36,093    40,276 
  

 

 

   

 

 

 
  W868,848    718,443 
  

 

 

   

 

 

 

 

(*)

Expenses recognized in relation to employee defined contribution plan for the three-month periods ended March 31, 2021 and 2020 amount toW214 million andW53 million, respectively.

 

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21.

Other Non-operating Income and Other Non-operating Expenses

 

 (a)

Details of other non-operating income for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)    
   2021   2020 

Foreign currency gain

  W472,459    527,740 

Gain on disposal of property, plant and equipment

   1,352    3,579 

Reversal of impairment loss on property, plant and equipment

   532    —   

Reversal of impairment loss on intangible assets

   1,250    550 

Rental income

   566    1,033 

Others

   3,212    9,131 
  

 

 

   

 

 

 
  W479,371    542,033 
  

 

 

   

 

 

 

 

 (b)

Details of other non-operating expenses for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)    
   2021   2020 

Foreign currency loss

  W453,794    483,259 

Other bad debt expense

   85    202 

Loss on disposal of property, plant and equipment

   8,372    4,377 

Impairment loss on property, plant and equipment

   1,727    5,912 

Impairment loss on intangible assets

   7,767    4,347 

Donations

   108    73 

Others

   1,785    8,911 
  

 

 

   

 

 

 
  W473,638    507,081 
  

 

 

   

 

 

 

 

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22.

Finance Income and Finance Costs

Finance income and costs recognized in profit or loss for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Finance income

    

Interest income

  W20,431    20,196 

Foreign currency gain

   41,857    74,087 

Gain on transaction of derivatives

   —      21,615 

Gain on valuation of derivatives

   149,341    85,563 

Gain on valuation of financial assets at fair value through profit or loss

   1,254    —   

Gain on valuation of financial liabilities at fair value through profit or loss

   —      131,735 
  

 

 

   

 

 

 
  W212,883    333,196 
  

 

 

   

 

 

 

Finance costs

    

Interest expense

  W114,695    72,908 

Foreign currency loss

   152,828    215,136 

Loss on sale of trade accounts and notes receivable

   665    2,062 

Loss on valuation of financial assets at fair value through profit or loss

   —      1,252 

Loss on valuation of financial liabilities at fair value through profit or loss

   99,568    —   

Loss on transaction of derivatives

   20,435    —   

Loss on valuation of derivatives

   31,263    11,905 

Others

   185    572 
  

 

 

   

 

 

 
  W419,639    303,835 
  

 

 

   

 

 

 

 

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23.

Income Tax Expense (Benefit)

 

 (a)

Details of income tax expense (benefit) for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Current tax expense (benefit)

  W45,730    55,718 

Deferred tax expense (benefit)

   11,752    (151,694
  

 

 

   

 

 

 

Income tax expense (benefit)

  W57,482    (95,976
  

 

 

   

 

 

 

 

 (b)

Deferred Tax Assets and Liabilities

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the deferred tax assets at the reporting date will be realized with the Group’s estimated future taxable income. The Group’s deferred tax assets and liabilities may differ from actual refundable or payable amount.

Deferred tax assets and liabilities as of March 31, 2021 and December 31, 2020 are attributable to the following:

 

(In millions of won)  Assets   Liabilities  Total 
   March,
31, 2021
   December,
31, 2020
   March,
31, 2021
  December,
31, 2020
  March,
31, 2021
  December,
31, 2020
 

Other accounts receivable, net

  W—      —      (19  (13  (19  (13

Inventories, net

   61,657    60,539    —     —     61,657   60,539 

Defined benefit liabilities, net

   —      —      (32,642  (35,617  (32,642  (35,617

Investments in subsidiaries and associates

   —      —      (82,564  (79,301  (82,564  (79,301

Accrued expenses

   112,967    123,106    —     —     112,967   123,106 

Property, plant and equipment

   678,797    669,449    (54,255  (63,971  624,542   605,478 

Intangible assets

   17,266    19,469    (21,042  (8,000  (3,776  11,469 

Provisions

   65,732    63,943    —     —     65,732   63,943 

Other temporary differences

   196,354    173,166    (3,695  (3,601  192,659   169,565 

Tax loss carryforwards

   900,749    953,209    —     —     900,749   953,209 

Tax credit carryforwards

   414,263    391,769    —     —     414,263   391,769 
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Deferred tax assets (liabilities)

  W2,447,785    2,454,650    (194,217  (190,503  2,253,568   2,264,147 
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

 

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24.

Earnings (Loss) Per Share Attributable to Owners of the Controlling Company

 

 (a)

Basic earnings (loss) per share for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In won and No. of shares)  2021   2020 

Profit (loss) attributable to owners of the Controlling Company

  W228,011,521,248    (198,990,652,665

Weighted-average number of common stocks outstanding

   357,815,700    357,815,700 
  

 

 

   

 

 

 

Basic earnings (loss) per share

  W637    (556
  

 

 

   

 

 

 

For the three-month periods ended March 31, 2021 and 2020, there were no events or transactions that resulted in changes in the number of common stocks used for calculating earnings (loss) per share.

 

 (b)

Diluted earnings (loss) per share is not different from basic earnings (loss) per share as there is no dilution effects of potential common stocks for the three-month period ended March 31, 2021. As of March 31, 2021, 40,988,998 shares of potential common stock were excluded from the calculation of weighted-average number of common stocks due to antidilution.

 

25.

Financial Risk Management

The Group is exposed to credit risk, liquidity risk and market risks. The Group identifies and analyzes such risks, and controls are implemented under a risk management system to monitor and manage these risks at below an acceptable level.

 

 (a)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(i) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the Controlling Company, Korean won (KRW). The currencies in which these transactions primarily are denominated are USD, CNY, JPY, etc.

Interest on borrowings is accrued in the currency of the borrowing. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group, primarily KRW, USD and CNY.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group adopts policies to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. Meanwhile, the Group entered into currency interest rate swap contracts to hedge currency risk with respect to foreign currency borrowings and bonds.

 

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25.

Financial Risk Management, Continued

 

 i)

Exposure to currency risk

The Group’s exposure to foreign currency risk based on notional amounts as of March 31, 2021 and December 31, 2020 is as follows:

 

(In millions)  March 31, 2021 
   USD  JPY  CNY  TWD  EUR  PLN   VND  SGD 

Cash and cash equivalents

   1,389   1,193   11,877   34   12   13    409,136   —   

Deposits in banks

   —     —     2,140   —     —     —      —     —   

Trade accounts and notes receivable

   3,643   6   631   —     —     —      —     —   

Non-trade receivables

   40   152   198   4   5   —      12,069   —   

Other assets denominated in foreign currencies

   30   12,526   9,477   626   6   —      4,951   —   

Trade accounts and notes payable

   (1,915  (11,441  (2,257  —     —     —      (342,925  —   

Other accounts payable

   (624  (5,975  (1,786  (3  (3  —      (1,146,858  (1

Financial liabilities

   (4,608  —     (27,524  —     —     —      —     —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 
   (2,045  (3,539  (7,244  661   20   13    (1,063,627  (1
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cross currency interest rate swap contracts

   1,925   —     —     —     —     —      —     —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net exposure

   (120  (3,539  (7,244  661   20   13    (1,063,627  (1
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

 

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25.

