Trade accounts and notes receivable as of December 31, 2019 was
W3,154 billion, representing an increase of W325 billion from net trade accounts and notes receivable as of December 31, 2018, mostly reflecting a decrease in sale of our trade accounts and notes
receivable and increase in foreign exchange rates as of December 31, 2019.
The book value of our total tangible assets as of
December 31, 2019 was W2,209 billion, representing an increase of W488 billion from the book value of our total tangible assets as of December 31, 2018. The increase was due to our continued
investment in increasing our production capacity and effects of increases in foreign exchange rates, which outpaced the negative effect of depreciation of our production facilities.
Trade accounts and notes payable as of December 31, 2019 was W2,618 billion, representing a decrease of
W469 billion from trade accounts and notes payable as of December 31, 2018, and our other accounts payable increased to W4,397 billion as of December 31, 2019.
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Dependence on Key Customers
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We sell our products to a select group of key customers, including our largest shareholder, and any significant decrease in their order levels will
negatively affect our financial condition and results of operations.
A substantial portion of our sales is attributable to a limited
group of end-brand customers and their designated system integrators. Sales attributed to our end-brand customers are for their
end-brand products and do not include sales to these customers for their system integration activities for other end-brand products, if any. Our top ten end-brand customers, including LG Electronics Inc., our largest shareholder, together accounted for approximately 81% of our sales in 2017, 77% in 2018 and 80% in 2019.
We benefit from the strong collaborative relationships we maintain with our end-brand customers by
participating in the development of their products and gaining insights about levels of future demand for our products and other industry trends. Customers look to us for a dependable supply of quality products, even during downturns in the
industry, and we benefit from the brand recognition of our customers’ end products. The loss of these end-brand customers, as a result of their entering into strategic supplier arrangements with our
competitors or otherwise, would thus result not only in reduced sales, but also in the loss of these benefits. We cannot provide assurance that a select group of key end-brand customers, including our largest
shareholder, will continue to place orders with us in the future at the same levels as in prior periods, or at all.
We expect that we
will continue to be dependent upon LG Electronics and its affiliates for a significant portion of our revenue for the foreseeable future. Our results of operations and financial condition could therefore be affected by the overall performance of LG
Electronics and its affiliates. Further details of our transactions with LG Electronics and its affiliates are described in Note 29 to our consolidated annual financial statements as of and for the years ended December 31, 2019 and 2018, which
were furnished on March 11, 2020 as part of the current report on Form 6-K titled “Submission of Audit Report.”
Our revenue depends on continuing demand for televisions, notebook computers, desktop monitors, tablet computers and mobile and other application products
with panels of the type we produce. Our sales may not grow at the rate we expect if consumers do not purchase these products.
Currently, our total sales are derived principally from customers who use our products in televisions, notebook computers, desktop monitors,
tablet computers and mobile and other application products with display devices. In particular, a substantial percentage of our sales is derived from end-brand customers, or their designated system
integrators, who use our panels in their televisions, which accounted for 42.2%, 40.0% and 34.1% of our total revenue in 2017, 2018 and 2019, respectively. A substantial portion of our sales is also derived from
end-brand customers, or their designated system integrators, who use our panels in their notebook computers, which accounted for 8.1%, 11.7% and 11.9% of our total revenue in 2017, 2018 and 2019, respectively,
those who use our panels in their desktop monitors, which accounted for 15.8%, 16.6% and 17.2% of our total revenue in 2017, 2018 and 2019, respectively, those who use our panels in their tablet computers, which accounted for 8.5%, 8.2% and 9.6% of
our total revenue in 2017, 2018 and 2019, respectively, and those who use our panels in their mobile and other applications, which accounted for 25.4%, 23.5% and 27.2% of our total revenue in 2017, 2018 and 2019, respectively. Although the degree to
which our total sales are dependent on sales of television panels has fluctuated in recent years, television panels remain our largest product category in terms of revenue and we will therefore continue to be dependent on continuing demand from the
television industry. In addition, we will continue to be dependent on continuing demand from the personal computer industry, the tablet computer industry and the mobile device industry for a substantial portion of our sales. Any downturn in any of
those industries in which our customers operate would result in reduced demand for our products, which may in turn result in reduced revenue, lower average selling prices and/or reduced margins.
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