Financial Risk Management, Continued

 

(In millions)  December 31, 2020 
   USD  JPY  CNY  TWD  EUR  PLN   VND  GBP 

Cash and cash equivalents

   1,795   164   13,382   34   7   4    33,843   —   

Trade accounts and notes receivable

   3,093   13   585   —     —     —      —     —   

Non-trade receivables

   52   93   222   3   6   —      9,773   —   

Other assets denominated in foreign currencies

   —     208   51   6   1   —      4,586   —   

Trade accounts and notes payable

   (1,948  (9,831  (2,037  —     —     —      (357,149  —   

Other accounts payable

   (268  (6,239  (2,018  (4  (8  —      (997,204  (2

Financial liabilities

   (4,294  —     (27,825  —     —     —      —     —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 
   (1,570  (15,592  (17,640  39   6   4    (1,306,151  (2
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cross currency interest rate swap contracts

   2,225   —     —     —     —     —      —     —   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net exposure

   655   (15,592  (17,640  39   6   4    (1,306,151  (2
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Average exchange rates applied for the three-month periods ended March 31, 2021 and 2020 and the exchange rates at March 31, 2021 and December 31, 2020 are as follows:

 

(In won)  Average rate   Reporting date spot rate 
   2021   2020   March 31,
2021
   December 31,
2020
 

USD

  W1,113.19    1,192.12    1,133.50    1,088.00 

JPY

   10.51    10.94    10.27    10.54 

CNY

   171.87    170.69    172.35    166.96 

TWD

   39.68    39.62    39.83    38.67 

EUR

   1,342.99    1,314.91    1,328.29    1,338.24 

PLN

   295.53    304.55    285.19    292.02 

VND

   0.0483    0.0513    0.0491    0.0471 

GBP

   1,535.42    1,525.45    1,557.66    1,482.40 

SGD

   835.86    861.06    840.97    822.22 

 

39


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25.

Financial Risk Management, Continued

 

 ii)

Sensitivity analysis

A weaker won, as indicated below, against the following currencies which comprise the Group’s assets or liabilities denominated in a foreign currency as of March 31, 2021 and December 31, 2020, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considers to be reasonably possible as of the end of reporting period. The analysis assumes that all other variables, in particular interest rates, would remain constant. The changes in equity and profit or loss would have been as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 
   Equity   Profit or loss   Equity  Profit or loss 

USD (5 percent weakening)

  W(25,095   53,428    12,438   73,186 

JPY (5 percent weakening)

   (45   (5,171   (6,250  (5,194

CNY (5 percent weakening)

   (62,600   497    (147,294  93 

TWD (5 percent weakening)

   1,315    —      75   —   

EUR (5 percent weakening)

   1,131    451    250   377 

PLN (5 percent weakening)

   141    141    43   43 

VND (5 percent weakening)

   (1,945   (1,945   (2,230  (2,230

GBP (5 percent weakening)

   —      —      (107  (107

SGD (5 percent weakening)

   (5   (5   —     —   

A stronger won against the above currencies as of March 31, 2021 and December 31, 2020 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

 

 (ii)

Interest rate risk

Interest rate risk arises principally from the Group’s variable interest-bearing bonds and borrowings. The Group establishes and applies its policy to reduce uncertainty arising from fluctuations in the interest rate and to minimize finance cost and manages interest rate risk by monitoring of trends of fluctuations in interest rates and establishing plan for countermeasures. Meanwhile, the Group entered into cross currency interest rate swap contracts amounting to USD 1,625 million (W1,841,938 million) and interest rate swap contracts amounting toW170,000 million in notional amount to hedge interest rate risk with respect to variable interest bearing borrowings.

 

 i)

Profile

The interest rate profile of the Group’s interest-bearing financial instruments as of March 31, 2021 and December 31, 2020 is as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Fixed rate instruments

    

Financial assets

  W4,351,729    4,296,823 

Financial liabilities

   (5,632,727   (5,875,729
  

 

 

   

 

 

 
  W(1,280,998   (1,578,906
  

 

 

   

 

 

 

Variable rate instruments

    

Financial liabilities

  W(8,675,807   (8,193,085

 

40


Table of Contents
25.

Financial Risk Management, Continued

 

 ii)

Equity and profit or loss sensitivity analysis for variable rate instruments

As of March 31, 2021 and December 31, 2020, a change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below for the respective following 12-month periods. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

 

(In millions of won)  Equity   Profit or loss 
   1%p
increase
   1%p
decrease
   1%p
increase
  1%p
decrease
 

March 31, 2021

       

Variable rate instruments(*)

  W(49,628   49,628    (49,628  49,628 

December 31, 2020

       

Variable rate instruments(*)

  W(45,352   45,352    (45,352  45,352 

 

(*)

Financial instruments related to non-hedging interest rate swap are excluded.

 

 (b)

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

The Group’s exposure to credit risk of trade and other receivables is influenced mainly by the individual characteristics of each customer. However, management believes that the default risk of the country in which each customer operates, do not have a significant influence on credit risk since the majority of the customers are global electronic appliance manufacturers operating in global markets.

The Group establishes credit limits for each customer and each new customer is analyzed quantitatively and qualitatively before determining whether to utilize third party guarantees, insurance or factoring as appropriate.

In relation to the impairment of financial assets subsequent to initial recognition, the Group recognizes the changes in expected credit loss (“ECL”) in profit or loss at each reporting date.

 

41


Table of Contents
25.

Financial Risk Management, Continued

 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as of March 31, 2021 and December 31, 2020 is as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Financial assets carried at amortized cost

    

Cash equivalents

  W3,902,799    4,217,943 

Deposits in banks

   447,645    78,663 

Trade accounts and notes receivable, net

   4,308,671    3,517,512 

Non-trade receivables

   114,509    140,616 

Accrued income

   6,739    3,864 

Deposits

   26,437    30,947 

Short-term loans

   21,925    28,491 

Long-term loans

   10,643    13,899 

Lease receivables

   21,466    22,262 
  

 

 

   

 

 

 
  W8,860,834    8,054,197 
  

 

 

   

 

 

 

Financial assets at fair value through profit or loss

    

Convertible securities

  W2,422    2,377 

Derivatives

   18,574    9,363 
  

 

 

   

 

 

 
  W20,996    11,740 
  

 

 

   

 

 

 

Financial assets at fair value through other comprehensive income

    

Debt instruments

  W63    72 
  

 

 

   

 

 

 
  W8,881,893    8,066,009 
  

 

 

   

 

 

 

Trade accounts and notes receivable are insured in order for the Group to manage credit risk if they do not meet the Group’s internal credit ratings. Uninsured trade accounts and notes receivable are managed by continuous monitoring of internal credit rating standards established by the Group and seeking insurance coverage, if necessary.

 

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25.

Financial Risk Management, Continued

 

 (c)

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group has historically been able to satisfy its cash requirements from cash flows from operations and debt and equity financing. To the extent that the Group does not generate sufficient cash flows from operations to meet its capital requirements, the Group may rely on financing activities, such as external long-term borrowings and offerings of debt instruments, equity-linked and other debt instruments. In addition, the Group maintains a line of credit with various banks.

The following are the contractual maturities of financial liabilities, including estimated interest payments, as of March 31, 2021.

 

(In millions of won)      Contractual cash flows in   

 

 
   Carrying
amount
   Total   6 months
or less
   6-12
months
   1-2 years   2-5 years   More than
5 years
 

Non-derivative financial liabilities

              

Borrowings

  W11,581,780    12,422,552    1,030,025    2,026,959    3,567,378    5,332,012    466,178 

Bonds

   2,726,754    2,621,825    126,063    874,619    1,281,954    247,646    91,543 

Trade accounts and notes payable

   3,974,921    3,974,921    3,479,935    494,986    —      —      —   

Other accounts payable

   1,766,521    1,766,521    1,719,339    47,182    —      —      —   

Other accounts payable (enterprise procurement
cards)(*)

   1,349,742    1,349,742    521,503    828,239    —      —      —   

Long-term other accounts payable

   230,292    235,910    —      —      62,910    173,000    —   

Security deposits received

   12,236    12,236    260    3,642    8,334    —      —   

Lease liabilities

   89,144    98,456    28,541    17,045    23,236    21,163    8,471 

Derivative financial liabilities

              

Derivatives

   58,758    45,969    7,596    7,312    14,568    16,493    —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W21,790,148    22,528,132    6,913,262    4,299,984    4,958,380    5,790,314    566,192 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

43


Table of Contents
25.

Financial Risk Management, Continued

 

 (*)

Represents liabilities payable to credit card companies for utility expenses and others paid using enterprise procurement cards. The Group presented the payable to credit card companies as other accounts payable and disclosed related cash flows as operating activities since the Group is using the enterprise procurement cards through agreements with suppliers for transactions arising from purchasing of goods and services, the payment term is within a year from the purchase, as part of the normal operating cycle, and no security is provided. Change in liabilities related to procurement cards for the three-month period ended March 31, 2021 is as follows:

 

(In millions of won)    
   January 1, 2021   Change
(Cash flows from
operation activities)
   March 31, 2021 

Other accounts payable
(enterprise procurement cards)

  W1,078,150    271,592    1,349,742 

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

 

 (d)

Capital management

Management’s policy is to maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Liabilities to equity ratio, net borrowings to equity ratio and other financial ratios are used by management to achieve an optimal capital structure. Management also monitors the return on capital as well as the level of dividends to ordinary shareholders.

 

(In millions of won)       
   March 31, 2021  December 31, 2020 

Total liabilities

  W23,158,450   22,334,584 

Total equity

   13,239,101   12,736,939 

Cash and deposits in banks (*1)

   4,351,666   4,296,751 

Borrowings (including bonds)

   14,308,534   14,068,814 

Total liabilities to equity ratio

   175  175

Net borrowings to equity ratio (*2)

   75  77

 

(*1)

Cash and deposits in banks consist of cash and cash equivalents and current deposits in banks.

(*2)

Net borrowings to equity ratio is calculated by dividing total borrowings (including bonds and excluding lease liabilities) less cash and current deposits in banks by total equity.

 

44


Table of Contents
25.

Financial Risk Management, Continued

 

 (e)

Determination of fair value

 

 (i)

Measurement of fair value

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

 

 i)

Current assets and liabilities

The carrying amounts approximate their fair value because of the short maturity of these instruments.

 

 ii)

Trade receivables and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. The carrying amounts of current receivables approximate their fair value.

 

 iii)

Investments in equity and debt securities

The fair value of marketable financial assets at FVTPL and FVOCI is determined by reference to their quoted closing bid price at the reporting date. The fair value of non-marketable instruments is determined using the results of fair value assessment performed by external valuation institutions and others.

 

 iv)

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, except for the liabilities at FVTPL, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

 

45


Table of Contents
25.

Financial Risk Management, Continued

 

 (ii)

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed consolidated interim statements of financial position as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)           
   March 31, 2021  December 31, 2020 
   Carrying
amounts
   Fair values  Carrying
amounts
   Fair values 

Financial assets carried at amortized cost

       

Cash and cash equivalents

  W3,904,032    (*)   4,218,099    (*) 

Deposits in banks

   447,645    (*)   78,663    (*) 

Trade accounts and notes receivable

   4,308,671    (*)   3,517,512    (*) 

Non-trade receivables

   114,509    (*)   140,616    (*) 

Accrued income

   6,739    (*)   3,864    (*) 

Deposits

   26,437    (*)   30,947    (*) 

Short-term loans

   21,925    (*)   28,491    (*) 

Long-term loans

   10,643    (*)   13,899    (*) 

Lease receivables

   21,466    (*)   22,262    (*) 

Financial assets at fair value through profit or loss

       

Equity instruments

  W19,795    19,795   13,223    13,223 

Convertible securities

   2,422    2,422   2,377    2,377 

Derivatives

   18,574    18,574   9,363    9,363 

Financial assets at fair value through other comprehensive income

       

Debt instruments

  W63    63   72    72 

Financial liabilities at fair value through profit or loss

       

Derivatives

  W58,758    58,758   167,625    167,625 

Convertible bonds

   997,268    997,268   861,675    861,675 

Financial liabilities carried at amortized cost

       

Borrowings

  W11,581,780    11,680,997   11,296,898    11,328,418 

Bonds

   1,729,486    1,744,659   1,910,241    1,923,517 

Trade accounts and notes payable

   3,974,921    (*)   3,779,290    (*) 

Other accounts payable

   3,116,263    (*)   2,781,941    (*) 

Long-term other accounts payable

   230,292    (*)   30    (*) 

Security deposits received

   12,236    (*)   12,539    (*) 

Lease liabilities

   89,144    (*)   83,431    (*) 

 

(*)

Excluded from disclosures as the carrying amount approximates fair value.

 

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Table of Contents
25.

Financial Risk Management, Continued

 

 (iii)

Fair values of financial assets and liabilities

 

 i)

Fair value hierarchy

Financial instruments carried at fair value are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques. The levels have been defined as follows:

 

  

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

 

  

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

 

  

Level 3: inputs for the asset or liability that are not based on observable market data

 

 ii)

Financial instruments measured at fair value

Fair value hierarchy classifications of the financial instruments that are measured at fair value as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021 
   Level 1   Level 2   Level 3   Total 

Financial assets at fair value through profit or loss

        

Equity instruments

  W—      —      19,795    19,795 

Convertible bonds

   —      —      2,422    2,422 

Derivatives

   —      —      18,574    18,574 

Financial assets at fair value through other comprehensive income

        

Debt instruments

  W63    —      —      63 

Financial liabilities at fair value through profit or loss

        

Derivatives

  W—      —      58,758    58,758 

Convertible bonds

   997,268    —      —      997,268 

 

(In millions of won)  December 31, 2020 
   Level 1   Level 2   Level 3   Total 

Financial assets at fair value through profit or loss

        

Equity instruments

  W—      —      13,223    13,223 

Convertible bonds

   —      —      2,377    2,377 

Derivatives

   —      —      9,363    9,363 

Financial assets at fair value through other comprehensive income

        

Debt instruments

  W72    —      —      72 

Financial liabilities at fair value through profit or loss

        

Derivatives

  W—      —      167,625    167,625 

Convertible bonds

   861,675    —      —      861,675 

 

47


Table of Contents
25.

Financial Risk Management, Continued

 

 iii)

Financial instruments not measured at fair value but for which the fair value is disclosed

Fair value hierarchy classifications, valuation technique and inputs for fair value measurements of the financial instruments not measured at fair value but for which the fair value is disclosed as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   

Valuation technique

  Input

Classification

  Level 1   Level 2   Level 3 

Liabilities

          

Borrowings

  W—      —      11,608,997   Discounted cash flow  Discount rate

Bonds

   —      —      1,744,659   Discounted cash flow  Discount rate

 

(In millions of won)  December 31, 2020   

Valuation

technique

  

Input

Classification

  Level 1   Level 2   Level 3 

Liabilities

          

Borrowings

  W—      —      11,328,418   Discounted cash flow  Discount rate

Bonds

   —      —      1,923,517   Discounted cash flow  Discount rate

 

 iv)

The interest rates applied for determination of the above fair value as of March 31, 2021 and December 31, 2020 are as follows:

 

   March 31, 2021  December 31, 2020 

Borrowings, bonds and others

   1.90~4.65  2.15~4.46

 

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26.

Changes in liabilities arising from financing activities

Changes in liabilities arising from financing activities for the three-month period ended March 31, 2021 are as follows:

 

(In millions of won)               
   January 1, 2021      Non-cash transactions     
   Cash flows from
financing
activities
  Reclassification  Gain or loss on
foreign currency
translation
   Effective interest
adjustment
   Others   March 31,
2021
 

Short-term borrowings

  W394,906    322,271   —     25,266    —      —      742,443 

Current portion of long-term borrowings and bonds

   2,705,709    (736,264  892,637   65,589    960    —      2,928,631 

Long-term borrowings

   9,019,658    200,000   (583,078  221,585    —      —      8,858,165 

Bonds

   1,948,541    —     (309,559  36,832    3,914    99,567    1,779,295 

Lease liabilities

   83,431    (15,879  —     10,822    —      10,770    89,144 
  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

 
  W14,152,245    (229,872  —     360,094    4,874    110,337    14,397,678 
  

 

 

   

 

 

  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others

 

 (a)

Related parties

Related parties as of March 31, 2021 are as follows:

 

Classification

  

Description

Associates (*)  Paju Electric Glass Co., Ltd. and others
Entity that has significant influence over the Controlling Company  LG Electronics Inc.
Subsidiaries of the entity that has significant influence over the Controlling Company  Subsidiaries of LG Electronics Inc.

 

(*)

Details of associates are described in note 8.

 

50


Table of Contents
27.

Related Parties and Others, Continued

 

 (b)

Significant transactions such as sales of goods and purchases of raw material and outsourcing service and others, which occurred in the normal course of business with related parties for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)   2021 
   Sales
and others
       Purchase and others 
   Dividend
income
   Purchase of raw
material and
others
   Acquisition of
property, plant
and equipment
   Outsourcing
fees
   Other costs 

Associates

            

AVATEC Co., Ltd.

  W—      200    23    —      18,700    292 

Paju Electric Glass Co., Ltd.

   —      3,668    85,082    —      —      669 

WooRee E&L Co., Ltd.

   —      —      3,807    —      —      4 

YAS Co., Ltd.

   —      200    2,024    1,709    —      1,403 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W—      4,068    90,936    1,709    18,700    2,368 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Entity that has significant influence over the Controlling Company

            

LG Electronics Inc.

  W72,589    —      3,443    123,997    —      28,537 

Subsidiaries of the entity that has significant influence over the Controlling Company

            

LG Electronics India Pvt. Ltd.

  W17,643    —      —      —      —      65 

LG Electronics Vietnam Haiphong

Co., Ltd.

   111,155    —      —      462    —      221 

LG Electronics Nanjing New Technology Co., Ltd.

   116,932    —      —      —      —      511 

 

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27.

Related Parties and Others, Continued

 

(In millions of won)   2021 
   Sales
and others
       Purchase and others 
   Dividend
income
   Purchase of
raw material
and others
   Acquisition of
property, plant
and equipment
   Outsourcing
fees
   Other costs 

LG Electronics RUS, LLC

  W30,400    —      —      —      —      269 

LG Electronics do Brasil Ltda.

   41,374    —      —      —      —      61 

LG Innotek Co., Ltd.

   682    —      6,129    —      —      21,451 

Qingdao LG Inspur Digital Communication Co., Ltd.

   —      —      —      —      —      —   

LG Electronics Mexicali S.A. DE C.V.

   91,053    —      —      —      —      13 

LG Electronics Mlawa Sp. z o.o.

   280,959    —      —      —      —      134 

LG Electronics Reynosa S.A. DE C.V.

   308,845    —      —      —      —      212 

LG Electronics Egypt S.A.E.

   18,894    —      —      —      —      63 

LG Electronics Japan, Inc.

   —      —      —      —      —      1,325 

P.T. LG Electronics Indonesia

   138,254    —      —      —      —      26 

Others

   1,431    —      66    —      —      2,157 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W1,157,622    —      6,195    462    —      26,508 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W1,230,211    4,068    100,574    126,168    18,700    57,413 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others, Continued

 

(In millions of won)  2020 
   Sales
and others
       Purchase and others 
   Dividend
income
   Purchase of
raw material
and others
   Acquisition of
property, plant
and equipment
   Outsourcing
fees
   Other costs 

Associates

            

AVATEC Co., Ltd.

  W—      200    —      —      14,983    199 

Paju Electric Glass Co., Ltd.

   —      7,739    74,280    —      —      973 

WooRee E&L Co., Ltd.

   —      —      1,583    —      —      5 

YAS Co., Ltd.

   —      300    1,484    1,114    —      970 

Material Science Co., Ltd.

   —      —      60    —      —      —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W—      8,239    77,407    1,114    14,983    2,147 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Entity that has significant influence over the Controlling Company

            

LG Electronics Inc.

  W196,295    —      3,621    126,792    —      29,837 

Subsidiaries of the entity that has significant influence over the Controlling Company

            

LG Electronics India Pvt. Ltd.

  W13,992    —      —      —      —      65 

LG Electronics Vietnam Haiphong Co., Ltd.

   71,901    —      —      —      —      199 

LG Electronics Nanjing New Technology Co., Ltd.

   89,650    —      —      —      —      241 

 

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27.

Related Parties and Others, Continued

 

(In millions of won)   2020 
   Sales
and others
       Purchase and others 
   Dividend
income
   Purchase of
raw material
and others
   Acquisition of
property, plant
and equipment
   Outsourcing
fees
   Other costs 

LG Electronics RUS, LLC

  W25,085    —      —      —      —      117 

LG Electronics do Brasil Ltda.

   30,024    —      —      —      —      40 

LG Innotek Co., Ltd.

   1,192    —      7,568    —      —      20,352 

Qingdao LG Inspur Digital Communication Co., Ltd.

   5,310    —      —      —      —      —   

LG Electronics Mexicali S.A. DE C.V.

   35,104    —      —      —      —      9 

LG Electronics Mlawa Sp. z o.o.

   100,238    —      —      —      —      528 

LG Electronics Reynosa S.A. DE C.V.

   129,300    —      —      —      —      530 

LG Electronics Egypt S.A.E.

   20,412    —      —      —      —      246 

LG Electronics Japan, Inc.

   —      —      —      8    —      1,503 

P.T. LG Electronics Indonesia

   20,779    —      —      —      —      98 

Others

   1,380    —      17    —      —      1,421 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W544,367    —      7,585    8    —      25,349 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  W740,662    8,239    88,613    127,914    14,983    57,333 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others, Continued

 

 (c)

Trade accounts and notes receivable and payable and others as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)     
   Trade accounts and notes receivable
and others
   Trade accounts and notes payable
and others
 
   March 31, 2021   December 31, 2020   March 31, 2021   December 31, 2020 

Associates

        

AVATEC Co., Ltd.

  W200    —      2,139    2,714 

Paju Electric Glass Co., Ltd.

   —      —      96,568    84,095 

WooRee E&L Co., Ltd.

   —      —      3,829    3,637 

YAS Co., Ltd.

   200    —      6,654    18,126 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W400    —      109,190    108,572 
  

 

 

   

 

 

   

 

 

   

 

 

 

Entity that has significant influence over the Controlling Company

        

LG Electronics Inc.

  W84,433    94,193    125,381    88,629 
           —       

Subsidiaries of the entity that has significant influence over the Controlling Company

        

LG Electronics India Pvt. Ltd.

  W14,867    3,697    —      —   

LG Electronics Vietnam Haiphong Co., Ltd.

   89,128    36,417    470    16 

LG Electronics Nanjing New Technology Co., Ltd.

   92,025    88,075    233    83 

LG Electronics RUS, LLC

   17,509    10,295    40    —   

LG Electronics do Brasil Ltda.

   24,481    7,481    14    14 

LG Innotek Co., Ltd.

   158    227    36,297    31,309 

 

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27.

Related Parties and Others, Continued

 

(In millions of won)     
   Trade accounts and notes receivable
and others
   Trade accounts and notes payable
and others
 
   March 31, 2021   December 31, 2020   March 31, 2021   December 31, 2020 

LG Electronics Mexicali, S.A. DE C.V.

  W56,080    20,969    13    15 

LG Electronics Mlawa Sp. z o.o.

   150,011    89,481    42    10 

LG Electronics Reynosa, S.A. DE C.V.

   183,972    70,555    —      50 

LG Electronics Egypt S.A.E.

   5,583    13,359    11    —   

P.T. LG Electronics Indonesia

   100,708    48,677    19    —   

Others

   1,290    804    2,130    2,062 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W735,812    390,037    39,269    33,559 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W820,645    484,230    273,840    230,760 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others, Continued

 

 (d)

Conglomerate Transactions

Transactions, trade accounts and notes receivable and payable, and others between the Group and certain companies and their subsidiaries included in LG Group, one of the conglomerates in the Republic of Korea according to the Monopoly Regulation and Fair Trade Act, for the three-month periods ended March 31, 2021 and 2020 and as of March 31, 2021 and December 31, 2020 are as follows. These entities are not related parties according to K-IFRS No. 1024, Related Party Disclosures.

 

(In millions of won) 
   For the three-month period ended
March 31, 2021
   March 31, 2021 
   Sales
and others
   Purchase
and others
   Trade accounts and
notes receivable

and others
   Trade accounts and
notes payable

and others
 

LG International Corp. and its subsidiaries

  W133,585    70,394    111,806    36,265 

LG Uplus Corp.

   —      577    —      161 

LG Chem Ltd. and its subsidiaries

   24    170,367    82    188,182 

S&I Corp. and its subsidiaries

   78    70,449    5,862    74,340 

Silicon Works Co., Ltd.

   —      286,883    —      144,360 

LG Corp.

   —      16,001    6,799    3,476 

LG Management Development Institute

   —      5,241    3,480    459 

LG CNS Co., Ltd. and its subsidiaries

   7    30,766    2    23,755 

LG Household & Health Care and its subsidiaries

   —      100    —      35 

LG Holdings Japan Co., Ltd.

   —      512    1    —   

G2R Inc. and its subsidiaries

   —      2,605    —      6,689 

Robostar Co., Ltd.

   —      781    —      936 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W133,694    654,676    128,032    478,658 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others, Continued

 

(In millions of won) 
   For the three-month period ended
March 31, 2020
   December 31, 2020 
   Sales
and others
   Purchase
and others
   Trade accounts and
notes receivable

and others
   Trade accounts and
notes payable and
others
 

LG International Corp. and its subsidiaries

  W115,325    77,042    81,353    28,583 

LG Uplus Corp.

       561    —      151 

LG Chem Ltd. and its subsidiaries

   171    213,622    115    179,944 

S&I Corp. and its subsidiaries

   84    63,222    5,864    103,896 

Silicon Works Co., Ltd.

   36    152,488    —      136,715 

LG Corp.

   —      11,783    6,799    1,417 

LG Management Development Institute

   —      1,597    3,480    351 

LG CNS Co., Ltd. and its subsidiaries

   2    24,231    253    93,477 

LG Household & Health Care Ltd. and its subsidiaries

   —      77    —      —   

LG Holdings Japan Co., Ltd.

   —      533    2,244    —   

G2R Inc. and its subsidiaries

   —      1,783    —      8,851 

Robostar Co., Ltd.

   —      406    —      1,033 
  

 

 

   

 

 

   

 

 

   

 

 

 
  W115,618    547,345    100,108    554,418 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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27.

Related Parties and Others, Continued

 

 (e)

Key management personnel compensation

Compensations to key management for the three-month periods ended March 31, 2021 and 2020 are as follows:

 

(In millions of won)        
   2021   2020 

Short-term benefits

  W826    569 

Expenses related to the defined benefit plan

   83    96 
  

 

 

   

 

 

 
  W909    665 
  

 

 

   

 

 

 

Key management refers to the registered directors who have significant control and responsibilities over the Controlling Company’s operations and business.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2021 and 2020

(With Independent Auditors’ Review Report Thereon)


Table of Contents


Table of Contents

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

LG Display Co., Ltd.:

Reviewed Financial Statements

We have reviewed the accompanying condensed separate interim financial statements of LG Display Co., Ltd. (the “Company”) which comprise the condensed separate interim statement of financial position as of March 31, 2021, the condensed separate interim statements of comprehensive income (loss), changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020, and notes comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Condensed Separate Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Security and Futures Commission of the Republic of Korea. A review of interim financial information consists principally 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 reviews, nothing has come to our attention that causes us to believe that the condensed separate interim financial statements referred to above are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards No. 1034, Interim Financial Reporting.

Other Matters

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

We audited the separate statement of financial position as of December 31, 2020, and the related separate statements of comprehensive loss, changes in equity and cash flows for the year then ended, which are not accompanying this review report, in accordance with Korean Standards on Auditing, and our report thereon, dated March 3, 2021, expressed an unmodified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2020, presented for comparative purposes, is not different from that audited by us from which it was derived in all material respects.

 

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Table of Contents

KPMG Samjong Accounting Corp.

Seoul, Korea

May 14, 2021

 

This report is effective as of May 14, 2021, 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 condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

 

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Table of Contents

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Financial Position

(Unaudited)

As of March 31, 2021 and December 31, 2020

 

(In millions of won)  Note   March 31, 2021   December 31, 2020 

Assets

      

Cash and cash equivalents

   4,24   W770,658   1,220,098

Deposits in banks

   4,24    76,852   76,852

Trade accounts and notes receivable, net

   5,14,24,26    4,939,212   3,797,248

Other accounts receivable, net

   5,24    96,598   141,332

Other current financial assets

   6,24    32,545   43,151

Inventories

   7    1,488,499   1,418,122

Prepaid income taxes

     110,448   110,388

Other current assets

     214,300   140,863
    

 

 

   

 

 

 

Total current assets

     7,729,112   6,948,054

Deposits in banks

   4,24    11   11

Investments

   8    4,779,685   4,784,828

Other non-current accounts receivable, net

   5,24    4,928   5,797

Other non-current financial assets

   6,24    34,859   29,133

Property, plant and equipment, net

   9    11,500,994   11,736,673

Intangible assets, net

   10    1,073,094   887,431

Deferred tax assets

   22    1,985,656   1,971,787

Defined benefit assets, net

   12    183,424   224,997

Other non-current assets

     129,546   116,491
    

 

 

   

 

 

 

Total non-current assets

     19,692,197   19,757,148
    

 

 

   

 

 

 

Total assets

    W27,421,309   26,705,202
    

 

 

   

 

 

 

Liabilities

      

Trade accounts and notes payable

   24,26   W5,377,412   4,591,319

Current financial liabilities

   11,24    2,227,788   2,162,989

Other accounts payable

   24    2,468,630   2,373,730

Accrued expenses

     466,795   499,610

Provisions

   13    191,607   196,107

Advances received

   14    257,605   312,790

Other current liabilities

     39,023   44,115
    

 

 

   

 

 

 

Total current liabilities

     11,028,860   10,180,660

Non-current financial liabilities

   11,24    5,734,280   6,072,225

Non-current provisions

   13    93,992   89,633

Other non-current liabilities

     259,041   99,449
    

 

 

   

 

 

 

Total non-current liabilities

     6,087,313   6,261,307
    

 

 

   

 

 

 

Total liabilities

     17,116,173   16,441,967
    

 

 

   

 

 

 

Equity

      

Share capital

   15    1,789,079   1,789,079

Share premium

     2,251,113   2,251,113

Retained earnings

     6,264,944   6,223,043

Total equity

     10,305,136   10,263,235
    

 

 

   

 

 

 

Total liabilities and equity

    W27,421,309   26,705,202
    

 

 

   

 

 

 

See accompanying notes to the separate interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won, except earnings per share)  Note   2021  2020 

Revenue

   16,26   W 6,632,538  4,481,421

Cost of sales

   7,17,26    (5,909,349)  (4,533,377)
    

 

 

  

 

 

 

Gross profit (loss)

     723,189  (51,956)

Selling expenses

   17,18    (128,761)  (135,470)

Administrative expenses

   17,18    (136,408)  (102,604)

Research and development expenses

   17    (270,944)  (263,679)
    

 

 

  

 

 

 

Operating profit (loss)

     187,076  (553,709)
    

 

 

  

 

 

 

Finance income

   21    177,421  284,887

Finance costs

   21    (352,133)  (264,734)

Other non-operating income

   20    338,153  451,006

Other non-operating expenses

   17,20    (317,300)  (392,892)
    

 

 

  

 

 

 

Profit (loss) before income tax

     33,217  (475,442)

Income tax benefit

   22    (12,105)  (137,865)
    

 

 

  

 

 

 

Profit (loss) for the period

     45,322  (337,577)
    

 

 

  

 

 

 

Other comprehensive income (loss)

     

Items that will never be reclassified to profit or loss

     

Remeasurements of net defined benefit liabilities

   12    (4,594)  (2,574)

Related income tax

   12    1,173  661
    

 

 

  

 

 

 

Other comprehensive loss for the period, net of income tax

     (3,421)  (1,913)
    

 

 

  

 

 

 

Total comprehensive income (loss) for the period

    W41,901  (339,490)
    

 

 

  

 

 

��

Earnings (loss) per share (in won)

     

Basic and diluted earnings (loss) per share

   23   W127  (943)
    

 

 

  

 

 

 

See accompanying notes to the separate interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

   Share   Share   Retained  Total 
(In millions of won)  capital   premium   earnings  equity 

Balances at January 1, 2020

  W1,789,079   2,251,113   6,625,901  10,666,093
  

 

 

   

 

 

   

 

 

  

 

 

 

Total comprehensive loss for the period

       

Loss for the period

   —      —      (337,577)  (337,577)

Other comprehensive loss

       

Remeasurements of net defined benefit liabilities, net of tax

   —      —      (1,913)  (1,913)
  

 

 

   

 

 

   

 

 

  

 

 

 

Total comprehensive loss for the period

  W —      —      (339,490)  (339,490)
  

 

 

   

 

 

   

 

 

  

 

 

 

Balances at March 31, 2020

  W1,789,079   2,251,113   6,286,411  10,326,603
  

 

 

   

 

 

   

 

 

  

 

 

 

Balances at January 1, 2021

  W1,789,079   2,251,113   6,223,043  10,263,235
  

 

 

   

 

 

   

 

 

  

 

 

 

Total comprehensive income (loss) for the period

       

Profit for the period

   —      —      45,322  45,322

Other comprehensive loss

       

Remeasurements of net defined benefit liabilities, net of tax

   —      —      (3,421)  (3,421)
  

 

 

   

 

 

   

 

 

  

 

 

 

Total comprehensive income for the period

  W—     —      41,901  41,901
  

 

 

   

 

 

   

 

 

  

 

 

 

Balances at March 31, 2021

  W1,789,079   2,251,113   6,264,944  10,305,136
  

 

 

   

 

 

   

 

 

  

 

 

 

See accompanying notes to the separate interim financial statements.

 

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Table of Contents

LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won)  Note   2021  2020 

Cash flows from operating activities:

     

Profit(loss) for the period

    W45,322  (337,577)

Adjustments for:

     

Income tax benefit

   22    (12,105)  (137,865)

Depreciation and amortization

   9,10,17    612,174  663,270

Gain on foreign currency translation

     (117,968)  (165,344)

Loss on foreign currency translation

     133,137  182,048

Expenses related to defined benefit plans

   12    35,634  39,698

Gain on disposal of property, plant and equipment

     (2,398)  (4,281)

Loss on disposal of property, plant and equipment

     8,323  4,374

Impairment loss on disposal of property, plant and equipment

     1,727  5,494

Impairment loss on intangible assets

     7,767  4,347

Reversal of impairment loss on intangible assets

     (1,250)  (550)

Expense on increase of provisions

     45,907  65,238

Finance income

     (158,778)  (257,734)

Finance costs

     349,002  258,264

Other income

     —    (13,944)

Other expenses

     15,423  259
    

 

 

  

 

 

 
     916,595  643,274

Changes in:

     

Trade accounts and notes receivable

     (1,044,085)  (48,552)

Other accounts receivable

     42,410  536

Inventories

     (70,378)  (77,184)

Other current assets

     (47,281)  (39,710)

Other non-current assets

     (34,425)  (25,687)

Trade accounts and notes payable

     680,607  538,969

Other accounts payable

     90,191  (298,182)

Accrued expenses

     (16,151)  (104,761)

Provisions

     (46,048)  (65,889)

Advances received

     53,614  (18,388)

Other current liabilities

     (9,803)  (14,114)

Defined benefit liabilities, net

     1,345  (4,007)

Other non-current liabilities

     (485)  3,218
    

 

 

  

 

 

 
     (400,489)  (153,751)

Cash generated from operating activities

     561,428  151,946

Income taxes paid

     (651)  (734)

Interests received

     414  4,647

Interests paid

     (72,469)  (70,159)
    

 

 

  

 

 

 

Net cash provided by operating activities

    W488,722  85,700
    

 

 

  

 

 

 

See accompanying notes to the separate financial statements.

 

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LG DISPLAY CO., LTD.

Condensed Separate Interim Statements of Cash Flows, Continued

(Unaudited)

For the three-month periods ended March 31, 2021 and 2020

 

(In millions of won)  Note  2021  2020 

Cash flows from investing activities:

     

Dividends received

    W3,668  7,739

Proceeds from withdrawal of deposits in banks

     —    500

Proceeds from disposal of financial assets at fair value through other comprehensive income

     9  6

Acquisition of investments

     (6,157)  (525,516)

Proceeds from disposal of investments

     11,900  600

Acquisition of property, plant and equipment

     (333,945)  (252,258)

Proceeds from disposal of property, plant and equipment

     5,545  269,228

Acquisition of intangible assets

     (194,813)  (111,119)

Receipt from (payment for) settlement of derivatives

     (20,435)  21,615

Proceeds from collection of short-term loans

     7,204  6,134

Increase in deposits

     —    (8)

Decrease in deposits

     130  947

Proceeds from disposal of other assets

     —    11,000
    

 

 

  

 

 

 

Net cash used in investing activities

     (526,894)  (571,132)
    

 

 

  

 

 

 

Cash flows from financing activities:

  25   

Proceeds from short-term borrowings

     330,460  644,178

Repayments of short-term borrowings

     (330,460)  (453,478)

Proceeds from long-term borrowings

     200,000  —  

Repayments of current portion of long-term borrowings and bonds

     (609,435)  (9,538)

Payment guarantee fee received

     1,281  —  

Repayments of lease liabilities

     (3,114)  (3,092)
    

 

 

  

 

 

 

Net cash provided by (used in) financing activities

     (411,268)  178,070
    

 

 

  

 

 

 

Net decrease in cash and cash equivalents

     (449,440)  (307,362)

Cash and cash equivalents at January 1

     1,220,098  1,105,245
    

 

 

  

 

 

 

Cash and cash equivalents at March 31

    W770,658  797,883
    

 

 

  

 

 

 

See accompanying notes to the separate interim financial statements.

 

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1.

Organization and Description of Business

LG Display Co., Ltd. (the “Company”) was incorporated in February 1985 and the Company is a public corporation listed in the Korea Exchange since 2004. The main business of the Company is to manufacture and sell displays and its related products. As of March 31, 2021, the Company is operating Thin Film Transistor Liquid Crystal Display (“TFT-LCD”) and Organic Light Emitting Diode (“OLED”) panel manufacturing plants in Gumi, Paju and China and TFT-LCD and OLED module manufacturing plants in Gumi, Paju, China and Vietnam. The Company is domiciled in the Republic of Korea with its address at 128 Yeouidae-ro, Yeongdeungpo-gu, Seoul, the Republic of Korea. As of March 31, 2021, LG Electronics Inc., a major shareholder of the Company, owns 37.9% (135,625,000 shares) of the Company’s common stock.

The Company’s common stock is listed on the Korea Exchange under the identifying code 034220. As of March 31, 2021, there are 357,815,700 shares of common stock outstanding. The Company’s common stock is also listed on the New York Stock Exchange in the form of American Depository Shares (“ADSs”) under the symbol “LPL”. One ADS represents one-half of one share of common stock. As of March 31, 2021, there are 17,451,976 ADSs outstanding.

 

2.

Basis of Presenting Financial Statements

 

 (a)

Statement of Compliance

The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No.1034, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the separate financial statements of the Company as of and for the year ended December 31, 2020.

These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No.1027, Separate Financial Statements, presented by a parent, an investor in an associate, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

 

 (b)

Basis of Measurement

The condensed separate interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

 

  

derivative financial instruments at fair value, financial assets at fair value through profit or loss (“FVTPL”), financial assets at fair value through other comprehensive income (“FVOCI”), financial liabilities at fair value through profit or loss (“FVTPL”), and

 

  

net defined benefit liabilities (defined benefit assets) recognized at the present value of defined benefit obligations less the fair value of plan assets

 

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2.

Basis of Presenting Financial Statements, Continued

 

 (c)

Functional and Presentation Currency

The condensed separate interim financial statements are presented in Korean won, which is the Company’s functional currency.

 

 (d)

Use of Estimates and Judgments

The preparation of the condensed separate interim financial statements in conformity with K-IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

3.

Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its condensed separate interim financial statements are the same as those followed by the Company in its preparation of the separate financial statements as of and for the year ended December 31, 2020, except for the application of K-IFRS No. 1034, Interim Financial Reporting.

 

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4.

Cash and Cash Equivalents and Deposits in Banks

Cash and cash equivalents and deposits in banks as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Current assets

    

Cash and cash equivalents

    

Demand deposits

  W770,658    1,220,098 

Deposits in banks

    

Restricted deposits (*)

  W76,852    76,852 

Non-current assets

    

Deposits in banks

    

Restricted deposits (*)

  W11    11 
  

 

 

   

 

 

 
  W847,521    1,296,961 
  

 

 

   

 

 

 

 

(*)

Includes funds deposited under agreements on mutually beneficial cooperation to aid LG Group companies’ suppliers, restricted deposits pledged to enforce the Company’s investment plans upon the receipt of grants from Gumi city and Gyeongsangbuk-do, and others.

 

5.

Trade Accounts and Notes Receivable and Other Accounts Receivable

 

 (a)

Trade accounts and notes receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Due from third parties

  W254,205    201,640 

Due from related parties

   4,685,007    3,595,608 
  

 

 

   

 

 

 
  W4,939,212    3,797,248 
  

 

 

   

 

 

 

 

 (b)

Other accounts receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Current assets

    

Non-trade receivables, net

  W90,260    130,217 

Accrued income

   6,338    11,115 
  

 

 

   

 

 

 
  W96,598    141,332 
  

 

 

   

 

 

 

Non-current assets

    

Long-term non-trade receivables

  W4,928    5,797 
  

 

 

   

 

 

 
  W101,526    147,129 
  

 

 

   

 

 

 

Due from related parties included in other accounts receivable as of March 31, 2021 and December 31, 2020 areW19,873 million andW59,620 million, respectively.

 

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5.

Trade Accounts and Notes Receivable and Other Accounts Receivable, Continued

 

 (c)

The aging of trade accounts and notes receivable and other accounts receivable as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021 
   Book value   Allowance for impairment 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
  Other
accounts
receivable
 

Current

  W4,935,832    101,861    (25  (1,545

1-15 days past due

   3,405    243    —     (2

16-30 days past due

   —      2    —     —   

31-60 days past due

   —      2    —     —   

More than 60 days past due

   —      994    —     (29
  

 

 

   

 

 

   

 

 

  

 

 

 
  W4,939,237    103,102    (25  (1,576
  

 

 

   

 

 

   

 

 

  

 

 

 

 

(In millions of won)  December 31, 2020 
   Book value   Allowance for impairment 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
  Other
accounts
receivable
 

Current

  W3,796,830    146,153    (27  (1,466

1-15 days past due

   415    919    —     (7

16-30 days past due

   30    521    —     —   

31-60 days past due

   —      782    —     (8

More than 60 days past due

   —      257    —     (22
  

 

 

   

 

 

   

 

 

  

 

 

 
  W3,797,275    148,632    (27  (1,503
  

 

 

   

 

 

   

 

 

  

 

 

 

Movements in the allowance for impairment in respect of trade accounts and notes receivable and other accounts receivable for the three-month period ended March 31, 2021 and for the year ended December 31, 2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 
   Trade accounts
and notes
receivable
   Other
accounts
receivable
   Trade accounts
and notes
receivable
   Other
accounts
receivable
 

Balance at the beginning of the period

  W27    1,503    5    2,978 

(Reversal of) bad debt expense

   (2   73    22    (411

Write-off

   —      —      —      (1,064
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at the end of the reporting period

  W25    1,576    27    1,503 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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6.

Other Financial Assets

Other financial assets as of March 31, 2021 and December 31,2020 are as follows:

 

(In millions of won)  March 31, 2021   December 31, 2020 

Current assets

    

Financial assets at fair value through profit or loss

    

Derivatives(*)

  W10,605    9,252 

Financial assets at fair value through other comprehensive income

    

Debt instruments

    

Government bonds

  W15    24 

Financial assets carried at amortized cost

    

Short-term loans

  W21,925    28,491 

Deposits

   —      5,384 
  

 

 

   

 

 

 
  W32,545    43,151 
  

 

 

   

 

 

 

Non-current assets

    

Financial assets at fair value through profit or loss

    

Equity instruments

  W2,635    1,381 

Convertible bonds

   1,289    1,289 

Derivatives(*)

   7,969    111 
  

 

 

   

 

 

 
  W11,893    2,781 
  

 

 

   

 

 

 

Financial assets at fair value through other comprehensive income

    

Debt instruments

    

Government bonds

  W48    48 

Financial assets carried at amortized cost

    

Deposits

  W12,275    12,405 

Long-term loans

   10,643    13,899 
  

 

 

   

 

 

 
  W22,918    26,304 
  

 

 

   

 

 

 
  W34,859    29,133 
  

 

 

   

 

 

 

 

(*)

Represents valuation gain from cross currency interest rate swap contracts related to foreign currency denominated borrowings and bonds and others. The contracts are not designated as hedging instruments.

 

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7.

Inventories

Inventories as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)        
   March 31, 2021   December 31, 2020 

Finished goods

  W312,960    372,864 

Work-in-process

   661,792    539,747 

Raw materials

   412,638    411,165 

Supplies

   101,109    94,346 
  

 

 

   

 

 

 
  W1,488,499    1,418,122 
  

 

 

   

 

 

 

For the three-month periods ended March 31, 2021 and 2020, the amounts of inventories recognized as cost of sales including inventory write-downs and usage of inventory write-downs are as follows:

 

(In millions of won)        
   2021   2020 

Inventories recognized as cost of sales

  W5,909,349    4,533,377 

Including: inventory write-downs

   134,276    335,255 

Including: usage of inventory write-downs

   (178,155   (408,567

There were no significant reversals of inventory write-downs recognized during the three-month periods ended March 31, 2021 and 2020.

 

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8.

Investments

 

 (a)

Investments in subsidiaries consist of the following:

 

(In millions of won)        March 31, 2021   December 31, 2020 

Subsidiaries

  

Location

  

Business

  Percentage
of
ownership
  Book
Value
   Percentage
of
ownership
  Book
Value
 

LG Display America, Inc.

  San Jose, U.S.A.  Sell display products   100 W36,815    100 W36,815 

LG Display Germany GmbH

  Eschborn, Germany  Sell display products   100  19,373    100  19,373 

LG Display Japan Co., Ltd.

  Tokyo, Japan  Sell display products   100  15,686    100  15,686 

LG Display Taiwan Co., Ltd.

  Taipei, Taiwan  Sell display products   100  35,230    100  35,230 

LG Display Nanjing Co., Ltd.

  Nanjing, China  Manufacture display products   100  593,726    100  593,726 

LG Display Shanghai Co., Ltd.

  Shanghai, China  Sell display products   100  9,093    100  9,093 

LG Display Guangzhou Co., Ltd.

  Guangzhou, China  Manufacture display products   100  293,557    100  293,557 

LG Display Shenzhen Co., Ltd.

  Shenzhen, China  Sell display products   100  3,467    100  3,467 

LG Display Singapore Pte. Ltd.

  Singapore  Sell display products   100  1,250    100  1,250 

L&T Display Technology (Fujian) Limited

  Fujian, China  Manufacture and sell LCD module and LCD monitor sets   51  10,123    51  10,123 

LG Display Yantai Co., Ltd.

  Yantai, China  Manufacture display products   100  169,195    100  169,195 

Nanumnuri Co., Ltd.

  

Gumi,

South Korea

  Provide janitorial services   100  800    100  800 

LG Display (China) Co., Ltd.

  

Guangzhou,

China

  Manufacture and sell display products   51  723,086    51  723,086 

Unified Innovative Technology, LLC

  Wilmington, U.S.A.  Manage intellectual property   100  9,489    100  9,489 

LG Display Guangzhou Trading Co., Ltd.

  Guangzhou, China  Sell display products   100  218    100  218 

Global OLED Technology LLC

  Sterling, U.S.A  Manage OLED intellectual property   100  164,322    100  164,322 

LG Display Vietnam Haiphong Co., Ltd.

  Haiphong, Vietnam  

Manufacture

display products

   100  672,658    100  672,658 

Suzhou Lehui Display Co., Ltd.

  Suzhou, China  Manufacture and sell LCD module and LCD monitor sets   100  121,640    100  121,640 

LG DISPLAY FUND I LLC(*)

  Wilmington, U.S.A  Invest in venture business and acquire technologies   100  19,721    100  13,564 

LG Display High-Tech (China) Co., Ltd.

  Guangzhou, China  Manufacture and sell display products   69  1,794,547    69  1,794,547 

Money Market Trust

  Seoul, South Korea  Money market trust   —     —      100  11,300 
       

 

 

    

 

 

 
       W4,693,996    W4,699,139 
       

 

 

    

 

 

 

 

(*)

For the three-month period ended March 31, 2021, the Company contributedW6,157 million in cash for the capital increase of LG DISPLAY FUND I LLC.

 

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8.

Investments, Continued

 

 (b)

Associates as of March 31, 2021 and December 31, 2020 are as follows:

 

(In millions of won)                    
         March 31, 2021   December 31, 2020 

Associates

  

Location

  

Business

  Percentage
of ownership
  Carrying
amount
   Percentage
of ownership
  Carrying
amount
 

Paju Electric Glass Co., Ltd.

  Paju, South Korea  Manufacture glass for display   40 W45,089    40 W45,089 

WooRee E&L Co., Ltd.

  Ansan, South Korea  Manufacture LED back light unit packages   14  10,540    14  10,540 

YAS Co., Ltd.

  Paju, South Korea  Develop and manufacture deposition equipment for OLEDs   15  10,000    15  10,000 

AVATEC Co., Ltd.

  Daegu, South Korea  Process and sell glass for display   15  8,000    14  8,000 

Arctic Sentinel, Inc.

  Los Angeles, U.S.A.  Develop and manufacture tablet for kids   10  —      10  —   

Cynora GmbH

  Bruchsal Germany  Develop organic emitting materials for displays and lighting devices   11  2,609    12  2,609 

Material Science Co., Ltd.

  Seoul, South Korea  Develop, manufacture and sell materials for display   10  3,791    10  3,791 

Nanosys Inc.

  Milpitas, U.S.A.  Develop, manufacture and sell materials for display   3  5,660    3  5,660